Rayovac 2006 Annual Report Download - page 105

SPECTRUM BRANDS | 2006 ANNUAL REPORT 93
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 marketing orga-
nization 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 com-
bined with existing counterpart organizations in Madison. Legal and
certain corporate fi nance 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 single country manager. 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 the Company begins to optimize its pet operations, two
pet supplies facilities in Brea, California and Hazleton, Pennsylvania
were closed in 2005.
The Company recorded $32,946 and $17,492 of pretax restruc-
turing and related charges in 2006 and 2005, respectively, in con-
nection with its integration of businesses acquired in 2005. Cash
costs of these integration initiatives incurred in 2006 were approxi-
mately $31,000, which include approximately $17,000 of cash pay-
downs on previously established accruals for employee retention
payment arrangements.
The Company’s integration activities related to the United and
Tetra acquisitions are ongoing and are expected to continue
through fi scal 2008. Costs associated with integration efforts are
expected to total approximately $85,000, of which approximately
$65,000 will be cash costs, and $20,000 will be non-cash. In fi scal
2007, the Company expects to incur $30,000 to $35,000 of costs
associated with the integration, which includes $20,000 to
$25,000 of cash costs.
The following tables summarize the remaining accrual balance
associated with the 2005 initiatives and activity that occurred dur-
ing fi scal 2006:
2005 Restructuring Initiatives Summary
Termination Other
Benefits Costs Total
Accrual balance at
September 30, 2005 $ 15,345 $ – $ 15,345
Provisions 13,577 – 13,577
Cash expenditures (17,334) (13) (17,347)
Non-cash expenditures (474) – (474)
Accrual balance at
September 30, 2006 $ 11,114 $ (13) $ 11,101
Expensed as incurred(A) $ 8,809 $10,819 $ 19,628
(A) Consists of amounts not impacting accrual for restructuring and related charges.
2005 Restructuring Initiatives Summary—
Pursuant to Acquisitions (A)
Termination Other
Benefits Costs Total
Accrual balance at
September 30, 2005 $ 3,336 $ – $ 3,336
Liability recognized 8,128 25,036 33,164
Cash expenditures (2,755) (903) (3,658)
Non-cash expenditures – (12,810) (12,810)
Accrual balance at
September 30, 2006 $ 8,709 $ 11,323 $20,032
(A) Provisions for costs to exit activities of the acquired United and Tetra businesses. These
costs, which include severance, lease termination costs, inventory disposal costs and
other associated costs, relate to the closure of certain acquired Pet and Lawn and Garden
manufacturing and distribution facilities. Such amounts are recognized as liabilities
assumed as part of the United acquisition and included in the allocation of the acquisition
cost in accordance with the provisions of EITF 95-3 “Recognition of Liabilities Assumed
in Connection with a Purchase Business Combination.”
2004 Restructuring Initiatives
In 2004, in connection with the September 2003 acquisition of
Remington, the Company committed to and announced a series of
initiatives to position itself for future growth opportunities and to
optimize the global resources of the combined companies. These ini-
tiatives include: integrating all of Remington’s North America admin-
istrative services, marketing, sales, and customer service functions
into the Company’s North America headquarters in Madison,
Wisconsin; moving Remington’s Bridgeport, Connecticut manufac-
turing operations to the Company’s Portage, Wisconsin manufactur-
ing location; creation of a global product development group in the
Company’s technology center in Madison, Wisconsin; closing
Remington’s Service Centers in the United States and the United
Kingdom; consolidating distribution centers; and moving the
Company’s corporate headquarters to Atlanta, Georgia. The Company
also announced the integration of its sales and marketing organiza-
tions throughout continental Europe. All activities associated with the
2004 restructuring initiatives have been completed, and the remain-
ing cash payments of approximately $340, which primarily relate to
termination benefi ts, will be made in fi scal 2007.
2006 Form 10-K Annual Report
Spectrum Brands, Inc.