UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
January 25, 2006
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(Date of earliest event reported)
SPECTRUM BRANDS, INC.
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(Exact Name of Registrant as Specified in Charter)
Wisconsin 001-13615 22-2423556
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(State or other Jurisdiction of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
Six Concourse Parkway, Suite 3300, Atlanta, Georgia 30328
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(Address of principal executive offices, including zip code)
(770) 829-6200
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(Registrant's telephone number, including area code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
EXPLANATORY NOTE
The Registrant's Current Report on Form 8-K/A (Amendment No. 1) is being
amended by this Amendment No. 2 solely to correct the unintentional omission of
the date and conformed signature of the Company's Executive Vice President and
Chief Financial Officer on the signature page. In the original Form 8-K/A
(Amendment No. 1) filed on August 31, 2006, the date was omitted and a
conformed signature was not included in the signature block. No other
information or amounts are amended hereby.
Item 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On January 25, 2006, United Industries Corporation ("United") and Nu-Gro Holding
Company, L.P. ("Nu-Gro Holding"), both wholly-owned subsidiaries of Spectrum
Brands, Inc. (the "Company"), completed the sale of all of the outstanding
shares of Nu-Gro America Corp. ("Nu-Gro America") and Nu-Gro IP Inc. (together
with Nu-Gro America, the "Nu-Gro Entities") to wholly-owned subsidiaries of
Agrium Inc. ("Agrium"). The sale was completed pursuant to the terms of the
Share Purchase Agreement dated as of November 22, 2005 by and among United,
Nu-Gro Holding and Agrium, as amended (the "Purchase Agreement").
Prior to the closing of this transaction, the Nu-Gro Entities transferred to a
separate, wholly-owned subsidiary of the Company all of the assets and
liabilities of the Nu-Gro Entities that are primarily related to the
manufacturing, marketing and selling of consumer products, so that this
transaction resulted in the Company selling to Agrium the Nu-Gro controlled
release nitrogen fertilizer products business and the Nu-Gro professional
fertilizer and pest control products business, while retaining the Nu-Gro
consumer lawn and garden products business.
Net of certain costs related to the transaction and subject to certain
post-closing adjustments as set forth in the Purchase Agreement, the Company
received approximately $83 million in cash consideration, which will primarily
be used to repay a portion of the Company's outstanding debt.
On January 26, 2006, the Company issued a press release announcing the
completion of this transaction. A copy of this press release is attached hereto
as Exhibit 99.1 and incorporated herein by reference.
Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
In order to assist the Company's shareholders to better understand the impact of
the transaction described in Item 2.01 above on its ongoing business, beginning
on January 26, 2006 the Company made available on the Investor Relations section
of its website certain supplementary information representing the Company's
quarterly results for the fiscal year ended September 30, 2005, as adjusted to
include the results of acquired businesses and to exclude the results of
disposed businesses, along with a reconciliation of these non-GAAP results to
financial results presented in accordance with U.S. generally accepted
accounting principles. A copy of this supplemental information is attached
hereto in its entirety as Exhibit 99.2 and incorporated herein by reference.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit
Number Description of Exhibit
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2.1 Share Purchase Agreement dated November 22, 2005 by and among Agrium
Inc., United Industries Corporation, and Nu-Gro Holding Company, L.P.
(as filed as Exhibit 2.1 to the Company's Current Report on Form 8-K
filed on November 29, 2005 and incorporated herein by reference).
2.2 Amendment No. 1, dated December 19, 2005, to Share Purchase Agreement
dated November 22, 2005.
99.1 Press release dated January 26, 2006 issued by Spectrum Brands, Inc.
99.2 Supplemental financial information issued by Spectrum Brands,
Inc. on January 26, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 31, 2006 SPECTRUM BRANDS, INC.
By: /s/ Randall J. Steward
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Name: Randall J. Steward
Title: Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
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2.1 Share Purchase Agreement dated November 22, 2005 by and
among Agrium Inc., United Industries Corporation, and Nu-Gro
Holding Company, L.P. (as filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K filed on November 29,
2005 and incorporated herein by reference).
