Rayovac 2006 Annual Report Download - page 14

2 SPECTRUM BRANDS | 2006 ANNUAL REPORT
2006 Form 10-K Annual Report
Spectrum Brands, Inc.
PART I
ITEM 1. BUSINESS
General
Spectrum Brands, Inc. and its subsidiaries (the “Company”) is a
global branded consumer products company with positions in
seven major product categories: consumer batteries; pet supplies;
lawn and garden; electric shaving and grooming; household insect
control; electric personal care products; and portable lighting.
We sell our products in approximately 120 countries through
a variety of trade channels, including retailers, wholesalers and
distributors, hearing aid professionals, industrial distributors and
original equipment manufacturers (“OEMs”). We enjoy strong
name recognition in our markets under the Rayovac, VARTA and
Remington brands, each of which has been in existence for more
than 80 years, and under the Spectracide, Cutter, Tetra, 8in1 and
various other brands. Our manufacturing and product develop-
ment facilities are located in the United States, Europe, China
and Latin America. We manufacture alkaline and zinc carbon bat-
teries, zinc air hearing aid batteries, lawn fertilizers, herbicides,
insecticides and repellents and specialty pet supplies in our
Company-operated manufacturing facilities. Substantially all of
our rechargeable batteries and chargers, electric shaving and
grooming products, electric personal care products and portable
lighting products are manufactured by third party suppliers,
primarily located in Asia.
Effective May 2, 2005, we changed our corporate name from
Rayovac Corporation to Spectrum Brands, Inc. In this Report,
unless specifi ed otherwise or the context requires, “Spectrum” and
“Rayovac” both refer to the Company. Rayovac may be used to refer
to the Company in relation to periods prior to the name change.
As of October 1, 2005, we began managing our business in
four reportable segments: (i) North America, which consists of our
legacy battery, shaving and grooming, personal care and portable
lighting business (the “Legacy Businesses”) in the United States
and Canada and the acquired United Industries Corporation
(“United”) lawn and garden and household insect control business
(“North America”); (ii) Latin America, which consists of the
Legacy Businesses in Mexico, Central America, South America
and the Caribbean (“Latin America”); (iii) Europe/ROW, which
consists of the Legacy Businesses in the United Kingdom, con-
tinental Europe, China, Australia and all other countries in
which we conduct Legacy Businesses (“Europe/ROW”); and
(iv) Global Pet, which consists of the acquired United Pet
Group, Inc. (“United Pet Group”), Tetra Holdings GmbH (“Tetra”)
and Jungle Laboratories Corporation (“Jungle Labs”) businesses
(together, “Global Pet”). The presentation of all historical segment
reporting herein has been changed to conform to this segment
reporting. For fi nancial information about each reporting seg-
ment, see “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” (“MD&A”) and Note 13,
Segment Information, to Notes to Consolidated Financial
Statements included in this Annual Report on Form 10-K.
Global and geographic strategic initiatives and fi nancial objec-
tives are determined at the corporate level. Each business seg-
ment is responsible for implementing defi ned strategic initiatives
and achieving certain fi nancial objectives. Each business segment
has a general manager responsible for sales and marketing initia-
tives for all product lines within that business segment plus the
fi nancial results of that business segment.
We made two signifi cant acquisitions in 2005 designed to
diversify our business and leverage our distribution strengths.
On February 7, 2005, we completed the acquisition of all of the
outstanding equity interests of United, a leading manufacturer and
marketer of products for the consumer lawn and garden and house-
hold insect control markets in North America and a leading supplier
of specialty pet supplies in the United States. On April 29, 2005,
we acquired all of the outstanding equity interests of Tetra. Tetra
manufactures, distributes and markets a comprehensive line of
foods, equipment and care products for fi sh and reptiles, along
with accessories for home aquariums and ponds. The Tetra acquisi-
tion provides us with a global brand and distribution network to
extend our North American pet supplies business. In the fourth
quarter of 2005, we completed a third acquisition, Jungle Labs,
which was inconsequential to the period. See MD&A for additional
information on the United and Tetra acquisitions and Note 17,
Acquisitions, of Notes to Consolidated Financial Statements included
in this Annual Report on Form 10-K for further discussion on all
acquisitions completed in fi scal 2005.
On January 25, 2006, we sold our fertilizer technology and
Canadian professional fertilizer products businesses of Nu-Gro
(“Nu-Gro Pro and Tech”) to Agrium Inc. for net proceeds of
approximately $83 million. Proceeds from the sale were used to
reduce outstanding debt. As part of the transaction, we signed
strategic multi-year reciprocal supply agreements with Agrium.
As of October 1, 2005, we began reporting the results of opera-
tions of Nu-Gro Pro and Tech as discontinued operations.
Therefore, the presentation herein of the results of continuing
operations has been changed to exclude Nu-Gro Pro and Tech for
all periods presented.
As previously disclosed, we have engaged advisors to assist with
a sale of various assets in order for us to sharpen our focus on stra-
tegic growth businesses, reduce our outstanding indebtedness and
maximize long-term shareholder value. In connection with this
undertaking, we have entered into discussions to dispose of certain