Q1 | Q2 | Remaining 6 Months | Total | ||||||||||||||||||||||
FISCAL YEAR 2007 | Sales | EBITDA | Sales | EBITDA | Sales | EBITDA | Sales | EBITDA | |||||||||||||||||
| Global Battery/Personal Care | 427 | 46 | 290 | 24 | 686 | 92 | 1,403 | 163 | |||||||||||||||||
| Home & Garden | 56 | (18 | ) | 224 | 15 | 403 | 59 | 683 | 57 | ||||||||||||||||
| Pet | 138 | 24 | 144 | 23 | 281 | 51 | 562 | 98 | |||||||||||||||||
| Corporate | 0 | (11 | ) | 0 | (10 | ) | 0 | (15 | ) | 0 | (35 | ) | |||||||||||||
Consolidated | 620 | 41 | 658 | 53 | 1,370 | 188 | 2,648 | 282 | |||||||||||||||||
Q1 | Q2 | Remaining 6 Months | Total | ||||||||||||||||||||||
FISCAL YEAR 2006 | Sales | EBITDA | Sales | EBITDA | Sales | EBITDA | Sales | EBITDA | |||||||||||||||||
| Global Battery/Personal Care | 434 | 68 | 277 | 21 | 641 | 54 | 1,352 | 142 | |||||||||||||||||
| Home & Garden | 54 | (7 | ) | 210 | 28 | 393 | 53 | 657 | 74 | ||||||||||||||||
| Pet | 133 | 23 | 138 | 24 | 273 | 46 | 543 | 93 | |||||||||||||||||
| Corporate | 0 | (5 | ) | 0 | (6 | ) | 0 | (11 | ) | 0 | (22 | ) | |||||||||||||
Consolidated | 620 | 79 | 625 | 67 | 1,307 | 142 | 2,552 | 287 | |||||||||||||||||
| · | In January 2007 the Company realigned its four operating segments into three vertically integrated, product-focused operating units: Global Batteries and Personal Care, Home and Garden, and Global Pet Supplies |
| · | In connection with this realignment the Company's Global Operations organization was consolidated within the three business segments. The sales and EBITDA presented on the previous page reflect this realignment |
| · | Accordingly, Global Operations costs (including research & development, manufacturing management, global purchasing, corporate quality, and inbound supply chain) previously reflected in Corporate have been embedded within the three operating units |
| · | In addition, general and administrative expenses necessary to reflect the business units on a stand alone basis have been allocated from corporate to the operating units. As a result the Corporate expenses presented on the previous page reflect administrative costs associated with maintaining a public company |
| · | The sales and EBITDA for Fiscal Year 2006 and the first fiscal quarter of 2007 reflect actual reported results, while the second fiscal quarter of 2007 and the remaining six months of 2007 reflect forecasted data |
| · | The commentary below addresses fluctuations between Fiscal Year 2006 versus Fiscal Year 2007 |
| · | Forecasted second fiscal quarter increase in sales and EBITDA is anticipated to be primarily driven by growth in alkaline battery and lights categories. This represents a continuation of the recovery of Rayovac branded product point of sale increases experienced over the last four months as a result of consumer acceptance of the new marketing program |
| · | Forecasted sales growth of 7% in the remaining six month period is anticipated to be driven primarily by price increases implemented in North America and Latin America, and stabilization in the European battery business |
| · | Gross profit is anticipated to be favorably impacted by the manufacturing efficiencies achieved as a result of transferring alkaline battery production from Germany to China |
| · | EBITDA in the remaining six months is expected to be further benefited by the savings resulting from the various overhead reduction initiatives taken during last year and early this year in North America and Europe |
| · | Second fiscal quarter EBITDA declines by $13 million due to: |