2.2 Amendment No. 1, dated December 19, 2005, to Share Purchase
Agreement dated November 22, 2005.
99.1 Press release dated January 26, 2006 issued by Spectrum
Brands, Inc.
99.2 Supplemental financial information issued by Spectrum
Brands, Inc. on January 26, 2006.
Exhibit 2.2
AMENDMENT NO. 1 TO
SHARE PURCHASE AGREEMENT
This Amendment Agreement dated as of December 19, 2005 (this
"Amendment") is entered into by and among Agrium Inc., a corporation
incorporated under the Canada Business Corporations Act ("Agrium"), United
Industries Corporation, a Delaware corporation ("United"), and Nu-Gro Holding
Company, L.P., an Ontario limited partnership ("Nu-Gro Holding"), all of whom
are parties to the Share Purchase Agreement dated November 22, 2005 (the "Share
Purchase Agreement"). For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties each hereby agree as
follows:
1. Amendment.
(a) Amendment to the Background Statement. The Background Statement of the
Share Purchase Agreement is hereby amended by deleting the words "Spectrum
Brands Lawn & Garden Canada L.P., a newly formed Affiliate of the Sellers
("Spectrum L&G Canada") all of the assets, and Spectrum L&G Canada" at the end
of the first page and replacing such deleted words with "Rayovac Canada, Inc.,
an Affiliate of Nu-Gro Corp. and also a wholly owned subsidiary of Spectrum
Brands, Inc. ("Rayovac Canada") all of the assets, and Rayovac Canada;" so that
as amended such final sentences of the background statement read as follows:
Prior to the Closing, the Companies and the Subsidiaries shall
transfer to Rayovac Canada, Inc., an affiliate of Nu-Gro and also a
wholly owned subsidiary of Spectrum Brands, Inc. ("Rayovac Canada")
all of the assets, and Rayovac Canada shall assume all of the
liabilities, of the Companies and the Subsidiaries that are primarily
related to the Consumer Products Business, as more particularly
described in Section 4.4.
(b) Amendment to Section 4.4(a) [Transfer of Consumer Assets and
Liabilities of Consumer Products Businesses: Indemnification.]. Section 4.4(a)
of the Share Purchase Agreement is hereby amended by deleting the two references
to "Spectrum L&G Canada" and replacing such deleted words with "Rayovac Canada;"
so that as amended Section 4.4(a) reads in its entirety as follows:
Transfer. Prior to the Closing, the Sellers shall cause the Companies
and the Subsidiaries to transfer to Rayovac Canada all of the assets
and employees of the Companies and the Subsidiaries that are
primarily related to the facilities of the Consumer Products Business
described generally on Exhibit C (the "Consumer Products
Facilities"), and the Sellers shall cause Rayovac Canada to assume
all of the liabilities primarily related to such assets and
employees, through a series of transactions as described in more
detail on Exhibit D.
(c) Amendment to Section 4.4(h) [Indemnification]. Section 4.4(b) of the
Share Purchase Agreement is hereby amended by deleting the two references to
"Spectrum L&G Canada" and replacing such deleted words with "Rayovac Canada;" so
that as amended Section 4.4(b) reads in its entirety as follows:
1
Indemnification. From and after the Closing, (i) United shall defend,
indemnify and hold harmless Purchaser and its Affiliates, including
the Companies and the Subsidiaries, from and against any and all
costs, Liabilities (including those assumed by Rayovac Canada
pursuant to Section 4.4(a)), losses, judgments, damages, Taxes,
fines, penalties and expenses arising out of the operation or
transfer of the Consumer Products Facilities; and (ii) Purchaser
shall defend, indemnify and hold harmless United and its Affiliates,
including Rayovac Canada, from and against any and all costs,
Liabilities, losses, judgments, damages, Taxes, fines, penalties and
expenses arising out of the operation of the facilities of the
Companies and the Subsidiaries other than the Consumer Products
Facilities; provided, however, that neither United nor Purchaser
shall be liable in any event under this Section 4.4(b) for lost
profits or consequential, punitive, special, or incidental damages.
