Fitch Affirms Newell Rubbermaid's Ratings; Stable Outlook.

CHICAGO -- Fitch Ratings has affirmed its ratings on Newell Rubbermaid Inc. (NWL), with a Stable Rating Outlook as follows:

-- Issuer Default Rating (IDR) at 'BBB';

-- Bank credit facility at 'BBB';

-- Senior unsecured notes at 'BBB';

-- Commercial paper at 'F2';

-- Trust convertible preferred stock (QUIPS) at 'BBB-'.

Fitch's ratings apply to NWL's approximately $1.9 billion senior unsecured debt, its $750 million revolving bank credit facility, its $750 million commercial paper program, and $437 million of QUIPS.

The rating and Outlook are based on NWL's solid execution of its key strategic goals, which has lead to improved margins and a consumer-focused posture that is expected to reduce the commodity nature of several product lines. Among its many initiatives, NWL is concentrating on two key goals: the first is to reduce costs and rationalize its product lines and the second is to transforming itself into an innovative branding and marketing company from a manufacturing and distribution company. Where its emphasis had been on the domestic retail customer and vertical integration, it is now on the consumer, on product innovation, and the need to become more global through sourcing, rationalization of products, and profitable international growth.

NWL has been shedding low- or-no-profit operations, reducing manufacturing footprint, paring back high-cost resin-related businesses, and improving productivity over the past several years. Although cost reduction activities have been underway for a number of years, the company has accelerated the process with the 2005 announcement and current implementation of Project Acceleration (PA). PA's primary goals are to reduce excess capacity and lower costs. The plan is expected to result in cumulative restructuring costs totaling between $350 million and $400 million ($295 million-$340 million after tax), with between $150 million and $180 million ($130 million-$155 million after tax) to be incurred in 2006. Approximately 60% of the costs are expected to be cash. Annualized savings are projected to exceed $120 million upon conclusion of the program in 2008 with expected savings of approximately $50 million in 2007. During the first six months of 2006, the company has announced the closure of 15 manufacturing facilities. Through June 30, 2006, NWL has approved approximately $125 million in restructuring actions related to PA and recorded $94.6 million of costs. While in the early stages of PA, previous restructuring efforts, productivity gains and the company's sale of low-margin lines appears to be providing solid benefits with improving margins. EBITDA margins have improved from 12.9% in 2004 to 13.6% for the last 12 months (LTM) ending June 30, 2006. Of note, is 14.2% EBITDA margin for the first half of 2006, evidence of a good start.

NWL's current trajectory appears positive but Fitch would like to see evidence of solid organic growth as well as a continuation of the margin trends seen thus far. While a sizable debt-financed acquisition could have an impact on ratings, bolt-on acquisitions are anticipated, those that would be funded with internally generated funds. The company's high dividend payout will continue but will not be a drain on financial flexibility.

The Stable Outlook reflects NWL's overall improvement in its portfolio of brands, improving profit margins, and stable financial protection measures, although leverage remains somewhat high and sustainable organic revenue growth needs to be demonstrated.

For the first half of 2006, sales were $3.1 billion, up 10.4%. Excluding sales related to DYMO, a $730 million office products acquisition completed on Nov. 23, 2005, sales would have increased 6.2%. All business segments had generally good sales increases, although tools and hardware's growth was affected by a material decline in consumer electronics tools. Operating profit (before restructuring and impairment charges) improved by 22% to $337 million, again benefiting from solid margin improvement. All businesses achieved strong results except office products, which was flat. The additional income generated from the DYMO acquisition was more than offset by increased SG&A investment and acquisition integration costs. For the LTM period ended June 30, 2006, leverage and interest coverage, as measured by total debt with equity credit/EBITDA and FFO/interest coverage, were at 2.7 times (x) and 5.1x, respectively.

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