Rayovac 2006 Annual Report Download - page 4

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Shareholders
To Our Fellow
It is often helpful to be reminded
of the little facts in order
to see the big picture.
The facts you have just read, for example, remind us that there is a large and
growing market for our products; our brands enjoy solid market positions;
and the distribution infrastructure supporting our worldwide customer base
has the scale and scope necessary to compete on a global basis. In short, these
facts essentially underscore our belief that Spectrum Brands’ diversifi ed portfolio
of consumer brands positions us well for future success.
We would prefer that the numbers this year tell the same story, but they do
not. Regrettably, our fi scal year 2006 fi nancial results are disappointing. As the
table on the opposite page shows, and as a detailed description on page 64 of
this Report explains, most key fi nancial performance metrics posted signifi -
cant year-over-year decreases. Following the acquisitions of United Industries
and Tetra Holdings in 2005, we encountered a year of challenging market con-
ditions, dramatic increases in raw material costs and a number of internal
execution issues. As a result, several of our businesses performed below plan,
offsetting the considerable synergies realized from the ongoing integration of
our recent acquisitions. Simply put, Spectrum Brands experienced signifi cant
growing pains over the past 12 months. A closer look at our businesses pro-
vides more perspective on what happened and, more importantly, our plans
for the future.
A CHALLENGING BATTERY ENVIRONMENT
Spectrum’s battery business has been challenged by a variety of changing mar-
ket and competitive conditions. During the most recent 18 months, our focus
has been to evolve our battery business toward better viability and profi tabil-
ity in light of these new market realities. In North America, these efforts are
David A. Jones
Chairman and Chief Executive Offi cer
Kent J. Hussey
Vice Chairman
There is a large and growing market
for our products; our brands enjoy solid
market positions; and the distribution
infrastructure supporting our worldwide
customer base has the scale and scope
necessary to compete on a global basis.
2 SPECTRUM BRANDS | 2006 ANNUAL REPORT