SOURCE: Spectrum Brands

Spectrum Brands

August 07, 2009 16:00 ET

Spectrum Brands Reports Third Quarter 2009 Financial Results

ATLANTA, GA--(Marketwire - August 7, 2009) - 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.

Consolidated adjusted EBITDA, a non-GAAP measurement which the Company believes is a useful indicator of the operating health of the business and its trajectory, was $102.0 million for the quarter, up 19.0 percent over the same quarter of last year. Adjusted EBITDA for the third quarter of 2009 included a negative impact of foreign exchange of $3.8 million.

The Company reported a net loss per fully diluted share of $0.71 per share for the quarter. 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 $0.47, a non-GAAP number. These excluded items, net of tax, include:

--  Reorganization costs associated with the Company's Chapter 11 filing
    of $40.6 million, or $0.77 cents per share;
    
--  Net tax adjustments of $17.2 million, or $0.33 per share, to exclude
    the effect of certain adjustments made to the valuation allowance against
    net deferred taxes and other tax related items;
    
--  Restructuring and related charges of $2.1 million, or $0.04 per share,
    details of which are provided in Table 3 and its respective footnotes of
    this release; and
    
--  Net loss from discontinued operations of $2.0 million, or $0.04 per
    share related to the Company's growing products portion of its Home and
    Garden business.
    

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.

Third Quarter Segment Results

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.

Adjusted EBITDA for the Global Batteries and Personal Care segment was $43.3 million for the quarter, which is up 14.1 percent over the same quarter of last year as this business continues to benefit from the successful implementation of numerous cost savings initiatives and the decision to exit targeted segments of its private label, lower margin business, particularly in European markets. Excluding $4.6 million of negative foreign exchange impacts during the third quarter of fiscal year 2009, adjusted EBITDA was up 26.2 percent compared to the same period last year. Profitability for this segment also improved this quarter to $37.3 million, up 12.3 percent over last year's level.

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.

Global sales of Remington® branded products were very stable for the quarter with $93.4 million in sales, including a negative foreign exchange impact of $10.5 million. Last year sales for the same period were $104.8 million. According to a recent Nielson survey dated July 11, 2009, Remington continues to be the fastest growing or top selling product in many of its product categories including men's shaving, women's hair care, personal groomers and women's electric shaving and grooming.

Global Pet Supplies

The Global Pet Supplies Segment reported net sales of $144.6 million down from $148.6 million in the same period of last year due to $4.4 million of negative foreign exchange impacts this quarter. With strong growth in North America, led by the performance of the Company's Dingo® branded products, companion animal sales grew 7.4 percent for the quarter. For the Company's aquatics products, sales of consumables, such as fish food, remained robust worldwide while sales of larger equipment lagged due to weak economic conditions. Overall aquatics sales for the quarter were down 7.5 percent with stable year-over-year sales in North America and the Pacific Rim regions, offset by weaker sales in Europe as negative foreign exchange and a shorter than anticipated pond season due to poor weather conditions in early spring, which tempered results there.

Benefiting from global cost reduction initiatives, adjusted EBITDA for the Global Pet Supplies segment was $24.9 million for the quarter compared to $22.4 million for the same period last year. Foreign exchange did not have a significant impact on Global Pet Supplies adjusted EBITDA. Segment profitability for Global Pet Supplies for the quarter was $19.2 million compared to $16.8 million for the same period last year.

Home and Garden

With the prime bug and pest season underway, the Company's Home and Garden Business segment's net sales, which included sales of brands such as Cutter®, Repel®, Hot Shot® and Spectracide®, were $148.0 million, as compared with $145.8 million for the same period last year.

Benefiting from successful cost cutting measures as well as positive sales results for the quarter, adjusted EBITDA for the Home and Garden segment for the quarter improved $7.3 million, or 21.6 percent, over the same period last year to $41.3 million. Segment profitability for the quarter was $38.7 million for the Home and Garden business as compared with $31.3 million in the same period last year.

Corporate Expenses and Interest Expense

Corporate expenses were $8.2 million for the quarter as compared with $12.4 million in corporate expenses during the third quarter of last year. This decrease was primarily due to the non-recurring $4.5 million charge incurred in the third quarter of fiscal 2008 to write off professional fees incurred in connection with the termination of a purchase contract for the Global Pet Supplies business.

