Spectrum Brands, Inc. Announces Third Quarter Financial Results

Last year, the company reported diluted earnings per share of$0.46 for the quarter ended July 3, 2005. The company estimates thatthe prior year's third quarter diluted earnings per share, excludingcertain adjustments which management believes are not indicative ofthe company's ongoing normalized operations, were $0.70.

"Spectrum Brands continues to face challenges in our Europeanbattery business, which was the leading contributor to ourdisappointing third quarter results," said David A. Jones, chairmanand chief executive officer. "We also generated lower-than-expectedsales this quarter from Remington men's shaving in North America atFather's Day. However, there were a number of bright spots in ourthird quarter results, including a strong performance from Remingtonbranded products in Europe and a modest but encouraging sequentialimprovement in our North American battery business.

"The Spectrum Brands management team is fully focused on improvingour financial performance. We are moving quickly to stabilize ourEuropean battery business and to execute on our growth strategythroughout the rest of our product portfolio. We continue to make goodprogress on our cost reduction initiatives. In addition, we areexamining ways to reduce debt and leverage levels and strengthen ourbalance sheet through potential divestiture of selected assets withthe goal of becoming a leaner, more flexible organizationwell-positioned to create long-term shareholder value."

Financial results for the quarter ended July 2, 2006 includeresults from Tetra Holding GmbH, acquired on April 29, 2005, andJungle Labs, acquired on September 1, 2005. Financial results forperiods prior to the acquisition dates exclude Tetra and Jungle. OnJanuary 25, 2006 Spectrum Brands divested its Canadian fertilizertechnology and professional products businesses. As a result of thissale, the company has reported the third quarter and year-to-dateresults of these businesses as discontinued operations in thecondensed consolidated statements of operations for both 2006 and2005.

Third Quarter Results

Spectrum Brands' third quarter net sales were $698.3 million, ascompared to $707.8 million for the same period last year. The revenuecontribution from acquisitions was $22.8 million. Foreign exchangetranslation contributed a net positive $5.0 million.

Gross profit and gross margin for the quarter was $265.5 millionand 38.0 percent, respectively, versus $270.2 million and 38.2 percentfor the same period last year. Cost of goods sold during the quarterincluded $2.7 million in restructuring and related charges. Prior yearresults included a $7.3 million inventory valuation charge related tothe United and Tetra acquisitions and $7.8 million in restructuringand related charges associated with the closure of a Frenchmanufacturing facility. Excluding these charges, gross profit marginfor the third quarter was 38.4 percent versus 40.3 percent for thesame period last year. The decline in gross margin percentage resultedprimarily from lower sales in the global battery business andincreased raw material costs.

Operating income was $49.0 million, or 7.0 percent of sales,versus fiscal 2005's third quarter operating income of $69.0 million,or 9.7 percent of sales. Operating expenses in 2006 included netrestructuring and related charges and other costs of $9.8 millionprimarily attributable to the United integration and rationalizationof the company's European sales and marketing organization. In 2005operating expenses included $7.3 million in net restructuring andrelated charges and other costs primarily related to the Unitedacquisition. Adjusted operating income for the third quarter was $61.5million, or 8.8 percent of sales, compared to $91.4 million, or 12.9percent of sales last year. Distribution costs were $9.7 millionhigher than compared with a year ago, in large part due to significantincreases in fuel costs. Increased investment in advertising spendingadded another $2.2 million to operating expenses.

Third quarter interest expense was $45.7 million versus $38.6million last year due to increased debt levels from the Tetraacquisition and higher interest rates. Total debt at July 2, 2006 was$2.283 billion.

Third Quarter Segment Results

North American net sales were $394.2 million compared with $412.8million reported last year. Battery and lighting sales declined 11percent versus last year, as the company has not yet fully recoveredfrom market share and distribution losses that occurred in 2005 andearlier in fiscal 2006. Remington branded product sales declined by 27percent, largely the result of a weak category performance in Father'sDay men's shaver sales. In the company's lawn and garden business,consumer purchases of Spectrum Brands products at retail grew fivepercent during the third quarter; however, reported lawn and gardensales grew at a three percent rate primarily as a result of retailcustomers' inventory reduction programs. North American segmentprofits were $61.7 million versus $72.3 million reported last year, asa result of the year over year sales decline.

