Spectrum Brands Reports First Quarter 2008 Financial Results

  
    
  
  
    
      Spectrum Brands, Inc. (NYSE: SPC) announced today first quarter net 
      sales from continuing operations of $560.5 million and a net loss of 
      $0.85 per share for the quarter ended December 30, 2007. Excluding 
      certain items which management believes are not indicative of the company’s 
      on-going normalized operations, the company generated adjusted diluted 
      earnings per share of $0.06. These items include:
    
    
      
        a loss from discontinued operations, net of tax, of $33.3 million, or 
        $0.65 per share, related to the company’s 
        Home & Garden business, which is being held for sale; the loss from 
        discontinued operations includes a loss, net of tax, of $1.2 million 
        on the sale of the company’s Canadian Home & 
        Garden business;
      
      
        net tax adjustments of $14.2 million, or $0.28 per share, to reflect a 
        normalized ongoing effective tax rate;
      
      
        restructuring and related charges, net of tax, of $2.5 million, or 
        $0.05 per share, associated with company-wide cost reduction 
        initiatives; and
      
      
        other items netting to a benefit of $3.6 million, net of tax, or $.07 
        per share.
      
    
    
      During the first quarter of fiscal 2007, the company reported a net loss 
      per share of $0.38. Excluding a loss from discontinued operations of 
      $0.43 per share, restructuring and related charges of $0.10 per share 
      and other non-cash benefits totaling $0.03 per share, first quarter 2007 
      adjusted diluted earnings per share were $0.12.
    
    
      Spectrum Brands' net sales of $560.5 million represented a slight 
      decline of one percent from the prior year. Sales in the quarter were 
      negatively impacted by customer requests for earlier than normal 
      shipments of holiday related merchandise, resulting in a timing shift of 
      approximately $15 million in battery and personal care sales from the 
      fiscal first quarter of 2008 to the fiscal fourth quarter of 2007. In 
      addition, our continued deliberate exiting of unprofitable or marginally 
      profitable private label battery sales in Europe was a contributor to 
      the year over year decline. Foreign currency exchange had a favorable 
      impact of $31 million.
    
    
      Adjusted EBITDA from continuing operations was $68.3 million as compared 
      with $59.3 million in the prior year, a 15 percent improvement. 
      Including adjusted EBITDA results from Home & Garden, which is accounted 
      for as discontinued operations, the company generated adjusted EBITDA of 
      $49.1 million, a 19 percent improvement over 2007’s 
      $41.4 million.
    
    
      "Spectrum Brands delivered a third consecutive quarter of strong year 
      over year EBITDA growth, demonstrating good progress on our 2008 goal of 
      operating profitability improvement,” said 
      Kent Hussey, Chief Executive Officer. “Our 
      first quarter top line results were negatively impacted by timing issues 
      related to customer-requested early shipments of holiday related 
      merchandise, which shifted sales between the fiscal first quarter of 
      2008 and the fiscal fourth quarter of 2007. As a result, we believe the 
      sales trends for the six months ended December 30, 2007 taken as a whole 
      are more representative of business trends. Measured over that six month 
      period, our global battery sales increased four percent and Remington 
      sales increased ten percent. As we look to the balance of 2008 and 
      beyond, we believe that the actions taken in 2007 to put the right 
      culture and infrastructure in place will provide opportunities for us to 
      deliver sustainable operating profitability improvement and create 
      long-term shareholder value."
    
    
      Gross profit and gross margin for the quarter were $208.2 million and 
      37.2 percent, respectively, versus $208.9 million and 37.0 percent for 
      the same period last year. Restructuring and related charges of $0.1 
      million were included in the current quarter's cost of goods sold; cost 
      of goods sold in the comparable period last year included $6.0 million 
      in similar charges. Excluding these restructuring and related charges, 
      gross margin declined 90 basis points primarily due to negative product 
      mix.
    
    
      The current quarter’s operating expenses were 
      $156.5 million, or 27.9 percent of sales, as compared with last year’s 
      $171.4 million in operating expenses, or 30.4 percent of sales. 
      Excluding $3.7 million in restructuring and related charges in the 
      fiscal first quarter of 2008 and $1.4 million in the fiscal first 
      quarter of 2007, operating expenses represented 27.3 percent of sales 
      and 30.1 percent of sales, respectively. The improvement was largely due 
      to lower selling, marketing and general and administrative expense, 
      driven by the restructuring initiatives previously implemented across 
      the organization, as well as a reduction in advertising expense.
    
