Rayovac 2004 Annual Report Download - page 40

Our profitability in fiscal 2003 increased to $18 million versus $5 million in fiscal 2002. This increase was
primarily the result of the VARTA acquisition and improved profitability in Central America partially offset by
profit declines in Venezuela and the Dominican Republic.
Our assets increased to $204 million in fiscal 2003 from $191 million in fiscal 2002, representing a 7%
increase. The acquisition of the VARTA business in Latin America resulted in increases across all asset
categories, except for a reduction in accounts receivable reflecting improvements in collections and a decrease in
property, plant and equipment reflecting the closure of the Mexico manufacturing facility. The closure and
subsequent write-off of the Mexico manufacturing related assets are included in restructuring and related charges
in our Consolidated Statement of Operations (see Note 15, Restructuring and Related Charges, of Notes to the
Consolidated Financial Statements) and are not included in our Latin America segment results. The Remington
acquisition had no effect on Latin America segment assets.
Corporate Expenses. Our fiscal 2003 corporate expenses increased to $44 million from $32 million in fiscal
2002, reflecting a 38% increase. As a percentage of sales, corporate expenses were 4.8% in fiscal 2003,
compared with 5.5% in fiscal 2002. Fiscal 2003 corporate expenses include higher legal expense associated with
patent infringement litigation, a $2 million net charge associated with the settlement of such litigation, generally
higher costs associated with the integration of the VARTA businesses and other increases in compensation
expense, primarily reflecting an increase in unearned restricted stock compensation of $2 million. Fiscal 2002
included a loss of $2 million related to the bankruptcy filing of a freight payment service provider.
Restructuring and Related Charges: In fiscal 2003, we recorded restructuring and related charges of $32.6
million associated with our cost reduction initiatives, as more fully described above under the heading “Cost
Reduction Initiatives—Fiscal 2003”, relating to: (i) approximately $13.0 million of employee termination
benefits for approximately 650 notified employees and non cash costs of approximately $0.7 million associated
with the write-off of pension intangible assets associated with the curtailment of our Madison, Wisconsin
packaging facility pension plan, (ii) approximately $12.8 million of equipment, inventory and other asset write-
offs primarily reflecting the abandonment of equipment and inventory associated with the closure of our Mexico
City, Mexico plant and inventory and fixed asset impairments related to the closure of our Wisconsin packaging
and distribution locations, (iii) approximately $6.1 million of other expenses which include distributor
termination costs of approximately $0.9 million, research and development contract termination costs of
approximately $0.5 million, and other legal and facility shutdown expenses of approximately $4.7 million, net of
a $0.3 million change in estimate reducing our anticipated costs to close our Wonewoc, Wisconsin facility.
In fiscal 2003, we recorded restructuring and related charges in cost of goods sold of approximately $21.1
million including amounts related to: (i) the closure in October 2002 of our Mexico City, Mexico plant and
integration of production into our 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 of approximately $0.5
million, (ii) the closure of operations at our Madison, Wisconsin packaging facility and combination with our
Middleton, Wisconsin distribution center into a new leased complex in Dixon, Illinois resulting in charges of
approximately $12.4 million, including termination costs of approximately $2.4 million and non cash pension
curtailment costs of approximately $0.7 million, fixed asset and inventory impairments of approximately $6.9
million, and relocation expenses and other shutdown related expenses of approximately $2.4 million, (iii) a series of
restructuring initiatives impacting our manufacturing functions in Europe, North America, and Latin America
resulting in charges of approximately $2.8 million, including termination benefits of approximately $1.8 million and
inventory and asset impairments of approximately $1.0 million, and (iv) a change in estimate relating to our
anticipated costs to close our Wonewoc, Wisconsin facility resulting in a credit of $0.3 million.
In fiscal 2003, we recorded restructuring and related charges in operating expenses of approximately $11.5
million including amounts related to: (i) the closure of operations at our Middleton, Wisconsin distribution center
and combination with our Madison, Wisconsin packaging facility into a new leased complex in Dixon, Illinois
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