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:
January 5, 2005
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(Date of earliest event reported)
RAYOVAC CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Wisconsin 001-13615 22-2423556
- ----------------------------- ------------------------ ---------------------
(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)
Not Applicable
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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 7.01. REGULATION FD DISCLOSURE.
The following information is being furnished pursuant to this Item
7.01 and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act except as shall be expressly set forth by
specific reference in such filing.
In connection with the proposed acquisition by Rayovac Corporation
(the "Company") of United Industries Corporation ("United"), certain unaudited
pro forma condensed consolidated financial data is being provided to United
shareholders. The Company is furnishing that information by attaching it as
Exhibits 99.1 and 99.2 hereto.
As used in the attached Exhibits 99.1 and 99.2, unless the context
indicates otherwise, "Rayovac" refers to Rayovac Corporation together with its
subsidiaries, "United" refers to United Industries Corporation together with
its subsidiaries, "Microlite" refers to Microlite S.A., "Nu-Gro" refers to The
Nu-Gro Corporation together with its subsidiaries and "United Pet Group" refers
to United Pet Group, Inc. together with its subsidiaries.
Item 8.01. OTHER EVENTS.
On January 5, 2005, the Company issued a press release, attached
hereto as Exhibit 99.3, which press release is incorporated herein by
reference.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit
Number Description of Exhibit
99.1 Unaudited pro forma condensed consolidated financial
data as of and for the fiscal year ended September
30, 2004.
99.2 United Industries Corporation unaudited pro forma
condensed combined financial information for the
nine months ended September 30, 2004 and the year
ended December 31, 2003.
99.3 Press release dated January 5, 2005.
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: January 6, 2005 RAYOVAC CORPORATION
By: /s/ Randall J. Steward
----------------------------------------
Name: Randall J. Steward
Title: Executive Vice President
and Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
99.1 Unaudited pro forma condensed consolidated
financial data as of and for the fiscal year ended
September 30, 2004.
99.2 United Industries Corporation unaudited pro forma
condensed combined financial information for the
nine months ended September 30, 2004 and the year
ended December 31, 2003.
99.3 Press release dated January 5, 2005.
EXHIBIT 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated balance sheet
as of September 30, 2004 and the unaudited pro forma condensed consolidated
statement of operations for the fiscal year ended September 30, 2004 are based
on the consolidated financial statements of Rayovac and United after giving
effect to Rayovac's acquisition of Microlite, United's acquisitions of Nu-Gro
and United Pet Group and consummation of the respective transactions, including
the acquisition of United, and the assumptions and adjustments described in the
accompanying notes to the unaudited pro forma condensed consolidated financial
data.
The unaudited pro forma condensed consolidated balance sheet as of
September 30, 2004 has been derived from Rayovac's condensed consolidated
balance sheet as of September 30, 2004 and United's unaudited consolidated
balance sheet as of September 30, 2004, adjusted to give effect to the
transactions as if they had occurred on September 30, 2004. The unaudited pro
forma condensed consolidated statement of operations for the fiscal year ended
September 30, 2004 gives effect to the transactions as if they occurred at the
beginning of the period presented. The unaudited pro forma condensed
consolidated statement of operations for the fiscal year ended September 30,
2004 gives effect to United's acquisition of Nu-Gro, which occurred on April
30, 2004, Rayovac's acquisition of Microlite, which occurred on May 28, 2004,
and United's acquisition United Pet Group, which occurred on July 30, 2004, as
if each acquisition occurred at the beginning of the period presented. The
unaudited pro forma condensed consolidated statement of operations excludes
non-recurring items directly attributable to the transactions.
The unaudited pro forma condensed consolidated financial data are
based on preliminary estimates and assumptions set forth in the notes to such
information. Pro forma adjustments are necessary to reflect the estimated
purchase price for the respective transactions, the new debt and equity
structure and to adjust amounts related to United's assets and liabilities to a
preliminary estimate of their fair values. Pro forma adjustments are also
necessary to reflect interest expense and the income tax effect related to the
pro forma adjustments.
