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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
May 2, 2006
------------------------------------------
(Date of earliest event reported)
SPECTRUM BRANDS, INC.
----------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Wisconsin 001-13615 22-2423556
- -------------------------------- --------------------- -----------------------
(State or other Jurisdiction of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
Six Concourse Parkway, Suite 3300, Atlanta, Georgia 30328
- -------------------------------------------------------------------------------
(Address of principal executive offices, including zip code)
(770) 829-6200
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- -------------------------------------------------------------------------------
(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))
Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
(a) The following information, including the Exhibit attached hereto, is being
furnished pursuant to this Item 2.02 and shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, except as shall be expressly set forth by specific
reference in such filing.
On May 2, 2006, Spectrum Brands, Inc. issued a press release discussing its
estimated financial results for its second fiscal quarter of 2006 ended March
31, 2006. A copy of the press release is furnished as Exhibit 99.1 to this
report.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) 99.1 Press Release dated May 2, 2006 issued by Spectrum Brands, Inc.
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: May 2, 2006 SPECTRUM BRANDS, INC.
By: /s/ Randall J. Steward
-----------------------------------------------
Name: Randall J. Steward
Title: Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit Description
99.1 Press Release dated May 2, 2006 issued by Spectrum Brands, Inc.
Exhibit 99.1
Spectrum Brands, Inc. Announces Second Quarter Financial Results
ATLANTA--(BUSINESS WIRE)--May 2, 2006--Spectrum Brands, Inc.
(NYSE: SPC), a global consumer products company with a diverse
portfolio of world-class brands, announced diluted earnings per share
of one cent and pro forma diluted earnings per share of three cents
for its fiscal second quarter ended April 2, 2006, in line with
analysts' mean estimates as reported by First Call.
For comparison purposes, the company estimates that the prior
year's pro forma diluted earnings per share would have been 42 cents
when adjusted to include the impact of all 2005 and 2006 acquisitions
and divestitures for the full fiscal year. See Table 4,
"Reconciliation of GAAP to As Adjusted Financial Data," for further
detail.
"We are disappointed by the results from our North American and
European battery businesses this quarter, where a decrease in sales
volume and high raw material costs, particularly zinc, resulted in
significant underperformance to our expectations," said Spectrum
Brands Chairman and CEO Dave Jones. "However, we are encouraged by
this quarter's good performance from our specialty pet and Remington
product portfolios. Our lawn and garden business is poised for a solid
performance in the upcoming selling season with consumer purchases at
retail up ten percent, although inventory management initiatives by
some of our largest retail customers had a negative impact on Q2 lawn
and garden sales."
"With a challenging second quarter behind us, we are now moving
forward with a renewed focus on organic sales growth, aggressive cost
management and debt reduction. Through the various restructuring
activities we have previously announced, we are committed to
aggressively pursuing cost management initiatives throughout our
organization designed to achieve $150 million in annual cost savings
by the end of fiscal 2007. At the same time, we are increasing our
focus on sales growth and investing in our brands through new product
development and increased advertising."
Financial results for the quarter ended April 2, 2006 include
results from United Industries, acquired on February 7, 2005, Tetra
Holding GmbH, acquired on April 29, 2005, and Jungle Labs, acquired on
September 1, 2005. Financial results for periods prior to the
acquisition dates exclude United, Tetra and Jungle. On January 25,
2006 Spectrum Brands divested its Canadian fertilizer technology and
professional products businesses. As a result of this sale the company
has reported the second quarter results of these businesses as
discontinued operations in the condensed consolidated statements of
operations for both 2006 and 2005.
Pro forma diluted EPS and other pro forma results referenced in
this release exclude the impact of certain items detailed in the
attached Table 3, "Reconciliation of GAAP to Pro Forma Financial
Data," and Table 5, "Reconciliation of GAAP to Pro Forma EPS
Guidance." In addition, the company has provided certain information
to assist investors in better understanding the seasonality of its
ongoing business. This information, a representation of fiscal 2005
quarterly results adjusted to include the acquisitions of United,
Tetra and Jungle Labs, and the divestiture of the Canadian fertilizer
technology and professional products businesses, can be found on the
company's website. A summary of this information for the second
quarter of fiscal 2005 is provided in the attached Table 4,
"Reconciliation of GAAP to As Adjusted Financial Data."
