Rayovac 2008 Annual Report Download

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FORM 10-K
Spectrum Brands, Inc. - SPCB
Filed: December 10, 2008 (period: September 30, 2008)
Annual report which provides a comprehensive overview of the company for the past year

Table of contents

  • Page 1
    FORM 10-K Spectrum Brands, Inc. - SPCB Filed: December 10, 2008 (period: September 30, 2008) Annual report which provides a comprehensive overview of the company for the past year

  • Page 2
    ... AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES OTHER INFORMATION PART...

  • Page 3
    ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES Signatures EXHIBIT INDEX EX-3.2 (AMENDED AND RESTATED BY-LAWS OF SPECTRUM BRANDS) EX-4.10 (TRIPARTITE AGREEMENT DATED OCTOBER 10) EX-10.5 (RETENTION AGREEMENT DATED AS OF NOVEMBER 10) EX-10.7 (AMENDMENT TO EMPLOYMENT AGREEMENT DATED AS OF NOVEMBER 10)...

  • Page 4
    ... BRANDS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Wisconsin (I.R.S. Employer Identification Number) (Zip Code) 22-2423556 Six Concourse Parkway, Suite 3300, Atlanta, Georgia (Address of principal executive offices...

  • Page 5
    ...AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES OTHER INFORMATION PART III...

  • Page 6
    ...of Contents Index to Financial Statements PART I ITEM 1. General BUSINESS We are a global branded consumer products company with positions in seven major product categories: consumer batteries; pet supplies; electric shaving and grooming; electric personal care; portable lighting; lawn and garden...

  • Page 7
    ... manufacture and market alkaline, zinc carbon and hearing aid batteries, lawn fertilizers, herbicides, insecticides and repellants and specialty pet supplies. We design and market rechargeable batteries, battery-powered lighting products, electric shavers and accessories, grooming products and hair...

  • Page 8
    ...portable lighting. Our broad line of products includes: • consumer batteries, including alkaline and zinc carbon batteries, rechargeable batteries and chargers and hearing aid batteries and other specialty batteries; pet supplies, including aquatic equipment and supplies, dog and cat treats, small...

  • Page 9
    ..., AAA, C, D and 9-volt sizes) to both retail and industrial customers. Our alkaline batteries are marketed and sold primarily under the Rayovac and VARTA brands. We also manufacture alkaline batteries for third parties who sell the batteries under their own private labels. Our zinc carbon batteries...

  • Page 10
    ... group of retailer customers, including, without limitation, Wal-Mart, The Home Depot, Carrefour, Target, Lowe's, PetSmart, Canadian Tire, PetCo and Gigante. Our sales to Wal-Mart Stores, Inc. represented approximately 19% of our consolidated net sales for Fiscal 2008. No other customer accounted...

  • Page 11
    ...to use granular urea in our continuing operations after January 31, 2009. Substantially all of our rechargeable batteries and chargers, portable lighting products, hair care and other personal care products and our electric shaving and grooming products are manufactured by third party suppliers that...

  • Page 12
    ... all products which we believe can benefit from the use of the brand name in our distribution channels. On February 12, 2004, United Industries Corporation ("United") executed a licensing, manufacturing and supply agreement with its largest customer at the time. Under the agreement, United licensed...

  • Page 13
    ... premium brands. In Latin America, where zinc carbon batteries outsell alkaline batteries, the Rayovac brand is competitively priced. The pet supply product category is highly fragmented with over 500 manufacturers in the U.S. alone, consisting primarily of small companies with limited product lines...

  • Page 14
    ... at September 30, 2008, should not be material to our business or financial condition. Electronic and electrical products that we sell in Europe, particularly products sold under the Remington brand name, VARTA battery chargers, certain portable lighting and all of our batteries, are subject to...

  • Page 15
    ... with our employees is good. Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as 10 Source: Spectrum Brands, Inc, 10...

  • Page 16
    ...of Contents Index to Financial Statements amended (the "Exchange Act") are made available free of charge on or through our website at www.spectrumbrands.com as soon as reasonably practicable after such reports are filed with, or furnished to, the United States Securities and Exchange Commission (the...

  • Page 17
    ... our business strategy, future operations, financial position, estimated revenues, projected costs, projected synergies, prospects, plans and objectives of management, as well as information concerning expected actions of third parties, are forward-looking statements. When used in this Annual Report...

  • Page 18
    ... Report on Form 10-K is accurate only as of September 30, 2008 or as otherwise specified, as our business, financial condition, results of operations and prospects may have changed since that date. Except as required by applicable law, including the securities laws of the United States and the rules...

  • Page 19
    ... any actions we may undertake, our stock price could continue to decline. In addition, we may be unsuccessful in implementing an option that is chosen by our board of directors or our implementation of any particular alternative could present additional risks to our business, financial position...

  • Page 20
    ... our business. Our Senior Credit Facilities, as defined in "Management's Discussion and Analysis of Financial Condition and Results of Operations-Debt Financing Activities," and the indentures governing our outstanding Senior Subordinated Notes each contain covenants that, among other things, limit...

  • Page 21
    ... economic conditions that could impact consumer and customer demand for our products or our ability to manage normal commercial relationships with our customers, suppliers and creditors. The recent emergence of a number of negative economic factors, including heightened investor concerns about...

  • Page 22
    ... limited shelf space based upon brand name recognition, perceived quality, price, performance, product packaging and design innovation, as well as creative marketing, promotion and distribution strategies. Our ability to compete in these consumer product markets may be adversely affected by a number...

  • Page 23
    ... a particular raw material market or as a result of changes in our business may no longer be useful for the Company. If these efforts are not effective or expose us to above average costs for an extended period of time and we are unable to pass our raw materials costs on to our customers, our future...

  • Page 24
    ...very limited group of retailer customers. Because of the importance of these key customers, demands for price reductions or promotions by such customers, reductions in their purchases, changes in their financial condition or loss of their accounts could have a material adverse effect on our business...

  • Page 25
    ...international markets are subject to a number of special risks which could have a material adverse effect on our business, financial condition and results of operations. These risks include, but are not limited to changes in the economic conditions or consumer preferences or demand for our products...

  • Page 26
    ... adverse effect on our business, financial condition and results of operations. Any such claims, with or without merit, could be time consuming and expensive, and may require us to incur substantial costs, including the diversion of management and technical personnel, cause product delays or require...

  • Page 27
    ... and retain qualified replacements. Class action and derivative action lawsuits and other investigations, regardless of their merits, could have an adverse effect on our business, financial condition and results of operations. Spectrum and certain of its officers and directors have been named in the...

  • Page 28
    ... agencies and regulations. For example, in the United States, all products containing pesticides must be registered with the EPA and, in many cases, similar state and foreign agencies before they can be manufactured or sold. Our inability to 23 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 29
    ...We manufacture and market a number of complex chemical products bearing our brands relating to our Home and Garden Business, such as fertilizers, growing media, herbicides and pesticides. On occasion, customers and some current or former employees have alleged that some products failed to perform up...

  • Page 30
    ..."), on any interest payment date prior to October 2, 2010, the Company may, at its option and subject to certain conditions, currently not being met, related to the trading price of its common stock, pay interest due on any semi-annual interest payment date by increasing the principal amount of such...