    
      Spectrum generated first quarter operating income and operating margin 
      of $51.7 million and 9.2 percent versus $37.5 million and 6.6 percent 
      last year, a 38 percent improvement. After excluding restructuring and 
      related charges from both years’ results, as 
      itemized above, operating margin increased 190 basis points versus the 
      prior year.
    
    
      First Quarter Segment Results
    
    
      The Global Batteries and Personal Care segment reported net sales of 
      $418.0 million compared with $426.9 million reported last year. 
      Favorable foreign exchange translation contributed $27.7 million. Global 
      battery sales were flat compared with the prior year. North American 
      battery sales volumes declined two percent, largely as a result of a 
      move on the part of some customers to bring in holiday-related 
      merchandise earlier than was the case in the prior year. European 
      battery sales declined two percent from the prior year. The positive 
      impact of the strong Euro was offset by a sales volume decline, the 
      majority of which represents the company’s 
      planned exit from unprofitable or marginally profitable private label 
      business. Latin American battery sales generated year over year growth 
      of seven percent. Sales of Remington branded products declined six 
      percent worldwide during the quarter. However, sales over the six month 
      period ended December 30, 2007 increased ten percent, a figure which 
      eliminates the impact of timing differences between quarters. Increased 
      distribution and market share gains in Europe generated double digit 
      sales growth in that region during the quarter compared to the prior 
      year, but the improvement was more than offset by a decline in the North 
      American market attributable to retailer initiatives for earlier 
      shipments of holiday related merchandise and a decline in the men’s 
      shaving category. Segment profitability for Global Batteries and 
      Personal Care was $47.1 million versus last year’s 
      $39.8 million, an 18 percent improvement. The profit improvement was 
      driven by lower operating expenses resulting from a reduction in selling 
      and marketing expense and the impact of cost cutting initiatives 
      throughout the business.
    
    
      Global Pet Supplies net sales were $142.5 million, a three percent 
      increase compared with the prior year. Companion animal product net 
      sales grew six percent, while global aquatics net sales increased two 
      percent from the prior year. Favorable foreign exchange translation 
      contributed $3.7 million. Segment profitability for the quarter was 
      $16.8 million compared with $18.3 million last year. Fiscal 2007 results 
      included a $2.7 million gain related to the termination of a 
      postretirement benefit plan. Absent this gain in 2007, the current year 
      segment profit increased by eight percent.
    
    
      Spectrum’s Home & Garden business, which is 
      held for sale, generated a loss from discontinued operations of $33.3 
      million during the quarter as compared with a $22.2 million loss in the 
      prior year. The increased loss primarily relates to the fact that no 
      U.S. tax benefit was recorded in 2008 as compared with a U.S. tax 
      benefit recorded last year. The Home & Garden business generated a U.S. 
      taxable loss in the first quarter, during fiscal 2007 and fiscal 2008; 
      however, the company increased the valuation allowance against the U.S. 
      net deferred tax asset associated with the U.S. taxable entity in this 
      quarter. This adjustment has no cash impact.
    
    
      Home & Garden fiscal 2008 sales included only one month of revenue for 
      the Canadian Home & Garden business, which was sold on November 1, 2007, 
      compared to three months of revenue in the prior year. Excluding 
      Canadian results from both years, net sales decreased by $2.4 million, 
      or five percent. Gross margin improvement largely offset the loss of 
      Canadian revenue in the quarter.
    
    
      Corporate expense was $8.4 million as compared with $13.2 million in the 
      prior year period. This improvement was attributable to headcount 
      reductions associated with the global realignment implemented in 2007 as 
      well as expense reductions in all corporate departments.
    
    
      Interest expense increased to $45.7 million from $31.7 million in the 
      comparable prior year period, in part attributable to a change in 
      allocation of interest expense between continuing and discontinued 
      operations. Total company interest expense, including both continuing 
      and discontinued operations, was $57.3 million this quarter versus $47.1 
      million last year, the result of higher interest rates and slightly 
      higher debt levels.
    
