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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
November 8, 2007
------------------------------------------
(Date of earliest event reported)
SPECTRUM BRANDS, INC.
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(Exact Name of Registrant as Specified in Charter)
Wisconsin 001-13615 22-2423556
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(State or other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
Six Concourse Parkway, Suite 3300, Atlanta, Georgia 30328
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(Address of principal executive offices, including zip code)
(770) 829-6200
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(Registrant's telephone number, including area code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
(a) The following information, including the Exhibit attached hereto, is being
furnished pursuant to this Item 2.02 and shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, except as shall be expressly set forth by specific
reference in such filing.
On November 8, 2007, Spectrum Brands, Inc. issued a press release discussing its
estimated financial results for its fiscal fourth quarter and fiscal full year
ended September 30, 2007. A copy of the press release is furnished as Exhibit
99.1 to this report.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) 99.1 Press Release dated November 8, 2007 issued by Spectrum Brands, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 8, 2007 SPECTRUM BRANDS, INC.
By: /s/ Anthony L. Genito
-----------------------------
Name: Anthony L. Genito
Title: Executive Vice President,
Chief Financial Officer and
Chief Accounting Officer
EXHIBIT INDEX
Exhibit Description
- ------- -----------
99.1 Press Release dated November 8, 2007 issued by Spectrum Brands, Inc.
Exhibit 99.1
Spectrum Brands Reports Fourth Quarter and
Fiscal 2007 Financial Results
Q4 Net Sales Increase 13 Percent
EBITDA Exceeds Previous Guidance
ATLANTA--(BUSINESS WIRE)--Nov. 8, 2007--Spectrum Brands, Inc.
(NYSE:SPC) announced fourth quarter net sales of $548.2 million and a
net loss of $6.60 per share for the quarter ended September 30, 2007.
Excluding certain items which management believes are not indicative
of the company's on-going normalized operations, the company generated
diluted earnings per share of $0.23. These items include:
-- a loss from discontinued operations, net of tax, of $178.8
million, or $3.55 per share, related to the company's Home &
Garden business, which is being held for sale, including a
$168.5 million non-cash charge related to the fair value of
this asset;
-- net tax adjustments of $126.7 million, or $2.51 per share,
which include the following:
-- a non-cash charge of $211.3 million, or $4.19 per share (of
which $54.2 million, or $1.08 per share, is included in the
loss from discontinued operations) reflecting an increase in
the valuation allowance against certain net deferred tax
assets; and
-- other tax benefit adjustments of $30.4 million, or $0.60
per share, which principally relate to the revaluation of
certain foreign deferred tax credits resulting from statutory
tax rate changes;
-- pretax restructuring and related charges of $36.6 million, or
$.47 per share, associated with company-wide cost reduction
initiatives;
-- a non-cash impairment charge of $24.4 million, or $.35 per
share, related to the value of certain tradenames; and
-- other items netting to a pretax benefit of $1.9 million, or
$.05 per share.
For the fourth quarter of 2006, the company reported a loss per
share of $8.88 including a non-cash pretax charge of $8.05 per share
relating to the impairment of certain long-lived intangible assets and
goodwill, a non-cash charge of $0.38 per share reflecting an increase
in the valuation allowance against certain net deferred tax assets, a
loss from discontinued operations of $0.35 per share, restructuring
and related charges of $0.28 per share and other non-cash benefits
totaling $0.01 per share.
Spectrum Brands' sales for the quarter were $548.2 million, an
increase of 13 percent, largely attributable to sales volume increases
and the impact of favorable foreign exchange rates. Segment profit
increased 54 percent to $76.4 million for the quarter due primarily to
increased sales and the impact of the company's cost restructuring
initiatives. On a constant currency basis, sales increased eight
percent and segment profit increased 48 percent. Adjusted EBITDA,
including EBITDA from Home & Garden, was $92 million as compared with
$58 million in the prior year.
Chief Executive Officer Kent Hussey stated, "We are pleased with
the overall improvement in sales, EBITDA and segment profitability
during the quarter. We are particularly pleased that the improvement
represented both sales and profitability growth in each of our
business segments, including our Home & Garden business. Our fourth
quarter performance improvement was driven by a combination of sales
volume growth and the benefits from the restructuring actions we took
over the last two years to better control our costs. We believe this
positive momentum demonstrates that we are taking the appropriate
steps to deliver sustainable operating profitability improvement and
create long-term shareholder value. We believe these positive trends
will continue in fiscal year 2008."
