During the fourth quarter of fiscal 2012, the Company made a total of $150 million of voluntary prepayments along with scheduled amortization of approximately $1 million to reduce its original $750 million Term Loan to approximately $370 million, and reach a year-end leverage ratio (total debt to adjusted EBITDA) of approximately 3.4 times, consistent with its stated target.
Fiscal 2013 Outlook
Spectrum Brands expects fiscal 2013 net sales to increase at or above the rate of GDP, with adjusted EBITDA expected to grow at a higher percentage rate than net sales. The Company anticipates free cash flow of at least $200 million in fiscal 2013.
The Company remains on track to complete its acquisition of the Hardware & Home Improvement Group of Stanley Black & Decker by the end of 2012. Accordingly, Spectrum Brands expects to update its outlook when it reports fiscal 2013 first quarter results in early February 2013.Conference Call/Webcast Scheduled for 4:30 PM Eastern Time Today Spectrum Brands will host an earnings conference call and webcast at 4:30 p.m. Eastern Time today, November 14. To access the live conference call, U.S. participants may call 877-556-5260 and international participants may call 973-532-4903. The conference ID number is 64209404. A telephone replay of the conference call will be available through Wednesday, November 28. To access this replay, participants may call 855-859-2056 and use the same conference ID number. The live audio webcast and replay is available by visiting the Investor Relations home page on the Company’s website at www.spectrumbrands.com. About Spectrum Brands Holdings, Inc. and Spectrum Brands, Inc. Spectrum Brands Holdings, Inc., a member of the Russell 2000 Index, is a global and diversified consumer products company and a leading supplier of batteries, shaving and grooming products, personal care products, small household appliances, specialty pet supplies, lawn & garden and home pest control products, personal insect repellents and portable lighting. Helping to meet the needs of consumers worldwide, the Company offers a broad portfolio of market-leading, well-known and widely trusted brands including Rayovac®, Remington®, Varta®, George Foreman®, Black & Decker®, Toastmaster®, Farberware®, Tetra®, Marineland®, Nature’s Miracle®, Dingo®, 8-in-1®, FURminator®, Littermaid®, Spectracide®, Cutter®, Repel®, Hot Shot® and Black Flag®. Spectrum Brands Holdings' products are sold by the world's top 25 retailers and are available in more than one million stores in approximately 140 countries. Spectrum Brands Holdings generated net sales of approximately $3.25 billion in fiscal 2012. For more information, visit 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 currency exchange rate fluctuations may provide additional meaningful information about 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 Earnings Per Share,” for a complete reconciliation of diluted earnings (loss) per share on a GAAP basis to adjusted diluted earnings (loss) per share, and see attached Table 4, “Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA,” for a reconciliation of GAAP Net Income (Loss) to adjusted EBITDA for the three months and twelve months ended September 30, 2012 versus the three months and twelve months ended September 30, 2011. See attached Table 5, “Reconciliation of Cash Flow from Operating Activities to Free Cash Flow,” for a reconciliation of Net Cash provided from Operating Activities to Free Cash Flow for the twelve months ended September 30, 2012. 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 also can 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, the Company’s 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. The Company’s management believes that free cash flow is useful to both management and investors in their analysis of the Company’s ability to service and repay its debt and meet its working capital requirements. Free cash flow should not be considered in isolation or as a substitute for pretax income (loss), net income (loss), cash provided by (used in) operating activities or other statement of operations or cash flow statement data prepared in accordance with GAAP or as a measure of profitability or liquidity. In addition, the calculation of free cash flow does not reflect cash used to service debt and therefore, does not reflect funds available for investment or discretionary uses. The Company 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 the Company’s 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. Forward-Looking Statements Certain matters discussed in this news release and other oral and written statements by representatives of the Company regarding matters such as the Company’s ability to meet its expectations for its fiscal 2013 (including its ability to increase its net sales and adjusted EBITDA) may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have tried, whenever possible, to identify these statements by using words like “future,” “anticipate”, “intend,” “plan,” “estimate,” “believe,” “expect,” “project,” “forecast,” “could,” “would,” “should,” “will,” “may,” and similar expressions of future intent or the negative of such terms. 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) Spectrum Brands Holdings’ ability to manage and otherwise comply with its covenants with respect to its significant outstanding indebtedness, (2) our ability to finance, complete the acquisition of, integrate, and to realize synergies from, the combined businesses of Spectrum Brands and the Hardware & Home Improvement Group of Stanley Black & Decker, and from our purchase of 56 percent of the equity of Shaser, Inc., and from other bolt-on acquisitions, (3) risks related to 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, (4) changes in consumer demand for the various types of products Spectrum Brands Holdings offers, (5) unfavorable developments in the global credit markets, (6) the impact of overall economic conditions on consumer spending, (7) fluctuations in commodities prices, the costs or availability of raw materials or terms and conditions available from suppliers, (8) changes in the general economic conditions in countries and regions where Spectrum Brands Holdings does business, such as stock market prices, interest rates, currency exchange rates, inflation and consumer spending, (9) Spectrum Brands Holdings’ ability to successfully implement manufacturing, distribution and other cost efficiencies and to continue to benefit from its cost-cutting initiatives, (10) Spectrum Brands Holdings’ ability to identify, develop and retain key employees, (11) unfavorable weather conditions and various other risks and uncertainties, including those discussed herein and those set forth in the securities filings of each of Spectrum Brands Holdings, Inc. and Spectrum Brands, Inc., including each of their most recently filed Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q. Spectrum Brands Holdings 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 Holdings and management’s reasonable assumptions about market conditions, and consequently may be inaccurate, or may not reflect significant segments of the retail market. Spectrum Brands Holdings 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 Holdings 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.
|SPECTRUM BRANDS HOLDINGS, INC.|
|Condensed Consolidated Statements of Operations|
|For the three and twelve months ended September 30, 2012 and September 30, 2011|
|(In millions, except per share amounts)|
|Three Months Ended September 30,||Twelve Months Ended September 30,|
|Cost of goods sold||551.1||543.9||2,126.9||2,050.2|
|Restructuring and related charges||1.5||2.9||9.8||7.8|
|General and administrative||60.7||62.0||218.8||241.7|
|Research and development||9.3||7.3||33.1||32.9|
|Acquisition and integration related charges||10.4||5.1||31.1||36.6|
|Restructuring and related charges||2.3||8.0||9.7||20.8|
|Total operating expenses||212.4||247.7||813.9||901.0|
|Other (income) expense, net||(1.3||)||1.1||0.9||2.5|
|Income (loss) from continuing operations before income tax expense||27.1||(10.7||)||109.0||17.1|
|Income tax expense||21.6||23.1||60.4||92.3|
|Net income (loss)||$||5.5||$||(33.8||)||$||48.6||$||(75.2||)|
|Average shares outstanding (a)||51.4||51.9||51.6||51.1|
|Basic income (loss) per share||$||0.11||$||(0.65||)||$||0.94||$||(1.47||)|
|Average shares and common stock equivalents outstanding (a) (b)||53.1||51.9||53.3||51.1|
|Diluted income (loss) per share||$||0.10||$||(0.65||)||$||0.91||$||(1.47||)|
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