Interest expense was $48.7 million compared to $57.1 million in the same period last year, primarily due to the Company's discontinuation of the accrual of $24 million in interest for the quarter on its Senior Subordinated Notes. In accordance with generally accepted accounting principles, as of February 3, 2009, the date of the Company's Chapter 11 filing, the Company ceased accruing interest on its Senior Subordinated Notes. These notes are expected to be cancelled upon the effective date of the Company's Plan of Reorganization, which is expected to occur later this month. This non-accrual of interest was partially offset by default interest accrued on the Company's senior term loans and a change in the required accounting treatment on its interest rate derivative contracts as a result of the Company's Chapter 11 filing.

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 www.spectrumbrands.com.

Non-GAAP Measurements

Management believes that certain non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Excluding the impact of current exchange rate fluctuations may provide additional meaningful reflection of underlying business trends. In addition, within this release, including the tables attached hereto, 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 GAAP to Adjusted Diluted Loss Per Share," for a complete reconciliation of diluted loss per share on a GAAP basis to adjusted diluted loss per share, and Table 4, "Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA," for a reconciliation of GAAP Net Income (Loss) to adjusted EBITDA for the third quarter of fiscal 2009 and the third quarter of fiscal 2008 on a consolidated basis and for each of the Company's business segments. 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 items 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. Management believes that adjusted diluted earnings per share is a useful measure for providing further insight into our operating performance because it eliminates the effects of certain items that are not comparable from one period to the next. 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 non-GAAP measurements 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, 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.

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) risks that the bankruptcy filing and the related cases disrupt current plans and operations; (2) risks that the Company's businesses could suffer from the loss of key customers, suppliers or personnel during the pendency of the bankruptcy cases, (3) risks that the Company will not be able to maintain sufficient liquidity for the pendency of the bankruptcy cases, (4) risks that the Company will not be able to secure satisfactory exit financing to emerge from the bankruptcy cases, (5) risks that the confirmed plan of reorganization will be overturned, (6) risks that changes and developments 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, (7) changes in consumer demand for the various types of products Spectrum Brands offers, (8) unfavorable developments in the global credit markets, (9) the impact of overall economic conditions on consumer spending, (10) fluctuations in commodities prices, the costs or availability of raw materials or terms and conditions available from suppliers, (11) changes in the general economic conditions in countries and regions where Spectrum Brands does business, such as stock market prices, interest rates, currency exchange rates, inflation and consumer spending, (12) the Company's ability to successfully implement manufacturing, distribution and other cost efficiencies and to continue to benefit from its cost-cutting initiatives, (13) unfavorable weather conditions 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 GAAP to Adjusted Diluted Earnings Per Share

Table 4 - Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA

                                  Table 1
                          SPECTRUM BRANDS, INC.
                      Debtor and Debtor-in-Possession
              Condensed Consolidated Statements of Operations
        For the three months ended June 28, 2009 and June 29, 2008
                                (Unaudited)
                  (In millions, except per share amounts)



                       THREE MONTHS                   NINE MONTHS
                --------------------------   -----------------------------
                F2009    F2008   INC(DEC)      F2009     F2008   INC(DEC)
                ------  -------              --------  --------
                                     %                               %
Net sales       $589.4  $ 638.8       -7.7%  $1,641.1  $1,758.6       -6.7%
Cost of goods
 sold            358.7    382.5               1,022.9   1,079.9
Restructuring
 and related
 charges           0.4     13.9                  13.2      14.2
                ------  -------              --------  --------
  Gross
   profit        230.3    242.4       -5.0%     605.0     664.5       -9.0%

Selling           95.1    135.2                 301.2     383.5
General and
 administrative   42.4     45.4                 116.8     139.1
Research and
 development       6.3      6.9                  17.7      18.8
Goodwill and
 intangibles
 impairment          -    303.3                     -     315.7
Restructuring
 and related
 charges           2.8      6.0                  27.2      16.0
                ------  -------              --------  --------

Total operating
 expenses        146.6    496.8                 462.9     873.1

  Operating
   income         83.7   (254.4)                142.1    (208.6)

Interest
 expense          48.6     57.1                 148.6     172.5
Other (income)
 expense, net     (0.8)     1.3                   3.5       0.1
                ------  -------              --------  --------

  Income
  (loss) from
   continuing
   operations
   before
   reorgani-
   zation
   items, net
   and income
   taxes          35.9   (312.8)                (10.0)   (381.2)

