Rayovac 2004 Annual Report Download - page 94

RAYOVAC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
The Company has certain other contingent liabilities with respect to litigation, claims and contractual
agreements arising in the ordinary course of business. Such litigation includes legal proceedings with Philips in
Europe with respect to trademark or other intellectual property rights, patent infringement claims by the Gillette
Company and its subsidiary Braun Gmbh, and a lawsuit alleging misleading advertising filed by Norelco
Consumer Products Company against the Company’s subsidiary, Remington Products Company, L.L.C. In the
opinion of management, it is either not likely or premature to determine whether such contingent liabilities will
have a material adverse effect on the financial condition, liquidity or cash flow of the Company.
The shareholder lawsuits filed against the Company were settled in April 2004, and the impact of such
settlement is included in results of operations for the year ended September 30, 2004. The net settlement was
approximately $4,000, which was largely covered by insurance, was paid in 2004. The suit filed against the
Company by Eveready Battery Company was settled in December 2002, and the impact of such settlement is
included in results of operations for the year ended September 30, 2003. The net settlement was approximately
$1,500.
Future minimum rental commitments under non-cancelable operating leases, principally pertaining to land,
buildings and equipment, are as follows:
2005 ............................................................. $15,270
2006 ............................................................. 14,090
2007 ............................................................. 11,524
2008 ............................................................. 10,143
2009 ............................................................. 8,924
Thereafter ......................................................... 39,192
Total minimum lease payments ........................................ $99,143
All of the leases expire during the years 2005 through 2018. Total rental expenses were $16,344, $12,315
and $7,341 for 2004, 2003 and 2002, respectively.
(14) Related Party Transactions
The Company has notes receivable from officers/shareholders in the amount of $3,605 at September 30, 2004
and 2003. Interest is payable at 3.65% and 3.50% at September 20, 2004 and 2003, respectively. Since the
officers utilized the proceeds of the notes to purchase common stock of the Company, directly or through the
exercise of stock options, the notes have been recorded as a reduction of shareholders’ equity.
The Company’s previous employment agreement with its Chief Executive Officer (“CEO”), granted him the
right to purchase his Rayovac-owned home for one dollar. In April 2004, the CEO waived such right in exchange
for the Company paying him the fair market value of the property, $993, plus an amount equal to 50% of
leasehold improvements to the property of $38.
The Company and Thomas H. Lee Company (THL Co.) were parties to a Management Agreement pursuant
to which the Company engaged THL Co. to provide consulting and management advisory services for an initial
period of five years through September 2001. The agreement was renewed for another year through 2002. The
agreement was not renewed upon expiration in September 2002. The Company paid THL Co. aggregate fees and
expenses of $364 for 2002.
(15) Restructuring and Related Charges
The Company reports restructuring and related charges relating to manufacturing and related initiatives in Cost
of goods sold. Restructuring and related charges reflected in Cost of goods sold include, but are not limited to,
termination and related costs associated with manufacturing employees, asset impairments relating to
manufacturing initiatives, and other costs directly related to the restructuring initiatives implemented.
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