Rayovac 2012 Annual Report Download - page 49

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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 2012, Fiscal 2011 and
Fiscal 2010 refer to fiscal year periods ended September 30, 2012, 2011 and 2010, respectively.
Spectrum Brands Holdings, Inc., a Delaware corporation (“SB Holdings”), is a diversified 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 are wholly-
owned subsidiaries of SB Holdings and Russell Hobbs is a wholly-owned subsidiary of Spectrum Brands. SB
Holdings’ common stock trades on the New York Stock Exchange (the “NYSE”) under the symbol “SPB.”
Unless the context indicates otherwise, the terms “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.
On October 8, 2012, we entered into an agreement with Stanley Black & Decker, Inc. (“Stanley Black &
Decker”) to acquire the residential hardware and home improvement business (the “HHI Business”) currently
operated by Stanley Black & Decker and certain of its subsidiaries for $1.4 billion, consisting of (i) the equity
interests of certain subsidiaries of Stanley Black & Decker engaged in the business and (ii) certain assets of
Stanley Black & Decker used or held for use in connection with the business (the “Hardware Acquisition”). The
Hardware Acquisition includes the purchase of shares and assets of certain subsidiaries of Stanley Black &
Decker involved in the HHI Business. The Hardware Acquisition will also include the purchase of certain assets
of Tong Lung Metal Industry Co. Ltd., a Taiwan Corporation (“TLM Taiwan”), which is involved in the
production of residential locksets (the “TLM Residential Business”). Stanley Black & Decker is currently in the
process of completing the acquisition of all of the issued and outstanding shares of TLM Taiwan.
The consummation of the Hardware Acquisition will take place in two separate closings. The first closing
(the “First Closing”) will involve the acquisition of the HHI Business. The second closing will involve the
acquisition of the TLM Residential Business (the “Second Closing”).
On November 16, 2012, our wholly owned subsidiary, Spectrum Brands Escrow Corp., issued $520 million
aggregate principal amount of 6.375% Senior Notes due 2020 (that “2020 Notes”) and $570 million aggregate
principal amount of 6.625% Senior Notes due 2022 (the “2022 Notes”). The 2020 Notes and the 2022 Notes will
be assumed by Spectrum Brands upon the First Closing. Spectrum Brands intends to use the net proceeds from
the offering to fund a portion of the purchase price and related fees and expenses for the Hardware Acquisition.
Spectrum Brands intends to finance the remaining portion of the Hardware Acquisition, as well as to refinance its
existing Term Loan (defined below), with a new $800 million senior secured term loan, which is expected to
close concurrently with the First Closing.
Business Overview
We manufacture and market alkaline, zinc carbon and hearing aid batteries, herbicides, insecticides and
repellants and specialty pet supplies. We design and market rechargeable batteries, battery-powered lighting
products, electric shavers and accessories, grooming products and hair care appliances. With the addition of
Russell Hobbs we design, market and distribute a broad range of branded small household appliances and
personal care products. Our manufacturing and product development facilities are located in the United States,
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