Gross profit and gross margin for the quarter were $198.6 million
and 36.2 percent, respectively, versus $168.0 million and 34.5 percent
for the same period last year. Restructuring and related charges of
$14.6 million were included in the current quarter's cost of goods
sold; cost of goods sold in the comparable period last year included
$18.0 million in similar charges. Excluding these restructuring and
related charges, gross margin improved as the positive impact of
volume increases and manufacturing cost efficiencies offset increased
raw material costs.
Spectrum generated fourth quarter operating income of $7.2 million
versus an operating loss of $415.3 million last year. The current
quarter included $22.0 million in restructuring and related charges
within operating expenses; last year's operating expenses included
$3.1 million. Fiscal year 2006 results also included a $433.0 million
non-cash charge related to the value of certain trade names and
goodwill. Absent these amounts, operating income increased largely due
to increased sales and lower costs as a result of the restructuring
initiatives implemented across the organization.
Fourth Quarter Segment Results
The Global Batteries and Personal Care segment reported net sales
of $400.4 million, an improvement of 16 percent compared with $346.0
million reported last year. Foreign exchange translation contributed
$19.4 million. Global battery sales showed year over year growth of
nine percent. North American battery sales volumes were positively
impacted by a move on the part of several retailer customers to ship
in holiday related merchandise earlier than was the case in the prior
year, contributing to sales growth of three percent. In Europe,
battery sales improved eleven percent as a result of increased volume
and the positive impact of the strong Euro. Latin American battery
sales generated year over year growth of twelve percent. Sales of
Remington branded products grew 36 percent worldwide during the
quarter, attributable to retailer requirements for earlier shipments
of holiday related merchandise and increased distribution and market
share gains in Europe. Segment profitability for Global Batteries and
Personal Care was $54.5 million versus last year's $31.6 million. In
addition to increased sales, the profit improvement was driven by
lower operating expenses resulting from cost cutting initiatives
throughout the business.
Global Pet Supplies net sales were $147.8 million, a five percent
increase as compared with the prior year. Companion animal product
sales grew ten percent, while global aquatics sales increased three
percent. Favorable foreign exchange translation contributed $2.1
million. Segment profitability for the quarter was $21.9 million
compared with $18.0 million last year, primarily a function of
increased sales and a reduction in segment general and administrative
expense.
Spectrum's Home & Garden business, which is held for sale,
generated a loss from discontinued operations of $178.8 million during
the quarter as compared with a $17.3 million loss in the prior year.
Net sales grew two percent. Excluding the $168.5 million non-cash
impairment charge (discussed in more detail below), the fourth quarter
loss in the quarter improved as compared with last year reflecting the
benefit of cost-cutting measures implemented throughout this business
Corporate expense was $8.2 million versus $10.8 million in the
prior year period. The improvement was primarily attributable to
headcount reductions and other cost savings associated with the global
realignment announced in January.
Interest expense increased to $53.1 million from $31.9 million in
the comparable prior year period, primarily due to higher debt levels
and higher interest rates.
Asset Impairment Charges
Under Statement of Financial Accounting Standards (SFAS) No. 142,
"Goodwill and Other Intangible Assets", companies are required to test
goodwill and indefinite-lived intangibles for impairment annually, or
more often if an event or circumstance indicates that an impairment
loss may have been incurred. In accordance with SFAS 142, Spectrum
Brands, with the assistance of independent third party valuation
specialists, conducted its annual impairment testing of goodwill and
indefinite-lived intangible assets. As a result of these analyses the
company recorded a non-cash impairment charge of $24.4 million,
primarily related to its Varta brand. The impairment will not result
in any future cash expenditures.
SFAS No. 144, "Impairments of Long-Lived Assets and Discontinued
Operations," requires assets classified as held for sale to be
measured at the lower of their carrying amount or fair value less
costs to sell. Spectrum Brands, with the assistance of third party
advisors, has revised its estimate of the fair value of its assets
held for sale, and has recorded a non-cash impairment charge of $168.5
million, net of tax, related to this business. The impairment will not
result in any future cash expenditures.
Fiscal Year 2007 Results
For the year ended September 30, 2007, the company recorded a net
loss of $596.7 million, or $11.72 per diluted share, compared to a net
loss of $434.0 million, or $8.77 per diluted share, last year.