European/ROW net sales were $117.1 million versus $137.3 millionin the prior year. Sales of Remington branded products grew by 19percent as a result of strong penetration gains in continental Europe.However, this improvement was more than offset by an unfavorableproduct mix shift from branded to private label battery sales and fromhigher margin specialty retail distribution channels to lower marginfood and mass channels, which contributed to a 23 percent salesdecline from batteries. Segment profitability for the quarter was $4.3million compared with $18.0 million last year, primarily a function oflower battery sales volume and higher raw material costs.

In Latin America, net sales increased to $54.6 million as comparedto $49.6 million in the third quarter last year. Sales growth wasdriven by strong performance from Remington branded products in theregion combined with modest growth in battery and lighting productsales. Favorable foreign exchange translation contributed $1.5 millionto net sales. Latin American segment profitability of $4.2 million wasflat versus last year as rising commodity prices and higher sellingand marketing expenses offset higher revenues.

In 2006, Spectrum Brands created the Global Pet segment, a newbusiness segment for reporting purposes, comprising United Pet Group,Tetra and Jungle Labs, all of which were acquired during 2005. TheGlobal Pet segment contributed net sales of $132.4 million and segmentprofits of $20.6 million during the third quarter. This compares tosegment revenues of $108.1 million and segment profits of $11.6million in the third fiscal quarter of last year. The third quarterrevenue contribution from acquisitions was $22.8 million.

Corporate expenses were $27.6 million, or 4.0 percent of netsales, as compared to $22.1 million, or 3.1 percent of net sales, inthe prior year period. Expansion of the global operations supportinfrastructure and increased professional fees accounted for themajority of the increase.

Termination of U.S. Attorney's Office Investigation

In unrelated news, Spectrum Brands was informed by the U.S.Attorney's Office for the Northern District of Georgia on July 27,2006 that the U.S. Attorney's Office has terminated its investigationinitiated November 9, 2005 related to the company's financial resultsfor the third and fourth quarters of fiscal year 2005 and the impactof these results on anticipated fiscal year 2006 earnings, as well asto the sale of company shares by senior management in advance ofnegative financial disclosures in 2005. Spectrum Brands continues tocooperate with the Atlanta District Office of the Securities andExchange Commission's investigation into such matters.

Webcast Information

Spectrum Brands management will discuss third quarter financialresults in a live webcast on Thursday, August 3, at 8:30 a.m. EDT.Interested investors and others can access this webcast through thecompany's website, www.spectrumbrands.com.

Non-GAAP Measurements

Throughout this release, references are made to adjusted grossprofit, adjusted operating income, adjusted net income and adjusteddiluted EPS. See attached Table 3, "Reconciliation of GAAP to AdjustedFinancial Data," for a complete reconciliation of gross profit,operating income, net income and diluted EPS on a GAAP basis toadjusted gross profit, adjusted operating income, adjusted net incomeand adjusted diluted EPS.

Spectrum Brands management and some investors use adjusted resultsof operations as one means of analyzing the company's current andfuture financial performance and identifying trends in its financialcondition and results of operations. Spectrum Brands provides adjustedinformation to investors to assist in meaningful comparisons of past,present and future operating results and to assist in highlighting theresults of on-going core operations. While management believes theseadjusted results provide useful supplemental information, adjustedresults are not intended to replace the company's GAAP financialresults and should be read in conjunction with those GAAP results.

About Spectrum Brands, Inc.

Spectrum Brands is a global consumer products company and aleading supplier of batteries, lawn and garden care products,specialty pet supplies, shaving and grooming products, householdinsecticides, personal care products and portable lighting. SpectrumBrands' products are sold by the world's top 25 retailers and areavailable in more than one million stores in more than 120 countriesaround the world. Headquartered in Atlanta, Georgia, Spectrum Brandshas approximately 10,000 employees worldwide. The company's stocktrades on the New York Stock Exchange under the symbol SPC.

