Rayovac 2008 Annual Report Download - page 43

Table of Contents
Index to Financial Statements
driven by an increase of $505 million in impairment charges. Impairment charges in Fiscal 2008 were $867 million versus $362 million in Fiscal 2007. In both
Fiscal 2008 and Fiscal 2007 the impairment charges were non-cash charges and related to the write down of the carrying value of goodwill and indefinite-lived
intangible assets to fair value in accordance with both SFAS 142 and SFAS 144. See “Goodwill and Intangibles Impairment” 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 in Fiscal 2008 versus Fiscal 2007 is also attributable
to the negative impact related to foreign exchange of approximately $36 million and a $21 million charge associated with the depreciation and amortization
related to the assets of the Home and Garden Business incurred as a result of our reclassification of our Home and Garden Business from discontinued operations
to continuing operations. See “Introduction” above and “Segment Results—Home and Garden” below, as well as Note 1, Description 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. The increases noted above were partially offset by the decrease of $44 million of restructuring and related charges in Fiscal 2008 compared to
Fiscal 2007. The restructuring and related charges incurred in Fiscal 2008 of $23 million are primarily attributable to various cost reduction initiatives in
connection with our global realignment announced in January 2007. The restructuring and related charges incurred in Fiscal 2007 of $67 million were primarily
attributable to the ongoing integration of our Global Pet Supplies business, rationalization of the sales and marketing organizations of the European and Latin
American divisions of Global Batteries & Personal Care and various cost reduction initiatives in connection with our global realignment announced in January
2007 to reduce general and administrative expenses. 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 additional information regarding our restructuring and related
charges.
Operating Loss. An operating loss of approximately $712 million was recognized in Fiscal 2008 compared to an operating loss in Fiscal 2007 of $245
million. The Fiscal 2008 operating loss is directly attributable to the impact of the previously discussed non-cash impairment charge of $867 million, coupled
with restructuring and related charges of $39 million. The Fiscal 2007 operating loss is directly attributable to the previously discussed non-cash impairment
charge of approximately $362 million coupled with restructuring and related charges of $98 million.
Segment Results. As discussed above in Item 1, Business, beginning Fiscal 2007, we manage our business in three reportable segments: (i) Global
Batteries & Personal Care, (ii) Global Pet Supplies; and (iii) Home and Garden Business. The presentation of all historical segment reporting herein has been
reclassified to conform to this segment reporting.
Operating segment profits do not include restructuring and related charges, interest expense, interest income, impairment charges and income tax
expense. In connection with the realignment of our operating segments, expenses associated with global operations, consisting of research and development,
manufacturing management, global purchasing, quality operations and inbound supply chain, which were previously reflected in corporate expenses, are now
included in the determination of operating segment profits. In addition, certain general and administrative expenses necessary to reflect the operating segments on
a stand alone basis and which were previously reflected as corporate expense, have been included in the determination of operating segment profits. Accordingly,
corporate expenses include primarily general and administrative expenses associated with corporate overhead and global long-term incentive compensation
plans. Segment reporting results for Fiscal 2006 have been reclassified to conform to the changes described above.
All depreciation and amortization included in income from operations is related to operating segments or corporate expense. Costs are allocated to
operating segments or corporate expense according to the function of each cost center. All capital expenditures are related to operating segments. Variable
allocations of assets are not made for segment reporting.
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008