Rayovac 2009 Annual Report Download - page 42

Table of Contents
Index to Financial Statements
During the second quarter of Fiscal 2008, we determined that in view of the difficulty in predicting the timing or probability of a sale of the remaining
U.S. portion of the Home and Garden Business, the requirements of GAAP necessary to classify the remaining U.S. portion of the Home and Garden
Business as discontinued operations were no longer met and that it was appropriate to present the remaining U.S. portion of the Home and Garden Business
as held and used in the Company’s continuing operations as of our second quarter of Fiscal 2008 and going forward. The presentation herein of the results
of continuing operations includes the Home and Garden Business excluding the Canadian division, which, as indicated above, was sold on November 1,
2007, for all periods presented.
In the third quarter of Fiscal 2008, we entered into a definitive agreement, subject to the consent of our lenders under our senior credit facilities, to sell
the assets related to Global Pet Supplies. We were unable to obtain the consent of the lenders, and on July 13, 2008, we entered into a termination agreement
regarding the agreement to sell the assets related to Global Pet Supplies. Pursuant to the termination agreement, as a condition to the termination, we paid
the proposed buyer $3 million as a reimbursement of expenses.
In November 2008, our board of directors committed to the shutdown of the growing products portion of the Home and Garden Business, which
includes the manufacturing and marketing of fertilizers, enriched soils, mulch and grass seed, following an evaluation of the historical lack of profitability
and the projected input costs and significant working capital demands for the growing products portion of the Home and Garden Business for Fiscal 2009.
We believe the shutdown was consistent with what we have done in other areas of our business to eliminate unprofitable products from our portfolio. As of
March 29, 2009, we completed the shutdown of the growing products portion of the Home and Garden Business. Accordingly, the presentation herein of the
results of continuing operations excludes the growing products portion of the Home and Garden Business for all periods presented. See Note 10,
Discontinued Operations, to our Consolidated Financial Statements included in this Annual Report on Form 10−K for further details on the disposal of the
growing products portion of the Home and Garden Business.
On December 15, 2008, we were advised that our common stock would be suspended from trading on the New York Stock Exchange (the “NYSE”)
prior to the opening of the market on December 22, 2008. We were advised that the decision to suspend our common stock was reached in view of the fact
that we had recently fallen below the NYSE’s continued listing standard regarding average global market capitalization over a consecutive 30 trading day
period of not less than $25 million, the minimum threshold for listing on the NYSE. Our common stock was delisted from the NYSE effective January 23,
2009.
On February 2, 2009, the Company did not make a $25.8 million interest payment due February 2, 2009 on the Company’s 7 3/8% Senior
Subordinated Notes due 2015, triggering a default with respect to the notes.
As a result of our substantial leverage, we determined that, absent a financial restructuring, it would be unable to achieve future profitability or
positive cash flows on a consolidated basis solely from cash generated from operating activities or to satisfy certain of our payment obligations as the same
may become due and be at risk of not satisfying the leverage ratios to which we were subject under our senior secured term loan facility, which ratios
become more restrictive in future periods. Accordingly, Spectrum Brands, inc. and its U.S. subsidiaries filed voluntary petitions under Chapter 11 of the
Bankruptcy Code in the Bankruptcy Court (the “Bankruptcy Filing”) to pursue such a restructuring. The Bankruptcy Filing is discussed in more detail under
“Chapter 11 Proceedings.”
As a result of our Bankruptcy Filing, we were able to significantly reduce our indebtedness. However, we continue to have a significant amount of
indebtedness relative to our competitors and continue to explore potential strategies that may be available to us to restructure this indebtedness.
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