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 (Date of earliest event reported):
July
14, 2008 (July 13, 2008)
SPECTRUM
BRANDS, INC.
(Exact
name of registrant as specified in its charter)
|
Wisconsin
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001-13615
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22-2423556
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|||
|
(State
or Other Jurisdiction of Incorporation)
|
(Commission
File Number)
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(IRS
Employer Identification Number)
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|||
|
Six
Concourse Parkway, Suite 3300
Atlanta,
Georgia
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30328
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||||
|
(Address
of Principal Executive Offices)
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(Zip
Code)
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||||
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(770)
829-6200
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|||||
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(Registrant’s
telephone number, including area code)
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|||||
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N/A
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|||||
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(Former
name or former address, if changed since last
report)
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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 (see General Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.02. Termination of a Material Definitive Agreement.
On
May
21, 2008, Spectrum Brands, Inc., a Delaware corporation (the "Company"),
publicly announced that it entered into a purchase agreement, dated as of May
20, 2008 (the "Purchase
Agreement"),
with
Salton Inc., a Delaware corporation ("Salton"),
and
its wholly owned subsidiary, Applica Pet Products LLC ("Applica"),
for
the sale of the Company's Global Pet Business. The Company has been unable
to
obtain the consent of the lenders under its senior term loan agreement, a
condition precedent to the sale under the Purchase Agreement.
On
July
13, 2008, the Company entered into a termination agreement (the "Termination
Agreement")
with
Salton and Applica to mutually terminate the Purchase Agreement. Under the
Termination Agreement, as a condition to the termination, the Company agreed
to
pay Salton and Applica within 2 business days $3 million as a reimbursement
of
expenses. In connection with the termination, the Company also agreed to
terminate the standstill period under the Company's Confidentiality Agreement,
dated February 26, 2008, with Harbinger Capital Partners Master Fund I Ltd.
and
Harbinger Capital Special Situations Fund, L.P., affiliates of Salton
(collectively, "Harbinger")
and to
terminate Harbinger's limited guarantees related to the Purchase
Agreement.
The
foregoing description of the Termination Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of
the
Termination Agreement, which is attached as Exhibit 10.1 and incorporated herein
by reference.
On
July
14, 2008, the Company issued a press release publicly announcing the
termination. A copy of the press release is attached hereto as Exhibit
99.1.
Forward
Looking Information
Certain
statements in this report are forward-looking statements which includes all
statements other than those made solely with respect to historical fact.
Forward-looking statements speak only as of the date on which they are made,
and
we undertake no obligation to update or revise any forward-looking statements.
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) the risk that
the termination disrupts current plans and operations; (2) difficulty or
unanticipated expenses in connection with the termination; (3) changes and
developments 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, (4)
changes in consumer demand for the various types of products the Company offers,
(5) unfavorable developments in the global credit markets, (6) the impact of
overall economic conditions on consumer spending, (7) fluctuations in
commodities prices, the costs or availability of raw materials or terms and
conditions available from suppliers, (8) changes in the general economic
conditions in countries and regions where the Company does business, such as
stock market prices, interest rates, currency exchange rates, inflation and
consumer spending, (9) the
Company’s
ability to successfully implement manufacturing, distribution and other cost
efficiencies and to continue to benefit from its cost-cutting initiatives,
(10)
unfavorable weather conditions and various other risks and uncertainties,
including those discussed herein and those set forth in the Company’s securities
filings, including the most recently filed Annual Report on Form 10-K or
Quarterly Report on Form 10-Q. The Company 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 the Company and management’s reasonable assumptions about market
conditions, and consequently may be inaccurate, or may not reflect significant
segments of the retail market.