(d) Amendment to Section 4.14(i) [Noncompetition and No Interference by
Sellers. Tax Elections.]. Section 4.14(i) of the Share Purchase Agreement is
hereby amended by deleting the words "Spectrum L&G Canada" in the sixth sentence
of Section 4.14(i) and replacing such deleted words with "Rayovac Canada;" so
that as amended Section 4.14(i) reads in its entirety as follows:
Tax Elections. Purchaser and the Sellers will elect in prescribed
form to apply paragraph 56.4(3)(c) as proposed in clause 24.1(1) of
the July 18, 2005 draft technical amendments to the Income Tax Act
(Canada) (the "Draft Technical Amendments") in respect of this
Agreement. Each of Purchaser and the Sellers shall make such election
in a manner consistent with this Agreement and shall include a copy
of the prescribed form in its income tax return for its taxation year
that includes the day on which this Agreement is entered into and
such return will be filed on or before the applicable filing due date
for that year. If a prescribed form is not available at that time,
then the election shall be made in a manner acceptable to the Canada
Revenue Agency. If any relevant provincial taxing authority proposes
or enacts a similar provision, then Purchaser and the Sellers shall
make such similar provincial election. While no portion of the
Purchase Price is allocated to the non-competition and other
covenants of the Sellers in Section 4.14, if any portion of the
Purchase Price is determined by the Canada Revenue Agency to be in
respect of a "restrictive covenant" as that term is defined in the
Draft Technical Amendments, and the Sellers accept such determination
or such determination is accepted by a court of competent
jurisdiction and the Sellers do not appeal such judgment, then the
full amount of such portion shall be subject to the paragraph
56.4(3)(c) election and Purchaser and the Sellers will take all
necessary steps to amend or revise such election accordingly. Nu-Gro
Corp., Nu-Gro Canada and Rayovac Canada shall make and file such Tax
elections, and at such elected amounts, if applicable, as determined
by Nu-Gro Holding in its sole discretion, in respect of the transfer
of assets and the assumption of liabilities and related transactions
described in Section 4.4(a).
(e) Amendment to Section 4.15(a) [Noncompetition and No Interference by
Purchaser, Scope and Reasonableness of Restrictions.]. Section 4.15(a) of the
Share Purchase Agreement is hereby amended by deleting the words "the Spectrum
L&G Canada" and replacing such deleted words with "Rayovac Canada;" so that as
amended Section 4.15(a) reads in its entirety as follows:
2
Scope and Reasonableness of Restrictions. Purchaser acknowledges (i)
that prior to the Closing the Companies and certain Subsidiaries have
conducted the Consumer Products Business, the assets and liabilities
of which have been transferred to Rayovac Canada, (ii) that the
Companies and certain Subsidiaries have conducted the Consumer
Products Business throughout the Territory, (iii) that certain of the
products, technology, trade secrets and confidential information
related to the Consumer Products Business also relate to the
Fertilizer Technology Business and the Professional Products
Business, and (iv) that the Sellers would not sell the Shares without
the assurance that Purchaser and its Affiliates (including, after the
Closing, the Companies and the Subsidiaries) will not engage in the
activities prohibited by this Section 4.15 for the periods set forth
herein, and to induce the Sellers to consummate the sale of the
Shares, Purchaser shall restrict its actions and those of the
Affiliates throughout the Territory as provided in this Section 4.15.
Purchaser acknowledges that such restrictions are reasonable in light
of the business of the Companies and the Subsidiaries and the
benefits of the transactions contemplated by this Agreement to
Purchaser.
