SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 15, 2003
(September 15, 2003)
RAYOVAC CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin (State or other jurisdiction of incorporation) |
001-13615 (Commission File Number) |
22-2423556 (I.R.S. Employer Identification No.) |
601 Rayovac Drive, Madison, Wisconsin, 53711
(Address of principal executive offices, including zip code)
(608) 275-3340
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Item 9. Regulation FD Disclosure | 3 | |
SIGNATURES | 20 |
2
Item 9. Regulation FD Disclosure
In connection with a proposed financing to be undertaken by Rayovac Corporation (the "Company") in connection with the proposed acquisition of Remington Products Company, L.L.C. ("Remington"), the Company provided certain summary condensed consolidated financial, summary consolidated financial and other data and certain unaudited pro forma condensed consolidated financial data to potential financing sources. The Company is furnishing the information by setting it forth below.
As used below, "Rayovac" refers to Rayovac Corporation together with its subsidiaries, "Remington" refers to Remington Products Company L.L.C. together with its subsidiaries, "VARTA" refers to the consumer battery business of VARTA AG, and the terms "we", "us", "our" and other similar terms refer to Rayovac Corporation and its consolidated subsidiaries giving pro forma effect to the acquisition of Remington and, therefore, include Remington and its subsidiaries.
3
Summary Financial DataRayovac
The following table sets forth summary financial data of Rayovac. The condensed consolidated financial data as of and for each of the fiscal years ended September 30, 2000, 2001 and 2002 have been derived from Rayovac's audited consolidated financial statements. The unaudited condensed consolidated financial data as of and for the nine months ended June 30, 2002 and June 29, 2003 have been derived from Rayovac's unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements as of and for the nine months ended June 30, 2002 and June 29, 2003, reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of Rayovac's management, necessary for a fair presentation of Rayovac's financial position, results of operations and cash flows as of and for the periods presented. The historical results included below and elsewhere in this document are not necessarily indicative of Rayovac's future performance and results for the nine months ended June 29, 2003 are not necessarily indicative of the results of Rayovac's operations for the full year. This information is only a summary and should be read in conjunction with Rayovac's audited consolidated financial statements, unaudited condensed consolidated financial statements and the notes thereto and Rayovac's Management's Discussion and Analysis of Financial Condition and Results of Operations included in Rayovac's reports previously filed with the Securities and Exchange Commission. The summary financial data for the nine months ended June 29, 2003 includes the results of VARTA, which Rayovac acquired on October 1, 2002.
|
Fiscal Year Ended September 30, |
Nine Months Ended |
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June 30, 2002 |
June 29, 2003 |
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|
2000 |
2001 |
2002 |
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|
|
|
|
(unaudited) |
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|
(in millions) |
||||||||||||||
Statement of Operations Data: | |||||||||||||||
Net sales(1)(2) | $ | 630.9 | $ | 616.2 | $ | 572.7 | $ | 418.4 | $ | 670.2 | |||||
Cost of sales(1) | 371.5 | 361.2 | 334.1 | 248.7 | 395.6 | ||||||||||
Special charges-cost of sales(3) | | 22.1 | 1.2 | 2.6 | 21.7 | ||||||||||
Gross profit(1) | 259.4 | 232.9 | 237.4 | 167.1 | 252.9 | ||||||||||
Operating expenses(1)(4) | 170.1 | 178.3 | 174.4 | 129.6 | 211.7 | ||||||||||
Special charges-operating expenses(5) | | 0.2 | | | 9.9 | ||||||||||
Income from operations | 89.3 | 54.4 | 63.0 | 37.5 | 31.3 | ||||||||||
Income before income taxes(6) | 58.0 | 17.5 | 45.7 | 25.2 | 3.8 | ||||||||||
Net income | 38.4 | 11.5 | 29.2 | 16.1 | 2.6 | ||||||||||
Other Financial Data: |
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EBITDA(7) | $ | 108.6 | $ | 65.9 | $ | 80.8 | $ | 51.9 | $ | 55.9 | |||||
Adjusted EBITDA(7)(8) | 108.6 | 96.8 | 82.0 | 54.5 | 92.9 | ||||||||||
Net cash provided by operating activities | 32.8 | 18.0 | 66.8 | 53.5 | 33.4 | ||||||||||
Capital expenditures | 19.0 | 19.7 | 15.6 | 11.9 | 17.4 | ||||||||||
Depreciation and amortization (excluding amortization of debt issuance costs)(4) | 20.0 | 21.2 | 19.1 | 14.5 | 24.0 | ||||||||||
Balance Sheet Data (at period end): |
|||||||||||||||
Cash and cash equivalents | $ | 9.8 | $ | 11.4 | $ | 9.9 | $ | 9.1 | $ | 10.2 | |||||
Working capital(9) | 104.7 | 158.5 | 140.5 | 130.5 | 173.7 | ||||||||||
Total assets(1) | 549.6 | 566.5 | 533.2 | 502.5 | 1,004.5 | ||||||||||
Total debt | 317.6 | 258.0 | 201.9 | 213.5 | 492.9 | ||||||||||
Total shareholders' equity | 80.7 | 157.6 | 174.8 | 167.5 | 187.9 |
4
adoption of EITF 00-25, Rayovac reclassified certain accrued trade incentives as a contra receivable versus Rayovac's previous presentation as a component of accounts payable. See also note 2(v) to Rayovac's audited consolidated financial statements.