Second Quarter Results
Spectrum Brands' second quarter net sales were $625.1 million, as
compared to $521.0 million for the same period last year. Revenue
contribution from acquisitions was $118.6 million. Unfavorable
currency translation impacted sales by a net $6.9 million. When
compared to management's estimates of fiscal year 2005 revenue
adjusted to include all acquisitions and dispositions for the full
period, net sales declined by four percentage points.
Gross profit for the quarter was $233.7 million versus $185.6
million for the same period last year. Cost of goods sold during the
quarter included $0.4 million in restructuring and related charges,
and 2005 second quarter results included a $27.7 million inventory
valuation charge associated with the United acquisition. Excluding
these charges, gross profit margin for the second quarter was 37.5
percent versus 40.9 percent for the same period last year. The decline
in gross margin percentage resulted primarily from lower sales in the
global battery business and increased raw material costs. Management's
estimate of gross profit in fiscal year 2005's second quarter, when
adjusted to include all acquisitions and dispositions, is $269.9, or
41.4 percent of net sales.
Operating income was $38.7 million versus fiscal 2005's second
quarter operating income of $33.1 million. Operating expenses in 2006
included restructuring and related charges of $6.1 million primarily
related to the integration of United and rationalization of the
company's European sales and marketing organization. In 2005 operating
expenses included $0.2 million in restructuring and related charges
resulting from the United acquisition. Pro forma operating income for
the second quarter was $44.9 million, or 7.2 percent of sales,
compared to $61.0 million, or 11.7 percent of sales last year.
Management's estimate of operating income in fiscal year 2005's second
quarter, when adjusted to include all acquisitions and dispositions,
is $70.1, or 10.7 percent of net sales.
Second quarter interest expense was $42.9 million as compared to
$39.0 million last year. Total debt at April 2, 2006 was $2.3 billion.
The company generated approximately $100 million in cash proceeds
during the quarter from the divestiture of the Canadian fertilizer
technology and professional products businesses and sale of other
assets.
Second Quarter Segment Results
North American net sales were $315.8 million compared with $280.6
million reported last year. When 2005 results are adjusted to include
all acquisitions and divestitures for the full year, net sales show a
year over year decline of three percent. Battery and lighting sales
declined 20 percent as recovery of alkaline battery sales under the
company's new "Performance Guaranteed" marketing program was slower
than anticipated and retail inventory reductions on the part of
several large customers negatively impacted sales. Remington branded
product sales improved by 23%, as the company grew market share in all
categories, including men's and women's shaving and grooming and
personal care. Although consumer purchases of Spectrum Brands lawn and
garden products at retail showed positive growth of ten percent during
the second quarter, reported lawn and garden sales declined one
percent versus year ago standalone results for United Industries as a
result of retail customers' inventory reduction programs. North
American segment profits were $39.4 million versus $33.7 million
reported last year.
European/ROW net sales were $117.2 million versus $144.3 million
reported last year, including $9.8 million of negative currency
impact. An unfavorable product mix shift from branded to private label
battery sales and from higher margin specialty retail distribution
channels to lower margin food and mass channels was the primary driver
of a 17 percent local currency sales decline in batteries and
lighting. Sales of Remington products grew by 13 percent in local
currency, a result of strong penetration gains in continental Europe.
Segment profitability for the quarter was $6.6 million compared with
$19.4 million last year, primarily attributable to lower sales volume
and higher raw material costs.
In Latin America, net sales increased to $54.3 million as compared
to $49.6 million in the second quarter last year. Sales growth was
driven by favorable currency of $3.4 million, combined with the
successful introduction of Remington branded products in this region
and modest growth in battery sales. Latin American segment
profitability of $3.3 million compares to last year's $3.6 million,
attributable to rising commodity prices and higher selling and
marketing expenses.