The pro forma adjustments and allocation of purchase price are
preliminary and are based on management's estimates of the fair value of the
assets acquired and liabilities assumed. The final purchase price allocation
will be completed after asset and liability valuations are finalized. This
final valuation will be based on the actual assets and liabilities of United
that exist as of the date of the completion of the transactions. Any final
adjustments may change the allocation of purchase price which could affect the
fair value assigned to the assets and liabilities and could result in a change
to the unaudited pro forma condensed consolidated financial data. In addition,
the impact of integration activities, the timing of the completion of the
transactions and other changes in United's assets and liabilities prior to
completion of the transactions could cause material differences in the
information presented.
The unaudited pro forma condensed consolidated financial data are
presented for informational purposes only and have been derived from, and
should be read in conjunction with, "Selected Financial Data - Rayovac",
"Selected Financial Data - United" and the consolidated financial statements of
Rayovac and United, including the notes thereto. The pro forma adjustments, as
described in the notes to the unaudited pro forma condensed consolidated
financial data, are based on currently available information and certain
adjustments that Rayovac believes are reasonable. They are not necessarily
indicative of Rayovac's consolidated financial position or results of
operations that would have occurred had the transactions taken place on the
dates indicated, nor are they necessarily indicative of future consolidated
financial position or results of operations.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2004
(in thousands)
Rayovac &
Rayovac United Pro Forma United Pro
Corporation Industries Adjustments Forma
(1) (2) (3) Combined
-------------------------------------------- -------------
ASSETS
Current assets:
Cash and cash equivalents............................. $ 15,789 $ 8,290 $ 35 (a) $ 24,114
Receivables, net...................................... 289,632 107,493 - 397,125
Inventories........................................... 264,726 160,003 15,000 (b) 439,729
Deferred income taxes................................. 19,233 - 6,731 (c) 25,964
Other current assets.................................. 61,132 19,885 - 81,017
-------------------------------------------- -------------
Total current assets.................................... 650,512 295,671 21,766 967,949
Property, plant and equipment, net...................... 182,396 99,365 - 281,761
Goodwill................................................ 320,577 247,446 458,903(d) 1,026,926
Intangible assets, net.................................. 422,106 310,898 - 733,004
Deferred income taxes................................... - 78,495 - 78,495
Other assets............................................ 60,378 22,839 (7,714)(e) 75,503
-------------------------------------------- -------------
Total assets........................................... $1,635,969 $1,054,714 $ 472,955 $3,163,638
============================================ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt................ $ 23,895 $ 6,678 $ (764)(f) $ 29,809
Accounts payable.................................... 228,052 41,653 - 269,705
Accrued liabilities................................. 146,711 67,195 (4,665)(f) 209,241
-------------------------------------------- -------------
Total current liabilities........................... 398,658 115,526 (5,429) 508,755
Long term debt, net of current maturities............. 806,002 865,667 135,464 (f) 1,807,133
Deferred income taxes................................. 7,272 - - 7,272
Other non-current liabilities......................... 106,614 5,290 - 111,904
-------------------------------------------- -------------
Total liabilities................................... 1,318,546 986,483 130,035 2,435,064
Minority interest in equity of consolidated subsidiary 1,379 - - 1,379
Total shareholders' equity............................ 316,044 68,231 342,920 (g) 727,195
-------------------------------------------- -------------
Total liabilities and shareholders' equity............ $1,635,969 $1,054,714 $ 472,955 $3,163,638
============================================ =============
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(1) Condensed consolidated balance sheet for Rayovac, as obtained from
Rayovac's Annual Report on Form 10-K for the period ended September 30,
2004.
(2) Condensed consolidated balance sheet for United, as obtained from United's
Quarterly Report on Form 10-Q for the period ended September 30, 2004.
(3) The total estimated consideration as shown in the table below is allocated
to the assets and liabilities of United as if the transactions had
occurred on September 30, 2004. The allocation set forth below is
preliminary. The unaudited pro forma condensed combined financial
information assumes that the historical values of United's current assets,
current liabilities and property plant and equipment approximate fair
value, except as adjusted, pending forthcoming appraisals and other
financial information.
