Rayovac 2010 Annual Report Download - page 64

driven by growth in Latin America driven by the successfully leveraging our value proposition, that is, products
that work as well as or better than our competitors, at a lower price. The $6 million increase in alkaline sales is
driven by the increased sales in North America, attributable to an increase in market share, as consumers opt for
our value proposition during the weakening economic conditions in the U.S, which was tempered by a decline in
alkaline battery sales in Europe as we continued efforts to exit from unprofitable or marginally profitable private
label battery sales, as well as certain second tier branded battery sales. We are continuing our efforts to promote
profitable growth and therefore, expect to continue to exit certain low margin business as appropriate to create a
more favorable mix of branded versus private label products. Net sales of electric shaving and grooming products
in Fiscal 2010 increased by $32 million, a 14% increase, compare to Fiscal 2009. This increase was primarily due
to an increase of $25 million in Europe, excluding foreign exchange translation, as a result of successful
promotions and operational execution. Positive foreign exchange translation impacted net sales of electric
shaving and grooming products in Fiscal 2010 by $5 million. Electric personal care sales increased by $5 million,
an increase of 3%, over Fiscal 2009. Favorable foreign exchange translation impacted net sales by approximately
$3 million. Excluding favorable foreign exchange, we experienced modest electric personal care product sales
increases within all geographic regions. Net sales of portable lighting products for Fiscal 2010 increased to $88
million as compared to sales of $80 million for Fiscal 2009, an increase of 10%. The portable lighting product
sales increase was primarily driven by favorable foreign exchange impact of $2 million, coupled with increased
sales in North America of $3 million, driven by increased sales with a major customer as a result of new product
introductions.
Segment profitability during Fiscal 2010 decreased to $153 million from $165 million in Fiscal 2009.
Segment profitability as a percentage of net sales decreased to 10.7% in Fiscal 2010 compared to 12.4% in Fiscal
2009. The decrease in segment profitability during Fiscal 2010 was mainly attributable to a $19 million increase
in cost of goods sold due to the revaluation of inventory coupled with approximately a $16 million increase in
intangible asset amortization due to our adoption of fresh-start reporting upon our emergence from Chapter 11 of
the Bankruptcy Code. Offsetting this decrease to segment profitability was higher sales, as discussed above, and
savings from our restructuring and related initiatives announced in Fiscal 2009. See “Restructuring and Related
Charges” below, as well as Note 14, Restructuring and Related Charges, to our Consolidated Financial
Statements included in this Annual Report on Form 10-K for additional information regarding our restructuring
and related charges.
Segment Adjusted EBITDA in Fiscal 2010 was $206 million compared to $193 million in Fiscal 2009. The
increase in Adjusted EBITDA is mainly driven by the efficient cost structure now in place from our cost
reduction initiatives announced in Fiscal 2009 coupled with increases in market share in certain of our product
categories.
Segment assets at September 30, 2010 increased to $1,629 million from $1,608 million at September 30,
2009. Goodwill and intangible assets, which are directly a result of the revaluation impacts of fresh-start
reporting, at September 30, 2010 decreased to $881 million from $909 million at September 30, 2009. The
decrease is mainly due to amortization of definite lived intangible assets of $18 million and foreign exchange
impacts of $10 million.
Foreign Currency Translation—Venezuela Impacts
The Global Batteries & Personal Care segment does business in Venezuela through a Venezuelan
subsidiary. At January 4, 2010, the beginning of our second quarter of Fiscal 2010, we determined that
Venezuela meets the definition of a highly inflationary economy under GAAP. As a result, beginning January 4,
2010, the U.S. dollar is the functional currency for our Venezuelan subsidiary. Accordingly, going forward,
currency remeasurement adjustments for this subsidiary’s financial statements and other transactional foreign
exchange gains and losses are reflected in earnings. Through January 3, 2010, prior to being designated as highly
inflationary, translation adjustments related to the Venezuelan subsidiary were reflected in Shareholders’ equity
as a component of AOCI.
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