Rayovac 2009 Annual Report Download - page 5

Table of Contents
Index to Financial Statements
product line mix, including pricing and gross margin, which vary by product line and geographic market; pricing of certain raw materials and commodities;
energy and fuel prices; and our general competitive position, especially as impacted by our competitors’ advertising and promotional activities and pricing
strategies.
We historically pursued a strategy of strategic acquisitions in furtherance of our goal of being a diversified global consumer products company
competing in high−growth markets. In August 1999, the Company acquired ROV Limited’s battery business, which operations had an extensive network of
distribution and production facilities in Central America, the Dominican Republic, Mexico and Venezuela. In 2002, the Company acquired substantially all
of VARTA AG’s consumer battery business. In September 2003, the Company acquired Remington Products Company, L.L.C. in order to expand its
products portfolio and become a more diversified consumer products company that did not solely focus on the battery and lighting product markets. In 2004,
the Company acquired Microlite, a Brazilian battery company, from VARTA AG and Tabriza Brasil Empreendimentos Ltd. In 2005, the Company acquired
United Industries Corporation (“United”) and Tetra Holding GmbH and its affiliates and subsidiaries in the aquatics business (“Tetra”) to further diversify
its business and leverage its distribution strengths through expansion into the home and garden and pet product markets. These acquisitions were financed in
substantial part with debt from a variety of sources.
In July 2006, in response to our substantial leverage and operating performance, we engaged advisors to assist us in exploring possible strategic
options, including divesting certain assets, in order to reduce its outstanding indebtedness. We also continued to pursue initiatives to reduce manufacturing
and operating costs. 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 U.S. and Canadian divisions and was engaged in the manufacturing and marketing of lawn and
garden and insect control products as well as growing media products. As a result of our decision to commence this process, we determined that all the
criteria set forth within U.S. generally accepted accounting principles (“GAAP”) were met and in the first quarter of our fiscal year ended September 30,
2007 (“Fiscal 2007”), we designated certain assets and liabilities related to the Home and Garden Business as held for sale and designated the 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 recorded an impairment charge against the Home and Garden Business during the fourth quarter of Fiscal 2007 to reflect its fair value as
determined by us. Subsequent to taking the impairment charge, and thereby revising our expectations of the proceeds that would ultimately be received
upon a sale of the Home and Garden Business, we continued to be in active discussions with various potential purchasers through December 30, 2007.
On November 1, 2007, we completed the sale of the Canadian division of the Home and Garden Business. See Note 10, Discontinued Operations of
Notes to Consolidated Financial Statements included in this Annual Report on Form 10−K for additional information on the sale of the Canadian division of
the Home and Garden Business.
During the second quarter of our fiscal year ended September 30, 2008 (“Fiscal 2008”), we determined that in view of the difficulty in predicting the
timing or probability of a sale of the remaining U.S. portion of the
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