In fiscal 2001, a $22.1 million charge ($9.9 million of which was non-cash) was recognized related to (i) an organizational restructuring in the U.S., (ii) manufacturing and distribution cost rationalization initiatives in Rayovac's Tegucigalpa, Honduras and Mexico City, Mexico manufacturing facilities and in its European operations, (iii) the closure of Rayovac's Wonewoc, Wisconsin manufacturing facility, (iv) the rationalization of uneconomic manufacturing processes at Rayovac's Fennimore, Wisconsin manufacturing facility and (v) the rationalization of packaging operations and product lines. The amount recorded includes $10.1 million of employee termination benefits for approximately 570 notified employees, $10.2 million of equipment, inventory and other asset write-offs and $1.8 million of other expenses.
In fiscal 2002, a $1.2 million charge ($0.9 million of which was non-cash) was recognized related to a restructuring initiative in Latin America and reversal of previously accrued amounts. A $2.5 million charge ($0.9 million of which was non-cash) was recorded for Latin American initiatives which included: (i) the closure of Rayovac's Santo Domingo, Dominican Republic manufacturing operations and (ii) outsourcing a portion of Rayovac's zinc carbon battery production, previously manufactured at its Mexico City, Mexico location. The amount recorded includes approximately $1.2 million of employee termination benefits for approximately 115 manufacturing employees, $0.9 million of charges from the abandonment of equipment and inventory associated with the closing of the manufacturing facility and other expenses. The net charge during the year also includes the reversal of expenses previously accrued in fiscal 2001 of $1.3 million which were ultimately not realized, primarily relating to termination costs.
In the nine months ended June 30, 2002, a $2.6 million charge ($1.3 million of which was non-cash) was recognized related to a restructuring initiative in Latin America which included: (i) the closure of Rayovac's Santo Domingo, Dominican Republic manufacturing operations and (ii) outsourcing a portion of Rayovac's zinc carbon battery production, previously manufactured at its Mexico City, Mexico location. The amount recorded includes approximately $1.2 million of employee termination benefits for approximately 115 manufacturing employees, $1.3 million of charges from the abandonment of equipment and inventory associated with the closing of the manufacturing facility and other expenses.
In the nine months ended June 29, 2003, a $21.7 million charge ($14.1 million of which was non-cash) was recognized, which includes amounts related to: (i) the closure in October 2002 of Rayovac's Mexico City, Mexico plant and integration of production into its Guatemala City, Guatemala manufacturing location, resulting in charges of approximately $6.2 million, including termination payments of approximately $1.4 million, fixed asset and inventory impairments of approximately $4.3 million and other shutdown related expenses, (ii) the closure of operations at Rayovac's Madison, Wisconsin packaging facility and combination with its Middleton, Wisconsin distribution center into a new leased complex in Dixon, Illinois resulting in charges of approximately $13.2 million, including pension and termination costs of approximately $2.9 million, fixed asset and inventory impairments of approximately $8.8 million and relocation expenses and other shutdown related expenses and (iii) a series of restructuring initiatives impacting Rayovac's manufacturing functions in Europe, North America, and Latin America resulting in charges of approximately $2.3 million, including termination benefits of approximately $1.3 million and inventory and asset impairments of approximately $1.0 million.