· | $9 million of one-time costs which were a result of prior year manufacturing inefficiencies, extraordinary freight transfer costs and the result of a difficult SAP systems implementation. These abnormal costs were capitalized into inventory at the end of Fiscal Year 2006 and are now rolling out to cost of sales as that inventory is shipped to customers during the first and second fiscal quarters of Fiscal Year 2007. Approximately $12 million of non-recurring costs were recognized in the first fiscal quarter. The Company is not experiencing the inefficiencies that occurred in the prior year and projects improved operating margins in the second half of Fiscal Year 2007 |
· | $4 million of additional selling investment consisting of higher retail merchandising expense and additional dedicated sales force to support the selling season. |
· | The modest second fiscal quarter EBITDA decline is due to: |
· | The result of increased advertising and marketing investments associated with the launch of new products |
· | The restructuring of the Global Pet business unit distribution network, which resulted in non-recurring costs of transitioning certain Global Pet distribution into the new facilities |
· | Corporate EBITDA declines by $13 million due to: |
· | Accrual for incentive compensation based on the projected achievement of certain financial targets versus the absence of such payment in Fiscal Year 2006 as the Company did not achieve its financial targets |
· | An increase in legal expense |
FISCAL YEAR 2007 | Q1 | Q2 | Q3 | Q4 | |||||||||
| Global Battery/Personal Care | 332 | 326 | 319 | 290 | |||||||||
| Home & Garden | 131 | 205 | 176 | 141 | |||||||||
| Pet | 118 | 122 | 114 | 103 | |||||||||
| Corporate | 1 | (7 | ) | (7 | ) | (5 | ) | ||||||
Consolidated | 581 | 645 | 601 | 529 | |||||||||
FISCAL YEAR 2006 | Q1 | Q2 | Q3 | Q4 | |||||||||
| Global Battery/Personal Care | 338 | 275 | 289 | 274 | |||||||||
| Home & Garden | 123 | 202 | 188 | 131 | |||||||||
| Pet | 103 | 114 | 109 | 109 | |||||||||
| Corporate | 6 | 3 | 1 | 3 | |||||||||
Consolidated | 570 | 595 | 586 | 517 | |||||||||
| · | Global Battery and Personal Care estimates that its working capital as of March 2007 will increase approximately $50 million versus the prior year due to: |
| · | Higher receivable balances in both Europe and North America |
| · | The result of the timing of shipments and customer mix |
| · | An increase in the amount of Remington inventory |
| · | Negative impact of currency valuation of approximately $15 million |
| · | Working capital is driven by the seasonality of the business |
| · | The peak working capital month is estimated to occur in April and the low point is estimated to be in October |
| · | The swing between the high and low point of working capital is estimated at approximately $140 million for the current calendar year |
| · | The Global Pet business increase in working capital versus the prior quarter and last year is the result of: |
| · | Increased inventory safety stock as we plan through a major manufacturing plant closing in spring 2007 |
| · | Other realignments of manufacturing locations and global sourcing initiatives |
| · | The negative $29 million of free cash flow in the second fiscal quarter referenced in the addendum posted on March 22, 2007 is calculated as follows: |
| · | +$53 million EBITDA |
| · | -$11 million cash taxes |
| · | -$18 million capital expenditures |
| · | -$54 million cash interest (excluding the expected payment of $31 million of accrued interest on 3/30/07) |
| · | The $54 million of cash interest in the second fiscal quarter referenced above is comprised of: |
| · | $26 million of interest on the Company’s 7 3/8% senior subordinated notes due 2015 |
| · | $28 million of interest on the Company’s existing secured credit facility |
| · | The $31 million of accrued interest expected to be paid on 3/30/07 is comprised of: |
