Rayovac 2008 Annual Report Download - page 53

Table of Contents
Index to Financial Statements
charges and related to the write down of the carrying value of goodwill and indefinite-lived intangible assets to fair value in accordance with SFAS 142. 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. Off-setting the
decrease in impairment charges were (i) increases in advertising and marketing expenses in Fiscal 2007 of approximately $8 million to support our new
Remington, Rayovac and VARTA marketing campaigns, (ii) increases in restructuring and related charges of approximately $33 million, rising to $67 million in
Fiscal 2007 from $34 million in Fiscal 2006 and (iii) increases resulting from the write off of professional fees during Fiscal 2007, which totaled approximately
$4 million and are included in general and administrative expense, in connection with the write off of professional fees incurred in connection with the
termination of the potential sale of the Home and Garden Business. The restructuring and related charges incurred in Fiscal 2007 were primarily attributable to
various cost reduction initiatives in connection with our global realignment announced in January 2007, ongoing integration of our Global Pet Supplies, ongoing
integration of our Home and Garden Business and rationalization of our Global Batteries & Personal Care European and Latin America manufacturing support,
sales and marketing organizations. The restructuring and related charges incurred in Fiscal 2006 were primarily attributable to the ongoing integration of our
Global Pet Supplies, ongoing integration of our Home and Garden Business and rationalization of 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 additional information regarding our restructuring and related charges.
Operating Loss. An operating loss of approximately $245 million was recognized in Fiscal 2007 compared to an operating loss in Fiscal 2006 of $284
million. The Fiscal 2007 operating loss is directly attributable to the impact of the previously discussed non-cash impairment charge of $362 million, coupled
with restructuring and related charges of $98 million. The Fiscal 2006 operating loss is directly attributable to the previously discussed non-cash impairment
charge of approximately $433 million coupled with restructuring and related charges of $55 million.
Segment Results. As discussed above in Item 1, Business, beginning in 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 discussed above, in Fiscal 2007 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 expense, 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.
Global strategic initiatives and financial objectives for each reportable segment are determined at the corporate level. Each reportable segment is
responsible for implementing defined strategic initiatives and
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008