    
      Tax expense recorded during the quarter was $16.4 million versus $1.4 
      million last year. In fiscal 2008, the company increased its valuation 
      allowance against its U.S. net deferred tax asset to reserve for the 
      possibility that the deferred tax assets will not be realized. As a 
      result, fiscal 2008 operating losses in the U.S. tax jurisdiction no 
      longer create tax benefits. (This accounting treatment has no impact on 
      the company’s ability to utilize net 
      operating losses against future taxable income within the U.S.) The 
      result of not recording a tax benefit in the U.S. combined with 
      recording a tax provision on taxable income generated by foreign 
      subsidiaries results in an effective tax rate significantly higher than 
      that experienced in prior years. This increased tax rate has no cash 
      impact to the company.
    
    
      Webcast Information
    
    
      Spectrum Brands will hold a conference call at 8:30 a.m. ET on February 
      7 to further discuss its first quarter results. The call will be 
      accessible via webcast through the company’s 
      website, www.spectrumbrands.com, 
      and will be archived online until February 21.
    
    
      Non-GAAP Measurements
    
    
      Within this release, reference is made to adjusted diluted earnings per 
      share and adjusted earnings before interest, taxes, depreciation and 
      amortization (EBITDA). See attached Table 3, “Reconciliation 
      of Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share,” 
      for a complete reconciliation of diluted earnings per share on a GAAP 
      basis to adjusted diluted earnings per share, and Table 4, “Reconciliation 
      of Net Income to Adjusted EBITDA”, for a 
      reconciliation of net income to adjusted EBITDA. Adjusted EBITDA is a 
      metric used by management and frequently used by the financial community 
      which provides insight into an organization’s 
      operating trends and facilitates comparisons between peer companies, 
      since interest, taxes, depreciation and amortization can differ greatly 
      between organizations as a result of differing capital structures and 
      tax strategies. Adjusted EBITDA can also be a useful measure of a company’s 
      ability to service debt and is one of the measures used for determining 
      the company’s debt covenant compliance. 
      Adjusted EBITDA excludes certain elements of earnings that are unusual 
      in nature or not comparable from period to period. In addition, Spectrum 
      Brands’ management uses 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 
      this information to investors to assist in comparisons of past, present 
      and future operating results and to assist in highlighting the results 
      of on-going operations. While Spectrum Brands management believes that 
      adjusted diluted earnings per share and adjusted EBITDA are useful 
      supplemental information, such 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 is a global consumer products company and a leading 
      supplier of batteries, portable lighting, lawn and garden products, 
      household insect control, shaving and grooming products, personal care 
      products and specialty pet supplies. 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 generated fiscal year 2007 net sales of $2.0 billion and has 
      approximately 7,100 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 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) the impact of 
      overall economic conditions on consumer spending, (4) fluctuations in 
      commodities prices, the costs or availability of raw materials or terms 
      and conditions available from suppliers, (5) changes in the general 
      economic conditions where Spectrum Brands does business, such as stock 
      market prices, interest rates, currency exchange rates, inflation and 
      consumer spending, (6) the company’s ability 
      to successfully implement manufacturing, distribution and other cost 
      efficiencies and to continue to benefit from its cost-cutting 
      initiatives, and various other risks and uncertainties, including those 
      discussed herein and those set forth in Spectrum Brands’ 
      securities filings, including the most recently filed Annual Report on 
      Form 10-K or Quarterly Report on Form 10-Q. Spectrum Brands also 
      cautions the reader that its estimates of trends, market share, retail 
      consumption of its products and reasons for changes in such consumption 
      are based solely on limited data available to Spectrum Brands and 
      management’s reasonable assumptions about 
      market conditions, and consequently may be inaccurate, or may not 
      reflect significant segments of the retail market.
    
    
      The company also cautions the reader that undue reliance should not 
      be placed on any forward-looking statements, which speak only as of the 
      date of this release. Spectrum Brands undertakes no duty or 
      responsibility to update any of these forward-looking statements to 
      reflect events or circumstances after the date of this report or to 
      reflect actual outcomes.
    
