Edgar Filing: NEWELL RUBBERMAID INC

NWL-12.31.2014-10K

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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, 2014		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)

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

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There were 268.5 million shares of the Registrant’s Common Stock outstanding (net of treasury shares) as of January 31, 2015. The aggregate market value of the shares of Common Stock (based upon the closing price on the New York Stock Exchange on June 30, 2014) beneficially owned by non-affiliates of the Registrant was approximately $8.4 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 12, 2015 are incorporated by reference into Part III of this Annual Report on Form 10-K.

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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	16
	ITEM 4. MINE SAFETY DISCLOSURES	17
	SUPPLEMENTARY ITEM — EXECUTIVE OFFICERS OF THE REGISTRANT	17
PART II
	ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	18
	ITEM 6. SELECTED FINANCIAL DATA	19
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	52
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	54
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	102
	ITEM 9A. CONTROLS AND PROCEDURES	102
	ITEM 9B. OTHER INFORMATION	103
PART III
	ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	104
	ITEM 11. EXECUTIVE COMPENSATION	104
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	104
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	104
	ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	105
PART IV
	ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	106
SIGNATURES		113
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

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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. The Company was founded in Ogdensburg, NY in 1903 and is incorporated in Delaware. The Company’s principal executive office is located at Three Glenlake Parkway, Atlanta, Georgia 30328, and the Company’s telephone number is 770-418-7000.

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^®, Contigo^®, Levolor^®, Goody^®, Calphalon^®, Irwin^®, Lenox^®, Rubbermaid Commercial Products^®, Graco^®, Aprica^® and Baby Jogger^®.

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


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


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


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


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


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

During 2014, the Company completed the acquisitions of Ignite Holdings, LLC (“Ignite”) and Baby Jogger Holdings, Inc. (“Baby Jogger”) and acquired the assets of bubba brands, inc. (“bubba”). Ignite and bubba are designers and marketers of durable beverage containers under the brands Contigo, Avex^® and bubba, and these businesses are included in the Company’s Home Solutions segment. Baby Jogger is a designer and marketer of premium infant and juvenile products focused on activity strollers and related accessories under the Baby Jogger brand and its City Mini^® and City Select^® sub-brands. Baby Jogger is included in the Company’s Baby & Parenting segment.

Based on the Company’s strategy to allocate resources to its businesses relative to their growth potential and those with the greater right to win in the marketplace, the Company determined in 2014 that its Endicia^®and Culinary electrics and retail businesses do not align with the Company’s long-term growth plans and has initiated plans to sell these businesses. Accordingly, the Company’s Endicia and Culinary electrics and retail businesses were classified as discontinued operations based on the Company’s commitment to sell those businesses, and the results of operations of these businesses have been classified as discontinued operations for all periods presented. The Endicia business was included in the Writing segment, and the Culinary businesses were included in the Home Solutions segment. The Endicia business provides on-line postage solutions. The Culinary electrics business sells kitchen electrics and accessories to retailers, and the retail business sells cookware products and accessories through outlet stores.

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.

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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. In 2014, the Company increased advertising investments in support of its brands by $52.8 million compared to 2013, and the Company intends to continue to leverage its portfolio of leading brands to create a margin structure that allows for further increases in 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.

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.

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During 2014, the Company executed against the Strategic Phase of the Growth Game Plan, investing in core activity systems critical to the Company’s success, unlocking trapped capacity for growth through Project Renewal, investing in new capabilities and the Company’s brands for accelerated growth, and beginning to leverage an operating company structure to release the full potential of the business. The Company expects to continue to implement the Strategic Phase of the Growth Game Plan in 2015.

The Company will continue implementing changes to drive the Growth Game Plan strategy 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 is focusing its resources on fewer products and countries, while simplifying go-to-market, delivery and back office support structures.


•	Best Cost Finance: The Company is delivering 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 is driving “One Newell Rubbermaid” efficiencies in customer and consumer services and sourcing functions.


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

In October 2014, the Company announced an expansion of Project Renewal focused on the Organizational Simplification and Supply Chain workstreams. The expansion of Project Renewal is designed to release costs in the areas of procurement, manufacturing and distribution, and through further overhead reduction. The expansion of Project Renewal is intended to focus on significantly reducing complexity in the business and simplifying the Company’s approach to bringing products and programs to market. Project Renewal is expected to be fully implemented by the end of 2017.

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 business segments and the key brands included in each of the segments are as follows:



Segment	Key Brands	Description of Primary Products
Writing	Sharpie^®, Paper Mate^®, Expo^®, Parker^®, Waterman^®, Dymo^® Office	Writing instruments, including markers and highlighters, pens and pencils; art products; fine writing instruments; labeling solutions
Home Solutions	Rubbermaid^®, Contigo^®, bubba^®, Calphalon^®, Levolor^®, Goody^®	Indoor/outdoor organization, food storage and home storage products; durable beverage containers; gourmet cookware, bakeware and cutlery; 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^®, Baby Jogger^®, Aprica^®, Teutonia^®	Infant and juvenile products such as car seats, strollers, highchairs and playards

Writing

The Company’s Writing segment is comprised of Win Bigger businesses within the framework of the Growth Game Plan. The Writing segment designs, manufactures or sources and distributes writing instruments and labeling 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^®

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trademarks. Fine writing instruments are primarily sold under the Parker^®, Waterman^® and Rotring^® trademarks. The Writing segment’s on-demand labeling solutions are primarily sold under the Dymo^®Office trademark.

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, on-line and other retailers.

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. On-the-go hydration and thermal bottles are primarily sold under the Rubbermaid^®, Contigo^®, Avex^®and bubba^®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 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 products 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^®, Citi Mini^®, Citi Select^®, 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, distributors and on-line retailers.

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NET SALES BY BUSINESS SEGMENT

The following table sets forth the amounts and percentages of the Company’s net sales for continuing operations for 2014, 2013 and 2012 for the Company’s five business segments. During 2014, the Company’s Endicia^®and Culinary electrics and retail businesses were classified as discontinued operations based on the Company’s commitment to sell the businesses. The Endicia business was included in the Writing segment, and the Culinary businesses were included in the Home Solutions segment. The net sales of these businesses have been classified as discontinued operations for all periods presented and are therefore not included in the net sales amount in the table below. The Company acquired Ignite, bubba and Baby Jogger during 2014, and the net sales of these businesses are included in the table below only since the acquisition date of each business. Ignite and bubba are included in the Home Solutions segment, and Baby Jogger is included in the Baby & Parenting segment (in millions, except percentages).



	2014		% of Total		2013		% of Total		2012		% of Total
Writing	$	1,708.9	29.8	%	$	1,653.6	29.5	%	$	1,682.0	30.5	%
Home Solutions	1,575.4		27.5	%	1,560.3		27.8	%	1,524.6		27.7	%
Tools	852.2		14.9	%	817.9		14.6	%	806.1		14.6	%
Commercial Products	837.1		14.6	%	785.9		14.0	%	759.7		13.8	%
Baby & Parenting	753.4		13.2	%	789.3		14.1	%	736.1		13.4	%
Total Company	$	5,727.0	100.0	%	$	5,607.0	100.0	%	$	5,508.5	100.0	%

Sales to Wal-Mart Stores, Inc. and subsidiaries, which includes Sam’s Club, amounted to approximately 10.6%, 11.2% and 10.3% of consolidated net sales for 2014, 2013 and 2012, respectively, substantially across all segments. For more detailed segment information, including operating income and identifiable assets by segment, refer to Footnote 19 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.

Foreign Operations

Information regarding the Company’s 2014, 2013 and 2012 foreign operations and financial information by geographic area is included in Footnote 19 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.

Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and Footnote 1 of the Notes to Consolidated Financial Statements for further information regarding the Company’s Venezuela operations.

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, polypropylene and copolyester. Over the long-term, the Company has experienced inflation in raw material prices, labor and sourced products, and the Company expects continued inflation pressures in 2015. On an annualized basis, resin and metals consumed as raw materials generally represent 10% to 15% of annual cost of products sold, with neither resin nor metals individually 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. For a limited number of product lines, 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

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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 90% 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^®,” “Contigo^®,” “Levolor^®,” “Goody^®,” “Calphalon^®,” “Irwin^®,” “Lenox^®,” “Graco^®,” “Baby Jogger^®” 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 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.