The allocation of consideration to acquired intangible assets is subject
to the outcome of independent appraisals to be conducted after the
completion of the combination transactions. A pro forma allocation of the
consideration to the identifiable intangible assets of United has not been
performed below; instead, all residual consideration has been allocated to
goodwill. The actual amounts recorded when the combination transactions
are completed may differ materially from the pro forma amounts presented
below (in thousands).
Total purchase price:
Issuance of Rayovac common stock.................. $ 439,175
Cash consideration................................ 70,000
Assumption of United debt......................... 872,345
Acquisition related costs......................... 35,000
---------------
$ 1,416,520
===============
Preliminary allocation of purchase price, reflecting the transactions:
Estimated adjustments to reflect assets and
liabilities at fair value:
Historical value of assets acquired, excluding
goodwill, as of September 30, 2004............... $ 807,268
Historical value of liabilities assumed............ (986,483)
Write-off of United deferred financing fees........ (19,772)
Current deferred tax liability recognized in
association with the write-off of United
deferred financing fees.......................... 7,513
Inventory valuation................................ 15,000
Current deferred tax asset recognized on inventory
valuation........................................ (5,700)
Assumption of United debt.......................... 872,345
Direct acquisition costs........................... 20,000
Goodwill acquired (including $247,446 of pre-
acquisition goodwill)............................ 706,349
-------------
$ 1,416,520
=============
(a) Net change in cash after completion of the transactions.
(b) Adjustment to the estimated purchase accounting valuation related to
inventory.
(c) Tax benefits associated with the anticipated write-off of Rayovac and
United unamortized debt issuance costs and purchase accounting
adjustments to inventory.
(d) Estimated preliminary fair market value of incremental goodwill
associated with the transactions.
(e) Write-off of United unamortized debt issuance costs of $19,772 and
Rayovac unamortized debt issuance costs of $12,942 related to debt to
be refinanced less the estimated $25,000 of deferred financing costs
to be incurred in connection with the transactions.
(f) Net additional debt incurred after repayment of United debt, $868,822,
and accrued interest, $4,665, at September 30 2004.
(g) Reflects the following adjustments affecting equity:
Issuance of common stock (13,750 shares @ $31.94)....... $ 439,175
Direct acquisition costs................................ (20,000)
Historical value of United net assets acquired.......... (68,231)
Rayovac debt financing cost write-off, net of tax....... (8,024)
-----------
$ 342,920
===========
Note: The stock price of $31.94 used in the calculation of the
purchase price is based on a five day closing price average
beginning two days prior to Rayovac's announcement of the
acquisition of United.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended September 30, 2004
(in thousands)
Rayovac United United Pet
Corporation Microlite ProForma Rayovac Industries Group Nu-Gro ProForma
(1) (2) Adjustments Combined (6) (7) (8) Adjustments
----------- --------- ----------- -------- ---------- ---------- ------ -----------
Net sales...............$ 1,417,186 $ 37,618 $ - $1,454,804 $ 640,890 $ 206,834 $ 87,942 $ -
Cost of goods sold...... 811,894 28,294 - 840,188 423,712 136,554 67,976 7,884(9)
Restructuring and
related charges...... (781) - - (781) - - - -
-------------------------------------------------------------------------------------------------
Gross profit............ 606,073 9,324 - 615,397 217,178 70,280 19,966 (7,884)
Operating expenses:
Selling, general and
administrative
expenses............. 437,629 15,695 3,241(3) 456,565 165,695 55,312 11,760 1,148(10)
Restructuring and
related charges...... 12,224 - - 12,224 - - - -
-------------------------------------------------------------------------------------------------
449,853 15,695 3,241 468,789 165,695 55,312 11,760 1,148
Operating income (loss). 156,220 (6,371) (3,241) 146,608 51,483 14,968 8,206 (9,032)
Interest expense........ 65,702 4,366 (2,252)(4) 67,816 42,528 7,308 591 1,228(11)
Other expense (income),
net.................. 64 (50) - 14 - - - -
Minority interest....... (78) - - (78) - - - -
-------------------------------------------------------------------------------------------------
Income (loss) from
continuing
operations before
income taxes......... 90,532 (10,687) (989) 78,856 8,955 7,660 7,615 (10,260)