  • Page 31
    ... at September 30, 2008: Facility Function Global Batteries & Personal Care Fennimore, Wisconsin(1) Portage, Wisconsin(1) Dischingen, Germany(1) Washington, UK(2) Ninghai, China(3) Guatemala City, Guatemala(1) Jaboatao, Brazil(1) Manizales, Colombia(1) Dixon, Illinois(2) Visalia, California...

  • Page 32
    ... centers, sales offices and administrative offices throughout the world in support of our business. We lease our administrative headquarters, located in Atlanta, Georgia, and our primary research and development facility and North America headquarters, located in Madison, Wisconsin. We believe...

  • Page 33
    ...of Contents Index to Financial Statements PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERS PURCHASES OF EQUITY SECURITIES Our common stock, par value $0.01 per share (the "Common Stock"), is traded on the New York Stock Exchange (the "NYSE") under...

  • Page 34
    ... remaining portion of the Home and Garden Business. The following selected financial data should be read in conjunction with our consolidated financial statements and notes thereto and the information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations...

  • Page 35
    ...Home and Garden Business in order to reflect the estimated fair value of this business. See Note 5, Assets Held for Sale, and Note 11, Discontinued Operations, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for information relating to this impairment charge...

  • Page 36
    ... value of the Home and Garden Business to take into account the changes in the credit markets and the weaker than planned operating performance during the Fiscal 2007 selling season so as to ensure that the Home and Garden Business was being marketed at a price that was reasonable in relation to its...

  • Page 37
    ..., wholesalers and distributors, hearing aid professionals, industrial distributors and original equipment manufacturers and 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 Tetra...

  • Page 38
    ..., Germany battery plant, transferring private label battery production at our Dischingen, Germany battery plant to our manufacturing facility in China and restructuring the sales, marketing and support functions. As a result, we have reduced headcount in Europe by approximately 350 employees or...

  • Page 39
    ... alkaline or zinc carbon batteries in cell sizes of AA, AAA, C, D and 9-volt, and specialty batteries, which include rechargeable batteries, hearing aid batteries, photo batteries and watch/calculator batteries. Most consumer batteries are marketed under one of the following brands: Rayovac/VARTA...

  • Page 40
    ... Business also has exclusive brand arrangements for our Vigoro brand at The Home Depot, for our Sta-Green brand at Lowe's and for our Expert Gardener brand at Wal-Mart. The Home and Garden Business' marketing position is primarily that of a value brand, enhanced and supported by innovative products...

  • Page 41
    ... Operations of Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for additional information regarding the sale of the Canadian division of our Home and Garden Business. As a result, and unless specifically stated, all discussions regarding Fiscal 2008 and Fiscal...

  • Page 42
    ... of Business, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information regarding the reclassification of the Home and Garden Business. Cost of goods sold during Fiscal 2008 also included $16 million in restructuring and related charges...

  • Page 43
    ..." below, as well as Note 2(c), Significant Accounting Policies and Practices-Intangible Assets, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information regarding these non-cash impairment charges. The increase in operating expenses...

  • Page 44
    ..., a non-cash charge, in Fiscal 2008. See "Goodwill and Intangibles Impairment" below as well Note 2(i), Significant Accounting Policies and Practices-Intangible Assets, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K 39 Source: Spectrum Brands, Inc, 10...

  • Page 45
    ... Financial Statements for additional information regarding this impairment charge and the amount attributable to Global Batteries & Personal Care. Goodwill and intangible assets at September 30, 2008 total approximately $416 million and primarily relate to the ROV Ltd., VARTA AG, Remington Products...

  • Page 46
    ... certain trade name intangible assets, a non-cash charge, in Fiscal 2008. See "Goodwill and Intangibles Impairment" below as well Note 2(i), Significant Accounting Policies and Practices-Intangible Assets, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for...

  • Page 47
    ...Index to Financial Statements The following table summarizes all restructuring and related charges we incurred in 2008 and 2007 (in millions): 2008 2007 Costs included in cost of goods sold: Breitenbach, France facility closure: Termination benefits Other associated costs United & Tetra integration...

  • Page 48
    ..., Germany battery plant, transferring private label battery production at our Dischingen, Germany battery plant to our manufacturing facility in China and restructuring Europe's sales, marketing and support functions. We recorded approximately $1 million in pretax restructuring and related credits...

  • Page 49
    ...our Global Batteries & Personal Care business segment. Future cash expenditures will not result from these impairment charges. See Note 2(i), Significant Accounting Policies and Practices-Intangible Assets, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for...

  • Page 50
    ... as Note 2(c), Significant Accounting Policies and Practices-Intangible Assets, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information regarding these non-cash impairment charges. In 2006, the Financial Accounting Standards Board ("FASB...

  • Page 51
    ... 2007. See Note 11, Discontinued Operations of Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for additional information regarding the sale of the Canadian division of our Home and Garden Business. As a result, and unless specifically stated, all discussions...

  • Page 52
    ...alkaline battery sales in Europe which were driven by (i) the continued shift in distribution channels from electronic specialty and photo stores to deep discount and food retail channels and (ii) the continued shift in product mix due to consumer preferences for lower-priced private label batteries...

  • Page 53
    ... our Global Batteries & Personal Care European manufacturing, support, sales and marketing organization. See "Restructuring and Related Charges" below, as well as Note 16, Restructuring and Related Charges, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for...

  • Page 54
    ... the low margin private label battery businesses, (ii) the continued shift in European distribution channels from electronic specialty stores and photo stores to discount channels and (iii) the continued shift in product mix due to consumer preferences for lower-priced private label batteries. Net...

  • Page 55
    ... assets as of September 30, 2007 total approximately $964 million and primarily relate to the acquisitions of Tetra and the United Pet Group division of United. Home and Garden 2007 2006 (in millions) Net sales to external customers Segment profit Segment profit as a % of net sales Assets as of...

  • Page 56
    ... benefit plan. Our corporate expense as a percentage of net sales in Fiscal 2007 increased to 1.8% from 1.7% in Fiscal 2006. Restructuring and Related Charges. See Note 16, Restructuring and Related Charges of Notes to Consolidated Financial Statements, included in this Annual Report on Form...

  • Page 57
    ...Index to Financial Statements The following table summarizes all restructuring and related charges we incurred in 2007 and 2006 (in millions): 2007 2006 Costs included in cost of goods sold: Breitenbach, France facility closure: Termination benefits Other associated costs United & Tetra integration...

  • Page 58
    ... plant, transferring private label battery production at our Dischingen, Germany battery plant to our manufacturing facility in China and restructuring Europe's sales, marketing and support functions. We recorded approximately $7 million and $21 million of pretax restructuring and related charges...

  • Page 59
    ... as part of our Global Batteries & Personal Care reportable segment. Future cash expenditures will not result from these impairment charges. See Note 2(i), Significant Accounting Policies and Practices-Intangible Assets, of Notes to Consolidated Financial Statements included in this Annual Report on...

  • Page 60
    ... Pro and Tech as discontinued operations. The Company discontinued these operations as part of the United integration initiatives. See Note 16, Restructuring and Related Charges, of Notes to Consolidated Financial Statements included in this Annual 55 Source: Spectrum Brands, Inc, 10-K, December 10...