Included in the current year's results are:
-- a non-cash pretax impairment charge of $238.4 million, or
$4.10 per share, related to the value of certain trade names
and goodwill;
-- a loss from discontinued operations, net of tax, of $184.6
million, or $3.63 per share, related to the company's Home &
Garden business, which is held for sale, and which includes a
$168.5 million non-cash charge related to the fair value of
this asset in accordance with SFAS No. 144;
-- net tax adjustments of $126.7 million, or $2.49 per share,
which include the following:
-- a non-cash charge of $211.3 million, or $4.15 per share,
(of which $54.2 million, or $1.07 per share, is included in
the loss from discontinued operations) reflecting an increase
in the valuation allowance against certain net deferred tax
assets; and
-- other tax benefit adjustments of $30.4 million, or $.60 per
share, which principally relate to the revaluation of certain
foreign deferred credits resulting from statutory tax rate
changes;
-- pretax restructuring and related charges of $91.0 million, or
$1.16 per share, primarily related to the global realignment
and cost cutting programs initiated during fiscal 2007;
-- $36.2 million, or $0.46 per share, of pretax charges
associated with a pre-payment premium incurred in connection
with the refinancing of the company's senior credit facility
and the write-off of deferred financing fees;
-- professional fees of $2.5 million, or $.05 per share, incurred
in connection with the sale of the Company's Home & Garden
business, discontinued effective October 1, 2006; and
-- other non-cash benefits totaling $0.15 per share.
The net impact of these items is a decrease in the current year's
net loss of $597.8 million, or $11.74 per share.
Fiscal 2006 results included:
-- a non-cash pretax charge of $433.0 million, or $8.05 per
share, related to the impairment of goodwill and certain
long-lived intangible assets;
-- pretax restructuring and related charges of $34.7 million, or
$.47 per share, primarily related to the integration of
acquisitions and the company's European restructuring
programs;
-- a non-cash charge in the amount of $18.9 million, or $.38 per
share, increasing the valuation allowance against certain net
deferred tax assets;
-- a loss from discontinued operations, net of tax, of $18.5
million, or $.37 per share, related to the company's Home &
Garden business and the fertilizer technology and Canadian
professional fertilizer business of Nu-Gro, which were held
for sale;
-- a pretax gain on the sale of assets in the amount of $8.0
million, or $.10 per share; and
-- other non-cash benefits totaling $0.01 per share.
The net impact of these items is a decrease in fiscal 2006 net
loss of $453.0 million, or $9.16 per share.
Webcast Information
Spectrum Brands will hold a conference call at 10:00 a.m. ET on
November 8 to further discuss its fourth quarter results. The call
will be accessible via webcast through the company's website,
www.spectrumbrands.com, and will be archived online until November 22.
Non-GAAP Measurements
Within this release, reference is made to adjusted diluted
earnings per share and adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA). See attached Table 3,
"Reconciliation of Diluted Earnings Per Share to Adjusted Diluted
Earnings Per Share," for a complete reconciliation of diluted earnings
per share on a GAAP basis to adjusted diluted earnings per share, and
Table 4, "Reconciliation of Net Income to Adjusted EBITDA", for a
reconciliation of net income to adjusted EBITDA. Adjusted EBITDA is a
metric used by management and frequently used by the financial
community which provides insights into an organization's operating
trends and facilitates comparisons between peer companies, since
interest, taxes, depreciation and amortization can differ greatly
between organizations as a result of differing capital structures and
tax strategies. Adjusted EBITDA can also be a useful measure of a
company's ability to service debt and is one of the measures used for
determining debt covenant compliance. Adjusted EBITDA excludes certain
elements of earnings that are unusual in nature or not comparable from
period to period. In addition, Spectrum Brands' management uses
adjusted diluted earnings per share as one means of analyzing the
company's current and future financial performance and identifying
trends in its financial condition and results of operations. Spectrum
Brands provides this information to investors to assist in comparisons
of past, present and future operating results and to assist in
highlighting the results of on-going operations. While Spectrum Brands
management believes that adjusted diluted earnings per share and
adjusted EBITDA are useful supplemental information, such adjusted
results are not intended to replace the company's GAAP financial
results and should be read in conjunction with those GAAP results.
About Spectrum Brands, Inc.
Spectrum Brands is a global consumer products company and a
leading supplier of batteries, portable lighting, lawn and garden
products, household insect control, shaving and grooming products,
personal care products and specialty pet supplies. Spectrum Brands'
products are sold by the world's top 25 retailers and are available in
more than one million stores in 120 countries around the world.
