Rayovac 2005 Annual Report Download - page 22

2005 Form 10-K Annual Report
Spectrum Brands, Inc.
PART I
ITEM 1. BUSINESS
General
Spectrum Brands, Inc. and its subsidiaries (the
“Company”) is a global branded consumer products
company with leading market positions in seven
major product categories: consumer batteries; lawn
and garden; pet supplies; electric shaving and groom-
ing; household insect control; electric personal care
products; and portable lighting. We are a leading
worldwide manufacturer and marketer of alkaline,
zinc carbon and hearing aid batteries, as well as
aquariums and aquatic health supplies and a lead-
ing worldwide designer and marketer of rechargeable
batteries, battery-powered lighting products, electric
shavers and accessories, grooming products and
hair care appliances. We are also a leading North
American manufacturer and marketer of lawn fertil-
izers, herbicides, pet supplies and specialty food
products, and insecticides and repellents.
We sell our products in approximately 120 coun-
tries through a variety of trade channels, including
retailers, wholesalers and distributors, hearing aid
professionals, industrial distributors and original
equipment manufacturers (“OEMs”). We enjoy strong
name recognition in our markets under the Rayovac,
VARTA and Remington brands, each of which has
been in existence for more than 80 years, and under
the Spectracide, Cutter, Tetra, 8-in-1 and various
other brands. We have manufacturing and product
development facilities located in the United States,
Europe, China and Latin America. We manufacture
alkaline and zinc carbon batteries, zinc air hearing
aid batteries, lawn fertilizers, herbicides, pet sup-
plies and specialty food products and insecticides
and repellents in our company-operated manufactur-
ing facilities. Substantially all of our rechargeable
batteries and chargers, electric shaving and groom-
ing products, electric personal care products and
portable lighting products are manufactured by third
party suppliers, primarily located in Asia.
Effective May 2, 2005, we changed our corporate
name from Rayovac Corporation to Spectrum Brands,
Inc. In this report, unless specifi ed otherwise or the
context requires, “Spectrum” and “Rayovac” both
refer to the Company. Rayovac may be used to refer
to the Company in relation to periods prior to the
name change.
We made two signifi cant acquisitions in 2005
designed to diversify our business and leverage our
distribution strengths. A third acquisition of Jungle
Laboratories Corporation (“Jungle Labs”), completed
in the fourth quarter, was inconsequential to the
period. (See Note 16, Acquisitions, of the Notes to
Consolidated Financial Statements included in this
Annual Report on Form 10-K for further discussion
of the Jungle Labs acquisition). On February 7, 2005,
we completed the acquisition of all of the outstand-
ing equity interests of United Industries Corporation
(“United”), a leading manufacturer and marketer of
products for the consumer lawn and garden and
household insect control markets in North America
and a leading supplier of quality pet supplies in the
United States. The aggregate purchase price was
approximately $1,490 million, net of cash acquired
of approximately $14 million. The purchase price
consisted of cash consideration of approximately
$1,051 million and our common stock totaling
approximately $439 million. The aggregate purchase
price included acquisition related expenditures of
approximately $22 million. At the time of the acqui-
sition, United had approximately 2,800 employees
throughout North America and was organized under
three operating divisions: U.S. Home & Garden,
Nu-Gro Corporation and United Pet Group. The
acquisition of United gives us a signifi cant presence
in several new consumer product categories that will
signifi cantly diversify our revenue base. Subsequent
to the acquisition, the fi nancial results of United are
reported as a separate business segment within our
consolidated results. United con tributed approximately
$787 million to our 2005 net sales, and recorded
operating income of approximately $79 million.
On April 29, 2005, we acquired all of the out-
standing equity interests of Tetra Holding GmbH
(“Tetra”) for a purchase price of approximately
$550 million, net of cash acquired of approximately
$13 million and inclusive of a fi nal working capital
payment of $2.4 million, paid in July 2005. The
aggregate purchase price also included acquisition
related expenditures of approximately $16 million.
The acquisition was fi nanced with additional borrow-
ings under an Incremental Term Loan Facility and
existing Revolving Credit Facility (each as defi ned in
Note 6, Debt, of the Notes to Consolidated Financial
Statements included in this Annual Report on Form
10-K). Headquartered in Melle, Germany, Tetra man-
ufactures, distributes and markets a comprehensive
SPECTRUM BRANDS, INC.2