UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 001-13615
---------
Rayovac Corporation
--------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 22-2423556
----------------------- -------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
601 Rayovac Drive, Madison, Wisconsin 53711
-----------------------------------------
(Address of principal executive offices) (Zip Code)
(608) 275-3340
--------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
--------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes ( X ) No ( )
The number of shares outstanding of the Registrant's common stock, $.01
par value, as of February 9, 2001, was 27,579,159.
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. FINANCIAL STATEMENTS
RAYOVAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2000 and September 30, 2000
(Unaudited)
(In thousands, except per share amounts)
DECEMBER 31 SEPTEMBER 30
-------------------------- --------------------------
-ASSETS-
Current assets:
Cash and cash equivalents $ 11,292 $ 9,757
Receivables 143,264 153,667
Inventories 94,736 100,676
Prepaid expenses and other 36,609 27,070
-------------------------- --------------------------
Total current assets 285,901 291,170
Property, plant and equipment, net 101,999 111,897
Deferred charges and other, net 42,035 43,835
Intangible assets, net 121,284 122,114
-------------------------- --------------------------
Total assets $ 551,219 $ 569,016
========================== ==========================
-LIABILITIES AND SHAREHOLDERS' EQUITY -
Current liabilities:
Current maturities of long-term debt $ 35,091 $ 44,815
Accounts payable 86,073 97,857
Accrued liabilities:
Wages and benefits and other 40,909 42,830
Recapitalization and other special charges 7,713 978
-------------------------- --------------------------
Total current liabilities 169,786 186,480
Long-term debt, net of current maturities 273,308 272,815
Employee benefit obligations, net of current portion 16,093 15,365
Other 13,540 13,660
-------------------------- --------------------------
Total liabilities 472,727 488,320
Shareholders' equity:
Common stock, $.01 par value, authorized 150,000 shares;
issued 57,389 and 57,101 shares respectively;
outstanding 27,853 and 27,570 shares, respectively 574 571
Additional paid-in capital 108,998 104,197
Retained earnings 106,684 108,450
Accumulated other comprehensive income 96 650
Notes receivable from officers/shareholders (3,440) (3,190)
-------------------------- --------------------------
212,912 210,678
Less: Treasury stock, at cost, 29,536 and 29,531
shares, respectively (130,070) (129,982)
Less: Unearned restricted stock compensation (4,350) 0
-------------------------- --------------------------
Total shareholders' equity 78,492 80,696
-------------------------- --------------------------
Total liabilities and shareholders' equity $ 551,219 $ 569,016
========================== ==========================
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THESE STATEMENTS.
2
RAYOVAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three month period ended December 31, 2000 and January 2, 2000
(Unaudited)
(In thousands, except per share amounts)
THREE MONTHS ENDING
---------------------------------------------------
DECEMBER 31, 2000 JANUARY 2, 2000
----------------- ---------------
Net sales $ 185,918 $ 214,790
Cost of goods sold 91,506 110,829
Special charges 16,030 --
----------------- ---------------
Gross profit 78,382 103,961
Selling 56,316 58,568
General and administrative 12,423 13,365
Research and development 3,015 2,555
----------------- ---------------
Total operating expenses 71,754 74,488
Income from operations 6,628 29,473
Interest expense 8,192 8,121
Other (income) expense, net 952 (63)
----------------- ---------------
Income (loss) before income taxes (2,516) 21,415
Income tax expense (benefit) (750) 7,496
----------------- ---------------
Net income (loss) $ (1,766) $ 13,919
================= ===============
BASIC EARNINGS PER SHARE
Weighted average shares of common stock outstanding 27,574 27,490
Net Income $ (0.06) $ 0.51
DILUTED EARNINGS PER SHARE
Weighted average shares outstanding
and equivalents outstanding 27,574 29,106
Net Income $ (0.06) $ 0.48
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THESE STATEMENTS.
3
RAYOVAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three month period ended December 31, 2000 and January 2, 2000
(Unaudited)
(In thousands)
THREE MONTHS ENDING
----------------------------------
DECEMBER 31, 2000 JANUARY 2, 2000
----------------- ---------------
Cash flows from operating activities:
Net (loss) income $ (1,766) $ 13,919
Non-cash adjustments to net income:
Amortization 1,457 1,688
Depreciation 4,526 4,222
Other non-cash adjustments 1,810 2,614
Net changes in assets and liabilities 6,467 (9,581)
----------------- ---------------
Net cash provided by operating activities 12,494 12,862
Cash flows from investing activities:
Purchases of property, plant and equipment (1,502) (3,472)
Proceeds from sale of property, plant and equipment 6 326
----------------- ---------------
Net cash used by investing activities (1,496) (3,146)
Cash flows from financing activities:
Reduction of debt (117,600) (54,531)
Proceeds from debt financing 108,687 53,310
Other (560) (215)
----------------- ---------------
Net cash (used) by financing activities (9,473) (1,436)
----------------- ---------------
Effect of exchange rate changes on cash and cash
equivalents 10 (36)
----------------- ---------------
Net increase in cash and cash equivalents 1,535 8,244
Cash and cash equivalents, beginning of period 9,757 11,065
----------------- ---------------
Cash and cash equivalents, end of period $ 11,292 $ 19,309
================= ===============
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
RAYOVAC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1 SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: These financial statements have been prepared by
Rayovac Corporation (the "Company"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission (the
"SEC") and, in the opinion of the Company, include all adjustments (all
of which are normal and recurring in nature) necessary to present
fairly the financial position of the Company at December 31, 2000,
results of operations for the three month periods ended December 31,
2000, and January 2, 2000, and cash flows for the three month periods
ended December 31, 2000 and January 2, 2000. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such SEC rules and regulations. These
condensed consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto as
of September 30, 2000. Certain prior year amounts have been
reclassified to conform with the current year presentation.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS: Effective October 1, 2000,
the Company adopted SFAS 133, "Accounting for Derivative Instruments
and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. All
derivatives, whether designated in hedging relationships or not, are
required to be recorded on the balance sheet at fair value. If the
derivative is designated as a fair value hedge, the change in the fair
value of the derivative and of the hedged item attributable to the
hedged risk are recognized in earnings. If the derivative is designated
as a cash flow hedge, the effective portions of changes in the fair
value of the derivative are recorded in other comprehensive income
(OCI) and are recognized in the income statement when the hedged item
affects earnings. Ineffective portions of changes in the fair value of
cash flow hedges are recognized in earnings.