    
      Attached
    
    
      Table 1 - Condensed Consolidated Statements of Operations
    
    
      Table 2 - Supplemental Financial Data
    
    
      Table 3 - Reconciliation of Diluted Earnings Per Share to Adjusted 
      Diluted Earnings Per Share
    
    
      Table 4 – Reconciliation of Net Income to 
      EBITDA
    
    
      
        
          Table 1
        
      
      
        
          SPECTRUM BRANDS, INC.
        
      
      
        
          Condensed Consolidated Statements of Operations
        
      
      
        
          For the three months ended December 30, 2007 and December 31, 2006
        
      
      
        
          (Unaudited)
        
      
      
        
          (In millions, except per share amounts)
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          THREE MONTHS
        
      
      
        
        
        
        
        
          F2008
        
        
        
        
          
            F2007 (a)
          
        
        
        
        
          
            INC(DEC)
          
          
            %
          
        
      
      
        
        
        
        
        
        
        
        
      
      
        
          Net sales
        
        
        
        
          $
        
        
          560.5
        
        
        
        
        
        
          $
        
        
          564.6
        
        
        
        
        
        
          -0.7
        
        
          %
        
      
      
        
          Cost of goods sold
        
        
        
        
        
        
          352.2
        
        
        
        
        
        
        
        
          349.7
        
        
        
        
        
        
        
      
      
        
          Restructuring and related charges
        
        
        
        
           
        
        
          0.1
        
        
           
        
        
        
        
           
        
        
          6.0
        
        
           
        
        
        
        
        
      
      
        
          Gross profit
        
        
        
        
        
        
          208.2
        
        
        
        
        
        
        
        
          208.9
        
        
        
        
        
        
          -0.3
        
        
          %
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Selling
        
        
        
        
        
        
          111.7
        
        
        
        
        
        
        
        
          126.0
        
        
        
        
        
        
        
      
      
        
          General and administrative
        
        
        
        
        
        
          35.7
        
        
        
        
        
        
        
        
          37.1
        
        
        
        
        
        
        
      
      
        
          Research and development
        
        
        
        
        
        
          5.4
        
        
        
        
        
        
        
        
          6.9
        
        
        
        
        
        
        
      
      
        
          Restructuring and related charges
        
        
        
        
           
        
        
          3.7
        
        
           
        
        
        
        
           
        
        
          1.4
        
        
           
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total operating expenses
        
        
        
        
        
        
          156.5
        
        
        
        
        
        
        
        
          171.4
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating income
        
        
        
        
        
        
          51.7
        
        
        
        
        
        
        
        
          37.5
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest expense
        
        
        
        
        
        
          45.7
        
        
        
        
        
        
        
        
          31.7
        
        
        
        
        
        
        
      
      
        
          Other (income) expense, net
        
        
        
        
           
        
        
          (0.3
        
        
          )
        
        
        
        
           
        
        
          1.0
        
        
           
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income from continuing operations before income taxes
        
        
        
        
        
        
          6.3
        
        
        
        
        
        
        
        
          4.8
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income tax expense
        
        
        
        
           
        
        
          16.4
        
        
           
        
        
        
        
           
        
        
          1.4
        
        
           
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (Loss) income from continuing operations
        
        
        
        
        
        
          (10.1
        
        
          )
        
        
        
        
        
        
          3.4
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Loss from discontinued operations, net of tax (a)
        
        
        
        
           
        
        
          (33.3
        
        
          )
        
        
        
        
           
        
        
          (22.2
        
        
          )
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss
        
        
        
        
          $
        
        
          (43.4
        
        
          )
        
        
        
        
          $
        
        
          (18.8
        
        
          )
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Average shares outstanding (b)
        
        
        
        
        
        
          51.0
        
        
        
        
        
        
        
        
          49.8
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (Loss) income from continuing operations
        
        
        
        
          $
        
        
          (0.20
        
        
          )
        
        
        
        
          $
        
        
          0.07
        
        
        
        
        
        
        
      
      
        
          Loss from discontinued operations
        
        
        
        
           
        
        
          (0.65
        
        
          )
        
        
        
        
           
        
        
          (0.45
        
        
          )
        
        
        
        
        
      
      
        
          Basic loss per share
        
        
        
        
          $
        
        
          (0.85
        
        
          )
        
        
        