(f) Amendment to Section 4.16 [Use of Names.]. Section 4.16 of the Share
Purchase Agreement is hereby amended by deleting the words "Spectrum L&G Canada"
in the second sentence and replacing such deleted words with "Rayovac Canada;"
so that as amended Section 4.16 reads in its entirety as follows:
Use of Names. Within five Business Days after the Closing, Nu-Gro
Holding shall, and United shall cause each of its Affiliates with
"Nu-Gro" in its corporate or organizational name to, amend its
governing documents to change its name to eliminate "Nu-Gro" from it.
The "Nu-Gro" name and certain other marks will be licensed to Rayovac
Canada by Nu-Gro IP pursuant to a license agreement to be delivered
at the Closing in the form of Exhibit E-1 (the "Nu-Gro License
Agreement").
(g) Amendment to Section 6.1(f) [To be Delivered by the Sellers.]. Section
6.1(f) of the Share Purchase Agreement is hereby amended by deleting the words
"Spectrum L&G Canada" and replacing such deleted words with "Rayovac Canada;" so
that as amended Section 6.1(f) reads in its entirety as follows:
Supply Agreements between Rayovac Canada and Nu-Gro Corp. with
respect to (i) the manufacture of finished products at the Morpac
plant, in the form of Exhibit F-1, (ii) the manufacture of finished
products at the Putnam plant, in the form of Exhibit F-2, and (iii)
the packaging and supply of fertilizer, in the form of Exhibit F-3,
and a Supply Agreement among Rayovac Canada and SCU Nitrogen, Wilson
Labs, Nu-Gro IP, Nu-Gro America and Nu-Gro Tech with respect to the
supply of raw materials, in the form of Exhibit F-4 (collectively,
the "Supply Agreements"), each duly executed by the parties thereto
other than Purchaser.
(h) Amendment to Section 6.1(h) [To he Delivered by the Sellers.]. Section
6.1(h) of the Share Purchase Agreement is hereby amended by (i) deleting the
words "Spectrum L&G Canada" in the first sentence and replacing such deleted
words with "Rayovac Canada" and (ii) deleting the word "Spectrum" and replacing
such deleted word with "Rayovac Canada;" so that as amended Section 6.1(h) reads
in its entirety as follows:
3
The Nu-Gro License Agreement and a license agreement between Rayovac
Canada and Nu-Gro Corp. with respect to the license by Rayovac Canada
of certain other trademarks used by both the Consumer Products
Business and the Professional Products Business, in the form of
Exhibit E-2 (the "Rayovac Canada License Agreement" and together with
the Nu-Gro License Agreement, the "License Agreements"), duly
executed by the parties thereto.
2. Exhibits.
(a) Amendment to Exhibit D [Transfer of Consumer Products Business and
Related Actions.]. Exhibit D to the Share Purchase Agreement is hereby amended
by (i) deleting sections (2.) and (4.) in their entirety and changing sections
(3.) to (2.), (5.) to (3.), and (6.) to (4.), (ii) deleting the word
"contributes" in new section (2.) and replacing such deleted word with "sells"
(iii) adding the words "in exchange for a note issued by Rayovac Canada" to the
end of new section (3.) and (iv) deleting the words "Spectrum L&G Canada" in new
section (2.) and the final paragraph and replacing such deleted words with
"Rayovac Canada;" so that as amended Exhibit D reads in its entirety as follows:
1. Nu-Gro Corp, Nu-Gro Canada and Nu-Gro IP are all amalgamated
together, with the successor by amalgamation being named "Nu-Gro IP, Inc"
(the "Successor Entity").
2. The Successor Entity sells all of its assets and liabilities and
employees that are primarily related to the Consumer Products Facilities to
Rayovac Canada (this will include the trademarks and other intellectual
property assets that are related to the Consumer Products Business, which
are owned by Nu-Gro IP as of the date of this Agreement) in exchange for a
note issued by Rayovac Canada.
3. The Successor Entity dividends the promissory note to Nu-Gro
Holding.