5
|
2000 |
2001 |
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(in millions) |
|||||
Goodwill amortization | $ | 1.2 | $ | 1.1 | ||
Trade name amortization | 2.3 | 2.3 | ||||
$ | 3.5 | $ | 3.4 | |||
In fiscal 2001, $0.2 million of cash charges were recognized attributable to Rayovac's secondary offering of our common stock in June 2001.
In the nine months ended June 29, 2003, a $9.9 million charge ($0.5 million of which was non-cash) was recognized, which includes amounts related to: (i) the closure of operations at Rayovac's Middleton, Wisconsin distribution center and combination with its Madison, Wisconsin packaging facility into a new leased complex in Dixon, Illinois resulting in charges of approximately $0.8 million, including termination costs of approximately $0.4 million, fixed asset impairments of approximately $0.3 million and relocation expenses and other shutdown related expenses and (ii) a series of restructuring initiatives impacting Rayovac's sales, marketing and administrative functions in Europe, North America and Latin America resulting in charges of approximately $9.1 million, including termination costs of approximately $7.3 million, research and development contract termination costs of approximately $0.5 million, fixed asset impairments of $0.2 million and integration, legal and other expenses of approximately $1.1 million.
In April 2002, the FASB issued Statement No. 145, Rescission of FASB Statements No. 4, 44 and 64, and Amendment of FASB Statement No. 13, and Technical Corrections, which addresses, among other things, the income statement presentation of gains and losses related to debt extinguishments, requiring such expenses to no longer be treated as extraordinary items, unless the items meet the definition of extraordinary per Accounting Principles Board ("APB") Opinion No. 30. Rayovac adopted this statement on October 1, 2002. As a result:
In fiscal 2001, a non-operating expense of $8.6 million was recorded for the premium on the repurchase of $65.0 million of Rayovac's senior subordinated notes and related write-off of unamortized debt issuance costs in connection with a primary offering of Rayovac's common stock in June 2001.
During the nine months ended June 29, 2003, a non-operating expense of $3.1 million was recorded for the write-off of unamortized debt issuance costs associated with the replacement of Rayovac's previous credit facility in October 2002.
6
Rayovac's existing senior credit facilities. Management believes that EBITDA and Adjusted EBITDA may be useful for potential purchasers of the notes in assessing Rayovac's operating performance and its ability to meet its debt service requirements. EBITDA and Adjusted EBITDA, as used herein, are not necessarily comparable with similarly titled measures of other companies. The items excluded from EBITDA and Adjusted EBITDA are significant in assessing Rayovac's operating results and liquidity. Therefore, EBITDA and Adjusted EBITDA should not be considered in isolation or as an alternative to operating income, cash flow or other combined income or cash flow data prepared in accordance with U.S. GAAP.
EBITDA and Adjusted EBITDA are calculated from net income and reconciled to net cash provided by operating activities as follows:
|
Fiscal Year Ended September 30, |
Nine Months Ended |
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June 30, 2002 |
June 29, 2003 |
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|
2000 |
2001 |
2002 |
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|
(in millions) |
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Net income | $ | 38.4 | $ | 11.5 | $ | 29.2 | $ | 16.1 | $ | 2.6 | ||||||
Interest expense | 30.6 | 27.2 | 16.0 | 12.2 | 28.1 | |||||||||||
Income tax expense | 19.6 | 6.0 | 16.5 | 9.1 | 1.2 | |||||||||||
Depreciation and amortization (excluding amortization of debt issuance costs) | 20.0 | 21.2 | 19.1 | 14.5 | 24.0 | |||||||||||
EBITDA | 108.6 | 65.9 | 80.8 | 51.9 | 55.9 | |||||||||||
Special charges-cost of sales | | 22.1 | 1.2 | 2.6 | 21.7 | |||||||||||
Special charges-operating expenses | | 0.2 | | | 9.9 | |||||||||||
Other(A) | | 8.6 | | | 5.4 | |||||||||||
Adjusted EBITDA | 108.6 | 96.8 | 82.0 | 54.5 | 92.9 | |||||||||||
Interest expense, less amortization | (28.3 | ) | (25.1 | ) | (14.4 | ) | (11.0 | ) | (26.8 | ) | ||||||
Other non-cash adjustments | 2.2 | 2.1 | 5.8 | 0.3 | (10.3 | ) | ||||||||||
Change in assets and liabilities, net of acquisitions | (30.1 | ) | (37.7 | ) | 10.5 | 20.0 | (3.3 | ) | ||||||||
