Rayovac 2005 Annual Report Download - page 47

as part of the United and Tetra acquisitions. Effective
October 1, 2005, we will report the United Pet Group,
which was acquired with the United acquisition, and
Tetra together as a separate business segment.
Our assets as of September 30, 2005 were
$1,718 million. Intangible assets approximate
$1,263 million of our total assets at September 30,
2005 and primarily arose as a result of our acquisi-
tion of United on February 7, 2005 which is described
in more detail in Note 16, Acquisitions, of the Notes
to Consolidated Financial Statements included in
this Annual Report on Form 10-K. Our purchase
price allocation for the United acquisition will be
fi nalized upon completion of our lawn and garden
and pet operations integration plans.
Tetra
(in millions)
2005
Net sales to external customers $ 96
Segment profit $ 10
Segment profit as a % of net sales 10.4%
Assets as of September 30, $630
Our net sales to external customers in the fi ve
months subsequent to the acquisition of Tetra were
$96 million, essentially fl at versus Tetra’s 2004
results in the comparable prior fi scal period. Economic
conditions in Europe and an overall slow down in the
aquatics market growth impacted the 2005 results.
Our operating profi tability in fi scal 2005 was
$10 million and segment profi tability as a percentage
of sales for fi scal 2005 was 10.4%. Both amounts
were negatively impacted by the previously dis-
cussed inventory valuation charge of approximately
$8 million. Excluding this charge, our segment profi t-
ability as a percentage of net sales would have been
approximately 18.8%. As previously discussed, effec-
tive October 1, 2005, the Global Pet business unit,
which encompasses both United Pet Group and
Tetra, operates as a separate business segment
headquartered in Cincinnati, Ohio. Accordingly, going
forward, we will no longer separately report the full
results of operations for Tetra.
Our assets as of September 30, 2005 were
$630 million. Intangible assets approximate
$530 million at September 30, 2005 and primarily
arose as a result of our acquisition of Tetra on
April 29, 2005 which is described in more detail in
Note 16, Acquisitions, of the Notes to Consolidated
Financial Statements included in this Annual Report
on Form 10-K. Our purchase price allocation for the
Tetra acquisition will be fi nalized upon completion of
our global pet integration plans.
Corporate Expense. Our corporate expense in fi s-
cal 2005 increased to $85 million from $71 million
in the previous year. The increase in expense is pri-
marily due to increased research and development
of approximately $6 million and increased costs of
global operations of approximately $6 million, pri-
marily attributable to the acquisitions of United and
Tetra. In addition, we realized a net increase of
approximately $3 million in corporate general and
administrative expenses primarily as a result of the
costs of Sarbanes-Oxley compliance, including both
audit and consulting costs, increased costs asso-
ciated with amortization of restricted stock, and
increased legal expenses. These increases were
somewhat offset by a reduction in incentive com-
pensation costs due to non-achievement of fi nancial
goals for 2005. Our corporate expense as a per-
centage of net sales in fi scal 2005 decreased to
3.6% from 5.0% in the previous year.
Restructuring and Related Charges. In April 2005,
we announced the closure of our Breitenbach,
France zinc carbon manufacturing facility. 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.
In connection with the February 2005 acquisition
of United, we announced a series of initiatives to
optimize the global resources of the combined
United and Spectrum companies. These initiatives
include: integrating all of United’s Home and Garden
administrative services, sales, and customer service
functions into our North America headquarters in
Madison, Wisconsin; converting all information
systems to SAP; consolidating United’s manufac-
turing and distribution locations in North America;
rationalizing the North America supply chain; and
consolidating United Pet Group’s administrative
and manufacturing and distribution facilities. These
restructuring initiatives are expected to be
completed by the end of fi scal 2007.
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
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
2005 ANNUAL REPORT 27