4. Nu-Gro Holding sells the shares of the Successor Entity to
Purchaser at the Closing.
The Successor Entity and Rayovac Canada shall make and file such Tax
elections at such amounts, if applicable, as determined by the Sellers in
their sole discretion, with respect to the steps described above.
(b) Amendment to Exhibits E-1-2 [Nu-Gro and Spectrum License Agreements.].
Exhibit E-1 to the Share Purchase Agreement is hereby amended by deleting the
words "Spectrum Brands Lawn and Garden Canada, L.P, a __________ limited
partnership" and replacing such words with "Rayovac Canada, Inc., a corporation
incorporated under the Canada Business Corporations Act." Exhibit E-2 to the
Share Purchase Agreement is hereby amended by deleting the title "Spectrum
License Agreement" and replacing such deleted words with the title "Rayovac
Canada License Agreement." In connection with such change in title, all
references to "Spectrum Brands Lawn and Garden, L.P, a __________ limited
partnership" within such license agreement are hereby deleted and such words
shall be replaced with "Rayovac Canada, Inc., a corporation incorporated under
the Canada Business Corporations Act."
4
(c) Amendment to Exhibits F-1-4 [Supply Agreements]. Exhibits F-1-4 to the
Share Purchase Agreement are hereby amended by (i) deleting any reference to
"Spectrum Brands Lawn and Garden Canada, L.P., an Ontario limited partnership"
and replacing such deleted words with "Rayovac Canada, Inc., a corporation
incorporated under the Canada Business Corporations Act" and (ii) deleting any
reference to "Spectrum" and replacing such deleted word with "Rayovac Canada."
3. General Provisions.
(a) Capitalized terms used in this Amendment have the same meaning ascribed
to them in the Share Purchase Agreement, unless otherwise defined herein.
(b) Except as provided in this Amendment, all of the provisions of the
Share Purchase Agreement will remain in full force and effect. To the extent
that the terms of this Amendment conflict with or are inconsistent with the
terms of the Share Purchase Agreement, this Amendment will control.
(c) This Amendment will be governed and construed in accordance with the
laws of the State of New York.
(d) The Share Purchase Agreement, as amended hereby and including its
Schedules and Exhibits and the other documents and agreements entered into in
connection with the Share Purchase Agreement, constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and thereof and
supersedes any prior or contemporaneous agreements or understandings, oral or
written, to the contrary.
(e) This Amendment is binding upon and inures to the benefit of the parties
and their respective successors and permitted assigns.
(f) This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
* * * * *
5
DULY EXECUTED and delivered by the parties as of the effective date, December
19, 2005.
Agrium Inc. United Industries Corporation
By: /s/ BRUCE G. WATERMAN By: /s/ ROBERT L. CAULK
--------------------------------- --------------------------------
Name: Bruce G. Waterman Name: Robert L. Caulk
Title: Sr. V.P., Finance and C.F.O. Title: Chief Executive Officer
Agrium Inc. Nu-Gro Holding Company, L.P.
By: /s/ ANDREW K. MITTAG By: /s/ JAMES T. LUCKE
--------------------------------- --------------------------------
Name: Andrew K. Mittag Name: James T. Lucke
Title: Sr. V.P., Corporate Title: Vice President, Secretary
Development and Strategy and General Counsel
* * * * *
6
Exhibit 99.1
Spectrum Brands Finalizes Divestiture of Fertilizer Technology and
Canadian Professional Products Business
ATLANTA, January 26, 2006 - (SPC: NYSE) - Spectrum Brands today announced
that it has completed the sale of its fertilizer technology and Canadian
professional products business to Agrium, Inc., in line with Spectrum Brands'
strategy to focus exclusively on consumer products. Net proceeds from the
sale of approximately $83 million will be utilized to reduce Spectrum Brands'
outstanding debt balance.