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 retailers, 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 10.6% of net sales in 2014, across substantially all segments. The Company’s top-ten customers in 2014 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.

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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 20 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, and the Company has consolidated its consumer marketing and insight capabilities into a global center of excellence and is investing further to strengthen these capabilities. The Company continues to invest to strengthen its product design and research and development capabilities and has consolidated its design and innovation capabilities into a 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, 2014, the Company had approximately 17,400 employees worldwide. Approximately 2,200 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, are affected by general economic conditions. With continuing challenging global economic conditions, particularly outside the U.S., 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.

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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. 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 customers may further consolidate, which could adversely affect its sales and margins.

The Company’s customers have steadily consolidated over the last two decades. In 2013, two of the Company’s large customers, Office Depot and OfficeMax, completed their previously announced merger. In February 2015, Staples and Office Depot announced plans to merge. The Company currently expects the combined companies will take actions to harmonize pricing from their suppliers, close retail outlets and rationalize their supply chain, which will negatively impact the Company’s sales and margins and adversely affect the Company’s business and results of operations. There can be no assurance that following consolidation these and other large customers will continue to buy from the Company across different product categories or geographic regions, or at the same levels as prior to consolidation, which could negatively impact the Company’s financial results. Further, if the consolidation trend continues, it is likely to result in future pressures that could reduce the Company’s sales and margins and have a material adverse effect on the Company’s business, results of operations and financial condition.

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 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.

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If the Company does not continue to develop and maintain consumer-meaningful brands, or realize the anticipated benefits of increased advertising spend, 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, polypropylene and copolyester, corrugate, steel, gold, brass, carbide 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 remains an important factor in the Company’s future growth. In 2014, the Company completed the acquisitions of Ignite and Baby Jogger and the assets of bubba. The Company’s ability to successfully integrate these or any other 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. During 2014, the Company’s Endicia and Culinary electrics and retail businesses were classified as discontinued operations based on the Company’s commitment to sell these businesses, and the Company may decide to sell or discontinue other businesses or products in the future based on an evaluation of performance and strategic fit. 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.

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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.

The Company has foreign currency translation and transaction risks that may materially adversely affect the Company’s operating results, financial condition and liquidity.

The financial position and results of operations of many of the Company’s international subsidiaries are initially recorded in various foreign currencies and then translated into U.S. Dollars at the applicable exchange rate for inclusion in the Company’s financial statements. The strengthening of the U.S. Dollar against these foreign currencies ordinarily has a negative impact on the Company’s reported sales and operating margin (and conversely, the weakening of the U.S. Dollar has a positive impact). For the year ended December 31, 2014, foreign currency unfavorably affected reported sales by $115.3 million compared to the year ended December 31, 2013. The volatility of foreign exchange rates may materially adversely affect the Company’s operating results.

The margin impacts from changes in foreign currency are because the Company’s costs for produced and sourced products are largely denominated in U.S. Dollars, and the Company’s international operations generally sell the Company’s products at prices denominated in local currencies. When local currencies decline in value relative to the U.S. Dollar in the regions in which the Company sells products whose costs are denominated in U.S. Dollars, the Company’s international businesses would need to increase the local currency sales prices of the products and/or reduce costs through productivity or other initiatives in order to maintain the same level of profitability. The Company may not be able to increase the selling prices of its products in its international businesses due to market dynamics, competition or otherwise and may not realize cost reductions through productivity or other initiatives. As a result, gross margins and overall operating results of the Company’s international businesses would be adversely affected when the U.S. Dollar strengthens.

The Company has been and will continue to be impacted by developments in Venezuela including the significant devaluations of the Venezuelan Bolivar Fuerte that have occurred in recent years as well as the implementation of related exchange controls. In addition, in the first quarter of 2014, the Venezuelan government issued a Law on Fair Pricing which establishes a maximum profit margin of 30%, thereby limiting the Company’s ability to implement price increases, which had been one of the key mechanisms to offset the effects of continuing high inflation and the impact of currency devaluation. In 2015, regulations will require the Company to identify the ultimate retail price to consumers on products it sells, which could adversely affect the prices the Company charges to its distributor customers. Going forward, additional government actions, including in the form of further currency devaluations, continued import authorization controls, foreign exchange, price or profit controls or expropriation or other form of government take-over could have further adverse impacts on the Company’s business, results of operations, cash flows and financial condition.

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

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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 and environmental 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. until those earnings are actually repatriated or deemed repatriated. If these or other tax regulations should change, the Company’s financial results could be impacted.

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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 or fines or penalties that may result from any governmental investigations, 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 2014, the Company initiated a voluntary recall on harness buckles used on certain Graco-branded convertible and harnessed booster toddler car seats, which was later expanded to include harness buckles used on certain infant car seats manufactured between July 2010 and May 2013. The Company’s results for the year ended December 31, 2014 included $15.0 million of charges reflecting the cost of the recall of the harness buckles used on certain toddler and infant car seats (which does not include any fines or penalties that may result from the investigation into the circumstances related to the recall announced by the National Highway Traffic Safety Administration in December 2014). 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.

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

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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.

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	Downers Grove	L	Writing Instruments
	TN	Shelbyville	O	Writing Instruments
	TN	Maryville	O	Writing Instruments
	TN	Manchester	O	Writing Instruments
	Thailand	Bangkok	O	Writing Instruments
	India	Chennai	L	Writing Instruments
	China	Shanghai	L	Writing Instruments
	Colombia	Bogota	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
	UK	London	L	Fine Writing
HOME SOLUTIONS	OH	Mogadore	L/O	Home Products
	KS	Winfield	L/O	Home Products
	Canada	Calgary	L	Home Products
	IL	Chicago	L	Beverage
	MO	Jackson	O	Home Storage Systems
	OH	Perrysburg	O	Cookware
	OH	Bowling Green	L	Cookware
	Mexico	Agua Prieta	L	Window Treatments
	UT	Ogden	L	Window Treatments
	Canada	Etobicoke	L	Window Furnishings

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BUSINESS SEGMENT	LOCATION	CITY	OWNED OR LEASED	GENERAL CHARACTER
TOOLS	MA	East Longmeadow	O	Tools
	China	Shanghai	L	Tools
	China	Shenzhen	L	Tools
	ME	Gorham	O	Tools
	Brazil	Sao Paulo	L	Tools
	Brazil	Carlos Barbosa	O	Tools
	Poland	Zerniki	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
	Mexico	Agua Prieta	L	Medical Products
BABY & PARENTING	PA	Exton	L	Infant Products
	VA	Richmond	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
	Japan	Tokyo	L	Shared
	Australia	Dandenong	L	Office
	MI	Kalamazoo	L	R&D
SHARED FACILITIES	AR	Bentonville	L	Shared Services
	CA	Victorville	L	Shared Services
	GA	Union City	L	Shared Services
	IL	Freeport	L/O	Shared Services
	NC	Huntersville	L	Shared Services
	NC	High Point	L	Shared Services
	Canada	Bolton	L	Shared Services
	UK	Lichfield	L	Shared Services
	Netherlands	Goirle	O	Shared Services
	France	Malissard	L/O	Shared Services
	France	Paris	L	Shared Services
	Italy	Milan	L	Shared Services
	Poland	Poznan	L	Shared Services
	Poland	Zerniki	L	Shared Services

ITEM 3. LEGAL PROCEEDINGS

Information regarding legal proceedings is included in Footnote 20 of the Notes to Consolidated Financial Statements and is incorporated by reference herein.

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ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

SUPPLEMENTARY ITEM — EXECUTIVE OFFICERS OF THE REGISTRANT

Name	Age	Present Position with the Company
Michael B. Polk	54	President and Chief Executive Officer
William A. Burke	54	Executive Vice President, Chief Operating Officer
Paula S. Larson	52	Executive Vice President, Chief Human Resources Officer
John K. Stipancich	46	Executive Vice President, Chief Financial Officer and General Counsel and Corporate Secretary
Mark S. Tarchetti	39	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. Mr. Polk also serves as a director of Colgate-Palmolive Company.