        
          $
        
        
          (0.38
        
        
          )
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Average shares and common stock equivalents outstanding (b) (c)
        
        
        
        
        
        
          51.0
        
        
        
        
        
        
        
        
          49.8
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (Loss) income from continuing operations
        
        
        
        
          $
        
        
          (0.20
        
        
          )
        
        
        
        
          $
        
        
          0.07
        
        
        
        
        
        
        
      
      
        
          Loss from discontinued operations
        
        
        
        
           
        
        
          (0.65
        
        
          )
        
        
        
        
           
        
        
          (0.45
        
        
          )
        
        
        
        
        
      
      
        
          Diluted loss per share
        
        
        
        
          $
        
        
          (0.85
        
        
          )
        
        
        
        
          $
        
        
          (0.38
        
        
          )
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Note: The Company's Home & Garden business, discontinued effective 
          October 1, 2006, is excluded from continuing operations for all 
          periods presented.
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (a) Reflects the loss from discontinued operations, net of tax, of 
          the Home & Garden business segment, discontinued effective October 
          1, 2006. Included in the three months ended December 30, 2007 is a 
          loss on disposal of Nu-Gro of $1.2 million, net of tax benefit.
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (b) Per share figures calculated prior to rounding.
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (c) For the three months ended December 30, 2007 and December 31, 
          2006, we have not assumed the exercise of common stock equivalents 
          as the impact would be antidilutive.
        
      
    
    
      
        
          Table 2
        
      
      
        
          SPECTRUM BRANDS, INC.
        
      
      
        
          Supplemental Financial Data
        
      
      
        
          For the three months ended December 30, 2007 and December 31, 2006
        
      
      
        
          (Unaudited)
        
      
      
        
          ($ in millions)
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
          Supplemental Financial Data
        
        
        
        
          F2008
        
        
        
        
          F2007
        
      
      
        
          Cash
        
        
        
        
          $
        
        
          84.9
        
        
        
        
        
        
          $
        
        
          38.0
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Trade receivables, net (a)
        
        
        
        
          $
        
        
          339.8
        
        
        
        
        
        
          $
        
        
          297.5
        
      
      
        
          Days Sales Outstanding (b)
        
        
        
        
        
        
          
            54
          
        
        
        
        
        
        
        
        
          52
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Inventory, net (a)
        
        
        
        
          $
        
        
          322.1
        
        
        
        
        
        
          $
        
        
          337.1
        
      
      
        
          Inventory Turnover (c)
        
        
        
        
        
        
          
            3.8
          
        
        
        
        
        
        
        
        
          3.5
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total Debt
        
        
        
        
          $
        
        
          2,570.1
        
        
        
        
        
        
          $
        
        
          2,380.5
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          THREE MONTHS
        
      
      
        
          Supplemental Cash Flow Data
        
        
        
        
          F2008
        
        
        
        
          F2007
        
      
      
        
          Depreciation and amortization, excluding amortization of debt 
          issuance costs
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          $
        
        
          16.2
        
        
        
        
        
        
          $
        
        
          17.6
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Capital expenditures
        
        
        
        
          $
        
        
          5.1
        
        
        
        
        
        
          $
        
        
          6.5
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          THREE MONTHS
        
      
      
        
          Supplemental Segment Sales & Profitability
        
        
        
        
          F2008
        
        
        
        
          F2007
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net Sales
        
        
        
        
        
        
        
        
        
      
      
        
          Global Batteries & Personal Care
        
        
        
        
          $
        
        
          418.0
        
        
        
        
        
        
          $
        
        
          426.9
        
      
      
        
          Global Pet Supplies
        
        
        
        
           
        
        
          142.5
        
        
           
        
        
        
        
           
        
        
          137.7
        
      
      
        
          Total net sales
        
        
        
        
          $
        
        
          560.5
        
        
           
        
        
        
        
          $
        
        
          564.6
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Segment Profit
        
        
        
        
        
        
        
        
        
      
      
        
          Global Batteries & Personal Care
        
        
        
        
          $
        
        
          47.1
        
        
        
        
        
        
          $
        
        
          39.8
        
      
      
        
          Global Pet Supplies
        
        
        
        
           
        
        
          16.8
        
        
           
        
        
        
        
           
        
        
          18.3
        
      
      