In order to assist investors in better understanding the impact of
acquisitions and divestitures on its ongoing business, the company has made
available certain supplementary information. This information, a
representation of fiscal 2005 quarterly results adjusted to include the
FY2005 acquisitions of United Industries, Tetra Holding and Jungle Labs, and
the divestiture of its fertilizer technology and Canadian professional
products business, can be found on the company's website at
http://phx.corporate-ir.net/phoenix.zhtml?c=75225&p=irol-presentations.)
Spectrum Brands management and certain investors use adjusted results of
operations as one means of analyzing the company's current and future
financial performance and identifying trends in its financial condition and
results of operations. Spectrum Brands provides this supplementary
information to investors to assist in meaningful comparisons of past, present
and future operating results and to assist in highlighting the results of
on-going core operations. While management believes this supplemental
information is useful, adjusted results are not intended to replace the
company's GAAP financial results and should be read in conjunction with those
GAAP results.
About Spectrum Brands, Inc.
- ---------------------------
Spectrum Brands (formerly Rayovac Corporation) is a global consumer products
company and a leading supplier of batteries and portable lighting, lawn and
garden care products, specialty pet supplies, shaving and grooming and
personal care products, and household insecticides. Spectrum Brands' products
are sold by the world's top 25 retailers and are available in more than one
million stores in 120 countries around the world. Headquartered in Atlanta,
Georgia, Spectrum Brands generates approximately $2.8 billion in annualized
revenues and has approximately 10,000 employees worldwide. The company's
stock trades on the New York Stock Exchange under the symbol SPC.
# # #
Investor Contact: Media Contact:
- ----------------- --------------
Nancy O'Donnell Dave Doolittle
VP Investor Relations Ketchum for Spectrum Brands
770-829-6208 404-879-9266
david.doolittle@ketchum.com
Exhibit 99.2
Spectrum Brands Inc.
Financial Data Adjusted to Include Results of Acquisitions (Unaudited)
Excluding Nu-Gro Discontinued Operations
The following unaudited adjusted financial data for the four quarters and year
ended September 30, 2005 assume all acquisitions completed by Spectrum Brands
during the year ended September 30, 2005 were completed on October 1, 2004.
Specifically, this includes the acquisition of United Industries Inc.
("United"), completed by Spectrum Brands on February 7, 2005, the acquisition
of Tetra Holding GmbH ("Tetra"), completed by Spectrum Brands on April 29,
2005, the acquisition of Jungle Laboratories ("Jungle"), completed by Spectrum
Brands on September 1, 2005, and the acquisition of Firstrax, completed by the
United Pet Group ("UPG") on February 1, 2005.
The data also excludes the results of operations for the Nu-Gro Pro and Tech
business that Spectrum Brands classified as an asset held for sale as of
September 30, 2005. This business was disposed of by sale in January 2006.
Amounts excluded are based upon internal financial information prepared by
management.
The information also gives effect to certain adjustments described in the
accompanying notes.
In addition, interest expense has been adjusted to reflect interest expense we
estimate would be incurred by the Company had all acquisitions occurred on
October 1, 2004 and the sale of the Nu-Gro Pro and Tech business had occurred
on October 1, 2004, with the proceeds from the sale applied to reduce
approximately $80 million in outstanding debt.
Our capital structure has also been adjusted as if the issuance of 13.75
million shares of our common stock, which actually occurred on February 7, 2005
in connection with the United acquisition, had occurred on October 1, 2004.
Earnings per share calculations presented in the accompanying unaudited
adjusted financial data reflect this adjusted capital structure.
The effective tax rate for the periods presented is adjusted to 35%.
The adjusted financial data makes no adjustments to estimate the impact of
synergies we expect to achieve from the integration of the acquired companies.
This report includes certain non-GAAP (Generally Accepted Accounting
Principles) financial measures, which are defined as numerical measures of a
company's financial performance, financial position or cash flows that exclude
(or include) amounts that are included in (or excluded from) the most directly
comparable measures calculated and presented in accordance with GAAP in the
Company's financial statements. This comparable information is provided solely
for the purpose of additional analysis of the results of the Company. The data
is presented for informational purposes only and is not intended to be in
conformity with the rules governing the preparation of pro forma financial
information, nor is it intended to be a forecast of future operating results.