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.

John K. Stipancich was named Executive Vice President, Chief Financial Officer and General Counsel and Corporate Secretary in February 2015. Prior thereto, he served as Executive Vice President, General Counsel and Corporate Secretary and EMEA Executive Leader since October 2012 and Interim Chief Financial Officer since October 2014. 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.

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PART II

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, 2015, there were 10,872 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:



	2014				2013
Quarters	High		Low		High		Low
First	$	32.54	$	29.14	$	26.11	$	21.72
Second	31.61		28.27		28.47		24.90
Third	35.25		30.85		27.97		24.32
Fourth	38.73		31.14		32.54		26.29

The Company has paid regular cash dividends on its common stock since 1947. For 2014, the Company paid a quarterly cash dividend of $0.15 per share in the first quarter and $0.17 per share in each of the second, third and fourth quarters. For 2013, the Company paid a quarterly cash dividend of $0.15 per share. 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.

In February 2015, the Company’s Board of Directors approved a 12% increase in the quarterly dividend from $0.17 per share to $0.19 per share, effective with the quarterly dividend payable in March 2015.

ISSUER PURCHASES OF EQUITY SECURITIES

The following table provides information about the Company’s purchases of equity securities during the quarter ended December 31, 2014:



Calendar Month	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⁾	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs⁽²⁾
October 2014	—	$	—	—	$	37,417,583
November 2014	432,281	35.64		411,223	522,327,987
December 2014	2,389,548	36.30		2,367,151	436,394,348
Total	2,821,829	$	36.20	2,778,374

__________________

(1)

During 2014, all share purchases other than those pursuant to the Company’s share repurchase program (the “SRP”) 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 November and December, in addition to the shares purchased under the SRP, the Company purchased 21,058 shares (average price: $34.76), and 22,397 shares (average price: $36.06), respectively, in connection with the 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. In February 2014, the SRP was expanded and extended such that the Company may repurchase up to $300.0 million of its own shares from February 2014 through the end of 2016. In November 2014, the SRP was further expanded and extended such that the Company may repurchase up to an additional $500.0 million of its outstanding shares through the end of 2017, which is in addition to the $300.0 million authorization in February 2014. The average per share price of shares purchased in November and December 2014 relating to the SRP was $35.68 and $36.30, respectively.

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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.



	2014⁽¹⁾		2013^{(1), (2)}		2012^{(1), (2)}			2011⁽²⁾			2010⁽²⁾
STATEMENTS OF OPERATIONS DATA
Net sales	$	5,727.0	$	5,607.0	$	5,508.5		$	5,451.5		$	5,224.0
Cost of products sold	3,523.6		3,482.1		3,414.4			3,388.3			3,231.8
Gross margin	2,203.4		2,124.9		2,094.1			2,063.2			1,992.2
Selling, general and administrative expenses	1,480.5		1,399.5		1,403.5			1,390.6			1,329.5
Pension settlement charge	65.4		—		—			—			—
Impairment charges	—		—		—			317.9			—
Restructuring costs⁽³⁾	52.8		110.3		52.9			47.9			76.7
Operating income	604.7		615.1		637.7			306.8			586.0
Nonoperating expenses:
Interest expense, net	60.4		60.3		76.1			86.2			118.4
Losses related to extinguishments of debt	33.2		—		10.9			4.8			218.6
Other expense (income), net	49.0		18.5		(1.3		)	13.5			(7.3		)
Net nonoperating expenses	142.6		78.8		85.7			104.5			329.7
Income before income taxes	462.1		536.3		552.0			202.3			256.3
Income taxes	89.1		120.0		161.5			19.1			(7.2		)
Income from continuing operations	373.0		416.3		390.5			183.2			263.5
Income (loss) from discontinued operations, net of tax	4.8		58.3		10.8			(58.0		)	29.3
Net income	$	377.8	$	474.6	$	401.3		$	125.2		$	292.8
Weighted-average shares outstanding:
Basic	276.1		288.6		291.2			293.6			282.4
Diluted	278.9		291.8		293.6			296.2			305.4
Earnings (loss) per share:
Basic:
Income from continuing operations	$	1.35	$	1.44	$	1.34		$	0.62		$	0.93
Income (loss) from discontinued operations	$	0.02	$	0.20	$	0.04		$	(0.20	)	$	0.10
Net income	$	1.37	$	1.64	$	1.38		$	0.43		$	1.04
Diluted:
Income from continuing operations	$	1.34	$	1.43	$	1.33		$	0.62		$	0.86
Income (loss) from discontinued operations	$	0.02	$	0.20	$	0.04		$	(0.20	)	$	0.10
Net income	$	1.35	$	1.63	$	1.37		$	0.42		$	0.96
Dividends	$	0.66	$	0.60	$	0.43		$	0.29		$	0.20
BALANCE SHEET DATA
Inventories, net	$	708.5	$	684.4	$	696.4		$	699.9		$	701.6
Working capital⁽⁴⁾	535.9		681.1		700.3			487.1			466.1
Total assets	6,681.1		6,069.7		6,222.0			6,160.9			6,405.3
Short-term debt, including current portion of long-term debt	397.4		174.8		211.9			367.5			305.0
Long-term debt, net of current portion	2,084.5		1,661.6		1,706.5			1,809.3			2,063.9
Total stockholders’ equity	$	1,854.9	$	2,075.0	$	2,000.2		$	1,852.6		$	1,905.5


(1)	Supplemental data regarding 2014, 2013 and 2012 is provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.


(2)	2013, 2012, 2011 and 2010 Statement of Operations data has been adjusted to reclassify the results of operations of the Endicia and Culinary electrics and retail businesses to discontinued operations. 2012, 2011 and 2010 Statement of Operations data has been adjusted to reclassify the results of operations of

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the Hardware and Teach businesses to discontinued operations. 2010 Statement of Operations data has been adjusted to reclassify the results of operations of the hand torch and solder business to discontinued operations.


(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

On September 4, 2014, the Company acquired Ignite Holdings, LLC (“Ignite”) for $312.9 million, which is net of $7.2 million of cash acquired. A portion of the purchase price was used to repay Ignite’s outstanding debt obligations at closing. Ignite is a designer and marketer of durable beverage containers sold in North America under the Contigo^® and Avex^® brands. The acquisition was accounted for using the purchase method of accounting, and accordingly, the results of operations of Ignite are included in the Company’s consolidated financial statements beginning September 4, 2014.

On October 22, 2014, the Company acquired the assets of bubba brands, inc. (“bubba”) for $82.9 million. bubba is a designer and marketer of durable beverage containers in North America. The acquisition was accounted for using the purchase method of accounting. As a result, the results of operations of bubba are included in the Company’s consolidated financial statements beginning October 22, 2014.

The Ignite and bubba acquisitions give the Company’s Home Solutions segment access to additional channels in the on-the-go hydration and thermal bottle market in North America and fit with the Company’s strategy of accelerating growth by leveraging its capabilities across additional product categories, geographies and channels.

On December 15, 2014, the Company acquired Baby Jogger Holdings, Inc. (“Baby Jogger”), a designer and marketer of premium infant and juvenile products focused on activity strollers and related accessories. Baby Jogger is headquartered in the U.S. and markets and sells its products in North America, Europe and Asia. The Baby Jogger acquisition gives the Baby & Parenting segment a premium brand and the opportunity to expand its geographic footprint. The Company acquired Baby Jogger for net cash consideration of $206.5 million, a portion of which was used to repay Baby Jogger’s outstanding debt obligations at closing. The acquisition was accounted for using the purchase method of accounting. As a result, the results of operations of Baby Jogger are included in the Company’s consolidated financial statements beginning December 15, 2014.