Income tax expense
(benefit)............ 34,372 - -(5) 34,372 (96,231) 5,856 2,793 (3,899)(12)
Income from continuing
operations........... 56,160 (10,687) (989) 44,484 105,186 1,804 4,822 (6,361)
Loss from
discontinued
operations, net of
tax.................. 380 - - 380 - - - -
-------------------------------------------------------------------------------------------------
Net income (loss).......$ 55,780 $ (10,687) $ (989) $ 44,104 $ 105,186 $ 1,804 $ 4,822 $ (6,361)
=================================================================================================
(CHART CONTINUED)
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended September 30, 2004
(in thousands)
United Rayovac &
Industries ProForma United ProForma
Combined Adjustments Combined
------------ ------------ ----------------
Net sales............... $ 935,666 $ - $ 2,390,470
Cost of goods sold...... 636,126 (55,528)(13) 1,420,786
Restructuring and
related charges...... - - (781)
------------------------------------------------
Gross profit............ 299,540 55,528 970,465
Operating expenses:
Selling, general and
administrative
expenses............. 233,915 55,528(13) 746,008
Restructuring and
related charges...... - - 12,224
------------------------------------------------
233,915 55,528 758,232
Operating income (loss). 65,625 - 212,233
Interest expense........ 51,655 2,321(14) 121,792
Other expense (income),
net.................. - (890)(15) (876)
Minority interest....... - - (78)
------------------------------------------------
Income (loss) from
continuing
operations before
income taxes......... 13,970 (1,431) 91,395
Income tax expense
(benefit)............ (91,481) (544)(16) (57,653)(17)
Income from continuing
operations........... 105,451 (887) 149,048
Loss from
discontinued
operations, net of
tax.................. - - 380
------------------------------------------------
Net income (loss)....... $ 105,451 $ (887) $ 148,668
================================================
Notes to Unaudited Pro Forma Consolidated Statement of Operations
(1) Consolidated statement of operations for Rayovac, as obtained from
Rayovac's Annual Report on Form 10-K for the period ended September 30, 2004.
(2) Represents the historical operating results for Microlite for the period
from October 1, 2003 to May 28, 2004.
(3) Reclassification of Microlite expenses from interest expense to selling,
general and administrative expenses to conform to the Rayovac presentation.
(4) Reclassification of Microlite expenses to conform to Rayovac's
presentation, net of additional interest expense incurred in connection with
the acquisition of Microlite.
(5) No net income tax benefit has been recognized in connection with
Microlite's operating loss for the period from October 1, 2003 to May 28, 2004.
Based on historical levels of income and the length of time required to utilize
its deferred tax assets, the Company determined that it was more likely than
not that it would not fully utilize its Microlite deferred tax assets and
therefore recorded a valuation allowance against the benefit of such losses.
(6) Represents the historical operating results for United Industries for the
twelve-month period ended September 30, 2004, including the results of United
Pet Group from July 30, 2004, its date of acquisition, through September 30,
2004, and Nu-Gro from April 30, 2004, its date of acquisition, through
September 30, 2004.
(7) Represents the historical operating results for United Pet Group for the
period from October 1, 2003 to July 30, 2004.
(8) Represents the historical operating results for Nu-Gro for the period from
October 1, 2003 to April 30, 2004.
(9) Represents a reclassification of $7.7 million from selling, general and
administrative expenses related to freight costs to conform with the accounting
treatment for such costs by United Industries. The adjustment also includes an
adjustment to record incremental depreciation expense related to property and
equipment acquired in the United Pet Group acquisition based on estimated fair
values. Such property and equipment is being depreciated using the
straight-line method over varying periods, the average of which is
approximately 10 years.
(10) Represents an adjustment to record approximately $8.8 million of
incremental amortization expense related to intangible assets (other than
goodwill) acquired in the United Pet Group and Nu-Gro acquisitions, based on
estimated fair values. Intangible assets acquired included trade names, patents
and customer relationships. The majority of acquired trade names are being
amortized using the straight-line method over periods ranging from 5 to 40
years, while several trade names have been determined to have indefinite lives.
