Rayovac 2008 Annual Report Download - page 6

Table of Contents
Index to Financial Statements
PART I
ITEM 1. BUSINESS
General
We are a global branded consumer products company with positions in seven major product categories: consumer batteries; pet supplies; electric shaving
and grooming; electric personal care; portable lighting; lawn and garden; and household insect control. Unless the context indicates otherwise, the terms the
“Company,” “Spectrum,” “Spectrum Brands,” “we,” “our” or “us” as used herein refer to Spectrum Brands, Inc. and its subsidiaries.
In our fiscal year ending September 30, 2007 (“Fiscal 2007”), we began managing our business in three reportable segments: (i) Global Batteries &
Personal Care, which consists of the Company’s worldwide battery, shaving and grooming, personal care and portable lighting business (“Global Batteries &
Personal Care”); (ii) Global Pet Supplies, which consists of our worldwide pet supplies business (“Global Pet Supplies”); and (iii) our Home and Garden
Business, which consists of our lawn and garden and household insect control product offerings (the “Home and Garden Business”). The presentation of all
historical segment reporting herein has been reclassified to conform to this segment structure.
On January 25, 2006, we sold the fertilizer technology and professional fertilizer products businesses of Nu-Gro, which was included in the Canadian
division of our Home and Garden Business, (“Nu-Gro Pro and Tech”), to Agrium Inc. for net proceeds of approximately $83 million. Proceeds from the sale
were used to reduce outstanding debt. As of October 1, 2005, we had begun reporting the results of operations of Nu-Gro Pro and Tech as discontinued
operations. The presentation herein of the results of continuing operations has been changed to exclude Nu-Gro Pro and Tech for all periods presented. See Note
11, Discontinued Operations, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information regarding
this divestiture.
We have retained financial advisors to assist us in exploring potential strategies which may be available to us to reduce or restructure our significant
outstanding indebtedness. In connection with this undertaking, during the first quarter of Fiscal 2007, we approved and initiated a plan to sell the Home and
Garden Business, which at the time was organized into United States (“U.S.”) and Canadian divisions. As a result of our decision to commence this process, we
determined that all the criteria set forth in paragraph 30 of Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets” (“SFAS 144”) were met and in the first quarter of Fiscal 2007, we designated certain assets and liabilities related to the Home
and Garden Business as held for sale and designated our Home and Garden Business as discontinued operations.
During the first and second quarters of Fiscal 2007, we engaged in substantive negotiations with a potential purchaser as to definitive terms for the
purchase of the Home and Garden Business; however, the potential purchaser ultimately determined not to pursue the acquisition. We continued to actively
market the Home and Garden Business after such time, however, the Fiscal 2007 selling season for our lawn and garden and household insect control product
offerings was significantly negatively impacted by extremely poor weather conditions throughout the U.S., resulting in poor operating performance of the Home
and Garden Business. In addition, during the fourth quarter of Fiscal 2007 there was an unforeseen, rapid and significant tightening of liquidity in the U.S. credit
markets. We believe that this tightening of liquidity in the credit markets had a direct impact on the expected proceeds that we would ultimately receive in
connection with a sale of the Home and Garden Business. To address these issues, during the fourth quarter of Fiscal 2007 we reassessed the value of the Home
and Garden Business to take into account the changes in the credit markets and the weaker than planned operating performance during the Fiscal 2007 selling
season so as to ensure that the Home and Garden Business was being marketed at a price that was reasonable in relation to its current fair value. Our
reassessment produced a lower range of expected sales values than was previously determined. As a result of the reassessment, we
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008