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Spectrum Brands reports 3rd Quarter 2009 Financial Results; net loss per fully diluted share of $0.71 per share for the quarter

Spectrum Brands Press Release (excerpted)

FlashlightNews.org - 8/11/2009


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Rayovac Hybrid Charger

Rayovac Hybrid Charger

ATLANTA, Ga. - Spectrum Brands (the "Company") today reported its results of operations and filed its Form 10-Q with the Securities and Exchange Commission for the quarter ended June 28, 2009, which is the Company's third quarter of fiscal 2009.

The Company's consolidated net sales for the third quarter were $589.4 million as compared to $638.8 million for the third quarter of fiscal 2008. Reported net sales exclude the Company's growing products division, which is being accounted for as discontinued operations. Net sales, excluding a $35.9 million negative impact due to foreign exchange in the third quarter of 2009, decreased 2.1 percent from the same quarter last year.

During the third quarter of fiscal year 2008, the Company reported a net loss per fully diluted share of $5.58. After adjusting for certain items which management believes are not indicative of the Company's on-going normalized operations, which are outlined in detail in this release in Table 3 and its respective footnotes, the Company generated an adjusted basic earnings per share of $0.13.

Gross profit and gross margin for the quarter were $230.3 million and 39.1 percent, respectively, versus $242.4 million and 37.9 percent for the same period in fiscal year 2008. Cost of goods sold during the fiscal 2008 third quarter included restructuring and related charges of approximately $14 million related to the shutdown of the Company's battery manufacturing facility in Ningbo, China and various cost cutting initiatives throughout the Company.

With tight budget controls and some ongoing organizational streamlining, Selling, General and Administrative ("SG&A") expenses were $137.5 million, or 23.3 percent of sales for the quarter, a $43.1 million reduction from the same quarter last year when SG&A was 28.3 percent of sales. During the third quarter of 2009, SG&A expenses also benefited from favorable foreign exchange impacts of $11.0 million versus the prior year.

Global Batteries and Personal Care

Continuing the positive trends experienced in recent quarters, the Company's Global Batteries and Personal Care segment reported its tenth consecutive quarter of year-over-year improvement in adjusted EBITDA as a direct result of continued market share growth in many product categories and successful cost cutting initiatives. Net sales for the segment for the third quarter were $296.8 million compared with $344.4 million for the same period last year, a difference of $47.6 million, of which $31.4 million represents the impact of negative foreign exchange.

Global battery sales for the quarter were $185.6 million, down $31.9 million from last year due to a negative foreign exchange impact of $19.5 million as well as slower sales in the Latin American market due to a slow-down in consumer spending and inventory de-stocking at retailers driven by economic conditions.

In North America, Rayovac® branded products are experiencing an outstanding year demonstrated by the Nielson survey results, which continue to show Rayovac® outpacing competitors in both dollar share and dollar sales growth. The Company believes that its value positioning is resonating with today's cost conscious consumer. Overall battery sales in North America were up 9.8 percent over the same period last year with sales of alkaline batteries up 14.9 percent.

European battery sales for the quarter were $73.0 million, down $18.1 million from last year primarily due to a negative foreign exchange impact of $13.0 million and the decision to exit targeted segments of the Company's private label, lower margin business.

Latin American battery sales for the quarter were $35.5 million, down from $56.1 million last year. Foreign exchange negatively impacted this quarter's results by $6.0 million, while the slowdown in several economies in that region and de-stocking of inventory at retailers also contributed to slower sales.

Financial Restructuring Update: Exit from Chapter 11 Expected This Month

As previously disclosed, on February 3, 2009, the Company announced a proposed financial restructuring and filed a pre-negotiated Plan of Reorganization (the "Plan") with the U.S. Bankruptcy Court that would, if confirmed, significantly reduce the Company's outstanding debt, which management believes will put the Company in a stronger financial position for the future. Under the terms of the Plan, existing common stock will be extinguished, and no distributions will be made to holders of the current equity. In addition, allowed claims with respect to the Senior Subordinated Notes will be refinanced with new common stock and new senior subordinated notes to be issued by the Company. Holders of the allowed claims with respect to the existing notes will receive their pro rata share of approximately 27 million shares of new common stock as well as their pro rata share of approximately $218 million in principal amount of the new subordinated notes.

On July 15, 2009, the Honorable Judge King of the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division, entered an order confirming the Company's Plan. The official equity committee appointed in the Company's chapter 11 cases has appealed the confirmation and the Fifth Circuit Court of Appeals has imposed a stay pending certain elements of this appeal. While there can be no assurances, the Company believes that the record demonstrates that the Bankruptcy Court reached the correct decision and, accordingly, that the confirmation will be upheld. The Company expects to exit from Chapter 11 protection later this month.

Once implemented, on the effective date, the confirmed Plan would reduce the Company's subordinated debt by approximately $840 million, significantly strengthening the Company's balance sheet and overall financial position.

In connection with the implementation of the confirmed Plan, the Company expects to close on the effective date an exit financing facility of up to $242 million.

A full discussion of the Company's Chapter 11 process is included in its Quarterly Report on Form 10-Q, which was filed with Securities and Exchange Commission earlier today. This Form 10-Q is also available on the Company's website at spectrumbrands.com.

About Spectrum Brands, Inc.

Spectrum Brands is a global consumer products company and a leading supplier of batteries, shaving and grooming products, personal care products, specialty pet supplies, lawn & garden and home pest control products, personal insect repellents and portable lighting. Helping to meet the needs of consumers worldwide, included in its portfolio of widely trusted brands are Rayovac®, Remington®, Varta®, Tetra®, Marineland®, Nature's Miracle®, Dingo®, 8-In-1®, Spectracide®, Cutter®, Repel®, and HotShot®. 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 annual revenue from continuing operations in excess of $2 billion.

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