Certain matters discussed in this news release, with the exceptionof historical matters, may be forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995. Thesestatements are subject to a number of risks and uncertainties thatcould cause results to differ materially from those anticipated as ofthe date of this release. Actual results may differ materially fromthese statements as a result of (1) changes in external competitivemarket factors, such as introduction of new product features ortechnological developments, development of new competitors orcompetitive brands or competitive promotional activity or spending,(2) changes in consumer demand for the various types of productsSpectrum Brands offers, (3) changes in the general economic conditionswhere Spectrum Brands does business, such as stock market prices,interest rates, currency exchange rates, inflation, consumer spendingand raw material costs, (4) the company's ability to successfullyimplement manufacturing, distribution and other cost efficiencies, andvarious other factors, including those discussed herein and those setforth in Spectrum Brands' securities filings, including the mostrecently filed Annual Report on Form 10-K and Form 10-Q.

Attached

Table 1 - Condensed Consolidated Statements of Operations

Table 2 - Supplemental Financial Data

Table 3 - Reconciliation of GAAP to Adjusted Financial Data
Table 1
SPECTRUM BRANDS, INC.
Condensed Consolidated Statements of Operations
For the three and nine months ended July 2, 2006 and July 3, 2005
(Unaudited)
(In millions, except per share amounts)

THREE MONTHS NINE MONTHS
------------------------ ---------------------------
F2006 F2005(a) INC(DEC) F2006 F2005(a) INC(DEC)
------ -------- % ------ -------- %

Net sales $698.3 $707.8 -1.3%$1,943.3 $1,719.5 13.0%
Cost of goods sold 430.1 429.8 1,196.5 1,057.7
Restructuring and
related charges 2.7 7.8 4.4 7.8
------ ------ -------- --------
Gross profit 265.5 270.2 -1.7% 742.4 654.0 13.5%

Selling 154.3 142.9 419.7 349.4
General and
administrative 43.2 43.0 137.4 112.7
Research and
development 7.5 8.0 22.5 21.2
Restructuring and
related charges 11.5 7.3 22.8 7.5
------ ------ -------- --------

Total operating
expenses 216.5 201.2 602.4 490.8

Operating
income 49.0 69.0 -29.0% 140.0 163.2 -14.2%

Interest expense 45.7 38.6 130.0 94.5
Other income, net (0.1) (1.1) (6.0) (1.3)
------ ------ -------- --------

Income from
continuing
operations
before income
taxes 3.4 31.5 16.0 70.0

Income tax expense 0.9 10.7 5.3 24.9
------ ------ -------- --------

Income from
continuing
operations 2.5 20.8 10.7 45.1

Income (loss) from
discontinued
operations, net
of tax - 2.9 (5.3)(a) 4.6
------ ------ -------- --------

Net income $ 2.5 $ 23.7 $ 5.4 $ 49.7
====== ====== ======== ========

Average shares
outstanding (b) 49.5 48.9 49.5 42.0

Income from
continuing
operations $ 0.05 $ 0.42 $ 0.22 $ 1.07
Discontinued
operations - 0.06 (0.11) 0.11
------ ------ -------- --------
Basic earnings per
share $ 0.05 $ 0.48 $ 0.11 $ 1.18
====== ====== ======== ========

Average shares and
common stock
equivalents
outstanding (b) 51.6 51.1 51.0 43.9

Income from
continuing
operations $ 0.05 $ 0.41 $ 0.21 $ 1.03
Discontinued
operations - 0.05 (0.10) 0.10
------ ------ -------- --------
Diluted earnings
per share $ 0.05 $ 0.46 $ 0.11 $ 1.13
====== ====== ======== ========

(a) The fertilizer technology and Canadian professional fertilizer
businesses of Nu-Gro, disposed of in January 2006, are excluded
from continuing operations for all periods presented. Certain
amounts have been reclassified in the three and nine months ended
July 3, 2005 to conform to the current year classification and
present these businesses as discontinued operations.

(b) Per share figures calculated prior to rounding in millions.




Table 2
SPECTRUM BRANDS, INC.
Supplemental Financial Data
For the three and nine months ended July 2, 2006 and July 3, 2005
(Unaudited)
($ In millions)


Supplemental Financial Data F2006 F2005
--------------------------- --------- ---------
Cash $ 13.1 $ 27.0

Trade receivables, net $ 374.3 $ 449.5
Days Sales Outstanding (a) 50 54

Inventory, net $ 461.0 $ 470.3
Inventory Turnover (b) 3.6 3.7

Total Debt $2,282.9 $2,336.7

THREE MONTHS NINE MONTHS
------------------ -----------------
Supplemental Cash Flow Data F2006 F2005 F2006 F2005
--------------------------- -------- --------- ------- ---------
Depreciation and amortization,
excluding amortization of debt
issuance costs $ 22.5 $ 21.0 $ 66.4 $ 48.8

