Newell Rubbermaid (NWL), the maker of Sharpie pens, Calphalon cookware and Rubbermaid containers, reported better-than-expected third-quarter results and raised its outlook. The quarterly earnings of 38 cents a share beat the Zacks Consensus Estimate of 35 cents and climbed 8.6% from 35 cents reported in the prior-year quarter.

On a reported basis including one-time items, quarterly earnings came in at 28 cents, up 40% from 20 cents reported in the prior-year quarter.

Management now expects fiscal year 2009 earnings in the range of $1.27 to $1.32 per share, as against $1.15 to $1.30 forecasted earlier. For the fourth quarter, earnings are expected between 23 cents and 28 cents a share.

Despite a double-digit fall of 17.7% in revenue to $1,449 million, Newell’s bottom line benefited from the exit of certain line of products, lower cost of products sold and effective cost management. Consequently, Newell’s gross margin expanded 480 basis points to 37.4%. However, the planned exit from less profitable products adversely affected revenue by 6%.

Management expects fiscal year 2009 revenue to decline in the range of 10% to 15%, with planned product exits being responsible for a 4% to 6% decline in revenue. For the fourth quarter, revenue is expected to fall between 2% and 4% with planned product line exits expected to negatively impact revenue by 3% to 5%.

During the quarter, Newell generated operating cash flow of $327.7 million that surpassed the company’s guidance of $200 million to $250 million. Management expects operating cash flow to be approximately $135 million and $550 million during the fourth quarter and fiscal year 2009, respectively.

Newell ended the quarter with cash and cash equivalents of $313 million and total long-term debt of 2,592.9 million, representing debt-to-capitalization ratio of 58.5%. The company generated free cash flow of $290.7 million during the quarter.

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