  • Page 61
    ... reduction initiatives designed to strengthen our market position and improve our financial performance, some of these initiatives will require time before the intended benefits can be realized, and, given current adverse economic conditions and the rapidly changing retail landscape, it is difficult...

  • Page 62
    ... Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information on the sale of the Canadian division of the Home and Garden Business. At September 30, 2008, the aggregate amount outstanding under our Senior Credit Facilities totaled a U.S. Dollar equivalent...

  • Page 63
    ... to make an offer, in cash, to repurchase all or a portion of the applicable outstanding notes for a specified redemption price, including a redemption premium, upon the occurrence of a change of control of our Company, as defined in such indentures and require prepayment in connection with certain...

  • Page 64
    ...reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. 59 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 65
    ... Sheets included in this Annual Report on Form 10-K, such as pension obligations. See Note 12, Employee Benefit Plans, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for a more complete discussion of our employee benefit plans (in millions): Contractual...

  • Page 66
    ...iii) $81 million related to our Home and Garden Business. The $362 million impairment charge incurred in Fiscal 2007 reflects $214 million of goodwill associated with our North America reporting unit, which is now part of our Global Batteries & Personal Care reportable segment, a goodwill impairment...

  • Page 67
    ... a corresponding asset is reported in Deferred charges and other in our Consolidated Balance Sheets included in this Annual Report on Form 10-K. Our trade receivables subject us to credit risk which is evaluated based on changing economic, political and specific customer conditions. We assess these...

  • Page 68
    ... and Major Customers and Employees, of Notes to Consolidated Financial Statements of this Annual Report on Form 10-K for more information about our revenue recognition and credit policies. Pensions Our accounting for pension benefits is primarily based on discount rate, expected and actual return on...

  • Page 69
    ...of the acquired company that do not meet the conditions prescribed in EITF 95-3 are treated as restructuring and related charges and expensed as incurred. See Note 16, Restructuring and Related Charges, of Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for...

  • Page 70
    ... SFAS 141(R) will significantly change the accounting for future business combinations after adoption. SFAS 141(R) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed...

  • Page 71
    ... related amounts payable to, or receivable from, the contract counter-parties are included in accounts payable or accounts receivable. Commodity Price Risk We are exposed to fluctuations in market prices for purchases of zinc, urea and di-ammonium phosphates used in the manufacturing process. We use...

  • Page 72
    ...of one year's purchases of the related commodities due to the same change in commodity prices, would have been a net gain of $2.7 million. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required for this Item is included in this Annual Report on Form 10-K on pages 122 through...

  • Page 73
    ... Financial Statements Management's Annual Report on Internal Control over Financial Reporting. The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company...

  • Page 74
    ...to Financial Statements Yoder Separation Agreement On October 10, 2008, the Company filed a Current Report on Form 8-K with the SEC (the "8-K") disclosing that Amy Yoder voluntarily resigned from her position as President, United Industries, the president of the Company's Home & Garden Business. The...

  • Page 75
    ... Index to Financial Statements PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following table sets forth the name, age and position with the Company of each of our executive officers and directors as of December 8, 2008: Name Age Position Kent J. Hussey Anthony...

  • Page 76
    ... and Marketing for Bassett Furniture Industries, Inc. From April 1998 to October 1998, he served as a consultant in the consumer products industry. From August 1996 to April 1998, Mr. Lupo served as Senior Vice President and Chief Operating Officer for the international division of Wal-Mart Stores...

  • Page 77
    ... late reporting by Mr. Hussey of the grant of 100,000 shares of restricted stock of the Company and (3) the inadvertent inclusion of 119,241 shares of stock of the Company in Form 4 filings made by Mr. Hussey after March 4, 2008 that were no longer beneficially owned by Mr. Hussey. Code of...

  • Page 78
    ... The Company's named executive officers for Fiscal 2008 consist of the following persons: Named Executive Position Kent J. Hussey Anthony L. Genito David R. Lumley John A. Heil Amy J. Yoder Chief Executive Officer Executive Vice President, Chief Financial Officer and Chief Accounting Officer Co...

  • Page 79
    ... percentage of annual compensation based on the Company's achievement of performance objectives set by the Compensation Committee is as set forth below for each named executive officer who continues to be employed by the Company: Named Executive % Performance Based Kent J. Hussey Anthony L. Genito...

  • Page 80
    ... officers is set forth in the employment agreement with the named executive officer. In determining the annual base salary reflected in each named executive officer's employment agreement, the Compensation Committee considered current market conditions, the Company's financial condition at the time...

  • Page 81
    ... by our Board of Directors. Consistent with the Company's operation of each of its three business segments, Global Batteries and Personal Care, Home and Garden and Global Pet Supplies, as stand alone business segments, the annual operating plan includes performance targets for the Company as a whole...

  • Page 82
    ... purposes of the 2009 MIP, the target award percentages for each participating named executive officer are as follows: Named Executive Target as % of Annual Base Kent J. Hussey Anthony L. Genito David R. Lumley John A. Heil 125% 100% 100% 100% The Fiscal 2009 MIP performance targets for each of...

  • Page 83
    ... an employee at the Company as of October 8, 2008, she is not eligible to participate in the Fiscal 2009 LTIP. The target LTIP award level for each named executive officer at the time the 2008 LTIP awards were granted was: Named Executive LTIP Target Level as % of Annual Base Kent J. Hussey Anthony...

  • Page 84
    ... Index to Financial Statements average of the high and low share prices on the date of grant. In order to utilize the remaining available shares under the 1997 Rayovac Incentive Plan prior to its expiration on August 31, 2007, a part of the equity-based portion of the 2008 LTIP award for each...

  • Page 85
    ... to Financial Statements Fiscal 2008 LTIP performance goal established by the Compensation Committee, then the executive would be eligible to earn 100% of the target cash-based award amount, payable as described below. If the Company achieved less than 80% of the Fiscal 2008 LTIP performance goal...

  • Page 86
    ...account the remaining number of shares authorized to be issued under the 2004 Rayovac Incentive Plan and the current market value of the Company's stock, has modified its LTIP program applicable to those named executive officers who continue to be employed by the Company such that (i) for Mr. Hussey...

  • Page 87
    ... into account Fiscal 2008 performance, is continued employment, the restrictions on 50% of such earned shares would lapse on December 1, 2009, and the restrictions on the other 50% of such earned shares would lapse on December 1, 2010; provided, that Mr. Hussey's employment with the Company has...

  • Page 88
    ...% 100% Pursuant to these awards, any restricted stock not earned based on Fiscal 2008 performance could be earned based on continued employment and the Company performance in excess of the stated adjusted EBITDA goal in the Company's Fiscal 2009 annual operating plan for, in the case of Mr. Hussey...

  • Page 89
    ... a grant of 100,000 shares of restricted stock. All such shares are time-based, with the restrictions as to 50% of the these shares to lapse on June 9, 2009 and the restrictions on the remaining 50% of these shares to lapse on June 9, 2010; provided, that Mr. Hussey's employment with the Company has...

  • Page 90
    ...-termination benefits payable to such named executive officers should his employment with the Company terminate. In connection with the termination of her employment with the Company, Ms. Yoder has entered into a Separation Agreement and Release with the Company to govern the parties relative rights...

