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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the Fiscal Year Ended September 30, 2003.

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file No. 001-13615

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RAYOVAC CORPORATION

(Exact name of registrant as specified in its charter)

Wisconsin(State or other jurisdiction of
incorporation or organization)

22-2423556(I.R.S. Employer
Identification Number)601 Rayovac Drive, Madison, WI(Address of principal executive offices)

53711-2497(Zip Code)


Registrant's telephone number, including area code: (608) 275-3340

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on
which registeredCommon Stock, Par Value $.01

New York Stock Exchange, Inc.


Securities registered pursuant to Section 12(g) of the Act:None

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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 ý    No o

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).
Yes ý    No o

On
March 28, 2003, the aggregate market value of the voting stock held by non-affiliates of the registrant was $357,914,171. As of December 19, 2003, there were
outstanding 32,612,850 shares of the registrant's Common Stock, $0.01 par value.

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TABLE OF CONTENTS

|         |  |                                                                                                |  | Page
|-------- |  | ---------------------------------------------------------------------------------------------- |  | ----
|PART I  
|ITEM 1.  |  | BUSINESS                                                                                       |  | 1   
|ITEM 2.  |  | PROPERTIES                                                                                     |  | 6   
|ITEM 3.  |  | LEGAL PROCEEDINGS                                                                              |  | 7   
|ITEM 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            |  | 10  
|PART II 
|ITEM 5.  |  | MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                      |  | 11  
|ITEM 6.  |  | SELECTED FINANCIAL DATA                                                                        |  | 12  
|ITEM 7.  |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          |  | 14  
|ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                     |  | 29  
|ITEM 8.  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                    |  | 39  
|ITEM 9.  |  | CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE            |  | 39  
|ITEM 9A. |  | CONTROLS AND PROCEDURES                                                                        |  | 39  
|PART III
|ITEM 10. |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                             |  | 40  
|ITEM 11. |  | EXECUTIVE COMPENSATION                                                                         |  | 44  
|ITEM 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |  | 48  
|ITEM 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                 |  | 51  
|PART IV 
|ITEM 15. |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                               |  | 52  
|         |  | INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE                    |  | F-1 
|         |  | SIGNATURES                                                                                     |  | II-3
|         |  | EXHIBIT INDEX                                                                                  |  | E-1 

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PART I

ITEM 1.    BUSINESS

General

Rayovac Corporation is a global branded consumer products company with leading market positions in our two major product categories: consumer batteries and
electric personal care products. We are a leading worldwide manufacturer and marketer of alkaline and zinc carbon batteries. We are also the leading worldwide manufacturer and marketer of hearing aid
batteries, a leading worldwide designer and marketer of rechargeable batteries and a leading marketer of battery-powered lighting products. We are also a leading designer and marketer of electric
shavers and accessories, electric grooming products and hair care appliances. Our products are sold on a global basis in over 100 countries through a variety of channels, including mass merchandisers,
home centers and hardware stores, consumer electronics stores, warehouse clubs, food, drug and convenience stores, department stores, hearing aid professionals, industrial distributors and original
equipment manufacturers. We enjoy strong name recognition in our markets under the Rayovac, VARTA and Remington brands, each of which has been in existence for more than 80 years. We became a
Wisconsin corporation in 1986. We have 10 manufacturing and product development facilities located in the U.S., Europe and Latin America. We also purchase a significant portion of our products from
third-party suppliers.

During
fiscal 2003, we completed two major acquisitions: (1) the acquisition of substantially all of the consumer battery business of VARTA AG on October 1, 2002;
and (2) the acquisition of Remington Products Company, L.L.C., on September 30, 2003. With the acquisition of VARTA in the fall of 2002, we became a truly global battery
manufacturer and marketer and acquired additional low-cost manufacturing capacity and battery technology. By expanding our product line with the acquisition of Remington, we have become a
diversified consumer products company no longer solely focused on the battery and lighting product markets. The results of the Remington business are
excluded from our Consolidated Statement of Operations in this Annual Report on Form 10-K for fiscal year 2003 because Remington was acquired on the last day of the fiscal year.

Our
business is organized and managed according to three geographic regions: (i) North America, which includes the U.S. and Canada, (ii) Latin America, which includes
Mexico, Central America and South America and (iii) Europe/Rest of World (which we refer to as Europe/ROW), which includes continental Europe, the United Kingdom and all other countries in
which we do business. Global and geographic strategic initiatives and financial objectives are determined at the corporate level. Each geographic region is responsible for implementing defined
strategic initiatives and achieving certain financial objectives. Each geographic region has a general manager responsible for all the sales and marketing initiatives for all product lines within that
region. Financial information pertaining to our geographic regions is contained in Note 12 of the Notes to Consolidated Financial Statements filed with this report.

Our Products

We compete in two major product categories within the consumer products industry: consumer batteries and electric personal care products. Our broad line of
products includes:



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Net
sales data for our products as a percentage of consolidated net sales is set forth below. During fiscal 2003, we had no sales in the electric personal care product lines because the
Remington acquisition was consummated on the last day of the fiscal year. In addition, the fiscal 2001 and 2002 net sales data appearing below excludes VARTA's information for such periods because
VARTA was acquired on October 1, 2002, during fiscal 2003.

Percentage of Company Net Sales
Fiscal Year Ended September 30,2001

2002

2003General batteries

72
%
68
%
65
%Rechargeable batteries and chargers

5

6

8Hearing aid batteries

10

12

9Other specialty batteries

3

3

8Lighting products

10

11

10100
%
100
%
100
%


General Batteries

Our general batteries category includes alkaline and zinc carbon. We sell a full line of alkaline batteries (AA, AAA, C, D and 9-volt sizes) for both
consumers and industrial customers. Our alkaline batteries are marketed and sold under the Rayovac Maximum Plus brand and the VARTA Universal, High Energy and MaxiTech brands. We also engage in
limited private label manufacturing of alkaline batteries. Our zinc carbon batteries are designed for low- and medium-drain battery-powered devices such as flashlights.

Rechargeable Batteries and Chargers

We sell our rechargeable batteries and chargers under the Rayovac and VARTA brands. We sell NiMH and rechargeable alkaline batteries and a variety of chargers. In
August 2003, we started shipping our new 15-minute I-C3 NiMH rechargeable system.

Hearing Aid Batteries

We are currently the largest worldwide seller of hearing aid batteries. We sell our hearing aid batteries through retail trade channels and directly to
professional audiologists under several brand names and under several private labels, including Beltone, Miracle Ear, Siemens and Starkey.

Other Specialty Batteries

Our specialty battery products include photo batteries, lithium batteries, silver oxide batteries and keyless entry batteries. We sell coin cells for use in
watches, cameras, calculators, communications equipment and medical instrumentation. Our lithium coin cells are high-quality lithium batteries marketed for use in instrumentation,
calculators and personal computer clocks and memory back-up systems.

Lighting Products

We sell our lighting products under the Rayovac and VARTA brand names, under other brand names and under licensing arrangements with third parties. We offer a
broad line of battery-powered lighting products, including flashlights, lanterns and similar portable devices, for the retail and industrial markets.

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Electric Shaver and Grooming Products

We market a broad line of shaver and grooming products, including men's rotary and foil shavers and women's shavers, beard and mustache trimmers, nose and ear
trimmers, haircut kits and related accessories. We market electric shaver accessories consisting of shaver replacement parts (primarily foils and cutters), preshave products and cleaning agents.
Remington is also the only brand of men's electric shavers to offer both a foil-design product line and a rotary-design product line.