Item
9.01 Financial
Statements and Exhibits
(d)
Exhibits
The
following exhibits are filed herewith:
| Exhibit |
| Number |
Description
|
| 10.1 |
Termination
Agreement, dated July 13, 2008, among Spectrum Brands, Inc., Salton,
Inc.
and Applica Pet Products LLC.
|
| 99.1 |
Press
Release issued by Spectrum Brands, Inc. on July 14,
2008.
|
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.
| SPECTRUM BRANDS, INC. | ||
| |
|
|
| Date: July 14, 2008 | By: | /s/ Anthony L. Genito |
|
|
||
|
Name:
Anthony L. Genito
Title: Executive Vice
President,
Chief Financial Officer and
Chief Accounting Officer
|
||
EXHIBIT
INDEX
|
Exhibit
|
Description
|
|
10.1
|
Termination
Agreement, dated July 13, 2008, among Spectrum Brands, Inc., Salton,
Inc.
and Applica Pet Products LLC.
|
|
99.1
|
Press
Release issued by Spectrum Brands, Inc. on July 14,
2008.
|
Exhibit
10.1
Salton,
Inc.
3633
Flamingo Road
Miami,
FL
33027
July
13,
2008
Spectrum
Brands, Inc.
Six
Concourse Parkway, Suite 3300
Atlanta,
Georgia 30328
Ladies
and Gentlemen:
Reference
is hereby made to that certain Purchase Agreement, dated as of May 20, 2008
(as
amended or modified from time to time in accordance with its terms, the
“Purchase
Agreement”),
by
and among Spectrum Brands, Inc., a Wisconsin corporation (“Spectrum”),
Salton, Inc., a Delaware corporation (“Salton”),
and
Applica Pet Products LLC, a Delaware limited liability company (“Pet
LLC”
and,
together with Salton, the “Purchaser”).
Capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Purchase Agreement.
Pursuant
to Section 8.01(a)(i) of the Purchase Agreement, Spectrum, Salton and Pet LLC
hereby mutually agree, subject to and conditioned upon, in the case of the
Purchaser, the receipt of the Reimbursement (as defined below), to terminate
the
Purchase Agreement. In consideration of the foregoing, and notwithstanding
anything to the contrary contained in the Purchase Agreement, as a reimbursement
of expenses, Spectrum hereby agrees to pay to the Purchaser promptly, and in
any
event within two business days, $3,000,000 in immediately available funds (the
“Reimbursement”)
to the
account specified by Purchaser.
The
Purchaser and Spectrum agree to consult with each other before issuing, and
give
each other the opportunity to review and comment upon, any press release or
other public statements with respect to the termination contemplated by this
letter agreement.
This
letter agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. This letter agreement may
be
executed in one or more counterparts, all of which shall be considered one
and
the same agreement, and shall become effective when one or more such
counterparts have been signed by each of the parties and delivered to the other
parties. Delivery of an executed counterpart of a signature page of this letter
agreement by facsimile or other electronic imaging means shall be effective
as
delivery of a manually executed counterpart of this letter
agreement.
This
letter agreement shall be governed by, and construed in accordance with, the
Laws of the State of New York, regardless of the Laws that might otherwise
govern under applicable principles of conflicts of Laws thereof.
[Remainder
of Page Intentionally Left Blank]
SALTON,
INC.
By:
/s/
Lisa
R. Carstarphen
Name:
Lisa R. Carstarphen
Title:
Vice President, General Counsel and Corporate Secretary
APPLICA
PET PRODUCTS LLC
By:
/s/
Lisa
R. Carstarphen
Name:
Lisa R. Carstarphen
Title:
Vice President, General Counsel and Corporate Secretary
SPECTRUM
BRANDS, INC.
By:
/s/
Kent
J. Hussey
Name:
Kent J. Hussey
Title:
CEO
Exhibit
99.1
Spectrum
Brands and Salton Inc. Terminate Sale Agreement
Global
Pet Supply Business to Remain in Spectrum’s Portfolio
ATLANTA,
July 14, 2008 -- Spectrum Brands, Inc. (NYSE: SPC) (the Company) announced
today
that it and Salton Inc. and Salton’s wholly owned subsidiary, Applica Pet
Products LLC, have mutually agreed to terminate the definitive agreement for
the
sale of the Company’s global pet supply business.