The adoption of SFAS 133 resulted in a pre-tax reduction to OCI of $317
($150 after tax). The reduction to OCI is primarily attributable to
losses of approximately $500 for foreign exchange forward cash flow
hedges partially offset by gains of approximately $200 on interest rate
swap cash flow hedges. The net derivative losses included in OCI as of
October 1, 2000 will be reclassified into earnings during the twelve
months ending September 30, 2001.
5
DERIVATIVE FINANCIAL INSTRUMENTS:
Derivative financial instruments are used by the Company principally in
the management of its interest rate, foreign currency and raw material
price exposures. The Company does not hold or issue derivative
financial instruments for trading purposes.
The Company uses interest rate swaps to manage its interest rate risk.
The swaps are designated as cash flow hedges with the fair value
recorded in OCI and as a hedge asset or liability as applicable. The
swaps settle in arrears in quarterly increments with the related
amounts for the current settlement quarter payable to, or receivable
from, the counter-parties included in accrued liabilities or accounts
receivable and recognized in earnings as an adjustment to interest
expense from the underlying debt to which the swap is designated.
During the quarter ended December 31, 2000, $75 of derivative gains
from such hedges were recorded as an adjustment to interest expense. At
December 31, 2000, the Company had a series of interest rate swap
agreements outstanding which effectively fix the interest rate on
floating rate debt at a rate of 6.404% for a notional principal amount
of $75,000 through October 2002. The derivative net losses on these
contracts recorded in OCI at December 31, 2000 was an after-tax loss of
$548, including amounts recorded as part of the transition adjustment.
The Company enters into forward foreign exchange contracts, to hedge
the risk from forecasted settlement in local currencies of
inter-company purchases and sales, trade sales, and trade purchases.
These contracts generally require the Company to exchange foreign
currencies for U.S. dollars or Pounds Sterling. These contracts are
designated as cash flow hedges with the fair value recorded in OCI and
as a hedge asset or liability as applicable. Once the forecasted
transaction has been recognized as a purchase or sale and a related
liability or asset recorded in the balance sheet, the gain or loss on
the related derivate hedge contract is reclassified from OCI into
earnings as an offset to the change in value of the liability or asset.
During the quarter ended December 31, 2000, $109 of pretax derivative
losses were recorded as an adjustment to earnings for cash flow hedges
related to an asset or liability. For forward contracts denominated in
a regional currency, the change in fair value of the hedges related to
the change in forward points is deemed to be ineffective and is
recorded currently in earnings. During the quarter ended December 31,
2000, $105 of pretax derivative losses were recorded as an adjustment
to earnings as a result of ineffectiveness. During the quarter ended
December 31, 2000, $349 of pretax derivative losses were recorded as an
adjustment to earnings for forward contracts settled at maturity. At
December 31, 2000, the Company had a series of forward contracts
outstanding with a contract value of $10,326. The derivative net losses
on these contracts recorded in OCI at December 31, 2000 was an
after-tax loss of $5, including amounts recorded as part of the
transition adjustment.
The Company is exposed to risk from fluctuating prices for zinc used in
the manufacturing process. The Company hedges a portion of this risk
through the use of commodity swaps. The swaps are designated as cash
flow hedges with the fair value recorded in OCI and as a hedge asset or
liability as applicable. The fair value of the swaps is reclassified
from OCI into earnings when the hedged purchase of zinc metal-based
items also affects earnings. The swaps effectively fix the floating
price on a specified quantity of a commodity through a specified date.
During the quarter ended December 31, 2000, $133 of pretax derivative
losses were recorded as an adjustment to cost of sales for swap
contracts settled at maturity. At December 31, 2000, the Company had a
series of swap contracts outstanding through October 2001 with a
contract value of $6,262. The derivative net losses on these contracts
recorded in OCI at December 31, 2000 was an after-tax loss of $306,
including amounts recorded as part of the transition adjustment.
6
2 INVENTORIES
Inventories consist of the following:
December 31, 2000 September 30, 2000
----------------- ------------------
Raw material..................................... $32,245 $31,355
Work-in-process.................................. 13,983 11,650
Finished goods................................... 48,508 57,671
------- --------
$94,736 $100,676
======= ========
3 OTHER COMPREHENSIVE INCOME
Comprehensive income and the components of other comprehensive income
(loss) for the three months ended December 31, 2000 and January 2, 2000
are as follows:
Three Months Ending
-------------------
December 31, 2000 January 2, 2000
----------------- ---------------
Net (loss) income.................................... ($1,766) $13,919
Other comprehensive income (loss):
Foreign currency translation....................... 307 (790)
Cumulative effect of change in accounting principle (150) --
Net loss on derivative instruments................. (711) --
------- -------
Comprehensive (loss) income.......................... $(2,320) $13,129
======= =======
4 NET INCOME PER COMMON SHARE
Net income per common share for the three months ended December 31,
2000 and January 2, 2000 is calculated based upon the following shares:
Three Months Ending
-------------------
December 31, 2000 January 2, 2000
----------------- ---------------
Basic............................................... 27,574 27,490
Effect of assumed conversion of options............. -- 1,616
------ ------
Diluted............................................. 27,574 29,106
====== ======
The effect of unexercised stock options and restricted stock
outstanding for the three-month period ending December 31, 2000 were
excluded from the diluted EPS calculation, as their effect was
anti-dilutive. These options may dilute EPS in the future.
7
5 COMMITMENTS AND CONTINGENCIES
In March 1998, the Company entered into an agreement to purchase
certain equipment and to pay annual royalties. In connection with this
1998 agreement, which supersedes previous agreements dated December
1991, and March 1994, the Company committed to pay royalties of $2,000
in 1998 and 1999, $3,000 in 2000 through 2002, and $500 in each year
thereafter, as long as the related equipment patents are enforceable
(2022). The Company incurred royalty expenses of $2,000 for 1998, 1999
and $2,250 for 2000.