Reorganization
 items, net       62.5        -                  83.8         -
                ------  -------              --------  --------

  Loss from
   continuing
   operations
   before
   income
   taxes         (26.6)  (312.8)                (93.8)   (381.2)

Income tax
 expense
 (benefit)         7.9    (33.9)                 31.8      49.2
                ------  -------              --------  --------

  Loss from
   continuing
   operations    (34.5)  (278.9)               (125.6)   (430.4)

Loss from
 discontinued
 operations,
 net of tax (a)   (2.0)    (5.0)                (84.0)     (8.6)
                ------  -------              --------  --------

  Net loss      $(36.5) $(283.9)             $ (209.6) $ (439.0)
                ======  =======              ========  ========

Average shares
 Outstanding
 (b)              51.4     50.9                  51.4      50.9

Loss from
 continuing
 operations     $(0.67) $ (5.48)             $  (2.44) $  (8.45)
Loss from
 discontinued
 operations      (0.04)   (0.10)                (1.63)    (0.17)
                ------  -------              --------  --------
Basic loss per
 share          $(0.71) $ (5.58)             $  (4.07) $  (8.62)
                ======  =======              ========  ========

Average shares
 and common
 stock
 equivalents
 outstanding
 (b) (c)          51.4     50.9                  51.4      50.9

Loss from
 continuing
 operations     $(0.67) $ (5.48)             $  (2.44) $  (8.45)
Loss from
 discontinued
 operations      (0.04)   (0.10)                (1.63)    (0.17)
                ------  -------              --------  --------
Diluted loss
 per share      $(0.71) $ (5.58)             $  (4.07) $  (8.62)
                ======  =======              ========  ========


Note:  The Company's growing products portion of the Home & Garden business
is excluded from continuing operations for all periods presented.

(a)  Reflects the loss from discontinued operations, net of tax, of the
growing products portion of the Home and Garden Business and of the
Canadian Home and Garden Business.  The shutdown of the growing products
portion of the Home and Garden Business was completed during the second
quarter of fiscal 2009.  The Canadian Home and Garden business was
discontinued effective October 1, 2006. Included in the loss from
discontinued operations for the nine months ended June 29, 2008, is a loss
on disposal of $1.1 million, net of tax benefit. The Company's Canadian
Home and Garden business was sold on November 1, 2007.

(b)  Per share figures calculated prior to rounding.

(c)  For the three and nine months ended June 28, 2009 and June 29, 2008,
we have not assumed the exercise of common stock equivalents as the impact
would be antidilutive.






                                  Table 2
                          SPECTRUM BRANDS, INC.
                      Debtor and Debtor-in-Possession
                        Supplemental Financial Data
        For the three months ended June 28, 2009 and June 29, 2008
                                (Unaudited)
                              ($ in millions)


Supplemental Financial Data       F2009      F2008
                                ---------  ---------
Cash                            $    64.4  $    72.7

Trade receivables, net          $   324.6  $   395.0
  Days Sales Outstanding (a)           50         57

Inventory, net                  $   361.5  $   428.3
  Inventory Turnover (b)              4.1        3.9

Total Debt                      $ 2,530.6  $ 2,634.7


                                    THREE MONTHS           NINE MONTHS
                                --------------------  --------------------
Supplemental Cash Flow Data       F2009      F2008      F2009      F2008
                                ---------  ---------  ---------  ---------
Depreciation and amortization,
 excluding amortization of
 debt issuance costs            $    15.3  $    16.6  $    47.5  $    64.0

Capital expenditures            $     2.3  $     4.1  $     5.6  $    12.7

                                    THREE MONTHS           NINE MONTHS
                                --------------------  --------------------
Supplemental Segment Sales &
 Profitability                    F2009      F2008      F2009      F2008
                                ---------  ---------  ---------  ---------

Net Sales
  Global Batteries & Personal
   Care                         $   296.8  $   344.4  $   973.6  $ 1,070.1
  Global Pet Supplies               144.6      148.6      419.1      439.4
  Home and Garden                   148.0      145.8      248.4      249.1
                                ---------  ---------  ---------  ---------
    Total net sales             $   589.4  $   638.8  $ 1,641.1  $ 1,758.6
                                =========  =========  =========  =========