“Despite
our desire and diligent efforts to complete this transaction upon the negotiated
terms, we have been unable to obtain the consent of our senior lenders necessary
to close on a basis that would be in the best interests of our shareholders
and
the Company,” said Kent Hussey, CEO of Spectrum Brands. “We
will
therefore continue to operate the global pet supply business and work to
capture
the strong market potential we see there. Additionally,
our
Board
and management team remain committed to finding and executing appropriate
alternatives for reducing the indebtedness of the Company.”
Hussey
continued, “With $72.7 million of cash on our Balance Sheet at quarter-end, June
29, 2008, and both sales and adjusted EBITDA growth expected for the full
year
fiscal 2008 versus full year fiscal 2007 results, we continue to believe
that we
have sufficient liquidity to run our businesses.” In addition, based on current
forecasts, the Company projects its fiscal 2009 free cash flow from operations,
which would be available to reduce outstanding indebtedness, to range between
$40 to $50 million. This projection includes an estimate of Cash Flows from
Operating Activities for fiscal 2009 of $75 to $85 million less capital
expenditures of $35 million.
Termination
of the definitive agreement is conditioned upon the Company paying to Salton
Inc. $3 million as a reimbursement of expenses within 2 business days.
Additionally, the standstill provisions of the confidentiality and standstill
agreement entered into on February 26, 2008 with Harbinger Capital Partners
Master Fund I, Ltd. were terminated.
Non-GAAP
Financial Measures
Within
this release, reference is made to free cash flow. Free cash flow is a metric
used by the Company’s management and frequently used by the financial community
which provides insight into an organization’s operating activities and is a
useful measure of performance and its ability to generate cash. While the
Company’s management believes that free cash flow is useful supplemental
information, such non-GAAP 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 consumer
batteries, lawn and garden care products, specialty pet supplies, shaving
and
grooming products, household insect control products, personal care products
and
portable lighting. Helping to meet the needs of consumers worldwide, included
in
its portfolio of widely trusted brands are Rayovac(R), Varta(R), Remington(R),
Tetra(R), Marineland(R), Nature's Miracle(R), Dingo(R), 8-In-1(R),
Spectracide(R), Schultz(R), Cutter(R), Repel(R), and HotShot(R). Spectrum
Brands' products are sold by the world's top 25 retailers and are available
in
more than one million stores in more than 120 countries around the world.
Headquartered in Atlanta, Georgia, Spectrum Brands generated fiscal year
2007
net sales of $2.6 billion. 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) the risk that the termination disrupts current
plans and operations; (2) difficulty or unanticipated expenses in connection
with the termination; (3) changes and developments 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, (4) changes in consumer demand
for
the various types of products the Company offers, (5) unfavorable developments
in the global credit markets, (6) the impact of overall economic conditions
on
consumer spending, (7) fluctuations in commodities prices, the costs or
availability of raw materials or terms and conditions available from suppliers,
(8) changes in the general economic conditions in countries and regions
where
the Company does business, such as stock market prices, interest rates,
currency
exchange rates, inflation and consumer spending, (9) the Company’s ability to
successfully implement manufacturing, distribution and other cost efficiencies
and to continue to benefit from its cost-cutting initiatives, (10) unfavorable
weather conditions and various other risks and uncertainties, including
those
discussed herein and those set forth in the Company’s securities filings,
including the most recently filed Annual Report on Form 10-K or Quarterly
Report
on Form 10-Q. The Company 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 the Company 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.
The
Company 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.
Spectrum
Brands
Investor
Contact:
Carey
Skinner, 770-829-6208
DVP
Investor Relations
or
Sard
Verbinnen & Co for Spectrum Brands
Media
Contact:
Kara
Findlay, 212-687-8080 or
Matt
Benson, 415-618-8750