Rayovac 2005 Annual Report Download - page 110

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(13) Commitments and Contingencies
The Company has provided for the estimated
costs associated with environmental remediation
activities at some of its current and former manu-
facturing sites. The Company believes that any
additional liability in excess of the amounts provided
of approximately $5,154, which may result from
resolution of these matters, will not have a material
adverse effect on the fi nancial condition, results of
operations, or cash fl ow of the Company.
The Company is a defendant in various other mat-
ters of litigation generally arising out of the normal
course of business. Such litigation includes legal
proceedings with Philips in Europe with respect to
trademark or other intellectual property rights, pat-
ent infringement claims by the Gillette Company and
its subsidiary Braun Gmbh, and purported class
action suits alleging violations of the Securities
Exchange Act of 1934. Additionally, the Company
has received requests for information from the U.S.
Attorney’s Offi ce and the SEC. With respect to the
Braun suit, the Company has reached a tentative
settlement under which it will enter into a licensing
agreement with Gillette and pay royalties on the
Company’s use of this license going forward. With
respect to the remaining items, in the opinion of
management, it is either not likely or premature to
determine whether such matters will have a material
adverse effect on the results of operations, fi nancial
condition, liquidity or cash fl ow of the Company.
The previous shareholder lawsuits fi led against
the Company were settled in April 2004, and the
impact of such settlement is included in results of
operations for the year ended September 30, 2004.
The net settlement of approximately $4,000, which
was largely covered by insurance, was paid in 2004.
Future minimum rental commitments under non-
cancelable operating leases, principally pertaining to
land, buildings and equipment, are as follows:
Affiliate Other
2006 $1,019 $ 26,732
2007 876 22,974
2008 857 20,437
2009 870 17,345
2010 884 15,149
Thereafter 221 44,346
Total minimum lease payments $4,727 $146,983
All of the leases expire during the years 2006
through 2021. Total rental expenses were $17,267,
$16,344 and $12,315 for 2005, 2004 and
2003, respectively.
The Company is the lessee of several operating
facilities from Rex Realty, Inc., a company owned by
certain of the Company’s stockholders and operated
by a former United executive and past member of
United’s Board of Directors. These affi liate leases
expire at various dates through December 31, 2010.
The Company has options to terminate the leases by
giving advance notice of at least one year. The Com-
pany also leases a portion of its operating facilities
from the same company under a sublease agree-
ment expiring on December 31, 2005 with minimum
annual rentals of $700. The Company has two
fi ve-year options to renew this lease, beginning
January 1, 2006.
(14) Related Party Transactions
The Company had notes receivable from offi cers/
shareholders in the amount of $0 and $3,605 at
September 30, 2005 and 2004, respectively. Inter-
est was payable at 3.65% at September 20, 2004.
Since the offi cers utilized the proceeds of the notes
to purchase common stock of the Company, directly
or through the exercise of stock options, the notes
have been recorded as a reduction of shareholders’
equity. The notes were paid in full prior to
September 30, 2005.
The Company’s previous employment agreement
with its Chief Executive Offi cer (“CEO”), granted him
the right to purchase his Spectrum-owned home for
one dollar. In April 2004, the CEO waived such right
in exchange for the Company paying him the fair
market value of the property, $993, plus an amount
equal to 50% of leasehold improvements to the
property of $38.
On February 7, 2005, the Company acquired all of
the equity interests of United Industries Corporation
(“United”) pursuant to the Agreement and Plan of
Merger (as amended, the “Merger Agreement”) by
and among the Company, Lindbergh Corporation and
United dated as of January 3, 2005 fi led as an
exhibit to the Current Report on Form 8-K fi led by the
Company on January 4, 2005. Pursuant to the terms
of the Merger Agreement, Lindbergh Corporation
merged with and into United, with United continuing
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
SPECTRUM BRANDS, INC.90