Patents acquired and customer relationships are being amortized using the
straight-line method over 15 years and 5 years, respectively. This adjustment
is offset by the reclassification of $7.7 million of freight costs from
selling, general and administrative expenses to cost of goods sold to conform
with the accounting treatment for such costs by United Industries.
(11) Represents the change in interest expense related to the new senior credit
facility executed by United Industries on April 30, 2004, a portion of the
proceeds of which were used to finance the Nu-Gro acquisition, and the
amendment of such senior credit facility on July 30, 2004, a portion of the
proceeds of which were used to finance the United Pet Group acquisition.
(12) Represents the income tax benefit associated with the adjustments
described herein to arrive at an estimated pro forma 2004 statutory tax rate of
38%.
(13) Represents a reclassification of freight costs from cost of goods sold to
selling, general and administrative expenses to conform with the accounting
treatment for such costs by Rayovac.
(14) Represents increased interest expense, net of a reclassification of
interest income, associated with the debt issued and refinanced in connection
with the transactions. The effect of a 0.125 percent change in the expected
interest rate on the approximately $1 billion of variable rate debt to be
refinanced in connection with the transactions is approximately $1.3 million.
(15) Represents a reclassification of interest income from interest expense,
net, to conform to Rayovac's presentation.
(16) Represents the income tax benefit associated with the adjustments
described herein to arrive at an estimated pro forma 2004 statutory tax rate of
38%.
(17) Includes a reduction of income tax expense of $104.1 million, reflecting a
full reversal of United's valuation allowance originally established against
the tax deductible goodwill deduction and certain net operating loss
carryforwards that were generated in 1999 through 2003. Based on historical
levels of income and the length of time required to utilize its deferred tax
assets, the Company determined that it was more likely than not that it would
fully utilize its deferred tax assets and that it was no longer necessary to
maintain a valuation allowance. The following table excludes this one-time
adjustment from income tax expense in arriving at net income:
Rayovac &
United
Pro Forma Tax Pro Forma
Combined Adjustment Adjusted
------------------------------------------------
Income from continuing operations before income taxes............. $ 91,395 $ - $ 91,395
Income tax (benefit) expense...................................... (57,653) 104,137 46,484
------------------------------------------------
Income from continuing operations................................. 149,048 (104,137) 44,911
Loss from discontinued operations (net of tax).................... 380 - 380
------------------------------------------------
Net income........................................................ $ 148,668 $ (104,137) $ 44,531
================================================
EXHIBIT 99.2
United Industries Corporation
Unaudited Pro Forma Condensed Combined Financial Information
For the Nine Months Ended September 30, 2004 and
For the Year Ended December 31, 2003
(Dollars in thousands, except where indicated)
The following unaudited pro forma condensed combined financial
information related to United Industries Corporation (United Industries or the
Company) and its acquisition of The Nu-Gro Corporation (Nu-Gro) and its merger
with and into United Pet Group, Inc. (UPG) is included for the nine months
ended September 30, 2004 and for the year ended December 31, 2003.
The acquisition of Nu-Gro closed on April 30, 2004 and the acquisition
of UPG closed on July 30, 2004; the information regarding the transactions,
including required financial and pro forma financial information has been
previously filed with the U.S. Securities and Exchange Commission. The
respective purchase price allocations ascribed to the Nu-Gro and UPG
acquisitions have been presented in the Company's Form 10-Q for the third
quarter of 2004, previously filed with the U.S. Securities and Exchange
Commission. The pro forma information contained herein includes the required
pro forma operating results of Nu-Gro and UPG.
The unaudited pro forma condensed combined financial information
presents how the combined financial statements of (1) United Industries, a
manufacturer and marketer of value-oriented products for the consumer lawn and
garden care and household insect control markets in the United States, (2)
Nu-Gro, a manufacturer and marketer of consumer lawn and garden products and
supplier of controlled release nitrogen and other fertilizer technologies in
Canada, and (3) UPG, a privately held marketer and manufacturer of premium
branded pet supplies, may have appeared had the businesses actually been
combined at the beginning of the periods presented herein. The unaudited pro
forma condensed combined financial information shows the impact of the
acquisitions of Nu-Gro and UPG on the Company's historical results of
operations under the purchase method of accounting with United Industries
treated as the acquirer. Under this method of accounting, United Industries
recorded the assets and liabilities of Nu-Gro and UPG at their estimated fair
values as of April 30, 2004 and July 30, 2004, respectively, the respective
dates the acquisitions were completed.