The non-GAAP financial measure utilized by the Company herein includes a
presentation of diluted earnings per share that includes or excludes the effect
of acquisitions, discontinued operations, the closings of selected facilities,
fixed asset write-downs, litigation settlements, non-recurring income tax
adjustments and other similar events. Spectrum Brands management and some
investors use adjusted diluted earnings per share as one means of analyzing the
company's current and future financial performance and identifying trends in
its financial condition and results of operations. Spectrum Brands provides
adjusted diluted earnings per share to investors to assist in meaningful
comparisons of past, present and future operating results and to assist in
highlighting the results of on-going core operations. While management believes
this adjusted financial data provides useful supplemental information, it is
not intended to replace the company's GAAP financial results and should be read
in conjunction with those GAAP results.
Spectrum Brands, Inc.
Net Income and Earnings Per Share Adjusted to Include Results of Acquisitions
(Unaudited)
Excluding Nu-Gro Discontinued Operations
For the Quarters Ended January 2, 2005, April 3, 2005, July 3, 2005 and
September 30, 2005, and for the Full Year Ended September 30, 2005
(in thousands)
Quarter Ended Quarter Ended Quarter Ended Quarter Ended Full Year Ended
January 2, 2005 April 3, 2005 July 3, 2005 September 30, 2005 September 30, 2005
--------------- --------------- -------------- ----------------- ------------------
Net Income (Loss), as Reported $ 27,929 (a) $ (1,931) (a) $ 23,711 (a) $ (2,877) (b) $ 46,832 (c)
Impact of Acquisitions (d) (956) (2,265) 5,171 594 2,544
Impact of Excluding Nu-Gro
Pro & Tech (e) (2,181) (3,446) (4,448) (1,275) (11,350)
Other Changes (9,847) (f) 28,788 (g) 13,796 (h) 8,881 (i) 41,618
--------------- -------------- -------------- --------------- ---------------
Net Income (Loss), as Adjusted $ 14,945 $ 21,146 $ 38,230 $ 5,323 $ 79,644
=============== ============== ============== =============== ===============
Diluted Shares Outstanding,
as Reported 35,540 43,222 51,086 51,207 45,631
Diluted Earnings (Loss) Per
Share, as Reported $ 0.79 $ (0.04) $ 0.46 $ (0.06) $ 1.03
Diluted Shares Outstanding,
as Reported 35,540 43,222 51,086 51,207 45,631
Adjustment to Shares
Outstanding (j) 13,750 7,181 - - 4,897
--------------- ------------- -------------- --------------- ---------------
Diluted Shares Outstanding, as
Adjusted 49,290 50,403 51,086 51,207 50,528
Diluted Earnings Per Share, as
Adjusted $ 0.30 $ 0.42 $ 0.75 $ 0.10 $ 1.58
=============== ============ ============== =============== ===============
(a) - Net Income (Loss) as obtained from the Company's 10-Q report for the respective three month period.
(b) - Net Loss as obtained from the Company's 4th Quarter Press Release issued November 10, 2005.
(c) - Net Income as obtained from the Company's Form 10-K report for the year ended September 30, 2005.
(d) - Includes the net income for the respective period for the following:
o United, from its Unaudited Consolidated Statement of Operations for the period prior to the
February 7, 2005 acquisition date.
o Tetra, from its Unaudited Consolidated Statement of Operations for the period prior to the
April 29, 2005 acquisition date.
o Firstrax, from its Unaudited Consolidated Statement of Operations for the period prior to
the February 1, 2005 acquisition date.
o Jungle, from its Unaudited Consolidated Statement of Operations for the period prior to
the September 1, 2005 acquisition date.
(e) - Excludes the unaudited net income of the Nu-Gro Corporation's Pro and Tech business for the
respective period. Nu-Gro's Pro and Tech business was disposed of by sale in January 2006.
