Newell Brands Inc. (NWL) Q1 2013 Earnings Report, Transcript and Summary

Good morning, and welcome to Newell Rubbermaid's First Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. A live webcast of this call is available at newellrubbermaid.com on the Investor Relations homepage under Events and Presentations. A slide presentation is also available for download. I will now turn the call over to Nancy O'Donnell, Vice President of Investor Relations. Ms. O'Donnell, you may begin.

Thanks, Brent, and thank you, everyone, for joining us this morning. On the call with me today are Mike Polk, Newell Rubbermaid's President and CEO; and Doug Martin, CFO. Before we get started, I'd like to take this opportunity to remind you that today's presentation includes forward-looking statements. These statements are based on current expectations and assumptions. Actual results or outcomes could differ materially from management's expectations and plans. We caution you to consider the important risk factors described in our press release and in our various SEC filings. Please also note that any non-GAAP financial measures, including but not limited to core sales, normalized operating margin and normalized EPS, are provided because management believes that they provide insights which enable investors to better understand and analyze our ongoing results. A reconciliation of GAAP to non-GAAP measures is included in today's earnings release and as part of the slide deck that's available on our website. With that, I would like to turn the call over to Mike Polk.

Thank you, Nancy. Good morning, everyone, and thanks for joining our call. We have 3 objectives today. First, I'll review our first quarter results. Second, I'll update you on the progress we're making driving the Growth Game Plan into action, including our decision to sell our Hardware and Teach Platform businesses. And third, I'll provide you my perspective on the balance of 2013. There are a couple of moving parts in Q1 2013, and we'll bring as much clarity as possible to the numbers so you can get a clean read on the underlying performance of the company. All the numbers we will share today relate to our business on a continuing basis, so excluding the Hardware and Teach Platform businesses. We'll also talk to 2013 adjusted for the impact of the 2012 European SAP implementation. So let's get going. Our Q1 performance represents our seventh consecutive quarter of consistent delivery. The results are in line with our expectations and set the stage for a solid 2013. Our Q1 2013 core sales grew 2.5%, adjusted for the 2012 European SAP-related timing shift from Q2 2012 to Q1 2012. Q1 2013 gross margin improved sequentially to 38.2%, up 110 basis points versus Q4 2012, but down 80 basis points versus prior year due in large part to the unusually high gross margins in Q1 2012 related to the European SAP pull forward and higher 2013 customer programming investment in a select number of businesses in Q1. As a result of a very full Project Renewal change agenda, we saw meaningful benefits in both structural and strategic SG&A in Q1. During the quarter, we restructured the marketing and R&D and design organizations, implemented the next phase of best cost finance and restructured the 2 Tools global business units into 1 Tools segment, combining the functional leadership teams. During the transition period in marketing, we also chose to tightly manage marketing investment as we made substantial leadership changes in the key roles that typically manage the spend. The renewal changes, coupled with tight management of Q1 spending, resulted in a 40-basis point increase in normalized operating income margin versus prior year adjusted for SAP timing. We delivered normalized EPS of $0.35, 9.4% ahead of prior year and $0.03 ahead of consensus. Remember, Q1 2012 normalized EPS was favorably impacted by about $0.03 of earnings related to the European SAP pull forward. So the Q1 2013 normalized EPS of $0.35 increased about $0.06 versus prior year adjusted for SAP. Importantly, our Q1 2013 result was bolstered by about $0.03 of net favorable discrete tax benefit that we will now use to help offset earnings dilution associated with the planned sale of our Hardware and Teach Platform businesses. I think these are good results up against tough comparisons, and I'm once again proud of the organization for driving delivery while simultaneously driving change. In Q1, we drove a jam-packed change agenda. We rolled out the new operating model, reorganizing the company around the first 2 pillars of the Growth Game Plan: development, where we make our brands really matter; and delivery, where we're building an execution powerhouse that delivers best-in-class results. We restructured our Tools segment functional leadership team, merging talent from the industrial products and services with construction tools and accessories. We announced the next round of change in finance as part of our best cost finance initiative. We created a comprehensive plan to simplify and transform the profitability of our European operations, resourcing the businesses aligned to its growth potential. Subject to the necessary consultation processes in Europe, many of these changes will take effect in late 2013. We restructured procurement, simplifying the organization, and recruited a new leader of direct procurement from General Electric. We initiated work to find buyers for our Hardware and Teach Platform businesses. And with the movement of these businesses to discontinued operations, we have reduced the number of operating segments from 6 to 5: Commercial, Tools, Writing, Home Solutions and Baby & Parenting. As I said, we've restructured marketing and R&D and design, reducing our people cost by almost 30%, while at the same time, recruiting new talent to blend consistency at Newell with new leadership and international perspectives. In Q1, new marketing and design leaders have joined from Christian Dior, Electrolux and Whirlpool. We launched Hilmor, our newest tools brand that will compete in the growing U.S. HVAC and refrigeration market. We also prepared for the launch of Sharpie Neon in the U.S., our second new line of premium-priced Sharpies, following the launch of Sharpie Metallics last fall. We expanded further into the hand tools market in Latin America with the launch of an innovative new product, Irwin Dupla, a new double-sided hacksaw that's off to a very fast start across the region. We created a larger independent consumer marketing insights function that will establish the insight foundations for accelerated growth, adding 50% more headcount and almost doubling our strategic research budget. In our commitment to transform Newell into a design-driven company, we announced the creation of a new design center that will open in 2014 and house almost all of our industrial and graphic designers in a new creative work environment. So we're driving the Growth Game Plan into action and, at the same time, have delivered a solid set of results. Let me pass the baton to Doug now to unpack our Q1 performance further.