In 2006, Spectrum Brands created the Global Pet segment, a new
business segment for reporting purposes, comprising United Pet Group,
Tetra and Jungle Labs, all of which were acquired during 2005. The
Global Pet segment contributed net sales of $137.8 million and segment
profits of $21.6 million during the second quarter. This compares to
segment revenues of $132.8 million and segment profits of $20.6
million in the second fiscal quarter of last year when adjusted to
include acquisitions for the full quarter. Excluding unfavorable
currency translation of $2.5 million, Global Pet revenues increased
six percent compared with last year's standalone adjusted results as
the company continued to generate strong growth in companion pet sales
and saw a return to growth in its aquatics business.
Corporate expenses were $25.7 million, or 4.1 percent of net
sales, as compared to $23.3 million, or 4.5 percent of net sales, in
the prior year period. Increased research and development expense and
expansion of the Asian global operations support infrastructure were
partially offset by lower corporate compensation expense.
Based on its second quarter results, Spectrum Brands has notified
its lenders that the company is not in compliance with certain debt
covenants required under its senior credit facility, and has entered
into discussions with its lenders to address possible remedies. The
company anticipates no problems with liquidity or ongoing cash
generation and will update investors when discussions are completed.
Financial Outlook
Looking to the second half of fiscal 2006, the company expects
continuing challenges in the European battery market, gradually
improving battery results in North America, and low to mid single
digit sales growth from its shaving, grooming, personal care, lawn and
garden and specialty pet categories. Commodity costs are projected to
remain at current high levels for the balance of the year. Taking into
account these and other assumptions, the company's latest forecast for
fiscal year 2006 results indicates net sales of approximately $2.6
billion and pro forma fully diluted earnings per share of between
$0.90 and $1.00. See Table 5, "Reconciliation of GAAP to Pro Forma
Earnings Guidance."
Webcast Information
Spectrum Brands management will discuss second quarter financial
results in a live webcast on Tuesday, May 2, at 8:30 a.m. EDT.
Interested investors and others can access this webcast through the
company's website, www.spectrumbrands.com.
Non-GAAP Measurements
Throughout this release, references are made to pro forma gross
profit, pro forma operating income, pro forma net income and pro forma
diluted EPS. See attached Table 3, "Reconciliation of GAAP to Pro
Forma Financial Data," for a complete reconciliation of gross profit,
operating income, net income and diluted EPS on a GAAP basis to pro
forma gross profit, pro forma operating income, pro forma net income
and pro forma diluted EPS. The company also maintains a reconciliation
of GAAP financial reporting to pro forma results in the Investor
Relations section of its website, which may be found at
www.spectrumbrands.com.
Spectrum Brands management and some investors use pro forma
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 pro forma 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 these pro forma results provide useful
supplemental information, pro forma 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 is a global consumer products company and a
leading supplier of batteries, lawn and garden care products,
specialty pet supplies, shaving and grooming products, household
insecticides, personal care products and portable lighting. Spectrum
Brands' products are sold by the world's top 25 retailers and are
available in more than one million stores in more than 120 countries
around the world. Headquartered in Atlanta, Georgia, Spectrum Brands
generates approximately $2.6 billion in annual revenues and has
approximately 9,800 employees worldwide. The company's stock trades on
the New York Stock Exchange under the symbol SPC.
Certain matters discussed in this news release, with the exception
of historical matters, may be forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are subject to a number of risks and uncertainties that
could cause results to differ materially from those anticipated as of
the date of this release. Actual results may differ materially from
these statements as a result of (1) changes in external competitive
market factors, such as introduction of new product features or
technological developments, development of new competitors or
competitive brands or competitive promotional activity or spending,
(2) changes in consumer demand for the various types of products
Spectrum Brands offers, (3) changes in the general economic conditions
where Spectrum Brands does business, such as stock market prices,
interest rates, currency exchange rates, inflation, consumer spending
and raw material costs, (4) the company's ability to successfully
implement manufacturing, distribution and other cost efficiencies, and
various other factors, including those discussed herein and those set
forth in Spectrum Brands' securities filings, including the most
recently filed Annual Report on Form 10-K and Form 10-Q.