Excluded results of the Pro and Tech business were calculated by management.
(f) - Comprises a $1.9 million charge for the fair value adjustment applied to UPG inventory,
acquired in United's acquisition of UPG on July 30, 2004, a $1.1 million charge related to
the disposal of Spectrum Brands property in Wisconsin, $0.4 million in transaction costs incurred
by United in connection with its acquisition of UPG, $0.5 million of executive recruiter fees
incurred by United during the quarter and a $1.8 million reduction in amortization expense as
a result of Spectrum Brands' acquisitions of United, Tetra, Firstrax and Jungle. These amounts
are offset by a $1.6 million gain on the sale of Spectrum Brands property in Mexico. Also includes
an increase to interest expense of $22.3 million associated with the debt issued and refinanced
in connection with the acquired companies. Such debt and resulting interest expense has been
reduced as a result of applying the net proceeds from the sale of the Nu-Gro Pro and Tech businesses
as if such sale occurred on October 1, 2004. Lastly, includes an adjustment to reduce income tax
expense by $8.3 million to arrive at an adjusted 2005 effective tax rate of 35 percent.
(g) - Comprises a $27.7 million charge for the fair value adjustment applied to United's
acquired inventory, $12.3 million of non-recurring transaction related costs incurred by
United in January 2005, Spectrum Brands restructuring and related charges of $0.2 million incurred
during the quarter, a $0.3 million reduction in amortization expense as a result of Spectrum
Brands' acquisitions of United, Tetra, Firstrax and Jungle and $12.0 million of debt issuance
costs related to the debt refinancing that occurred in connection with Spectrum Brands'
acquisition of United. Also includes an increase to interest expense of $11.1 million
associated with the debt issued and refinanced in connection with the acquired companies.
Such debt and resulting interest expense has been reduced as a result of applying the net
proceeds from the sale of the Nu-Gro Pro and Tech businesses as if such sale occurred on
October 1, 2004. Lastly, includes an adjustment to reduce income tax expense by $12.6 million
to arrive at an adjusted 2005 effective tax rate of 35 percent.
(h) - Comprises a $1.6 million charge for the fair value adjustment applied to United's acquired
inventory, a $5.7 million charge for the fair value adjustment applied to Tetra's acquired
inventory, restructuring and related charges of $7.8 million incurred by Spectrum Brands
during the quarter in connection with the closure of a manufacturing facility in France and
restructuring and related charges of $7.3 million incurred during the quarter in connection
with Spectrum Brands' integration of United's operations. Also includes an increase to
interest expense of $0.2 million associated with the debt issued and refinanced in connection
with the acquired companies. Such debt and resulting interest expense has been reduced as a
result of applying the net proceeds from the sale of the Nu-Gro Pro and Tech businesses as if
such sale occurred on October 1, 2004. Lastly, includes an adjustment to increase income tax
expense by $8.4 million to arrive at an adjusted 2005 effective tax rate of 35 percent.
(i) - Comprises a $2.3 million charge for the fair value adjustment applied to Tetra's acquired
inventory, a $0.3 million charge for the fair value adjustment applied to Jungle's acquired
inventory, restructuring and related charges of $2.7 million incurred by Spectrum Brands
during the quarter primarily in connection with the closure of a manufacturing facility in
France and restructuring and related charges of $8.3 million incurred during the quarter
primarily in connection with Spectrum Brands' integration of United's operations. Also
includes an adjustment of $1.1 million for decreased interest expense as a result of applying
the proceeds from the sale of the Nu-Gro Pro and Tech businesses to reduce outstanding debt.
Lastly, includes an adjustment to increase income tax expense by $5.8 million to arrive at an
adjusted 2005 effective tax rate of 35 percent.
(j) - Increase to weighted shares outstanding due to the assumed issuance of 13.75 million shares
of Spectrum Brands common stock on October 1, 2004.