Headquartered in Atlanta, Georgia, Spectrum Brands generated fiscal
year 2007 net sales of $2.0 billion and has approximately 7,500
employees worldwide. The company's stock trades on the New York Stock
Exchange under the symbol SPC.
Certain matters discussed in this news release, with the exception
of historical matters, may be forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are subject to a number of risks and uncertainties that
could cause results to differ materially from those anticipated as of
the date of this release. Actual results may differ materially as a
result of (1) changes in external competitive market factors, such as
introduction of new product features or technological developments,
development of new competitors or competitive brands or competitive
promotional activity or spending, (2) changes in consumer demand for
the various types of products Spectrum Brands offers, (3) fluctuations
in commodities prices, the costs or availability of raw materials or
terms and conditions available from suppliers, (4) changes in the
general economic conditions where Spectrum Brands does business, such
as stock market prices, interest rates, currency exchange rates,
inflation and consumer spending, (5) the company's ability to
successfully implement manufacturing, distribution and other cost
efficiencies and to continue to benefit from its cost-cutting
initiatives, and various other risks and uncertainties, including
those discussed herein and those set forth in Spectrum Brands'
securities filings, including the most recently filed Annual Report on
Form 10-K or Quarterly Report on Form 10-Q. Spectrum Brands also
cautions the reader that its estimates of trends, market share, retail
consumption of its products and reasons for changes in such
consumption are based solely on limited data available to Spectrum
Brands and management's reasonable assumptions about market
conditions, and consequently may be inaccurate, or may not reflect
significant segments of the retail market.
The company also cautions the reader that undue reliance should
not be placed on any forward-looking statements, which speak only as
of the date of this release. Spectrum Brands undertakes no duty or
responsibility to update any of these forward-looking statements to
reflect events or circumstances after the date of this report or to
reflect actual outcomes.
Attached
Table 1 - Condensed Consolidated Statements of Operations
Table 2 - Supplemental Financial Data
Table 3 - Reconciliation of Diluted Earnings Per Share to Adjusted
Diluted Earnings Per Share
Table 4 - Reconciliation of Net Income to EBITDA
Table 1
SPECTRUM BRANDS, INC.
Condensed Consolidated Statements of Operations
For the three months and fiscal years ended September 30, 2007 and
September 30, 2006
(Unaudited)
(In millions, except per share amounts)
THREE MONTHS
----------------------------
F2007 F2006 INC
(a) (DEC)
-------- --------
%
Net sales $548.2 $486.3 12.7%
Cost of goods sold 335.0 300.3
Restructuring and related charges 14.6 18.0
-------- --------
Gross profit 198.6 168.0 18.2%
Selling 100.5 101.5
General and administrative 39.0 38.0
Research and development 5.5 7.7
Restructuring and related charges 22.0 3.1
Goodwill and intangibles impairment (a) 24.4 433.0
-------- --------
Total operating expenses 191.4 583.3
Operating income (loss) 7.2 (415.3)
Interest expense 53.1 31.9
Other (income) expense, net (4.8) 1.3
-------- --------
Loss from continuing operations before
income taxes (41.1) (448.5)
Income tax expense (benefit) (b) 113.1 (26.4)
-------- --------
Loss from continuing operations (154.2) (422.1)
Loss from discontinued operations, net of
tax (178.8)(c) (17.3)(d)
-------- --------
Net loss $(333.0) $(439.4)
======== ========
Average shares outstanding (e) 50.4 49.5
Loss from continuing operations $(3.05) $(8.53)
Loss from Discontinued operations (3.55) (0.35)
-------- --------
Basic loss per share $(6.60) $(8.88)
======== ========
Average shares and common stock
equivalents outstanding (e) (f) 50.4 49.5
Loss from continuing operations $(3.05) $(8.53)
Loss from Discontinued operations (3.55) (0.35)
-------- --------
Diluted loss per share $(6.60) $(8.88)
======== ========
FISCAL YEAR
------------------------------
F2007 F2006 (a) INC
(DEC)
--------- ---------
%
Net sales $1,994.5 $1,894.7 5.3%
Cost of goods sold 1,226.9 1,165.0
Restructuring and related charges 31.3 22.5
--------- ---------
Gross profit 736.3 707.2 4.1%
