Rayovac 2005 Annual Report Download - page 40

As part of this reorganization, Spectrum’s and
United’s sales management, fi eld sales operations
and marketing teams (including customer teams
located in Atlanta, Bentonville, and Charlotte) were
merged into a single North American sales and mar-
keting organization reporting to Spectrum’s North
American management team located in Madison,
Wisconsin. United’s accounting, information ser-
vices, customer service and other administrative
functions were combined with existing counterpart
organizations in Madison. Legal, fi nance and other
corporate administrative functions were combined
directly into Spectrum’s global headquarters
in Atlanta.
Canadian Consumer Product sales and marketing
teams have been merged as well and report to a sin-
gle country manager based in Toronto. Purchasing
and sourcing have been completely integrated on a
global basis, with an expanded product sourcing
offi ce in Asia serving all parts of the Company. In
addition, as we begin to optimize our Global Pet
operations, two pet supplies facilities in Brea,
California and Hazleton, California were closed in
2005 as part of our restructuring plan for United.
In connection with our integration of United’s lawn
and garden and pet operations, we recorded approxi-
mately $17.5 million of pretax restructuring and
related charges in 2005. Cash costs of these inte-
gration initiatives incurred in 2005 were approxi-
mately $5.3 million. The remaining $12.2 million of
costs incurred relate primarily to stay pay arrange-
ments which are being accrued over the retention
period and will be paid primarily in the fi rst half of
fi scal 2006.
Our integration activities related to the United
and Tetra acquisitions are ongoing and are expected
to continue through at least 2007, resulting in cost
savings estimated at over $100 million per year
when fully realized, $35 million of which are expected
to be realized in fi scal 2006. Total costs associated
with our integration efforts are expected to total
approximately $75 million, of which approximately
$40 million will be cash costs and $35 million will
be non-cash. In fi scal 2006, we expect to incur
approximately $35 million to $40 million of costs
associated with the integration, which includes
approximately $20 million to $25 million of cash
costs. The successful integration of these acquisi-
tions is critical to the achievement of our fi nancial
goals in 2006 and beyond, which include increasing
our operating margins and improving our operating
cash fl ow.
In 2005, we also announced the closure of a
zinc carbon manufacturing facility in France. Costs
associated with this initiative are expected to total
approximately $12 million. We incurred approxi-
mately $10 million of pretax restructuring and
related charges in 2005, with the remainder to be
incurred during fi scal 2006.
Fiscal 2004. In connection with our acquisition
of Remington, in January 2004 we announced a
series of initiatives to position us for future growth
opportunities and to optimize the global resources
of the combined Remington and Spectrum compa-
nies. As of September 30, 2004, all of the following
global integration initiatives were complete:
• Remington’s North American operations were
integrated into Spectrum’s existing business
structure.
• Remington’s European operations were con-
solidated into Spectrum’s European business
segment.
• Remington’s and Spectrum’s North American
and European distribution facilities were
consolidated.
• Spectrum and Remington research and devel-
opment functions were merged into a single
corporate research facility in Madison, WI.
• The Remington manufacturing operations in
Bridgeport, CT were consolidated into Spectrum’s
manufacturing facility in Portage, WI.
• All operations at Remington’s United Kingdom
and United States Service Centers were
discontinued.
• Spectrum’s corporate headquarters was moved
to Atlanta, GA.
We recorded pretax restructuring and related
charges of $11 million in 2004. Cash costs of the
integration program, including those recorded as
additional acquisition costs, totaled approximately
$30 million. Annual savings related to these costs
totaled approximately $35 million. The result of
these initiatives was a reduction of approximately
500 positions, or approximately 10%, of the
combined organization.
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
SPECTRUM BRANDS, INC.20