Rayovac 2009 Annual Report Download - page 12

Table of Contents
Index to Financial Statements
Manufacturing, Raw Materials and Suppliers
The principal raw materials used in manufacturing our products—zinc powder, 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 discontinued the use of granular urea during the second quarter of Fiscal 2009 as a
result of the shutdown of the growing products portion of the Home and Garden Business.
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 our fiscal years ended September 30, 2009, 2008 and 2007, we invested $24.4 million, $25.3 million and $26.8 million, respectively, in product
research and development.
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.
We also use and maintain a number of trademarks in our business, including DINGO, JUNGLETALK, MARINELAND, RAYOVAC,
REMINGTON, TETRA, VARTA, 8IN1, CUTTER, HOT SHOT, GARDEN SAFE, NATURE’S MIRACLE, REPEL, SPECTRACIDE and
SPECTRACIDE TERMINATE. We seek trademark protection in the U.S. and in foreign countries by all available means, including registration.
As a result of the October 2002 sale by VARTA AG of substantially all of its consumer battery business to us and VARTA AG’s subsequent sale of
its automotive battery business to Johnson Controls, Inc. (“Johnson Controls”), we acquired rights to the VARTA trademark in the consumer battery
category and Johnson Controls acquired rights to the trademark in the automotive battery category. VARTA AG continues to have rights to use the
trademark with travel guides and industrial batteries and VARTA Microbattery GmbH has the right to use the trade mark with micro batteries. We are party
to a Trademark and Domain Names Protection and Delimitation Agreement that governs ownership and usage rights and obligations of the parties relative
to the VARTA trademark.
As a result of the common origins of the Remington Products, L.L.C., (“Remington Products”) business we acquired in September 2003 and the
Remington Arms Company, Inc. (“Remington Arms”), the REMINGTON
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