        
          Total segment profit
        
        
        
        
        
        
          63.9
        
        
        
        
        
        
        
        
          58.1
        
      
      
        
        
        
        
        
        
        
        
        
        
      
      
        
          Corporate
        
        
        
        
        
        
          8.4
        
        
        
        
        
        
        
        
          13.2
        
      
      
        
          Restructuring and related charges
        
        
        
        
        
        
          3.8
        
        
        
        
        
        
        
        
          7.4
        
      
      
        
          Interest expense
        
        
        
        
        
        
          45.7
        
        
        
        
        
        
        
        
          31.7
        
      
      
        
          Other (income) expense, net
        
        
        
        
           
        
        
          (0.3
        
        
          )
        
        
        
        
           
        
        
          1.0
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income from continuing operations before income taxes
        
        
        
        
          $
        
        
          6.3
        
        
           
        
        
        
        
          $
        
        
          4.8
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Note: As of January 1, 2007, the Company began managing its 
            business in three reportable segments: (i) Global Batteries & 
            Personal Care, which consists of the Company’s 
            world-wide battery, shaving and grooming, personal care and 
            portable lighting business; (ii) Global Pet Supplies, which 
            consists of the acquired United Pet Group, Tetra and Jungle Labs 
            businesses; and (iii) Home & Garden, which consists of the 
            discontinued Home and Garden Business. In connection with this 
            realignment of reportable segments, costs associated with Global 
            Operations, consisting of research and development, manufacturing 
            management, global purchasing, quality operations and inbound 
            supply chain, which were previously reflected in Corporate 
            expenses, have been embedded within each of the operating 
            segments.  In addition, certain general and administrative 
            expenses necessary to reflect the operating segments on a stand 
            alone basis, which were previously reflected as Corporate 
            expenses, have been allocated to the operating 
            segments.  Accordingly, Corporate expenses include only those 
            general and administrative expenses associated with corporate 
            overhead and long-term compensation plans.  All prior periods 
            presented above have been restated to reflect the changes 
            described above.
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (a) Trade receivables, net and Inventory, net as of December 30, 
          2007 and December 31, 2006 exclude amounts related to our 
          discontinued Home & Garden business as these amounts are classified 
          as Assets held for sale, effective October 1, 2006.
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (b) Reflects actual days sales outstanding at end of period.
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (c) Reflects cost of sales (excluding restructuring and related 
          charges) during the last twelve months divided by inventory as of 
          the end of the period.
        
      
    
    
      
        
          Table 3
        
      
      
        
          SPECTRUM BRANDS, INC.
        
      
      
        
          Reconciliation of GAAP to Adjusted Diluted Earnings Per Share
        
      
      
        
          For the three months ended December 30, 2007 and December 31, 2006
        
      
      
        
          (Unaudited)
        
      
      
        
           
        
        
        
        
           
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
          THREE MONTHS
        
      
      
        
        
        
        
        
        
        
          F2008
        
        
        
        
          F2007
        
        
        
      
      
        
          Diluted loss per share, as reported
        
        
        
        
          $
        
        
          (0.85
        
        
          )
        
        
        
        
          $
        
        
          (0.38
        
        
          )
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Adjustments, net of tax:
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Restructuring and related charges
        
        
        
        
        
        
          0.05
        
        
        
        
          (a)
        
        
        
        
          0.10
        
        
        
        
          (b)
        
      
      
        
        
        
          Discontinued operations
        
        
        
        
        
        
          0.65
        
        
        
        
          (c)
        
        
        
        
          0.43
        
        
        
        
          (c)
        
      
      
        
        
        
          Income taxes
        
        
        
        
        
        
          0.28
        
        
        
        
          (d)
        
        
        
        
          -
        
        
        
        
        
      
      
        
        
        
          Other adjustments
        
        
        
        
           
        
        
          (0.07
        
        
          )
        
        
          (e)
        
        
           
        
        
          (0.03
        
        
          )
        
        
          (f)
        
      
      
        
        
        
        
        
        
        
        
        
          0.91
        
        
        
        
        
        
        
        
          0.50
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic earnings per share, as adjusted
        
        
        
        
          $
        
        
          0.06
        
        
           
        
        
        
        
          $
        
        
          0.12
        
        
           
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Note: Per share figures calculated prior to rounding.
          
