Rayovac 2004 Annual Report Download - page 18

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PART I
ITEM 1. BUSINESS
General
Rayovac Corporation is 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 batteries, zinc carbon batteries, and hearing aid batteries, a
leading worldwide designer and marketer of rechargeable batteries and a leading marketer of battery-powered
lighting products. We are also a leading designer and marketer of electric shavers and accessories, electric
grooming products and hair care appliances.
We sell our products in over 120 countries through a variety of trade channels, including retailers,
wholesalers and distributors, hearing aid professionals, industrial distributors and original equipment
manufacturers (“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. We have 12 manufacturing and
product development facilities located in the U.S., Europe, China and Latin America. A significant portion of our
products are manufactured by third-party suppliers.
On May 28, 2004, we completed the acquisition of 90.1% of the outstanding capital stock, including all
voting stock, of Microlite S.A. (“Microlite”), a Brazilian battery company, from VARTA AG of Germany and
Tabriza Brasil Empreendimentos Ltda. (“Tabriza”) of Brazil. The total cash paid was approximately $30 million,
including approximately $21 million in purchase price, approximately $7 million of contingent consideration and
approximately $2 million of acquisition related expenditures, plus approximately $8 million of assumed debt.
The contingent consideration will be earned by Tabriza upon Microlite’s attainment of certain earnings targets
through June 30, 2005. Upon the calculation of the total contingent consideration due to Tabriza, if any, Tabriza
will transfer Microlite’s remaining outstanding capital stock to us. Microlite operates two battery-manufacturing
facilities in Recife, Brazil and has several sales and distribution centers located throughout Brazil. The
acquisition of Microlite consolidates our rights to the Rayovac brand in Latin America. Subsequent to the
acquisition, the financial results of Microlite are reported as part of our consolidated results in our Latin America
segment.
On March 31, 2004, we completed the acquisition of an 85 percent equity interest in Ningbo Baowang
Battery Company, Ltd. (“Ningbo”) of Ninghai, China for approximately $17 million in cash, including
approximately $1 million of acquisition related expenditures, plus approximately $14 million of assumed debt.
Ningbo, founded in 1995, produces alkaline and zinc carbon batteries for retail, OEM and private label customers
within China. Ningbo also exports its batteries to customers in North and South America, Europe and Asia.
Subsequent to the acquisition, the financial results of Ningbo are reported as part of our consolidated results in
our Europe/Rest of World (“Europe/ROW”) segment.
During fiscal 2003, we completed two major acquisitions: (i) the acquisition of substantially all of the
consumer battery business (“VARTA”) of VARTA AG on October 1, 2002; and (ii) the acquisition of
Remington Products Company, L.L.C. (“Remington”), on September 30, 2003. With the acquisition of VARTA,
we greatly enhanced our status as a global battery manufacturer and marketer and acquired additional low-cost
manufacturing capacity and advanced battery technology. By expanding our product line with the acquisition of
Remington, we became a diversified consumer products company with a focus beyond the battery and lighting
product markets.
Our business is organized and managed according to three geographic regions: (i) North America, which
includes the U.S. and Canada; (ii) Latin America, which includes Mexico, Central America, South America and
the Caribbean; and (iii) Europe/ROW, which includes continental Europe, the United Kingdom, China, Australia
and all other countries in which we do business. Global and geographic strategic initiatives and financial
objectives are determined at the corporate level. Each geographic region is responsible for implementing defined
strategic initiatives and achieving certain financial objectives. Each geographic region has a general manager
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