Capital expenditures $ 20.9 $ 20.6 $ 51.2 $ 40.8

THREE MONTHS NINE MONTHS
------------------ -----------------
Supplemental Segment Sales &
Profitability F2006 F2005 F2006 F2005
---------------------------- --------- -------- -------- --------

Net Sales
---------
North America $ 394.2 $ 412.8 $ 954.6 $ 909.2
Europe/ROW 117.1 137.3 416.9 503.8
Latin America 54.6 49.6 168.9 151.9
Global Pet 132.4 108.1 402.9 154.6
-------- -------- -------- --------
Total net sales $ 698.3 $ 707.8 $1,943.3 $1,719.5
======== ======== ======== ========

Segment Profit
--------------
North America $ 61.7 $ 72.3 $ 125.9 $ 147.2
Europe/ROW 4.3 18.0 41.5 73.3
Latin America 4.2 4.3 14.2 13.6
Global Pet 20.6 11.6 62.4 11.6
-------- -------- -------- --------
Total segment profit 90.8 106.2 244.0 245.7

Corporate 27.6 22.1 76.8 67.2
Restructuring and related
charges 14.2 15.1 27.2 15.3
Interest expense 45.7 38.6 130.0 94.5
Other income, net (0.1) (1.1) (6.0) (1.3)
-------- -------- -------- --------

Income from continuing
operations before income
taxes $ 3.4 $ 31.5 $ 16.0 $ 70.0
======== ======== ======== ========

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

(b) Reflects cost of sales (excluding restructuring and related
charges) during the quarter divided by average inventory for the
quarter, multiplied by four.




Table 3
SPECTRUM BRANDS, INC.
Reconciliation of GAAP to Adjusted Financial Data
For the three months ended July 2, 2006 and July 3, 2005
(Unaudited)
(In millions, except per share amounts)

THREE MONTHS
---------------------------------------------------------
F2006 F2005
----------------------------- ---------------------------
As Adjust- As Adjust-
Reported ments- Adjusted Reported ments Adjusted

Net sales $ 698.3 $ - $ 698.3 $ 707.8 $ - $ 707.8

Gross profit 265.5 2.7 (a) 268.2 270.2 15.1 (b) 285.3
Gross profit
% of sales 38.0% 38.4% 38.2% 40.3%

Operating
expenses 216.5 9.8 (c) 206.7 201.2 7.3 (d) 193.9
Operating
income 49.0 12.5 61.5 69.0 22.4 91.4
Operating
income % of
sales 7.0% 8.8% 9.7% 12.9%

Income from
continuing
operations
before
income taxes 3.4 12.1 (e) 15.5 31.5 22.4 53.9
Income from
continuing
operations 2.5 9.0 11.5 20.8 15.0 (f) 35.8

Income from
discontinued
operations,
net of tax - - - 2.9 (2.9) -

Net
income 2.5 9.0 11.5 23.7 12.1 35.8

Basic
earnings per
share (g) $ 0.05 $ 0.18 $ 0.23 $ 0.48 $ 0.25 $ 0.73
======= ======= ======= ======= ======= =======


Diluted
earnings per
share (g) $ 0.05 $ 0.17 $ 0.22 $ 0.46 $ 0.24 $ 0.70
======= ======= ======= ======= ======= =======

(a) For the three months ended July 2, 2006, reflects restructuring
and related charges incurred during the period.

(b) For the three months ended July 3, 2005, reflects inventory
valuation adjustments of $5.7 million related to the fair value
write-up of Tetra inventory and $1.6 million related to the fair
value write-up of United inventory in accordance with the
requirements of SFAS 141, "Business Combinations." Also includes
$7.8 million of restructuring and related charges incurred during
the period associated with the closure of our manufacturing
facility in Breitenbach, France.

(c) For the three months ended July 2, 2006, includes $9.9 million and
$1.6 million of restructuring and related charges incurred during
the period in connection with (i) the United integration and (ii)
a series of actions in Europe to reduce operating costs and
rationalize operating structure, respectively. In addition,
general and administrative expenses include a $1.7 million benefit
related to expiring 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.

