Rayovac 2008 Annual Report Download - page 46

Table of Contents
Index to Financial Statements
Home and Garden
2008 2007
(in millions)
Net sales to external customers $ 595 $ 570
Segment profit $ 8 $ 47
Segment profit as a % of net sales 1.3% 8.2%
Assets as of September 30, $ 290 $ 548
Segment net sales to external customers in Fiscal 2008 increased to $595 million from $570 million in Fiscal 2007, representing an increase of $25 million
or 4%. The Fiscal 2008 sales of lawn and garden products versus Fiscal 2007 increased $22 million, or 5%, to $431 million primarily due to price increases
implemented to offset rising commodity costs associated with the lawn and garden business. Household insect control sales for Fiscal 2008 increased $3 million,
or 2%, compared to Fiscal 2007, mainly driven by price increases tempered by lower sales volume as certain of our customers continued to reduce their inventory
levels.
Segment profitability in Fiscal 2008 decreased to $8 million from $47 million in Fiscal 2007. Segment profitability as a percentage of sales in Fiscal 2008
decreased to 1.3% from 8.2% in the same period last year. The decrease in segment profit for Fiscal 2008 was primarily due to increased commodity costs
associated with the lawn and garden business, our increased investment in the Spectricide and Cutter brands, coupled with depreciation and amortization expense
of $27 million recorded during Fiscal 2008, while no depreciation and amortization expense was recorded in Fiscal 2007. From October 1, 2006 through
December 30, 2007, the U.S. division of our Home and Garden Business was designated as discontinued operations. In accordance with generally excepted
accounting principles, while designated as discontinued operations we ceased recording depreciation and amortization expense associated with the assets of this
business. As a result of our reclassification of that business to a continuing operation we recorded a catch-up of depreciation and amortization expense, which
totaled $17 million, for the five quarters during which this business was designated as discontinued operations. In addition, Fiscal 2008 also includes depreciation
and amortization of $10 million representing the depreciation and amortization expense of the U.S. division of our Home and Garden Business since it was
reclassified as a continuing operation on December 30, 2007.
Segment assets as of September 30, 2008 decreased to $290 million from $548 million at September 30, 2007. The decrease is primarily attributable to the
depreciation expense mentioned above coupled with the impairment of goodwill and certain trade name intangible assets, a non-cash charge, in Fiscal 2008. See
“Goodwill and Intangibles Impairment” below as well 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 additional information regarding this impairment charge and the amount attributable to
Home and Garden. Intangible assets as of September 30, 2008 total approximately $115 million and primarily relate to the acquisition of the United Industries
division of United.
Corporate Expense. Our corporate expense in Fiscal 2008 decreased to $45 million from $47 million in Fiscal 2007. The decrease in expense for Fiscal
2008 is primarily due to savings associated with our global realignment announced in January 2007, lower executive compensation expense and other corporate
overhead expense reductions, tempered by the write off of professional fees incurred in connection with the termination of potential sales of certain of the
Company’s businesses coupled with the non-recurrence of a curtailment gain of $2 million which was recorded in Fiscal 2007 in connection with the termination
of an employee benefit plan. Our corporate expense as a percentage of consolidated net sales in Fiscal 2008 decreased to 1.7% from 1.8% in Fiscal 2007.
Restructuring and Related Charges. See 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.
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008