Rayovac 2004 Annual Report Download - page 31

2003. With the acquisition of VARTA, we greatly enhanced our status as a global battery manufacturer and
marketer and acquired additional low-cost manufacturing capacity and advanced battery technology. By
expanding our product line with the acquisition of Remington, we became a diversified consumer products
company with a focus beyond the battery and lighting product markets.
Our financial performance is influenced by a number of factors including: general economic conditions,
foreign exchange fluctuations, and trends in consumer markets; our overall product line mix, including sales
prices and gross margins which vary by product line and geographic market; and our general competitive
position, especially as impacted by our competitors’ promotional activities and pricing strategies.
We manage our business based upon three geographic regions. The regions are as follows: North America,
which includes the United States and Canada; Latin America, which includes Mexico, Central America, South
America and the Caribbean; and Europe/ROW, which includes continental Europe, the United Kingdom, China,
Australia and all other countries in which we do business.
Cost Reduction Initiatives
We continually seek to improve our operational efficiency, match our manufacturing capacity and product
costs to market demand and better utilize our manufacturing resources. Since the beginning of fiscal 2001, we
have undertaken various initiatives to reduce manufacturing and operating costs. We believe that we can continue
to drive down our costs with continued focus on cost reduction initiatives.
Fiscal 2004. In January 2004, we announced a series of initiatives to position us for future growth opportunities
and to optimize the global resources of the combined Remington and Rayovac companies. As of September 30,
2004, all these global integration initiatives were complete, as follows:
• Remington’s North American operations have been integrated into Rayovac’s existing business
structure.
• Remington’s European operations were consolidated into Rayovac’s European business unit.
• Remington’s and Rayovac’s North American and European distribution facilities have been
consolidated.
• Rayovac and Remington research and development functions have been merged into a single corporate
research facility in Madison, WI. In addition, a new global product innovation team has been organized
and is functioning to develop future product innovations across all of our product categories.
• The Remington manufacturing operations in Bridgeport, CT have been consolidated into Rayovac’s
manufacturing facility in Portage, WI.
• All operations at Remington’s United Kingdom and United States Service Centers were discontinued.
• Rayovac’s corporate headquarters were moved to Atlanta, GA.
We recorded pretax restructuring and related integration charges of $11.4 million in 2004. Cash costs of the
integration program, including those recorded as additional acquisition costs, are expected to total approximately
$30 million. Cash savings related to these costs are projected to be approximately $35 million when fully realized
in fiscal 2005. The result of these initiatives is a reduction of approximately 500 positions, or approximately
10%, of the combined organization.
As a result of the integration of Remington and Rayovac operations, we no longer separately report
profitability for Remington and Rayovac legacy operations. Gross profit information related to the products sold
historically by each company is available and presented below in our discussions of segment profitability.
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