Rayovac 2007 Annual Report Download - page 68

66 SPECTRUM BRANDS | 2007 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Spectrum Brands, Inc.
The following table summarizes restructuring and related
charges incurred by type of charge:
2007 2006 2005
Costs included in cost of goods sold:
Breitenbach, France facility closure:
Termination benefits $ 18 $ 259 $ 8,276
Other associated costs 468 – 1,965
United & Tetra integration:
Termination benefits 149 5,430 255
Other associated costs 13,005 1,810 –
European initiatives:
Termination benefits 7,494 14,953 –
Other associated costs 308 – –
Latin America initiatives:
Termination benefits 712 – –
Other associated costs 9,847 – –
Global Realignment initiatives:
Termination benefits (686) – –
Total included in cost of goods sold 31,315 22,452 10,496
Costs included in operating expenses:
United & Tetra integration:
Termination benefits 988 2,491 3,165
Other associated costs 8,435 1,791 4,495
European initiatives:
Termination benefits (1,298) 7,936 –
Other associated costs – – –
Latin America initiatives:
Termination benefits 363 – –
Global Realignment:
Termination benefits 47,617 – 194
Other associated costs 3,620 – (1,611)
Total included in
operating expenses 59,725 12,218 6,243
Total restructuring and
related charges $ 91,040 $ 34,670 $ 16,739
2007 Restructuring Initiatives
The Company has implemented a series of initiatives within
the Global Batteries & Personal Care segment in Latin America
to reduce operating costs (the “Latin American Initiatives”).
These initiatives include the reduction of certain manufacturing
operations in Brazil and the restructuring of management, sales,
marketing and support functions. The Company incurred
$10,923 of pretax restructuring and related charges during the
year September 30, 2007 of which approximately $1,177 repre-
sent cash costs. Costs associated with the Latin America Initia-
tives are fully accrued.
In Fiscal 2007, the Company began managing its business in
three vertically integrated, product-focused reporting segments;
Global Batteries & Personal Care, Global Pet Supplies and the
Home and Garden Business. As part of this realignment, the
Company’s Global Operations organization, previously included
in corporate expense, consisting of research and development,
manufacturing management, global purchasing, quality opera-
tions and inbound supply chain, is now included in each of the
operating segments. (See also Note 13, Segment Information,
for additional discussion on the Company’s realignment of its
operating segments). In connection with these changes the
Company undertook a number of cost reduction initiatives, pri-
marily headcount reductions, at the corporate and operating
segment levels (the “Global Realignment Initiatives”). The
Company incurred $50,550 of pretax restructuring and related
charges in connection with these initiatives during the year
ended September 30, 2007. Costs associated with these initia-
tives, which are expected to be incurred through December 31,
2008, relate primarily to severance and are projected at approx-
imately $59,000, the majority of which will be cash costs.
The following table summarizes the remaining accrual bal-
ance associated with the 2007 initiatives and activity that
occurred during Fiscal 2007:
2007 Restructuring Initiatives Summary
Termination Other
Benefits Costs Total
Accrual balance at
September 30, 2006 $ – $ – $ –
Provisions
27,884 13,645 41,529
Cash expenditures (6,445) (1) (6,446)
Non-cash expenditures 6,162 (9,025) (2,863)
Accrual balance at
September 30, 2007 $ 27,601 $ 4,619 $ 32,220
Expensed as incurred(1) $ 20,124 $ (180) $ 19,944
(1) Consists of amounts not impacting the accrual for restructuring and related charges.
2006 Restructuring Initiatives
The Company implemented a series of initiatives within the
Global Batteries & Personal Care segment in Europe to reduce
operating costs and rationalize the Company’s manufacturing
structure (the “European Initiatives”). These initiatives include
the relocation of certain operations at the Ellwangen, Germany
packaging center to the Dischingen, Germany battery plant,
transferring private label battery production at the Company’s
Dischingen, Germany battery plant to the Company’s manufac-
turing facility in China and restructuring its sales, marketing and
support functions. The Company incurred $6,504 and $21,242
of pretax restructuring and related charges in Fiscal 2007 and
2006, respectively, in connection with the European Initiatives.
Costs associated with these initiatives are fully accrued.