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92 SPECTRUM BRANDS | 2006 ANNUAL REPORT
The following table summarizes restructuring and related
charges incurred by segment:
2006 2005 2004
Cost of goods sold:
North America $ 1,385 $ – $ (781)
Europe/ROW 15,212 10,241 –
Latin America – – –
Global Pet 5,855 255 –
Total restructuring and related
charges in cost of goods sold 22,452 10,496 (781)
Operating expense:
North America 22,940 15,652 9,621
Europe/ROW 7,936 (30) 2,603
Latin America – – –
Global Pet 2,766 198 –
Total restructuring and related
charges in operating expense 33,642 15,820 12,224
Total restructuring and
related charges $56,094 $26,316 $11,443
The following table summarizes restructuring and related
charges incurred by type of charge:
2006 2005 2004
Costs included in cost of
goods sold:
Breitenbach, France
facility closure:
Termination benefits $ 259 $ 8,276 $ –
Other associated costs – 1,965 –
United & Tetra integration:
Termination benefits 5,430 255 –
Other associated costs 1,810 – –
European initiatives:
Termination benefits 14,953 – –
Other initiatives:
Other associated costs – – (781)
Total included in cost of
goods sold $22,452 $10,496 $ (781)
Costs included in operating
expenses:
United & Tetra integration:
Termination benefits $23,915 $12,742 $ –
Other associated costs 1,791 4,495 –
European initiatives:
Termination benefits 7,936 – –
Other initiatives:
Termination benefits – 194 8,297
Other associated costs – (1,611) 3,927
Total included in operating
expenses $33,642 $15,820 $12,224
Total restructuring and related
charges $56,094 $26,316 $11,443
2006 Restructuring Initiatives
The Company has implemented a series of initiatives in
Europe to reduce operating costs and rationalize the Company’s
manufacturing structure (“European Initiatives”). These initia-
tives include the reduction of certain operations at the Ellwangen,
Germany packaging center and relocating such operations to the
Dischingen, Germany battery plant, transferring private label
battery production at the Company’s Dischingen, Germany bat-
tery plant to the Company’s manufacturing facility in China and
restructuring the sales, marketing and support functions. As a
result, the Company will reduce headcount in Europe by approx-
imately 350, or 24%. The Company incurred $22,889 of pretax
restructuring and related charges in 2006 in connection with the
European Initiatives. Costs associated with these initiatives,
expected to be incurred through June 2007, relate primarily to
severance and are projected at $29,000, the majority of which
will be cash costs.
The following table summarizes the remaining accrual bal-
ance associated with the 2006 initiatives and activity that occurred
during fi scal 2006:
2006 Restructuring Initiatives Summary
Termination Other
Benefits Costs Total
Accrual balance at
September 30, 2005 $ – $ – $ –
Provisions 19,463 – 19,463
Cash expenditures (6,542) – (6,542)
Accrual balance at
September 30, 2006 $12,921 $ – $12,921
Expensed as incurred(A) $ 3,426 $ – $ 3,426
(A) Consists of amounts not impacting accrual for restructuring and related charges.
2005 Restructuring Initiatives
In April 2005, the Company announced the closure of its
Breitenbach, France zinc carbon manufacturing facility. Costs
associated with this initiative total approximately $11,000. The
Company incurred $259 and $10,241 of pretax restructuring
and related charges in 2006 and 2005, respectively, in connection
with this closure.
In connection with the acquisitions of United and Tetra in
2005, the Company announced a series of initiatives to optimize
the global resources of the combined United and Spectrum com-
panies. These initiatives include: integrating all of United’s Home
& Garden administrative services, sales and customer service
functions into the Company’s North America headquarters in
Madison, Wisconsin; converting all information systems to SAP;
consolidating United’s manufacturing and distribution locations
in North America; rationalizing the North America supply chain;
and consolidating United Pet Group’s and Tetra’s administrative,
manufacturing and distribution facilities.
2006 Form 10-K Annual Report
Spectrum Brands, Inc.