Rayovac 2003 Annual Report Download - page 19

The following is management’s discussion of the financial results, liquidity, and other key items related to our performance. This
section should be read in conjunction with the “Selected Financial Data” and our Consolidated Financial Statements and related
notes in the “Financial Statements” section of this Annual Report. Certain prior year amounts have been reclassified to conform
to current year presentation. All references to 2001, 2002, and 2003 refer to fiscal year periods ended September 30, 2001, 2002, and
2003, respectively.
INTRODUCTION
On October 1, 2002, we acquired substantially all of the consumer battery business of VARTA AG. The acquisition consisted of the
purchase of all of VARTA AG’s consumer battery subsidiaries and business outside of Germany, excluding Brazil, and a controlling
ownership and management interest in a new joint venture entity that will operate the VARTA AG consumer battery business in
Germany. The residual interest in the joint venture is held by VARTA AG. With the acquisition of VARTA, we became a truly global
battery manufacturer and marketer and acquired additional low-cost manufacturing capacity and battery technology.
In addition, on September 30, 2003, we acquired all of the equity interests of Remington Products Company, L.L.C. Remington is a
leading consumer products company focusing on the development and marketing of personal care products. Remington designs and
distributes electric shavers and accessories, grooming products, hair care appliances and other small electrical consumer products.
The acquisition of Remington allowed us to become a diversified consumer products company no longer solely focused on the
battery and lighting product markets. Remington was attractive due to its position as a strong branded company, its new product
pipeline and its use of distribution channels similar to those employed by Rayovac in the United States.
Following the acquisitions of VARTA and Remington, we are a global branded consumer products company with leading market
positions in our two major product categories: consumer batteries and electric personal care products. We are a leading worldwide
manufacturer and marketer of alkaline and zinc carbon batteries. We are also the leading worldwide manufacturer and marketer of
hearing aid batteries, a leading worldwide designer and marketer of rechargeable batteries and a leading marketer of battery-powered
lighting products. With the acquisition of Remington, we are also a leading designer and marketer of electric shavers and accessories,
electric grooming products and hair care appliances. Our products are sold on a global basis in over 100 countries through a variety
of channels, including mass merchandisers, home centers and hardware stores, consumer electronics stores, warehouse clubs, food,
drug and convenience stores, department stores, hearing aid professionals, industrial distributors and original equipment manufac-
turers (“OEMs”). We enjoy strong name recognition in our markets under the Rayovac, VARTA and Remington brands, each of
which has been in existence for more than 80 years.
Our financial performance is influenced by a number of factors including: general economic conditions and trends in consumer
markets; our overall product line mix, including sales prices and gross margins which vary by product line; and our general com-
petitive position, especially as impacted by our competitors’ promotional activities and pricing strategies. These influencing factors
played significant roles in our financial results during fiscal 2001, 2002 and 2003.
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 continental Europe, the United Kingdom, and all other countries in which we do business.
Our Consolidated Results of Operations for the twelve months ended September 30, 2003 do not include the impacts of the
Remington acquisition, as the transaction occurred on the close of business on September 30, 2003. Our Consolidated Balance
Sheet, as of September 30, 2003, and Consolidated Statement of Cash Flows for the year then ended do incorporate the impacts
of the Remington transaction.
Cost Reduction Initiatives We continually seek to improve our operational efficiencies, match our manufacturing capacity
and product costs to market demand and better utilize our manufacturing resources. Since the beginning of fiscal 2001, we have
undertaken various initiatives to reduce manufacturing, operating and other costs. We believe that we can continue to drive down
our cost of goods manufactured with continued focus on cost reduction initiatives.
Fiscal 2001. In fiscal 2001, we closed our Wonewoc, Wisconsin plant 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. In addition, we outsourced certain
manufacturing operations at our Fennimore, Wisconsin plant to accommodate the installation of a new high speed AA-size alkaline
battery line and discontinued inefficient packaging operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Rayovac Corporation and Subsidiaries