Thanks, Mike, and good morning, everyone. Before I dive into the results, I'll remind you as Mike did, that effective in Q1, we reclassified the company's Hardware and Teach Platform businesses into discontinued operations. These include Bulldog, SHUR-LINE, Ashland, Amerock, the drapery hardware business within the Home Solutions segment and Mimio. The results of operations of these are reported as discontinued operations in the company's financial statements. In addition to a small profit in the quarter on these businesses, we recorded a $10 million impairment on the Teach business. The remaining businesses in the specialty segment, namely Dymo Office and Endicia, have become part of the Writing segment, and the results our consolidated within. The former specialty segment has been eliminated. These stated quarterly results for 2012 and 2011 have been posted on the company's website in the Quarterly Earnings section of the Investor Relations site. Now turning more specifically to the numbers. Newell reported net sales for the quarter of $1.24 billion, an 80 basis point decline versus prior year. Core sales, which exclude the impact of unfavorable foreign currency, increased 20 basis points. Recall also that last year's first quarter included approximately $28 million of sales related to our EMEA SAP go-live that were pulled forward from the second quarter. First quarter sales grew 2.5% if we adjust last year for the impact of that pull forward. Our company-wide gross margin was 38.2% in Q1, an 80 basis point year-over-year decline. Incremental investments in customer programming and the favorable impact of last year's SAP pull forward drove the decline. Input cost inflation was offset by productivity. For the full year, we continue to expect year-over-year expansion in gross margin. Normalized SG&A expense decreased $8 million to last year, declining 40 basis points to 27% of sales. Renewal savings enabled us to focus strategic investment behind marketing news in Tools, Commercial Products and Baby. We expect to continue to accelerate strategic spending behind our brands sequentially as we progress through 2013. Reported first quarter operating margin was 7.9% compared with 9.9% in the prior year. On a normalized basis, Q1 operating margin was 11.2%, a 40 basis point decrease from the prior year, reflecting the absence of approximately $13 million in SAP timing-related benefits, partially offset by cost savings from Project Renewal. Interest expense was $14.6 million, a 28% reduction from 2012 due to the work that we did last year to strengthen our balance sheet. Our normalized tax rate was 16.5%, attributable to onetime favorable discrete period net benefits of approximately $8 million to record net international deferred tax assets. Other expense in the quarter reflects the devaluation of the bolivar in Venezuela. Now because Venezuela is a hyperinflationary country for accounting purposes renewal, the initial devaluation impact of approximately $11 million is recorded below operating income and other expense rather than in the equity section. First quarter reported earnings per share were $0.19 compared with $0.27 in the prior period. Normalized earnings per share, which exclude restructuring and restructuring-related costs and discontinued operations were $0.35, a 9.4% increase from a year ago. This improvement was largely attributable to the more favorable tax rate. Last year's normalized earnings per share also included approximately $0.03 of SAP-related benefit. So the underlying normalized earnings per share growth rate excluding both the 2013 tax benefit and the 2012 SAP benefit is about $0.03 or around 10%. In the first quarter, we've used operating cash of $123.1 million, and this compares with the use of $47.4 million in the prior year. The change was driven primarily by a voluntary pension plan contribution we made this year in the amount of $100 million. In last year's first quarter, the pension contribution was $25 million. We also returned $78.3 million to shareholders in the quarter in the form of $44.5 million in dividends and $33.8 million for the repurchase of 1.4 million shares. Program to date, the company has repurchased 9.7 million shares at an average price of $17.65 for a total of $171.4 million. Turning now to a little more detail on the segments. Reported net sales in our Commercial Products segment grew 4.4%. Core sales rose 4.9%, and core sales excluding last year's SAP benefit grew 6.1%. Commercial Products sales were strong in North America, driven by healthy order rates across most products and customers. In the U.S., our health care platform continued its double-digit core growth, driven by new innovation like our new CareLink mobile nurse station. Latin America also grew double digits as sales force and local manufacturing investments continue to drive growth. Recall that sales force capability investments were part of where we decided to make some renewal investments last year, and those investments are yielding growth dividends. Operating margin for this segment was 11.8%, up 120 basis points due to structural cost reductions, partially offset by increased investment in emerging markets. The Tools segment delivered a reported sales decline of 1%. Core sales grew 70 basis points, and core sales excluding SAP were 5.1%. This strong underlying performance was driven by double-digit growth in Latin America where we have invested heavily in selling systems and new products like the recent launch of Irwin Dupla, our new double-sided hacksaw. Normalized operating margin in Tools declined 520 basis points to 9.9% as a result of heavy investment behind the launch of Irwin Dupla in Latin America and Hilmor in North America, increased selling investment in Latin America and input cost inflation that was not fully covered by productivity and pricing in the quarter. In our Writing segment, first quarter reported sales fell 9.3%. Core sales decreased 8.5%, and core sales excluding the SAP benefit declined 4.5%. We faced a tough comp as we lapped the launch of both Parker Ingenuity in Asia and Paper Mate InkJoy in the prior year period. Fine Writing sales were also negatively impacted by continued macro challenges in Europe and a slowdown in Asia as we transition our distribution model in China to better align inventory levels with consumer POS. Our weaker performance was accomplished by sluggish markets -- was compounded rather by sluggish markets in the U.S. office superstore channel. We have a very strong set of Writing marketing plans for the balance of 2013, with year 2 innovation and launch support on Paper Mate InkJoy. Solid programming behind Parker's 125th anniversary, year 2 support on Sharpie Metallics, strengthened back-to-school merchandising plans and the 2013 back-to-school launch of Sharpie Neon. And as the category leader in the U.S., we plan to spend on writing brand at historically high levels in the back-to-school time frame, despite the uncertain channel dynamics, in order to strengthen our leadership share positions and jump-start market growth in the category. First quarter normalized operating margin in the Writing segment was 18.6%, up 90 basis points due to improved gross margins driven by productivity and planned SG&A reductions as compared with last year's InkJoy launch. Our Baby segment also delivered strong results, despite having to lap double-digit growth in the prior period. Reported sales growth was 4.1%. Core sales growth was 6.4%, and excluding SAP, core sales growth was 7.9%. Again, the formula for success has been winning innovation and strengthened customer partnerships. In the first quarter of 2013, we significantly increased distribution behind Graco new items in the U.S. and Europe, and our Baby team was recognized by our largest Baby customer as the 2012 global vendor of the year and by our second-largest Baby customer as category captain. In Japan, Aprica also grew nicely, driven by increased promotional activity and new products at retail. Baby's Q1 normalized operating margin was 12.6%, up 30 basis points to last year. The Home Solutions segment, which was a drag on the growth rate in 2012, turned positive in Q1 behind very good execution in the U.S. of the first of 5 merchandising scale events on Rubbermaid and steady progress on our Décor blinds business. The Home Solutions' reported sales growth was 3.7%, and core sales growth was 3.9%. The Décor business, which was down low single digits last year, is starting to stabilize but still has a ways to go to become a growth contributor. Home Solutions' first quarter normalized operating margin was 10.1%, a 60 basis point improvement versus the prior year, reflecting higher sales volume and the benefit of Project Renewal savings. Looking at Q1 sales by geography, North American core sales grew 2.5% by strong performances in Commercial Products, Baby & Parenting and Home Solutions. In EMEA, core sales fell 17.2% versus last year's results, which included the SAP pull forward. Excluding that $28 million benefit in 2012, core sales declined 3.5%, which reflects ongoing macro challenges in Western Europe and is consistent with our expectations and what we experienced last year. In Latin America, core sales grew a very strong 28.6%, with strong growth across all of our businesses. In Asia Pacific, core sales fell by 5.3%, due largely to the previously discussed step back in Fine Writing in China, partially offset by continued growth in Aprica and Fine Writing in Japan. The emerging markets' growth rate was slightly below last year's low double-digit rate as the acceleration in Latin America was partially offset by declines in China as a result of our decision to reset our route-to-market model in China on Fine Writing. Our developed world core sales growth adjusted for SAP was nearly 2%, driven by good growth in the United States of nearly 3%. We've also made very good progress on the first phase of Project Renewal. Through the end of Q1, we've realized $80 million of savings and are on track to capture $90 million to $100 million in cumulative savings by our target date of Q2 2013. The second phase of Project Renewal is expected to generate an incremental annualized cost savings of $180 million to $225 million by the middle of 2015. We expect the benefits of Phase 2 to start flowing through in a meaningful way by the second and third quarters of this year. And we intend for the majority of these savings to be invested back into strategic SG&A, such as sales force, advertising and promotion, product development, consumer research and capability building to drive acceleration of core sales growth in our priority segments and markets. In summary, we are pleased with our Q1 results and our continued progress in driving the Growth Game Plan into action. Mike?