The Company has provided for the estimated costs associated with
environmental remediation activities at some of its current and former
manufacturing sites. In addition, the Company, together with other
parties, has been designated a potentially responsible party of various
third-party sites on the United States EPA National Priorities List
(Superfund). The Company provides for the estimated costs of
investigation and remediation of these sites when such losses are
probable and the amounts can be reasonably estimated. The actual cost
incurred may vary from these estimates due to the inherent
uncertainties involved. The Company believes that any additional
liability in excess of the amounts provided of $2,892, which may result
from resolution of these matters, will not have a material adverse
effect on the financial condition, liquidity, or cash flow of the
Company.
The Company has certain other contingent liabilities with respect to
litigation, claims and contractual agreements arising in the ordinary
course of business. In the opinion of management, such contingent
liabilities are not likely to have a material adverse effect on the
financial condition, liquidity or cash flow of the Company.
6 OTHER
During Fiscal 2001, the Company recorded special charges related to:
(i) an organizational restructuring in the U.S, (ii) manufacturing
and distribution cost rationalization initiatives in the Company's
international operations,
8
(iii) the closure of the Company's Wonewoc, Wisconsin, manufacturing
facility, (iv) and the rationalization of uneconomic manufacturing
processes at the Company's Fennimore, Wisconsin, manufacturing
facility, and rationalization of packaging operations and product
lines. The amount recorded includes $4,996 of employee termination
benefits for approximately 360 employees, $10,184 of equipment,
inventory, and other asset write-offs, and $850 of other expenses. A
summary of the 2001 restructuring activities follows:
2001 RESTRUCTURING SUMMARY
TERMINATION OTHER TOTAL
BENEFITS COSTS
Expense accrued............................................... $4,996 $11,034 $16,030
------ ------- -------
Balance December 31, 2000..................................... $4,996 $11,034 $16,030
====== ======= =======
9
During 1999, the Company recorded special charges as follows: (i)
$2,528 of employee termination benefits for 43 employees related to
organizational restructuring in the U.S. and Europe, (ii) $1,300 of
charges related to the discontinuation of the manufacturing of
silver-oxide cells at the Company's Portage, Wisconsin, facility, and
(iii) $2,100 of charges related to the termination of non-performing
foreign distributors. The Company also recognized special charges of
$803 related to the investigation of financing options and developing
organizational strategies for the Latin American acquisition. A summary
of the 1999 restructuring activities follows:
1999 RESTRUCTURING SUMMARY
TERMINATION OTHER TOTAL
BENEFITS COSTS
Expense accrued............................................... $2,500 $3,400 $5,900
Cash expenditures............................................. (200) -- (200)
------ ------ ------
Balance September 30, 1999.................................... $2,300 $3,400 $5,700
Change in estimate............................................ -- 100 100
Cash expenditures............................................. (2,200) -- (2,200)
Non cash charges.............................................. -- (3,300) (3,300)
------ ------ ------
Balance September 30, 2000.................................... $100 $200 $300
Cash expenditures............................................. (100) -- (100)
Non cash charges.............................................. -- (200) (200)
------ ------ ------
Balance December 31, 2000..................................... $-- $-- $--
====== ====== ======
7 SEGMENT INFORMATION
The Company manages operations in three reportable segments based upon
geographic area. North America includes the United States and Canada;
Latin America includes Mexico, Central America, and South America;
Europe/Rest of World ("Europe/ROW") includes the United Kingdom, Europe
and all other countries in which the Company does business.
The Company manufactures and markets dry cell batteries including
alkaline, zinc carbon, alkaline rechargeable, hearing aid, and other
specialty batteries and lighting products throughout the world.
Net sales and cost of sales to other segments have been eliminated. The
gross contribution of inter segment sales is included in the segment
selling the product to the external customer. Segment revenues are
based upon the geographic area in which the product is sold.
The reportable segment profits do not include interest expense,
interest income, and income tax expense. Also, not included in the
reportable segments, are corporate expenses including corporate
purchasing expense, general and administrative expense and research and
development expense. All depreciation and amortization included in
income from operations is related to corporate or reportable segments.
Costs are identified to reportable segments or corporate, according to
the function of each cost center.
The reportable segment assets do not include cash, deferred tax
benefits, investments, long-term intercompany receivables, most
deferred charges, and miscellaneous assets. All capital expenditures
are related to reportable segments. Variable allocations of assets are
not made for segment reporting.
10
REVENUES FROM EXTERNAL
CUSTOMERS THREE MONTH PERIODS ENDED
------------------------------------------
DECEMBER 31, 2000 JANUARY 2, 2000
----------------- ---------------
North America................................. $138,530 $166,593
Latin America................................. 33,695 30,869
Europe/ROW.................................... 13,693 17,328
-------- --------
Total segments................................ $185,918 $214,790
======== ========
INTER SEGMENT REVENUES THREE MONTH PERIODS ENDED
------------------------------------------
DECEMBER 31, 2000 JANUARY 2, 2000
----------------- ---------------
North America................................. $8,212 $6,791
Latin America................................. 1,418 --
Europe/ROW.................................... 599 161
------- ------
Total segments................................ $10,229 $6,952
======= ======
SEGMENT PROFIT THREE MONTH PERIODS ENDED
------------------------------------------
DECEMBER 31, 2000 JANUARY 2, 2000
----------------- ---------------
North America................................. $23,023 $28,938
Latin America................................. 6,882 5,666
Europe/ROW.................................... 175 2,018
------- ------
Total segments................................ 30,080 36,622
Corporate..................................... 7,422 7,149
Special charges............................... 16,030 --
Interest expense.............................. 8,192 8,121
Other (income) expense, net................... 952 (63)
------- ------
Income (loss) before income taxes............. $(2,516) $21,415
======== =======
SEGMENT ASSETS DECEMBER 31, 2000 JANUARY 2, 2000
----------------- ---------------
North America................................. $259,926 $285,104
Latin America................................. 208,730 182,196
Europe/ROW.................................... 31,413 33,734
------- ------
Total segments................................ $500,069 $501,034
Corporate..................................... 51,150 48,574
------- ------
Total assets at period end.................... $551,219 $549,608
======== ========
8 GUARANTOR SUBSIDIARIES (ROV HOLDING, INC. AND ROVCAL, INC.)
The following condensed consolidating financial data illustrate the
composition of the consolidated financial statements. Investments in
subsidiaries are accounted for by the Company and the Guarantor
Subsidiaries using the equity method for purposes of the consolidating
presentation. Earnings of subsidiaries are therefore reflected in the
Company's and Guarantor Subsidiary's' investment accounts and earnings.
