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January 22, 2003

Rayovac reports $600,000 loss

From: Milwaukee Journal Sentinel, WI - 22 Jan 2003

But battery maker posts 61% quarterly sales boost
Last Updated: Jan. 22, 2003

Rayovac Corp. said Wednesday that it took a first-quarter loss of about $600,000, mainly because of plant closings, refinanced debt and increased promotional activity.

But the Madison-based battery manufacturer reported a 61% quarterly sales increase, reflecting the integration of the consumer line of Varta AG, the European battery maker that Rayovac acquired in July, into its business.

For the first quarter ended Dec. 29, the Rayovac reported a loss of $600,000, or 2 cents a share, compared to a profit of $400,000, or 1 cent a share, during the same period a year earlier.

Rayovac attributed the poor performance to special charges related to acquisition-related plant closings and softness in the U.S. battery market, as well as lower sales to troubled Kmart Corp., which announced widespread store closings this month.

Rayovac's North American sales were $107 million, down 12% from the $122 million reported last year, Rayovac said.

"There was some softness in the U.S. that caused our sales in the U.S. to be down," said Rayovac spokesman John Daggett. "That was related to the economy and the promotional activity that was out there. There were a lot of pricing promotions in the marketplace."

Rayovac executives, however, said they were encouraged by a strong showing in international sales, boosted by the presence of Varta. They said the 61% sales increase gives a more accurate picture of how Varta's presence impacts the overall operation.

"If you looked at it combined, the majority of the (sales) increase reflected the significant impact of the Varta acquisition as well as a strong overall performance for European operations," Daggett said. "This was the first quarter that really marked the new Rayovac. The majority of our sales will now be outside the U.S."

Since acquiring Varta for $262 million in cash, Rayovac has reduced excess facilities and overhead and has expanded its international presence.

For example, during the quarter, Rayovac had stronger sales in Europe and Latin America.

In Europe, sales were $119 million, up from $14 million last year. In addition to Varta, the favorable results arose from the continued strength of Rayovac's European hearing-aid and general battery businesses.

In Latin America, sales increased to $34 million from $26 million in the same period last year.

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