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
2014
Net sales	$	1,214.3	$	1,502.2	$	1,484.5		$	1,526.0	$	5,727.0
Gross margin	$	457.0	$	595.6	$	576.7		$	574.1	$	2,203.4
Income from continuing operations	$	51.8	$	149.0	$	122.9		$	49.3	$	373.0
Income (loss) from discontinued operations	$	1.1	$	1.6	$	(0.6	)	$	2.7	$	4.8
Net income	$	52.9	$	150.6	$	122.3		$	52.0	$	377.8
Earnings per share:
Basic
Income from continuing operations	$	0.18	$	0.54	$	0.45		$	0.18	$	1.35
Income (loss) from discontinued operations	$	—	$	0.01	$	—		$	0.01	$	0.02
Net income	$	0.19	$	0.54	$	0.45		$	0.19	$	1.37
Diluted
Income from continuing operations	$	0.18	$	0.53	$	0.44		$	0.18	$	1.34
Income (loss) from discontinued operations	$	—	$	0.01	$	—		$	0.01	$	0.02
Net income	$	0.19	$	0.54	$	0.44		$	0.19	$	1.35

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Calendar Year	1st			2nd			3rd		4th		Year
2013⁽¹⁾
Net sales	$	1,221.8		$	1,453.8		$	1,466.1	$	1,465.3	$	5,607.0
Gross margin	$	461.7		$	569.0		$	552.5	$	541.7	$	2,124.9
Income from continuing operations	$	62.5		$	115.3		$	122.2	$	116.3	$	416.3
(Loss) income from discontinued operations	$	(8.3	)	$	(5.5	)	$	71.1	$	1.0	$	58.3
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	$	1.44
(Loss) income from discontinued operations	$	(0.03	)	$	(0.02	)	$	0.25	$	—	$	0.20
Net income	$	0.19		$	0.38		$	0.67	$	0.41	$	1.64
Diluted
Income from continuing operations	$	0.21		$	0.39		$	0.42	$	0.41	$	1.43
(Loss) income from discontinued operations	$	(0.03	)	$	(0.02	)	$	0.24	$	—	$	0.20
Net income	$	0.18		$	0.37		$	0.66	$	0.41	$	1.63


(1)	The 2013 quarterly data has been adjusted to reclassify the results of operations of the Endicia and Culinary electrics and retail businesses to discontinued operations.

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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

The Company is executing its Growth Game Plan, a 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 Company considers the changes being implemented in the execution of the Growth Game Plan to be key enablers to building a bigger, faster-growing, more global and more profitable company.

During 2014, 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 2014, the Company executed against the Strategic Phase of the Growth Game Plan, investing in core activity systems critical to the Company’s success, unlocking trapped capacity for growth through Project Renewal, investing in new capabilities and the Company’s brands for accelerated growth, and beginning to leverage an operating company structure to release the full potential of the business. The Company expects to continue to implement the Strategic Phase of the Growth Game Plan in 2015.

The Company is driving 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 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	Writing instruments, including markers and highlighters, pens and pencils; art products; fine writing instruments; labeling solutions
Home Solutions	Rubbermaid^®, Contigo^®, bubba^®, Calphalon^®, Levolor^®, Goody^®	Indoor/outdoor organization, food storage and home storage products; durable beverage containers; gourmet cookware, bakeware and cutlery; 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^®, Baby Jogger^®, Aprica^®, Teutonia^®	Infant and juvenile products such as car seats, strollers, highchairs and playards

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electrics and retail businesses were classified as discontinued operations based on the Company’s commitment to sell these businesses, and the results of operations of these businesses have been classified as discontinued operations for all periods presented. The Endicia business was included in the Writing segment, and the Culinary businesses were included in the Home Solutions segment. The Endicia business provides on-line postage solutions. The Culinary electrics business sells kitchen electrics and accessories to retailers, and the retail business sells cookware products and accessories through outlet stores. During 2013, the Company divested its Hardware and Teach businesses. Accordingly, the results of operations of these businesses have been classified as discontinued operations. 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).

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 2014 in driving the Growth Game Plan into action:

•

Core sales, which excludes the effects of foreign currency and acquisitions until their one-year anniversary, increased 3.0% in 2014. Core sales excludes a 210 basis point adverse impact from foreign currency and a 120 basis point contribution from acquisitions. Core sales growth in Latin America, North America and Asia Pacific of 22.6%, 2.1% and 0.4%, respectively, was partially offset by core sales declines in Europe of 1.3%.

Core sales is determined by applying a fixed exchange rate, calculated as the 12-month average in 2013, to the current and prior year local currency sales amounts, with the difference, after deducting the impact of acquisitions in the current year period, equal to changes in core sales, and the difference between the change in reported sales, excluding the effects of acquisitions, and the change in core sales being attributable to currency.


•	Core sales increased mid- to high-single digits in the Company’s Win Bigger businesses, which includes the Writing, Tools and Commercial Products segments. Core sales declined 2.5% and 4.0% in the Home Solutions and Baby & Parenting segments, respectively.


•	Gross margin was 38.5%. Pricing, productivity and segment mix more than offset the impact of inflation, negative foreign currency, the $12.0 million of costs associated with the Graco harness buckle recall and the adverse impact of the $5.2 million increase in Venezuela cost of products sold due to changes in Venezuela exchange rates.

•

Selling, general and administrative expenses increased $81.0 million to $1,480.5 million, due primarily to increased advertising in support of the Company’s brands. The Company’s advertising strategy is to invest behind innovation, including new product launches, and in building brands, with a primary focus on advertising in North America and Latin America in the Company’s Win Bigger businesses. During 2014, the Company increased investments in advertising by $52.8 million, representing an incremental 90 basis points as a percentage of net sales. The Company’s investments for brand-building and consumer demand creation and commercialization activities during 2014 included the following:


•	a new Sharpie^® Neon Permanent Marker designed to inspire bold, vivid expression supported with “50Ways To Use Sharpie” advertising in advance of Back-To-School in the U.S. and Canada;


•	advertising for a new line of Sharpie highlighters called Sharpie Clear View which have a unique, see-through tip for more precise highlighting;


•	continued investment in InkJoy^®advertising in North America and expansion to the Latin America and Asia Pacific markets;


•	an advertising campaign supporting the re-launch of Mr. Sketch^® scented markers, a children’s classic first introduced in the U.S. in 1965;


•	advertising for Rubbermaid^® Food Storage for LunchBlox and Easy Find Lids in the Home Solutions segment;


•	advertising for the launch of the Calphalon^® Nonstick Dishwasher safe line and Goody^®, the first advertising for these brands in years;


•	advertising in North America and Australia to support Irwin^® new product launches in Vise Grip and IMPACT Accessories in the Tools segment;


•	the second wave of Big Bang Brazil, launching nine additional product categories and more than 700 SKUs of Irwin^® tools, in addition to the 500 SKUs launched last year in Brazil;

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•	advertising for Brute^®, the Executive Series and HYGEN^TM disposable microfiber in the Commercial Products segment;


•	a New Distributor Model in North America, focused primarily in Tools and Commercial Products, building a structure that assigns relationship owners to key distributors, removing redundancies and simplifying the approach with distributors to sell a broader assortment of the Company’s products; and


•	key product launches and advertising support in Graco^®, including 4EVER^TM All-in-One car seats that transition from baby to booster as the child grows and MODES^®3-in-1 stroller.

The Company plans to continue increasing advertising in support of its brands to drive growth.


•	Continued execution of Project Renewal to simplify the business, reduce structural costs and increase investment in the most significant growth platforms within the business by taking significant steps in implementing activities centered around Project Renewal’s five workstreams, resulting in $52.8 million of restructuring costs in 2014.


•	Settled U.S. pension liabilities with plan assets for certain participants which resulted in a $65.4 million non-cash settlement charge in the fourth quarter of 2014.


•	Realized a $45.6 million foreign exchange loss in 2014 for the Company’s Venezuelan operations, which includes a $38.7 million charge upon adoption of the SICAD I rate in the first quarter of 2014 and further losses as a result of declines in the SICAD I rate.