The principal elimination entries eliminate investments in subsidiaries
and inter-company balances and transactions. Separate financial
statements of the Guarantor Subsidiaries are not presented because
management has determined that such financial statements would not be
material to investors.
11
RAYOVAC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2000
(Unaudited)
(In thousands)
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
------ ------------ ------------ ------------ -------------
-ASSETS-
Current assets:
Cash and cash equivalents $ 5,426 $ 47 $ 5,819 $ - $ 11,292
Receivables 77,912 39,424 56,417 (30,489) 143,264
Inventories 62,225 - 32,279 232 94,736
Prepaid expenses and other 26,003 342 10,264 - 36,609
------------ ------------ ------------ ------------ ------------
Total current assets 171,566 39,813 104,779 (30,257) 285,901
Property, plant and equipment, net 69,830 43 32,126 - 101,999
Deferred charges and other, net 38,736 274 3,882 (857) 42,035
Intangible assets, net 91,353 - 30,119 (188) 121,284
Investment in subsidiaries 134,934 96,244 - (231,178) -
------------ ------------ ------------ ------------ ------------
Total assets $ 506,419 $ 136,374 $ 170,906 $ (262,480) $ 551,219
============ ============ ============ ============ ============
-LIABILITIES AND SHAREHOLDERS' EQUITY-
Current liabilities:
Current maturities of long-term debt $ 18,325 $ - $ 16,920 $ (154) $ 35,091
Accounts payable 79,645 6 35,609 (29,187) 86,073
Accrued liabilities:
Wages and benefits and other 27,316 1,434 12,119 40 40,909
Recapitalization and other special
charges 7,713 - - - 7,713
------------ ------------ ------------ ------------ ------------
Total current liabilities 132,999 1,440 64,648 (29,301) 169,786
Long-term debt, net of current maturities 273,976 - 136 (804) 273,308
Employee benefit obligations, net of current
portion 15,460 - 633 - 16,093
Other 4,295 - 9,245 - 13,540
------------ ------------ ------------ ------------ ------------
Total liabilities 426,730 1,440 74,662 (30,105) 472,727
Shareholders' equity :
Common stock 573 1 12,072 (12,072) 574
Additional paid-in capital 108,880 62,788 54,899 (117,569) 108,998
Retained earnings 108,000 71,138 28,266 (100,720) 106,684
Accumulated other comprehensive income 96 1,007 1,007 (2,014) 96
Notes receivable from officers/shareholders (3,440) - - - (3,440)
------------ ------------ ------------ ------------ ------------
214,109 134,934 96,244 (232,375) 212,912
Less treasury stock, at cost (130,070) - - - (130,070)
Less unearned restricted stock compensation (4,350) - - - (4,350)
------------ ------------ ------------ ------------ ------------
Total shareholders' equity 79,689 134,934 96,244 (232,375) 78,492
------------ ------------ ------------ ------------ ------------
Total liabilities and shareholders' equity $ 506,419 $ 136,374 $ 170,906 $ (262,480) $ 551,219
============ ============ ============ ============ ============
12
RAYOVAC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ending December 31, 2000
(Unaudited)
(In thousands)
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------------- ---------------- --------------- -------------- ---------------
Net sales $ 135,436 $ 11,010 $ 53,180 $ (13,708) $ 185,918
Cost of goods sold 64,729 10,679 29,713 (13,615) 91,506
Special Charges 16,030 - - - 16,030
-------------- ---------------- --------------- -------------- ---------------
Gross profit 54,677 331 23,467 (93) 78,382
Selling 43,523 180 12,706 (93) 56,316
General and administrative 11,678 (3,123) 3,868 - 12,423
Research and development 3,015 - - - 3,015
-------------- ---------------- --------------- -------------- ---------------
Total operating expenses 58,216 (2,943) 16,574 (93) 71,754
Income (loss) from operations (3,539) 3,274 6,893 - 6,628
Interest expense 7,721 - 471 - 8,192
Equity in profit of subsidiary (6,994) (3,817) - 10,811 -
Other (income) expense, net (15) (11) 981 (3) 952
-------------- ---------------- --------------- -------------- ---------------
Income (loss) before income taxes (4,251) 7,102 5,441 (10,808) (2,516)
Income tax expense (benefit) (2,482) 108 1,624 - (750)
-------------- ---------------- --------------- -------------- ---------------
Net income (loss) $ (1,769) $ 6,994 $ 3,817 $ (10,808) $ (1,766)
============== ================ =============== ============== ===============
13
RAYOVAC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Quarter Ending December 31, 2000
(Unaudited)
(In thousands)
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------------- ---------------- --------------- -------------- ---------------
Net cash provided (used) by
operating activities $16,855 $ 3 $ (4,364) $ - $12,494
Cash flows from investing activities:
Purchases of property, plant and
equipment (1,114) - (388) - (1,502)
Proceeds from sale of property,
plant, and equip. 6 - - - 6
-------------- ---------------- --------------- -------------- ---------------
Net cash used by investing activities (1,108) - (388) - (1,496)
Cash flows from financing activities:
Reduction of debt (117,171) - (429) - (117,600)
Proceeds from debt financing 104,719 - 3,968 - 108,687
Other (560) - - - (560)
-------------- ---------------- --------------- -------------- ---------------
Net cash (used) by financing activities (13,012) - 3,539 - (9,473)
Effect of exchange rate changes on
cash and cash equivalents - - 10 - 10
-------------- ---------------- --------------- -------------- ---------------
Net increase (decrease) in cash and
cash equivalents 2,735 3 (1,203) - 1,535
Cash and cash equivalents, beginning
of period 2,691 44 7,022 - 9,757
-------------- ---------------- --------------- -------------- ---------------
Cash and cash equivalents, end
of period $ 5,426 $ 47 $ 5,819 $ - $ 11,292
============== ================ =============== ============== ===============
14
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FISCAL QUARTER ENDED DECEMBER 31, 2000 COMPARED TO
FISCAL QUARTER ENDED JANUARY 2, 2000
NET SALES. Net sales for the three months ended December 31, 2000 (the
"Fiscal 2001 Quarter") decreased $28.9 million, or 13.5%, to $185.9 million from
$214.8 million in the three months ended January 2, 2000 (the "Fiscal 2000
Quarter"). The decrease was driven by decreased sales of alkaline and lighting
products primarily reflecting the impacts Y2k loading last year, a weak storm
season, and retailer inventory reductions partially offset by strength in
hearing aid batteries.
