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Newell Rubbermaid to sell Hardware business for $214 million

BY HBSDealer Staff

Newell Rubbermaid, Inc. is selling its Hardware business to Nova Capital, a firm that specializes in the acquisition of corporate and private equity portfolios, for $214 million.

Specifically, components of the sale include Newell’s Amerock, Ashland, Drapery Hardware, Bulldog and Shur-Line brands. Sales for 2013 came in at $255 million so far, with gross proceeds resting at $214 million.

The move is part of a larger initiative by Newell to streamline the company’s operations in order to reduce costs and buoy its focus on products with growth potential, according to the Wall Street Journal.

“The successful sale of our Hardware business will leave us with a focused, cohesive portfolio of brands in five core business segments, each of which have significant potential to grow through innovation, brand development and selective emerging market expansion," said president and CEO Michael Polk. "That’s the Growth Game Plan in action."

Nova investment partner David Jacobs said that he expects to see sustained growth in the Hardware business, due in part to the continued housing recovery and growth in the home improvement market. 

Nick Morrisroe, VP and general manager of Hardware for Newell Rubbermaid, will maintain his position overseeing the combined businesses.

The deal, which was advised by Rothschild, is set to close at some point next quarter.

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Communication about healthcare changes should start soon

BY Steve Bates

The Oct. 1, 2013, deadline for employers to provide employees with written notice about new health care exchanges should trigger employers’ efforts to help their workers understand a wide range of pending health care changes, benefits experts say.

They urge employers to work on their strategy for compliance with the Patient Protection and Affordable Care Act (PPACA or ACA) and to begin explaining how the law will affect employees. Benefits experts say that organizations should start their messaging immediately — beginning with the most timely and basic information and enhancing the conversation over time.

“Do something now, and hit them again later during open enrollment,” said Rhonda Newman, a senior partner in Mercer’s communication consulting business who is based in Dallas.

Employers in the U.S. must provide workers with one of two versions of a notice regarding health care exchanges developed by the U.S. Department of Labor. Exchanges, also called marketplaces, are being set up in each state — many are being created by the federal government for the states — to provide health insurance to those who cannot or choose not to obtain it through an employer. Starting Oct. 1, the exchanges are scheduled to accept applications for coverage beginning on Jan. 1, 2014.

Also in 2014, most Americans will face a penalty if they do not obtain health care coverage, though enforcement will probably be limited before 2015. Separate penalties affecting employers that provide no health care coverage or that offer insurance that fails to meet tests of affordability and minimum coverage — originally scheduled to take effect in 2014 — have been delayed until 2015 by the Obama administration.

Additional changes take effect in January 2014, including a 90-day maximum waiting period, caps on out-of-pocket minimums, new wellness plan rules and elimination of pre-existing condition limitations. And concerns remain among some employers, employees and policy experts that new delays or changes in the ACA might take place, such as through efforts announced by some congressional Republicans to remove funding for portions of the act. The confusion surrounding the law was underscored by a Kaiser Health Tracking Poll in April 2013 that found that about 40 percent of Americans didn’t know that the ACA was still in effect.

 

‘Uncertainty and Confusion’

“There is still quite a bit of uncertainty and confusion around the ACA,” said Ilyse Schuman, an attorney in Littler Mendelson’s employment practice in Washington, D.C., and co-chair of the Workplace Policy Institute. However, “It’s important for employers and HR to recognize that the [employer mandate] delay does not spell the end of the preparations for the ACA,” she stated.

“There’s a huge need for employer communication across the board,” said Jennifer Benz, founder and CEO of Benz Communications, an HR and benefits communication strategy firm based in San Francisco. Just sending employees a health exchange notice isn’t enough, she said. “All companies need to put some context around that notice.”

Communicating about health care changes gives employers an opportunity to explain what coverage they will offer, demonstrate the value of their benefits packages and emphasize their commitment to employee well-being, experts say.

“It’s a fundamental employee relations issue,” Schuman said. “It makes good business sense to try to help your employees understand this.”

Some employers have begun scheduling meetings with workers to discuss how the ACA will affect them. “We have clients sending out packets and doing newsletters,” Newman said. The manner in which the communication is accomplished is “a matter of what fits your culture.”

However, some organizations have held back on such plans because they believe that the ACA might be altered or because they are overwhelmed by the complex law and its implications.

Explaining the ACA to workers might get even more complicated during the fall of 2013 as some exchanges market their insurance plans aggressively. Employees will receive lots of communications about the exchanges in the mail and hear a great deal through the media. “There is going to be a lot of noise from external sources,” said Anita Doncaster, communication sales and strategies leader for Aon Hewitt. “It’s going to be like an election year.”

As the publicity escalates, “Employers are going to have their hands full answering questions from employees,” said Robert Laszewski, president of Health Policy and Strategy Associates in Alexandria, Va.

