Rayovac 2008 Annual Report Download - page 42

Table of Contents
Index to Financial Statements
Global consumer battery sales during Fiscal 2008 increased $34 million, or 4%, compared to Fiscal 2007, primarily driven by a favorable foreign exchange
impact of $61 million and market share gains of $15 million in North America. This increase was tempered by lower European battery sales as a result of our
continued efforts to exit from unprofitable or marginally profitable private label battery sales as well as a shift in the timing of shipments, done at the request of
certain of our retailers, related to holiday displays and promotions to the fourth quarter of Fiscal 2007 from the first quarter of Fiscal 2008. Sales of portable
lighting products in Fiscal 2008 increased $5 million, or 5%, as sales gains resulting from new product launches in North America of $4 million and favorable
foreign exchange impact of $4 million were partially offset by decreases in Latin America and Europe due to a declining market demand.
Electric shaving and grooming product sales during Fiscal 2008 decreased $21 million, or 8%, compared to Fiscal 2007 due to disappointing results in the
men’s electric shaving category. Further contributing to the sales decrease in electric shaving and grooming products for Fiscal 2008 versus Fiscal 2007 is the
shift in timing of shipments to certain retailers from the first quarter of Fiscal 2008 to the fourth quarter of Fiscal 2007. These decreases were offset by a
favorable foreign exchange impact of $9 million. Net sales of electric personal care products for Fiscal 2008 increased $44 million, or 24%, when compared to
Fiscal 2007, driven by strong worldwide growth in our women’s hair care products. We continued to see strong electric personal care double digit growth in all
geographic regions during Fiscal 2008, particularly in North America with 28% growth, when compared to Fiscal 2007.
Pet product sales during Fiscal 2008 increased $36 million, or 6%, compared to Fiscal 2007, primarily driven by a favorable foreign exchange impact of
$18 million, growth in European aquatic sales, increases in global companion animal sales, driven by our Dingo brand, and increased volume resulting from the
continued introduction of companion animal products in Europe.
Sales of lawn and garden products during Fiscal 2008 versus Fiscal 2007 increased $22 million, or 5%, primarily due to price increases implemented to
offset rising commodity costs. Household insect control sales for Fiscal 2008 versus Fiscal 2007 increased slightly by $3 million, or 2%, as price increases were
tempered by lower volume, primarily due to lower inventory levels at certain of our customers.
Gross Profit. Gross profit for Fiscal 2008 was $969 million versus $934 million for Fiscal 2007. Our gross profit margin for Fiscal 2008 decreased slightly
to 36.0% from 36.4% in Fiscal 2007. As a result of our reclassification of our Home and Garden Business from an asset held for sale to an asset held and used,
during Fiscal 2008 we recorded a charge in Cost of goods sold of $6 million associated with depreciation expense for the production related assets of that
business as a result of our reclassification of our Home and Garden business from discontinued operations to continuing operations. From October 1, 2006
through September 30, 2007, the U.S. division of our Home and Garden Business was designated as discontinued operations. In accordance with generally
accepted accounting principles, while designated as discontinued operations we ceased recording depreciation and amortization expense associated with the
assets of this business. See “Introduction” above and “Segment Results—Home and Garden” below, as well as Note 1, Description of Business, of Notes to
Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information regarding the reclassification of the Home and
Garden Business. Cost of goods sold during Fiscal 2008 also included $16 million in restructuring and related charges, primarily attributable to the Ningbo Exit
Plan. The restructuring and related charges incurred in Fiscal 2007 were $31 million which were associated with various cost cutting initiatives in connection
with the integration activities in our Global Pet Supplies business, which are substantially complete, and the rationalization of our Global Batteries & Personal
Care European and Latin American manufacturing organizations. See “Restructuring and Related Charges” below, as well as Note 16, Restructuring and Related
Charges, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information regarding our restructuring and
related charges.
Operating Expense. Operating expenses for Fiscal 2008 totaled $1,680 million versus $1,179 million for Fiscal 2007. This $501 million increase in
operating expenses for Fiscal 2008 versus Fiscal 2007 was primarily
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008