•

Reported a 19.3% effective tax rate for 2014, compared to an effective tax rate of 22.4% for 2013. During 2014, the Company recognized discrete income tax benefits of $15.5 million related to the resolution of certain tax contingencies and $18.4 million of income tax benefits associated with the net reduction of valuation allowances on certain international deferred tax assets. In 2013, the Company recognized $7.9 million of discrete income tax benefits related to the resolution of various income tax contingencies and the expiration of various statutes 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.


•	Extended and expanded the Company’s ongoing share repurchase plan (the “SRP”), authorizing additional repurchases of over $750.0 million of its outstanding shares through the end of 2017. The Company repurchased and retired 11.4 million shares of its common stock for $363.2 million during 2014.


•	Initiated plans to sell the Culinary electrics and retail businesses as well as the Endicia^® online postage business. As a result, the results of operations of these businesses have been reclassified to discontinued operations for all periods presented.

•

Completed the offering and sale of $850.0 million medium-term notes, consisting of $350.0 million principal amount of 2.875% notes due 2019 (the “2.875% 2019 Notes”) and $500.0 million principal amount of 4.0% notes due 2024 (the “2024 Notes”). The aggregate proceeds were used to redeem $168.7 million of the $550.0 million principal amount outstanding 4.7% notes due 2020 (the “2020 Notes”), redeem the $250.0 million of outstanding 2.0% notes due 2015 (the “2015 Notes”), redeem the $20.7 million of outstanding 10.6% notes due 2019 (the “10.6% 2019 Notes”), reduce borrowings under the Company’s commercial paper program and receivables facility, finance acquisitions and for general corporate purposes. The Company incurred $33.2 million of losses on extinguishment of debt in 2014 in connection with the repayment of a portion of the outstanding 2020 Notes and all outstanding 2015 Notes and 10.6% 2019 Notes.

Acquisitions

On September 4, 2014, the Company acquired Ignite for $312.9 million, which is net of $7.2 million of cash acquired. A portion of the purchase price was used to repay Ignite’s outstanding debt obligations at closing. Ignite is a designer and marketer of durable beverage containers in North America sold under the Contigo^® and Avex^® brands. For its most recently completed fiscal year ended March 31, 2014, Ignite reported net sales of $102 million.

On October 22, 2014, the Company acquired the assets of bubba for $82.9 million. bubba is a designer and marketer of durable beverage containers in North America. For its most recently completed fiscal year ended December 31, 2013, bubba reported net sales of $39 million.

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On December 15, 2014, the Company acquired Baby Jogger, a designer and marketer of premium infant and juvenile products focused on activity strollers and related accessories, for $206.5 million. Baby Jogger is headquartered in the U.S. and markets and sells its products in North America, Europe and Asia. For its most recently completed fiscal year ended December 31, 2013, Baby Jogger reported net sales of $76 million. The Baby Jogger acquisition gives the Baby & Parenting segment a premium brand and the opportunity to expand its geographic footprint.

The results of operations of Ignite, bubba and Baby Jogger are included in the Company’s consolidated financial statements beginning on the respective acquisition dates of each business, which included net sales of $51.1 million, $13.4 million and $4.4 million for Ignite, bubba and Baby Jogger, respectively.

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 is focusing its resources on fewer products and countries, while simplifying go-to-market, delivery and back office support structures.


•	Best Cost Finance: The Company is delivering 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 is driving “One Newell Rubbermaid” efficiencies in customer and consumer services and sourcing functions.


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

Through Project Renewal, the Company has been realigned from a holding company comprised of 13 GBUs, each with its own support structure, to an operating company centered around four primary capabilities: Design; Marketing & Insight; Supply Chain; and Customer Development. The Company has developed centers of excellence in each of these capabilities and has realigned its back office support structure functions (Human Resources, Finance/IT and Legal) to support the four primary capabilities. This realignment has led to efficiencies and cost reductions, allowing the Company to increase investments in its brands and capabilities. In addition, through Project Renewal, the Company has simplified its go-to-market and back office structures in EMEA which has resulted in significant Project Renewal costs in the EMEA region in years prior to 2014. As a result, EMEA’s reported operating margin in 2014 was 12.0%, a significant improvement compared to prior years.

In October 2014, the Company announced an expansion of Project Renewal focused on the Organizational Simplification and Supply Chain workstreams. The expansion of Project Renewal is designed to release costs in the areas of procurement, manufacturing and distribution, and through further overhead reduction. The expansion of Project Renewal will focus on significantly reducing the complexity in the business and simplifying the Company’s approach to bringing products and programs to market. The expansion of Project Renewal is expected to generate incremental annualized cost savings of approximately $200 million when fully implemented by the end of 2017. The Company expects to incur incremental costs of approximately $200 million over the same period, of which $190 million are expected to be cash costs.

By the end of 2017, the Company expects Project Renewal to deliver from $470 to $525 million of cumulative annualized savings. The Company is on track to realize annualized cost savings from the first two phases of Project Renewal of approximately $270 to $325 million by the middle of 2015, having realized $266 million of annualized cost savings through December 31, 2014. The majority of these savings have been, and future savings from Project Renewal initiatives are expected to be, reinvested in the business to strengthen brand building and selling capabilities. Cumulative costs of the expanded Project Renewal are expected to be $540 to $575 million pretax, with cash costs of $510 to $540 million. Approximately 65% to 75% of the total Project Renewal costs are expected to be restructuring costs, a majority of which are expected to be employee-related cash costs, including severance, retirement and other termination benefits and costs.

Through December 31, 2014, the Company had incurred $235 million and $69 million of restructuring and restructuring-related costs, respectively. Restructuring-related costs represent certain organizational change implementation costs, including advisory

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and consulting 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. The Company expects approximately 2,250 employees will be impacted as a result of initiatives implemented in the first two phases of Project Renewal, and through December 31, 2014, the Company estimates it has reduced its headcount by approximately 2,100 employees.

The following table summarizes the estimated costs and savings relating to Project Renewal, as well as the actual results through December 31, 2014 (amounts in millions):



	Total Project	Through December 31, 2014	Remaining through December 31, 2017
Cost	$540 - $575	$304	$236 - $271
Savings	$470 - $525	$266	$204 - $259

In 2014, the Company has continued to execute existing projects as well as initiate new activities relating to Project Renewal as follows:


•	Completed 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 in Kalamazoo, Michigan, and the consolidation of the marketing function into a global center of excellence.

•

The ongoing implementation of the EMEA Simplification workstream, which includes 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. In 2014, the Company completed the closures of a manufacturing facility and a distribution center in EMEA. As part of the EMEA Simplification workstream, the Company has also exited certain markets and product lines, as follows:


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


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


•	Discontinued several lines of Baby & Parenting products; and


•	Exited the custom-logo Fine Writing business.

The Company’s sales were adversely impacted by approximately $25 million for the year ended December 31, 2014 as a result of these geographic and product line exits.


•	The implementation of projects to consolidate the Company’s North American customer and consumer service operations.


•	Undertaking an evaluation of the Company’s overhead structure, supply chain organization and processes, and pricing structure to optimize and transform processes, simplify the organization and reduce costs.


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


•	The continued execution 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 ongoing reconfiguration and consolidation of the Company’s manufacturing footprint and distribution centers to reduce overhead, improve operational efficiencies and better utilize existing assets, including the closure of a distribution center and the initiation of a project to close a manufacturing facility in North America.

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 Customer Development and Global Supply Chain organizations and consolidating activities into centers of excellence for design and innovation capabilities and marketing capabilities.

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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. Substantially all of the Company’s North American, Latin American and European operations are live on SAP, and the Company has initiated plans to implement SAP in its Asia Pacific operations.

Foreign Currency - Venezuela

The Company began accounting for its Venezuelan operations using highly inflationary accounting in January 2010. Under highly inflationary accounting, the Company remeasures assets, liabilities, sales and expenses denominated in Bolivar Fuertes (“Bolivars”) into U.S. Dollars using the applicable exchange rate, and the resulting translation adjustments are included in earnings. The Company’s Venezuelan operations are primarily included in the Company’s Writing segment. The Company generally imports raw materials into Venezuela and manufactures writing instruments locally. The Company’s Venezuelan operations also import components and finished goods. Generally, purchases of imported products are denominated in U.S. Dollars. The Company has historically used various means, including price increases and productivity initiatives, to offset increased costs due to the impacts of high inflation and currency devaluations. During 2014, 2013 and 2012, the Company’s Venezuelan operations generated 1.4% or less of consolidated net sales and 5.4% or less of operating income.

