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72 SPECTRUM BRANDS | 2007 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Spectrum Brands, Inc.
Consolidating Statement of Operations
Year Ended September 30, 2007
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
Net sales $ 398,474 $ 578,971 $ 1,145,238 $ (128,161) $ 1,994,522
Cost of goods sold 252,715 427,338 675,200 (128,303) 1,226,950
Restructuring and related charges 540 12,941 17,834 – 31,315
Gross profit 145,219 138,692 452,204 142 736,257
Operating expenses:
Selling 70,296 80,176 270,256 (434) 420,294
General and administrative (371,865) 151,332 374,703 – 154,170
Research and development 16,031 4,654 4,437 – 25,122
Restructuring and related charges 30,352 8,018 21,355 – 59,725
Goodwill and intangibles impairment 214,039 1,000 23,400 – 238,439
(41,147) 245,180 694,151 (434) 897,750
Operating income (loss) 186,366 (106,488) (241,947) 576 (161,493)
Interest expense 139,124 (18,744) 24,785 50,065 195,230
Other expense (income), net 377,889 214,490 (5,753) (586,957) (331)
(Loss) income from continuing operations
before income taxes (330,647) (302,234) (260,979) 537,468 (356,392)
Income tax expense (benefit) 88,086 23,403 (16,894) (38,879) 55,716
(Loss) income from continuing operations (418,733) (325,637) (244,085) 576,347 (412,108)
(Loss) income from discontinued operations, net of tax (167,684) (1,400) (15,521) – (184,605)
Net (loss) income $ (586,417) $ (327,037) $ (259,606) $ 576,347 $ (596,713)
Consolidating Statement of Cash Flows
Year Ended September 30, 2007
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
Net cash provided (used) by operating activities $ 339,184 $ (99,685) $ (121,297) $ (151,183) $ (32,981)
Cash flows from investing activities:
Purchases of property, plant and equipment (7,806) (3,010) (11,285) – (22,101)
Proceeds from sale of property, plant, and equipment – – 1,572 – 1,572
Intercompany investments (27,758) 22,758 5,000 – –
Net cash (used) provided by investing activities
of continuing operations (35,564) 19,748 (4,713) – (20,529)
Net cash (used) provided by investing activities
of discontinued operations – (2,200) – – (2,200)
Net cash (used) provided by investing activities (35,564) 17,548 (4,713) – (22,729)
Cash flows from financing activities:
Reduction of debt (1,181,027) – (847,522) – (2,028,549)
Proceeds from debt financing 1,547,500 – 629,123 – 2,176,623
Debt issuance costs (43,969) – – – (43,969)
Payments of capital lease obligations – – (8,730) – (8,730)
Proceeds from exercise of stock options 655 – – – 655
Stock option income tax benefit 37 – – – 37
Treasury stock purchases (3,003) – – – (3,003)
(Advances related to) proceeds from intercompany transactions (614,887) 82,234 381,470 151,183 –
Net cash (used) provided by financing activities (294,694) 82,234 154,341 151,183 93,064
Effect of exchange rate changes on
cash and cash equivalents – – 4,069 – 4,069
Net increase (decrease) in cash and cash equivalents 8,926 97 32,400 – 41,423
Cash and cash equivalents, beginning of period 2,676 1,376 24,378 – 28,430
Cash and cash equivalents, end of period $ 11,602 $ 1,473 $ 56,778 $ – $ 69,853