NET INCOME. Net income for the Fiscal 2001 Quarter decreased $15.7
million to $(1.8) million from $13.9 million in the Fiscal 2000 Quarter. The
decrease reflects the impact of sales softness in North America and Europe, a
$16.0 million restructuring charge and unfavorable foreign exchange partially
offset by lower operating expenses.
SEGMENT RESULTS. The Company manages operations in three reportable
segments based upon geographic area. North America includes the United States
and Canada; Latin America includes Mexico, Central America, and South America;
Europe/Rest of World ("Europe/ROW") includes the United Kingdom, Europe and all
other countries in which the company does business. We evaluate segment
profitability based on income from operations before corporate expense which
includes corporate purchasing expense, general and administrative expense and
research and development expense.
Fiscal Quarter
--------------
NORTH AMERICA 2001 2000
---- ----
Revenue from external customers............................ $138.5 $166.6
Profitability.............................................. 23.0 28.9
Profitability as a % of net sales.......................... 16.6% 17.3%
Assets..................................................... 259.9 285.1
Our sales to external customers decreased $28.1 million, or 16.9%, to
$138.5 million in the Fiscal 2001 Quarter from $166.6 million the previous year
due primarily to decreased sales of alkaline batteries, lighting products, and
camcorder batteries. Alkaline sales decreases of $18.1 million, or 17.8%, were
driven by the impacts of Y2k on last year's sales volumes, a strong hurricane
season in the Fiscal 2000 Quarter, and lower promotional activity at certain
food retailers. Lighting product sales decreases of $7.8 million, or 32.8%, were
driven by weakness in the lights product line and in lantern battery sales. The
weak performance versus last year primarily reflects the impact of the Y2k
phenomenom and the lack of a strong storm season, which resulted in strong sales
of lighting and related products last year. Camcorder battery sales decreases of
$2.2 million, or 52.3%, primarily reflect the transition to the licensing
agreement with our Hong Kong licensee and the timing of promotions at a key
electronics retailer. Hearing aid battery sales increases of $2.0 million, or
21.5%, primarily reflect strength in the professional channel and expanded
distribution in Fiscal 2001.
Our profitability decreased $5.9 million, or 20.4%, to $23.0 million in
the Fiscal 2001 Quarter from $28.9 million in the Fiscal 2000 Quarter. The
decrease was primarily attributable to an unfavorable volume variance reflecting
the sales shortfall partially offset by improved gross profit margins,
reflecting a favorable product mix, and operating expense decreases of 10.5%.
Our profitability margins decreased 70 basis points to 16.6% of net sales from
17.3% the previous year. The decrease primarily reflects higher distribution
costs as a percent of sales, reflecting higher fuel costs, and the continuation
of advertising and promotional support in spite of the weak performance of the
alkaline category in comparison to the previous year. These decreases were
partially offset by favorable gross profit margins.
15
Our assets decreased $25.2 million, or 8.8%, to $259.9 million from
$285.1 million the previous year due primarily to a decrease in accounts
receivable of $24.3 million reflecting the sales shortfall and timing of
customer payments.
Fiscal Quarter
--------------
LATIN AMERICA 2001 2000
---- ----
Revenue from external customers.............................. $33.7 $30.9
Profitability................................................ 6.9 5.7
Profitability as a % of net sales............................ 20.5% 18.4%
Assets....................................................... 208.7 182.2
Our sales to external customers increased $2.8 million, or 9.1% to
$33.7 million in the Fiscal 2001 Quarter from $30.9 million the previous year
due primarily to an increase in sales of alkaline batteries. Alkaline sales
increases of $3.3 million were driven by new distribution of alkaline batteries
in mass merchandiser chains compounded by expansion of distribution into the
Southern region of South America in Fiscal 2000. Heavy duty battery sales were
slightly unfavorable compared to last year.
Our profitability increased $1.2 million, or 21.1%, to $6.9 million in
the Fiscal 2001 Quarter from $5.7 million the previous year. Our operating
profit margins as a percent of net sales increased 210 basis points primarily
reflecting improved gross profit margins, reflecting a favorable product mix and
the benefits of price increases and cost reductions implemented during Fiscal
2000, partially offset by an increase in selling and promotional expenses
associated with the expanded distribution.
Our assets increased $26.5 million, or 14.5%, to $208.7 million in the
Fiscal 2001 Quarter from $182.2 the previous year. The increase was primarily
attributable to an increase in accounts receivable of $17.0 million compounded
by an increase in inventory of $6.8 million reflecting expanded distribution
with mass merchandisers and expansion into the southern region of South America.
Fiscal Quarter
--------------
EUROPE/ROW 2001 2000
---- ----
Revenue from external customers............................. $13.7 $17.3
Profitability............................................... 0.2 2.0
Profitability as a % of net sales........................... 1.5% 11.6%
Assets...................................................... 31.4 33.7
Our sales to external customers decreased $3.6 million, or 20.8%, to
$13.7 million in the Fiscal 2001 Quarter from $17.3 million the previous year
due primarily to the impacts of currency devaluation, of $1.7 million,
compounded by weakness in our alkaline battery category partially offset by
stronger sales in the Rest of World geography.
Our profitability decreased $1.8 million to $0.2 million in the Fiscal
2001 Quarter reflecting the impact of currency devaluation on gross profit
compounded by higher operating expenses reflecting higher selling and
distribution costs partially offset by gross profit margin improvement
reflecting a favorable product mix.
Our assets decreased $2.3 million, or 6.8%, to $31.4 million from $33.7
million the previous year due primarily to a decrease in receivables of $2.6
million primarily reflecting weaker sales.