In 2010, the Venezuelan government introduced a newly regulated foreign currency exchange system, Transaction System for Foreign Currency Denominated Securities (“SITME”). Foreign currency exchange through SITME was allowed within a specified band of 4.5 to 5.3 Bolivars to U.S. Dollar, but most of the exchanges have been executed at the rate of 5.3 Bolivars to U.S. Dollar. Since the introduction of SITME in June 2010, the Venezuelan government held the rate constant at 5.3 Bolivars to U.S. Dollar until February 2013. In February 2013, the Venezuelan government announced a devaluation of the Bolivar, resulting in the exchange rate declining from 5.3 to 6.3 Bolivars to U.S. Dollar. The Company recorded an $11.1 million foreign exchange loss in 2013 as a result of the rate declining from 5.3 to 6.3 Bolivars to U.S. Dollar.

Beginning in July 2013, the Venezuelan government authorized certain companies that operate in designated industry sectors to exchange a limited volume of Bolivars for U.S. Dollars at a bid rate established via weekly auctions under a system referred to as “SICAD I.” During the first quarter of 2014, the government expanded the types of transactions that may be subject to the weekly SICAD I auction rate while retaining the official rate of 6.3 Bolivars per U.S. Dollar and introduced another currency exchange mechanism (“SICAD II”). The official exchange rate for settling certain transactions through the National Center of Foreign Trade (“CENCOEX”), including imports of essential goods, remains at 6.3 Bolivars per U.S. Dollar. As of December 31, 2014, the SICAD I auction rate was 12.0 Bolivars per U.S. Dollar, and the SICAD II rate was 50.0 Bolivars per U.S. Dollar. The Company continues to believe that transactions for imports of essential goods, such as certain raw materials and finished goods (primarily in the Writing segment), may be settled at the official exchange rate of 6.3 Bolivars per U.S. Dollar, and the Company has continued to receive authorizations to import product and to receive cash for vendor payments at this rate. During 2014, the Company was awarded $7.5 million and $16.0 million via the CENCOEX and SICAD I exchange mechanisms, respectively, which were (or will be) used by the Venezuela business to pay third party and intercompany vendors. The Company did not receive any U.S. Dollars via SICAD II in 2014.

In March 2014, the Company analyzed the multiple rates currently available and the Company’s estimates of the applicable rate at which future transactions could be settled and dividends can be paid. Based on this analysis, the Company determined as of March 31, 2014 that the SICAD I rate was the most appropriate rate to use prospectively for remeasurement rather than the CENCOEX rate, which the Company used up to March 31, 2014. As a result, the Company recorded net charges of $45.6 million in 2014, based on changes in the exchange rate applicable for remeasuring the net monetary assets of the Company’s Venezuelan operations that are denominated in Bolivars. In addition, the Company’s 2014 reported net sales and operating income were adversely impacted by $42 million and $24 million, respectively, due solely to the use of the SICAD I rate for 2014 rather than the CENCOEX rate, which includes the adverse impact on gross margins attributable to higher costs of inventory due to the use of the SICAD I rate and the increased costs of importing raw materials and finished goods.

The results of the Company’s Venezuelan operations have been included in the Company’s consolidated financial statements for all periods presented, as the Company has been able to exchange Bolivars for a sufficient amount of U.S. Dollars to fund its Venezuelan operations’ U.S. Dollar purchases and has had the ability to exercise control over a majority of the operating decisions of its Venezuelan business.

As of December 31, 2014, the Company’s Venezuelan subsidiary had approximately $55.8 million of net monetary assets denominated in Bolivars at the rate of 12.0 Bolivars per 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 approximately $6 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 $6 million, respectively. Although the SICAD II rate was no longer quoted beginning in February

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2015, were the Company to have adopted the SICAD II rate for remeasurement as of December 31, 2014, the Company would have been required to record a pretax charge of $42.4 million associated with the decline in value of the net monetary assets of the Company’s Venezuelan operations denominated in Bolivars. In addition, annual sales would have been adversely affected by $59.9 million compared to the use of the SICAD I rate, and the Company would generate operating losses in Venezuela absent any price increases or other actions the Company may implement.

In February 2015, the Venezuelan government announced changes in its foreign currency exchange system. The preferential rate of 6.3 Bolivars per U.S. Dollar is expected to continue to be made available for purchases of essential goods, and the existing SICAD I rate remains at 12.0 Bolivars per U.S. Dollar as of February 2015. The SICAD II market has been eliminated, and a new alternative currency market, the Foreign Exchange Marginal System (“SIMADI”) has been created.The SIMADI market is intended to have a floating exchange rate determined by market participants. SIMADI became operational with an initial exchange rate of approximately 170 Bolivars per U.S. Dollar. While the Company will continue to assess the impact, if any, of the changes to the Venezuela foreign currency exchange system, if the Company is unable to obtain sufficient U.S. Dollars from CENCOEX or the SICAD I markets to fund its requirements for imported goods and instead needs to access the SIMADI market, it would significantly impact the Company’s Venezuelan operations which would adversely impact the Company’s results of operations.

As part of the changes implemented in the first quarter of 2014, the Venezuelan government also issued a new Law on Fair Pricing, establishing a maximum profit margin of 30%. In addition, new regulations will require the Company to identify the ultimate retail price to consumers on products it sells to distributors in Venezuela in 2015, which could adversely affect the prices the Company charges its distributor customers. Laws and regulations limit the Company’s ability to implement future price increases, could result in the reduction of prices with respect to certain products categories and result in fines for practices deemed to be in violation of the laws and regulations. The impacts of any future pricing regulations are not included in the estimated ongoing impacts outlined above. Price controls generally may affect products the Company markets and sells in Venezuela.

The Company is unable to predict with certainty whether future devaluations will occur because of the economic uncertainty in Venezuela; however, future devaluations would adversely impact the Company’s future financial results. Any change in the rate would not impact reported changes in core sales, which exclude the impact of foreign currency.

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):



	2014				2013				2012
Net sales	$	5,727.0	100.0	%	$	5,607.0	100.0	%	$	5,508.5		100.0	%
Cost of products sold	3,523.6		61.5		3,482.1		62.1		3,414.4			62.0
Gross margin	2,203.4		38.5		2,124.9		37.9		2,094.1			38.0
Selling, general and administrative expenses	1,480.5		25.9		1,399.5		25.0		1,403.5			25.5
Pension settlement charge	65.4		1.1		—		—		—			—
Restructuring costs	52.8		0.9		110.3		2.0		52.9			1.0
Operating income	604.7		10.6		615.1		11.0		637.7			11.6
Nonoperating expenses:
Interest expense, net	60.4		1.1		60.3		1.1		76.1			1.4
Losses related to extinguishments of debt	33.2		0.6		—		—		10.9			0.2
Other expense (income), net	49.0		0.9		18.5		0.3		(1.3		)	—
Net nonoperating expenses	142.6		2.5		78.8		1.4		85.7			1.6
Income before income taxes	462.1		8.1		536.3		9.6		552.0			10.0
Income tax expense	89.1		1.6		120.0		2.1		161.5			2.9
Income from continuing operations	373.0		6.5		416.3		7.4		390.5			7.1
Income from discontinued operations	4.8		0.1		58.3		1.0		10.8			0.2
Net income	$	377.8	6.6	%	$	474.6	8.5	%	$	401.3		7.3	%

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Results of Operations — 2014 vs. 2013

Net sales for 2014 were $5,727.0 million, representing an increase of $120.0 million, or 2.1%, from $5,607.0 million for 2013. Core sales increased 3.0%, as foreign currency had the effect of decreasing net sales by 2.1% , while the acquisitions had the effect of increasing net sales by 1.2%. The following table sets forth an analysis of changes in consolidated net sales for 2014 as compared to 2013 (in millions, except percentages):



