Rayovac 2010 Annual Report Download - page 77

Segment net sales to external customers in Fiscal 2009 decreased to $574 million from $599 million in
Fiscal 2008, representing a decrease of $25 million, or 4%. Unfavorable foreign currency exchange translation
impacted net sales in Fiscal 2009 compared to Fiscal 2008 by approximately $11 million. Worldwide aquatic
sales for Fiscal 2009 decreased to $360 million when compared to sales of $398 million in Fiscal 2008. The
decrease in worldwide aquatic sales was a result of unfavorable foreign exchange impacts of $11 million coupled
with declines of $14 million, $10 million and $3 million in the United States, Europe and the Pacific Rim,
respectively. The declines in the U.S. were a result of decreased sales of large equipment, primarily aquariums,
due to the slowdown in economic conditions. The declines in Europe were due to inventory de-stocking at
retailers and the poor weather season, which impacted our outdoor pond product sales. The declines the Pacific
Rim were as a result of the slowdown in economic conditions. Companion animal net sales increased to $214
million in Fiscal 2009 compared to $201 million in Fiscal 2008, an increase of $13 million, or 6%. We continued
to see strong growth, and foresee further growth in Fiscal 2010, in companion animal related product sales in the
U.S., driven by our Dingo brand dog treats, coupled with increased volume in Europe and the Pacific Rim
associated with the continued introductions of companion animal products.
Segment profitability in Fiscal 2009 decreased slightly to $65 million from $69 million in Fiscal 2008.
Segment profitability as a percentage of sales in Fiscal 2009 also decreased slightly to 11.3% from 11.5% during
Fiscal 2008. This decrease in segment profitability and profitability margin was primarily due to decreased sales,
as discussed above, coupled with increases in cost of goods sold driven by higher input costs, which negatively
impacted margins, as price increases lagged behind such cost increases. Tempering the decrease in profitability
and profitability margin were lower operating expenses, principally selling related expenses. In addition, as a
result of our adoption of fresh-start reporting upon emergence from Chapter 11 of the Bankruptcy Code, in
accordance with SFAS 141, inventory balances were revalued as of August 30, 2009 resulting in an increase in
such Global Pet Supplies inventory balances of $19 million. As a result of the inventory revaluation, Global Pet
Supplies recognized $5 million in additional cost of goods sold in Fiscal 2009. The remaining $14 million of the
inventory revaluation was recorded during the first quarter of Fiscal 2010.
Segment assets as of September 30, 2009 increased to $867 million from $700 million at September 30,
2008. The increase is primarily a result of the revaluation impacts of fresh-start reporting. See Note 2, Voluntary
Reorganization Under Chapter 11, of Notes to Consolidated Financial Statements included in this Annual Report
on Form 10-K for more information related to fresh-start reporting. Partially offsetting this increase in assets was
a non-cash impairment charge of certain intangible assets in Fiscal 2009 of $19 million. See Note 3(i),
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 this impairment charge and
the amount attributable to Global Pet Supplies. Goodwill and intangible assets as of September 30, 2009 total
approximately $618 million and are directly a result of the revaluation impacts of fresh-start reporting. Goodwill
and intangible assets as of September 30, 2008 total approximately $447 million and primarily relate to the
acquisitions of Tetra and the United Pet Group division of United.
Home and Garden Business
2009 2008
(in millions)
Net sales to external customers ..................................................... $322 $334
Segment profit .................................................................. $ 42 $ 29
Segment profit as a % of net sales ................................................... 13.0% 8.7%
Assets as of September 30, ......................................................... $504 $290
Segment net sales to external customers 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
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