Thanks, Doug. Now just a few words in the businesses we plan to sell. Our Hardware and Teach Platform businesses are good businesses run by talented people with a lot of potential to benefit from the inevitable economic recovery, especially in housing. They have a lot of heritage with our company, and the people, the brands and their history with Newell will be missed. But the businesses are not core to our strategy and, as a consequence, have not gotten the strategic focus they deserve. In my experience, noncore assets almost always perform better in the hands of focused owners. Focused owners invest more in these businesses to build them because they are, in fact, strategic to them. We believe the current market conditions are right, so we've decided to exit now. Over the last 3 years, our continuing business grew core sales about 60 basis points faster than Newell did with the planned divestitures included. We had nearly a 40-basis-point higher normalized operating income margin, and we grew normalized operating income about 110 basis points faster. So with a more focused portfolio, Newell Rubbermaid becomes a faster growing, higher-margin business. Restated 2012 results for the movement of our Hardware and Teach Platform businesses to discontinued operations are as follows: Newell Rubbermaid's 2012 net sales were $5.58 billion, normalized operating income margin was 13%, normalized earnings per share was $1.67. In 2013, we intend to fully cover the lost impact of the disc ops businesses. The normalized EPS over delivery of $0.03 in Q1 2013 will help us cover the nearly $0.04 of lost earnings associated with the Hardware and Teach Platform businesses. We have a line of sight to accelerated Project Renewal savings that will enable us to fully cover the lost earnings flow and strip out any retained costs so that we stay on our EPS glide path in 2013 and 2014. We're confident we can do this without compromising our Growth Game Plan drive to increase brand support for accelerated growth on our priority businesses and in our priority markets. So let's now turn to our 2013 outlook. As a result of these changes, we're reaffirming our 2013 full year guidance against the restated 2012 base as follows: core sales growth of 2% to 4%, this is unchanged versus prior guidance; normalized operating income margin expansion up to 20 basis points, this is unchanged versus prior guidance; normalized EPS of $1.78 to $1.84, this is unchanged versus prior guidance but now represents normalized EPS growth of 7% to 10% above our restated 2012 normalized EPS of $1.67; operating cash flow of $575 million to $625 million, this is unchanged versus prior guidance. There are 2 key factors that could influence our delivery on full year guidance in 2013. First, our delivery of the Project Renewal savings. Second, the performance of our Writing segment. On savings, we're making progress, but still have a lot to do. Our focus is on the 5 work streams associated with Phase 2 of Project Renewal announced in Q4 2012. We have projects initiated in all 5 work streams, and as Doug said, we will deliver the 2013 savings on time and in full. We also have a good pipeline of savings we can accelerate that will help cover the lost earnings cash flow associated with our planned divestitures. The savings associated with Phase 2 of Project Renewal are backloaded in 2013 and, as such, the benefits to the P&L will accelerate from mid-Q2 forward. We will also have choices to make about how much of the savings flow to brand support and how much falls to normalized EPS. Our dominant logic is that the brands need more support than they have today. Our ability to accelerate growth is contingent on increasing brand support, and we have not made enough progress here yet. The good news is we have clear line of sight to the savings, and I'm confident we have the risks of delivery reasonably well balanced. The second key factor that could influence where we land in our guidance range is the performance of our Writing business. As expected, Writing had a weaker start to the year as we lap the Paper Mate InkJoy and Parker Ingenuity launches, and we took the choice to reset our route-to-market approach on Fine Writing in China. As Doug mentioned, our Writing plans in the balance of the year are strong. We have terrific momentum in Latin America with strong double-digit growth in Q1, which we expect to continue through the year. In the U.S., we're staged for more back-to-school display in merchandising this year than last. We have heavy marketing support planned in Q3 behind a good flow of innovation with year 2 of InkJoy, Sharpie Metallics and the launch of Sharpie Neon. And we plan to extend the shoulders of the season into October and November with new consumer-facing programs. So we feel good about our brands and the ideas we're bringing to market despite this sluggish start and the tough market conditions. Within Writing, there are 3 factors that could influence the flow of overall Newell results in 2013. First, the timing of our Fine Writing recovery in China. Second, the timing of U.S. back-to-school shipments. Third, the timing of the consolidation of the U.S. office superstore channel and the resulting retailer inventory liquidation. On Fine Writing in China, we expect to get back to growth in the second half of 2013. We have more work to do in Q2, but we intend to play for the long term, accept the negative growth in Q2 and see the Fine Writing reset all the way through. Predicting back-to-school selling timing is more art than science, as you know. We do know that many U.S. retailers have said they will not take inventory into their systems until the fourth -- July 4 merchandising has largely moved through their stores. This year, July 4 falls on a Thursday, so more shipments may slip from the last week of June into the first week of July. Finally, the consolidation of the U.S. office superstore channel is likely to be an overhang on the U.S. Writing business for some time to come. We expect a pretty significant liquidation of retailer inventory to occur shortly after the Office Depot and OfficeMax deal closes. We intend to proactively manage down inventories after the back-to-school merchandising window so that we're not long with them prior to their deal closing. This planning approach will help us avoid tough conversations and expensive discounting as they consolidate distribution networks. This certainly means a less significant back-to-school replenishment season for us in September than last year but likely a better consumption-driven selling flow in early Q4. Our total company outlook assumes a no to slow growth year in 2013 on the Writing segment and then a return to greater growth in 2014. While we have all of this factored into our full year guidance and our internal quarterly forecast, based on looking at the quarterly consensus, I'm pretty sure that some of you don't have these shifts properly factored in. There are few things to keep in mind as you revisit your models. Our normalized EPS will experience $0.01 of dilution per quarter in the remaining quarters given the movement of the Hardware and Teach Platform businesses to discontinued operations. Versus last year, a higher proportion of U.S. back-to-school sell-in will occur in Q3 rather than Q2. However, the September replenishment activity in Q3 will be weaker than a year ago, washing out some of the revenue upside in Q3. Additionally, we will spend significantly more in marketing in Q3 on Writing than we did a year ago, so revenue may not flow to earnings in the way it typically does on Writing in Q3. Finally, our renewal savings accelerate through the year, with the largest year-over-year impact in Q4. That should influence your thinking on earnings flow perhaps a little more than it does to date. While we don't provide quarterly guidance, my view in all of this is that the normalized EPS will be much more evenly distributed across the remaining 3 quarters of the year than it has been in past years. We continue to believe the middle of our full year guidance range is the best estimate for our 2013 delivery, with the first steps slower than the second in momentum building through the year. And this is consistent with what we said in January. The line of sight we have to savings through Project Renewal makes the high side of our normalized EPS range certainly possible, but the probability is moderated by the choices we're making on the Writing business and our drive to increase brand investment for accelerated performance. So let me close by saying we're pleased with the start of the year. There's no doubt this is a time of great change at Newell, and it will take change of this nature to recast the future of our company. My new leadership team is on board and set to make the new operating model work. We're driving a more consistent cadence of delivery while simultaneously driving change, and we recognize that neither the delivery nor the change has come easily, particularly in this economy. I have no delusions about where we stand today and how much more work is left to be done. Our confidence is strengthened by the fact that we are asking a lot of our employees and they're rising to this challenge. They're embracing the changes we're making far better than I had hoped and that, along with good performance, gives us permission to change further and faster. I hope you see through our track record that we're committed to building a stronger company while also creating value for all of our constituents. You saw it last year with good results and strong returns, and you'll continue to see it in what we achieve in 2013. We're all committed to making our Newell Rubbermaid a larger, fast-growing, more global, more profitable company. With that, let me open it up for questions.