Other Personal Care Products

Our hair care products consist of hair dryers, hairsetters, curling irons, hair crimpers and straighteners, hot air brushes and lighted mirrors. Our wellness
products consist primarily of paraffin wax hand spas and foot spas. We plan to continue Remington's strategy of de-emphasizing wellness products.

Sales and Distribution

We sell our products to mass merchandisers, home centers and hardware stores, consumer electronics stores, warehouse clubs, food, drug and convenience stores,
department stores, hearing aid professionals, industrial distributors and original equipment manufacturers. Our sales to Wal-Mart represented approximately 13% of consolidated net sales
for fiscal 2003 and no other customer accounted for more than 10% of our consolidated net sales in fiscal 2003. Sales to Wal-Mart represented approximately 30% of Remington's consolidated net sales
during its fiscal year ended December 31, 2002. Other major customers include Target, Sears, Carrefour, Ahold and Kmart. We sell Remington-branded products and accessories, and provide related
product service, at approximately 80 service stores located in the U.S. and in the U.K.

North America

We align our internal sales force by distribution channel. We maintain separate sales forces primarily to service (i) our retail sales and distribution
channels, (ii) our hearing aid professionals and (iii) our industrial distributors and original equipment manufacturer sales and distribution channels. In addition, we use a network of
independent brokers to service participants in selected distribution channels.

Latin America

We align our internal sales force by distribution channel. We maintain two separate sales groups primarily to service (i) large retailers and food and drug
chains located mainly in urban areas and (ii) other retailers located in both urban and rural areas through distributors and wholesalers.

Europe/ROW

We maintain a separate sales force in Europe and utilize an international network of distributors to promote the sale of all of our products. We have sales
operations throughout Europe organized by three sales channels: (i) food/retail, which includes mass merchandisers, discounters, drug and food stores and non-food stores;
(ii) special trade, which includes clubs (cash/carry), consumer electronics stores, department stores, photography stores, hearing aid professionals and wholesalers/distributors and
(iii) industrial, government and original equipment manufacturers.

Manufacturing, Raw Materials and Suppliers

We manufacture alkaline batteries, zinc air hearing aid batteries and zinc carbon batteries. Raw materials comprise a significant portion of our cost of goods
sold. Zinc powder, electrolytic manganese dioxide powder and steel are the most significant raw materials we use to manufacture batteries and a number of worldwide sources of such materials exist. We
believe we will continue to have access to adequate quantities of these materials at competitive prices. We use commodity swaps, calls and puts in

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an
attempt to manage risks associated with fluctuations in market prices for purchases of zinc used in the manufacturing process.

All
of our rechargeable batteries and chargers, lighting products and hair care, wellness and other personal care products, and a majority of our shaving and grooming products, are
manufactured by third party suppliers, primarily located in China and Japan. We maintain ownership of tooling and molds used by many of our suppliers.

We
continually evaluate our 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 currently foreseeable needs.

Research and Development

Our research and development strategy is to direct resources toward performance improvements of our existing products, cost reduction and new product development.
Our battery research and development strategy is focused on alkaline, zinc air and NiMH rechargeable battery systems. Our alkaline product development groups in Madison, Wisconsin and Ellwangen,
Germany work closely with both our alkaline manufacturing plant in Fennimore, Wisconsin as well as our plant in Dischingen, Germany. Our zinc air product development group is also located in Madison,
Wisconsin and works closely with our zinc air plants in Portage, Wisconsin and Washington, U.K. Our rechargeable NiMH program has been enhanced by our strong working relationships with suppliers based
in China and Japan. Both our Hong Kong and Bridgeport foil and rotary cutting system development groups work closely with our Asian suppliers to develop new features and innovative electric shaving
products.

In
fiscal years 2001, 2002 and 2003, Rayovac invested $12.2 million, $13.1 million and $14.4 million, respectively, in battery and lighting product research and
development. These investments were supplemented by funds received from U.S. government contracts. These contracts enable us to investigate additional development opportunities. During calendar years
2001 and 2002, Remington invested approximately $4.3 million and $3.4 million, respectively, in research and development activities.

Patents and Trademarks

We own or license from third parties a considerable number of patents and patent applications throughout the world for battery product improvements, additional
features and manufacturing equipment. We have a license through March 2022 to certain alkaline battery designs, technology and manufacturing equipment from Matsushita to whom we pay a royalty.

We
also use and maintain a number of trademarks in our business, including Rayovac®, VARTA®, Remington®, Maximum®, Maximum
Plus, I-C3, Renewal®, Loud n Clear®, Pro Line®, Prodigy®, Microscreen®,
Microflex®, Precision®, Remington
Titanium and Smooth & Silky®. We rely on both registered and common law trademarks worldwide to protect our trademark rights. The Rayovac, VARTA and Remington
trademarks are also registered in countries outside of the U.S., including countries in Europe, Latin America and Asia. We do not have any right to the Rayovac trademark in Brazil, where an
independent third-party battery manufacturer owns the trademark.

As
a result of the October 2002 sale by VARTA AG of substantially all of its consumer battery business to Rayovac and VARTA AG's subsequent sale of its automotive battery business
to Johnson Controls, Inc., we became the owner of the VARTA trademark in the consumer battery category and Johnson Controls acquired ownership rights to the trademark in the automotive battery
category. VARTA AG and its VARTA Microbatterie subsidiary continue to have ownership rights to use the trademark with travel guides, industrial batteries and micro batteries. The four owners of the
VARTA trademark are parties to a Trademark and Domain Names Protection and Delimitation Agreement that governs ownership and usage rights and obligations of the parties relative to the trademark.

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As
a result of the common origins of our Remington subsidiary and Remington Arms Company, Inc., the Remington trademark is owned by us and by Remington Arms each with respect to
its principal products as well as associated products. As a result of the acquisition of Remington, we own the Remington trademark for shavers, shaver accessories, grooming products and personal care
products, while Remington Arms owns the trademark for firearms, sporting goods and products for industrial use, including industrial hand tools. The terms of a 1986 agreement between Remington and
Remington Arms provides for the shared rights to use the Remington trademark on products which are not considered "principal products of interest" for either company. A separate company, Remington
Licensing Corporation, owns the Remington trademark in the U.S. with respect to any overlapping uses and we and Remington Arms are each licensed to use the trademarks owned by Remington Licensing
Corporation in the respective areas of interest. We retain the Remington trademark for nearly all products which we believe can benefit from the use of the brand name in our distribution channels.

Competition

In our retail markets, companies compete for limited shelf space and consumer acceptance. Factors influencing product sales are brand name recognition, perceived
quality, price, performance, product packaging and design innovation, as well as creative marketing, promotion and distribution strategies.

Most
consumer batteries manufactured throughout the world are sold by one of four global companies: Rayovac, Energizer, Duracell and Panasonic. We also face competition from the private
label brands of major retailers, particularly in Europe. The offering of private-label batteries by retailers may create pricing pressure and may also increase consumer perceptions that batteries are
a commodity product. Typically, private-label brands are not supported by advertising or promotion, and retailers sell these
private label offerings at retail prices below competing brands. Significant new competitors are not anticipated due to significant costs to enter the marketplace. The main barriers to entry are
investment in technology research, cost of building manufacturing capacity and the expense of building retail distribution channels.