CORPORATE EXPENSE. Our corporate expense increased $0.3 million, or
4.2%, to $7.4 million in the Fiscal 2001 Quarter from $7.1 million the previous
year. These increases were primarily attributable to higher research and
development expenses of $0.5 million, reflecting an increase in royalities and
other expenses partially offset by lower legal and other administrative
expenses. As a percentage of total sales, our corporate expense was 4.0% in the
Fiscal 2001 Quarter and 3.3% the previous year.
16
SPECIAL CHARGES. During Fiscal 2001, the Company recorded special
charges related to: (i) an organizational restructuring in the U.S, (ii)
manufacturing and distribution cost rationalization initiatives in the Company's
international operations, (iii) the closure of the Company's Wonewoc, Wisconsin,
manufacturing facility, (iv) and the rationalization of uneconomic manufacturing
processes at the Company's Fennimore, Wisconsin, manufacturing facility, and
rationalization of packaging operations and product lines. The amount recorded
includes $5.0 million of employee termination benefits for approximately 360
employees, $10.2 million of equipment, inventory, and other asset write-offs,
and $0.8 million of other expenses.
INCOME FROM OPERATIONS. Our income from operations decreased $22.9
million to $6.6 million in the Fiscal 2001 Quarter from $29.5 million the
previous year. These decreases were primarily due to decreased profitability in
North America, Europe/ROW, and the impact of special charges of $16.0 million
recognized in the Fiscal 2001 Quarter. Excluding the impact of the special
charges, income from operations decreased $6.9 million, or 23.4%, reflecting the
decreased profitablility in North America and Europe.
INTEREST EXPENSE. Interest expense increased $0.1 million to $8.2
million in the Fiscal 2001 Quarter from $8.1 million in the prior year. These
increases were primarily due to year over year increases in general market
interest rates.
OTHER EXPENSE (INCOME). Other expense (income) decreased $1.0 million
to a $0.9 million net expense in the Fiscal 2001 Quarter from a net gain of $0.1
million in the previous year. These decreases were primarily attributable to
foreign exchange losses, primarily in Latin America.
INCOME TAX EXPENSE. Our effective tax rate was 35.0%, excluding the tax
benefit of the special charge, for the Fiscal 2001 Quarter, comparable to the
previous year. Our effective tax rate was 29.8% including the tax benefit of the
special charge.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
Effective October 1, 2000, the Company adopted SFAS 133, which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. All derivatives, whether designated in hedging relationships
or not, are required to be recorded on the balance sheet at fair value. If the
derivative is designated as a fair value hedge, the change in the fair value of
the derivative and of the hedged item attributable to the hedged risk are
recognized in earnings. If the derivative is designated as a cash flow hedge,
the effective portions of changes in the fair value of the derivative are
recorded in other comprehensive income (OCI) and are recognized in the income
statement when the hedged item affects earnings. Ineffective portions of changes
in the fair value of cash flow hedges are recognized in earnings.
The adoption of SFAS 133 resulted in a pre-tax reduction to OCI of $0.3
million ($0.2 million after tax). The reduction to OCI is primarily attributable
to losses of approximately $0.5 million for foreign exchange forward cash flow
hedges partially offset by gains of approximately $0.2 million on interest rate
swap cash flow hedges. The net derivative losses included in OCI as of October
1, 2000 will be reclassified into earnings for the twelve months ending
September 30, 2001.
LIQUIDITY AND CAPITAL RESOURCES
For the Fiscal 2001 Quarter, operating activities provided $12.5
million in net cash compared with $12.9 million the previous year. Operating
cash flow decreases versus the previous year primarily reflect lower
operating earnings attributable to our decrease in sales partially offset by
working capital increases which were $16.2 million less than the previous year
primarily reflecting decreased investments in accounts receivable and
inventory partially offset by lower accounts payable and accrued liabilities.
Net cash used by investing activities decreased $1.6 million versus the
same period a year ago primarily reflecting lower capital expenditures.
Expenditures in the current year were primarily for improvements to alkaline
17
battery manufacturing and information systems hardware and software. The Company
currently expects capital spending for Fiscal 2001 to be approximately $24.5
million due to alkaline capacity expansion, alkaline vertical integration
programs, and enhancements to our warehouse and distribution systems.
During the Fiscal 2001 Quarter we granted approximately 0.5 million
options to purchase shares of common stock to various employees of the company.
All grants have been at an exercise price equal to the market price of the
common stock on the date of the grant. We also granted approximately 277,000
shares of restricted stock on October 1, 2000, from the 1997 incentive plan, to
certain members of management. Approximately 210,000 of these shares will vest
on September 30, 2003 provided the recipient is still employed by the Company.
The remainder vests one third each year for the next three years. The total
market value of the restricted shares on date of grant totaled approximately
$4.7 million and has been recorded as restricted stock as a separate component
of shareholders' equity. Unearned compensation is being amortized to expense
over the three-year vesting period.
The Company believes that cash flow from operating activities and
periodic borrowings under its amended credit facilities will be adequate to meet
the Company's short-term and long-term liquidity requirements prior to the
maturity of those credit facilities, although no guarantee can be given in this
regard. The Company's current credit facilities include a revolving credit
facility of $250.0 million and term loan of $75.0 million. As of December 31,
2000, $43.0 million of the term loan remained outstanding and $183.0 million was
outstanding under the revolving facility with approximately $22.2 million of the
remaining availability utilized for outstanding letters of credit.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition" (SAB 101). The SAB summarizes
certain of the SEC's views in applying U.S. generally accepted accounting
principles to revenue recognition in financial statements. In June 2000, the SEC
issued SAB 101B, which delays the implementation date of SAB 101 until no later
than the fourth fiscal quarter of fiscal years beginning after December 15,
1999. In October 2000, the SEC issued frequently asked questions and answers
about how guidance in accounting standards and SAB 101 would apply to particular
transactions. The amendment in June 2000 delayed the effective date for the
Company until the fourth fiscal quarter of 2001, which is when the Company will
adopt the bulletin. The impact of adopting SAB 101 is still being evaluated. The
Company does not currently believe its adoption will have a material impact on
the consolidated financial statements.
