Rayovac 2002 Annual Report Download - page 63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Rayovac Corporation and Subsidiaries
(In thousands, except per share amounts)
(18) Subsequent Events
On October 1, 2002, the Company acquired the consumer battery business of VARTA AG (VARTA) for approximately 262 million Euros. The trans-
action did not include VARTA’s Brazilian joint venture, its automotive or micro-power business. The Company acquired all of the VARTA consumer
subsidiaries located outside of Germany and became the majority owner of a new joint venture entity that will conduct all consumer battery business
within Germany. The Company has not yet finalized the purchase price allocation for the acquisition. (See also footnote 6.)
On October 10, 2002, the Company committed to and announced a series of initiatives to position the Company for future growth opportunities and
to optimize the global resources of the combined VARTA and Rayovac companies. The Company expects to take a restructuring charge of approximately
$20 million pretax to be recorded in the first quarter of fiscal 2003 and an additional $10–$15 million to be recorded as incurred. Cash cost of the
restructuring program is expected to total $15–$20 million. Cost savings related to these initiatives are projected to be in the range of $35–$40 million
when fully realized in fiscal 2005. Initiatives include: closure of the Mexico City, Mexico zinc carbon manufacturing plant; closure of operations at its
Middleton, Wisconsin distribution center and its Madison, Wisconsin packaging center and combination of the two operations into a new leased com-
plex being built in Dixon, Illinois. Transition to the new facility is expected by June 2003. In addition to the manufacturing, packaging, and distribu-
tion changes, the Company anticipates a series of sales, marketing, operations and administrative restructuring initiatives on all three continents. These
changes are the result of duplication synergies between the Rayovac and VARTA organizations and ongoing cost containment initiatives. The combination
of all these restructuring initiatives is expected to ultimately reduce the workforce by approximately 630 or 14 percent of the current worldwide workforce.
MANAGEMENT’S STATEMENT OF RESPONSIBILITY FOR FINANCIAL STATEMENTS
Rayovac Corporation and Subsidiaries
Rayovac Corporation’s financial statements are prepared by management, which is responsible for their fairness, integrity and objectivity. The accom-
panying financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consis-
tent basis except for accounting changes as disclosed and accordingly, include amounts that are estimates and judgments. All historical financial
information in this annual report is consistent with the accompanying financial statements.
Rayovac maintains accounting systems, including internal accounting controls monitored by internal audit, that are designed to provide reasonable
assurance of the reliability of financial records and the protection of assets. The concept of reasonable assurance is based on recognition that the cost of
a system should not exceed the related benefits. The effectiveness of those systems depends primarily upon the careful selection of financial and other
managers, clear delegation of authority and assignment of accountability, inculcation of high business ethics and conflict-of-interest standards, policies
and procedures and the leadership and commitment of top management.
Rayovac’s financial statements are audited by independent auditors, in accordance with generally accepted auditing standards in the United States.
These standards provide for a review of Rayovac’s internal accounting controls to the extent they deem appropriate in order to issue their opinion on
the financial statements.
The Audit Committee of the Board of Directors, which consists solely of non-employee directors, is responsible for overseeing the functioning of the
accounting system and related controls and the preparation of annual financial statements. The Audit Committee members periodically meet with
management to review and evaluate their accounting, auditing and financial reporting activities and responsibilities. The independent accountants and
internal audit have full and free access to the Audit Committee with and without management present.