Core sales	$	166.4		3.0	%
Acquisitions	68.9			1.2
Foreign currency	(115.3		)	(2.1	)
Total change in net sales	$	120.0		2.1	%

Core sales in the Company’s North American and international businesses grew 2.1% and 5.4%, respectively. Latin America led with 22.6% core sales growth driven by strong innovation and pricing in the Writing segment, particularly in Venezuela, and strong innovation and increased distribution in the Tools segment in Brazil. North America reported modest core sales growth of 2.1%, as the Win Bigger businesses generated solid growth that was partially offset by declines in Home Solutions due to deemphasizing certain lower margin Rubbermaid product lines. Baby & Parenting core sales were flat in North America, as the Graco harness buckle recall impacted sales growth. Asia Pacific core sales growth of 0.4% was attributable to core sales growth across the Win Bigger businesses, partially offset by declines in Baby & Parenting primarily as a result of increased competition in Japan. EMEA had a core sales decline of 1.3% as a result of planned product and geographic exits, continued macroeconomic challenges in Western Europe and challenging market conditions in Eastern Europe. The Company’s core sales growth in 2014 was favorably impacted by additional sell-in in advance of advertising and merchandising support planned for 2015.

Gross margin, as a percentage of net sales, for 2014 was 38.5%, or $2,203.4 million, an increase of 60 basis points compared to the prior year. Pricing, productivity and segment and product mix more than offset the impact of inflation, negative foreign currency, the $12.0 million of costs associated with the Graco harness buckle recall and the adverse impact of the $5.2 million increase in Venezuela cost of products sold due to changes in Venezuela exchange rates.

SG&A expenses for 2014 were 25.9% of net sales, or $1,480.5 million, versus 25.0% of net sales, or $1,399.5 million, for 2013. During 2014, the Company increased investments in advertising across all segments by $52.8 million, representing an incremental 90 basis points as a percentage of net sales. Continued investment in selling and e-commerce capabilities in North America and Latin America also contributed to the increase. The increase was also driven by an increase in organizational change implementation and restructuring-related costs and advisory costs for process transformation and optimization initiatives, which increased from $23.8 million in 2013 to $41.9 million in 2014, to support efforts to improve selling, pricing and supply chain capabilities. SG&A expenses in 2014 also include $5.5 million of acquisition and integration costs associated with the Ignite, bubba and Baby Jogger acquisitions and $3.0 million of costs relating to the Graco harness buckle recall. These increases in SG&A were partially offset by Project Renewal cost savings.

In 2014, the Company offered certain U.S. pension plan participants who have deferred vested benefits under the Company’s U.S. pension plan the opportunity to make a one-time election to receive a lump sum distribution of the present value of their benefits. Based on participants that accepted the offer, the Company paid $98.6 million of lump sum distributions from plan assets, which resulted in a $65.4 million non-cash settlement charge during the fourth quarter of 2014.

The Company recorded restructuring costs of $52.8 million and $110.3 million for 2014 and 2013, respectively. The year-over-year decrease in restructuring costs is primarily due to the significant costs incurred in 2013 associated with the implementation of restructuring plans and initiatives under Project Renewal in Europe as part of the EMEA Simplification workstream. The restructuring costs in 2014 primarily related to Project Renewal and consisted of $7.5 million of facility and other exit costs, including impairments, $22.9 million of employee severance, termination benefits and employee relocation costs and $22.4 million of exited contractual commitments and other restructuring costs. 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 $16.0 million of exited contractual commitments and other restructuring costs. See Footnote 5 of the Notes to Consolidated Financial Statements for further information.

Operating income for 2014 was 10.6% of net sales, or $604.7 million, versus 11.0% of net sales, or $615.1 million, for 2013. Gross margin expansion was more than offset by the increased investment in brands and capabilities and the non-cash pension settlement charge of $65.4 million.

Net nonoperating expenses for 2014 were $142.6 million versus $78.8 million for 2013. Interest expense for 2014 was $60.4 million, an increase of $0.1 million from $60.3 million for 2013, as the impact of higher average debt levels was offset by a lower average interest rate and interest income earned on foreign cash balances. The increase in nonoperating expenses during 2014 was

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driven by the negative impact of the hyperinflationary accounting for the Company’s Venezuelan operations compared to 2013, which resulted in the Company recognizing $45.6 million of charges in 2014 based on the decline in value of the net monetary assets of its Venezuelan operations that are denominated in Bolivars compared to $11.1 million of charges in 2013, as well as the $33.2 million loss on extinguishment of debt associated with the repayment of all outstanding 2015 Notes and 10.6% 2019 Notes and a portion of the 2020 Notes.

The Company’s effective income tax rate was 19.3% and 22.4% for 2014 and 2013, respectively. During 2014, the Company recognized discrete income tax benefits of $15.5 million related to the resolution of certain tax contingencies and $18.4 million of net income tax benefits associated with the reduction of valuation allowances on certain international deferred tax assets. The tax rate for 2013 was impacted by $7.9 million of tax benefits related to the resolution of various income tax contingencies and the expiration of various statutes 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 rates for both 2014 and 2013 were impacted by the geographical mix in earnings.

Income from discontinued operations was $4.8 million for 2014 compared to $58.3 million for 2013. Income from discontinued operations during 2014 and 2013 relates to the Company’s Hardware, Teach, Endiciaand Culinary electrics and retail businesses. The Company’s Hardware and Teach businesses were sold during 2013, which resulted in a net gain (including impairment charges) of $58.9 million in 2013. Income (loss) from discontinued operations was $1.4 million and $(0.6) million for 2014 and 2013, respectively. See Footnote 3 of the Notes to Consolidated Financial Statements for further information.

Results of Operations — 2013 vs. 2012

Net sales for 2013 were $5,607.0 million, representing an increase of $98.5 million, or 1.8%, from $5,508.5 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	$	164.9		3.0	%
Foreign currency	(66.4		)	(1.2	)
Total change in net sales	$	98.5		1.8	%

Geographically, the core sales growth was driven by double-digit core sales growth in Latin America and low-single-digit core sales growth in North America. 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 2.7% and 3.6%, respectively. In North America, the 2.7% core sales growth was driven by growth in the Baby & Parenting and Home Solutions segments. Core sales in the Company’s Latin American 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.

Gross margin, as a percentage of net sales, for 2013 was 37.9%, or $2,124.9 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 25.0% of net sales, or $1,399.5 million, versus 25.5% of net sales, or $1,403.5 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 $110.3 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 $16.0 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

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employee severance, termination benefits and employee relocation costs; and $11.7 million of exited contractual commitments and other restructuring costs. See Footnote 5 of the Notes to Consolidated Financial Statements for further information.

Operating income for 2013 was 11.0% of net sales, or $615.1 million, versus 11.6% of net sales, or $637.7 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 Bolivars declined to 6.3 Bolivars 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 Bolivars. During 2013, the Company recognized foreign exchange transactional losses of $9.9 million, excluding the impact of the devaluation of the Venezuelan Bolivar, 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 22.4% and 29.3% for 2013 and 2012, respectively, resulting in $120.0 million and $161.5 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 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 $58.3 million for 2013 compared to $10.8 million for 2012. Income from discontinued operations during 2013 and 2012 primarily relates to the Company’s Hardware, Teach, Endicia and Culinary electrics and retail businesses. The Hardware and Teach businesses were sold during 2013. (Loss) income from discontinued operations was $(0.6) million and $9.1 million for 2013 and 2012, respectively. The sale of the Hardware and Teach businesses resulted in a net gain (including impairment charges) of $58.9 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 3 of the Notes to Consolidated Financial Statements for further information.