Selling 420.3 394.0
General and administrative 154.2 157.9
Research and development 25.2 29.2
Restructuring and related charges 59.7 12.2
Goodwill and intangibles impairment (a) 238.4 433.0
--------- ---------
Total operating expenses 897.8 1,026.3
Operating income (loss) (161.5) (319.1)
Interest expense 195.2 123.0
Other (income) expense, net (0.3) (3.9)
--------- ---------
Loss from continuing operations
before income taxes (356.4) (438.2)
Income tax expense (benefit) (b) 55.7 (22.7)
--------- ---------
Loss from continuing operations (412.1) (415.5)
Loss from discontinued operations, net
of tax (184.6)(c) (18.5)(d)
--------- ---------
Net loss $(596.7) $(434.0)
========= =========
Average shares outstanding (e) 50.9 49.5
Loss from continuing operations $(8.09) $(8.40)
Loss from Discontinued operations (3.63) (0.37)
--------- ---------
Basic loss per share $(11.72) $(8.77)
========= =========
Average shares and common stock
equivalents outstanding (e) (f) 50.9 49.5
Loss from continuing operations $(8.09) $(8.40)
Loss from Discontinued operations (3.63) (0.37)
--------- ---------
Diluted loss per share $(11.72) $(8.77)
========= =========
Note: The Company's Home & Garden business, discontinued effective
October 1, 2006, is excluded from continuing operations for all
periods presented. Certain amounts have been reclassified in the
three months and year ended September 30, 2006 to conform to the
current year classification and present this business as discontinued
operations.
(a) For the three months and fiscal year ended September 30, 2007,
reflects a non-cash charge related to the impairment of certain
indefinite lived intangible assets (tradenames). For the three months
and fiscal year ended September 30, 2006, reflects a non-cash charge
related to the impairment of certain indefinite lived assets
(tradenames) and goodwill.
(b) For the three months and fiscal year ended September 30, 2007,
reflects a non-cash charge of $157.1 million reflecting an increase
in the valuation allowance against certain U.S. net deferred tax
assets. For the three months and fiscal year ended September 30,
2006, reflects a non-cash charge of $18.9 million reflecting a
valuation allowance against certain U.S. net deferred tax assets.
(c) For the three months and fiscal year ended September 30, 2007,
reflects the loss from discontinued operations, net of tax, of the
Company's Home & Garden business, discontinued effective October 1,
2006. Such loss includes a $168.5 million non-cash charge related to
an impairment of the net assets held for sale of the discontinued
Home & Garden business and a non-cash charge of $54.2 million
reflecting a valuation allowance against certain U.S. net deferred
tax assets related to the discontinued Home & Garden business.
(d) For the three months and fiscal year ended September 30, 2006,
reflects the loss from discontinued operations, net of tax, of the
Home & Garden business segment, discontinued effective October 1,
2006. In addition, the fiscal year ended September 30, 2006 includes
the fertilizer technology and Canadian professional fertilizer
businesses of Nu-Gro, disposed of in January 2006.
(e) Per share figures calculated prior to rounding.
(f) For the three months and fiscal year ended September 30, 2007, we
have not assumed the exercise of common stock equivalents as the
impact would be antidilutive.
Table 2
SPECTRUM BRANDS, INC.
Supplemental Financial Data
For the three months and fiscal years ended September 30, 2007 and
September 30, 2006
(Unaudited)
($ in millions)
Supplemental Financial Data F2007 F2006
- ------------------------------ --------- ---------
Cash $ 69.9 $ 28.4
Trade receivables, net (a) $ 311.0 $ 329.3
Days Sales Outstanding (b) 44 46
Inventory, net (a) $ 317.5 $ 460.7
Inventory Turnover (c) 3.9 3.3
Total Debt $2,460.4 $2,277.2
THREE MONTHS FISCAL YEAR
------------------- -------------------
Supplemental Cash Flow Data F2007 F2006 F2007 F2006
- ------------------------------ --------- --------- --------- ---------
Depreciation and amortization,
excluding amortization of
debt issuance costs $ 16.7 $ 17.2 $ 77.4 $ 70.5
Capital expenditures $ 3.7 $ 8.0 $ 22.1 $ 54.9
THREE MONTHS FISCAL YEAR
------------------- -------------------
Supplemental Segment Sales &
Profitability F2007 F2006 F2007 F2006
- ------------------------------ --------- --------- --------- ---------
Net Sales
- ------------------------------
Global Batteries & Personal
