Rayovac 2004 Annual Report Download - page 32

Fiscal 2003. In 2002, in conjunction with the acquisition of the VARTA consumer battery business, we announced
a series of initiatives designed to position our consumer battery business for future growth opportunities and to
optimize the combined global resources of Rayovac and VARTA. These initiatives provide significant benefits to
the combined organization, including the renegotiation of certain sourcing arrangements, the elimination of
duplicate costs in our consumer battery business and the consolidation of sales and marketing functions.
Also in 2002, we closed our Mexico City, Mexico zinc carbon manufacturing facility and transferred the
majority of the production requirements to our Guatemala manufacturing facility. The consolidation of our zinc
carbon capacity within Latin America was consistent with the global market trend away from zinc carbon toward
alkaline batteries, and was intended to allow us to more closely match our manufacturing capacity to anticipated
market demands.
We also announced the closure of operations at our Madison, Wisconsin packaging center and Middleton,
Wisconsin distribution center in 2002. These facilities were closed during fiscal 2003 and their operations were
combined into a new leased complex in Dixon, Illinois. Transition to the new facility was completed in June
2003.
We expect that all geographies will benefit from decreased costs and expenses resulting from the VARTA
initiatives. These initiatives are anticipated to create long-term opportunities for procurement savings, resulting
from renegotiated raw material and finished good sourcing arrangements, and lower operating costs as
duplicative administrative support and sales and marketing functions are consolidated and overlapping functions
are eliminated. Annual savings associated with all VARTA related initiatives are projected to be approximately
$40 million when fully realized in fiscal 2005.
Fiscal 2002. In fiscal 2002, we closed our Santo Domingo, Dominican Republic manufacturing facility and
transferred production of zinc carbon batteries to our Guatemala City, Guatemala manufacturing facility. We also
outsourced a portion of our zinc carbon battery production previously manufactured at our Mexico City, Mexico
facility.
Meeting Consumer Needs through Technology and Development
We continue to focus our efforts on meeting consumer needs for portable power, personal care, and lighting
products through new product development and technology innovations. Research and development efforts at
Remington allow us to maintain our unique manufacturing process in cutting systems for electric shavers.
Remington is continuously pursuing new innovations for its line of shavers including foil improvements and new
cutting and trimmer configurations. During fiscal 2003, Remington introduced the Remington Titanium™line of
men’s MicroScreen®and MicroFlex®shavers, a line of personal grooming products that utilize titanium-coated
components. During fiscal 2004, the Remington Titanium™line was expanded to include shavers with automatic
cleaning systems. Remington also devotes resources to the development of new technologies for its other
products. During fiscal 2004, we introduced the “Wet 2 Straight Professional Straightener”. This ceramic hair
straightener dries and straightens hair in one step and includes special steam vents that release moisture to allow
hair to dry as it is straightened.
We believe that our products are well poised to meet the portable power, lighting and electric personal care
needs of consumers. We will continue to focus on identifying new technologies necessary to meet consumer and
retailer needs within the marketplace.
Competitive Landscape
We primarily compete in two major product categories within the consumer products industry: consumer
batteries and electric personal care products.
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