  • Page 91
    ... companies on whose boards Mr. Hussey serves. Timing and Pricing of Stock-Based Grants Annual grants of restricted stock to our named executive officers are generally made on the first business day in October each year following approval by the Compensation Committee. For Fiscal Year 2009, however...

  • Page 92
    ... Option Plan. The Rayovac Corporation 1996 Stock Option Plan expired in 2006 and no additional grants may be made pursuant to it. The 1997 Rayovac Incentive Plan expired on August 31, 2007 and no additional grants may be made pursuant to it. 87 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 93
    ...for the Company for the named executive officers. Summary Compensation Table Change in Pension Value and Nonqualified Deferred Comp Earnings(8) Non-Equity Name(1) Year Salary Bonus(2) Stock Awards(4) Option Awards(5) Incentive Plan Compensation(6) Kent J. Hussey Chief Executive Officer 2008 $ 775...

  • Page 94
    ... case as described under the heading "Restricted Stock Grants upon Execution of Employment Agreements" beginning on page 84. This column reflects the dollar amount recognized for financial statement reporting purposes for Fiscal 2008 and Fiscal 2007 in accordance with SFAS 123R. See Note 2(w), Stock...

  • Page 95
    .... In connection with the relocation of the Company's corporate headquarters from Madison, Wisconsin to Atlanta, Georgia, Mr. Hussey was provided a cost of living differential allowance in the amount of $3,000 per month. (5) (6) (7) (8) (9) 90 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 96
    ...'s contribution to each participating named executive officers' SERP account, consisting of annual contribution and 8.0% annual interest credit. In connection with the relocation of the Company's corporate headquarters from Madison, Wisconsin to Atlanta, Georgia, Mr. Hussey was provided cost of...

  • Page 97
    ... Financial Statements included in this Annual Report on Form 10-K for additional information as to the assumptions used in the valuation of these awards. Represents performance-based restricted stock granted to executives pursuant to the Company's 2008 LTIP, granted under the 2004 Rayovac...

  • Page 98
    ... Index to Financial Statements (4) (5) Represents the threshold, target and maximum payments under the Company's Management Incentive Plan for Fiscal 2008. The actual amount earned under these plans for Fiscal 2008 is disclosed in the "Summary Compensation Table" beginning on page 88 as part of the...

  • Page 99
    ... Company's stock on September 30, 2008 (the last day the market was open prior to the end of Fiscal 2008), by the number of shares. Outstanding Equity Awards At Fiscal Year-End Table Option Awards Unexercised Options Unexercisable Stock Awards Unvested Stock Awards Name Kent J. Hussey Grant Date...

  • Page 100
    ...None of the named executive officers exercised any stock options during Fiscal 2008. Option Exercises and Stock Vested Information Option Awards Number Market Of Shares Value Realized Exercised Stock Awards Shares Market Acquired Value on Vesting Realized Name Kent J. Hussey Anthony L. Genito John...

  • Page 101
    ... SERP only as of September 30, 2008. (2) (3) (4) (5) Termination and Change in Control Provisions Awards under the Company's Incentive Plans Each named executive officer has received and currently holds stock options and/or restricted stock awards under the 1997 Rayovac Incentive Plan and the 2004...

  • Page 102
    ... of a change in control. Kent J. Hussey The Company and Mr. Hussey, who was appointed Chief Executive Officer of the Company on May 23, 2007, are parties to an amended and restated employment agreement dated as of April 1, 2005, which was 97 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 103
    ...Index to Financial Statements amended on June 29, 2007 and on June 9, 2008 (as amended, "Mr. Hussey's employment agreement"). Mr. Hussey's employment agreement contains the following provisions applicable upon the termination of Mr. Hussey's employment with the Company or in the event of a change in...

  • Page 104
    ... stock award agreements between the Company and Mr. Hussey, treated as a termination by the Company without cause. As such, it would entitle Mr. Hussey, contingent upon his execution of a separation agreement with a release of claims agreeable to the Company, to receive those benefits described...

  • Page 105
    ...change in the nature or scope of Mr. Genito's responsibilities, authorities, powers, functions or duties, provided that the Company may replace Mr. Genito as Chief Accounting Officer of the Company without implicating this subsection; 100 (iii) Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 106
    ... or (ii) the time remaining until September 30, 2010, arrange to provide the executive and his dependents with the insurance and other benefits generally made available from time to time by the Company to its executive officers who report to the Chief Executive Officer, on a basis substantially...

  • Page 107
    ...of the sale an amount equal to double the sum of (i) such executive's annual base salary and (ii) the target MIP award amount such executive would be eligible to receive if the Company met 100% of the applicable performance goals established by the Board of Directors or, if higher, the amount of the...

  • Page 108
    ... Index to Financial Statements Company terminates Mr. Lumley's employment without Cause (as defined in Mr. Lumley's employment agreement), the executive would be entitled to receive any portion of the total potential award that has not yet been paid. John A. Heil Mr. Heil is a party to an amended...

  • Page 109
    ...of the sale an amount equal to double the sum of (i) such executive's annual base salary and (ii) the target MIP award amount such executive would be eligible to receive if the Company met 100% of the applicable performance goals established by the Board of Directors or, if higher, the amount of the...

  • Page 110
    ... the provisions of the restricted stock award agreements evidencing the awards of such restricted stock. Ms. Yoder will continue to receive her monthly car allowance of $1500 per month until January 30, 2010. Outplacement services through April 8, 2009, up to a maximum cost to the Company of $12,000...

  • Page 111
    ... 2009. (2) (3) (4) (5) (6) (6a) Amount represents the present value of the accounts payable at the benefit payment date. The discount value used to calculate the present value is 120% of the applicable Federal short-term rate of 2.86%. 106 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 112
    ... and payable in two installments, the first of which occurred in November 2008 and the second of which will be made on or before December 31, 2009. For more information on this incentive plan, please see the discussion under Long Term Incentive Plan on page 78. 107 Source: Spectrum Brands, Inc...

  • Page 113
    ... calculated using the highest stock price during the 60 day period prior to the termination using an assumed September 30, 2008 termination date ($2.78 per share), pursuant to the applicable incentive plan governing documents. (6) Reflects 76,525 shares of restricted stock awarded under performance...

  • Page 114
    ... Index to Financial Statements David R. Lumley Termination Scenarios Good Reason (No Sale of Legacy) Component Cash Severance(1) $ - $ Retention Award(2) $ - $ LTIP Cash(3) $ - $ Equity Time-Lapse Restricted Stock(4)$ - $ Performance Shares(5) $ - $ Total $ - $ Retirement Benefits NQ Defined...

  • Page 115
    ... Contents Index to Financial Statements (6a) Amount represents the present value of the accounts payable at the benefit payment date. The discount value used to calculate the present value is 120% of the applicable Federal mid-term rate of 2.86%. (6b) Upon death, the entire account balance is fully...

  • Page 116
    ...good reason or change in control in relation to the sale of the Global Pet Supplies business and provided that the executive continues employment for one year following such sale, the target bonus amount the executive would be eligible to receive if the Company met 100% of the applicable performance...

  • Page 117
    ...of a change in control. Change in control value is calculated using the highest stock price during the 60 day period prior to the termination using an assumed September 30, 2008 termination date ($2.78 per share), pursuant to the applicable incentive plan governing documents. In all other cases, the...

