Rayovac 2006 Annual Report Download - page 79

SPECTRUM BRANDS | 2006 ANNUAL REPORT 67
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(1) Description of Business
Spectrum Brands, Inc. and its subsidiaries (the “Company”) is a
global branded consumer products company with positions in
seven major product categories: consumer batteries; lawn and gar-
den; pet supplies; electric shaving and grooming; household insect
control; electric personal care products; and portable lighting. The
Company is a worldwide manufacturer and marketer of alkaline,
zinc carbon and hearing aid batteries, as well as aquariums and
aquatic health supplies, a designer and marketer of rechargeable
batteries and battery-powered lighting products and a designer and
marketer of electric shavers and accessories, grooming products
and hair care appliances. The Company is also a North American
manufacturer and marketer of lawn fertilizers, herbicides, insecti-
cides and repellents, and specialty pet supplies.
During 2005, the Company made two signifi cant acquisitions
designed to diversify the Company’s business and leverage the
Company’s distribution strengths. On April 29, 2005, the Company
acquired all of the outstanding equity interests of Tetra Holding
GmbH (“Tetra”) for a purchase price of approximately $550,000,
net of cash acquired of approximately $13,000 and inclusive of a
fi nal working capital payment of $2,400, made in July 2005. The
aggregate purchase price also included acquisition related expendi-
tures of approximately $16,100. The acquisition was fi nanced with
borrowings under an Incremental Term Loan Facility and existing
Revolving Credit Facility (each as defi ned in Note 7, Debt). Tetra
manufactures, distributes and markets a comprehensive line of
foods, equipment and care products for fi sh and reptiles, along
with accessories for home aquariums and ponds. Subsequent to the
acquisition, the fi nancial results of Tetra are included in the Global
Pet business segment within the Company’s consolidated results.
(See also Note 17, Acquisitions, for additional information on the
Tetra acquisition).
On February 7, 2005, the Company completed the acquisi-
tion of all of the outstanding 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 spe-
cialty pet supplies in the United States. The aggregate purchase
price was approximately $1,490,000, net of cash acquired of
approximately $14,000. The purchase price consisted of cash
consideration of approximately $1,051,000 and common stock
totaling approximately $439,000. The aggregate purchase price
included acquisition related expenditures of approximately
$22,000. Subsequent to the acquisition, the fi nancial results of
the lawn and garden and household insect control business of
United are included in the North America business segment, and
the fi nancial results of the pet business of United are included in
the Global Pet business segment within the Company’s consoli-
dated results. (See also Note 17, Acquisitions, for additional
information on the United acquisition).
The Company also completed the acquisition of Jungle
Laboratories Corporation (“Jungle Labs”) during the fourth
quarter of 2005. The Jungle Labs acquisition was inconsequential
to 2005 results. During 2004, the Company completed the acqui-
sitions of Microlite and Ningbo. (See also Note 17, Acquisitions,
for additional information on these acquisitions).
The Company sells its 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”)
and enjoys strong name recognition in its 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, 8in1 and various other brands. The Company has
manufacturing and product development facilities located in the
United States, Europe, China and Latin America.
(2) Significant Accounting Policies and Practices
(a) Principles of Consolidation and Fiscal Year End
The consolidated fi nancial statements include the fi nancial state-
ments of Spectrum Brands, Inc. and its subsidiaries and are prepared
in accordance with generally accepted accounting principles in the
United States of America. All intercompany transactions have been
eliminated. The Company’s fi scal year ends September 30.
References herein to 2006, 2005 and 2004 refer to the fi scal years
ended September 30, 2006, 2005 and 2004, respectively.
The Company’s Consolidated Financial Statements presented
herein include the results of Jungle Labs subsequent to the
September 1, 2005 date of acquisition; the results of operations
for Tetra subsequent to the April 29, 2005 date of acquisition; the
results of operations for United subsequent to the February 7,
2005 date of acquisition; the results of operations for Microlite
subsequent to the May 28, 2004 date of acquisition; and the
results of operations for Ningbo subsequent to the March 31,
2004 date of acquisition. (See also Note 17, Acquisitions, for
additional information on the Jungle Labs, Tetra, United,
Microlite and Ningbo acquisitions).
(b) Revenue Recognition
The Company recognizes revenue from product sales gener-
ally upon delivery to the customer or the shipping point in situa-
tions where the customer picks up the product. This represents
the point at which title and all risks and rewards of ownership of
the product are passed, provided that: there are no uncertainties
regarding customer acceptance; there is persuasive evidence that
an arrangement exists; the price to the buyer is fi xed or deter-
minable; and collectibility is deemed reasonably assured. The
2006 Form 10-K Annual Report
Spectrum Brands, Inc.