In
the U.S. alkaline battery category, Rayovac is positioned as the value brand while Duracell and Energizer are positioned as premium brands. In Europe, the VARTA brand has premium
positioning in Germany and the Scandinavian countries, while it is positioned more as a value brand in Italy, France and Spain. In Latin America where lower disposable incomes prevail and zinc carbon
batteries still outsell alkaline, Rayovac is positioned as a value brand.

The
battery marketplace is highly competitive and has recently been affected by pricing promotions. In the U.S., Duracell announced in early calendar 2003 that it would lower prices on
its AA and AAA alkaline batteries. Energizer reduced its prices with respect to certain retailers in response to Duracell's announcement. These pricing plans will affect the short term dollar growth
of the overall U.S. battery category. In Latin America and in Europe, promotional pricing has not been as significant a factor in influencing the battery marketplace.

Our
primary competitors in the foil and rotary shavers market are Philips/Norelco (which only sells and markets rotary shavers) and Braun (which only sells and markets foil shavers).
Only Remington competes in both the foil and rotary segments. Our major competitors in the hair care market are Conair and Helen of Troy. Companies that are able to maintain or increase the amount of
retail shelf space allocated to their respective products can gain competitive advantage.

Our
major competitors in the consumer battery and electric shaver markets have greater financial and other resources and greater overall market share than we do. They have committed
significant resources to protect their own market shares or to capture market share from us in the past and may continue to do so in the future. In some key product lines, our competitors may have
lower production costs and higher profit margins than we do, which may enable them to compete more aggressively in offering retail discounts and other promotional incentives to retailers,
distributors, wholesalers, and, ultimately, consumers.

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Seasonality

Sales of our products are seasonal. Sales during the first and fourth quarters of the fiscal year are generally higher than other quarters due to the impact of
the December holiday season. With our acquisition of Remington, we anticipate that our sales for the fiscal quarter ending in December will constitute a larger portion of our annual sales going
forward. For a more detailed discussion of the seasonality of our product sales, see "Management's Discussion and Analysis of Financial Condition and Results of OperationsSeasonal Product
Sales."

Governmental Regulations and Environmental Matters

Due to the nature of our operations, our facilities are subject to a broad range of federal, state, local and foreign legal and regulatory provisions relating to
the environment, including those regulating the discharge of materials into the environment, the handling and disposal of solid and hazardous substances and wastes and the remediation of contamination
associated with releases of hazardous substances at our facilities. We believe that compliance with the federal, state, local and foreign regulations to which we are subject will not have a material
effect upon our capital expenditures, earnings and competitive position. See Item 3, "Legal ProceedingsEnvironmental," for additional information regarding environmental matters.

Employees

We had approximately 5,000 full-time employees worldwide as of September 30, 2003.

Available Information

Our Internet website is http://www.rayovac.com and you may access, free of charge, through the Investor Relations portion of our website our annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, as soon as reasonably
practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

ITEM 2.    PROPERTIES

The following table lists our primary owned or leased manufacturing, packaging, and distribution facilities:

|Facility      |                            | Function |                                                                | Square Footage
|------------- | -------------------------- | -------- | -------------------------------------------------------------- | --------------
|North America |                            |          |                                                                |               
|              | Fennimore, Wisconsin(1)    |          | Alkaline Battery Manufacturing                                 |               
|              | Portage, Wisconsin(1)      |          | Zinc Air Button Cell & Lithium Coin Cell Battery Manufacturing |               
|              | Bridgeport, Connecticut(1) |          | Foil Cutting Systems and Accessories Manufacturing             |               
|              | Dixon, Illinois(2)         |          | Packaging & Distribution of Batteries and Lighting Devices     |               
|              | McDonough, Georgia(3)      |          | Distribution of Electric Personal Care Products                |               
|              |                            |          |                                                                |               

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|Europe/ROW    |                              |  |                                            | 
|------------- | ---------------------------- |  | ------------------------------------------ | 
|              | Dischingen, Germany(2)       |  | Alkaline Battery Manufacturing             | 
|              | Breitenbach, France(1)       |  | Zinc Carbon Battery Manufacturing          | 
|              | Washington, UK(2)            |  | Zinc Air Button Cell Battery Manufacturing | 
|              | Ellwangen, Germany(2)        |  | Battery Packaging                          | 
|              | Ellwangen, Germany(2)        |  | Battery Distribution                       | 
|Latin America |                              |  |                                            | 
|              | Guatemala City, Guatemala(1) |  | Zinc Carbon Battery Manufacturing          | 
|              | Manizales, Colombia(1)       |  | Zinc Carbon Battery Manufacturing          | 

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We also own, operate or contract with third parties to operate distribution centers, sales offices and administrative offices throughout the world in support of our
business. We lease our administrative headquarters and our primary battery research and development facility, which are both located in Madison, Wisconsin. We own our primary foil and rotary cutter
research and development facility, which is located in Bridgeport, Connecticut. We also lease retail space for approximately 80 Remington service stores, most of which are located in the U.S.

ITEM 3.    LEGAL PROCEEDINGS

Litigation

We are subject to litigation from time to time in the ordinary course of business. The amount of any liability with respect to any litigation to which we are now
subject cannot currently be determined. Other than the matters set forth below, we are not party to any pending legal proceedings which, in the opinion of management, are material to our business or
financial condition.

Three
class action lawsuits brought against Rayovac Corporation and several of its current and former officers and directors have been consolidated into one suit, Eli Friedman v. Rayovac Corporation, Thomas H. Lee Partners, LP,
Kenneth V. Biller, Kent J. Hussey, David A. Jones, Scott A. Schoen, Stephen P. Shanesy, Thomas R. Shepherd,
Randall J. Steward, Warren C. Smith, Jr., and Merrell Tomlin(Case No. 02 C 0308 C, United States District Court, Western District of Wisconsin),
which generally alleges that the defendants made various false and misleading statements, which had the alleged effect of artificially inflating the price of Rayovac stock during the period from
April 26, 2001 until September 19, 2001. Plaintiffs allege that statements by Rayovac during this period were false and misleading due to alleged failures to disclose, among other
things: (a) alleged improper sales practices in purported violation of generally accepted accounting principles; (b) failure to establish sufficient reserves for doubtful receivables;
(c) declining demand; and (d) risks of doing business in Latin America.

Rayovac
and the individual defendants filed a motion to dismiss the consolidated amended class action complaint in its entirety on February 10, 2003, and in May 2003, the
Court issued an order denying our motion to dismiss as to claims made under the Securities Act and granting the motion to dismiss as to claims made under the Exchange Act, with leave to amend the
Complaint to attempt to state a claim upon which relief could be granted under the Exchange Act. On June 19, 2003, plaintiffs filed the second consolidated amended class action complaint and on
July 9, 2003, Rayovac and the individual defendants filed a motion to dismiss the complaint. On October 20, 2003, the Court granted defendants' motion and dismissed plaintiffs' claims
under the Exchange Act with prejudice. The trial date with respect to the remaining claims under the Securities Act has been tentatively set for

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November 15,
2004. Rayovac and the individual defendants believe the remaining claims under the Securities Act to be wholly without merit and intend to vigorously defend themselves in this
litigation.

Our
Remington subsidiary is involved in a number of legal proceedings with Philips with respect to intellectual property rights, including trademarks owned by Philips, relating to the
shape of the head portion of Philips' three-headed rotary shaver.





