Rayovac 2002 Annual Report Download - page 26

RECONCILIATION TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
Rayovac Corporation and Subsidiaries
The Company believes adjusting for unusual items in the Company’s results provides useful information regarding the Company’s ability to service its
indebtedness and facilitates investors’ and analysts’ ability to evaluate the Company’s operations excluding these unusual items. However, the following
factors should be considered in evaluating such measures: EBITDA and other related adjusted financial measures (i) should not be considered in
isolation, (ii) are not measures of performance calculated in accordance with generally accepted accounting principles (“GAAP”), (iii) should not be
construed as alternatives or substitutes for income from operations, net income or cash flows from operating activities in analyzing the Company’s
operating performance, financial position or cash flows (in each case, as determined in accordance with GAAP) and (iv) should not be used as indicators
of the Company’s operating performance or measures of its liquidity. Additionally, because all companies do not calculate EBITDA and related adjusted
financial measures in a uniform fashion, the calculations presented herein may not be comparable to other similarly titled measures of other companies.
All information in millions, except per-share amounts
Table 1—Adjusted Diluted Net Income Per Share
Impact of Unusual Items within the Statement of Operations: 1998 1999 2000 2001 2002
Diluted Net Income Per Share (5) $ 0.51 $ 0.83 $ 1.32 $ 0.39 $ 0.90
Unusual Items
Unusual items within gross profit and operating expenses, net of tax (2), (3) 0.16 0.21 — 0.48 0.26
Extraordinary items, net of tax (6) 0.07 ——0.18 —
Adjusted diluted net income per share $ 0.74 $ 1.04 $ 1.32 $ 1.05 $ 1.16
Table 2—Adjusted Gross Profit
Impact of Unusual Items within the Statement of Operations: 1998 1999 2000 2001 2002
Gross profit (1) $172.9 $198.2 $259.4 $232.9 $237.4
Unusual Items
Special charges within gross profit (2) — 1.3 — 22.1 1.2
Adjusted gross profit $172.9 $199.5 $259.4 $255.0 $238.6
Table 3—Adjusted Operating Income
Impact of Unusual Items within the Statement of Operations: 1998 1999 2000 2001 2002
Operating income $ 40.5 $ 53.6 $ 89.3 $ 54.4 $ 63.0
Unusual Items
Special charges within gross profit (2) — 1.3 — 22.1 1.2
Special charges within operating expenses (2) 6.2 8.1 — 0.2 —
Bankruptcy filing of a key customer (3) ————12.0
Adjusted operating income $ 46.7 $ 63.0 $ 89.3 $ 76.7 $ 76.2
Table 4—Adjusted EBITDA
Impact of Unusual Items within the Statement of Operations: 1998 1999 2000 2001 2002
EBITDA (4) $ 53.0 $ 67.4 $108.6 $ 74.5 $ 80.8
Unusual Items
Special charges within gross profit (2) — 1.3 — 22.1 1.2
Special charges within operating expenses (2) 6.2 8.1 — 0.2 —
Bankruptcy filing of a key customer (3) ————12.0
Adjusted EBITDA $ 59.2 $ 76.8 $108.6 $ 96.8 $ 94.0
Table 5—Adjusted Net Income
Impact of Unusual Items within the Statement of Operations: 1998 1999 2000 2001 2002
Net income $ 14.4 $ 24.1 $ 38.4 $ 11.5 $ 29.2
Unusual Items
Unusual items within gross profit and operating expenses, net of tax (2), (3) 5.0 6.3 — 14.2 8.3
Extraordinary items, net of tax (6) 2.0 ——5.4 —
Adjusted net income $ 21.4 $ 30.4 $ 38.4 $ 31.1 $ 37.5
(1) Footnote 2(v) in the Notes to Consolidated Financial Statements.
(2) The Company recorded special charges within gross profit and operating expenses during fiscal 1998, 1999, 2001, and 2002 reflecting: (i) the rationalization of uneconomic manufacturing,
packaging, and distribution processes, (ii) the realignment of manufacturing capacities, and (iii) restructuring of the Company’s administrative functions. Please see footnote 15 in the Notes to
Consolidated Financial Statements and the Management Discussion and Analysis for more information.
(3) In fiscal 2002, the Company recognized a bad debt reserve of $12.0 million, net of recoveries, attributable to the bankruptcy filing of a key customer.
(4) EBITDA represents income from operations plus other (income) expense, net, plus depreciation and amortization (excluding amortization of debt issuance costs). Unless otherwise noted,
EBITDA includes expenses related to all identified unusual items in the fiscal years ended September 30, 1998, 1999, 2000, 2001 and 2002.
(5) In fiscal 2002, the Company adopted the provisions of FAS 142 which requires that goodwill and intangible assets with indefinite useful lives no longer be amortized. See also Footnote 2(v)
and Footnote 5 in the Notes to Consolidated Financial Statements and the Management Discussion and Analysis for more information.
(6) The Company recorded extraordinary expenses in fiscal 1998 and fiscal 2001 relating to the premium on the repurchase of or redemption of the Company’s senior term notes and related write-
off of debt issuance costs. See Footnote 6 in the Notes to Consolidated Financial Statements and the Management Discussion and Analysis for more information.