Current income taxes, cash special charges and other | (19.6 | ) | (18.1 | ) | (17.1 | ) | (10.3 | ) | (19.1 | ) | ||||||
Net cash provided by operating activities | $ | 32.8 | $ | 18.0 | $ | 66.8 | $ | 53.5 | $ | 33.4 | ||||||
7
Summary Financial DataRemington
The following table sets forth Remington's summary financial data. The consolidated financial data of Remington as of and for each of the years ended December 31, 2000, 2001 and 2002 have been derived from Remington's audited consolidated financial statements. The consolidated financial data as of and for the six months ended June 30, 2002 and June 30, 2003 have been derived from Remington's unaudited consolidated financial statements. The unaudited consolidated financial data as of and for the six months ended June 30, 2002 and June 30, 2003 reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of Remington's management, necessary for a fair presentation of Remington's financial position, results of operations and cash flows as of and for the periods presented. The historical results indicated below and elsewhere in this document are not necessarily indicative of Remington's future performance and results for the six months ended June 30, 2003 are not necessarily indicative of the results of Remington's operations for the full year. This information is only a summary and should be read in conjunction with Remington's consolidated financial statements and the notes thereto and Remington's Management's Discussion and Analysis of Financial Condition and Results of Operations included in Remington's reports previously filed with the Securities and Exchange Commission.
|
Fiscal Year Ended December 31, |
Six Months Ended June 30, |
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|
2000 |
2001 |
2002 |
2002 |
2003 |
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(in millions) |
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|
|
|
(unaudited) |
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Statement of Operations Data: | ||||||||||||||||
Net sales(1) | $ | 342.2 | $ | 356.0 | $ | 365.1 | $ | 123.8 | $ | 119.0 | ||||||
Cost of sales | 196.5 | 230.5 | 210.0 | 74.1 | 66.2 | |||||||||||
Gross profit | 145.7 | 125.5 | 155.1 | 49.7 | 52.8 | |||||||||||
Operating expenses(1)(2) | 107.4 | 123.6 | 114.9 | 43.1 | 42.8 | |||||||||||
Income from operations | 38.3 | 1.9 | 40.2 | 6.6 | 10.0 | |||||||||||
Income (loss) before income taxes | 13.1 | (26.5 | ) | 17.0 | (4.6 | ) | (0.2 | ) | ||||||||
Net income (loss) | 12.7 | (23.4 | ) | 16.8 | (4.3 | ) | (0.9 | ) | ||||||||
Other Financial Data: |
||||||||||||||||
EBITDA(3) | $ | 43.7 | $ | 5.7 | $ | 44.8 | $ | 8.9 | $ | 12.9 | ||||||
Cash provided by (used in) operating activities | (3.9 | ) | (4.3 | ) | 58.5 | 11.8 | (0.7 | ) | ||||||||
Capital expenditures | 4.4 | 4.3 | 2.1 | 1.1 | 1.1 | |||||||||||
Depreciation and amortization (excluding amortization of debt issuance costs) | 5.8 | 5.8 | 3.4 | 1.6 | 1.7 | |||||||||||
Balance Sheet Data (at period end): |
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Cash and cash equivalents | $ | 10.3 | $ | 4.1 | $ | 32.8 | $ | 3.7 | $ | 24.7 | ||||||
Working capital(4) | 106.0 | 87.4 | 82.6 | 75.2 | 80.6 | |||||||||||
Total assets | 242.5 | 241.7 | 235.1 | 200.9 | 198.6 | |||||||||||
Total debt | 203.3 | 213.0 | 187.1 | 203.1 | 180.5 | |||||||||||
Total members' deficit | (17.5 | ) | (42.4 | ) | (27.0 | ) | (46.9 | ) | (26.0 | ) |
8
|
Fiscal Year Ended December 31, |
Six Months Ended June 30, |
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|
2000 |
2001 |
2002 |
2002 |
2003 |
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(in millions) |
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Net income (loss) | $ | 12.7 | $ | (23.4 | ) | $ | 16.8 | $ | (4.3 | ) | $ | (0.9 | ) | |||
Interest expense(A) | 24.8 | 26.4 | 24.4 | 11.9 | 11.4 | |||||||||||
Income tax expense (benefit) | 0.4 | (3.1 | ) | 0.2 | (0.3 | ) | 0.7 | |||||||||
Depreciation and amortization (excluding amortization of debt issuance costs) | 5.8 | 5.8 | 3.4 | 1.6 | 1.7 | |||||||||||
EBITDA | 43.7 | 5.7 | 44.8 | 8.9 | 12.9 | |||||||||||
Interest expense (income), less amortization | (22.0 | ) | (24.2 | ) | (22.1 | ) | (10.9 | ) | (10.1 | ) | ||||||
Other non-cash adjustments | 2.8 | 11.2 | 3.8 | (1.2 | ) | 0.7 | ||||||||||
Change in assets and liabilities | (28.0 | ) | (0.2 | ) | 32.2 | 14.7 | (3.5 | ) | ||||||||
Current income tax expenses (benefit) and other | (0.4 | ) | 3.2 | (0.2 | ) | 0.3 | (0.7 | ) | ||||||||
Cash provided by (used in) operating activities | $ | (3.9 | ) | $ | (4.3 | ) | $ | 58.5 | $ | 11.8 | $ | (0.7 | ) | |||
