Rayovac 2002 Annual Report Download - page 28

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Rayovac Corporation and Subsidiaries
We manage our business based upon three geographic regions. The regions are as follows: North America, which includes the United States and Canada;
Latin America, which includes Mexico, Central America, South America and the Caribbean; and Europe/Rest of World (“Europe/ROW”), which
includes the United Kingdom, continental Europe and all other countries in which we do business.
Set forth below are other significant developments that have impacted our results and may continue to affect our performance.
Continued Manufacturing Cost Reduction Initiatives
We continually assess our worldwide manufacturing capacity and product costs in light of existing and forecasted market demand. With our continued
focus on cost reduction and rationalization, we believe we can continue to drive down our cost of goods manufactured with continued focus on cost
reduction initiatives.
In furtherance of this goal, we closed our Wonewoc, Wisconsin plant during 2001 and now source lighting products previously made at this plant from
third-party suppliers. With this closure, we now outsource all of our lighting products.
Similarly, we closed our zinc carbon battery plants in Tegucigalpa, Honduras, and Santo Domingo, Dominican Republic in 2001 and 2002, respectively.
We closed the Mexico City, Mexico plant in October 2002. With the closure of the Mexico City, Mexico plant, and prior to the acquisition discussed
below, the Guatemala City, Guatemala plant is our only remaining zinc carbon manufacturing plant. The consolidation of our zinc carbon capacity
within Latin America is consistent with the global market trend away from zinc carbon toward alkaline batteries.
In October 2002, we announced the closure of operations at our Madison, Wisconsin packaging center and Middleton, Wisconsin distribution center
and combination of the two operations into a new leased complex being built in Dixon, Illinois. Transition to the new facility is expected by June 2003.
Meeting Consumer Needs through Technology and Development
We continue to focus our efforts on meeting consumer needs for portable power and lighting products through new product development and technology
innovations. We have announced improvements and new developments in our rechargeable, alkaline, hearing aid, and lighting products product lines.
During 2001, we introduced a one-hour charger for nickel metal hydride (NiMH) batteries, and began selling higher performing NiMH batteries. In
2002, we announced the development of a revolutionary rechargeable NiMH battery system capable of recharging batteries in as little as 15 minutes
and which we anticipate will be available in the retail market during 2003. These technological advancements are expected to provide consumers with
portable, rechargeable power as the use of digital cameras and other high drain devices continues to grow.
In 2002, we launched our new, more powerful Maximum Plus娃alkaline batteries, with bold new graphics. Also during 2001 and 2002, we increased
the performance of our hearing aid batteries, and launched innovative packaging allowing consumers to more easily dispense the hearing aid batteries.
Finally, we rejuvenated our lighting products product line through a series of new product launches designed to reach unique markets within the mass
and retail channels.
We believe that our products are well poised to meet the portable power and lighting needs for consumers. We will continue to focus on identifying new
technologies necessary to meet consumer and retailer needs within the marketplace.
Competitive Landscape
The alkaline battery business is highly competitive on a global scale. Within North America, there are three primary branded providers of alkaline bat-
teries. The alkaline marketplace has seen changes in recent years related to product line segmentation, with attempts to segment the category into high-
performance, regular and value positions, combined with the introduction of private label batteries at certain retailers. In addition, market participants
continue to engage in high levels of promotional activities to gain market share.