  • Page 118
    ...with the vesting schedules set forth in the applicable award agreements. The value is calculated using the stock price at September 30, 2008 ($1.39 per share). Reflects health and welfare benefit continuation over a 15 month period. Benefit plans include: medical and dental insurance, life insurance...

  • Page 119
    ... FAS 123R. See Note 2(w), Stock Compensation, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information as to the assumptions used in the valuation of these awards. Fees earned by Mr. Brizius and Mr. Schoen are paid directly to Thomas H. Lee...

  • Page 120
    ... D. Bowlin All current directors and executive officers of the Company as a group (9 persons) Named Executive Officers Not Serving at December 8, 2008: Amy J. Yoder * (1) (2) Indicates less than 1% of the total number of outstanding shares of our Common Stock. Number of Shares Percent 5,462,302...

  • Page 121
    ... and in that capacity direct ACPGP's operations. As set forth in a Schedule 13F for the quarter ended September 30, 2008 and filed with the SEC on November 17, 2008, ACPGP claims sole investment discretion over 3,322,985 shares of Common Stock. As 116 Source: Spectrum Brands, Inc, 10-K, December 10...

  • Page 122
    ...the fiscal quarter Ended September 30, 2008 and filed with the SEC on November 12, 2008 on behalf of Barclays Global Investors UK Holdings Limited ("Barclays UK"), Barclays UK claims shared investment discretion over 3,274,969 shares of Common Stock with Barclays Global Investors Ltd. ("Barclays Ltd...

  • Page 123
    ... for review and approval of related-person transactions appear in our Code of Ethics for our Principal Executive Officer and Senior Financial Officers and our Code of Business Conduct and Ethics, each of which is posted on our website. All of our executive officers, directors and employees are...

  • Page 124
    ... Index to Financial Statements Mr. Shepherd, a member of our Board of Directors, is an investor in Thomas H. Lee Equity Fund IV, L.P., which was a large shareholder of United immediately prior to the Merger, and, as a result of the Merger, became a large shareholder of our Common Stock. As mentioned...

  • Page 125
    ... Fees" are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. During both Fiscal 2008 and 2007, such amounts primarily related to the carve out audits of various businesses. "Tax Fees" are fees for tax compliance...

  • Page 126
    ... financial statement schedule listed in the Index to Consolidated Financial Statements and Financial Statement Schedule, filed as part of this Annual Report on Form 10-K. 3. The exhibits listed in the Exhibit Index filed as part of this Annual Report on Form 10-K. 121 Source: Spectrum Brands, Inc...

  • Page 127
    ... Statements of Shareholders' Equity (Deficit) and Comprehensive Income (Loss) Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Schedule II Valuation and Qualifying Accounts 122 123 124 125 126 127 128 183 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 128
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was...

  • Page 129
    Table of Contents Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES Consolidated Balance Sheets September 30, 2008 and 2007 (In thousands, except per share amounts) 2008 2007 Current assets: Cash and cash equivalents Receivables: Trade accounts receivable, net of allowances of $...

  • Page 130
    ... Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES Consolidated Statements of Operations Years ended September 30, 2008, 2007 and 2006 (In thousands, except per share amounts) 2008 2007 2006 Net sales Cost of goods sold Restructuring and related charges Gross profit Operating...

  • Page 131
    Table of Contents Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES Consolidated Statements of Shareholders' Equity (Deficit) and Comprehensive Income (Loss) Years ended September 30, 2008, 2007 and 2006 (In thousands) Common Stock Shares Amount Additional Paid-In Capital $ 635,...

  • Page 132
    ...costs Non-cash restructuring and related charges Changes in assets and liabilities, net of acquisitions: Accounts receivable Inventories Prepaid expenses and other current assets Accounts payable and accrued liabilities Other assets and liabilities Net cash (used) provided by operating activities of...

  • Page 133
    ..."Home and Garden Business"). The Company's operations include the worldwide manufacturing and marketing of alkaline, zinc carbon and hearing aid batteries, as well as aquariums and aquatic supplies and the designing and marketing of rechargeable batteries, battery-powered lighting products, electric...

  • Page 134
    ...to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) subject to a number of closing conditions, including, without limitation, consent of the Company's lenders under its senior credit facilities...

  • Page 135
    ..., generally made from wire or other permanent racking, which are shipped to customers for display of the Company's products. These permanent fixtures are restocked with the Company's product multiple times over the fixture's useful life. 130 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 136
    ... fair value of net assets acquired (goodwill) and indefinite-lived intangible assets (certain trade name intangibles) are not amortized. Goodwill is tested for impairment at least annually, at the reporting unit level with such groupings being consistent with the Company's reportable segments. If an...

  • Page 137
    ... amount of the respective reporting unit's goodwill over the implied fair value of such goodwill of which $270,811 related to Global Pet Supplies and $49,801 related to the Home and Garden Business. In connection with the Company's annual goodwill impairment testing performed during Fiscal 2007 the...

  • Page 138
    ... name intangibles of the Company's Home and Garden Business were tested during the first quarter of Fiscal 2008 in conjunction with the Company's reclassification of that business from an asset held for sale to an asset held and used. The Company first compared the fair value of this reporting unit...

  • Page 139
    ... in circumstances in the business or external factors warrants a review. Circumstances such as the discontinuation of a product or product line, a sudden or consistent decline in the sales forecast for a product, changes in technology or in the way an asset is being used, a history of operating or...

  • Page 140
    ...Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) impairment review to determine if an impairment test is required is based on an undiscounted cash flow analysis for asset groups at the...

  • Page 141
    ...Contents Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) incurred with third-party carriers to transport products to customers and salaries and overhead costs related to activities to...

  • Page 142
    ...Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) The Company uses interest rate swaps to manage its interest rate risk. The swaps are designated as cash flow hedges with the changes in...

  • Page 143
    ... and cash equivalents, accounts and notes receivable, accounts payable and short-term debt approximate fair value. The fair values of long-term debt and derivative financial instruments are generally based on quoted or observed market prices. The carrying value of financial instruments approximate...

  • Page 144
    ...Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) U.S. Dollar Term B Loan due March 30, 2013 with interest payable periodically but not less than quarterly at LIBOR plus 4.00%, a â,¬262...

  • Page 145
    ..., each as defined by the Company for purposes of such awards. The remaining shares granted in Fiscal 2008 and Fiscal 2007 are time based, which vest either 100% after three years or on a pro rata basis over three years. Restricted stock shares granted through Fiscal 2006 generally have vesting...

  • Page 146
    ...Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) three or four year vesting period and approximately 50% are time-based and performance-based. Vesting of such performance based restricted stock...

  • Page 147
    ... to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) The following table summarizes the stock option transactions: 2008 WeightedAverage Exercise Price 2007 WeightedAverage Exercise Price 2006...

  • Page 148
    ... SFAS 141(R) will significantly change the accounting for future business combinations after adoption. SFAS 141(R) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed...

  • Page 149
    ... primarily of a distribution facility in the Dominican Republic and manufacturing facilities in France and Brazil. At September 30, 2007, the Company had assets and liabilities of $24,975 and $8,475, respectively, related to the Canadian division of the Home and Garden Business included in Assets...