9
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated balance sheet as of June 29, 2003 and the unaudited pro forma condensed consolidated statements of operations for the fiscal year ended September 30, 2002, the twelve months ended June 29, 2003 and the nine months ended June 29, 2003 are based on the consolidated financial statements of Rayovac and Remington after giving effect to the acquisition of VARTA, the consummation of the acquisition of Remington, the offering by us of $300 million of senior subordinated notes, the retirement of Remington's 11% Series B Senior Subordinated Notes due 2006 and 11% Series D Senior Subordinated Notes due 2006 and the amendment of our senior credit facilities, and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed consolidated financial data. We have presented pro forma condensed consolidated statement of operations data for the twelve months ended June 29, 2003 because our management believes investors may find such data to be a useful measure of our recent operating performance.
The unaudited pro forma condensed consolidated balance sheet as of June 29, 2003 has been derived from Rayovac's unaudited condensed consolidated balance sheet as of June 29, 2003 and Remington's unaudited consolidated balance sheet as of June 30, 2003, adjusted to give effect to the transactions as if they occurred on June 29, 2003. The unaudited pro forma condensed consolidated statements of operations for the fiscal year ended September 30, 2002, the twelve months ended June 29, 2003 and the nine months ended June 29, 2003 give effect to the transactions as if they occurred at the beginning of the period presented. The unaudited pro forma condensed consolidated statement of operations for the fiscal year ended September 30, 2002 and the twelve months ended June 29, 2003 give effect to the acquisition of VARTA, which occurred on October 1, 2002, as if it occurred at the beginning of the period presented. The unaudited pro forma condensed consolidated statements of operations exclude non-recurring items directly attributable to the transactions.
The unaudited pro forma condensed consolidated financial data are based on preliminary estimates and assumptions set forth in the notes to such information. Pro forma adjustments are necessary to reflect the estimated purchase price, the new debt and equity structure and to adjust amounts related to Remington's assets and liabilities to a preliminary estimate of their fair values. Pro forma adjustments are also necessary to reflect the amortization expense related to amortizable intangible assets, changes in depreciation and amortization expense resulting from fair value adjustments to assets, interest expense and the income tax effect related to the pro forma adjustments.
The pro forma adjustments and allocation of purchase price are preliminary and are based on management's estimates of the fair value of the assets acquired and liabilities assumed. The final purchase price allocation will be completed after asset and liability valuations are finalized. This final valuation will be based on the actual assets and liabilities of Remington that exist as of the date of the completion of the transactions. Any final adjustments may change the allocation of purchase price which could affect the fair value assigned to the assets and liabilities and could result in a change to the unaudited pro forma condensed consolidated financial data. In addition, the impact of integration activities, the timing of the completion of the transactions and other changes in Remington's assets and liabilities prior to completion of the transactions could cause material differences in the information presented.
The unaudited pro forma condensed consolidated financial data are presented for informational purposes only and have been derived from, and should be read in conjunction with, the consolidated financial statements of Rayovac, Remington and combined financial statements for VARTA, including the notes thereto. The pro forma adjustments, as described in the notes to the unaudited pro forma condensed consolidated financial data, are based on currently available information and certain adjustments that we believe are reasonable. They are not necessarily indicative of our consolidated financial position or results of operations that would have occurred had the transactions taken place on the dates indicated, nor are they necessarily indicative of future consolidated financial position or results of operations.
