Rayovac 2006 Annual Report Download - page 11

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Reconciliation to Generally Accepted Accounting Principles (GAAP)
Spectrum Brands, Inc. and Subsidiaries
The Company believes adjusting for unusual items in the Company’s results provides useful information regarding the Company’s abil-
ity to service its indebtedness and facilitates investors’ and analysts’ ability to evaluate the Company’s operations excluding these
unusual items. However, the following factors should be considered in evaluating such measures: Adjusted Diluted Earnings Per Share
(i) should not be considered in isolation, (ii) is not a measure of performance calculated in accordance with U.S. generally accepted
accounting principles (“GAAP”), (iii) should not be construed as an alternative or a substitute for diluted earnings per share in analyz-
ing the Company’s operating performance, (as determined in accordance with GAAP) and (iv) should not be used as an indicator of the
Company’s operating performance. Additionally, because all companies do not calculate Adjusted Diluted Earnings Per Share in a uni-
form fashion, the calculations presented herein may not be comparable to other similarly titled measures of other companies.
Adjusted Diluted Earnings Per Share
Impact of Unusual Items within the Statements of Operations:
(All information in millions, except per share amounts)
2006 2005 2004 2003 2002
Diluted Net (Loss) Earnings Per Share $(8.77) $ 1.03 $1.61 $0.48 $0.90
Unusual Items:
Unusual items within gross profit and operating expenses,
net of tax (1) (2) (3) 8.79 1.08 0.21 0.73 0.26
Non-operating expense, net of tax (4) (0.10) – – 0.06 –
Adjustment to deferred tax assets valuation allowance (5) 0.38 – – – –
Discontinued operations, net of tax (6) 0.11 (0.12) 0.01 – –
Adjusted Diluted Net Earnings Per Share $0.41 $ 1.99 $1.83 $1.27 $1.16
(1) The Company recorded restructuring and related charges and other costs within gross profi t and operating expenses during fi scal 2006, 2005, 2004, 2003 and 2002 refl ecting: (i) the rational-
ization of manufacturing, packaging and distribution processes, (ii) the realignment of manufacturing capacities, (iii) restructuring of the Company’s administrative functions, and (iv) acquisi-
tion-related inventory valuation charges. For more information see Management’s Discussion and Analysis and Note 16 in the Notes to Consolidated Financial Statements.
(2) In fi scal 2006, the Company recorded an impairment charge for certain goodwill and intangible assets written off as a result of the Company’s annual SFAS 142 impairment evaluation.
For more information see Management’s Discussion and Analysis and Note 2(i) in the Notes to Consolidated Financial Statements.
(3) In fi scal 2002, the Company recognized a bad debt reserve, net of recoveries, attributable to the bankruptcy fi ling of a key customer.
(4) In fi scal 2006, the Company recorded a gain on the sale of certain manufacturing facilities. The Company recorded non-operating expense in fi scal 2003 relating to the write-off of debt
issuance costs. For more information see Management’s Discussion and Analysis.
(5) In fi scal 2006, the Company recorded a non-cash charge to increase the valuation allowance against certain net deferred tax assets. For more information see Management’s Discussion
and Analysis and Note 10 in the Notes to Consolidated Financial Statements.
(6) For fi scal 2006, 2005 and 2004, refl ects the respective loss (income) from discontinued operations, net of tax. For more information see Management’s Discussion and Analysis and Note
11 in the Notes to Consolidated Financial Statements.
2006 Form 10-K Annual Report
Spectrum Brands, Inc.
SPECTRUM BRANDS | 2006 ANNUAL REPORT 9