Rayovac 2006 Annual Report Download - page 18

6 SPECTRUM BRANDS | 2006 ANNUAL REPORT
In the U.S. alkaline battery category, the Rayovac brand is
positioned as a value brand, which represents comparable per-
formance at a lower price. In Europe, the VARTA brand is com-
petitively priced with other premium brands. In Latin America,
where zinc carbon batteries outsell alkaline batteries, the Rayovac
brand is competitively priced.
The pet supply industry is highly fragmented with over 500
manufacturers in the U.S., consisting primarily of small companies
with limited product lines. Our largest competitors in this product
category are The Hartz Mountain Corporation and Central Garden
& Pet Company.
Our primary competitors in the lawn and garden market are:
The Scotts Miracle-Gro Company, which markets lawn and garden
products under the Scotts, Ortho, Roundup and Miracle-Gro
brand names; Central Garden & Pet Company, which markets gar-
den products under the AMDRO, Sevin and Pennington Seed
brand names; and Bayer A.G., which markets lawn and garden
products under the Bayer Advanced brand name.
Our primary competitors in the electric shaving and groom-
ing market are: Norelco, a division of Koninklijke Philips
Electronics NV (“Philips”), which sells and markets rotary shav-
ers, and Braun, a division of The Procter & Gamble Company,
which sells and markets foil shavers. Remington sells both foil
and rotary shavers.
Our primary competitors in the household insect control
market are: S.C. Johnson & Son, Inc., which markets insecticide
and repellent products under the Raid and OFF! brands; The
Scotts Miracle-Gro Company, which markets household insect
control products under the Ortho brand; and Henkel KGaA,
which markets the Combat brand.
Our major competitors in the electric personal care market
are: Conair Corporation, Wahl Clipper Corporation and Helen
of Troy Limited.
Our primary competitors in the portable lighting category
are Energizer Holdings, Inc. and Mag Instrument, Inc.
Some of our major competitors have greater resources and
greater overall market share than we do. They have committed
signifi cant resources to protect their market shares or to cap-
ture market share from us in the past and may continue to do so
in the future. In some key product lines, our competitors may
have lower production costs and higher profi t margins than we
do, which may enable them to compete more aggressively in
advertising and in offering retail discounts and other promo-
tional incentives to retailers, distributors, wholesalers and,
ultimately, consumers.
Seasonality
On a consolidated basis our fi nancial results are approxi-
mately equally weighted between quarters; however, sales of cer-
tain product categories tend to be seasonal. The battery, shaving
and grooming and personal care businesses, particularly in North
America, tend to be seasonal, with purchases of such products by
consumers concentrated in the December holiday season
(Spectrum’s fi rst fi scal quarter). Demand for lawn and garden
products typically peaks during the fi rst six months of the calen-
dar year (Spectrum’s second and third fi scal quarters) and pet
supplies sales remain fairly constant throughout the year. For a
more detailed discussion of the seasonality of our product sales,
see “Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Seasonal Product Sales.”
Governmental Regulations and
Environmental Matters
Due to the nature of our operations, our facilities are subject
to a broad range of federal, state, local and foreign legal and regu-
latory provisions relating to the environment, including those
regulating the discharge of materials into the environment, the
handling and disposal of solid and hazardous substances and
wastes, and the remediation of contamination associated with the
releases of hazardous substances at our facilities. We believe that
compliance with the federal, state, local and foreign laws and
regulations to which we are subject will not have a material effect
upon our capital expenditures, fi nancial position, earnings or
competitive position.
From time to time, we have been required to address the
effect of historic activities on the environmental condition of our
properties. We have not conducted invasive testing at all facilities
to identify all potential environmental liability risks. Given the
age of our facilities and the nature of our operations, there can be
no assurance that material liabilities will not arise in the future in
connection with our current or former facilities. If previously
unknown contamination of property underlying or in the vicinity
of our manufacturing facilities is discovered, we could incur
material unforeseen expenses. If this occurs, it may have a mate-
rial adverse effect on our capital expenditures, earnings and
competitive position. Although we are currently engaged in
investigative or remedial projects at some of our facilities, we do
not expect that such projects will cause us to incur material
expenditures; however, there can be no assurance that our liabil-
ity will not be material.
We have been, and in the future may be, subject to proceedings
related to our disposal of industrial and hazardous material at off-
site disposal locations or similar disposals made by other parties for
which we are held responsible as a result of our relationships with
2006 Form 10-K Annual Report
Spectrum Brands, Inc.