In May 2000, the Financial Accounting Standards Board's Emerging Issues
Task Force (EITF) reached a consensus on Issue No. 00-14, "Accounting for
Certain Sales Incentives". This Issue addresses the recognition, measurement,
and income statement classification for various types of sales incentives
including discounts, coupons, rebates and free products. The Company will adopt
this consensus in the fourth fiscal quarter of 2001. The impact of this
consensus on the Company's consolidated financial statements is still being
evaluated. The Company does not currently believe its adoption will have a
material impact on the consolidated financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISK FACTORS
We have market risk exposure from changes in interest rates, foreign
currency exchange rates and commodity prices. We use derivative financial
instruments for purposes other than trading to mitigate the risk from such
exposures.
A discussion of our accounting policies for derivative financial
instruments is included in Note 1 "Significant Accounting Policies in Notes to
our Condensed Consolidated Financial Statements. "
INTEREST RATE RISK
We have bank lines of credit at variable interest rates. The general
level of U.S. interest rates, LIBOR, IBOR, and to a lesser extent European Base
rates, primarily affects interest expense. We use interest rate swaps to manage
18
such risk. The swaps are designated as cash flow hedges with the fair value
recorded in OCI and as a hedge asset or liability as applicable. The swaps
settle quarterly in arrears with the related amounts for the current settlement
quarter payable to, or receivable from, the counter-parties included in accrued
liabilities or accounts receivable and recognized in earnings as an adjustment
to interest expense from the underlying debt to which the swap is designated.
FOREIGN EXCHANGE RISK
We are subject to risk from sales to, purchases from and loans to our
subsidiaries as well as sales to, purchases from and bank lines of credit with,
third-party customers, suppliers and creditors, respectively, denominated in
foreign currencies. Foreign currency sales are made primarily in Pounds
Sterling, Canadian Dollars, Euro, German Marks, French Francs, Italian Lira,
Spanish Pesetas, Dutch Guilders, Mexican Pesos, Guatemalan Quetzals, Dominican
Pesos, Venezuelan Bolivars, Argentine Pesos, Chilean Pesos and Honduran Lempira.
Foreign currency purchases are made primarily in Pounds Sterling, German Marks,
French Francs, Mexican Pesos, Dominican Pesos, Guatemalan Quetzals and Honduran
Lempira. We manage our foreign exchange exposure from forecasted sales, accounts
receivable, forecasted purchases, accounts payable, intercompany loans, firm
purchase commitments and credit obligations through the use of naturally
occurring offsetting positions (borrowing in local currency) and forward foreign
exchange contracts. Forward foreign exchange contracts to hedge forecasted
transactions are designated as cash flow hedges with the fair value recorded in
OCI and as a hedge asset or liability as applicable. Once the forecasted
transaction has been recognized as a sale or purchase and a related asset or
liability recorded in the balance sheet, the gain or loss on the related
derivative hedge contract is re-classified from OCI into earnings as an offset
to the change in value of the asset or liability. Forward foreign exchange
contracts to hedge firm purchase commitments are designated as fair value hedges
with the fair value recorded in earnings and as a hedge asset or liability as
applicable. For foreign exchange contracts denominated in regional currencies,
the change in fair value of the hedges related to the change in forward points
is deemed to be ineffective and is recorded currently in earnings.
COMMODITY PRICE RISK
We are exposed to fluctuation in market prices for purchases of zinc
metal-based items used in the manufacturing process. We hedge a portion of this
risk through the use of commodity swaps. The swaps are designated as cash flow
hedges with the fair value recorded in OCI and as a hedge asset or liability as
applicable. The fair value of the swaps is reclassified from OCI into earnings
when the hedged forecasted purchase of zinc metal-based items also affects
earnings.
SENSITIVITY ANALYSIS
The analysis below is hypothetical and should not be considered a
projection of future risks. Earnings projections are before tax.
As of December 31, 2000, the potential change in fair value of
outstanding interest rate derivative instruments, assuming a 1% unfavorable
shift in the underlying interest rates would be a loss of $1.3 million. The net
impact on reported earnings, after also including the reduction in one year's
interest expense on the related debt due to the same shift in interest rates,
would be a net gain of $1.1 million.
As of December 31, 2000, the potential change in fair value of
outstanding foreign exchange rate derivative instruments, assuming a 10%
unfavorable change in the underlying foreign exchange rates would be a loss of
$1.1 million. The net impact on future cash flows, after also including the gain
in value on the related accounts receivable payment obligations outstanding at
December 31, 2000 due to the same change in exchange rates, would be a net gain
of $2.6 million.
As of December 31, 2000, the potential change in fair value of
outstanding commodity price derivative instruments, assuming a 10% unfavorable
change in the underlying commodity prices would be a loss of $0.5 million. The
net impact on reported earnings, after also including the reduction in cost of
one year's purchases of the related commodities due to the same change in
commodity prices, would be a net gain of $0.9 million.
19
FORWARD LOOKING STATEMENTS
Certain of the information contained in this Form 10-Q, including
without limitation statements made under Part I, Item 1, "Financial Statements"
and Part I, Item 2, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Part I, Item 3, "Quantitative and Qualitative
Disclosures about Market Risk" which are not historical facts, may include
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act, as amended. In reviewing such information, you should
note that our actual results may differ materially from those set forth in such
forward-looking statements.
Important factors that could cause our actual results to differ
materially from those included in the forward-looking statements made herein
include, without limitation, (1) significant changes in consumer demand and
buying practices for household batteries, hearing aid batteries or other
products we manufacture or sell in North America, Latin America or Europe/ROW;
(2) the loss of, or a significant reduction in, sales through a significant
retail customer; (3) the successful introduction or expansion of competitive
brands into the marketplace, including private label offerings; (4) the
introduction of new product features or new battery technologies by a
competitor; (5) promotional campaigns and spending by a competitor; (6)
difficulties or delays in the integration of operations of acquired companies;
(7) our ability to successfully implement manufacturing and distribution cost
efficiencies and improvements; (8) delays in manufacturing or distribution due
to work stoppages, problems with suppliers, natural causes or other factors; (9)
the enactment or imposition of unexpected environmental regulations negatively
impacting consumer demand for certain of our battery products or increasing our
cost of manufacture or distribution; (10) the costs and effects of unanticipated
legal, tax or regulatory proceedings; (11) the effects of competitors' patents
or other intellectual property rights; (12) interest rate, exchange rate and raw
material price fluctuations; (13) impact of unusual items resulting from
evaluation of business strategies, acquisitions and divestitures and
organizational structure; (14) changes in accounting standards applicable to our
business; and (15) the effects of changes in trade, monetary or fiscal policies
and regulations by governments in countries where we do business.