Segment Profit
  Global Batteries & Personal
   Care                         $    37.3  $    33.2  $   124.4  $   105.0
  Global Pet Supplies                19.2       16.8       45.8       48.8
  Home and Garden                    38.7       31.3       36.9       13.5
                                ---------  ---------  ---------  ---------
    Total segment profit             95.2       81.3      207.1      167.3

  Corporate                           8.2       12.4       24.5       30.0
  Restructuring and related
   charges                            3.2       19.9       40.4       30.2
  Goodwill and intangibles
   impairment                           -      303.3          -      315.7
  Interest expense                   48.7       57.1      148.6      172.5
  Other (income) expense, net        (0.8)       1.3        3.6        0.1
                                ---------  ---------  ---------  ---------

    Income (loss) from
     continuing operations
     before reorganization
     items, net and income
     taxes                      $    35.9  $  (312.7) $   (10.0) $  (381.2)
                                =========  =========  =========  =========

(a)  Reflects actual days sales outstanding at end of period.

(b)  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.
                      Debtor and Debtor-in-Possession
      Reconciliation of GAAP to Adjusted Diluted Earnings Per Share
        For the three months ended June 28, 2009 and June 29, 2008
                                (Unaudited)


                            THREE MONTHS              NINE MONTHS
                        --------------------      --------------------
                         F2009        F2008        F2009        F2008
                        -------      -------      -------      -------
Diluted loss per
 share, as reported     $ (0.71)     $ (5.58)     $ (4.07)     $ (8.62)

Adjustments, net of
 tax:
  Reorganization
   items, net              0.77  (a)       -         1.03  (a)       -
  Restructuring and
   related charges         0.04  (b)    0.27  (c)    0.50  (d)    0.41  (e)
  Goodwill and
   intangibles
   impairment                 -         4.76  (f)       -         5.13  (g)
  Discontinued
   operations              0.04  (h)    0.10  (i)    1.63  (h)    0.17  (i)
  Income taxes             0.33  (j)    0.33  (k)    1.22  (j)    2.46  (k)
  Depreciation and
   Amortization - U.S
   Home and Garden            -            -            -         0.13  (l)
  Write off of
   deferred financing
   costs                      -            -         0.03  (m)       -
  Transaction costs           -         0.05  (n)       -         0.08  (n)
  Other adjustments           -        (0.06) (o)   (0.03) (p)   (0.16) (q)
                        -------      -------      -------      -------
                           1.18         5.45         4.38         8.22

Basic earnings per
 share, as adjusted     $  0.47      $ (0.13)     $  0.31      $ (0.40)
                        =======      =======      =======      =======

Note: Per share figures calculated prior to rounding.

(a)  For the three and nine months ended June 28, 2009, reflects $40.6
million and $54.5 million, respectively,  of reorganization costs
associated with the Company's Chapter 11 Bankruptcy filing, net of tax,
in accordance with SOP 90-7, "Financial Reporting by Entities in
Reorganization."

(b)  For the three months ended June 28, 2009, reflects $2.1 million, net
of tax, of restructuring and related charges as follows: (i) $1.6 million
related to the Global Cost Reduction Initiatives; (ii) $0.9 million for the
Global Realignment Initiatives announced in January 2007; and (iii) $(0.4)
million to revise prior estimates related to the 2005 Purchase Accounting
Initiatives related to the integration of United and Tetra.

(c)  For the three months ended June 29, 2008, reflects $14.3 million, net
of tax, of restructuring and related charges as follows: $10.3 million for
the Ningbo exit strategy, $0.3 million for the integration of United and
Tetra and $3.7 million for the Global restructuring announced in January
2007.

(d)  For the nine months ended June 28, 2009, reflects $26.3 million, net
of tax, of restructuring and related charges as follows: (i) $8.6 million
for the Global Cost Reduction initiatives; (ii) $7.3 million for the Global
Realignment Initiatives announced in January 2007; (iii) $8.5 million for
the Ningbo Exit Plan; and (iv) $1.9 million for the integration of United
and Tetra.

(e)  For the nine months ended June 29, 2008, reflects $21.0 million, net
of tax, of restructuring and related charges as follows: $10.3 million for
the Ningbo exit strategy, $2.2 million for the integration of United and
Tetra and $8.5 million for the Global restructuring announced January 10,
2007.

