Rayovac 2010 Annual Report Download - page 17

Manufacturing, Raw Materials and Suppliers
The principal raw materials used in manufacturing our products—zinc powder, electrolytic manganese
dioxide powder and steel—are sourced either on a global or regional basis. The prices of these raw materials are
susceptible to price fluctuations due to supply and demand trends, energy costs, transportation costs, government
regulations and tariffs, changes in currency exchange rates, price controls, general economic conditions and other
unforeseen circumstances. We have regularly engaged in forward purchase and hedging derivative transactions in
an attempt to effectively manage the raw material costs we expect to incur over the next 12 to 24 months.
Substantially all of our rechargeable batteries and chargers, portable lighting products, hair care and other
personal care products and our electric shaving and grooming products and small appliances are manufactured by
third party suppliers that are primarily located in the Asia/Pacific region. We maintain ownership of most of the
tooling and molds used by our suppliers.
We continually evaluate our manufacturing facilities’ capacity and related utilization. As a result of such
analyses, we have closed a number of manufacturing facilities during the past five years. In general, we believe
our existing facilities are adequate for our present and foreseeable needs.
Research and Development
Our research and development strategy is focused on new product development and performance
enhancements of our existing products. We plan to continue to use our strong brand names, established customer
relationships and significant research and development efforts to introduce innovative products that offer
enhanced value to consumers through new designs and improved functionality.
In our fiscal years ended September 30, 2010, 2009 and 2008, we invested $31.0 million, $24.4 million and
$25.3 million, respectively, in product research and development.
Patents and Trademarks
We own or license from third parties a significant number of patents and patent applications throughout the
world relating to products we sell and manufacturing equipment we use. We hold a license that expires in March
2022 for certain alkaline battery designs, technology and manufacturing equipment from Matsushita Electrical
Industrial Co., Ltd. (“Matsushita”), to whom we pay a royalty.
We also use and maintain a number of trademarks in our business, including DINGO, JUNGLETALK,
MARINELAND, RAYOVAC, REMINGTON, TETRA, VARTA, 8IN1, CUTTER, HOT SHOT, GARDEN
SAFE, NATURE’S MIRACLE, REPEL, SPECTRACIDE, SPECTRACIDE TERMINATE, GEORGE
FOREMAN, RUSSELL HOBBS and BLACK & DECKER. We seek trademark protection in the U.S. and in
foreign countries by all available means, including registration.
As a result of the October 2002 sale by VARTA AG of substantially all of its consumer battery business to
us and VARTA AG’s subsequent sale of its automotive battery business to Johnson Controls, Inc. (“Johnson
Controls”), we acquired rights to the VARTA trademark in the consumer battery category and Johnson Controls
acquired rights to the trademark in the automotive battery category. VARTA AG continues to have rights to use
the trademark with travel guides and industrial batteries and VARTA Microbattery GmbH has the right to use the
trade mark with micro batteries. We are party to a Trademark and Domain Names Protection and Delimitation
Agreement that governs ownership and usage rights and obligations of the parties relative to the VARTA
trademark.
As a result of the common origins of the Remington Products, L.L.C. (“Remington Products”), business we
acquired in September 2003 and the Remington Arms Company, Inc. (“Remington Arms”), the REMINGTON
trademark is owned by us and by Remington Arms each with respect to its principal products as well as
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