10
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of June 29, 2003
(in millions)
|
Rayovac |
Remington* |
Pro Forma Adjustments |
Pro Forma Condensed Consolidated |
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Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 10.3 | $ | 24.7 | $ | (5.5 | )(A)(ii) | $ | 29.5 | ||||
Accounts receivable, net | 189.7 | 41.2 | | 230.9 | |||||||||
Inventories | 155.9 | 52.2 | (5.0 | )(A)(iii) | 203.1 | ||||||||
Other current assets | 55.9 | 6.0 | 14.4 | (A)(iv) | 76.3 | ||||||||
Total current assets | 411.8 | 124.1 | 3.9 | 539.8 | |||||||||
Property plant and equipment, net | 150.8 | 12.1 | (5.0 | )(A)(v) | 157.9 | ||||||||
Intangible assets, net | 360.2 | 51.9 | 235.8 | (A)(vi) | 647.9 | ||||||||
Other assets | 81.7 | 10.5 | 10.4 | (A)(vii) | 102.6 | ||||||||
Total assets | $ | 1,004.5 | $ | 198.6 | $ | 245.1 | $ | 1,448.2 | |||||
Liabilities, members' deficit and stockholders' equity | |||||||||||||
Current liabilities: | |||||||||||||
Current portion of long-term debt | $ | 18.3 | $ | 0.2 | $ | | $ | 18.5 | |||||
Accounts payable | 109.7 | 19.4 | | 129.1 | |||||||||
Accrued liabilities | 110.0 | 23.9 | 17.6 | (A)(viii) | 151.5 | ||||||||
Total current liabilities | 238.0 | 43.5 | 17.6 | 299.1 | |||||||||
Long term debt, net of current maturity | 474.6 | 180.2 | 193.9 | (B) | 848.7 | ||||||||
Other non-current liabilities | 104.0 | 0.9 | 7.6 | (A)(x) | 112.5 | ||||||||
Total liabilities | 816.6 | 224.6 | 219.1 | 1,260.3 | |||||||||
Total shareholders' equity and members' deficit | 187.9 | (26.0 | ) | 26.0 | (A)(xi) | 187.9 | |||||||
Total liabilities, shareholders' equity and members' deficit | $ | 1,004.5 | $ | 198.6 | $ | 245.1 | $ | 1,448.2 | |||||
11
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
Total purchase price: | |||||
Cash purchase price paid |
$ |
165.0 |
|||
Assumption of Remington Notes | 180.0 | ||||
Acquisition related costs, net of applied cash on hand | 21.4 | ||||
Total purchase price paid, including acquisition related expenditures | $ | 366.4 | |||
Preliminary allocation of purchase price, reflecting the transactions: |
|||||
Estimated adjustments to reflect assets and liabilities at fair value(i): |
|||||
Cash and cash equivalents used in the transactions(ii) | $ | (5.5 | ) | ||
Inventory valuation(iii) | (5.0 | ) | |||
Other current assets consisting of net current deferred tax asset on purchase accounting items(iv) | 14.4 | ||||
Property, plant and equipment valuation(v) | (5.0 | ) | |||
Intangible assets including goodwill, tradename and amortizable intangibles(vi) | 235.8 | ||||
Other assets, including debt issuance costs and long-term deferred tax assets(vii) | 10.4 | ||||
Accrued liabilities(viii) | (17.6 | ) | |||
Retirement of Remington Notes(ix) | 172.5 | ||||
Long-term deferred tax related to amortizable intangible asset(x) | (7.6 | ) | |||
Book value of acquired assets and liabilities, as of June 30, 2003(xi) | (26.0 | ) | |||
$ | 366.4 | ||||
12
13
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Nine Months Ended June 29, 2003
(in millions)
|
Rayovac |
Remington* |
Pro Forma Adjustments |
Pro Forma Condensed Consolidated |
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Net sales | $ | 670.2 | $ | 281.1 | $ | | $ | 951.3 | ||||||
Cost of goods sold | 395.6 | 156.8 | | 552.4 | ||||||||||
Special charges | 21.7 | | | 21.7 | ||||||||||
Gross profit | 252.9 | 124.3 | | 377.2 | ||||||||||
Operating expenses: | ||||||||||||||
Operating expenses | 211.7 | 92.0 | 0.4 | (A) | 304.1 | |||||||||
Special charges | 9.9 | | | 9.9 | ||||||||||
221.6 | 92.0 | 0.4 | 314.0 | |||||||||||
Income (loss) from operations | 31.3 | 32.3 | (0.4 | ) | 63.2 | |||||||||
Interest expense | 28.1 | 17.4 | 6.0 | (B)(C) | 51.5 | |||||||||
Non-operating expense | 3.1 | | | 3.1 | ||||||||||
Other (income) expense, net | (3.7 | ) | (1.5 | ) | (0.3) | (C) | (5.5 | ) | ||||||
Income (loss) before income taxes | 3.8 | 16.4 | (6.1 | ) | 14.1 | |||||||||
Income tax expense | 1.2 | 1.8 | 2.1 | (D) | 5.1 | |||||||||
Net income | $ | 2.6 | $ | 14.6 | $ | (8.2 | ) | $ | 9.0 | |||||
Notes begin on the third succeeding page.
