Rayovac 2010 Annual Report Download - page 73

Pet supplies product sales during Fiscal 2009 decreased $25 million, or 4%, compared to Fiscal 2008. The
decrease of $25 million is primarily attributable to decreased aquatics sales of $27 million coupled with
unfavorable foreign exchange impacts of $11 million. These decreases were partially offset by increases of $13
million within specialty pet products. The decrease in aquatics sales of $27 million during Fiscal 2009 was
attributable to declines in the U.S., Europe and Pacific Rim of $14 million, $10 million and $3 million,
respectively. The declines in the U.S. were a result of decreased sales of large equipment, such as aquariums,
driven by softness in this product category due to the macroeconomic slowdown as we maintained our market
share in the category. The declines in Europe were due to inventory de-stocking at retailers and weak filtration
product sales, both a result of the slowdown in economic conditions. The declines the Pacific Rim were also a
result of the slowdown in economic conditions. The increase of $13 million in specialty pet products is a result of
increased sales of our Dingo brand dog treats coupled with price increases on select products, primarily in
the U.S.
Sales of home and garden control products during Fiscal 2009 versus Fiscal 2008 decreased $12 million, or
4%, primarily due to our retail customers managing their inventory levels to unprecedented low levels, combined
with such retailers ending their outdoor lawn and garden control season six weeks early as compared to prior year
seasons and our decision to exit certain unprofitable or marginally profitable products. This decrease in sales
within lawn and garden control products was partially offset by increased sales of household insect control
products.
Electric shaving and grooming product sales during Fiscal 2009 decreased $22 million, or 9%, compared to
Fiscal 2008 primarily due to unfavorable foreign exchange translation of $19 million. The decline of $3 million,
excluding unfavorable foreign exchange, was due to a $7 million decrease of sales within North America, which
was partially offset by slight increases within Europe and Latin America of $3 million and $1 million,
respectively. The decreased sales of electric shaving and grooming products within North America were a result
of delayed inventory stocking at certain of our major customers for the 2009 holiday season which in turn
resulted in a delay of our product shipments that historically would have been recorded during the fourth quarter
of our fiscal year. We anticipate the first quarter sales of Fiscal 2010 to be positively impacted versus our
historical results due to this delay. The increases within Europe and Latin America were driven by new product
launches, pricing and promotions.
Electric personal care product sales during Fiscal 2009 decreased $20 million, or 9%, when compared to
Fiscal 2008. The decrease of $20 million during Fiscal 2009 was attributable to unfavorable foreign exchange
impacts of $24 million and declines in North America of $7 million. These decreases were partially offset by
increases within Europe and Latin America of $8 million and $3 million, respectively. Similar to our electric
shaving and grooming products sales, the decreased sales of electric personal care products within North
America was a result of delayed holiday inventory stocking by our customers which in turn resulted in a delay of
our product shipments that historically would have been recorded during the fourth quarter of our fiscal year. We
expect the first quarter sales of Fiscal 2010 to be positively impacted versus our historical results due to this
delay. The increased sales within Europe and Latin America were a result of successful product launches, mainly
in women’s hair care.
Sales of portable lighting products in Fiscal 2009 decreased $20 million, or 20%, compared to Fiscal 2008
as a result of unfavorable foreign exchange impacts of $5 million coupled with declines in North America, Latin
America and Europe of $9 million, $3 million and $1 million, respectively. The decreases across all regions are a
result of the slowdown in economic conditions and decreased market demand.
Gross Profit. Gross profit for Fiscal 2009 was $817 million versus $920 million for Fiscal 2008. Our gross
profit margin for Fiscal 2009 decreased slightly to 36.6% from 37.9% in Fiscal 2008. Gross profit was lower in
Fiscal 2009 due to unfavorable foreign exchange impacts of $58 million. As a result of our adoption of fresh-start
reporting upon emergence from Chapter 11 of the Bankruptcy Code, in accordance with SFAS No. 141,
“Business Combinations,” (“SFAS 141”), inventory balances were revalued as of August 30, 2009 resulting in
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