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In
addition, The Gillette Company and its subsidiary, Braun GmbH, filed a complaint against Remington in the federal district court in Massachusetts on December 2, 2003 alleging
that Remington's "Smart Cleaner" automatic cleaning device on Remington's Titanium Smart System shaving product infringes United States patent numbers 5,711,328 and 5,649,556 allegedly held by Braun
(The Gillette Company and Braun GmbH v. Remington Consumer Products Company, LLC., Case No. 03 CV 12428 WGY). The complaint,
which has not yet been served on Remington, seeks injunctive relief and monetary damages. Should it be served with the complaint, Remington will deny the allegations and vigorously defend itself in
this case.

Further,
on December 10, 2003, Norelco Consumer Products Company filed a complaint against Remington in federal district court for the southern district of New York alleging that
a Remington
television advertisement referred to as "Slice" or "A Close Shave" and airing in the United States was false and misleading thereby violating certain provisions of the Lanham Act and the Connecticut
Unfair Trade Practices Act (Norelco Consumer Products Company v. Remington Products Company, LLC., Case No. 03 CV 979). The lawsuit
seeks injunctive relief as well as monetary damages. On December 12, 2003, the court granted Norelco's request for a temporary restraining order and enjoined Remington from airing the
advertisement pending resolution of the lawsuit. Remington denies the allegations brought by Norelco and will vigorously defend itself in this matter.

Environmental

We are subject to various federal, state and local environmental laws and regulations. We believe we are in substantial compliance with all such environmental
laws which are applicable to our operations. We are also involved in the environmental remediation activities as described below.

Rayovac's
former manganese processing facility in Covington, Tennessee was accepted into the Voluntary Cleanup, Oversight and Assistance Program of the Tennessee Department of
Environment and Conservation (the "TDEC") in February 1999. Under Tennessee's voluntary cleanup program, we negotiated a Consent Order and Agreement with the TDEC, dated February 12,
1999, covering investigation, and if necessary, remediation of the facility. Groundwater monitoring conducted with respect to a capped non-hazardous landfill at the facility, and groundwater testing
beneath former process areas of the facility, indicated elevated levels of certain inorganic contaminants, particularly (but not exclusively) manganese, in the groundwater underneath the facility. We
have completed closure of lagoons on the property and have completed the remediation of a stream that borders the

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facility.
Upon successful completion of the requirements of the Consent Order and Agreement, we expect that no further action will be required at the facility. While remediation costs are uncertain at
this time, we do not expect the matter to have a material adverse financial impact on us.

In
addition, as part of routine reporting requirements in connection with past property transfers, our Remington subsidiary has reported to the Connecticut Department of Environmental
Protection (the "CTDEP") that it has detected petroleum, metals and solvent compounds in soil and ground water samples taken from its Bridgeport, Connecticut facility. The general remedial strategies
have been selected by Remington and those strategies which require CTDEP approvals have been submitted for approval. All other strategies do not require approval for implementation. While costs for
the remediation activities which will eventually be undertaken are uncertain at this time, we do not expect that these activities will have a material adverse financial impact on us.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Rayovac's Annual Meeting of Shareholders was held on July 23, 2003. The directors standing for election were elected in an uncontested election. The
directors elected were William P. Carmichael, Kent J. Hussey and Philip F. Pellegrino. Mr. Carmichael received 25,218,657 votes in favor of his election and 1,738,492 votes were withheld. Mr.
Hussey received 25,738,625 votes in favor of his election and 1,218,524 votes were withheld. Mr. Pellegrino received 24,755,058 votes in favor of his election and 2,202,091 votes were withtheld. In
addition to the election of directors, the Company submitted the ratification of the appointment of KPMG LLP as our independent auditors to a vote of the shareholders. The vote in favor of
ratification was: For: 25,050,013; Against: 1,887,525; Abstained: 19,612.

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PART II

ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock, $0.01 par value per share (the "Common Stock"), is traded on the New York Stock Exchange (the "NYSE") under the symbol "ROV." The Common Stock
commenced public trading on November 21, 1997. As of December 1, 2003, there were 244 holders of record of Common Stock based upon data provided by the transfer agent for the Common
Stock. The following table sets forth the reported high and low prices per share of the Common Stock as reported on the New York Stock Exchange Composite Transaction Tape for the fiscal periods
indicated:

High

LowFiscal 2003Quarter ended December 29, 2002

$
16.28

$
11.20Quarter ended March 30, 2003

$
14.49

$
10.50Quarter ended June 29, 2003

$
13.84

$
9.93Quarter ended September 30, 2003

$
15.75

$
12.68Fiscal 2002Quarter ended December 30, 2001

$
18.05

$
13.60Quarter ended March 31, 2002

$
17.93

$
12.81Quarter ended June 30, 2002

$
19.10

$
14.80Quarter ended September 30, 2002

$
18.52

$
11.75


We
have not declared or paid any cash dividends on the Common Stock since it commenced public trading in 1997 and we do not anticipate paying cash dividends in the foreseeable future,
but intend to retain any future earnings for reinvestment in our business. In addition, the terms of our credit facility and the indentures governing our outstanding 81/2% senior
subordinated notes due 2013 restrict our ability to pay dividends to our shareholders. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be
dependent upon our financial condition, results of operations, capital requirements, contractual restrictions and such other factors as the Board of Directors deems relevant.

Information
regarding our equity compensation plans is set forth in Item 12 hereof under the caption "Equity Compensation Plan Information."

11

---



ITEM 6.    SELECTED FINANCIAL DATA

The following selected historical financial data is derived from our audited consolidated financial statements. Only the most recent three fiscal years audited
statements are included elsewhere in this Annual Report on Form 10-K. The following selected financial data should be read in conjunction with our consolidated financial statements
and notes thereto and the information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere herein.

|                                                                                 |         | Fiscal Year Ended September 30,
|-------------------------------------------------------------------------------- | ------- | -------------------------------
|
|
|Statement of Operations Data:                                                    |         |                                
|Net sales(1)                                                                     |         | $                              
|Gross profit(1)                                                                  |         |                                
|Income from operations(2)                                                        |         |                                
|Income before income taxes(3)                                                    |         |                                
|Net income                                                                       |         |                                
|Restructuring and related chargescost of goods sold                             |         | $                              
|Restructuring and related chargesoperating expenses                             |         |                                
|Non-operating expense(3)                                                         |         |                                
|Interest expense                                                                 |         | $                              
|Per Share Data:                                                                  |         |                                
|Net income per common share:                                                     |         |                                
|                                                                                 | Basic   |                                
|                                                                                 | Diluted |                                
|Average shares outstanding:                                                      |         |                                
|                                                                                 | Basic   |                                
|                                                                                 | Diluted |                                
|Cash Flow and Related Data:                                                      |         |                                
|Net cash provided by operating activities                                        |         | $                              
|Capital expenditures                                                             |         |                                
|Depreciation and amortization (excluding
amortization of debt issuance costs)(2) |         |                                
|Balance Sheet Data (at period end):                                              |         |                                
|Cash and cash equivalents                                                        |         | $                              
|Working capital(9)                                                               |         |                                
|Total assets(1)                                                                  |         |                                
|Total long-term debt, net of current maturities                                  |         |                                
|Total debt                                                                       |         |                                
|Total shareholders' equity                                                       |         |                                

---

12

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1999

2000

2001(in millions)Goodwill amortization

$
0.8

$
1.2

$
1.1Trade name amortization


0.4


2.3


2.3$
1.2

$
3.5

$
3.4






13

---



ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management's discussion of the financial results, liquidity, and other key items related to our performance. This section should be read in
conjunction with the "Selected Financial Data" and our Consolidated Financial Statements and related notes in the "Financial Statements" section of this Annual Report on Form 10-K. Certain
prior year amounts have been reclassified to conform to current year presentation. All references to 2001, 2002, and 2003 refer to fiscal year periods ended September 30, 2001, 2002, and 2003,
respectively.