(f) For the three months ended June 29, 2008, reflects an impairment charge
of $253.7 million, net of tax, of goodwill and trade names as follows:
$13.7 million of trade names and $68.9 million of goodwill of our Home and
Garden Business as a result of an impairment evaluation in accordance with
SFAS 142, "Goodwill and Other Intangible Assets;" $154.9 million of
goodwill of our Global Pet Supplies business as a result of an impairment
evaluation in accordance with SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets;" and $16.2 million of goodwill of our Global
Battery and Personal Care business as a result of the Ningbo exit strategy
in accordance with SFAS 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets."

(g) For the nine months ended June 29, 2008, reflects an impairment charge
of $261.5 million, net of tax, of goodwill and trade names as follows:
$21.5 million of trade names and $68.9 million of goodwill of our Home &
Garden business as a result of an impairment evaluation in accordance with
SFAS 142, "Goodwill and Other Intangible Assets;" $154.9 million of
goodwill of our Global Pet Supplies business as a result of an impairment
evaluation in accordance with SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets;" and $16.2 million of goodwill of our
Global Battery and Personal Care business as a result of the Ningbo exit
strategy in accordance with SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets."

(h) For the three and nine months ended June 28, 2009, reflects loss from
discontinued operations, net of tax, of $2.0 million and $84.0 million,
respectively, of the Company's growing products portion of the Home and
Garden Business.

(i) For the three and nine months ended June 29, 2008, reflects results
from discontinued operations, net of tax, of $5.0 million of income and
$7.5 million of loss, respectively, of the Company's growing products
portion of the Home and Garden Business.  The nine months ended June 28,
2008 also reflects the loss on discontinued operations, net of tax of
$1.1 million of the Company's Canadian Home & Garden business sold on
November 1, 2007.

(j) For the three and nine months ended June 28, 2009, reflects $17.2
million and $64.7 million, respectively, 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.

(k) For the three and nine months ended June 29, 2008, reflects $17.6
million and $125.3 million, respectively, 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.

(l) Effective December 31, 2007, the Company discontinued the active
marketing of the Home and Garden business for sale and, accordingly,
reclassified the Home and Garden business, which had been designated as a
discontinued operation since October 1, 2006, as an asset held and used in
continuing operations.  Inasmuch as depreciation and amortization expense
is not recorded for assets designated as discontinued operations, this
adjustment reflects the impact of depreciation and amortization expense as
if the Home and Garden business was designated as a continuing operation
for all periods presented.

(m)  For the nine months ended June 28, 2009 reflects $1.5 million, net of
tax, of a charge to write of the deferred financing costs related to the
Company's Asset Based Revolver Loan that was paid off in March 2009.

(n) For the three months ended June 29, 2008 general and administrative
expenses include $2.9 million, net of tax, representing professional fees
incurred in connection with the proposed sale of the Company's Global Pet
Supplies business. For the nine months ended June 29, 2008 general and
administrative expenses include $3.9 million, net of tax, representing
professional fees incurred in connection with the proposed sale of the
Company's Global Pet Supplies and Home and Garden businesses.

(o) For the three months ended June 29, 2008, general and administrative
expenses include a net of tax benefit of $1.9 million 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. For the three months ended
June 29, 2008, interest expense includes a net of tax benefit of $0.9
million related to interest charges associated with the Company's provision
for presumed credits applied to the Brazilian excise tax on manufactured
products.   Lastly, Diluted earnings per share, as reported for the three
months ended June 29, 2008 is calculated using average basic shares
outstanding of 50.9 million as the use of average diluted shares
outstanding would be antidilutive.  However, all adjustments to arrive at
Diluted earnings per share, as adjusted for the three months ended June 28,
2008 are calculated using average diluted shares outstanding of 53.3
million.

(p) For the nine months ended June 28, 2009, general and administrative
expenses include a net of tax benefit of $3.2 million 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. For the three months ended
June 29, 2008, interest expense includes a net of tax benefit of $1.6
million related to interest charges associated with the Company's provision
for presumed credits applied to the Brazilian excise tax on manufactured
products.   Lastly, Diluted earnings per share, as reported for the nine
months ended June 28, 2009 is calculated using average basic shares
outstanding of 51.4 million as the use of average diluted shares
outstanding would be antidilutive.  However, all adjustments to arrive at
Diluted earnings per share, as adjusted for the nine months ended June 28,
2009 are calculated using average diluted shares outstanding of 52.9
million.