| · | $15 million of interest accrued through 3/30/07 on the Company’s 8 1/2% senior subordinated notes due 2013 |
| · | $16 million of interest accrued through 3/30/07 on the Company’s existing secured credit facility |
| · | Cash flow in the 2nd half of Fiscal Year 2007 is expected to be positively impacted by the $31 million of accrued interest paid on 3/30/07, as this payment reduces the amount of interest that would have otherwise been paid in the third fiscal quarter |
| · | For the full Fiscal Year 2007, the Company continues to expect: |
| · | Approximately $25 million of cash taxes |
| · | Approximately $45 million of capital expenditures |
Global Bat./ Per. Care | Home and Garden | Pet | Corporate | Total | ||||||||||||
| Income from Continuing Operations before Interest and Taxes | 58 | - | 17 | (9 | ) | 66 | ||||||||||
| Depreciation and Amortization | 8 | - | 5 | 4 | 17 | |||||||||||
| Restructuring and Related Charges (A) | 2 | - | 1 | - | 3 | |||||||||||
| Discontinued Operations (B) | - | (7 | ) | - | - | (7 | ) | |||||||||
EBITDA | $ | 68 | $ | (7 | ) | $ | 23 | $ | (5 | ) | $ | 79 | ||||
Global Bat./ Per. Care | Home and Garden | Pet | Corporate | Total | ||||||||||||
| Income from Continuing Operations before Interest and Taxes | 20 | 20 | 17 | (10 | ) | 47 | ||||||||||
| Depreciation and Amortization | 7 | 4 | 5 | 4 | 20 | |||||||||||
| Restructuring and Related Charges (A) | 2 | 4 | 2 | - | 8 | |||||||||||
| Gain on Asset Sales (C) | (8 | ) | - | - | - | (8 | ) | |||||||||
EBITDA | $ | 21 | $ | 28 | $ | 24 | $ | (6 | ) | $ | 67 | |||||
Global Bat./ Per. Care | Home and Garden | Pet | Corporate | Total | ||||||||||||
| Income from Continuing Operations before Interest and Taxes | (141 | ) | 28 | (243 | ) | (20 | ) | (376 | ) | |||||||
| Depreciation and Amortization | 16 | 8 | 11 | 9 | 44 | |||||||||||
| Restructuring and Related Charges (A) | 19 | 17 | 7 | - | 43 | |||||||||||
| Goodwill and Intangible Asset Impairment (D) | 162 | - | 271 | - | 433 | |||||||||||
| Brazilian IPI Credit (E) | (2 | ) | - | - | - | (2 | ) | |||||||||
EBITDA | $ | 54 | $ | 53 | $ | 46 | $ | (11 | ) | $ | 142 | |||||
Global Bat./ Per. Care | Home and Garden | Pet | Corporate | Total | ||||||||||||
| Income from Continuing Operations before Interest and Taxes | 40 | - | 14 | (16 | ) | 38 | ||||||||||
| Depreciation and Amortization | 6 | - | 6 | 5 | 17 | |||||||||||
| Restructuring and Related Charges (A) | 3 | - | 4 | - | 7 | |||||||||||
| Discontinued Operations (B) | - | (18 | ) | - | - | (18 | ) | |||||||||
| Brazilian IPI Credit (E) | (3 | ) | - | - | - | (3 | ) | |||||||||
EBITDA | $ | 46 | $ | (18 | ) | $ | 24 | $ | (11 | ) | $ | 41 | ||||
Global Bat./ Per. Care | Home and Garden | Pet | Corporate | Total | ||||||||||||
| Income from Continuing Operations before Interest and Taxes | 13 | - | 13 | (15 | ) | 12 | ||||||||||
| Depreciation and Amortization | 7 | - | 6 | 5 | 18 | |||||||||||
| Restructuring and Related Charges (A) | 7 | - | 4 | - | 11 | |||||||||||
| Discontinued Operations (B) | - | 15 | - | - | 15 | |||||||||||
| Brazilian IPI Credit (E) | (3 | ) | - | - | - | (3 | ) | |||||||||
EBITDA | $ | 24 | $ | 15 | $ | 23 | $ | (10 | ) | $ | 53 | |||||
Global Bat./ Per. Care | Home and Garden | Pet | Corporate | Total | ||||||||||||
| Income from Continuing Operations before Interest and Taxes | 75 | - | 36 | (26 | ) | 86 | ||||||||||
| Depreciation and Amortization | 15 | - | 11 | 11 | 37 | |||||||||||
| Restructuring and Related Charges (A) | 9 | - | 4 | - | 13 | |||||||||||
| Discontinued Operations (B) | - | 59 | - | - | 59 | |||||||||||
| Brazilian IPI Credit (E) | (7 | ) | - | - | - | (7 | ) | |||||||||
EBITDA | $ | 92 | $ | 59 | $ | 51 | $ | (15 | ) | $ | 188 | |||||
