Rayovac 2007 Annual Report Download - page 17

SPECTRUM BRANDS | 2007 ANNUAL REPORT 15
Products in our lawn and garden category are sold through
our Home and Garden Business, which we have classifi ed as
discontinued operations. The Home and Garden Business manu-
factures and markets lawn and garden care products, including
fertilizers, herbicides, outdoor and indoor insect control prod-
ucts, rodenticides, plant foods, potting soil and other growing
media and grass seed. The Home and Garden Business operates
in the U.S. market under the brand names Spectracide, Cutter,
Garden Safe and Schultz. The Home and Garden Business also
has exclusive brand arrangements for our Vigoro brand at The
Home Depot, for our Sta-Green brand at Lowe’s and for our
Expert Gardener brand at Wal-Mart. The Home and Garden
Business’ marketing position is primarily that of a value brand,
enhanced and supported by innovative products and packaging
to drive sales at the point of purchase. The Home and Garden
Business’ primary competitors in the lawn and garden category
include The Scotts Miracle-Gro Company and Central Garden &
Pet Company. Our primary competitor in the outdoor and indoor
insect control products category is S.C. Johnson & Son, Inc.
The following factors contribute to our ability to succeed in
these highly competitive product categories:
• Strong Diversifi ed Global Brand Portfolio. We have a global
portfolio of well-recognized consumer product brands. We
believe that the strength of our brands positions us to extend
our product lines and provide our retail customers with
strong sell-through to consumers.
• Strong Global Retail Relationships. We have well-established
business relationships with many of the top global retailers,
distributors and wholesalers, which have assisted us in our
efforts to expand our overall market penetration and pro-
mote sales.
• Expansive Distribution Network. We distribute our products
in approximately 120 countries through a variety of trade
channels, including retailers, wholesalers and distributors,
hearing aid professionals, industrial distributors and OEMs.
• Innovative New Products, Packaging and Technologies. We
have a long history of product and packaging innovations in
each of our seven product categories and continually seek to
introduce new products both as extensions of existing product
lines and as new product categories.
• Experienced Management Team. Our management team has
substantial consumer products experience. On average, each
senior manager has more than 20 years of experience at
Spectrum, VARTA, Remington or other branded consumer
product companies such as Regina, Newell Rubbermaid,
H.J. Heinz, Schering-Plough and Chemtura.
Seasonal Product Sales
On a consolidated basis our fi nancial results are approximately
equally weighted between quarters; however, certain of our prod-
ucts experience seasonal sales fl uctuations. Sales in the battery,
electric shaving and grooming and electric personal care product
categories, particularly in North America, tend to be seasonal,
with purchases of such products by consumers concentrated in
the December holiday season. Pet supplies and personal care
sales remain fairly constant throughout the year. Demand for our
lawn and garden and household insect control products sold
through the Home and Garden Business, which we have desig-
nated as discontinued operations, typically peaks during the fi rst
six months of the calendar year (Spectrum’s second and third fi s-
cal quarters). The seasonality of our sales during the last three
fi scal years is as follows:
Percentage of Annual Sales
Fiscal Year Ended
September 30,
Fiscal Quarter Ended 2007 2006 2005
December 28% 30% 28%
March 22% 22% 20%
June 22% 22% 25%
September 28% 26% 27%
Fiscal Year Ended September 30, 2007, Compared to
Fiscal Year Ended September 30, 2006
Highlights Of Consolidated Operating Results
During Fiscal 2007, we approved and initiated a plan to sell our
Home and Garden Business and as a result, we have designated our
Home and Garden Business as discontinued operations. Conse-
quently, the results of our Home and Garden Business for Fiscal
2007 are presented in our Consolidated Statements of Operations
as discontinued operations. The results of our Home and Garden
Business in Fiscal 2006 and 2005 have been reclassifi ed to conform
to the Fiscal 2007 classifi cation. In addition, during Fiscal 2006,
we designated Nu-Gro Pro and Tech as discontinued operations
consistent with our decision to sell these businesses. Consequently,
the results of Nu-Gro Pro and Tech for Fiscal 2006 are refl ected in
our Consolidated Statements of Operations as discontinued opera-
tions. The results of Nu-Gro Pro and Tech in Fiscal 2005 have been
reclassifi ed to conform to the Fiscal 2006 classifi cation. Unless
specifi cally stated otherwise, all discussions in this section regard-
ing Fiscal 2007, 2006 and 2005 operating results refl ect results
only from our continuing operations. See Note 11, Discontinued
Operations, of Notes to Consolidated Financial Statements
included in this Annual Report on Form 10-K for additional
information on our discontinued Home and Garden Business and
Nu-Gro Pro and Tech businesses.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Spectrum Brands, Inc.