(d) For the three months ended July 3, 2005, reflects restructuring
and related charges incurred during the period.

(e) For the three months ended July 2, 2006, interest expense includes
a $0.4 million net benefit related to interest charges associated
with the Company's provision for presumed credits applied to the
Brazilian excise tax on manufactured products.

(f) During the three months ended July 3, 2005, the Company, based on
its current estimate of profits for fiscal 2005, reduced its full
year effective tax rate from 37 percent to approximately 36
percent.

(g) Per share figures calculated prior to rounding in millions.




Table 3 (continued)
SPECTRUM BRANDS, INC.
Reconciliation of GAAP to Adjusted Financial Data
For the nine months ended July 2, 2006 and July 3, 2005
(Unaudited)
(In millions, except per share amounts)

NINE MONTHS
---------------------------------------------------------
F2006 F2005
----------------------------- ---------------------------
As Adjust- As Adjust-
Reported ments Adjusted Reported ments Adjusted

Net sales $1,943.3 $ - $1,943.3 $1,719.5 $ - $1,719.5

Gross profit 742.4 4.6 (a) 747.0 654.0 42.8 (b) 696.8
Gross profit
% of sales 38.2% 38.4% 38.0% 40.5%

Operating
expenses 602.4 20.8 (c) 581.6 490.8 7.0 (d) 483.8
Operating
income 140.0 25.5 165.5 163.2 49.8 213.0
Operating
income % of
sales 7.2% 8.5% 9.5% 12.4%

Income from
continuing
operations
before
income taxes 16.0 18.9 (e) 34.9 70.0 61.9 (f) 131.9
Income from
continuing
operations 10.7 12.6 23.3 45.1 39.9 (g) 85.0

(Loss) income
from
discontinued
operations,
net of tax (5.3) 5.3 - 4.6 (4.6) -

Net
income 5.4 17.9 23.3 49.7 35.3 85.0

Basic
earnings per
share (h) $ 0.11 $ 0.36 $ 0.47 $ 1.18 $ 0.84 $ 2.02
======= ======= ======= ======= ======= =======


Diluted
earnings per
share (h) $ 0.11 $ 0.35 $ 0.46 $ 1.13 $ 0.80 $ 1.93
======= ======= ======= ======= ======= =======

(a) For the nine months ended July 2, 2006, includes $4.4 million of
restructuring and related charges and an inventory valuation
adjustment of $0.2 million related to the fair value write-up of
Jungle Labs inventory in accordance with the requirements of
Statement of Financial Accounting Standards ("SFAS") 141,
"Business Combinations."

(b) For the nine months ended July 3, 2005, reflects inventory
valuation adjustments of $5.7 million related to the fair value
write-up of Tetra inventory and $29.3 million related to the fair
value write-up of United inventory in accordance with the
requirements of SFAS 141, "Business Combinations." Also includes
$7.8 million of restructuring and related charges incurred during
the period associated with the closure of our manufacturing
facility in Breitenbach, France.

(c) For the nine months ended July 2, 2006, includes $17.6 million and
$5.2 million of restructuring and related charges incurred during
the period in connection with (i) the United integration and (ii)
a series of actions in Europe to reduce operating costs and
rationalize operating structure, respectively. In addition,
general and administrative expenses include a $2.0 million benefit
related to expiring 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.

(d) For the nine months ended July 3, 2005, operating expenses include
a $1.6 million gain on sale of land and building, offset by a $1.1
million charge related to the disposal of our Madison, WI
manufacturing facility, closed in fiscal 2003. Also includes $7.5
million of restructuring and related charges incurred during the
period.

(e) For the nine months ended July 2, 2006, other income, net includes
a $7.9 million gain on sale of the Company's Bridgeport, WI and
Madison, WI manufacturing facilities. In addition, interest
expense includes $1.3 million related to interest charges
associated with the Company's provision for presumed credits
applied to the Brazilian excise tax on manufactured products.

(f) For the nine months ended July 3, 2005, interest expense includes
$12.0 million related to the write-off of debt issuance costs in
the second quarter of 2005 associated with debt refinanced in
connection with the United acquisition.

(g) For the nine months ended July 3, 2005, the Company, based on its
current estimate of profits for fiscal 2005, reduced its full year
effective tax rate from 37 percent to approximately 36 percent.

(h) Per share figures calculated prior to rounding in millions.