INTRODUCTION

On October 1, 2002, we acquired substantially all of the consumer battery business of VARTA AG. The acquisition consisted of the purchase of all of VARTA
AG's consumer battery subsidiaries and business outside of Germany, excluding Brazil, and a controlling ownership and management interest in a new joint venture entity that will operate the VARTA AG
consumer battery business in Germany. The residual interest in the joint venture is held by VARTA AG. With the acquisition of VARTA, we became a truly global battery manufacturer and marketer and
acquired additional low-cost manufacturing capacity and battery technology.

In
addition, on September 30, 2003, we acquired all of the equity interests of Remington Products Company, L.L.C. Remington is a leading consumer products company focusing on the
development and marketing of personal care products. Remington designs and distributes electric shavers and accessories, grooming products, hair care appliances and other small electrical consumer
products. The acquisition of Remington allowed us to become a diversified consumer products company no longer solely focused on the battery and lighting product markets. Remington was attractive due
to its position as a strong branded company, its new product pipeline and its use of distribution channels similar to those employed by Rayovac in the United States.

Following
the acquisitions of VARTA and Remington, we are a global branded consumer products company with leading market positions in our two major product categories: consumer batteries
and electric personal care products. We are a leading worldwide manufacturer and marketer of alkaline and zinc carbon batteries. We are also the leading worldwide manufacturer and marketer of hearing
aid batteries, a leading worldwide designer and marketer of rechargeable batteries and a leading marketer
of battery-powered lighting products. With the acquisition of Remington, we are also a leading designer and marketer of electric shavers and accessories, electric grooming products and hair care
appliances. Our products are sold on a global basis in over 100 countries through a variety of channels, including mass merchandisers, home centers and hardware stores, consumer electronics stores,
warehouse clubs, food, drug and convenience stores, department stores, hearing aid professionals, industrial distributors and original equipment manufacturers ("OEMs"). We enjoy strong name
recognition in our markets under the Rayovac, VARTA and Remington brands, each of which has been in existence for more than 80 years.

Our
financial performance is influenced by a number of factors including: general economic conditions and trends in consumer markets; our overall product line mix, including sales prices
and gross margins which vary by product line; and our general competitive position, especially as impacted by our competitors' promotional activities and pricing strategies. These influencing factors
played significant roles in our financial results during fiscal 2001, 2002 and 2003.

We
manage our business based upon three geographic regions. The regions are as follows: North America, which includes the United States and Canada; Latin America, which includes Mexico,
Central America, South America and the Caribbean; and Europe/Rest of World ("Europe/ROW"), which includes continental Europe, the United Kingdom, and all other countries in which we do business.

14

---

Our
Consolidated Results of Operations for the twelve months ended September 30, 2003 do not include the impacts of the Remington acquisition, as the transaction occurred on the
close of business on September 30, 2003. Our Consolidated Balance Sheet, as of September 30, 2003, and Consolidated Statement of Cash Flows for the year then ended do incorporate the
impacts of the Remington transaction.

Cost Reduction Initiatives

We continually seek to improve our operational efficiencies, match our manufacturing capacity and product costs to market demand and better utilize our
manufacturing resources. Since the beginning of fiscal 2001, we have undertaken various initiatives to reduce manufacturing, operating and other costs. We believe that we can continue to drive down
our cost of goods manufactured with continued focus on cost reduction initiatives.

Fiscal 2001.In fiscal 2001, we closed our Wonewoc, Wisconsin plant and now source lighting products previously made at this
plant from third party suppliers. With this closure, we now outsource all of our lighting products. In addition, we outsourced certain manufacturing operations at our Fennimore,
Wisconsin plant to accommodate the installation of a new high speed AA-size alkaline battery line and discontinued inefficient packaging operations.

Also
in fiscal 2001, we closed our zinc carbon battery plants in Tegucigalpa, Honduras and rationalized our manufacturing and distribution processes in our Mexico City, Mexico
manufacturing facilities and in our European operations by discontinuing or outsourcing uneconomic product lines or production processes, including the outsourcing of zinc carbon rod manufacturing,
and by changing uneconomical modes of distribution.

Finally,
in fiscal 2001, we engaged in an organizational restructuring in North America and Latin America. As part of this initiative, sales and marketing functions were eliminated
and/or consolidated. These cost reduction initiatives reduced our global workforce by approximately 570 employees.

Fiscal 2002.In fiscal 2002, we closed our Santo Domingo, Dominican Republic manufacturing facility and transferred
production of zinc carbon batteries to our Guatemala City, Guatemala manufacturing facility. We also outsourced a portion of our zinc carbon battery production previously manufactured at our Mexico
City, Mexico facility.

The
impact of the fiscal 2001 and fiscal 2002 cost reduction initiatives on our operations is described below under the heading "Fiscal Year Ended September 30, 2002 Compared to
Fiscal Year Ended September 30, 2001Restructuring and Related Charges."

Fiscal 2003.In October 2002, in conjunction with the acquisition of the VARTA consumer battery business described
above, we announced a series of initiatives designed to position our consumer battery business for future growth opportunities and to optimize the combined global resources of Rayovac and VARTA. These
initiatives, which are expected to provide significant benefits to the combined organization, include the renegotiation of certain sourcing arrangements, the elimination of duplicate costs in our
consumer battery business and the consolidation of sales and marketing functions.

In
October 2002, we closed our Mexico City, Mexico manufacturing facility. With the closure of the Mexico City, Mexico plant, the plants in Guatemala City, Guatemala, Breitenbach,
France, and Manizales, Colombia became our remaining zinc carbon manufacturing plants. The consolidation of our zinc carbon capacity within Latin America is consistent with the global market trend
away from zinc carbon toward alkaline batteries, and is intended to allow us to more closely match our manufacturing capacity to anticipated market demands.

15

---

We
also announced the closure of operations at our Madison, Wisconsin packaging center and Middleton, Wisconsin distribution center in October 2002. These facilities were closed
during fiscal 2003 and their operations were combined into a new leased complex in Dixon, Illinois. Transition to the new facility was completed in June 2003. We anticipate that the relocation
to the new leased packaging and distribution center will result in operational changes that are intended to reduce freight and inventory handling costs.

We
expect that all geographies will benefit from decreased costs and expenses resulting from the VARTA initiatives. These initiatives are anticipated to create long-term
opportunities for procurement savings resulting from renegotiated raw material and finished good sourcing arrangements and lower operating costs as duplicative administrative support and sales and
marketing functions are consolidated and overlapping functions are eliminated.

The
benefits of the VARTA initiatives are expected to positively impact future gross profit and operating margins, but were partially offset during fiscal 2003 and in the
near-term by exit and integration costs, including employee termination benefits and asset impairments associated with the elimination of duplicative functions, an increase in interest
expense associated with the acquisition, and increased exposure to foreign currency movements reflecting our expanded global presence. In addition, the acquisition of the VARTA consumer battery
business is expected to negatively impact our effective tax rate, as we estimate a larger percentage of our income will be generated in higher tax jurisdictions.