[Operator Instructions] Your first question comes from the line of Bill Chappell with SunTrust.

Maybe just to go back to the divestitures, and since this is kind of disparate businesses between Teach and Hardware, is this kind of a clean sweep throughout the business of a once-and-done, or will you continue to look at other aspect and potentially sell things here and there?

Yes, let me make sure we're clear. We've got 2 separate processes working on the Teach Platform and the Hardware Platform, because obviously, those businesses don't work together. Obviously, Hardware has the opportunity to participate in what will eventually be a resurgent economy, and Teach also benefits from that as school budgets and municipality budgets improve. But they are separate processes. I've said all along, if you recall back, all the way back to the Back-to-School Conference in 2011, I said there were about $300 million worth of business that didn't fit within our portfolio and wasn't really connected to our core strategies. And what you see today is the outcome of that observation. We're going to work hard to strengthen our portfolio over time. Obviously, our energy is focused on our organic performance. So I think this is, for now, the right set of steps to take to strengthen the portfolio. It makes the company faster-growing and higher-margin and more focused. And while I wouldn't rule out in the future us either feeding the portfolio and doing some more weeding, I think that, that's not on the agenda in the very near term. So our focus is on strengthening the agenda, driving the Growth Game Plan, strengthening our organic performance, driving the Growth Game Plan into action and building the capabilities that we've talked about building over the last number of months.

Okay. And to just follow up on the Writing instruments, historically, you haven't had that much of a correlation with what's going on in the office market, can you maybe give us some more color of are you expecting half of the store base between OfficeMax and Office Depot to close or are you just seeing worrisome trends or what are you seeing where that's correlating a little bit more?

Well, we don't see anything at this point because their deal is not done. And I think they're going to be drawn out into the second half of the year, as best I can tell. You've seen their reported results and you've seen some of our competitors who reported last week in Writing talk to the channel dynamics. I mean, I think their general assessment of the channel dynamics are accurate. We have the benefit of stronger brands and good marketing and innovation plans in place but certainly feel the effects of that in our numbers. I think as back-to-school -- the back-to-school window kicks in, we'll see some of that strengthen. As our spending increases on the brands, as the category leader in the U.S., we have a responsibility to drive category growth. And you'll see us do that, as Doug and I mentioned, in Q3. But I think it's going to be a tough year for the U.S. super store channel. Now with respect to what happens post the closure of the deal, we can only speculate, obviously. The thing that we want to make sure we do from a planning perspective is not put our head in the sand with respect to what I would do if I were in their shoes. And you bring 2 companies together, you likely would go after the distribution network efficiencies. And with respect to store locations close to each other, you're not going to have redundancies there. So there is going to be, as I said in CAGNY and on the prior call, there's going to be probably a 90- to 120-day period where they're going to go through the rationalization that you need to go through to deliver your synergies. And that will affect all of us in the market. And all I'm saying to you today is that we're going to plan for that, we're not going to have that happen to us. Because you can get into all kinds of inefficient discussions if you don't go proactive. And so the reason there's a governor on our growth on the full year in Writing is in part related to that and in part related to the fact that we're not going to replicate the pipeline fill associated with the launch of InkJoy and Ingenuity.

Your next question comes from the line of Joe Altobello with Oppenheimer. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: I wanted to see what you thought the impact of weather was in the quarter. You did adjust for the pull forward last year, but I know last year, obviously, you did benefit a little bit as well from the early onset of spring. So I'm curious if you guys have quantified what the impact might have been year-over-year.

Joe, I didn't ask the team to sort of figure that out. I asked the team to spend their time focusing on how to deal with it in this year's performance. Clearly, last year in the U.S., you all recall that the right half of the country benefited from the warm spring and everybody benefited from that, all the home centers and we did. You can't do anything about the weather. I used to run an ice cream business and a ready-to-drink tea business, and you really could get screwed up with weather challenges. But you can't do anything about it, so you have to overcome it. What I'm really pleased about in the first quarter is that our Commercial business delivered 6.1% growth adjusted for SAP and the Tools business delivered 5.1% growth adjusted for SAP, and that's well ahead of sort of my midpoint plan for the quarter. Writing, a little bit worse on the office channel challenges. And based on what I've seen our peer companies report, it's generally better than what others have reported. So it just speaks to the underlying momentum and the good leadership that my Tools and Commercial team delivered. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay, understood. Just moving to the tax benefit, $0.03 in the quarter. Did you guys know about that early on in the quarter and adjust your spending to that, or was that a late quarter surprise?

I'll let Doug handle.

Yes, I wouldn't say it was a surprise, Joe. It's something that we -- it's one of the period type tax adjustments that are required to be made by companies like ours. We did have some visibility to it as we got to the middle part of the quarter, and as Mike said, we'll use that to help above-the-line activities through the rest of the year.