Attached
Table 1 - Condensed Consolidated Statements of Operations
Table 2 - Supplemental Financial Data
Table 3 - Reconciliation of GAAP to Pro Forma Financial Data
Table 4 - Reconciliation of GAAP to As Adjusted Financial Data
Table 5 - Reconciliation of GAAP to Pro Forma EPS Guidance
Table 1
SPECTRUM BRANDS, INC.
Condensed Consolidated Statements of Operations
For the three and six months ended April 2, 2006 and April 3, 2005
(Unaudited)
(In millions, except per share amounts)
THREE MONTHS SIX MONTHS
-------------------------------------------------------
F2006 F2005 (a) INC(DEC) F2006 F2005 (a) INC(DEC)
------- --------- % -------- --------- %
Net sales $625.1 $521.0 20.0% $1,245.1 $1,011.7 23.1%
Cost of goods
sold 391.0 335.4 766.4 627.8
Restructuring
and related
charges 0.4 - 1.7 -
------- ------- -------- --------
Gross profit 233.7 185.6 25.9% 477.0 383.9 24.3%
Selling 134.5 106.2 265.5 206.6
General and
administrative 46.8 39.0 94.2 69.7
Research and
development 7.6 7.1 15.0 13.2
Restructuring
and related
charges 6.1 0.2 11.3 0.2
------- ------- -------- --------
Total operating
expenses 195.0 152.5 386.0 289.7
Operating
income 38.7 33.1 16.9% 91.0 94.2 -3.4%
Interest
expense 42.9 39.0 84.3 55.9
Other income,
net (7.4) (0.1) (5.9) (0.2)
------- ------- -------- --------
Income (loss)
from
continuing
operations
before
income taxes 3.2 (5.8) 12.6 38.5
Income tax
expense
(benefit) 1.1 (2.2) 4.4 14.2
------- ------- -------- --------
Income (loss)
from
continuing
operations 2.1 (3.6) 8.2 24.3
(Loss) income
from
discontinued
operations,
net of tax (1.5) (b) 1.7 (b) (5.3) (b) 1.7 (b)
------- ------- -------- --------
Net income
(loss) $0.6 $(1.9) $2.9 $26.0
======= ======= ======== ========
Average shares
outstanding
(c) 49.5 43.2 49.5 38.7
Income (loss)
from
continuing
operations $0.04 $(0.08) $0.17 $0.63
Discontinued
operations (0.03) 0.04 (0.11) 0.04
------- ------- -------- --------
Basic earnings
(loss) per
share $0.01 $(0.04) $0.06 $0.67
======= ======= ======== ========
Average shares
and common
stock
equivalents
outstanding (c) 51.0 43.2 (d) 50.8 40.3
Income (loss)
from
continuing
operations $0.04 $(0.08) $0.16 $0.60
Discontinued
operations (0.03) 0.04 (0.10) 0.04
------- ------- -------- --------
Diluted
earnings
(loss) per
share $0.01 $(0.04) $0.06 $0.64
======= ======= ======== ========
(a) As of September 30, 2005 and for the three and six months ended
April 3, 2005, amounts have been reclassified to present the
discontinued operations of the fertilizer technology and Canadian
professional fertilizer businesses of Nu-Gro.
(b) For the three and six months ended April 2, 2006 and April 3,
2005, reflects the discontinued operations of the fertilizer
technology and Canadian professional fertilizer businesses of
Nu-Gro for which the Company discontinued operations as of
September 30, 2005.
(c) Per share figures calculated prior to rounding in millions.
(d) For the three months ended April 3, 2005, the Company did not
assume the exercise of common stock equivalents as the impact
would have been antidilutive.
Table 2
SPECTRUM BRANDS, INC.
