Rayovac 2008 Annual Report Download - page 38

Table of Contents
Index to Financial Statements
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. We have undertaken various initiatives to reduce manufacturing and operating costs.
Fiscal 2008. In connection with our decision to exit our zinc carbon and alkaline battery manufacturing and distribution facility in Ninghai, China, we
undertook cost reduction initiatives (the “Ningbo Exit Plan”). These initiatives include fixed cost savings by integrating production equipment into our remaining
production facilities and head count reductions.
Fiscal 2007. In connection with our announcement that we would manage our business in three vertically integrated, product-focused reporting segments
our costs related to research and development, manufacturing management, global purchasing, quality operations and inbound supply chain, which had
previously been included in our corporate reporting segment are now included in each of the operating segments on a direct as incurred basis. In connection with
these changes we undertook a number of cost reduction initiatives, primarily headcount reductions, at the corporate and operating segment levels (the “Global
Realignment Initiatives”), including a headcount reduction of approximately 200 employees.
We also implemented a series of initiatives within our Global Batteries & Personal Care business segment in Latin America to reduce operating costs (the
“Latin America Initiatives”). These initiatives include the reduction of certain manufacturing operations in Brazil and the restructuring of management, sales,
marketing and support functions. As a result, we reduced headcount in Latin America by approximately 100 employees.
Fiscal 2006. As a result of our continued concern regarding the European economy and the continued shift by consumers from branded to private label
alkaline batteries, we announced a series of initiatives in the Global Batteries & Personal Care segment in Europe to reduce operating costs and rationalize our
manufacturing structure (the “European Initiatives”). These initiatives include the reduction of certain operations at our Ellwangen, Germany packaging center
and relocating those operations to our Dischingen, Germany battery plant, transferring private label battery production at our Dischingen, Germany battery plant
to our manufacturing facility in China and restructuring the sales, marketing and support functions. As a result, we have reduced headcount in Europe by
approximately 350 employees or 24%.
Fiscal 2005. In connection with the acquisitions of United and Tetra in 2005, we announced a series of initiatives to optimize the global resources of the
combined United and Spectrum companies. These initiatives included: integrating all of United’s home and garden business’ administrative services, sales and
customer service functions into our North America headquarters in Madison, Wisconsin; converting all of our information systems to SAP; consolidating
United’s manufacturing and distribution locations in North America; rationalizing the North America supply chain; and consolidating United’s pet supply
business’ and Tetra’s administrative, manufacturing and distribution facilities. In addition, certain corporate finance functions were shifted to our global
headquarters in Atlanta, Georgia.
As of October 1, 2006, initiatives to integrate the activities of our Home and Garden Business into our operations in Madison, Wisconsin were suspended.
Our integration activities within Global Pet Supplies were substantially completed as of September 30, 2007. Global Pet Supplies integration activities
consisted primarily of the rationalization of manufacturing facilities and the optimization of the distribution network. As a result of these integration initiatives,
two pet supplies facilities were closed in 2005, one in Brea, California and the other in Hazleton, Pennsylvania; one pet supply facility was closed in 2006 in
Hauppauge, New York; and one pet supply facility was closed in Fiscal 2007 in Moorpark, California.
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008