Yes, let me build on that. We definitely did not use it to fund incremental investment like we did in Q4. If you'll recall, we had some below-the-line benefits in Q4 that helped us deal with gross margin challenges in that window and still keep spending up. We went through a fundamental change in our marketing and R&D and design organization in the first quarter. I mentioned the fact that 30% of our people costs are going to come out of that area. And in the context of that, with new leadership, a new org design and people moving roles, there was no way I was going to spend a lot of money in the first quarter, in part because a number of jobs changed for the key people that control that spend. And so we pulled way back in the first quarter. So I'm actually quite pleased with the core sales results in that context. We're going to spend it back, obviously, I mentioned, in Q3 on the Writing business so that we really play for a good pull through consumption period. But no, you wouldn't see big spending in Q1 this year. And against last year, that was up against the InkJoy launch in North America. So the year-over-year comparisons are quite meaningful, which is how in the context of an 80-basis-point gross margin decline, you get 40 basis points of normalized operating income margin benefit adjusted for SAP. So the answer -- the short answer to your question is no, we didn't take the tax and spend it. We're holding the tax as a benefit against the dilution effect associated with Hardware and Teach. And then, obviously, that helps you in the short term. We got to do the cost work to sustain that benefit into '14, and that's why I say we'll accelerate renewal savings as fast as we can so that when we get out of this fiscal year, we got a run rate that allows us to stay on the 2014 glide path, the EPS glide path that we've been on. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. Just one last one. On that '14 glide path, what's the use of proceeds that you expect for the divested businesses?

Well, we don't know what the proceeds will be yet. So until I know what the proceeds will be, I think I'll hold off on answering that question, but there's obviously a number of different things that we can do. And you can see through our behaviors over time that we strike the right balance between managing our capital structure and doing shareholder-friendly things.

Your next question comes from the line of Chris Ferrara with Bank of America Merrill Lynch.

So I just want to try to understand a little better the growth rates x SAP and particularly Baby, Tools and Commercial. And, I guess, the context I'm looking for is that you guys just said you probably didn't go heavy up on marketing this quarter. You probably pulled a little back. What's the sustainability of those growth rates and can you tie in, I guess, the investments you've made so far on the savings that you've generated as to why or why not these growth rates where they are today, the 4.9 in Commercial, the 6 -- or the 7.9 in Baby & Parenting. How sustainable those are?

Look, like I said, I'm pleased with that. You'll remember, last year, we've made a significant investment in sales force using the Project Renewal savings focused on Commercial and on Tools. And the benefit of those choices, remember, it's in the emerging markets, particularly in Latin America. The benefits of those choices don't play out immediately. You have to hire the people, you got to train the people, and we're starting to see that really play out in both businesses, particularly on Tools. Commercial Products had a great innovation quarter, the CareLink nurse station is a big innovation in the health care vertical that Commercial owns. And we've also invested in North American sales force in Commercial that's yielding the right dividends -- growth dividends. So I think you're actually seeing the choices we made last year play out. Combination of innovation, strength and selling and absent of a real big step-up in brand support from an advertising or promotion standpoint. That's a pretty good outcome. On Baby, I just got to say that Kristie and her team, both the development and delivery side of that business and our supply partner are doing an amazing job. The CDO is part of that as well, the Customer Development Organization is part of that as well. We're really firing on all cylinders now in our Baby business. And it's a combination of excellent innovation and a strong supply network and relationship and a real investment in strengthened dialogues and seniority of our selling organization in connection to our key business partners. And so we're winning share in North America. We continue to win share in Japan. The gratifying thing to see in the first quarter is that in Europe, we see some stabilization in Baby. So it's very good progress. And I'm pleased with it, and I'm really pleased about the impact that the changes we made in leadership in that team are having. It takes 18 months to 2 years to kind of get things like this to really turn. And this was a broken business in early 2011. And I think it's very gratifying to see where we are today. I maintain a level of constructive dissatisfaction on everything that we're involved with. So I don't tell the Baby people as much as I should about how I feel about them because I don't want them to get complacent, but the reality is we made a good run. Now we've got a lot more to do in Baby and we have a lot more opportunity, and we want to sustain this momentum going forward. And I think you can look forward a couple of months and feel very, very good about it. We see the POS responding to the innovation and the greater strategic dialogue that we're having with our key customers. And I hope we're able to sustain that. We want to keep the pressure on ourselves to do just that.

And I guess what are the bogeys that, that business has to hit for you to want to allocate more investment dollars? Is the picture getting any clear?

Look, our strategic priorities are quite clear, Commercial Products, Tools and Writing. Creating a little bit more coherence in our Home Solutions business, but it's a big business for us. We've got to keep that business healthy so that it can spin off the cash and profit that we need to invest to deliver our ambition on Commercial Products, Tools and Writing. And I think the thing we have to ask our Writing -- our Baby team to do is to continue to do what they're doing, which is be very, very sparse in terms of the way they invest their money and managing it as if they owned it because we've got too many other priorities in the other places that offer more strategic value to us long term. What I like about our new portfolio is it's much more focused. So I won't rule out some money flowing to Baby, but I think it's going to really be a story that's built on innovation, which we're obviously really funding, and strong sales leadership and insight to drive conversion at the point of availability. And that'll be the story on Baby going forward. I can't -- there's no -- once you set your strategic priorities, I'm not one for going back and revisiting them. We got a 5-year plan, 5-year framework. We'll continue to do what we need to do to make sure we're creating value in Baby. So we're going to focus on profitability and focus on growth, and we can do it with the resources we have. Obviously, we've shown that. We need to sustain that going forward. And I don't think it's a double-down moment for Baby. If we can deliver mid-single digits, low to mid single-digit growth in that business for the foreseeable future, we will create a ton of value for our shareholders.

Your next question comes from the line of Connie Maneaty with BMO Capital Markets.

Couple of questions. What percentage of writing instrument sales do Office Depot and OfficeMax represent, ballpark?

We haven't given that number out. I'm reluctant to do that, Connie. I'll just say that one of them is in our top 10 in North America and one of them is not.

Okay. On the discontinued operations...

Connie, that was total Newell I just gave you, not Writing. Of course, they're in our top 5 in Writing.

On the discontinued ops, what's the magnitude of stranded overhead do you think?

Yes, Connie, we have stranded overhead in the $0.05 to $0.06 range on a full year annualized basis in those businesses that we've identified and are building plans around to take out. Now some of that is, as you know, there's some art and science in allocating cost across our businesses so it may be -- it could be a little better or it could be a little worse, but in that range.

And obviously, Connie, we don't have to deal with that until we sell these assets. And they will likely be a shared services arrangement in place for a period of time after that. So when I talk about accelerating renewal costs, we need that to cover the dilution effect. We also need it to cover the retained cost impact. And my comments in the commentary contemplated that. So when I talk about maintaining our glide path in '13 and in '14, it's in the context of both the earnings dilution and in the context of our need to cover the retained costs.

