Rayovac 2006 Annual Report Download - page 109

SPECTRUM BRANDS | 2006 ANNUAL REPORT 97
(18) Subsequent Events
As previously disclosed, the Company has engaged advisors
to assist with a sale of various assets in order for the Company to
sharpen its focus on strategic growth businesses, reduce its out-
standing indebtedness and maximize long-term shareholder
value. In connection with this undertaking, the Company has
entered into discussions to dispose of certain of its assets. The
assets which are the subject of such discussions, subject to nego-
tiations of a defi nitive sales agreement, consist primarily of:
inventory of approximately $120,000; goodwill and intangible
assets of approximately $600,000; and property plant and equip-
ment of approximately $40,000, as well as executory contracts
related to the assets to be disposed. The Company currently
expects that any such sale would be consummated during the sec-
ond quarter of fi scal 2007.
On December 12, 2006, the Company reached agreement
with its Senior Lenders to amend the maximum consolidated
leverage ratio and the minimum consolidated interest coverage
ratio covenants associated with its Senior Credit Facilities effective
for the periods ended December 31, 2006 and April 1, 2007. The
amendment raises the interest rate on all of the Company’s
debt under its Senior Credit Facilities by 0.25% per annum
until the Company prepays at least $500,000 in principal
amount of its term loans with proceeds from the sale of certain
of its assets. The Company’s ability to comply with future debt
covenants beyond the fi rst quarter of fi scal 2007, ending
December 31, 2006, will depend on its ability to consummate
the disposal of the above mentioned assets on favorable con-
tractual terms. In connection with the amendment, the
Company incurred approximately $1,285 of fees which are
being amortized over the remaining term of its Senior Credit
Facilities. Failure to comply with the fi nancial covenants and
other provisions could materially and adversely affect the
Company’s ability to fi nance its future operations or capital
needs and could create a default under such instrument and
cause all amounts borrowed to become due and payable imme-
diately. In the event of default under the Senior Credit Facilities,
the amounts outstanding under its Senior Subordinated Notes
would also be subject to acceleration.
2006 Form 10-K Annual Report
Spectrum Brands, Inc.
(19) Quarterly Results (unaudited)
Quarter Ended
September 30, July 2, April 2, January 1,
2006 2006 2006 2006
Net sales $ 608,402 $698,269 $625,121 $619,960
Gross profit 210,835 265,475 233,695 243,229
Net (loss) income (439,397) 2,545 563 $ 2,317
Basic net income (loss) per common share $ (8.88) $ 0.05 $ 0.01 $ 0.05
Diluted net income (loss) per common share $ (8.88) $ 0.05 $ 0.01 $ 0.05
Quarter Ended
September 30, July 3, April 3, January 2,
2005(A) 2005 2005 2005
Net sales(B) $587,629 $707,791 $520,965 $490,769
Gross profit (B) 215,471 270,153 185,542 198,357
Net (loss) income (2,877) 23,711 (1,931) $ 27,929
Basic net income (loss) per common share(C) $ (0.06) $ 0.48 $ (0.04) $ 0.82
Diluted net income (loss) per common share(C) $ (0.06) $ 0.46 $ (0.04) $ 0.79
(A) Net sales, gross margin and net income in the fourth quarter of 2005 excluded the benefi t of approximately $4,867, $1,867 and $1,042, respectively, related to net sales which were not recorded
pursuant to contractual revenue recognition terms. The Company believes that this adjustment, if applied retroactively, would not have had a material effect on the quarterly results for previous
periods as reported.
(B) Amounts adjusted to exclude the effect of the Nu-Gro Pro and Tech discontinued operations. See Note 11, Discontinued Operations, for additional information.
(C) Due to rounding and the method required by SFAS 128, “Earnings Per Share,” to calculate per share data, the quarterly per share data does not total the full year per share data shown on the
Consolidated Statements of Operations.