The unaudited pro forma condensed combined income statements
present the historical financial information of United Industries, Nu-Gro, and
UPG for the nine months ended September 30, 2004 and the year ended December
31, 2003 and give effect to the acquisitions as if they had been completed at
the beginning of the periods presented.
The unaudited pro forma condensed combined financial information has
been derived from and should be read in conjunction with the historical
consolidated financial statements and the related notes of United Industries,
as filed in its quarterly and annual reports with the U.S. Securities and
Exchange Commission, and the historical consolidated financial statements and
the related notes of Nu-Gro and UPG. The unaudited pro forma condensed combined
financial information includes estimated adjustments to record the assets and
liabilities of Nu-Gro and UPG at their respective fair values and represents
management's estimates based on available information. The final allocation of
the purchase price will be determined upon completion of a final valuation,
from an independent third-party valuation firm, to determine the fair values of
Nu-Gro's and UPG's tangible and identifiable intangible assets and liabilities
as of the acquisition date. Increases or decreases in the fair value of the net
assets, commitments, executory contracts and other items of Nu-Gro and UPG may
change the amount of the purchase price allocated to goodwill and other assets
and liabilities and may impact the income statements due to adjustments in
yield or amortization of the adjusted assets or liabilities.
The unaudited pro forma condensed combined financial information is
not necessarily indicative of the results of operations that would have
resulted had the acquisitions been completed at the beginning of the periods
presented, nor is it indicative of the results of operations in future periods
of the combined companies. In addition, the allocations of the purchase prices
which impact the income statements are subject to adjustment and may vary
materially from the actual purchase price allocations that will be recorded
upon receipt of a final independent third-party valuation report.
United Industries Corporation Pro Forma Condensed Combined Income Statement
Nine Months Ended September 30, 2004
($ in Thousands)
United
United United Pet The Nu-Gro Pro Forma Industries
Industries(1) Group(2) Corporation(3) Adjustments Combined
---------- ---------- ------------ ----------- -----------
Net sales.......................... $ 593,578 $ 142,333 $ 67,234 $ - $ 803,145
Cost of goods sold................. 392,776 96,366 51,443 5,904 (4) 546,489
---------- ---------- ------------ ----------- -----------
Gross profit....................... 200,802 45,967 15,791 (5,904) 256,656
Operating expenses................. 138,152 41,992 7,375 208 (5) 187,727
---------- ---------- ------------ ----------- -----------
Income from operations............. 62,650 3,975 8,416 (6,112) 68,929
Interest expense, net.............. 33,940 5,020 413 320 (6) 39,693
---------- ---------- ------------ ----------- -----------
Income (loss) before income taxes.. 28,710 (1,045) 8,003 (6,432) 29,236
Income tax expense (benefit)....... 7,447 2,694 2,937 (2,444) (7) 10,634
---------- ---------- ------------ ----------- -----------
Net income (loss).................. $ 21,263 $ (3,739) $ 5,066 $ (3,988) $ 18,602
========== ========== ============ =========== ===========
United Industries Corporation Pro Forma Condensed Combined Income Statement
Year Ended December 31, 2003
($ in Thousands)
United
United United Pet The Nu-Gro Pro Forma Industries
Industries(1) Group(2) Corporation(3) Adjustments Combined
---------- ---------- ------------ ----------- -----------
Net sales.......................... $ 536,146 $ 231,974 $ 164,340 $ - $ 932,460
Cost of goods sold................. 328,238 155,748 123,850 7,918 (4) 615,754
----------- ---------- ------------ ----------- -----------
Gross profit....................... 207,908 76,226 40,490 (7,918) 316,706
Operating expenses................. 139,042 43,351 24,178 3,760 (5) 210,331
----------- ---------- ------------ ----------- -----------
Income from operations............. 68,866 32,875 16,312 (11,678) 106,375
Interest expense, net.............. 36,213 7,412 1,182 3,632 (6) 48,439
----------- ---------- ------------ ----------- -----------
Income before income taxes......... 32,653 25,463 15,130 (15,310) 57,936
Income tax (benefit) expense....... (82,851) 8,752 5,586 (5,818) (7) (74,331)
----------- ---------- ------------ ----------- -----------
Net income......................... $ 115,504 $ 16,711 $ 9,544 $ (9,492) $ 132,267
=========== ========== ============ =========== ===========
Pro Forma Footnotes
Nine months ended September 30, 2004:
(1) Represents the historical operating results for United Industries for
the nine months ended September 30, 2004, including the results of
United Pet Group from July 30, 2004, its date of acquisition, through
September 30, 2004, and Nu-Gro from April 30, 2004, its date of
acquisition, through September 30, 2004.