Care $ 400.4 $ 346.0 $1,431.5 $1,351.5
Global Pet Supplies 147.8 140.3 563.0 543.2
--------- --------- --------- ---------
Total net sales $ 548.2 $ 486.3 $1,994.5 $1,894.7
========= ========= ========= =========
Segment Profit
- ------------------------------
Global Batteries & Personal
Care $ 54.5 $ 31.6 $ 143.9 $ 117.4
Global Pet Supplies 21.9 18.0 71.0 72.5
--------- --------- --------- ---------
Total segment profit 76.4 49.6 214.9 189.9
Corporate 8.2 10.8 47.0 41.3
Restructuring and related
charges 36.6 21.1 91.0 34.7
Goodwill and intangibles
impairment 24.4 433.0 238.4 433.0
Interest expense 53.1 31.9 195.2 123.0
Other (income) expense, net (4.8) 1.3 (0.3) (3.9)
--------- --------- --------- ---------
Loss from continuing
operations before income
taxes $ (41.1) $ (448.5) $ (356.4) $ (438.2)
========= ========= ========= =========
Note: As of January 1, 2007, the Company began managing its business
in three reportable segments: (i) Global Batteries & Personal Care,
which consists of the Company's world-wide battery, shaving and
grooming, personal care and portable lighting business; (ii) Global
Pet Supplies, which consists of the acquired United Pet Group, Tetra
and Jungle Labs businesses; and (iii) Home & Garden, which consists
of the discontinued Home and Garden Business. In connection with this
realignment of reportable segments, costs associated with Global
Operations, consisting of research and development, manufacturing
management, global purchasing, quality operations and inbound supply
chain, which were previously reflected in Corporate expenses, have
been embedded within each of the operating segments. In addition,
certain general and administrative expenses necessary to reflect the
operating segments on a stand alone basis, which were previously
reflected as Corporate expenses, have been allocated to the operating
segments.
Accordingly, Corporate expenses include only those general and
administrative expenses associated with corporate overhead and long-
term compensation plans. All prior periods presented above have been
restated to reflect the changes described above.
(a) Trade receivables, net and Inventory, net as of September 30, 2007
exclude amounts related to our discontinued Home & Garden business as
these amounts are classified as Assets held for sale, effective
October 1, 2006. Comparable balances as of September 30, 2006 include
amounts for our Home & Garden business.
(b) Reflects actual days sales outstanding at end of period.
(c) Reflects cost of sales (excluding restructuring and related
charges) during the last twelve months divided by inventory as of the
end of the period.
Table 3
SPECTRUM BRANDS, INC.
Reconciliation of GAAP to Adjusted Diluted Earnings Per Share
For the three months and fiscal years ended September 30, 2007 and
September 30, 2006
(Unaudited)
THREE MONTHS FISCAL YEAR
----------------- ------------------
F2007 F2006 F2007 F2006
------- ------- -------- -------
Diluted loss per share, as
reported $(6.60) $(8.88) $(11.72) $(8.77)
Adjustments, net of tax:
Restructuring and related
charges 0.47 (a) 0.28 (b) 1.16 (c) 0.47 (d)
Gain on sale of assets - - - (0.10)(e)
Goodwill and intangibles
impairment 0.35 (f) 8.05 (g) 4.10 (f) 8.05 (g)
Re-financing costs - - 0.46 (h) -
Disposition costs - - 0.05 (i) -
Discontinued operations 3.55 (j) 0.35 (k) 3.63 (j) 0.37 (k)
Tax related adjustments 2.51 (l) 0.38 (m) 2.49 (l) 0.38 (m)
Other adjustments (0.05)(n) (0.01)(o) (0.15)(p) (0.01)(q)
------- ------- -------- -------
6.83 9.05 11.74 9.16
Basic earnings per share, as
adjusted $ 0.23 $ 0.17 $ 0.02 $ 0.39
======= ======= ======== =======
Note: Per share figures calculated prior to rounding.
(a) For the three months ended September 30, 2007, reflects $23.8
million, net of tax, of restructuring and related charges as follows:
(i) $4.1 million for the integration of United and Tetra; (ii) $7.2
million for a series of actions in Europe and Latin America to reduce
operating costs and rationalize operating structure; and (iii) $12.5
million for the Global restructuring announced January 10, 2007.
(b) For the three months ended September 30, 2006, reflects $13.7
million, net of tax, of restructuring and related charges as follows:
(i) $1.9 million primarily for the integration of United and Tetra and
(ii) $9.7 million for a series of actions in Europe to reduce
operating costs and rationalize operating structure; and (iii) $2.1
million for other initiatives.