Business Segment Operating Results:

2014 vs. 2013 Business Segment Operating Results

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



	2014		2013		% Change
Writing	$	1,708.9	$	1,653.6	3.3	%
Home Solutions	1,575.4		1,560.3		1.0
Tools	852.2		817.9		4.2
Commercial Products	837.1		785.9		6.5
Baby & Parenting	753.4		789.3		(4.5	)
Total net sales	$	5,727.0	$	5,607.0	2.1	%

The following table sets forth an analysis of changes in net sales in each segment for 2014 as compared to 2013:



	Writing		Home Solutions		Tools		Commercial Products		Baby & Parenting
Core sales	7.8	%	(2.5	)%	6.3	%	7.2	%	(4.0	)%
Acquisitions	—		4.1		—		—		0.6
Foreign currency	(4.5	)	(0.6	)	(2.1	)	(0.7	)	(1.1	)
Total change in net sales	3.3	%	1.0	%	4.2	%	6.5	%	(4.5	)%

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



	2014			2013			% Change
Writing⁽¹⁾	$	416.6		$	382.2		9.0	%
Home Solutions⁽²⁾	196.0			213.1			(8.0	)
Tools⁽³⁾	94.6			68.3			38.5
Commercial Products⁽⁴⁾	101.3			82.5			22.8
Baby & Parenting⁽⁵⁾	40.6			91.2			(55.5	)
Restructuring costs	(52.8		)	(110.3		)	52.1
Corporate⁽⁶⁾	(191.6		)	(111.9		)	(71.2	)
Total operating income	$	604.7		$	615.1		(1.7	)%


(1)	For 2014, includes charges of $5.2 million associated with Venezuelan inventory resulting from changes in the exchange rate for the Venezuelan Bolivar. For 2013, includes $0.3 million of organizational change implementation and restructuring-related costs associated with Project Renewal.


(2)	For 2014, includes $4.2 million of acquisition and integration charges associated with the Ignite and bubba acquisitions.


(3)	For 2014, includes $1.7 million of organizational change implementation and restructuring-related costs associated with Project Renewal.


(4)	For 2014, includes $0.4 million of organizational change implementation and restructuring-related costs associated with Project Renewal.


(5)	For 2014, includes $15.0 million of charges relating to the Graco harness buckle recall and $1.3 million of acquisition and integration charges associated with the Baby Jogger acquisition. For 2013, includes $0.8 million of organizational change implementation and restructuring-related costs associated with Project Renewal.

(6)

For 2014, includes a $65.4 million non-cash charge associated with the settlement of U.S. pension liabilities for certain participants with plan assets, $31.7 million of organizational change implementation and restructuring-related costs associated with Project Renewal, and $10.2 million of advisory costs for process transformation and optimization initiatives. For 2013, includes $23.8 million of organizational change implementation and restructuring-related costs associated with Project Renewal.

Writing

Net sales for 2014 were $1,708.9 million, an increase of $55.3 million, or 3.3%, from $1,653.6 million for 2013. Core sales increased 7.8%, driven by strong innovation, positive pricing and advertising and merchandising support. Cores sales grew across all regions and was led by Latin America with strong double-digit growth as a result of pricing and volume growth. North America core sales grew mid-single digits as a result of increased advertising and strong Back-To-School growth. EMEA generated low-single-digit core sales growth despite the challenging economic environment and product exits in Fine Writing. Asia Pacific core sales grew low single digits due to pricing and growth in China and Southeast Asia. Foreign currency had an unfavorable impact of 4.5% on net sales.

Operating income for 2014 was $416.6 million, or 24.4% of net sales, an increase of $34.4 million, or 9.0%, from $382.2 million, or 23.1% of net sales, for 2013. The 130 basis point increase in operating margin is primarily attributable to pricing, mix, strong productivity and overhead cost management, partially offset by the increased cost of products sold attributable to the devaluation of the Venezuelan Bolivar and increased advertising. The increase in advertising resulted in SG&A increasing 60 basis points as a percentage of sales.

Home Solutions

Net sales for 2014 were $1,575.4 million, an increase of $15.1 million, or 1.0%, from $1,560.3 million for 2013. Core sales decreased 2.5% primarily due to deemphasizing certain lower margin Rubbermaid product lines. Foreign currency had an unfavorable impact of 0.6% on net sales, while the impact of the Ignite and bubba acquisitions had a positive impact of 4.1% on net sales.

Operating income for 2014 was $196.0 million, or 12.4% of net sales, a decrease of $17.1 million, or 8.0%, from $213.1 million, or 13.7% of net sales, for 2013. The 130 basis point operating margin decline reflects increased advertising, the effects of input cost inflation and the deleveraging effect on operating margins of lower sales volumes, partially offset by pricing, productivity and overhead cost management. The more efficient management of overhead costs was more than offset by the deleveraging effect, acquisition and integration costs, and increased advertising, resulting in SG&A increasing 110 basis points as a percentage of sales.

Tools

Net sales for 2014 were $852.2 million, an increase of $34.3 million, or 4.2%, from $817.9 million for 2013. Core sales increased 6.3%. Cores sales grew across all regions led by double-digit core sales growth in Latin America related to strong innovation, new distribution and pricing. The Tools segment generated mid-single-digit core sales growth in North America, as strong volume growth on Lenox^® was partially offset by the impact of a slower than expected transition of an Irwin distribution center in 2014. Foreign currency had an unfavorable impact of 2.1% on net sales.

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Operating income for 2014 was $94.6 million, or 11.1% of net sales, an increase of $26.3 million, or 38.5%, from $68.3 million, or 8.4% of net sales, for 2013. The 270 basis point increase in operating margin is primarily attributable to greater operating leverage from the strong sales growth, gross margin expansion behind improved mix, Project Renewal savings, significant brand support in 2013 in Brazil for product launches and a reduction in advertising in North America versus last year. The operating leverage, Project Renewal savings and reduced brand support in Brazil and North America contributed to SG&A decreasing 270 basis points as a percentage of sales.

Commercial Products

Net sales for 2014 were $837.1 million, an increase of $51.2 million, or 6.5%, from $785.9 million for 2013. Core sales increased 7.2%, primarily driven by innovation, pricing, new distribution in Brazil and China and volume growth in all regions. Foreign currency had an unfavorable impact of 0.7% on net sales.

Operating income for 2014 was $101.3 million, or 12.1% of net sales, an increase of $18.8 million, or 22.8%, from $82.5 million, or 10.5% of net sales, for 2013. The 160 basis point increase in operating margin reflects the benefits of improved operating leverage, pricing, mix and strong productivity, partially offset by input cost inflation and increased advertising. The improved operating leverage contributed to SG&A declining 90 basis points as a percentage of sales.

Baby & Parenting

Net sales for 2014 were $753.4 million, a decrease of $35.9 million, or 4.5%, from $789.3 million for 2013. Core sales decreased 4.0%, primarily attributable to planned geographic exits in EMEA, difficult market conditions in Eastern Europe, competitive pressures in Japan and the negative impact of the Graco harness buckle recall in the U.S. Foreign currency had an unfavorable impact of 1.1% on net sales, while the acquisition of Baby Jogger had a positive effect of 0.6% on net sales.

Operating income for 2014 was $40.6 million, or 5.4% of net sales, a decrease of $50.6 million, or 55.5%, from $91.2 million, or 11.6% of net sales, for 2013. The 620 basis point decrease in operating margin is largely attributable to the $15.0 million of costs associated with the recall, geographic mix, transactional foreign currency, increased advertising and promotion in North America and the deleveraging impact of lower sales, partially offset by pricing. The deleveraging impact of lower sales, increased advertising, acquisition and integration costs and SG&A costs associated with administering and supporting the recall contributed to SG&A increasing 470 basis points as a percentage of sales.

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	$	1,653.6	$	1,682.0	(1.7	)%
Home Solutions	1,560.3		1,524.6		2.3
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	$	5,607.0	$	5,508.5	1.8	%

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	(0.5	)%	2.7	%	3.4	%	3.9	%	10.2	%
Foreign currency	(1.2	)	(0.4	)	(1.9	)	(0.5	)	(3.0	)
Total change in net sales	(1.7	)%	2.3	%	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⁾	$	382.2	$	331.6	15.3	%
Home Solutions⁽²⁾	213.1		198.3		7.5
Tools	68.3		109.8		(37.8	)
Commercial Products	82.5