  • Page 150
    ... Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) The remaining balance in Assets held for sale in the Consolidated Balance Sheets as of September 30, 2007, consisted primarily of a distribution facility...

  • Page 151
    ... Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) Intangible assets subject to amortization include proprietary technology, customer relationships and certain trade names. The carrying...

  • Page 152
    ... FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) The amortization expense related to intangibles subject to amortization for Fiscal 2008, 2007 and 2006 is as follows: 2008(A) 2007(A) 2006 Proprietary technology amortization Customer list amortization Trade names...

  • Page 153
    ... to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) $50,000 synthetic letter of credit facility (the "L/C Facility"). The proceeds of borrowings under the Senior Credit Agreement were used to...

  • Page 154
    ... Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) The Senior Credit Agreement contains financial covenants with respect to debt, including, but not limited to, a maximum senior secured...

  • Page 155
    ...the performance targets are not met, the performance component of a restricted stock award will automatically vest one year after the originally scheduled vesting date, effectively making the award time-based. The remaining 160 shares vest at specific dates throughout 2008 and 2009. The total market...

  • Page 156
    ... Note 2(w), Significant Accounting Policies-Stock Compensation, for additional information on grants and forfeitures of restricted shares during Fiscal 2008, 2007 and 2006). (9) Stock Option Plans In 1996, the Company's Board of Directors ("Board") approved the Rayovac Corporation 1996 Stock Option...

  • Page 157
    Table of Contents Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) The components of income tax expense (benefit) are as follows: 2008 2007 2006 Current: Federal Foreign State Total ...

  • Page 158
    Table of Contents Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) The tax effects of temporary differences, which give rise to significant portions of the deferred tax assets and ...

  • Page 159
    ...,116, respectfully. The Company has had a change of ownership, as defined under Internal Revenue Code Section 382, that subjects the Company's U.S. net operating losses to certain limitations. These limitations include an overall annual limitation and a limitation related to gains generated upon the...

  • Page 160
    ... sold the Canadian division of the Home and Garden Business, which operated under the name Nu-Gro, to a new company formed by RoyCap Merchant Banking Group and Clarke Inc. Cash proceeds received at closing, net of selling expenses, totaled $14,931 and were used to reduce outstanding debt. These...

  • Page 161
    ... used to reduce outstanding debt. Nu-Gro Pro and Tech Fiscal 2005 revenue approximated $80,000 from sales of high-end specialty controlled-release nitrogen fertilizer and other products to professional turf markets and specialty wholesale fertilizer customers. As part of the transaction, the Company...

  • Page 162
    ... Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) (12) Employee Benefit Plans Pension Benefits The Company has various defined benefit pension plans covering some of its employees in the United...

  • Page 163
    Table of Contents Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) plan assets and obligations as of September 30, its fiscal year end. The Company does not believe the adoption of the...

  • Page 164
    ... SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) The following tables provide additional information on the Company's pension and other postretirement benefit plans: Pension and Deferred Compensation Benefits 2008...

  • Page 165
    ... Average Allocation Actual 2008 Asset Category Equity Securities Fixed Income Securities Other Total The weighted average expected long-term rate of return on total assets is 6.4%. 160 Target 2008 0-60% 0-40% 0-100% 100% 36% 16% 48% 100% 2007 32% 15% 53% 100% Source: Spectrum Brands, Inc, 10...

  • Page 166
    ... studies. The investment policies permit variances from the targets within certain parameters. The weighted average expected long-term rate of return is based on a Fiscal 2008 review of such rates. The plan assets currently do not include holdings of Spectrum common stock. The Company's Fixed Income...

  • Page 167
    ... Contents Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) Global strategic initiatives and financial objectives for each reportable segment are determined at the corporate level. Each...

  • Page 168
    ...reclassification of the Home and Garden Business as a continuing operation during Fiscal 2008. Segment profit 2008 2007 2006 Global Batteries & Personal Care (A) Global Pet Supplies (B) Home and Garden Total segments (A) Corporate expenses Restructuring and related charges Goodwill and intangibles...

  • Page 169
    ... to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) Segment total assets September 30, Global Batteries & Personal Care Global Pet Supplies (A) Home & Garden Total segments Corporate Total...

  • Page 170
    ... of Contents Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) Geographic Disclosures-Long-lived assets September 30, United States Outside the United States Long-lived assets at year...

  • Page 171
    ...Fiscal 2008, 2007 and 2006, respectively. (15) Related Party Transactions On February 7, 2005, the Company acquired all of the equity interests of United pursuant to the Agreement and Plan of Merger (as amended, the "Merger Agreement") by and among the Company, Lindbergh Corporation and United dated...

  • Page 172
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) to the Merger, which shares were converted into an aggregate of approximately 36 shares of Company Common Stock pursuant to the Merger. Mr. Jones was a member of the Board of Directors of United...

  • Page 173
    ...Contents Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) unless either party elects to terminate such year-to-year extension by giving termination notice in which case, the term shall...

  • Page 174
    ... CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) The following table summarizes restructuring and related charges incurred by type of charge: 2008 2007 2006 Costs included in cost of goods sold: Breitenbach, France facility closure: Termination benefits Other...

  • Page 175
    ..., product-focused reporting segments; Global Batteries & Personal Care, Global Pet Supplies and the Home and Garden Business. As part of this realignment, the Company's Global Operations organization, previously included in corporate expense, consisting of research and development, manufacturing...

  • Page 176
    ... transferring private label battery production at the Company's Dischingen, Germany battery plant to the Company's manufacturing facility in China and restructuring its sales, marketing and support functions. The Company recorded $(707), $6,504 and $21,242 of pretax restructuring and related charges...

  • Page 177
    ... year ended September 30, 2005, the Company also announced the closure of a zinc carbon manufacturing facility in Breitenbach, France within Global Batteries and Personal Care. The Company recorded no pretax restructuring and related charges during Fiscal 2008 in connection with this closure. The...

  • Page 178
    ... 95-3. (17) Subsequent Events Subsequent to September 30, 2008, the Company's Board of Directors approved the shutdown of the growing products portion of its Home and Garden Business segment, which includes the manufacturing and marketing of fertilizers, enriched soils, mulch and grass seed. This...

  • Page 179
    ... and intercompany balances and transactions. Separate consolidated financial statements of the Guarantor Subsidiaries are not presented because management has determined that such financial statements would not be material to investors. 174 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 180
    ... liabilities: Current maturities of long-term debt Accounts payable Accrued liabilities: Wages and benefits Income taxes payable Restructuring and related charges Accrued interest Other Total current liabilities Long-term debt, net of current maturities Employee benefit obligations, net of current...

  • Page 181
    ...Financial Statements Consolidating Statement of Operations Year Ended September 30, 2008 Guarantor Subsidiaries Nonguarantor Subsidiaries Consolidated Total Net sales Cost of goods sold Restructuring and related charges...931,545) 78,516 80,153 14,220 9,236 8,100 190,225 (31,115) 182,158 764,954 (978...

  • Page 182
    ... of debt Proceeds from debt financing Debt issuance costs Treasury stock purchases Proceeds (advances related to) from intercompany transactions Net cash provided (used) by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash...

  • Page 183
    ... Current maturities of long-term debt Accounts payable Accrued liabilities: Wages and benefits Income taxes payable Restructuring and related charges Accrued interest Liabilities held for sale Other Total current liabilities Long-term debt, net of current maturities Employee benefit obligations, net...