Okay. And then one final question, the trend in your sales in Asia Pacific. So it looks -- I don't know what's been restated. I don't know if my model is up-to-date right now given everything you reported this morning. But it sort of looks like on a core basis, Asia Pacific sales declined in Q1 on top of the decline last year. And I guess in the context, what exactly do you mean by resetting the route-to-market model in China? And what's going on in the Fine Writing business there? And how does it all tie in to the weakness we're seeing in Asia Pac?

Yes, so let me address that. So we continue to have challenges in Australia and New Zealand, which for us is a big part of Asia Pacific. We didn't really call that out, but I'll share that with you. Bill and his team were in Melbourne this week to sort through that, so we'll talk next week when he gets back and we'll figure out what we need to do to get that performance strengthened. It's been a prolonged issue. And we're all -- we all need to address that now. That's probably 20%, 30% of the issue in Asia. The other piece of it though is the choice we're making to reset the Fine Writing route-to-market in China. There's a piece of that, that has to do with us getting more balanced in the way we manage our inventories between distributors and retailer -- and the retail environment. And we made the choice in Q4, when Bill picked up responsibility for the business to change the way we move product through our business model and through the distributors to the retailers. And that's impacted our growth in China on Fine Writing in the first quarter. Fine Writing in China, despite last year's sellout being up 32%, the first quarter was down double digits versus prior year in China. And that was big, and that's certainly big enough to have more than the Australia and New Zealand impact. And we expect that will continue to play forward into Q2. The other piece of the puzzle though is that as the Tier 2 and Tier 3 cities in China develop and department stores open in those cities, like the ones that had opened in Tier 1 cities, we need to change our route-to-market in those cities because what we've had up until now is a 2-tiered distribution model, effectively a model where you push inventory out in a lot of small outlets that carry your products in those cities. As those cities get wealthier and as development moves from the coastline in, we need to apply the same model that we've got in the Tier 1 cities to those cities, which means pulling back on the multilevel distribution model and establishing a distributor retail to department store model. And that's what we're on and about doing, which obviously has an impact on sell-in and inventories. And we want to set the stage for the future in China through both actions. We have some rebalancing to do on inventory in the environment we're in, in the Tier 1 cities, and we have a job to do to reset our route-to-market in the Tier 2 cities. And those 2 things, Australia and New Zealand and that activity are the most meaningful contributors in APAC. And I suspect we'll continue to experience that. The other thing I'd say is more of a strategic comment. Our priority is in Latin America. We've said when we talked about extending our borders that we are going to focus first on Latin America and next on Asia. So I use the language, first South then East. And so you see that playing out in our growth rates in Latin America in the first quarter. If you look at the core sales growth in the first quarter, I think you have access to this, it's nearly 30%, I think -- so it's a very big number. And while I don't believe we'll sustain that rate, we're going to be strong double digits up in Latin America this year across the total portfolio. I want to get Latin America scaled first before we play hard for Asia. We're doing the thinking work in Asia today. We're taking choices like resetting the network to set the stage for the future, but APAC emerging won't be the big priority this year that it will become in '14 and '15.

Your next question comes from the line of Bill Schmitz with Deutsche Bank.

Rubbermaid Home, this is the first time I can remember when it actually grew. Is that the beginning of a trend? And I know that business is surprisingly related to housing starts and the robust housing economy. So do you think those trends should continue? Then I have a couple follow-ups.

Yes, I mean, we're pleased, obviously. The biggest piece of news is probably the one that won't get a lot of coverage in our results, which is Home growing nearly 4%. So Jeff Hohler and his whole team should feel terrific about that, and all the folks in development supporting that agenda. What's changed there is Rubbermaid Consumer. We've gone through the process of assessing what the real drivers of growth can be in that business, and which we weren't doing enough to put our brands and our products, particularly in food and beverage, in front of the consumer, interrupting the shopping experience or the brand experience around those key holidays where food is central to. So Super Bowl, Easter. We look forward to July 4 and then back-to-school where the pantry changes over and then certainly around Thanksgiving. These are all wonderful moments for us to be pushing our product to the floor, out of the aisle and interrupting the shopping experience with our Rubbermaid Consumer food storage and beverage products. And so you see that coming to life in the first quarter with the first-ever Super Bowl program. We call these 5 merchandising windows the furious 5, and there was only 1 last year, which was Thanksgiving. And so we've retooled how we go to market in the U.S. in Rubbermaid to focus on really giving our customers, shoppers, a brand experience in store around those events, and it really worked in Q1. So we're very pleased about that.

Okay. And does that continue, do you think?

Well, I think it should, if we can replicate it. Because we didn't decide to do it until pretty late in last year. Mark and the team, in partnership with Jeff, made the judgment around October to try to play for this idea. And so we didn't have as broad a set of customer participation in the Super Bowl event as I think we will next year. And I think this will strengthen as we go forward, the depth of participation. So I'm really bullish about that, on Rubbermaid. I think there's more opportunity within Jeff's portfolio because we sort of got different businesses performing in different ways. And so, obviously, the biggest one to focus on was the biggest business, which is Rubbermaid Consumer brand. The other thing we've got going on is you see some stabilization in our blinds business. So you heard Doug in his comments say that versus last year, our Décor business was only down 1.5 -- what did you say, low single digits?

That business is up.

Well, there you go, up 1.5%. So that's a big turnaround in terms of the absence of a negative. Now do I think we sustain it there? I don't know. That one is one that's going to be a little bit more volatile. We have to see what happens with J.C. Penney. They're headed in -- they obviously are making lots of different changes right now. Some of which, we think, are positive for us. Some of which are uncertain for us. But that certainly will not be the huge negative that it was last year. So that bodes well. And we've got to work hard on Goody and on Calphalon to make them growth contributors and do it without spending big money. These are Win Where We Are businesses. So that means they don't get the first call on resources. You have to think about -- I've said this before, Win Where We Are means win differently. An example of winning differently is doing what we did on Rubbermaid Consumer this year with the furious 5. And so we need to really unpack these businesses, break them down to their core and build them back up in a way that allows them to grow without big investment. And that's what we're doing. We kind of hope that we're able to sustain this level of performance. I think we'll be certainly stronger than we were a year ago.

Okay. And then in terms of the gross margins trajectory, I think you always said that we were kind of in a pricing lull in the fourth quarter and the first quarter. So is pricing going to start to come through? And should we see that sort of translate into some gross margin growth?

I'll give you some personal reflections on my leadership, and then I'll let Doug answer the question on pricing. I think I made a mistake last year by aiming off on pricing in the late September, early October window as commodities started breaking. I should have been stronger from a leadership perspective and held what were pricing actions that we had planned, I should have held those pricing actions in place. And we've paid the price from a gross margin perspective in Q4 and, to a lesser degree, Q1. And we have taken pricing starting late Q1 that will start to contribute to the business going forward. But that one's on me. I should have not flinched as the commodities broke and tried to encourage our CEO to sell those things all the way through because it hurt us.