Supplemental Financial Data
For the three and six months ended April 2, 2006 and April 3, 2005
(Unaudited)
($ In millions)
Supplemental Financial Data F2006 F2005
- --------------------------- -------- ---------
Cash $ 14.6 $ 44.3
Trade receivables, net $ 391.2 $ 424.2
Days Sales Outstanding (a) 49 56
Inventory, net $ 485.6 $ 481.6
Inventory Turnover (b) 3.3 3.3
Total Debt $2,282.7 $1,940.6
THREE MONTHS SIX MONTHS
------------------------------------
Supplemental Cash Flow Data F2006 F2005 F2006 F2005
- --------------------------- -------- -------- -------- ---------
Depreciation and amortization,
excluding amortization of debt
issuance costs $ 18.5 $ 13.5 $ 36.2 $ 22.8
Capital expenditures $ 18.8 $ 13.6 $ 30.3 $ 20.7
THREE MONTHS SIX MONTHS
------------------------------------
Supplemental Segment Sales &
Profitability F2006 F2005 F2006 F2005
- ---------------------------- -------- -------- ------------------
Net Sales
- ---------
North America $ 315.8 $ 280.6 $ 560.4 $ 496.4
Europe/ROW 117.2 144.3 299.8 366.6
Latin America 54.3 49.6 114.3 102.3
Global Pet 137.8 46.5 270.6 46.4
-------- -------- -------- --------
Total net sales $ 625.1 $ 521.0 $1,245.1 $1,011.7
======== ======== ======== ========
Segment Profit
- --------------
North America $ 39.4 $ 33.7 $ 64.3 $ 74.9
Europe/ROW 6.6 19.4 37.2 55.4
Latin America 3.3 3.6 10.0 9.3
Global Pet 21.6 (0.1) 41.8 (0.1)
-------- -------- -------- --------
Total segment profit 70.9 56.6 153.3 139.5
Corporate 25.7 23.3 49.3 45.1
Restructuring and related
charges 6.5 0.2 13.0 0.2
Interest expense 42.9 39.0 84.3 55.9
Other income, net (7.4) (0.1) (5.9) (0.2)
-------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes $ 3.2 $ (5.8)$ 12.6 $ 38.5
======== ======== ======== ========
(a) Reflects actual days sales outstanding at end of period.
(b) Reflects cost of sales (excluding restructuring and related
charges) during the quarter divided by average inventory for the
quarter, multiplied by four.
Table 3
SPECTRUM BRANDS, INC.
Reconciliation of GAAP to Pro Forma Financial Data
For the three months ended April 2, 2006 and April 3, 2005
(Unaudited)
(In millions, except per share amounts)
THREE MONTHS
------------------------------------------------------------
F2006 F2005
------------------------------------------------------------
Pro Pro
As Forma Pro As Forma Pro
Reported Adjustments Forma Reported Adjustments Forma
Net sales $625.1 $- $625.1 $521.0 $- $521.0
Gross profit 233.7 0.4 (a) 234.1 185.6 27.7 (b) 213.3
Gross profit
% of sales 37.4% 37.5% 35.6% 40.9%
Operating
expenses 195.0 5.8 (c) 189.2 152.5 0.2 (d) 152.3
Operating
income 38.7 6.2 44.9 33.1 27.9 61.0
Operating
income % of
sales 6.2% 7.2% 6.4% 11.7%
Income (loss)
from
continuing
operations
before
income taxes 3.2 (0.9) (e) 2.3 (5.8) 39.9 (f) 34.1
Income (loss)
from
continuing
operations 2.1 (0.6) 1.5 (3.6) 25.0 21.4
(Loss) income
from
discontinued
operations,
net of tax (1.5) 1.5 - 1.7 (1.7) -
Net income
(loss) 0.6 0.9 1.5 (1.9) 23.3 21.4
Basic
earnings
(loss) per
share (g) $0.01 $0.02 $0.03 $(0.04) $0.54 $0.50
=========================================================
Diluted
earnings
(loss) per
share (g) $0.01 $0.02 $0.03 $(0.04) $0.51 (h) $0.47
=========================================================
(a) For the three months ended April 2, 2006, reflects restructuring
and related charges incurred during the period.
(b) For the three months ended April 3, 2005, reflects an inventory
valuation adjustment related to the fair value write- up of United
inventory in accordance with the requirements of SFAS 141.