(c) For the fiscal year ended September 30, 2007, reflects $59.2
million, net of tax, of restructuring and related charges as follows:
(i) $14.7 million for the integration of United and Tetra; (ii) $11.6
million for a series of actions in Europe and Latin America to reduce
operating costs and rationalize operating structure; and (iii) $32.9
million for the Global restructuring announced January 10, 2007.
(d) For the fiscal year ended September 30, 2006, reflects $23.2
million, net of tax, of restructuring related charges as follows: (i)
$6.6 million primarily for the integration of United and Tetra and
(ii) $14.2 million for a series of actions in Europe to reduce
operating costs and rationalize operating structure; and (iii) $2.4
million for other initiatives.
(e) For the fiscal year ended September 30, 2006, reflects a $5.1
million, net of tax, gain on sale of our Bridgeport, CT and Madison,
WI manufacturing facilities.
(f) For the three months and fiscal year ended September 30, 2007,
reflects an impairment charge of $17.6 million and $208.8 million,
respectively, net of tax, for certain intangible assets written off as
a result of our annual impairment evaluation in accordance with SFAS
142, "Goodwill and Other Intangible Assets."
(g) For the three months and fiscal year ended September 30, 2006,
reflects an impairment charge of $398.3 million, net of tax, for
certain goodwill and intangible assets written off as a result of our
annual impairment evaluation in accordance with SFAS 142, "Goodwill
and Other Intangible Assets."
(h) For the fiscal year ended September 30, 2007 reflects $23.5
million, net of tax, of charges associated with a refinancing of the
Company's debt as follows: (i) $16.0 million write-off of deferred
financing fees associated with the Senior term debt and the $350
million 8 1/2% Senior subordinated notes and (ii) $7.6 million
pre-payment penalty associated with the Senior term debt. The above
charges have been included in interest expense.
(i) For the fiscal year ended September 30, 2007 general and
administrative expenses include $2.5 million, net of tax, representing
professional fees incurred in connection with the sale of the
Company's Home & Garden business discontinued effective October 1,
2006.
(j) For the three months and fiscal year ended September 30, 2007,
reflects the loss from discontinued operations, net of tax, of the
Company's Home & Garden business, discontinued effective October 1,
2006.
(k) For the three months and fiscal year ended September 30, 2006,
reflects the loss from discontinued operations, net of tax, of the
Home & Garden business segment, discontinued effective October 1,
2006. In addition, the fiscal year ended September 30, 2006 includes
the fertilizer technology and Canadian professional fertilizer
businesses of Nu-Gro, disposed of in January 2006.
(l) For the three months and fiscal year ended September 30, 2007,
reflects a non-cash charge of $126.7 million necessary to increase the
valuation allowance against certain net deferred tax assets, the
revaluation of deferred tax liabilities as a result of changes in
foreign statutory tax rates, and other tax-related matters.
(m) For the three months and fiscal year ended September 30, 2006,
reflects non-cash charge of $18.9 million necessary to increase the
valuation allowance against certain net deferred tax assets.
(o) For the three months ended September 30, 2007, general and
administrative expenses include $1.6 million, net of tax benefit,
related to expiring taxes and related penalties, associated with the
Company's provision for presumed credits applied to the Brazilian
excise tax on manufactured products, which expired in the current
period. Interest expense includes $.4 million, net of tax benefit,
related to interest charges associated with the Company's provision
for presumed credits applied to the Brazilian excise tax on
manufactured products.
(n) For the three months ended September 30, 2006, general and
administrative expenses include $1.1 million, net of tax benefit,
related to expiring taxes and related penalties, associated with the
Company's provision for presumed credits applied to the Brazilian
excise tax on manufactured products, which expired in the current
period. In addition, interest expense includes $.3 million, net of tax
benefit, related to interest charges associated with the Company's
provision for presumed credits applied to the Brazilian excise tax on
manufactured products.
(p) For the fiscal year ended September 30, 2007, general and
administrative expenses include $5.7 million, net of tax benefit,
related to expiring taxes and related penalties, associated with the
Company's provision for presumed credits applied to the Brazilian
excise tax on manufactured products, which expired in the current
period. In addition, interest expense includes $1.9 million, net of
tax benefit, related to interest charges associated with the Company's
provision for presumed credits applied to the Brazilian excise tax on
manufactured products.