(2) Represents the historical operating results for United Pet Group for
the period from January 1, 2004 to July 30, 2004.
(3) Represents the historical operating results for Nu-Gro for the period
from January 1, 2004 to April 30, 2004.
(4) Represents an adjustment to record incremental depreciation expense
related to property and equipment acquired in the United Pet Group
acquisition based on estimated fair values. Such property and
equipment is being depreciated using the straight-line method over
varying periods, the average of which is approximately 10 years. The
adjustment also includes a reclassification of $5.8 million from
selling, general and administrative expenses related to freight costs
to conform with the accounting treatment for such costs by United
Industries.
(5) Represents an adjustment to record incremental amortization expense
related to intangible assets (other than goodwill) acquired in the
United Pet Group and Nu-Gro acquisitions, based on estimated fair
values. Intangible assets acquired included trade names, patents and
customer relationships. The majority of acquired trade names are being
amortized using the straight-line method over periods ranging from 5
to 40 years, while several trade names have been determined to have
indefinite lives. Patents acquired and customer relationships are
being amortized using the straight-line method over 15 years and 5
years, respectively.
(6) Represents the change in interest expense related to the new senior
credit facility executed by United Industries on April 30, 2004, a
portion of the proceeds of which were used to finance the Nu-Gro
acquisition, and the amendment of such senior credit facility on July
30, 2004, a portion of the proceeds of which were used to finance the
United Pet Group acquisition.
(7) Represents the income tax benefit associated with the adjustments
described herein to arrive at an estimated pro forma 2004 statutory
tax rate of 38%.
Twelve months ended December 31, 2003:
(1) Represents the historical operating results for United Industries for
the twelve-month period ended December 31, 2003.
(2) Represents the historical operating results for United Pet Group for
the twelve-month period ended December 31, 2003.
(3) Represents the historical operating results for Nu-Gro for the
twelve-month period ended December 31, 2003.
(4) Represents an adjustment to record incremental depreciation expense
related to property and equipment acquired in the United Pet Group
acquisition based on estimated fair values. Such property and
equipment is being depreciated using the straight-line method over
varying periods, the average of which is approximately 10 years. The
adjustment also includes a reclassification of $7.7 million from
selling, general and administrative expenses related to freight costs
to conform with the accounting treatment for such costs by United
Industries.
(5) Represents an adjustment to record incremental amortization expense
related to intangible assets (other than goodwill) acquired in the
United Pet Group and Nu-Gro acquisitions, based on estimated fair
values. Intangible assets acquired included trade names, patents and
customer relationships. The majority of acquired trade names are being
amortized using the straight-line method over periods ranging from 5
to 40 years, while several trade names have been determined to have
indefinite lives. Patents acquired and customer relationships are
being amortized using the straight-line method over 15 years and 5
years, respectively.
(6) Represents the change in interest expense related to the new senior
credit facility executed by United Industries on April 30, 2004, a
portion of the proceeds of which were used to finance the Nu-Gro
acquisition, and the amendment of such senior credit facility on July
30, 2004, a portion of the proceeds of which were used to finance the
United Pet Group acquisition, as if the acquisitions and related
financing activities had occurred on January 1, 2003.
(7) Represents the income tax benefit associated with the adjustments
described herein to arrive at an estimated pro forma 2004 statutory
tax rate of 38%.