Additional factors and assumptions that could generally cause our
actual results to differ materially from those included in the forward-looking
statements made herein include, without limitation, (1) our ability to develop
and introduce new products; (2) the effects of general economic conditions in
North America, Europe, Latin America or other countries where we do business,
including inflation, labor costs and stock market volatility; (3) the effects of
political or economic conditions, unrest or volatility in Latin America and
other international markets; (4) the sufficiency of our production and
distribution capacity to meet future demand for our products; (5) our ability to
keep pace with the product and manufacturing technological standards in our
industry; and (6) our ability to continue to penetrate and develop new
distribution channels for our products. Other factors and assumptions not
identified above were also involved in the derivation of the forward-looking
statements contained in this Form 10-Q and the failure of such other assumptions
to be realized, as well as other factors, may also cause actual results to
differ materially from those projected. We assume no obligations to update these
forward-looking statements to reflect actual results or changes in factors or
assumptions affecting such forward-looking statements.
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
There have been no significant changes in the status of Rayovac's legal
proceedings since the filing of Rayovac's Annual Report on Form 10-K for its
fiscal year ended September 30, 2000 ("2000 Form 10-K").
20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT NUMBER DESCRIPTION
3.1+ Amended and Restated Articles of Incorporation of the
Company.
3.2****** Amended and Restated By-laws of the Company, as amended
through May 17, 1999.
4.1** Indenture, dated as of October 22, 1996, by and among
the Company, ROV Holding, Inc. and Marine Midland Bank,
as trustee, relating to the Company's 10 1/4% Senior
Subordinated Notes due 2006.
4.2****** First Supplemental Indenture, dated as of February 26,
1999, by and among the Company, ROV Holding, Inc. and
HSBC Bank USA (formerly known as Marine Midland Bank)
as trustee, relating to the Company's 10 1/4% Senior
Subordinated Notes due 2006.
4.3++++ Second Supplemental Indenture, dated as of August 6,
1999, by and among the Company, ROV Holding, Inc. and
HSBC Bank USA (formerly known as Marine Midland Bank)
as trustee, relating to the Company's 10 1/4% Senior
Subordinated Notes due 2006.
4.4** Specimen of the Notes (included as an exhibit to
Exhibit 4.1)
4.5**** Amended and Restated Credit Agreement, dated as of
December 30, 1997, by and among the Company, the lenders
party thereto and Bank of America National Trust and
Savings Association ("BofA"), as Administrative Agent.
4.6++++ Second Amended and Restated Credit Agreement, dated as of
August 9, 1999, by and among the Company, the lenders
party thereto and Bank of America, NA or Administrative
Agent.
4.7+++++ The First Amendment dated as of July 28, 2000 to the
Second Amended and Restated Credit Agreement, dated as of
August 9, 1999, by and among the Company, the lenders
party thereto and Bank of America, NA as Administrative
Agent.
4.8** The Security Agreement, dated as of September 12, 1996,
by and among the Company, ROV Holding, Inc. and BofA.
4.9** The Company Pledge Agreement, dated as of September 12,
1996, by and between the Company and BofA.
4.10*** Shareholders Agreement, dated as of September 12, 1996,
by and among the Company and the shareholders of the
Company referred to therein.
4.11*** Amendment No. 1 to Rayovac Shareholders Agreement, dated
August 1, 1997, by and among the Company and the
shareholders of the Company referred to therein.
4.12***** Amendment No. 2 to Rayovac Shareholders Agreement, dated
as of January 8, 1999, by and among the Company and the
Shareholders of the Company referred to therein.
4.13 Amendment No. 3 to Rayovac Shareholders Agreement dated
January 1, 2001, by and among the Company and the
shareholders of the Company referred to therein.
4.14* Specimen certificate representing the Common Stock.
10.1+++++ Amended and Restated Employment Agreement, dated as of
October 1, 2000, by and between the Company and David A.
Jones.
10.2+++++ Amended and Restated Employment Agreement, dated as of
October 1, 2000, by and between the Company and Kent J.
Hussey
10.3+++++ Employment Agreement, dated as of October 1, 2000, by
and between the Company and Randall J. Steward.
10.4+++++ Employment Agreement, dated as of October 1, 2000, by
and between the Company and Kenneth V. Biller.
10.5+++++ Employment Agreement, dated as of October 1, 2000, by
and between the Company and Stephen P. Shanesy.
21
10.6+++++ Employment Agreement, dated as of October 1, 2000, by
and between the Company and Merrell M. Tomlin.
10.7+++++ Employment Agreement, dated as of October 1, 2000, by
and between the Company and Luis A. Cancio.
27 Financial Data Schedule.
- ----------------
* Incorporated by reference to the Company's Registration Statement on
Form S-1 (Registration No. 333-35181) filed with the Commission.
** Incorporated by reference to the Company's Registration Statement on
Form S-1 (Registration No. 333-17895) filed with the Commission.
*** Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarterly period ended June 29, 1997, filed with the
Commission on August 13, 1997.
**** Incorporated by reference to the Company's Registration Statement on
Form S-3 (Registration No. 333-49281) filed with the Commission.
***** Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarterly period ended January 3, 1999, filed with the
Commission on February 17, 1999.
****** Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarterly period ended April 4, 1999, filed with the
Commission on May 17, 1999.
+ Incorporated by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1997, filed with the
Commission on December 23, 1997.
++++ Incorporated by reference to the Company's Current Report on Form 8-K
filed with the Commission on August 24, 1999, as subsequently amended
on October 26, 1999.
+++++ Incorporated by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 2000, filed with the
Commission on December 19, 2000.
(b) Reports on Form 8-K: The Company has not filed any reports on Form
8-K during the three month period ending December 31, 2000.
22
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: February 14, 2001
RAYOVAC CORPORATION
By: /s/ Randall J. Steward
-----------------------------
Randall J. Steward
Executive Vice President of Administration
and Chief Financial Officer
23