 

‘Keep It Simple’

Doncaster urges employers to “use all of the communication vehicles you’ve used in the past.” The focus should be: “What do your employees need to know, and when do they need to know it?” Above all, Doncaster said, “keep it simple.”

“It’s better to be on top of things than to procrastinate,” notes Kevin Kulhman, manager of legislative affairs for the Washington, D.C.-based National Federation of Independent Business. He said that in recent months more top executives are learning the details of health care reform and joining their HR staffs in developing messages for employees.

Benz said that employers should make it easy for workers to compare company-offered coverage with exchange-provided insurance plans. There is a danger that employees might enroll through exchanges and discover later that they do not qualify for an expected subsidy, she said. And employers might face higher health care costs if young and relatively healthy employees shun their plans, leaving them with mostly older and less healthy enrollees. She adds that educating employees about the exchanges is important because they might have family members or friends who can benefit from the information. 

 

Long-Range Thinking

While benefits experts generally agree that employers should focus messages in the short term on how the next round of health care changes will affect employees, some say that employers need a long-term strategy for complying with the ACA. Though two critical penalties for employers were delayed until 2015, employers are being urged to develop at least a tentative plan for 2015 and beyond. For example, employers need to keep in mind that if a low-income employee qualifies for a federal subsidy for exchange-provided coverage in 2014 and continues that coverage and subsidy in 2015, an employer penalty will be triggered in 2015.

“You absolutely have to have a multi-year plan,” said Rick Kahle, president of the Lockton Companies, a Kansas City, Mo.-based benefits broker and consulting firm. “You don’t have to make all the decisions now.”

“Smart employers will use this time to prepare for 2015,” said Alden Bianchi, the benefits practice group leader with law firm Mintz, Levin, Cohn, Ferris, Glovsky and Popeo in Boston. He noted that the delay related to the employer mandate isn’t as long as many employers believe because some accounting of hours worked will be required starting in early 2014.

Kahle said that employers with fewer than 50 employees—which will remain exempt from the federal mandate—are also entering a period of particularly significant change. “We’re having to talk about things with them that we have never talked about before,” such as the possibility of self-funding their health coverage or expanding their size to 50 or more full-time workers.

 

Spreading the Word

Yarco, a large family-owned property management company based in Kansas City, Mo., has been developing a comprehensive communications campaign about the exchanges and the ACA in general, says Jonathan R. Cohn, the company’s principal and CEO. Manager training started in June 2013. Helped by the Lockton Companies, Yarco developed “best-in-class” resources for its employees and scheduled e-mails, webinars, snail-mail messages and more.

Cohn says he believes that Yarco’s health benefits package is affordable and meets or exceeds federal standards for coverage that will apply in 2015. “We intend to play rather than pay,” he said. However, he recognizes that some Yarco workers might want to explore — and sign up for — coverage through his state’s exchange. “These decisions will be theirs to make. Our objective is to give them as much information as we can,” he said.

Cohn said that, although his managers have not been overwhelmed so far with questions or expressions of anxiety about health care changes, “there is some understandable confusion.” For example, he said, a manager was asked whether an employee would be forced to drop company-provided health care coverage if the employee’s spouse obtained coverage through an exchange.

Cohn said he has spoken about the ACA to a number of leaders at other companies, and “all of them are struggling with a number of different aspects of the law.” He advised HR leaders and other executives to “find other employers in your industry or other industries that you can use as a sounding board.”

But start talking with your employees right away, he added. “The sooner that the employer is getting the information in front of their employees, the better the relationship is with those employees.”

Steve Bates is a freelance writer based in the Washington, D.C., area and is a former writer and editor for SHRM.

Have HR-related questions and concerns? Get access to essential forms, policies and guides, plus a live call center, at ToolkitHR.com, powered by HCN and the Society for Human Resource Management (SHRM). 

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Sales decline at Central Garden & Pet

BY HBSDEALER Staff

Central Garden & Pet anticipated lower quarterly results, and it got them.

The Walnut Creek, Calif.-based marketer and producer of branded products for the lawn and garden and pet supplies markets reported net sales of $494.1 million in the third quarter ended June 29, down 7% from the same quarter last year.

Net income was $13.7 million, down from $22.7 million in the same quarter last year. 

“We anticipated lower results this quarter compared to strong sales and earnings gains a year ago; and although Pet performed in-line with our expectations, our Garden business did not,” said John Ranelli, president and CEO of Central Garden & Pet. “While our results for the quarter were disappointing, we are taking the right steps to strengthen our business for the future, including improving customer service and innovation, and identifying additional ways to take costs out of the business.

Net sales for the Pet segment for the quarter were $237.8 million, a decline of 12% from the third quarter of 2012, which included the benefit of the initial sell-in of high-margin flea and tick products to a new channel. 

Net sales for the Garden segment for the quarter were $256.3 million, a decline of 2% from the third quarter of 2012, due in part to lower sales of controls products.

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