Rayovac 2005 Annual Report Download - page 41

As a result of the integration of Remington and
Spectrum operations, we no longer separately report
profi tability for Remington and Spectrum legacy
operations. Gross profi t information related to the
products sold historically by each company is avail-
able and presented below in our discussions of
segment profi tability.
Fiscal 2003. In 2002, in conjunction with the
acquisition of the VARTA consumer battery business,
we announced a series of initiatives designed to
position our consumer battery business for future
growth opportunities and to optimize the combined
global resources of Spectrum and VARTA. These ini-
tiatives provide signifi cant benefi ts to the combined
organization, including the renegotiation of certain
sourcing arrangements, the elimination of duplicate
costs in our consumer battery business and the
consolidation of sales and marketing functions.
Also in 2002, we closed our Mexico City, Mexico
zinc carbon manufacturing facility and transferred
the majority of the production requirements to our
Guatemala manufacturing facility. The consolidation
of our zinc carbon capacity within Latin America was
consistent with the global market trend away from
zinc carbon toward alkaline batteries, and was
intended to allow us to more closely match our man-
ufacturing capacity to anticipated market demands.
We also announced the closure of operations
at our Madison, Wisconsin packaging center and
Middleton, Wisconsin distribution center in 2002.
These facilities were closed during fi scal 2003 and
their operations were combined into a new leased
complex in Dixon, Illinois. Transition to the new
facility was completed in June 2003.
Annual savings associated with all VARTA related
initiatives totaled approximately $40 million.
Meeting Consumer Needs through Technology
and Development
We continue to focus our efforts on meeting con-
sumer needs for our products through new product
development and technology innovations. Research
and development efforts associated with our electric
shaving and grooming products allow us to maintain
our unique manufacturing process in cutting systems
for electric shavers. We are continuously pursuing
new innovations for our line of shavers including
foil improvements and new cutting and trimmer
confi gurations.
During fi scal 2005, we launched a new self-
cleaning women’s shaver, the world’s fi rst vacuuming
haircut kit with a built-in vacuum and a new product
line-up of hair dryers, setters and stylers under the
“All-That” platform. Also, during fi scal 2005, we
brought to market a new self-repairing, self-spread-
ing grass seed using RTF (Rhizomatous Tall Fescue)
technology under the Vigoro and Expert Gardener
brands. In the household insect control category, we
introduced a new product during fi scal 2005 called
Cutter Advanced™ Insect Repellant. Cutter Advanced
introduced Picaridin as an active ingredient, the only
non-DEET alternative recommended by the Centers
for Disease Control and Prevention.
During fi scal 2004, the Remington Titanium™ line
was expanded to include shavers with automatic
cleaning systems. During fi scal 2004, we introduced
the “Wet 2 Straight Professional Straightener.” This
ceramic hair straightener dries and straightens hair
in one step and includes special steam vents that
release moisture to allow hair to dry as it is straight-
ened.
During fi scal 2003, we introduced the Remington
Titanium™ line of men’s MicroScreen® and MicroFlex®
shavers, a line of personal grooming products that
utilize titanium-coated components.
Competitive Landscape
We compete in seven major product categories
within the consumer products industry: consumer
batteries; lawn and garden; pet supplies; electric
shaving and grooming; household insect control;
electric personal care products; and portable lighting.
The consumer battery industry has two major
segments: general and specialty. General batteries
consist of non-rechargeable alkaline or zinc carbon
batteries in cell sizes of AA, AAA, C, D and 9-volt.
Specialty batteries include rechargeable batteries,
hearing aid batteries, photo batteries and watch/
calculator batteries. Most consumer batteries are
marketed under one of the following brands:
Rayovac/VARTA, Duracell, Energizer or Panasonic.
In addition, batteries are marketed under retailers’
private label brands, particularly in Europe.
In North America and Europe, the majority of
consumers purchase alkaline batteries. The Latin
America market consists primarily of zinc carbon
batteries, but is slowly converting to higher-priced
alkaline batteries as disposable income grows.
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
2005 ANNUAL REPORT 21