Rayovac 2005 Annual Report Download - page 6

and garden care, household insect control, and branded
specialty pet supplies. This $1.5 billion acquisition, the
most ambitious in our history, positioned our company
as a more substantial player in the consumer products
industry. We followed this transaction with the $550 mil-
lion acquisition of Tetra Holding GmbH, a Melle, Germany-
based manufacturer, distributor and marketer of foods,
equipment and care products for fi sh and reptiles.
TRANSFORMATIONAL ACQUISITIONS
Combined, these two acquisitions had a signifi cant
impact on Spectrum Brands, dramatically increasing
the size of our organization, nearly doubling our annual
revenues and adding 3,500 people to our global
employee base.
Perhaps more importantly, these acquisitions
expanded our product portfolio to include three major
new categories. They established our company as the
world’s largest manufacturer of specialty pet supplies,
with operations in 90 countries, and provided us with
an expansive portfolio of widely recognized brands.
In combination with the United acquisition, Spectrum
Brands is now a leading competitor in the $8 billion
North American specialty pet supplies market, histori-
cally one of the fastest growing consumer product
categories with annual growth between six and eight
percent. With the acquisition of Tetra, we became the
global leader in aquatic supplies. We are the number
two player in the $3 billion U.S. lawn and garden indus-
try, and the number two competitor in the $1 billion
North American household insect control market.
These business categories hold a steady and sus-
tainable appeal to consumers worldwide with historically
attractive growth rates. Driving their growth are favorable
demographic trends, including the interests and needs
of the affl uent baby boomer population, increasing home
ownership levels and the “humanization” of pets. They
also offer growth opportunities in many world markets
where we already enjoy a strong sales, marketing and
distribution presence. This powerful combination of
factors gives us confi dence in our ability to leverage the
potential of these categories to drive our future growth.
These two acquisitions yielded other strategic
benefi ts for Spectrum Brands as well. Our increased
scale strengthens our relationships with key global
retailers by enabling us to better meet their demands
for sophisticated supply chain, distribution and cus-
tomer service capabilities. Our combined presence at
major retailers also offers compelling marketing and
cross-selling opportunities.
The acquisitions helped to broaden our revenue
stream, lowering the risk associated with operating on
a narrower scale. At year-end 2005, the revenue contri-
bution from batteries was 35 percent on an annualized
basis, down from 67 percent last year and 90 percent
in 2003.
We plan to generate signifi cant cost synergies
through the integration of these recent acquisitions
into our existing business. Our management team has
successfully integrated acquisitions, including Varta in
Europe, Remington in North America and the United
Kingdom, Ningbo Baowang Battery Company in China
and Microlite in Brazil, achieving planned synergies on
schedule without disruption to our ongoing business.
Our prior success and our well-developed integration
process give us confi dence that we will reach our goal
of $100 million in annual cost savings from the United
and Tetra acquisitions.
To Our Fellow Shareholders continued
SPECTRUM BRANDS, INC.4