14
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended September 30, 2002
(in millions)
|
Rayovac |
Remington* |
VARTA** |
Pro Forma Adjustments |
Pro Forma Condensed Consolidated |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales | $ | 572.7 | $ | 365.1 | $ | 370.5 | $ | | $ | 1,308.3 | ||||||
Cost of goods sold | 334.1 | 210.0 | 227.8 | | 771.9 | |||||||||||
Special charges | 1.2 | | | | 1.2 | |||||||||||
Gross profit | 237.4 | 155.1 | 142.7 | | 535.2 | |||||||||||
Operating expenses: | ||||||||||||||||
Operating expenses | 174.4 | 114.9 | 116.3 | 0.5 | (A) | 406.1 | ||||||||||
Special charges | | | | | | |||||||||||
174.4 | 114.9 | 116.3 | 0.5 | 406.1 | ||||||||||||
Income (loss) from operations | 63.0 | 40.2 | 26.4 | (0.5) | (B)(C) | 129.1 | ||||||||||
Interest expense | 16.0 | 24.2 | 24.7 | 8.1 | 73.0 | |||||||||||
Non-operating expense | | | | | | |||||||||||
Other (income) expense, net | 1.3 | (1.0 | ) | 1.6 | (0.2) | (C) | 1.7 | |||||||||
Income (loss) before income taxes | 45.7 | 17.0 | 0.1 | (8.4 | ) | 54.4 | ||||||||||
Income tax expense | 16.5 | 0.2 | 2.8 | 3.1 | (D) | 22.6 | ||||||||||
Net income (loss) | $ | 29.2 | $ | 16.8 | $ | (2.7 | ) | $ | (11.5 | ) | $ | 31.8 | ||||
Notes begin on the second succeeding page.
15
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Twelve Months Ended June 29, 2003
(in millions)
|
Rayovac |
Remington* |
VARTA** |
Pro Forma Adjustments |
Pro Forma Condensed Consolidated |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales | $ | 824.5 | $ | 360.3 | $ | 92.2 | $ | | $ | 1,277.0 | |||||||
Cost of goods sold | 481.0 | 202.1 | 59.9 | | 743.0 | ||||||||||||
Special charges | 20.3 | | | | 20.3 | ||||||||||||
Gross profit | 323.2 | 158.2 | 32.3 | | 513.7 | ||||||||||||
Operating expenses: | |||||||||||||||||
Operating expenses | 256.4 | 114.7 | 29.2 | 0.5 | (A) | 400.8 | |||||||||||
Special charges | 9.9 | | | | 9.9 | ||||||||||||
266.3 | 114.7 | 29.2 | 0.5 | 410.7 | |||||||||||||
Income (loss) from operations | 56.9 | 43.5 | 3.1 | (0.5 | ) | 103.0 | |||||||||||
Interest expense | 31.9 | 23.5 | 5.6 | 8.0 | (B)(C) | 69.0 | |||||||||||
Non-operating expense | 3.1 | | | | 3.1 | ||||||||||||
Other (income) expense, net | (2.4 | ) | (1.4 | ) | 0.6 | (0.4) | (C) | (3.6 | ) | ||||||||
Income (loss) before income taxes | 24.3 | 21.4 | (3.1 | ) | (8.1 | ) | 34.5 | ||||||||||
Income tax (benefit) expense | 8.6 | 1.2 | (0.8 | ) | 3.8 | (D) | 12.8 | ||||||||||
Net income (loss) | $ | 15.7 | $ | 20.2 | $ | (2.3 | ) | $ | (11.9 | ) | $ | 21.7 | |||||
Notes begin on the succeeding page.