  • Page 184
    ...Financial Statements Consolidating Statement of Operations Year Ended September 30, 2007 Guarantor Subsidiaries Nonguarantor Subsidiaries Consolidated Total Net sales Cost of goods sold Restructuring and related charges...400) (327,037) $ $ $ Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 185
    ...stock options Stock option income tax benefit Treasury stock purchases (Advances related to) proceeds from intercompany transactions Net cash (used) provided by financing activities Effect of exchange rate changes on cash and cash equivalents... $ Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 186
    ...Financial Statements Consolidating Statement of Operations Year Ended September 30, 2006 Guarantor Subsidiaries Nonguarantor Subsidiaries Consolidated Total Net sales Cost of goods sold Restructuring and related charges...11,100 (309,453) $ $ $ Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 187
    ...stock options Stock option income tax benefit Treasury stock purchases Proceeds from (advances related to) intercompany transactions Net cash provided (used) by financing activities Effect of exchange rate changes on cash and cash equivalents... $ Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 188
    ... of Contents Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS For the years ended September 30, 2008, 2007 and 2006 (In thousands) Column A Column B Balance at Descriptions Beginning of Period Column C Additions Charged to Costs and...

  • Page 189
    ...on its behalf by the undersigned thereunto duly authorized. SPECTRUM BRANDS, INC. By: /s/ Kent J. Hussey Kent J. Hussey Chief Executive Officer DATE: December 10, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on...

  • Page 190
    ... and United Industries Corporation (filed by incorporation by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on January 4, 2005). Share Purchase Agreement dated as of March 14, 2005 by and among Rayovac Corporation, Triton Managers Limited, acting in its own name but...

  • Page 191
    ...Employment Agreement, effective June 9, 2008, by and between Spectrum Brands, Inc. and Kent J. Hussey (filed by incorporation by reference to Exhibit 10.21 to the Quarterly Report on Form 10-Q for the quarterly period ended June 29, 2008, filed with the SEC on August 8, 2008). Restricted Stock Award...

  • Page 192
    ... to Financial Statements Exhibit 10.5 Exhibit 10.6 Exhibit 10.7 Exhibit 10.8 Retention Agreement, dated as of November 10, 2008, by and between Spectrum Brands, Inc. and Kent J. Hussey.* Amended and Restated Employment Agreement, effective as of January 16, 2007, by and between Spectrum Brands, Inc...

  • Page 193
    ... 2005, by and among Rayovac Corporation and those Persons listed on Schedule 1 attached thereto, who were, immediately prior to the Effective Time, stockholders of United Industries Corporation (filed by incorporation by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the SEC...

  • Page 194
    ... with the SEC on April 7, 2005). Form of Restricted Stock Award Agreement under the 2004 Rayovac Incentive Plan (for grants of restricted stock made on or after October 1, 2007) (filed by incorporation by reference to Exhibit 10.29 to the Annual Report on Form 10-K for the year ended September 30...

  • Page 195
    ... in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the Corporation shall be identical to such registered office. ARTICLE II. SHAREHOLDERS II.1Annual...

  • Page 196
    ..., or any adjournment thereof, arranged in alphabetical order, and indicating the address of each shareholder, the number of shares of each class of capital stock of the Corporation entitled to vote registered in the name of such shareholder and the total number of votes to which each shareholder is...

  • Page 197
    II.10Voting of Shares by Certain Holders. (a)Other Corporations. Shares standing in the name of another corporation may be voted either in person or by proxy, by the president of such corporation or any other officer appointed by such president. A proxy executed by any principal officer of such ...

  • Page 198
    ... to the Board of Directors or other business to be properly brought before a meeting by a shareholder pursuant to Section II.13(a)(iv) or Section II.13(b)(iii), as the case may be, the shareholder shall (i) have given timely notice thereof in writing to the secretary of the Corporation in accordance...

  • Page 199
    ... Notice: (A)(1) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation's books and records), (2) the class or series, as applicable, and number of shares of capital 5 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 200
    ... such Proposing Person, the name and address of any other person who owns, of record or beneficially, any shares of capital stock of the Corporation and who supports such individual for election or reelection as a director of the Corporation; (G) as to each item of business that the Proposing Person...

  • Page 201
    ... to be part of a group (within the meaning of Rule 13d-3 under the Exchange Act) that intends, (1) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company's outstanding capital stock required to approve or adopt the proposed business or nomination...

  • Page 202
    ...'s proxy statement pursuant to Rule 14a-8 under the Exchange Act. ARTICLE III. BOARD OF DIRECTORS III.1General Powers and Number. The business and affairs of the Corporation shall be managed by its Board of Directors. The number of directors shall be fixed from time to time by the Board of Directors...

  • Page 203
    ... or death benefits, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such directors, officers and employees to the Corporation. III.10Committees. The Board of Directors by...

  • Page 204
    ... Executive Officer's place and stead. In general, the Chief Executive Officer shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time. 10 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 205
    ...upon the Chairman of the Board or Chief Executive Officer (as the case may be). Any President may sign, with the Secretary or Assistant Secretary, certificates for shares of the Corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned...

  • Page 206
    ... restricted by the Board of Directors. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power...

  • Page 207
    .... The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of shares of the Corporation. ARTICLE VII. AMENDMENTS...

  • Page 208
    ... capitalized terms (including any plural forms thereof) used in this Article VIII shall be defined as follows: (a) "Affiliate" shall include, without limitation, any corporation, partnership, joint venture, employee benefit plan, trust or other enterprise that directly or indirectly through one or...

  • Page 209
    ... a Breach of Duty and, in the case of subsection (i) above (but not subsection (ii)), indemnification by the Corporation of the requested amount of Liabilities shall be paid to the Director or Officer immediately. VIII.4Determination of Indemnification. (a) If the Board authorizes an Authority...

  • Page 210
    ... Liabilities incurred by, and/or provide for the allowance of reasonable Expenses of, an employee or authorized agent of the Corporation acting within the scope of his or her duties as such and who is not otherwise a Director or Officer. 16 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 211
    ..., Board resolution, vote of shareholders of the Corporation or otherwise, including, without limitation, under the Statute. Nothing contained in this Article VIII shall be deemed to limit the Corporation's obligations to indemnify against Liabilities or advance Expenses to a Director or Officer...

  • Page 212
    ... ACCEPTANCE (this "Instrument"), dated as of October 24, 2008 ("Effective Date"), is by and among Spectrum Brands, Inc., a corporation duly organized and existing under the laws of the State of Wisconsin (the "Company"), U.S. Bank National Association, a national banking association duly organized...