(q) For the fiscal year ended September 30, 2006, general and
administrative expenses include $2.5 million, net of tax benefit,
related to expiring taxes and related penalties, associated with the
Company's provision for presumed credits applied to the Brazilian
excise tax on manufactured products, which expired in the current
period. In addition, interest expense includes $.6 million related to
interest charges associated with the Company's provision for presumed
credits applied to the Brazilian excise tax on manufactured products.
In addition, cost of goods sold includes $.1 million, net of tax
expense, reflecting an inventory valuation adjustment related to the
fair value write-up of Jungle Lab inventory in accordance with the
requirements of SFAS 141.
Table 4
SPECTRUM BRANDS, INC.
Reconciliation of GAAP Net Income to EBITDA
For the fiscal years ended September 30, 2007 and September 30, 2006
(Unaudited)
($ in Millions)
Fiscal Year
-----------------
F2007 F2006
-------- --------
1st Six Months
- ----------------------------------------------------
Net (Loss) Income $(256.3) $ 2.9
Income tax (benefit) expense: Continuing Operations (49.2) 4.5
Income tax (benefit) expense: Discontinued
Operations (8.3) 5.2
Interest Expense: Discontinued Operations 31.7 25.0
Interest Expense: Continuing Operations 101.0 59.7
Depreciation and Amortization 36.5 43.4
Restructuring and Related Charges: Continuing
Operations 23.8 6.7
Restructuring and Related Charges: Discontinued
Operations 3.6 6.3
Brazilian IPI Credit (a) (4.2) (0.3)
Goodwill Impairment (b) 214.0 -
Professional fees - H&G Sale Process (c) 3.9 -
Gain on Asset Sales (d) - (8.0)
-------- --------
EBITDA $ 96.4 $ 145.3
======== ========
2nd Six Months
- ----------------------------------------------------
Net Loss $(340.4) $(436.9)
Income tax (benefit) expense: Continuing Operations 104.9 (32.0)
Income tax (benefit) expense: Discontinued
Operations 2.2 1.4
Interest Expense: Discontinued Operations 30.1 29.3
Interest Expense: Continuing Operations 94.2 63.3
Restructuring and Related Charges: Continuing
Operations 67.2 28.2
Restructuring and Related Charges: Discontinued
Operations 3.7 15.0
Depreciation and Amortization 31.0 43.5
Brazilian IPI Credit (a) (4.5) (3.4)
Goodwill and Intangibles Impairment (b) 24.4 433.0
Discontinued Operations Asset Impairment (e) 168.5 -
-------- --------
EBITDA $ 181.1 $ 141.3
======== ========
Full Year
- ----------------------------------------------------
Net Loss $(596.7) $(434.0)
Income tax (benefit) expense: Continuing Operations 55.7 (27.6)
Income tax (benefit) expense: Discontinued
Operations (6.1) 6.6
Interest Expense: Discontinued Operations 61.8 54.3
Interest Expense: Continuing Operations 195.3 123.0
Restructuring and Related Charges: Continuing
Operations 91.0 34.9
Restructuring and Related Charges: Discontinued
Operations 7.3 21.3
Depreciation and Amortization 67.5 86.9
Brazilian IPI Credit (a) (8.7) (3.7)
Gain on Asset Sales (d) - (8.0)
Goodwill and Intangible Impairment (b) 238.4 433.0
Professional fees - H&G Sale Process (c) 3.9 -
Discontinued Operations Asset Impairment (e) 168.5 -
-------- --------
EBITDA $ 277.5 $ 286.6
======== ========
(a) Represents the benefit related to expiring penalties associated
with the Company's provision for presumed credits applied to the
Brazilian excise tax on manufactured products, which expire in the
respective period.
(b) Represents the gain on sale of the Company's Bridgeport, CT and
Madison, WI manufacturing facilities.
(c) Reflects professional fees incurred in connection with the sale of
the Company's Home & Garden business.
(d) Represents the impairment of goodwill and intangibles written off
as a result of a performed evaluation in accordance with SFAS No.
142, "Goodwill and Other Intangible Assets."
(e) Represents the impairment of assets held for sale written off as a
result of a performed evaluation in accordance with SFAS No. 144
("Impairments of Long-Lived Assets and Discontinued Operations").
CONTACT: Spectrum Brands, Inc.
Investor Relations:
Nancy O'Donnell, VP Investor Relations, 770-829-6208
or
Media Relations:
Sard Verbinnen & Co. (for Spectrum Brands)
Victoria Hofstad or Jamie Tully, 212-687-8080