Bill, what I would say on the margin is you're right. I think the -- and as Mike says, we're beginning to take price in some areas and in some parts of our portfolio, in some parts of our world. And you'll see that begin to come through. But what you'll really see, I think, and you will continue to see gross margin expansion from us, and it will increase through the year. And it's going to be driven by productivity in addition to pricing. And Meri, as you know, joined us in December, and she's been working through plans and finding some early opportunities to accelerate some productivity wins. And we're also, recall, executing on our 5 Ways to $50m of productivity savings, some of which hits gross margin in the second, and part of which hits this year.

Okay. That's really helpful. So if you also look at the Tools business, big margin contraction and way below our model and, I think, what The Street was looking for. I mean, did that have to do with pricing or timing or kind of what drove that? And does that continue also?

Yes. So there's a couple of things. When you look at normalized operating margin, you have 2 big launches, in Hilmor and Irwin Dupla in Latin America, but that's one of those businesses where we should, particularly on the Irwin brand, we should have priced in September and we aimed off. And so that was a -- that turns out to have been a mistake. It recovers steadily through the year. So you have the combination of sales force, you have the investments, you have the combination of 2 launches in Q1 up against weaker gross margins than we would like. They will recover certainly more substantially in the second half of the year than in Q2, but we just didn't have pricing against inflation the way we should have.

Great. That's helpful. And then just one last sort of housekeeping item, more like a modeling question, but it seems that just addition by subtraction, you kind of get to 20 basis points of EBIT margin expansion. So does that mean like the base business x divestitures kind of would've been flat from an operating margin perspective?

Yes, we haven't -- I'm going to defer on giving you the specific answer to that, Bill, but Nancy will follow up with you and try to give you the answer. I think that x SAP, we probably still would have been up or near flat. I think up slightly, though. And what happens with our operating income margin this year is going to be a function of what we spend. I mean, that's basically how the story is going to play out. Because we'll get gross margin back on track. In fact, gross margin, I'm sure, will be up versus prior year. We've said we want that to happen every year. And our outlook is for that to happen again this year. So our income margin is going to be a function of spending more than anything else, and I think that would have been true had we held the disc ops businesses in the mix or not.

Got you. And would that spending be a lot more media-related now? I mean like historically -- or not historically, but last year was much more sort of sales force and capability driven it looks like.

When I talk about -- we may do a little bit more sales force work, and we will certainly invest in capabilities like consumer marketing insight and we need stronger -- we just recruited an excellent category management thought leader from the industry to lead the development of our category management capabilities with customers, and we're investing in shopper marketing capabilities. But when I talk about investments going forward, I'm largely talking about brand support. And we got to figure out a way to break apart strategic SG&A for you because -- which is reasonably easy for us to do. I just don't want to confuse people at this point. But strategic SG&A is where our people costs are from marketing and R&D, and as we go down on people cost, you're going to look at that and you're going to say, "Wait a minute, you're not spending the reality for brand support standpoint, A&P standpoint," and we are. Now your question was, is it advertising? No, I think it won't look as a-driven as you guys probably are used to if you're covering fast food and consumer goods. So a lot of e-based communication, a lot of PR-based communication, a lot of in-store communication, but not print and television. The exception to that probably is our Writing business where I think that business responds to that type of investment. So it's horses for courses, I think you'll see an innovation and a brand communication-led change, but not through typical broad reach advertising vehicles that you would expect a fast moving consumer goods business to use, the exception being Writing.

Your next question comes from the line of Dara Mohsenian with Morgan Stanley.

So on writing instruments, can you talk a bit about what's occurring here from a category growth perspective? And this is separate from any of the worry over merger activity. I'm just wondering if the shift to notebooks, mobile devices, et cetera, technology is having incremental pressure here on category growth, and given you feel good about your own internal plans, I was also hoping for a little more clarity on just top line growth for the business as we look at the balance of the year, as you got some internal plans to offset any of those external issues.

Yes. So look, I think the first quarter, the industry as a whole sort of had laid out some numbers. I see slightly better numbers than what I see some of our competitors having thrown out in terms of category performance, but the first quarter performance of the category in the U.S. was not positive. And I think that's in part due to our absence of marketing support connected to the InkJoy launch from prior year. So we were on television in January, we were doing big communication in that window. So I'm sure the absence of that contributes to some of the softness in the channel given the size of our business. Remember, we're a 40 share of the total writing market in the U.S. So if we're not supporting the category, the category probably is not going to grow as actively as it would otherwise grow. It was not the right window for us to spend our money in Q1 for the reasons I've stated before because our innovation and our money should support the big consumption drive windows. So we want to piggyback our investment when the category is relevant and hot for consumers, which obviously is back-to-school. And I think it can be extended to the shoulders of the season further, but we weren't spending in that window. So we are part of the issue. I think there's channel shifting also going on here, as some folks have talked about. I do not think it has anything to do with technology though. There's no linkage that I can find, believe me. That's the question, do we believe technology is superseding writing? We don't see that. And so I think it's more about activities and some channel shifting that's happening between the office superstore channel in the U.S. and other channels.

Okay. And then could you give us some perspective on the housing recovery here in the U.S.? How much of a tailwind do you think it gives to your business this year and more importantly as you look out to 2014? And what are you assuming in your guidance for 2013 in that perspective?

Dara, we do watch that, and we see there are pockets of good news around housing and some areas where housing still is lagging. And as that picks up, it certainly can't hurt our business, but we're not necessarily directly correlated with it. A nice housing boom would be great for us, but where we're starting from is still so low relative to where we went off the cliff in housing, that we think it's going to take a little while before that has a meaningful impact on our business. But we like it.

Okay. And then just last, housekeeping. Did you give the tax rate for the full year you're expecting now?

Here's what I do on the tax rate for the full year. We've given a range of 25% to 26%, and I think somewhere within that range, you can then take that $8 million or so benefit into your numbers.

Your next question comes from the line of Jason Gere with RBC Capital Markets.

I apologize; I jumped in a little late. Did you guys talk about the J.C. Penney business and what's going on there and just any kind of impact? I know you're anniversary-ing the impact last year, and I think last quarter was a little bit more nebulous. Clearly, by looking at the segment results, it looks like things are better, if I infer correctly. So just first question, just if you can kind of give a little bit of an update there.

