| Rayovac Corporation | |||
| Ticker: | ROV | 601 Rayovac Drive | |
| Exchange: | New York Stock Exchange | Madison, WI 53711 | |
| Industry: | Manufacturing (SIC Code 3692) | (608) 275-3340 | |
| # of Employees: | 2181 | ||
| Type of Shares: | Common Shares | Filing Date: | 9/9/97 | |
| U.S. Shares: | 5,360,000 | Offer Date: | 11/20/97 | |
| Non-U.S. Shares: | 1,340,000 | Filing Range: | $13.00 - $15.00 | |
| Primary Shares: | 6,700,000 | Offer Price: | $14.00 | |
| Secondary Shares: | 0 | Gross Spread: | $0.98 | |
| Offering Amount: | $93,800,000 | Selling: | $0.58 | |
| Expenses: | - | Reallowance: | $0.10 | |
| Shares Out After: | - |
| Manager | Tier | Phone |
| Merrill Lynch & Co. | Lead Manager | (212) 449-4600 |
| Bear, Stearns & Co. Inc. | Co-manager | (212) 272-4850 |
| Donaldson, Lufkin & Jenrette Securities Corp. | Co-manager | (212) 371-0641 |
| Smith Barney Inc. | Co-manager | (212) 723-7300 |
| Issuer's Law Firm: | Skadden, Arps, Slate, Meagher & Flom |
| Bank's Law Firm: | Fried, Frank, Harris, Shriver & Jacobson |
| Auditor: | Coopers & Lybrand |
Dollar amounts in U.S. millions except for per share data | |||||
| 9 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 6/30/96 | 6/30/97 | 6/30/96 | 6/30/97 | ||
| Revenue: | $423.40 | $321.00 | $316.00 | Assets: | $218.00 |
| Net Income: | $14.30 | $3.30 | $10.70 | Curr Assets: | |
| EPS: | $0.29 | Liabilities: | $299.20 | ||
| Prior EPS: | $0.33 | $32.60 | $28.20 | Curr Liabilities: | |
| Cash Flow/Oper: | $17.84 | Equity: | -$81.20 | ||
| Cash Flow/Fin: | -$11.95 | Cash: | |||
| Cash Flow/Inv: | -$6.35 | Working Cap: | $50.50 | ||
| Business Description |
| The company is a leading value brand and the third largest domestic manufacturer of general batteries and is the leading worldwide manufacturer of hearing aid batteries. The company is also the leading worldwide manufacturer of rechargeable household batteries, including lantern batteries and lithium batteries for personal computer clocks and memory backup. In addition, the company is a leading marketer of battery powered lighting products. Originally introduced in 1921, the Rayovac brand is a well recognized name in the battery industry. The company attributes the longevity and strength of its brand name to its high-quality products and to the success of its marketing and merchandising initiatives. The company has established its position as the leading value brand in the U.S. general alkaline battery market by focusing on the mass merchandiser channel. The company achieved this position by 1) offering batteries with quality and performance substantially equivalent to batteries offered by its principal competitors at a lower price, 2) emphasizing innovative in-store merchandising programs, and 3) offering retailers attractive margins. |
| Competition |
| The industries in which the Company participates are very competitive. Competition is based upon brand name recognition, perceived quality, price, performance, product packaging and product innovation, as well as creative marketing, promotion and distribution strategies. In the U.S. battery industry, the Company competes primarily with two well established companies, Duracell International Inc. ("Duracell"), a subsidiary of The Gillette Company, and Eveready Battery Company, Inc., a subsidiary of Ralston Purina Company and producer of Energizer brand batteries ("Energizer"), each of which has substantially greater financial and other resources and greater overall market share than the Company. In addition, the Company believes that Duracell and Energizer may have lower costs of production and higher profit margins in certain product lines than the Company. The Company competes with these competitors for the limited shelf space that retailers allot to battery products and for the promotional efforts of such retailers. Although foreign battery manufacturers historically have not been successful in penetrating the U.S. retail market to any significant extent, they have, from time to time, attempted to establish a significant presence in the U.S. battery market. There can be no assurance that these attempts will not be successful in the future or that the Company will be able to compete effectively with current or prospective participants in the U.S. battery industry. In addition, the battery-powered lighting device industry is highly competitive and includes a greater number of competitors than the U.S. battery industry, some of which have greater financial and other resources than the Company. |
| Business Plan |
| In September 1996, pursuant to the Recapitalization, affiliates of the Thomas H. Lee Company acquired beneficial ownership of approximately 79% of the outstanding Common Stock of Rayovac. David A. Jones was hired as Chief Executive Officer of the company to implement a new business strategy focused on 1) reinvigorating the Rayovac brand name by raising consumer brand awareness through, among other things, focused marketing and advertising, 2) growing Rayovac's market share by expanding distribution into new channels and customers, launching new products, and selectivity pursuing acquisitions and alliances, 3) reducing costs by rationalizing manufacturing and distribution, better utilizing existing plant capacity, outsourcing products where appropriate, reducing working capital, and downsizing corporate overhead, and 4) improving employee productivity by reorganizing workflow to support the business units, implementing modern information systems, increasing training and education, and implementing a pay-for-performance culture. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used to repay indebtedness incurred in connection with the recapitalization of the company completed in September 1996. |
| Name of Shareholder | % Owned Before | % Owned After |
| Thomas H. Lee Equity Fund III, L.P. | 73.70% | |
| THL-CCI Limited Partnership | 7.40% |
| Officer Name | Title | Age |
| David A. Jones | Chairman of the Board, Chief Executive Officer and President | 47 |
| Kent J. Hussey | Executive Vice President of Finance and Administration, Chief Financial Officer and Director | 51 |
| Trygve Lonnebotn | Executive Vice President of Operations and Director | 59 |
| Roger F. Warren | President/International and Contract Micropower and Director | 56 |
| Kenneth V. Biller | Senior Vice President and General Manager of Lighting Products and Industrial | 49 |
| Stephen P. Shansey | Senior Vice President of Marketing and General Manger of General Batteries | 41 |
| Merrell M. Tomlin | Senior Vice President of Sales | 44 |
| James A. Broderick | Vice President, General Counsel and Secretary | 53 |