(q)  For the nine months ended June 29, 2008, general and administrative
expenses include a net of tax benefit of $5.5 million 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. For the nine months ended
June 29, 2008, interest expense includes a net of tax benefit of $2.7
million 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.
                      Debtor and Debtor-in-Possession
        Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
                 for the three months ended June 28, 2009
                                (Unaudited)
                               ($ millions)


                                                                   Consol-
                      Global                                       idated
                      Batter-                             Unallo-  Spectr-
                       ies &   Global                      cated     um
                      Person-    Pet    Home &             Items   Brands
                      al Care  Supplies Garden   Corporate  (a)      Inc.
                      -------  -------- -------  -------  -------  -------

Net Income (loss)     $  37.1  $   19.2 $  35.4  $ (71.8) $ (56.5) $ (36.5)

  Loss from
   discontinued
   operations, net
   of tax                   -         -     2.0        -               2.0
  Income tax
   expense                  -         -       -        -      7.9      7.9
  Interest expense          -         -       -        -     48.6     48.6
  Restructuring
   and related
   charges                1.0       0.2     1.2      0.9        -      3.2
  Reorganization
   Items                    -         -       -     62.5        -     62.5
  Accelerated
   Depreciation
   (b)                      -         -    (0.4)                      (0.4)
  Brazilian IPI Credit   (0.8)        -       -        -        -     (0.8)
                      -------  -------- -------  -------  -------  -------

Adjusted EBIT            37.3      19.5    38.3     (8.4)       -     86.7
  Depreciation and
   Amortization           5.9       5.4     3.1      0.9        -     15.3
                      -------  -------- -------  -------  -------  -------

Adjusted EBITDA       $  43.3  $   24.9 $  41.3  $  (7.5) $     -  $ 102.0
                      =======  ======== =======  =======  =======  =======


Note:  Amounts calculated prior to rounding

(a) It is the Company's policy to record Income tax expense (benefit), and
interest expense on a consolidated basis. Accordingly, such amounts are not
reflected in the operating results of the operating segments.

(b) Adjustment reflects accelerated depreciation associated with the Global
Cost Reduction Initiatives.  This amount is included within Restructuring
and related charges.  This adjustment negates the impact of reflecting the
expense twice.







                                  Table 4
                          SPECTRUM BRANDS, INC.
                      Debtor and Debtor-in-Possession
        Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
                   for the 9 months ended June 28, 2009
                                (Unaudited)
                               ($ millions)



                 Global                                           Consoli-
                Batteri-                                          dated
                  es &     Global                       Unalloc-  Spectrum
                Personal    Pet      Home &               ated    Brands,
                  Care    Supplies   Garden   Corporate Items (a)   Inc.
                --------  --------- --------  --------  --------  --------

Net Income
 (loss)         $   99.4  $    41.9 $  (50.1) $ (120.5) $ (180.4) $ (209.6)

  Loss from
   disconti-
   nued
   operations,
   net of tax          -          -     84.0         -         -      84.0
  Income tax
   expense             -          -        -         -      31.8      31.8
  Interest
   expense             -          -        -         -     148.6     148.6
  Restructuring
   and related
   charges          20.6        4.7      2.9      12.2         -      40.4
  Reorganiz-
   ation
   Items               -          -        -      83.8         -      83.8
  Accelerated
   Depreciation
   (b)              (2.7)         -     (0.4)        -         -      (3.1)
  Brazilian
   IPI
   Credit           (4.9)         -        -         -         -      (4.9)
                --------  --------- --------  --------  --------  --------

Adjusted EBIT      112.4       46.6     36.5     (24.5)        -     171.0
  Depreciation
   and
   Amortization     20.6       16.2      8.4       2.3         -      47.5
                --------  --------- --------  --------  --------  --------

Adjusted EBITDA $  133.0  $    62.8 $   44.9  $  (22.2) $      -  $  218.5
                ========  ========= ========  ========  ========  ========

Note:  Amounts calculated prior to rounding

(a) It is the Company's policy to record Income tax expense (benefit), and
interest expense on a consolidated basis. Accordingly, such amounts are not
reflected in the operating results of the operating segments.

(b) Adjustment reflects accelerated depreciation associated with the Global
Cost Reduction Initiatives.  This amount is included within Restructuring
and related charges.  This adjustment negates the impact of reflecting the
expense twice.



