Rayovac 2013 Annual Report Download - page 18

Hardware & Home Improvement
The sales force of the Hardware & Home Improvement is aligned by customer and geographic region. We
sell primarily to large retailers, non-retail distributors, home improvement centers, hardware stores, home
builders and other retailers.
Manufacturing, Raw Materials and Suppliers
The principal raw materials used in manufacturing our products—zinc, electrolytic manganese dioxide,
brass 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.
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 and small appliances are manufactured by
third party suppliers that are primarily located in the Asia/Pacific region. We maintain ownership of most of the
tooling and molds used by 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, 2013, 2012 and 2011, we invested $43.3 million, $33.1 million and
$32.9 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 RAYOVAC, REMINGTON,
VARTA, TETRA, 8IN1, DINGO, NATURE’S MIRACLE, WILD HARVEST, MARINELAND,
FURMINATOR, SPECTRACIDE, CUTTER, HOT SHOT, GARDEN SAFE, REPEL, GEORGE FOREMAN,
RUSSELL HOBBS, BLACK & DECKER, KWIKSET, WEISER, BALDWIN, NATIONAL HARDWARE,
FANAL AND PFISTER. 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
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