Rayovac 2012 Annual Report Download - page 63

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Global consumer battery sales during Fiscal 2011 were flat compared to Fiscal 2010, primarily driven by
decreased sales in Latin America of $41 million, which were tempered by increased sales in North America and
Europe of $24 million and $5 million, respectively, coupled with favorable foreign exchange impacts of
$12 million. Sales decreases in Latin America were driven by decreased alkaline battery sales of $11 million,
zinc carbon battery sales of $26 million and portable lighting sales of $4 million primarily due to decreased
volumes in Brazil as a result of competitive pressures in the region. North American sales increased as a result of
strong holiday sales during our first fiscal quarter, distribution gains throughout the year, incremental sales due to
strong weather patterns during Fiscal 2011 and a successful new product line launch at a major customer. The
sales increases in Europe were primarily attributable to the successful promotion of our Varta value sub-brands
as well as customer gains.
Pet product sales during Fiscal 2011 increased $13 million, or 2%, compared to Fiscal 2010. The increase of
$13 million is attributable to increased companion animal product sales of $15 million, $7 million of which was a
direct result of the Merger, with the remaining $8 million being driven by the Birdola acquisition, successful
product launches and continued expansion in Europe. Favorable foreign exchange impacted sales by $8 million.
These gains were partially offset by decreased aquatics sales of $10 million resulting from overall global
macroeconomic conditions.
Sales of home and garden control products during Fiscal 2011 versus Fiscal 2010 increased $11 million, or
3%. This increase is a result of increased household insect controls sales of $14 million, of which $4 million
related to the Merger. The remaining growth in household insect control sales was driven by increased
distribution and product placements with major customers. These gains were partially offset by a $3 million
decrease in lawn and garden control sales due to unseasonable weather conditions in the U.S. which negatively
impacted the lawn and garden season.
Electric shaving and grooming product sales during Fiscal 2011 increased $17 million, or 7%, compared to
Fiscal 2010 due to increased sales within North America, Europe and Latin America of $6 million, $4 million
and $3 million, respectively, coupled with favorable foreign exchange translation of $4 million. North American
and European sales increases were driven by distribution and customer gains and increased online sales. Latin
American sales increases were driven by distribution gains.
Electric personal care product sales during Fiscal 2011 increased $32 million, or 15%, when compared to
Fiscal 2010. The increase of $32 million during Fiscal 2011 was attributable to increases in North America,
Europe and Latin America of $12 million, $14 million and $2 million, respectively, coupled with favorable
foreign exchange impacts of $4. The increases in North American and European sales were a result of successful
new product launches, distribution and customer gains and increased online sales, while increases in Latin
American sales were driven by distribution gains.
Small appliances contributed $778 million or 24% of total net sales for Fiscal 2011 compared to
$231 million or 9% of sales in Fiscal 2010. This represents a full year of sales related to Russell Hobbs during
Fiscal 2011 as compared to Fiscal 2010 in which we realized sales of the acquired business from the date of the
Merger, June 16, 2010, through September 30, 2010, the close of our Fiscal 2010.
Gross Profit. Gross profit for Fiscal 2011 was $1,129 million versus $921 million during Fiscal 2010,
representing a $208 million increase. Our gross profit margin for Fiscal 2011 decreased slightly to 35.4% from
35.9% in Fiscal 2010. The increase in gross profit is primarily attributable to increased sales coupled with the
non-recurrence of a $34 million increase in cost of goods sold that resulted from the sale of inventory that was
revalued in connection with our adoption of fresh-start reporting upon emergence from Chapter 11 of the
Bankruptcy Code, that we recognized during the first quarter of Fiscal 2010. The increased sales due to the
Merger accounted for a gross profit increase of $152 million during Fiscal 2011 as compared to Fiscal 2010. The
decrease in gross profit margin is attributable to the change in overall product mix as a result of the Merger as
well as increasing commodity prices during Fiscal 2011.
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