Rayovac 2002 Annual Report Download - page 29

Within Latin America, poor economic conditions have dramatically impacted battery sales especially within the heavy duty product line. Heavy duty
batteries continue to be the largest share of the battery market in Latin America. In North America, the majority of consumers purchase alkaline batteries.
The rechargeable business has experienced dramatic changes over the past three years. Primary rechargeable alkaline sales have declined over this period
with a shift towards rechargeable batteries, such as NiMH, which are higher performing in high drain devices. Our development of a one-hour charger
and an innovative 15-minute rechargeable battery technology help us maintain the number one market position within the rechargeable category in the
United States with approximately 60% market share, as estimated by management.
Within the hearing aid battery category, we continue to hold the number one global market position based on management estimates. We believe that
our close relationship with hearing aid manufacturers and other customers, as well as our product performance improvements and packaging innova-
tions position us for continued success in this category.
Recent Developments
On October 1, 2002, we acquired the consumer battery business of VARTA AG (VARTA). The combination of the Rayovac and VARTA brands makes
us a much stronger global competitor selling in more than 100 countries worldwide. We believe that the combination of these two businesses provides
us with a strong platform for market growth, improved customer service, and technology advancements for consumers. We are now one of the largest
consumer battery companies in the world with the number one market position in Germany, the largest European battery market, number two overall
market position in Europe, a stronger number one position in Latin America, excluding Brazil, as well as the leading value brand in North America (all
market shares based on management estimates on a unit basis).
On October 10, 2002, we announced a series of initiatives to position the combined company for future growth opportunities and to optimize the
global resources of the combined VARTA and Rayovac organizations. These initiatives include the elimination of duplicate costs in the VARTA and
Rayovac organizations and are expected to provide significant benefit to the combined organization. We expect that all geographies will benefit from
these initiatives.
Seasonal Product Sales
Rayovac’s quarterly results are impacted by our seasonal sales. Sales during the first and fourth fiscal quarters of the year are generally higher than other
quarters due to the impact of the December holiday season. The seasonality of our sales during the last three fiscal years is as follows:
Percent of Annual Sales
Fiscal Quarter Ended 2000 2001 2002
December 30% 27% 28%
March 20 22 21
June 22 24 24
September 28 27 27
Fiscal Year Ended September 30, 2002 Compared to Fiscal Year Ended September 30, 2001
Highlights of consolidated operating results
Net Sales. Our net sales decreased $43.5 million, or 7.1%, to $572.7 million in fiscal 2002 from $616.2 million the previous year. Increases in hearing
aid battery and lighting product sales were unable to offset declines in heavy duty and alkaline sales.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Rayovac Corporation and Subsidiaries