EXHIBIT 99.3
Rayovac Commences Tender Offer
for United Industries Corporation's 9 7/8% Notes
ATLANTA, Jan.5, 2005 - Rayovac Corp. (NYSE:ROV), a global consumer products
company with a diverse portfolio of world-class brands, announced today that in
connection with its previously announced agreement to acquire United Industries
Corporation, it has commenced an offer to purchase for cash all $231.9 million
principal amount of 9 7/8% Series D Senior Subordinated Notes due 2009 issued
by United Industries. Rayovac is also soliciting consents from the holders of
the notes to approve certain amendments to the indenture under which the notes
were issued. The tender offer is contingent on, among other things, the receipt
of consents necessary to approve such amendments to the indenture governing the
notes, the closing of the acquisition of United Industries and the closing of
the required financing. The source of funds required to acquire the Notes will
be an issue of senior subordinated notes and a new senior secured credit
facility.
The tender offer will expire at midnight, New York City time, on February 2,
2005, unless extended or earlier terminated. The total consideration to be paid
to holders that tender their notes and deliver their consents prior to 5:00
p.m., New York City time, on January 19, 2005, will be equal to $1,053.13 per
$1,000 principal amount of the notes, which includes a consent payment of
$30.00 per $1,000 principal amount. Holders that tender their notes after 5:00
p.m., New York City time, on January 19, 2005, and prior to the expiration of
the tender offer will receive $1,023.13 per $1,000 principal amount of the
notes. The consents being solicited will eliminate substantially all of the
covenants and certain events of default in the indenture governing the notes.
After the acquisition of United Industries is completed, Rayovac intends to
redeem all of the notes which are not tendered pursuant to the tender offer.
Information regarding the pricing, tender and delivery procedures and
conditions of the tender offer and consent solicitation is contained in the
Offer to Purchase and Consent Solicitation dated January 5, 2005, and related
documents. Copies of these documents can be obtained by contacting D.F. King &
Co., Inc., the information agent for the tender offer and consent solicitation
at 800-290-6427 (U.S. toll free) or 212-269-5550 (collect). Banc of America
Securities LLC is the exclusive dealer manager and solicitation agent for the
tender offer and consent solicitation. Additional information concerning the
terms and conditions of the tender offer and consent solicitation may be
obtained by contacting Banc of America Securities LLC at 888-292-0070 (U.S.
toll free) or 704-388-9217 (collect).
About Rayovac:
- -------------
Rayovac is a global consumer products company and one of the largest battery,
shaving and grooming, and lighting companies in the world. Through a diverse
and growing portfolio of world-class brands - including Rayovac, Varta and
Remington - Rayovac holds leading market positions in a number of major product
categories. The company's products are sold by 19 of the world's top 20
retailers, and are available in over one million stores in 120 countries around
the world. Headquartered in Atlanta, Georgia, Rayovac generates approximately
$1.5 billion in annual revenues and has 6,500 employees worldwide. The
company's stock trades on the New York Stock Exchange under the symbol ROV.
Certain matters discussed in the 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, uncertainties and other factors that could cause results to
differ materially from those anticipated as of the date of this release. Actual
results may differ materially from these statements as a result of (1) our
ability to close and finance the contemplated United acquisition as
anticipated, (2) our ability to achieve anticipated synergies and efficiencies
as a result of this transaction, (3) changes in external competitive market
factors, such as introduction of new product features of 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 Rayovac and United offer, (5) changes in the
general economic conditions where Rayovac and United do business, such as stock
market prices, interest rates, currency exchange rates, inflation and raw
material costs, (6) our ability to successfully implement manufacturing,
distribution and other cost efficiencies and (7) various other factors,
including those discussed herein and those set forth in Rayovac's and United's
securities filings, including their most recently filed Forms 10Q and Annual
Reports on Form 10-K.
# # #
Investor Contact:
- ----------------
Nancy O'Donnell
VP Investor Relations
770-829-6208
cell 404-992-9001
Media Contact:
- -------------
David Doolittle
Ketchum for Rayovac
404-879-9266
cell 404-840-1321