Rayovac 2008 Annual Report Download - page 11

Table of Contents
Index to Financial Statements
discounters and drug and food stores; (ii) specialty trade, which includes clubs, consumer electronics stores, department stores, photography stores and
wholesalers/distributors; and (iii) industrial, government, hearing aid professionals and OEMs.
Global Pet Supplies
Our Global Pet Supplies sales force is aligned by customer, geographic region and product group. We sell pet supply products to mass merchandisers,
grocery and drug chains, pet superstores, independent pet stores and other retailers.
Home and Garden
The sales force of our Home and Garden Business is aligned by customer. We sell primarily to home improvement centers, mass merchandisers, hardware
stores, lawn and garden distributors, and food and drug retailers.
Manufacturing, Raw Materials and Suppliers
The principal raw materials used in manufacturing our products—zinc powder, granular urea, electrolytic manganese dioxide powder and steel—are
sourced either on a global or regional basis. The prices of these raw materials are susceptible to price fluctuations due to supply and demand trends, energy costs,
transportation costs, government regulations and tariffs, changes in currency exchange rates, price controls, general economic conditions and other unforeseen
circumstances. We have regularly engaged in forward purchase and hedging derivative transactions in an attempt to effectively manage the raw material costs we
expect to incur over the next 12 to 24 months. We expect to have access to adequate quantities of these materials in the future; however, as a result of the planned
shutdown of the growing media portion of the Home and Garden Business, we do not expect to use granular urea in our continuing operations after January 31,
2009.
Substantially all of our rechargeable batteries and chargers, portable lighting products, hair care and other personal care products and our electric shaving
and grooming products are manufactured by third party suppliers that are primarily located in the Asia/Pacific region. We maintain ownership of the tooling and
molds used by most of our suppliers.
We continually evaluate our manufacturing facilities’ capacity and related utilization. As a result of such analyses, we have closed a number of
manufacturing facilities during the past five years. In general, we believe our existing facilities are adequate for our present and foreseeable needs.
Research and Development
Our research and development strategy is focused on new product development and performance enhancements of our existing products. We plan to
continue to use our strong brand names, established customer relationships and significant research and development efforts to introduce innovative products that
offer enhanced value to consumers through new designs and improved functionality.
In Fiscal 2008 and 2007 and our fiscal year ended September 30, 2006 (“Fiscal 2006”), we invested $25.6 million, $26.8 million and $30.6 million,
respectively, in product research and development. We expect that Fiscal 2009 product research and development investment levels will be similar to our
investment levels in Fiscal 2008.
Patents and Trademarks
We own or license from third parties a significant number of patents and patent applications throughout the world relating to products we sell and
manufacturing equipment we use. We hold a license that expires in March 2022 for certain alkaline battery designs, technology and manufacturing equipment
from Matsushita Electrical Industrial Co., Ltd. (“Matsushita”), to whom we pay a royalty.
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008