Rayovac 2005 Annual Report Download - page 19

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Reconciliation to Generally Accepted Accounting Principles (GAAP)
The Company believes adjusting for unusual items in the Company’s results provides useful information regard-
ing 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: Adjusted Net Income and other related adjusted fi nancial measures (i) should not
be considered in isolation, (ii) are not measures of performance calculated in accordance with U.S. Generally
Accepted Accounting Principles (“GAAP”), (iii) should not be construed as alternatives or substitutes for income
from operations, net income or cash fl ows from operating activities in analyzing the Company’s operating perfor-
mance, fi nancial position or cash fl ows (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 Adjusted Net Income and related adjusted fi nancial 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 Statements of Operations:
2005 2004 2003 2002 2001
Diluted Net Income Per Share (1) $1.03 $1.61 $0.48 $0.90 $0.39
Unusual Items:
Unusual items within gross profit and operating expenses,
net of tax (2) (3) (4) 1.08 0.22 0.73 0.26 0.48
Non-operating expense, net of tax (5) – – 0.06 – 0.18
Adjusted Diluted Net Income Per Share $2.11 $1.83 $1.27 $1.16 $1.05
Table 2 – Adjusted Net Income
Impact of Unusual Items within the Statements of Operations:
2005 2004 2003 2002 2001
Net Income (1) $46.8 $55.8 $15.5 $29.2 $11.5
Unusual Items:
Unusual items within gross profit and operating expenses,
net of tax (2) (3) (4) 49.5 7.5 24.1 8.3 14.2
Non-operating expense, net of tax (5) – – 1.9 – 5.4
Adjusted Net Income $96.3 $63.3 $41.5 $37.5 $31.1
(1) In fi scal 2002, the Company adopted the provisions of Financial Accounting Standards No. 142, Goodwill and other Intangible Assets, which requires that goodwill and other intangible assets
with indefi nite useful lives no longer be amortized. For more information see Management’s Discussion and Analysis and Note 5 in the Notes to Consolidated Financial Statements.
(2) The Company recorded Restructuring and related charges within gross profi t and operating expenses during fi scal 2005, 2004, 2003, 2002 and 2001 refl ecting: (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. For more
information see Management’s Discussion and Analysis and Note 15 in the Notes to Consolidated Financial Statements.
(3) For fi scal year 2005, this amount includes the following charges, net of tax: (i) inventory valuation adjustments of $24.6 million ($0.54 per diluted common share) related to the fair value
write-up of United, Tetra and Jungle inventory in accordance with the requirements of SFAS 141, “Business Combinations,” (ii) restructuring and related charges of $17.3 million ($0.38 per
diluted common share) primarily associated with the United integration and the closure of our manufacturing facility in Breitenbach, France, (iii) an interest expense charge of $7.9 million
($0.17 per diluted common share) to write-off debt issuance costs in connection with debt refi nanced as part of the United acquisition, (iv) a charge related to the disposition of our Madison, WI
manufacturing facility of $0.8 million ($0.02 per diluted common share) and (v) a gain on sale of land and building of $1.1 million ($0.03 per diluted common share).
(4) In fi scal 2002, the Company recognized a bad debt reserve of $12.0 million, net of recoveries, attributable to the bankruptcy fi ling of a key customer.
(5) The Company recorded non-operating expenses in fi scal 2003 and fi scal 2001 relating to the repurchase of or redemption of the company’s senior term notes and write-off of debt issuance
costs. For more information see Management’s Discussion and Analysis and Note 6 in the Notes to Consolidated Financial Statements.
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
2005 ANNUAL REPORT 17