(c) For the three months ended April 2, 2006, includes $3.0 million
and $3.1 million of restructuring and related charges incurred
during the period in connection with (i) the United integration
and (ii) a series of actions in Europe to reduce operating costs
and rationalize operating structure, respectively. In addition,
operating expenses include a $0.3 million benefit related to
expiring penalties, associated with the Company's provision for
presumed credits applied to the Brazilian excise tax on
manufactured products, which expired in the current period.
(d) For the three months ended April 3, 2005, reflects restructuring
and related charges associated with the United acquisition.
(e) For the three months ended April 2, 2006, other income, net
includes a $7.9 million gain on sale of the Company's Bridgeport,
CT and Madison, WI manufacturing facilities. In addition, interest
expense includes $0.8 million related to interest charges
associated with the Company's provision for presumed credits
applied to the Brazilian excise tax on manufactured products.
(f) For the three months ended April 3, 2005, interest expense
includes $12.0 million related to the write-off of debt issuance
costs associated with debt refinanced in connection with the
United acquisition.
(g) Per share figures calculated prior to rounding in millions.
(h) Pro forma earnings per share calculation for the three months
ended April 3, 2005 assumes diluted shares outstanding of 45.0
million.
SPECTRUM BRANDS, INC.
Reconciliation of GAAP to Pro Forma Financial Data
For the six months ended April 2, 2006 and April 3, 2005
(Unaudited)
(In millions, except per share amounts)
SIX MONTHS
---------------------------------------------------------
F2006 F2005
---------------------------------------------------------
Pro Pro
As Forma Pro As Forma Pro
Reported Adjustments Forma Reported Adjustments Forma
Net sales $1,245.1 $- $1,245.1 $1,011.7 $- $1,011.7
Gross profit 477.0 1.9 (a) 478.9 383.9 27.7 (b) 411.6
Gross profit
% of sales 38.3% 38.5% 37.9% 40.7%
Operating
expenses 386.0 11.0 (c) 375.0 289.7 (0.3) (d) 290.0
Operating
income 91.0 12.9 103.9 94.2 27.4 121.6
Operating
income % of
sales 7.3% 8.3% 9.3% 12.0%
Income from
continuing
operations
before
income taxes 12.6 6.7 (e) 19.3 38.5 39.4 (f) 77.9
Income from
continuing
operations 8.2 4.3 12.5 24.3 24.8 49.1
Loss from
discontinued
operations,
net of tax (5.3) 5.3 - 1.7 (1.7) -
Net income 2.9 9.6 12.5 26.0 23.1 49.1
Basic
earnings per
share (g) $0.06 $0.19 $0.25 $0.67 $0.60 $1.27
=========================================================
Diluted
earnings per
share (g) $0.06 $0.19 $0.25 $0.64 $0.57 $1.21
=========================================================
(a) For the six months ended April 2, 2006, includes $1.7 million of
restructuring and related charges and an inventory valuation
adjustment of $0.2 million related to the fair value write-up of
Jungle Labs inventory in accordance with the requirements of
Statement of Financial Accounting Standards ("SFAS") 141,
"Business Combinations."
(b) For the six months ended April 3, 2005, reflects an inventory
valuation adjustment related to the fair value write-up of United
inventory in accordance with the requirements of SFAS 141.
(c) For the six months ended April 2, 2006, includes $7.7 million and
$3.6 million of restructuring and related charges incurred during
the period in connection with (i) the United integration and (ii)
a series of actions in Europe to reduce operating costs and
rationalize operating structure, respectively. In addition,
operating expenses include a $0.3 million benefit related to
expiring penalties, associated with the Company's provision for
presumed credits applied to the Brazilian excise tax on
manufactured products, which expired in the current period.
(d) For the six months ended April 3, 2005, operating expenses include
a $1.6 million gain on sale of land and building, offset by a $1.1
million charge related to the disposal of our Madison, WI
manufacturing facility, closed in fiscal 2003. Also includes $0.2
million of restructuring and related charges incurred during the
period associated with the United acquisition.