Yes, so I think there's still uncertainty in how JCP is going to -- how things are going to evolve with J.C. Penney. I ask this question pretty much every week of the team that's calling on them, and the headlines there is they're obviously in transition. You've seen their new advertising the last couple of days with new logo. And there -- as best we can tell, they're slowing down their rate of store conversions to the new home centers. But at the same time, they're strengthening their investment in merchandising. And so they're going back to sort of the older -- the old model where prices go up but businesses are sold on a relatively deep discount. It appears that, that's the direction they're heading. I don't think -- I think all the changes going on there are going to be a net positive for us. I think we lose a little bit of opportunity connected to Culinary if they don't roll out their revised store-in-store model as aggressively as they were planning. That's sort of opportunity lost. I think Culinary is going to have an excellent year at JCP this year. And then on blinds, I think that's a business that will respond well to the new merchandising approach they're taking. However, because it's a custom blinds business, it needs the associate in the store to help sell the product. And I'm concerned that they've gone deep on their associate cuts, and that may influence the rate of recovery despite the change in merchandising. Custom blinds require somebody to help a consumer through the experience, and I worry a little bit about JCP's choice to go deep, under the prior regime, to go deep on cutting back on those associates, which may not -- may cause our business not to recover as fast as we -- you might hope with the new merchandising strategy.

Okay. That makes sense. I guess, the second question I have was just thinking about your -- I hope I got the dates right, but your 2 years on the job here, and obviously, we know that there is this war chest of cost savings and that should be helped by -- even by the proceeds of the disposal down the road. If you could think about the cost of doing business, like which categories you're seeing that your expectations over the last 2 years have kind of changed that, there will be a lot more reinvestment into growing those businesses, especially in emerging markets down the road. So I was wondering if you could provide a little bit of context to how you're thinking about that.

Look, I think the longer I've been here, the more excited I get about the possibilities for our business. We have a lot of heavy lifting to do. We've had a lot of heavy lifting to do over the last 18, 20 months, and we have probably another year, a year and a bit of work of like sort to get the company repositioned completely to be able to drive accelerated performance. So I think I would expect our work plans to look very similar and our conversations with you to be very similar as we work through what's a serious amount of cost changes that we're driving. When I look at the businesses, I come back to the portfolio roll choices we made with the Growth Game Plan, and I believe they are right. So Commercial Products, Tools and Writing is our #1 priority. Home Solutions is the fourth pillar, with an opportunity for more coherence within that portfolio, but as a -- and an opportunity to grow but to grow differently than it historically has, so with less investment. Baby, of like kind. Baby is quickly becoming another Win Where We Are business as opposed to an incubate business. It's about winning differently, and we're proving that model out, that we do not need to put big brand support behind these businesses in the traditional sense. But with innovation and good selling systems and good insights, we can drive good growth. So my formula, the algorithm, hasn't really changed at this point. We're just beginning to broaden our footprint into the emerging markets, and you see the acceleration in Latin America as evidence of that. And we have a lot more to learn about how to grow and build brands there through the experiences we will have over the next 6, 12 months. And that learning may influence some of the choices we make with respect to where to invest, in what vehicles, whether it's advertising or whether it's in-store or whether it's e-based or in what businesses. So I think here we are 20 months in, I don't -- I'm not looking at this any differently than I was at the beginning other than having greater clarity in the sense of certainty around -- and a sense of confidence around our ability to do what we said we were going to do.

Okay. And here's just a last question, and hopefully I'm not putting quantification over qualification, but when you think about the guidance now, now you're saying 7% to 10% EPS growth for this year versus the numbers when you kind of pull out the discontinued businesses. And I know at CAGNY you talked about the middle of next year falling into that acceleration phase, which I think by definition is 6% to 9% EPS. So are you saying that acceleration is coming earlier, or am I just putting the numbers ahead of the actual qualifiers behind it?

No, we're not saying the acceleration is coming early. We have a lot of work to do to get the brand budgets to where they need to be. We made a determination that we want to get this portfolio sorted, so we've got a responsibility to cover the costs associated with doing that. And that means accelerating savings, not just through renewal, but in other ways through the business to do that. So I think the way to think about our forward-looking view is that we've got a 1-year event here where we need to -- we have a responsibility to our shareholders to cover the dilution effect and the retained costs issue that creating greater clarity within our portfolio creates. But our frame of reference for the Growth Game Plan is the same, and I'd encourage you to think about it that way.

Your next question comes from the line of Leigh Ferst with Wellington Shields. Leigh Ferst - Wellington Shields & Co., LLC, Research Division: Could you clarify what you're saying about your leadership team? You say it's in place, but you do refer to various changes. Is it that your direct reports are in place, but there's still changes in middle management?

The changes I was referring to are a level below my direct reports. And so we have a lot of changes going on, Leigh. And we have way more changes to drive over the coming year to 18 months, as I was saying. We put the leadership structure in place; we're now driving an organization through and into action in the company. When we talk about the marketing and R&D changes and say 30% of the costs are coming out, that's a significant change. And when we talk about Project Renewal, accelerating Project Renewal savings, that means we're going to do more cost work that involves people, structures and the like. And so while we're doing that, we're strengthening capabilities. Now my team is set, my leadership team is set, and I'm delighted, and we're really starting to kind of gain our stride. But there are more changes to be driven through the organization and they are substantial, and that's the only way the costs come out. Leigh Ferst - Wellington Shields & Co., LLC, Research Division: And you said the market conditions are right for sale and you referred to the economy, can I assume that there's a good deal environment also in terms of more buyers being interested?

Yes, well, I won't comment specifically on the deal because it's work-in-progress -- deals, because they are works in progress. But in the broader sense, cheap debt, lots of cash, good environment to be selling things. So -- and with the housing -- the housing starts are encouraging, but they're off a very, very low base relative to history. So there's much more upside there to be had. So for a prospective buyer that's in this business and views these assets as strategic, this is an excellent time to be buying, too, given the macro environment and the impending inevitable economic recovery and the inevitable real housing recovery. Because I think we're just sort of bouncing off the bottom at the moment. I read all the headlines, as you do Leigh, but I don't really view them as particularly credible when I look at the rate of new housing starts versus the historical numbers. They're way below still. Leigh Ferst - Wellington Shields & Co., LLC, Research Division: It'll be interesting to watch because we've achieved cheap debt and lots of cash for a while, so it's just intriguing to see.

This concludes our question-and-answer period. If we were unable to get to your question, please call the Investor Relations team at (770) 418-7075. I will now turn the call back to Mr. Polk for any concluding remarks.

I would just conclude by saying our confidence has been strengthened by the response of our employees to what is an incredible change agenda. They're embracing the changes we're making better than I expected, and along with what is good performance, I believe this gives us permission to change further and continue to press hard for the full opportunity to unlock our potential as a larger, faster-growing, more-global, more-profitable company. So I appreciate all the questions and the feedback, and I look forward to talking to you at our next opportunity.

Thank you. Today's call will be available on the web at newellrubbermaid.com and on digital replay at (855) 859-2056 with an access code of 43070102, starting 2 hours following the end of today's call. This concludes our conference. You may now disconnect.