Annual
savings associated with the VARTA initiatives are projected to be in the range of $40-45 million when fully realized by the end of fiscal 2005. Costs associated
with certain cost reduction initiatives are discussed in Note 15, Restructuring and Related Charges, to our Notes to Consolidated Financial Statements.

The
impact of the fiscal 2003 cost reduction initiatives on our operations is described below under the heading "Fiscal Year Ended September 30, 2003 Compared to Fiscal Year Ended
September 30, 2002Restructuring and Related Charges."

In
conjunction with the acquisition of the Remington business, we identified annual savings opportunities of approximately $23.5 million when fully realized, which we currently
expect by 2006. These savings are primarily related to purchasing, supply chain management, manufacturing and back office functions. We estimate we will incur total costs (cash and
non-cash) of approximately $35.0 million over the next two years to achieve these savings. Integration activities are currently underway and savings and cost estimates will be
further refined during fiscal 2004. We expect the North America and Europe/ROW geographies to benefit from decreased costs and expenses resulting from these Remington initiatives to optimize the
combined resources of Rayovac and Remington.

Meeting Consumer Needs through Technology and Development

We continue to focus our efforts on meeting consumer needs for portable power, personal care, and lighting products through new product development and technology
innovations. Prior to the Remington acquisition, we announced improvements and new developments in our rechargeable, alkaline, hearing aid, and lighting products product lines.

During
fiscal 2001, we introduced a one-hour charger for nickel metal hydride (NiMH) batteries, and began selling higher performing NiMH batteries. In fiscal 2002, we
announced the development of a revolutionary rechargeable NiMH battery system capable of recharging batteries in as little as 15 minutes which was introduced in the retail market during fiscal 2003.
These technological advancements provide consumers with portable, rechargeable power as the use of digital cameras and other high drain devices continues to grow.

In
fiscal 2002, we launched our new, more powerful Rayovac Maximum Plus alkaline batteries, with bold new graphics. Also during fiscal 2001 and fiscal 2002, we increased the performance
of our

16

---

hearing
aid batteries, and launched innovative packaging allowing consumers to more easily dispense the hearing aid batteries. In Europe during fiscal 2003, we launched our High Energy
alkaline batteries and upgraded our graphic designs for our MaxiTech and LongLife batteries, all marketed under the VARTA brand name. Finally, we rejuvenated our lighting
products product line through a series of new product launches designed to reach unique markets within the mass and retail channels.

During
fiscal 2003, we introduced to the United States marketplace a comprehensive pricing strategy for our alkaline battery product portfolio. We simplified the battery buying decision
process for consumers by offering fifty percent more of our AA and AAA batteries for the same price as the competition. We believe this "fifty percent more" strategy will help redefine the value
position of our Maximum Plus alkaline products. This strategy will also match up with the consumer trend of buying larger pack size of batteries.

Research
and development efforts at Remington allow us to maintain our unique manufacturing process in cutting systems for shavers. Remington is continuously pursuing new innovations for
its line of shavers including foil improvements and new cutting and trimmer configurations. Remington also devotes resources to the development of new technologies for its other products. During
fiscal 2003 and prior to the acquisition, Remington introduced the Remington Titanium line of men's MicroScreen® and MicroFlex® shavers, a line of personal
grooming products that utilize titanium-coated blades and trimmers.

We
believe that our products are well poised to meet the portable power, lighting and electric personal care needs of consumers. We will continue to focus on identifying new technologies
necessary to meet consumer and retailer needs within the marketplace.

Competitive Landscape

The alkaline battery business is highly competitive on a global scale. Within North America, Europe and Latin America, there are four primary branded providers of
alkaline batteries and a few local manufacturers within each geographic region. The alkaline marketplace has seen changes in recent years related to product line segmentation, with attempts to segment
the category into high-performance, regular and value positions, combined with the introduction of private label batteries at certain retailers. In addition, market participants continue
to engage in high levels of promotional and pricing activities to gain market share. In the United States in 2003, Duracell, one of our competitors, announced they were lowering the prices of their
alkaline batteries. This action, in conjunction with our and Energizer's responses, is expected to have a short-term impact on the overall United States battery category growth.

Within
Latin America, poor economic conditions have dramatically impacted battery sales especially within the zinc carbon product line. Zinc carbon batteries continue to be the largest
share of the battery market in Latin America in unit terms. In North America and Europe, the majority of consumers purchase alkaline batteries.

Within
North America and Europe, the rechargeable battery business has experienced dramatic changes over the past three years. Primary rechargeable alkaline sales have declined over this
period with a shift towards rechargeable batteries, such as NiMH, which are higher performing in high drain devices. Our development of a one-hour charger and an innovative
15-minute rechargeable battery technology help us maintain the number one market position within the rechargeable category in the United States, as estimated by management.

Within
the hearing aid battery category, we continue to hold the number one global market position based on management estimates. We believe that our close relationship with hearing aid
manufacturers and other customers, as well as our product performance improvements and packaging innovations, position us for continued success in this category.

17

---

Seasonal Product Sales

Our quarterly results are impacted by our seasonal sales. Sales during the first and fourth fiscal quarters of the year are generally higher than other quarters
due to the impact of the December holiday season. The seasonality of our sales during the last three fiscal years is as follows:

Percentage of Annual Sales

Fiscal Year Ended
September 30,Fiscal Quarter Ended2001

2002

2003December

27
%
28
%
28
%March

22
%
21
%
22
%June

24
%
24
%
23
%September

27
%
27
%
27
%


Remington
also experiences seasonal sales. During calendar 2002, Remington's sales for the quarters ended March 31, June 30, September 30, and December 31
were 15%, 19%, 22%, and 44%, respectively.
We anticipate our sales for the fiscal quarter ending in December will be a larger portion of our annual sales going forward.

Fiscal Year Ended September 30, 2003 Compared to Fiscal Year Ended September 30, 2002

Highlights of consolidated operating results

Year over year historical comparisons are influenced by our October 1, 2002 acquisition of substantially all of the consumer battery business of VARTA AG,
which is included in our current year but not prior year results. See Note 16, Acquisitions and Divestitures, of Notes to the Consolidated Financial Statements for additional information regarding the
VARTA acquisition. The acquisition of Remington, had no effect on fiscal 2003 operating results, as the transaction was completed after the close of business on September 30, 2003.

Net Sales.Our net sales increased $349.4 million to $922.1 million in fiscal 2003 from $572.7 million
the previous year. The sales increase is attributable to the VARTA acquisition partially offset by sales decreases in the North America segment.

Operating Income.Our income from operations decreased $3.4 million to $59.6 million in fiscal 2003 from
$63.0 million the previous year. The decrease was primarily attributable to $32.6 million in restructuring charges reflecting a series of restructuring initiatives announced and
implemented during fiscal 2003 and a $20.7 million decrease in North America segment profitability discussed below. These decreases were mostly offset by the profitability associated with the
VARTA acquisition. For further discussion of restructuring and related charges see Note 15, Restructuring and Related Charges, of Notes to the Consolidated Financial Statements.