(e) For the six months ended April 2, 2006, other income, net includes
a $7.9 million gain on sale of the Company's Bridgeport, WI and
Madison, WI manufacturing facilities. In addition, interest
expense includes $1.7 million related to interest charges
associated with the Company's provision for presumed credits
applied to the Brazilian excise tax on manufactured products.
(f) For the six months ended April 3, 2005, interest expense includes
$12.0 million related to the write-off of debt issuance costs
associated with debt refinanced in connection with the United
acquisition.
(g) Per share figures calculated prior to rounding in millions.
Table 4
SPECTRUM BRANDS, INC.
Reconciliation of GAAP to As Adjusted Financial Data
For the three months ended April 3, 2005
(Unaudited)
(In millions, except per share amounts)
---------------------------------------------------------
F2005
---------------------------------------------------------
Pro Forma
As Pro Forma Pro As
Reported Adjustments Forma Adjustments(a) Adjusted
Net sales $521.0 $- $521.0 $131.3 $652.3
Gross profit 185.6 27.7(b) 213.3 56.6(c) 269.9
Gross profit
% of sales 35.6% 40.9% 41.4%
Operating
expenses 152.5 0.2(d) 152.3 47.5(e) 199.8
Operating
income 33.1 27.9 61.0 9.1 70.1
Operating
income % of
sales 6.4% 11.7% 10.7%
(Loss) income
from
continuin
xxxxxxxxxxxxxxxxxxxxxx
g
operations
before
income taxes (5.8) 39.9(f) 34.1 (1.6)(g) 32.5
Net (loss)
income from
continuing
operations (3.6) 25.0 21.4 (0.3)(h) 21.1
Income (loss)
from
discontinued
operations,
net of tax 1.7 (1.7) - - -
Net (loss)
income (1.9) 23.3 21.4 (0.3) 21.1
Diluted
average
shares
outstanding
(i) 43.2 43.2 50.4(j)
Diluted
(loss)
earnings per
share from
continuing
operations
(i) $(0.04) $0.51 $0.47 $0.42
================================ =======
(a) Includes the results of operations for the following as if such
entity was acquired on October 1, 2004:
-- United, from its Unaudited Consolidated Statement of
Operations for the three month period ended December 31, 2004.
-- Tetra, from its Unaudited Consolidated Statement of Operations
for the three month period ended December 31, 2004.
-- Firstrax, from its Unaudited Consolidated Statement of
Operations for the three month period ended December 31, 2004.
-- Jungle, from its Unaudited Consolidated Statement of
Operations for the three month period ended December 31, 2004.
(b) Represents a charge for the fair value adjustment applied to
United's acquired inventory.
(c) Excludes non-recurring transaction related costs incurred by
United in January 2005.
(d) Represents restructuring and related charges associated with the
United acquisition.
(e) Excludes transaction costs related incurred by United in January
2005 and includes the impact on amortization of Spectrum Brands'
acquisitions of United, Tetra, Firstrax and Jungle.
(f) Includes debt issuance costs written off related to the debt
financing that occurred in connection with Spectrum Brands'
acquisition of United.
(g) Includes interest expense 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.
(h) Includes an adjustment to income tax expense to arrive at an
adjusted 2005 effective tax rate of 35 percent.
(i) Per share figures calculated prior to rounding in millions.
(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.
Table 5
SPECTRUM BRANDS, INC.
Reconciliation of GAAP to Pro Forma EPS Guidance
Estimate of EPS for the Fiscal Year Ended September 30, 2006
(Unaudited)
F2006
-----------------
Diluted earnings per share $0.35 - $0.40
Pro forma adjustments, net of tax:
Discontinued operations $(0.10) - $(0.10)
Gain on sale of facilities $0.10 - $0.10
Estimated restructuring and related charges and
other non-recurring items $0.55 - $0.60
-----------------
Pro forma diluted earnings per share $0.90 - $1.00
=================
CONTACT: Spectrum Brands
Investor Relations
Nancy O'Donnell, 770-829-6208
or
Media Relations
Ketchum for Spectrum Brands
David Doolittle, 404-879-9266