Rayovac 2006 Annual Report Download - page 58

Download and view the complete annual report

Please find page 58 of the 2006 Rayovac annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

46 SPECTRUM BRANDS | 2006 ANNUAL REPORT
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over fi nancial
reporting (as defi ned in Rules 13a-15(f) and 15d-15(f) under
the Securities Exchange Act of 1934, as amended) that occurred
during our fourth fi scal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control
over fi nancial reporting.
Limitations on the Effectiveness of Controls
The Company’s management, including our Chief Executive
Offi cer and Chief Financial Offi cer, does not expect that the
Company’s disclosure of controls and procedures or the Company’s
internal controls over fi nancial reporting will prevent all errors
and all fraud. A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assur-
ance that the objectives of the control system are met. Further,
the design of a control system must refl ect the fact that there are
resource constraints, and the benefi ts of controls must be consid-
ered relative to their costs. Because of the inherent limitations in
all control systems, no evaluation of controls can provide abso-
lute assurance that all control issues and instances of fraud, if any,
within the Company have been detected.
ITEM 9B. OTHER INFORMATION
Entry Into a Material Definitive Agreement—
Amendment to Credit Agreement
On December 12, 2006, the Company entered into Amendment
No. 4 to the Fourth Amended and Restated Credit Agreement
dated as of February 7, 2005, (as so amended and supplemented,
the “Credit Agreement”) (the Credit Agreement governs our
Senior Credit Facilities, which are described in “Liquidity and
Capital Resources” in MD&A), among Spectrum Brands, Inc.,
formerly known as Rayovac Corporation, a Wisconsin corpora-
tion, Varta Consumer Batteries GmbH & Co. KGaA, a German
partnership limited by shares, Rayovac Europe Limited, a limited
liability company, each lender from time to time party thereto
(collectively, the “Senior Lenders”), Citicorp North America,
Inc., as Syndication Agent, Merrill Lynch Capital Corporation, as
Co-Documentation Agent and Managing Agent, LaSalle Bank
National Association, as Co-Documentation Agent and Bank of
America, N.A., as Administrative Agent, Swing Line Lender and
L/C Issuer.
Pursuant to Amendment No. 4 to the Credit Agreement, the
maximum consolidated leverage ratio and the minimum consoli-
dated interest coverage ratio associated with our Senior Credit
Facilities for the fi scal quarters ending nearest December 31,
2006 and March 31, 2007, were, respectively, raised and low-
ered. Amendment No. 4 to the Credit Agreement raises the
interest rate on all of our debt under our Senior Credit Facilities
by 0.25% per annum until we prepay at least $500 million in
principal amount of our term loans with proceeds from the sale
of certain of our assets. Our ability to comply with future debt
covenants beyond the fi rst quarter of fi scal 2007, ending
December 31, 2006, will depend on our ability to consummate
the disposal of the above mentioned assets on favorable contrac-
tual terms. In connection with the amendment, we incurred
approximately $1.3 million of fees which are being amortized
over the remaining term of our Senior Credit Facilities.
The Fourth Amended and Restated Credit Agreement dated
as of February 7, 2005 has been fi led as Exhibit 10.1 to the
Company’s Current Report on Form 8-K, fi led by the Company
with the Securities and Exchange Commission (the “Commission”)
on February 11, 2005. Amendment No. 1, dated as of April 29,
2005, to the Fourth Amended and Restated Credit Agreement
has been fi led as Exhibit 10.1 to the Company’s Current Report on
Form 8-K, fi led by the Company with the Commission on May 5,
2005. Amendment No. 2, dated as of December 12, 2005, to the
Fourth Amended and Restated Credit Agreement has been fi led as
Exhibit 10.1 to the Company’s Current Report on Form 8-K, fi led
by the Company with the Commission on December 13, 2005.
Amendment No. 3, dated as of May 9, 2005, to the Fourth
Amended and Restated Credit Agreement has been fi led as Exhibit
10.1 to the Company’s Current Report on Form 8-K, fi led by the
Company with the Commission on May 10, 2005.
The foregoing description of Amendment No. 4 to the Credit
Agreement does not purport to be complete, and is qualifi ed in
its entirety by reference to the full text of such amendment, a
copy of which is fi led as Exhibit 10.12 to this Annual Report on
Form 10-K and is incorporated herein by reference.
2006 Form 10-K Annual Report
Spectrum Brands, Inc.