Rayovac 2011 Annual Report Download - page 49

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
The following is management’s discussion of the financial results, liquidity and other key items related to
our performance and should be read in conjunction with Item 6. Selected Financial Data and our Consolidated
Financial Statements and related notes included in this Annual Report on Form 10-K. Certain prior year amounts
have been reclassified to conform to the current year presentation. All references to Fiscal 2011, 2010 and 2009
refer to fiscal year periods ended September 30, 2011, 2010 and 2009, respectively.
Spectrum Brands Holdings, Inc., a Delaware corporation (“SB Holdings”), is a global branded consumer
products company and was created in connection with the combination of Spectrum Brands, Inc. (“Spectrum
Brands”), a global branded consumer products company and Russell Hobbs, Inc. (“Russell Hobbs”), a global
branded small appliance company, to form a new combined company (the “Merger”). The Merger was
consummated on June 16, 2010. As a result of the Merger, both Spectrum Brands and Russell Hobbs became
wholly-owned subsidiaries of SB Holdings. Russell Hobbs was subsequently merged into Spectrum Brands. SB
Holdings’ common stock trades on the New York Stock Exchange (the “NYSE”) under the symbol “SPB.”
As further described below, on February 3, 2009 (the “Petition Date”), we and our wholly owned United
States (“U.S.”) subsidiaries (collectively, the “Debtors”) filed voluntary petitions under Chapter 11 of the U.S.
Bankruptcy Code (the “Bankruptcy Code”), in the U.S. Bankruptcy Court for the Western District of Texas (the
“Bankruptcy Court”). On August 28, 2009 (the “Effective Date”), the Debtors emerged from Chapter 11 of the
Bankruptcy Code. Effective as of the Effective Date and pursuant to the Debtors’ confirmed plan of
reorganization, we converted from a Wisconsin corporation to a Delaware corporation.
Unless the context indicates otherwise, the terms the “Company,” “Spectrum,” “we,” “our” or “us” are used
to refer to SB Holdings and its subsidiaries subsequent to the Merger and Spectrum Brands prior to the Merger,
as well as before, on and after the Effective Date. The term “Old Spectrum” refers only to Spectrum Brands, our
Wisconsin predecessor, and its subsidiaries prior to the Effective Date.
On June 28, 2011 we filed a Form S-3 registration statement with the U.S. Securities and Exchange
Commission (“SEC”) under which 1.2 million shares of our common stock and 6.3 million shares of our
common stock held by Harbinger Capital Partners Master Fund I, Ltd. (the “Selling Stockholder”) were offered
to the public. The registration statement was declared effective on July 14, 2011, and at the closing of the
offering, we received net proceeds from the sale of the 1.2 million shares, after underwriting discounts and
offering expenses, of approximately $30 million. We did not receive any proceeds from the sale of our common
stock by the Selling Stockholder. We expect to use the net proceeds of the sale of common shares for general
corporate purposes, which may include, among other things, working capital needs, the refinancing of existing
indebtedness, the expansion of our business and acquisitions.
On November 1, 2011, we completed a cash acquisition of certain trade name brands from The Homax
Group, Inc., a portfolio company of Olympus Partners. This acquisition was not significant individually. In
accordance with ASC Topic 805, “Business Combinations” (“ASC 805”), we will account for the acquisition by
applying the acquisition method of accounting and include the fair value of acquired assets within the Company’s
Home and Garden Business segment. We are in process of preparing the preliminary purchase price allocation.
On November 2, 2011, we offered $200 million aggregate principal amount of 9.5% Notes; these notes are
in addition to the $750 million aggregative principal amount of 9.5% Notes already outstanding. The additional
notes are guaranteed by Spectrum Brands’ parent company, SB/RH Holdings, LLC, as well as by existing and
future domestic restricted subsidiaries and secured by liens on substantially all of the Spectrum Brands’ and the
guarantors assets. The additional notes will vote together with the existing 9.5% Notes.
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