Rayovac 2007 Annual Report Download - page 69

SPECTRUM BRANDS | 2007 ANNUAL REPORT 67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Spectrum Brands, Inc.
The following table summarizes the remaining accrual balance
associated with the 2006 initiatives and activity that occurred
during Fiscal 2007:
2006 Restructuring Initiatives Summary
Termination Other
Benefits Costs Total
Accrual balance at
September 30, 2006 $ 12,922 $ – $ 12,922
Provisions
7,549 – 7,549
Cash expenditures (12,793) – (12,793)
Non-cash expenditures (2,454) – (2,454)
Accrual balance at
September 30, 2007 $ 5,224 $ – $ 5,224
Expensed as incurred(1) $ (1,352) $ 307 $ (1,045)
(1) Consists of amounts not impacting the accrual for restructuring and related charges.
2005 Restructuring Initiatives
In connection with the acquisitions of United and Tetra in 2005,
the Company announced a series of initiatives to optimize the
global resources of the combined companies. These initiatives
included: integrating all of United’s home and garden administra-
tive services, sales and customer service functions into the Compa-
ny’s operations in Madison, Wisconsin; converting all information
systems to SAP; consolidating United’s home and garden manu-
facturing and distribution locations in North America; rationalizing
the North America supply chain; and consolidating administrative,
manufacturing and distribution facilities of the Company’s Global
Pet Supplies business. In addition, certain corporate fi nance func-
tions were shifted to the Company’s global headquarters in Atlanta.
Effective October 1, 2006, the Company refl ected the operations
of its Home and Garden Business as discontinued operations.
(See Note 5, Assets Held for Sale, and Note 11, Discontinued
Operations, for further details on the discontinued Home and
Garden Business). As a result, as of October 1, 2006, initiatives
to integrate the activities of the Home and Garden Business into
the Company’s operations in Madison, Wisconsin were sus-
pended. In connection with the integration of the United home
and garden business, the Company recorded $131, $2,901 and
$6,075 in Fiscal 2007, 2006 and 2005, respectively.
Integration activities within Global Pet Supplies are substan-
tially complete as of September 30, 2007. Global Pet Supplies
integration activities consisted primarily of the rationalization of
manufacturing facilities and the optimization of the distribution
network. As a result of these integration initiatives, two pet sup-
plies facilities were closed in 2005, one in Brea, California and
the other in Hazleton, Pennsylvania; one pet supply facility was
closed in 2006, in Hauppauge, New York; and one pet supply
facility was closed in 2007, in Moorpark, California. The Company
recorded $22,446, $8,622 and $453 of pretax restructuring and
related charges during Fiscal 2007, 2006 and 2005, respectively,
primarily in connection with its integration activities within the
Global Pet Supplies business.
In Fiscal 2005, the Company also announced the closure of a
zinc carbon manufacturing facility in France. The Company
incurred $485, $259 and $10,211 in Fiscal 2007, 2006 and 2005,
respectively. Costs associated with this initiative totaled $10,955.
The following table summarizes the remaining accrual balance
associated with the 2005 initiatives and activity that occurred
during Fiscal 2007:
2005 Restructuring Initiatives Summary
Termination Other
Benefits Costs Total
Accrual balance at
September 30, 2006 $ 8,945 $ 2,735 $ 11,680
Provisions
405 597 1,002
Cash expenditures (6,004) (911) (6,915)
Non-cash expenditures (729) (153) (882)
Accrual balance at
September 30, 2007 $ 2,617 $ 2,268 $ 4,885
Expensed as incurred(1) $ 750 $ 21,310 $ 22,060
(1) Consists of amounts not impacting the accrual for restructuring and related charges.
2005 Restructuring Initiatives Summary –
Pursuant to Acquisitions(1)
Termination Other
Benefits Costs Total
Accrual balance at
September 30, 2006 $ 4,515 $ 15,278 $ 19,793
Cash expenditures (3,437) (4,666) (8,103)
Non-cash expenditures (978) 1,158 180
Accrual balance at
September 30, 2007 $ 100 $ 11,770 $ 11,870
(1) Represents costs to exit activities of the acquired United and Tetra businesses. These costs,
which include severance, lease termination costs, inventory disposal costs and other asso-
ciated costs, relate to the closure of certain acquired Global Pet Supplies and home and
garden manufacturing and distribution facilities. Such amounts are recognized as liabili-
ties assumed as part of the United acquisition and included in the allocation of the acqui-
sition cost in accordance with the provisions of EITF 95-3, “Recognition of Liabilities
Assumed in Connection with a Purchase Business Combination.”
(17) Acquisitions
Acquisition of Jungle Labs
On September 1, 2005, the Company acquired Jungle Labs
for approximately $29,000, which included $26,000 cash con-
sideration at closing, $1,280 paid after closing and $2,000 of
non-compete arrangements which were earned and paid
through August 31, 2007. The aggregate purchase price included
acquisition-related expenditures of approximately $200. Such
amounts paid were recorded as additional acquisition consider-
ation. Cash acquired totaled approximately $600. Based in San
Antonio, Texas, Jungle Labs is a leading manufacturer and mar-
keter of premium water and fi sh care products, including water
conditioners, plant and fi sh foods, fi sh medications and other
products designed to maintain an optimal environment in
aquariums or ponds. Jungle Labs generates annual revenues of
approximately $14,000. The fi nancial results of Jungle Labs are