Rayovac 2011 Annual Report Download - page 73

this category. The decrease in specialty pet product sales was driven by a distribution loss at a major retailer of
certain dog shampoo products and the impact of a product recall. The Merger accounted for a Net sales increase
of $6 million during Fiscal 2010.
Segment profitability in Fiscal 2010 decreased to $58 million from $66 million in Fiscal 2009. Segment
profitability as a percentage of sales in Fiscal 2010 also decreased to 10.2% from 11.5% during Fiscal 2009. This
decrease in segment profitability and profitability margin was primarily attributable to increases in cost of goods
sold and in intangible asset amortization because we revalued the related inventory and intangible assets when
we adopted fresh-start reporting upon our emergence from Chapter 11 of the Bankruptcy Code. The decrease in
Fiscal 2010 segment profitability was tempered by improved pricing and lower manufacturing and operating
costs as a result of our global cost reduction initiatives announced in Fiscal 2009. See “Restructuring and
Related Charges” below, as well as Note 14, Restructuring and Related Charges, to our Consolidated Financial
Statements included in this Annual Report on Form 10-K for additional information regarding our restructuring
and related charges.
Segment Adjusted EBITDA in Fiscal 2010 was $104 million compared to $97 million in Fiscal 2009.
Despite decreased net sales during Fiscal 2010 of $8 million, our successful efforts to create a lower cost
structure including the closure and consolidation of some of our pet facilities, and improved product mix,
resulted in Adjusted EBITDA increase of $7 million. See “ Restructuring and Related Charges” below, as well
as Note 14, Restructuring and Related Charges, to our Consolidated Financial Statements included in this Annual
Report on Form 10-K, for further detail on our Fiscal 2009 initiatives.
Segment assets decreased to $839 million as of September 30, 2010 from $867 million at September 30,
2009. Goodwill and intangible assets, which are a direct result of the revaluation impacts of fresh-start reporting
and the Merger, decreased to $602 million at September 30, 2010 from $618 million at September 30, 2009. The
decrease is mainly due to amortization of definite lived intangible assets of $15 million and foreign exchange
impacts of $14 million, which were partially offset by the increase of goodwill and intangible assets of $13
million related to the Merger.
Home and Garden Business
2010 2009
(in millions)
Net sales to external customers ..................................................... $343 $322
Segment profit .................................................................. $ 51 $ 42
Segment profit as a % of net sales .................................................. 14.9% 13.0%
Segment Adjusted EBITDA ....................................................... $ 68 $ 58
Assets as of September 30, ........................................................ $496 $504
Segment net sales to external customers of home and garden control products during Fiscal 2010 increased
$21 million, or 7% versus Fiscal 2009, driven by incentives to retailers and promotional campaigns during the
year in both home and garden control products and household control products.
Segment profitability in Fiscal 2010 increased to $51 million compared to $42 million in Fiscal 2009.
Segment profitability as a percentage of sales in Fiscal 2010 increased to 14.9% from 13.0% in Fiscal 2009. This
increase in segment profitability was attributable to savings from our global cost reduction initiatives announced
in Fiscal 2009. See “Restructuring and Related Charges” below, as well as Note 14, Restructuring and Related
Charges, to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional
information regarding our restructuring and related charges. The increase in profitability during Fiscal 2010 was
tempered by a $2 million increase in cost of goods sold due to our revaluation of inventory and intangible assets
when we adopted fresh-start reporting upon our emergence from Chapter 11 of the Bankruptcy Code. These
valuation increases resulted in higher cost of goods sold and increased intangible asset amortization of our
customer relationships in Fiscal 2010.
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