Rayovac 2008 Annual Report Download - page 54

Table of Contents
Index to Financial Statements
achieving certain financial objectives and has a general manager responsible for the sales and marketing initiatives and financial results for product lines within
that segment. Financial information pertaining to our reportable segments is contained in Note 13, Segment Information, of Notes to Consolidated Financial
Statements included in this Annual Report on Form 10-K.
Global Batteries & Personal Care
2007 2006
(in millions)
Net sales to external customers $ 1,431 $ 1,352
Segment profit $ 144 $ 117
Segment profit as a % of net sales 10.0% 8.7%
Assets as of September 30, $ 1,377 $ 1,612
Segment net sales to external customers in Fiscal 2007 increased $79 million to $1,431 million from $1,352 million during Fiscal 2006, representing a 6%
increase. Favorable foreign currency exchange translation impacted net sales in Fiscal 2007 by approximately $58 million. Battery sales for Fiscal 2007 were
slightly up to $882 million when compared to Fiscal 2006 sales of $861 million, principally due to increases in Latin America of $24 million, which were driven
by favorable pricing, volume growth and product mix. These increases were tempered by declines in North America sales of $8 million associated with lost
distribution as well as in Europe of $25 million driven by (i) our continued exit from the low margin private label battery businesses, (ii) the continued shift in
European distribution channels from electronic specialty stores and photo stores to discount channels and (iii) the continued shift in product mix due to consumer
preferences for lower-priced private label batteries. Net sales of electric shaving and grooming products in Fiscal 2007 increased by $16 million, or 6%, as the
result of the growth in our Latin America and European markets. Electric personal care sales increased by $36 million, an increase of 24% over Fiscal 2006,
driven by our expanded global distribution in conjunction with our investments in brand development. Net sales of portable lighting products for Fiscal 2007
increased to $95 million as compared to sales of $88 million for Fiscal 2006. The sales increase was driven by new product launches and occurred in all
geographic regions.
Segment profitability in Fiscal 2007 increased to $144 million from $117 million in Fiscal 2006. Segment profitability as a percentage of net sales
increased to 10.0% in Fiscal 2007 as compared with 8.7% in Fiscal 2006. The increase in segment profitability for Fiscal 2007 was the result of higher gross
profit, driven by sales increases, which more than offset increases in raw material commodity costs, coupled with savings from our Fiscal 2006 Global
Batteries & Personal Care restructuring initiatives and our global realignment announced in January 2007. 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. The cost reductions noted above were slightly offset by our increased investment in marketing and
advertising expenses of $8 million associated with our new Rayovac, VARTA and Remington marketing campaigns.
Segment assets at September 30, 2007 decreased to $1,377 million from $1,612 million at September 30, 2006. The decrease is primarily attributable to
the non-cash impairment of goodwill and certain trade name intangible assets in Fiscal 2007. See “Goodwill and Intangibles 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 additional information regarding this impairment charge and the amount attributable to Global Batteries & Personal Care. Goodwill and intangible
assets at September 30, 2007 total approximately $530 million and primarily relate to the ROV Ltd., VARTA AG, Remington Products and Microlite
acquisitions. Included in long-term liabilities assumed in connection with the acquisition of Microlite is a provision for “presumed” credits applied to the
Brazilian excise tax on manufactured products, or “IPI taxes.” Although a previous ruling by the Brazilian Federal Supreme Court had been issued in favor of a
specific Brazilian taxpayer with similar tax credits, on February 15, 2007 the Brazilian Federal Supreme Court
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008