          
             
          
          
            (a)  For the three months ended December 30, 2007, reflects $2.5 
            million, net of tax, of restructuring and related charges as 
            follows: (i) $0.3 million for the integration of United and Tetra; 
            (ii) $0.4 million for a series of actions in Europe and Latin 
            America to reduce operating costs and rationalize operating 
            structure; and (iii) $1.8 million for the Global restructuring 
            announced January 10, 2007.
          
          
             
          
          
            (b)  For the three months ended December 31, 2006, reflects $5.2 
            million, net of tax, of restructuring and related charges as 
            follows: (i) $3.0 million primarily for the integration of United 
            and Tetra and (ii) $2.2 million for a series of actions in Europe 
            and Latin America to reduce operating costs and rationalize 
            operating structure.
          
          
             
          
          
            (c)  For the three months ended December 30, 2007 and December 31, 
            2006, reflects a loss from discontinued operations, net of tax of 
            $33.3 million and $22.2 million, respectively, of the Company's 
            Home & Garden business, discontinued effective October 1, 2006.
          
          
             
          
          
            (d)  For the three months ended December 30, 2007, reflects $14.2 
            million adjustment to income tax expense to exclude the impact of 
            the valuation allowance against deferred taxes and other tax 
            related items in order to reflect a normalized ongoing effective 
            tax rate.
          
          
             
          
          
            (e)  For the three months ended December 30, 2007, general and 
            administrative expenses include $2.3 million, net of tax benefit, 
            related to expiring taxes and related 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.  In addition, interest expense includes $1.3 
            million, net of tax benefit, 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 December 31, 2006, general and 
            administrative expenses include $1.6 million, net of tax benefit, 
            related to expiring taxes and related 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. Interest expense includes $0.6 million, net of 
            tax benefit, related to interest charges associated with the 
            Company's provision for presumed credits applied to the Brazilian 
            excise tax on manufactured products.
          
        
      
    
    
      
        
          Table 4
        
      
      
        
          SPECTRUM BRANDS, INC.
        
      
      
        
          Reconciliation of GAAP Net Income to EBITDA
        
      
      
        
          For the three months ended December 30, 2007 and December 31, 2006
        
      
      
        
          (Unaudited)
        
      
      
        
          ($ in Millions)
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
        
        
        
        
          Fiscal Year
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          F2008
        
        
        
        
          F2007
        
      
      
        
          Net Loss
        
        
        
        
          $
        
        
          (43.4
        
        
          )
        
        
        
        
          $
        
        
          (18.8
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income tax expense: Continuing Operations
        
        
        
        
        
        
          16.4
        
        
        
        
        
        
        
        
          1.4
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income tax benefit: Discontinued Operations
        
        
        
        
        
        
          (0.6
        
        
          )
        
        
        
        
        
        
          (13.3
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest Expense: Continuing Operations
        
        
        
        
        
        
          45.7
        
        
        
        
        
        
        
        
          31.7
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest Expense: Discontinued Operations
        
        
        
        
        
        
          11.6
        
        
        
        
        
        
        
        
          15.4
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Depreciation and Amortization
        
        
        
        
        
        
          16.2
        
        
        
        
        
        
        
        
          17.6
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Restructuring and Related Charges: Continuing Operations
        
        
        
        
        
        
          3.8
        
        
        
        
        
        
        
        
          7.3
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Restructuring and Related Charges: Discontinued Operations
        
        
        
        
        
        
          1.2
        
        
        
        
        
        
        
        
          2.2
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Loss on disposal - Canadian Home and Garden Business
        
        
        
        
        
        
          1.9
        
        
        
        
        
        
        
        
          -
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Brazilian IPI Credit (a)
        
        
        
        
           
        
        
          (3.6
        
        
          )
        
        
        
        
           
        
        
          (2.3
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          EBITDA
        
        
        
        
          $
        
        
          49.1
        
        
           
        
        
        
        
          $
        
        
          41.4
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Note: Amounts calculated prior to rounding.
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            a)  Represents the benefit related to expiring penalties 
            associated with the Company's provision for presumed credits 
            applied to the Brazilian excise tax on manufactured products, 
            which expire in the respective period.