Net Income.Our net income in fiscal 2003 decreased $13.7 million to $15.5 million from $29.2 million
the previous year. The decrease was due to restructuring and related charges of $20.2 million, after tax, an increase in interest expense of $13.1 million, after tax, North America
retailer markdown programs of $3.8 million, after tax, non-operating expense of $1.9 million, after tax, reflecting the write-off of unamortized debt issuance
costs associated with the replacement of our previous credit facility, and the decline in North America profitability, partially offset by the profitability of the VARTA acquisition. Fiscal 2002
includes a $7.5 million, after tax, net bad debt expense related to the bankruptcy filing of a North America segment customer.

18

---

Segment Results.We evaluate segment profitability based on income from operations before corporate expense and restructuring
and related charges. Corporate expense includes corporate purchasing expense, general and administrative expense, and certain research and development expenses.

Europe/ROW

2002

2003Net sales from external customers

$
52.5

$
421.1Segment profit


5.1


49.7Segment profit as a % of net sales


9.7
%

11.8
%Assets

$
31.4

$
537.4


The
Europe/ROW segment was the segment most dramatically impacted by the VARTA acquisition. Increases in sales, segment profitability and assets all reflect the significance of VARTA
within the region and the favorable impact of foreign currency movements. Intense sales, marketing, operational and administrative integration activities were implemented and substantially completed
within the region making identification of factors causing year-over-year variation difficult.

Profitability
as a percent of net sales increased to 11.8% in fiscal 2003 from 9.7% in the previous year primarily reflecting the impact of the VARTA acquisition and improved gross
profit margins.

Intangible
assets of $240.6 million, primarily related to the VARTA acquisition, now make up a substantial portion of the asset base within the segment. The segment's asset base
as of September 30, 2003, includes the international operations of Remington.

North America

2002

2003Net sales from external customers

$
435.6

$
376.0Segment profit


85.5


64.8Segment profit as a % of net sales


19.6
%

17.2
%Assets

$
256.4

$
625.5


Our
sales to external customers decreased $59.6 million, or 13.7%, to $376.0 million in fiscal 2003 from $435.6 million the previous year due primarily to weakness
in alkaline, zinc carbon, and rechargeable product line sales. Alkaline sales decreases of $54.3 million were caused by intense competitive promotional pricing activity in this battery
category, a $9.7 million decline in post-bankruptcy sales to a customer, approximately $6.2 million in retailer markdown programs associated with the Company's new alkaline
pricing program, and our inability to replace $4.0 million in sales to a discontinued low-margin OEM customer in the prior year. Zinc carbon sales decreased $9.6 million
compared to last year due to reduced distribution and general marketplace trends away from the use of this type of battery. Rechargeable battery sales also decreased $2.6 million compared to
last year due to lower sales in advance of the I-C3 rechargeable battery system launched in the fourth quarter of fiscal 2003. Hearing aid battery sales increased
$3.7 million, or 9.0% due to overall category strength.

Our
profitability decreased $20.7 million to $64.8 million from $85.5 million the previous year. The decrease in profitability was primarily attributable to lower
gross profit due to the current year sales decrease partially offset by a $12.0 million net bad debt expense related to the bankruptcy filing of a key customer recorded in the prior year. Due
to the reasons mentioned above, our profitability margins decreased 240 basis points to 17.2% from 19.6% the previous year.

Our
assets increased to $625.5 million from $256.4 million the previous year primarily reflecting the impacts of the Remington acquisition and intangible assets of
approximately $283.0 million

19

---

attributable
to the transaction. The purchase price allocation for the Remington acquisition is not yet final.

Latin America

2002

2003Net sales from external customers

$
84.7

$
125.0Segment profit


5.3


17.7Segment profit as a % of net sales


6.3
%

14.2
%Assets

$
191.0

$
203.9


Our
sales to external customers increased $40.3 million, or 47.6% to $125.0 million in fiscal 2003 from $84.7 million the previous year. The increase in sales is due
to the impact of the VARTA acquisition and sales increases within Central America of $7.6 million primarily reflecting improvements in our wholesaler and distributor channels. These increases
were partially offset by currency devaluations in the Dominican Republic contributing to a sales decrease of $4.3 million, declines caused by unfavorable economic conditions and political
uncertainties in Venezuela resulting in a sales decline of $2.3 million, and the unfavorable impacts of foreign currency movements impacting other geographies within the region.

Our
profitability increased $12.4 million to $17.7 million and was primarily the result of the VARTA acquisition, improved profitability in Central America partially offset
by profit declines in Venezuela and Dominican Republic.

Our
assets increased $12.9 million, or 6.8%, to $203.9 million from $191.0 million the previous year. The acquisition of the VARTA business in Latin America resulted
in asset increases across all asset categories, except for a reduction in accounts receivable reflecting improvements in collections, a decrease in property, plant and equipment reflecting the closure
of the Mexico manufacturing facility. The closure and subsequent write-off of the Mexico manufacturing related assets are included in restructuring and related charges in our Consolidated
Statement of Operations (see Note 15, Restructuring and Related Charges, of Notes to the Consolidated Financial Statements) and are not included in our Latin America segment results. The
Remington acquisition had no effect on Latin America segment assets.

Corporate Expense.Our corporate expenses increased $8.3 million to $40.0 million from $31.7 million in
the previous year. As a percentage of sales, our corporate expense was 4.3% in fiscal 2003, compared with 5.5% in the previous year. Fiscal 2003 corporate expense includes higher legal expense
associated with patent infringement litigation, a $1.5 million net charge associated with the settlement of such litigation, generally higher costs associated with the integration of the VARTA
businesses and other increases in compensation expense, primarily reflecting an increase in unearned restricted stock compensation of $2.1 million. Fiscal 2002 included a loss of
$1.5 million related to the bankruptcy filing of a freight payment service provider.

Restructuring and Related Charges.In fiscal 2003, we recorded restructuring and related charges of $32.6 million associated
with our cost reduction initiatives, as more fully described above under the heading "Cost Reduction InitiativesFiscal 2003", relating to: (i) approximately $13.0 million of
employee termination benefits for approximately 650 notified employees and non cash costs of approximately $0.7 million associated with the write-off of pension intangible assets
reflecting the curtailment of our Madison, Wisconsin packaging facility pension plan, (ii) approximately $12.8 million of equipment, inventory and other asset write-offs
primarily reflecting the abandonment of equipment and inventory associated with the closure of our Mexico City, Mexico plant and inventory and fixed asset impairments related to the closure of our
Wisconsin packaging and distribution locations, (iii) approximately $6.1 million of other expenses which include, distributor termination costs of approximately $0.9 million,
research and development contract termination costs of approximately

20

---

$0.5 million,
and other legal and facility shutdown expenses of approximately $4.7 million, net of a $0.3 million change in estimate reducing our anticipated costs to close our Wonewoc,
Wisconsin facility.

In
fiscal 2003, we recorded restructuring and related charges in cost of goods sold of approximately $21.1 million including amounts related to: (i) the closure in
October 2002 of our Mexico City, Mexico plant and integration of production into our Guatemala City, Guatemala manufacturing location, resulting in charges of approximately $6.2 million,
including termination payments of approximately $1.4 million, fixed asset and inventory impairments of approximately $4.3 million, and other shutdown related expenses of approximately
$0.5 million, (ii) the closure of operations at our Madison, Wisconsin packaging facility and combination with the Company's Middleton, Wisconsin distribution center into a
new leased complex in Dixon, Illinois resulting in charges of approximately $12.4 million, including termination costs of approximately $2.4 million and non cash pension curtailment
costs of approximately $0.7 million, fixed asset and inventory impairments of approximately $6.9 million, and relocation expenses and other shutdown related expenses of approximately
$2.4 million, (iii) a series of restructuring initiatives impacting our manufacturing functions in Europe, North America, and Latin America resulting in charges of approximately
$2.8 million, including termination benefits of approximately $1.8 million and inventory and asset impairments of approximately $1.0 million, and (iv) a change in estimate
relating to our anticipated costs to close our Wonewoc, Wisconsin facility resulting in a credit of $0.3 million.