                                  Table 4
                          SPECTRUM BRANDS, INC.
        Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
                 for the three months ended June 29, 2008
                                (Unaudited)
                               ($ millions)



                 Global                                           Consoli-
                Batteri-                                           dated
                  es &     Global                       Unalloc-  Spectrum
                Personal    Pet      Home &               ated     Brands,
                  Care    Supplies   Garden   Corporate Items (a)   Inc.
                --------  --------  --------  --------  --------  --------

Net Income
 (loss)         $   (0.7) $ (138.7) $ (106.8) $  (14.4) $  (23.2) $ (283.9)

  Loss from
   discontinued
   operations,
   net of tax          -         -       4.9                   -       4.9
  Income tax
   expense             -         -         -               (33.9)    (33.9)
  Interest
   expense             -         -         -                57.1      57.1
  Goodwill
   and
   intangibles
   impairment       16.2     154.9     132.2         -         -     303.3
  Restructuring
   and Related
   charges          17.4       0.4       1.0       1.1         -      19.9
  Brazilian
   IPI Credit       (2.8)        -         -         -         -      (2.8)
  Transaction
   costs -
   Corporate           -         -         -       4.5         -       4.5
                --------  --------  --------  --------  --------  --------

Adjusted EBIT       30.1      16.6      31.3      (8.8)        -      69.2
  Depreciation
   and
   Amortization      7.8       5.8       2.7       0.2         -      16.6
                --------  --------  --------  --------  --------  --------

Adjusted EBITDA $   37.9  $   22.4  $   34.0  $   (8.6) $      -  $   85.8
                ========  ========  ========  ========  ========  ========

Note:  Amounts calculated prior to rounding

(a) It is the Company's policy to record Income tax expense (benefit), and
interest expense on a consolidated basis. Accordingly, such amounts are not
reflected in the operating results of the operating segments.



                                  Table 4
                          SPECTRUM BRANDS, INC.
        Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
                  for the nine months ended June 29, 2008
                                (Unaudited)
                               ($ millions)



                 Global                                           Consoli-
                Batteri-                                           dated
                  es &     Global                       Unalloc-  Spectrum
                Personal    Pet      Home &               ated     Brands,
                  Care    Supplies   Garden   Corporate Items (a)   Inc.
                --------  --------  --------  --------  --------  --------

Net Income
 (loss)         $   68.2  $ (108.0) $ (142.5) $  (35.1) $ (221.5) $ (439.0)

  Loss from
   disconti-
   nued
   operations,
   net of tax          -         -       8.5         -         -       8.5
  Income tax
   expense             -         -         -         -      49.2      49.2
  Interest
   expense             -         -         -         -     172.5     172.5
  Goodwill
   and
   intangibles
   impairment       16.2     154.9     144.6         -         -     315.7
  Restructuring
   and related
   charges          22.1       1.5       2.9       3.7         -      30.2
  Restricted
   Stock
   Amortization
    /Restructu-
    ring (b)           -         -         -         -      (0.2)     (0.2)
   Brazilian
    IPI Credit      (8.3)        -         -         -         -      (8.3)
   Transaction
    costs              -         -       1.5       4.5         -       6.0
                --------  --------  --------  --------  --------  --------

Adjusted EBIT       98.3      48.4      15.0     (26.9)        -     134.8
  Depreciation
   and
   Amortization     23.8      16.9      18.9       4.2         -      63.9
                --------  --------  --------  --------  --------  --------

Adjusted EBITDA $  122.1  $   65.3  $   34.0  $  (22.7) $      -  $  198.7
                ========  ========  ========  ========  ========  ========

Note:  Amounts calculated prior to rounding

(a) It is the Company's policy to record Income tax expense (benefit), and
interest expense on a consolidated basis. Accordingly, such amounts are not
reflected in the operating results of the operating segments.

(b) Adjustment reflects restricted stock amortization which is associated
with and included in restructuring and related charges.  The adjustment
negates the impact of reflecting this expense twice.

Contact Information

  • Investor Contact:
    Carey Phelps
    DVP Investor Relations & Corporate Communications
    Spectrum Brands
    770-829-6208

    Media Contact:
    Kekst and Company for Spectrum Brands
    Michael Freitag or Victoria Weld
    (212) 521-4800