Rayovac 2008 Annual Report Download - page 37

Table of Contents
Index to Financial Statements
Annual Report on Form 10-K for additional information on the sale of the Canadian division of our Home and Garden Business.
During the second quarter of Fiscal 2008, we determined that in view of the difficulty in predicting the timing or probability of a sale of the Home and
Garden Business the requirements of SFAS 144, necessary to classify the Home and Garden Business as discontinued operations, were no longer met and that it
was appropriate to present the Home and Garden Business as held and used in the Company’s continuing operations as of our second quarter of Fiscal 2008 and
going forward. The presentation herein of the results of continuing operations includes our Home and Garden Business excluding the Canadian division, which,
as indicated above, was sold on November 1, 2007, for all periods presented.
In the third quarter of Fiscal 2008, we entered into a definitive agreement, subject to consent of our lenders under our senior credit facilities, to sell the
assets related to Global Pet Supplies. We were unable to obtain the consent of the lenders, and on July 13, 2008, we entered into a termination agreement
regarding the agreement to sell Global Pet Supplies. Pursuant to the termination agreement, as a condition to the termination, we paid the proposed buyer $3
million as a reimbursement of expenses.
On November 5, 2008, the Company’s board of directors committed to the shutdown of the growing products portion of the Home and Garden Business,
which includes fertilizers, enriched soils, mulch and grass seed, following an evaluation of the historical lack of profitability and the projected input costs and
significant working capital demands for the growing product portion of the Home and Garden Business for the Company’s 2009 fiscal year (“Fiscal 2009”). We
believe the shutdown is consistent with what the Company has done in other areas of its business to eliminate unprofitable products from its portfolio. The
Company expects the shutdown of the growing products portion of the Home and Garden Business to be completed by January 31, 2009.
We remain committed to exploring potential strategies which may be available to us to reduce or restructure our significant outstanding indebtedness.
We manufacture and market alkaline, zinc carbon and hearing aid batteries, lawn fertilizers, herbicides, insecticides and repellants and specialty pet
supplies. We design and market rechargeable batteries, battery-powered lighting products, electric shavers and accessories, grooming products and hair care
appliances. Our manufacturing and product development facilities are located in the United States, Europe, China and Latin America. Substantially all of our
rechargeable batteries and chargers, shaving and grooming products, personal care products and portable lighting products are manufactured by third-party
suppliers, primarily located in Asia.
We sell our products in approximately 120 countries through a variety of trade channels, including retailers, wholesalers and distributors, hearing aid
professionals, industrial distributors and original equipment manufacturers and enjoy strong name recognition in our markets under the Rayovac, VARTA and
Remington brands, each of which has been in existence for more than 80 years, and under the Tetra, 8in1, Spectracide, Cutter and various other brands.
SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”) requires companies to test goodwill and indefinite-lived intangible assets for
impairment annually, or more often if an event or circumstance indicates that an impairment loss may have been incurred. In Fiscal 2008, 2007 and 2006, we
tested our goodwill and indefinite-lived intangible assets and, as a result of this testing, we recorded non-cash pretax impairment charges of approximately $867
million, $362 million and $433 million in Fiscal 2008, 2007 and 2006, respectively. Future cash expenditures will not result from these impairment charges. See
“Critical Accounting Policies—Valuation of Assets and Asset Impairment” below as well as Note 2(i), Significant Accounting Policies and Practices—Intangible
Assets, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further details on these impairment charges.
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008