16
Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations
17
Summary Unaudited Pro Forma Condensed Consolidated Financial Data
The following table sets forth summary unaudited pro forma condensed consolidated financial data for Rayovac, giving effect to the acquisitions of VARTA and Remington, as if they had occurred on the dates indicated below and after giving effect to the pro forma adjustments. The unaudited pro forma condensed consolidated statement of operations data for the twelve months ended June 29, 2003 gives effect to the acquisition of VARTA, the consummation of the acquisition of Remington, the offering by us of $300 million of senior subordinated notes, the retirement of Remington's 11% Series B Senior Subordinated Notes due 2006 and 11% Series D Senior Subordinated Notes due 2006 and the amendment of our senior credit facilities, as if they had occurred on July 1, 2002. The unaudited pro forma condensed consolidated balance sheet data as of June 29, 2003 has been derived from Rayovac's unaudited balance sheet as of June 29, 2003 and Remington's unaudited balance sheet as of June 30, 2003, adjusted to give effect to the transactions as if they occurred on June 29, 2003. The pro forma adjustments are based upon available information and certain assumptions that we consider reasonable. The pro forma results of operations are not necessarily indicative of the results of operations that would have been achieved had the transactions reflected therein been consummated on the date indicated or that will be achieved in the future. We have presented pro forma condensed consolidated statement of operations data for the twelve months ended June 29, 2003 because our management believes investors may find such data to be a useful measure of our recent operating performance. The unaudited pro forma condensed consolidated financial data are only a summary and should be read in conjunction with Rayovac's, VARTA's and Remington's historical consolidated financial statements and the notes thereto and the other information included in this report.
|
Twelve Months Ended June 29, 2003(1) |
|||
---|---|---|---|---|
|
(dollars in millions) |
|||
Statement of Operations Data: | ||||
Net sales(2) | $ | 1,277.0 | ||
Cost of sales | 743.0 | |||
Special charges-cost of sales(3) | 20.3 | |||
Gross profit | 513.7 | |||
Operating expenses | 400.8 | |||
Special charges-operating expenses(3) | 9.9 | |||
Income from operations | 103.0 | |||
Income before income taxes | 34.5 | |||
Net income | 21.7 | |||
Other Financial Data: |
||||
EBITDA(4) | $ | 140.4 | ||
Adjusted EBITDA(4) | 176.0 | |||
Net cash provided by operating activities | 72.4 | |||
Capital expenditures | 30.3 | |||
Depreciation and amortization (excluding amortization of debt issuance costs) | 36.9 | |||
Ratio of total net debt to Adjusted EBITDA(5) | 4.8 | x | ||
Ratio of Adjusted EBITDA to interest expense | 2.6 | x | ||
Balance Sheet Data (at period end): |
||||
Cash and cash equivalents(6) | $ | 29.5 | ||
Working capital(7) | 240.7 | |||
Total assets | 1,448.2 | |||
Total debt | 867.2 | |||
Total shareholders' equity | 187.9 |
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|
Twelve Months Ended June 29, 2003 |
|||
---|---|---|---|---|
|
(in millions) |
|||
Net income | $ | 21.7 | ||
Interest expense | 69.0 | |||
Income tax expense | 12.8 | |||
Depreciation and amortization (excluding amortization of debt issuance costs) | 36.9 | |||
EBITDA | 140.4 | |||
Special charges-cost of sales | 20.3 | |||
Special charges-operating expenses | 9.9 | |||
Other(A) | 5.4 | |||
Adjusted EBITDA | 176.0 | |||
Interest expense, less amortization | (63.1 | ) | ||
Change in assets and liabilities, net of acquisitions | (10.6 | ) | ||
Current income taxes, cash special charges and all other | (29.9 | ) | ||
Net cash provided by operating activities | $ | 72.4 | ||
19
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RAYOVAC CORPORATION | |||
Date: September 15, 2003 |
By: |
/s/ RANDALL J. STEWARD Randall J. Steward Executive Vice President and Chief Financial Officer |
20