  • Page 213
    ... by the Resigning Trustee or, to the best of the knowledge of the Responsible Officer of the Resigning Trustee, by the Holders of the percentage in aggregate principal amount of the Notes required by the Indenture to effect any such waiver; 2 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 214
    ... and subject to conditions set forth in the Indenture. Promptly after the execution and delivery of this Instrument, the Successor Trustee shall cause a notice in the form annexed hereto asExhibit A, to be sent to each Holder of the Notes. 3 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 215
    ... copy of the Board Resolution that was duly adopted by the Board of Directors of the Company authorizing the appointment ...Corporate Trust Services 625 Marquette Avenue; N9311-110 Minneapolis, MN 55479 Phone: 612-316-1445 Fax: 612-667-9825 4 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 216
    TO THE COMPANY: Spectrum Brands, Inc. Attn: General Counsel Six Concourse Parkway, Suite 3300 Atlanta, GA 30328 Fax: 770-829-6298 With a copy to (which shall not constitute notice): Skadden,...effective 10 days after the date first above written. 5 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 217
    IN WITNESS WHEREOF, the parties hereto have executed this Instrument as of the date set forth above. Spectrum Brands, Inc., as the Company By /s/ Kent J. Hussey Its Chief Executive Officer U.S. Bank National Association, as the Successor Trustee By /s/ Richard Prokosch Its Vice President Wells Fargo...

  • Page 218
    ... Association, as Trustee under the Indenture, dated March 30, 2007 pursuant to which your Notes were issued and are outstanding. Spectrum Brands, Inc. has appointed U.S. Bank National Association, whose Corporate Trust Office is located at 60 Livingston Avenue, EP-MN-WS3C, St. Paul, MN 55107-2292...

  • Page 219
    ... during the past twelve months, if any. 6. Notes debt service records. 7. Trust account statements for one-year period proceeding the date of this Instrument. 8. All unissued Note inventory, if any or DTC FAST held global certificates. 8 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 220
    ... individuals as the Board may direct (collectively the "Authorized Officers"), are authorized and directed in the name of and on behalf of the Company to execute and deliver the Instrument including any modifications or amendments thereof; and 9 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 221
    RESOLVED FURTHER, that the actions heretofore taken by the officers of the Company in relation to the foregoing be, and each such action hereby is, in all respects approved, ratified and confirmed. 10 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 222
    ...and effective as of the 10th day of November, 2008 ("Effective Date") by and between Spectrum Brands, Inc. (the "Company"), and Kent J. Hussey (the "Executive"). WHEREAS, the Compensation Committee of the Board of Directors of the Company (the "Board") believes that the next twelve to fifteen months...

  • Page 223
    ... the Executive are personal and may be performed only by him. The Company may assign this Agreement without Executive's consent, but any such assignment shall not relieve the Company of its obligations hereunder. [Signatures on following page] 2 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 224
    ... WHEREOF, the parties have executed this Agreement as of the date first above written. SPECTRUM BRANDS, INC. By: /s/ John T. Wilson John T. Wilson, Vice President, Secretary and General Counsel EXECUTIVE: /s/ Kent J. Hussey Kent J. Hussey 3 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 225
    ... as of the 10th day of November, 2008 (the "Effective Date"), by and between Spectrum Brands, Inc. ("the "Company") and John A. Heil (the "Executive"). WHEREAS, the Company and the Executive previously entered into that certain Amended and Restated Employment Agreement dated January 16, 2007 (the...

  • Page 226
    IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. SPECTRUM BRANDS, INC /s/ By: Kent J. Hussey Kent J. Hussey, Chief Executive Officer EXECUTIVE: /s/ John A. Heil Name: John A. Heil 2 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 227
    ... as of the 10th day of November, 2008 (the "Effective Date"), by and between Spectrum Brands, Inc. ("the "Company") and David R. Lumley (the "Executive"). WHEREAS, the Company and the Executive previously entered into that certain Amended and Restated Employment Agreement dated January 16, 2007 (the...

  • Page 228
    IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. SPECTRUM BRANDS, INC /s/ By: Kent J. Hussey Kent J. Hussey, Chief Executive Officer EXECUTIVE: /s/ David R. Lumley Name: David R. Lumley 2 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 229
    ... employment or the termination of her employment; or (f) for indemnity for third party claims against Yoder for actions taken while she was an employee of Spectrum, as provided under Wisconsin Statutes, Spectrum's Charter, Spectrum's by-laws, 1 Source: Spectrum Brands, Inc, 10-K, December 10, 2008

  • Page 230
    ...disparaging remarks to customers, suppliers or others about Spectrum's business, products or employees, or about Yoder. For purposes of this paragraph, "disparaging remarks" by Yoder shall include, but are not limited to, any comments, whether written or oral, which directly or indirectly discredits...

  • Page 231
    ... remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date written below. Spectrum Brands, Inc. By: Date: /s/ Kent J. Hussey Amy J. Yoder /s/ Amy J. Yoder Date: October 8, 2008 3 October 8, 2008 Source: Spectrum Brands, Inc, 10-K, December 10...

  • Page 232
    ... of Ms. Yoder's First Amendment to the Employment Agreement, effective June 9, 2008, has been filed as Exhibit 10.22 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 29, 2008, filed with the SEC on August 8, 2008. 4 Source: Spectrum Brands, Inc, 10-K, December 10...

  • Page 233
    ... to provide continuation coverage under Code section 4980B. In all cases, reimbursements of medical and dental expenses will be made in accordance with the terms and conditions of the plans maintained by Spectrum for its employees generally and, without limiting the foregoing, to the extent...

  • Page 234
    ...by the Board. Such indemnification shall be covered by the terms of Spectrum's policy of insurance for directors and officers in effect from time to time (the "D&O Insurance"). Copies of Spectrum's charter, by-laws and D&O Insurance will be made available to Yoder upon request. 5. Company Car. Yoder...

  • Page 235
    ... C.V. Rayovac Europe B.V. Rayovac Europe GmbH Rayovac Europe Limited Rayovac Far East Limited Rayovac Foreign Sales Corporation Rayovac Guatemala, S.A. Rayovac Honduras, S.A. Rayovac Overseas Corp. Rayovac PRC Rayovac Venezuela, S.A. Rayovac-VARTA S.A. Remington Consumer Products Remington Consumer...

  • Page 236
    ... Private Limited Tetra France S.A.S. Tetra GmbH Tetra Holding (US), Inc. Tetra Holding GmbH Tetra Italia S.r.L. Tetra Japan K.K. United Industries Corporation United Pet Group, Inc. United Pet Polska Sp.z.o.o. VARTA B.V. VARTA Baterie Sp. Zo.o VARTA Baterie spol.s r.o. VARTA Batterie Ges.m.b.H VARTA...

  • Page 237
    ... of internal control over financial reporting as of September 30, 2008, which appears in the annual report on Form 10-K of Spectrum Brands, Inc. Our report refers to a change in the method of accounting for pension and other postretirement benefits in 2007. /s/ KPMG LLP Atlanta, Georgia December...

  • Page 238
    Exhibit 31.1 CERTIFICATIONS I, Kent J. Hussey, Chief Executive Officer, certify that: 1. I have reviewed this annual report on Form 10-K of Spectrum Brands, Inc. (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a ...

  • Page 239
    ... Officer, certify that: 1. I have reviewed this annual report on Form 10-K of Spectrum Brands, Inc. (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light...

  • Page 240
    ...In connection with the Annual Report on Form 10-K of Spectrum Brands, Inc. (the "Company") for the fiscal year ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kent J. Hussey, as Chief Executive Officer of the Company, hereby certify...

  • Page 241
    ...connection with the Annual Report on Form 10-K of Spectrum Brands, Inc. (the "Company") for the fiscal year ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Anthony L. Genito, as Chief Financial Officer of the Company, hereby certify...