In
fiscal 2003, we recorded restructuring and related charges in operating expenses of approximately $11.5 million including amounts related to: (i) the closure of
operations at our Middleton, Wisconsin distribution center and combination with our Madison, Wisconsin packaging facility into a new leased complex in Dixon, Illinois resulting in charges of
approximately $1.4 million, including termination costs of approximately $0.3 million, fixed asset impairments of approximately $0.3 million, and relocation expenses and other
shutdown related expenses of approximately $0.8 million, and (ii) a series of restructuring initiatives impacting our sales, marketing, and administrative functions in Europe, North
America, and Latin America resulting in charges of approximately $10.1 million, including termination costs of approximately $7.1 million, distributor termination costs of approximately
$0.9 million, research and development contract termination costs of approximately $0.5 million, fixed asset impairments of $0.3 million, and legal and other expenses of
approximately $1.3 million. The carrying value of assets held for sale under restructuring plans is approximately $8.7 million, and is included in Prepaid expense and other in our
Consolidated Balance Sheets.

In
fiscal 2002, we recorded net restructuring and related charges in cost of goods sold of $1.2 million related to: (i) the closure of our manufacturing facility in Santo
Domingo, Dominican Republic and transfer of production to our Guatemala City, Guatemala manufacturing facility and the outsourcing of a portion of our zinc carbon battery production previously
manufactured at our Mexico City, Mexico manufacturing facility, as more fully described above under the heading "Cost Reduction InitiativesFiscal 2002" and (ii) the reversal of
$1.3 million of expenses related to the December 2000 restructuring announcement which were not realized, primarily reflecting a change in estimated termination benefits of
$1.0 million, due to lower estimates of outplacement costs and costs attributable to fringe benefits, and the retention of selected employees.

The
closure of the Dominican Republic manufacturing facility and outsourcing of Mexico zinc carbon production, in fiscal 2002, resulted in $1.2 million of employee termination
benefits for approximately 115 manufacturing employees, $0.9 million of charges from the abandonment of equipment and inventory, net of a change in estimate of $0.4 million, associated
with the closing of the manufacturing facility and $0.3 million of other expenses. The change in estimate reflected our ability to utilize more inventory and manufacturing equipment at our
Guatemala City, Guatemala manufacturing location than originally anticipated.

21

---

Interest Expense.Interest expense increased $21.1 million to $37.2 million in fiscal 2003 due to the increase
in debt to finance the VARTA acquisition.

Non-Operating expense.In fiscal 2003, we recorded non-operating expense of $3.1 million
relating to the write-off of unamortized debt fees associated with our previous credit facility, replaced in conjunction with the VARTA acquisition. There was no non-operating
expense in fiscal 2002.

Other (Income) Expense.Other (income) expense, net, improved $4.9 million to income of $3.6 million in fiscal
2003, primarily attributable to foreign exchange transaction gains.

Income Tax Expense.Our effective tax rate was 32.8% for fiscal 2003, a decrease from 36.0% during the previous year. The
decrease in the effective tax rate from the prior year primarily reflects the net impact of certain tax credits realized during fiscal 2003, favorable adjustments to prior year deferred taxes,
adjustments to prior year tax reserves reflecting the expiration of certain statute of limitations, partially offset by non-deductible interest expense associated with our acquisition of VARTA.

Fiscal Year Ended September 30, 2002 Compared to Fiscal Year Ended September 30, 2001

Highlights of consolidated operating results

Net Sales.Our net sales decreased $43.5 million, or 7.1%, to $572.7 million in fiscal 2002 from
$616.2 million the previous year. Increases in hearing aid battery and lighting product sales were unable to offset declines in zinc carbon and alkaline sales.

Income from Operations.Our income from operations increased $8.6 million, or 15.8%, to $63.0 million in fiscal
2002 from $54.4 million the previous year. This increase was primarily due to reduction in restructuring charges of $21.1 million offset by a $12.0 million bad debt reserve, net
of recoveries, resulting from the bankruptcy filing of a key customer.

Net Income.Our net income for fiscal 2002 increased $17.7 million, or 153.9%, to $29.2 million from
$11.5 million the previous year. The increase reflects a reduction in interest expense attributable to the retirement of $65.0 million of senior subordinated notes following our
June 2001 common stock offering, plus a $56.1 million reduction in debt during fiscal 2002 due to strong cash flow from operations. In addition, fiscal 2001 results reflect a
$22.3 million pretax restructuring charge and an $8.6 million pretax non-operating expense. These improvements were partially offset by a bad debt reserve of
$7.5 million, net of tax, recognized in fiscal 2002 related to the bankruptcy filing of a key customer.

North America

2001

2002Net sales from external customers

$
448.8

$
435.6Segment profit


80.8


85.5Segment profit as a % of net sales


18.0
%

19.6
%


Our
revenue from external customers decreased $13.2 million, or 2.9%, to $435.6 million in fiscal 2002 from $448.8 million the previous year. Zinc carbon sales
decreases of $12.3 million reflect the trend in the industry toward alkaline and the discontinuation of certain products at selected stores of a major retailer. Alkaline sales decreases of
$4.8 million were attributable to the decline in sales to a key customer in bankruptcy, a cautious retail inventory environment and continued promotional activity, and our inability to replace
sales to an OEM customer in the previous year. Increases in lighting products of $4.3 million resulted from new product launches and distribution gains.

22

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Our profitability increased $4.7 million to $85.5 million in fiscal 2002 from $80.8 million the previous year. This increase was primarily attributable to the
benefits of the 2001 plant closures and organizational restructurings as more fully described under the heading "Cost Reduction Initiatives", that lowered operating expenses and improved gross profit
margins. This was partially offset by a $12.0 million bad debt reserve, net of recoveries, resulting from the bankruptcy filing of a North America segment customer.

Latin America

2001

2002Net sales from external customers

$
118.7

$
84.7Segment profit


16.9


5.3Segment profit as a % of net sales


14.2
%

6.3
%


Our
revenue from external customers decreased $34.0 million, or 28.6%, to $84.7 million in fiscal 2002 from $118.7 million the previous year due primarily to
decreased sales of zinc carbon batteries. Net sales were impacted by unfavorable economic conditions in Mexico, Argentina, and Venezuela, primarily due to general weakened market conditions. Also
impacting net sales were curtailments of shipments to certain distributors and wholesalers who were delinquent on payments, general political
uncertainties and instability in Argentina and Venezuela, and the unfavorable impacts of currency devaluation which contributed approximately $9.3 million of the sales decline versus fiscal
2001.

We
have a business presence in approximately 100 countries throughout the world, all of which are subject to varying degrees of political and economic risk. In fiscal 2002, changes in
the economic and political environments in Mexico, Argentina and Venezuela subjected us to varying degrees of political and economic risks. While these markets collectively represent approximately
40.0% and 23.3% of our Latin America segment revenue and total assets, respectively, they collectively represent approximately 6.0% and 8.4% of our consolidated revenue and total assets, respectively.

In
spite of the sales decline, the segment remained profitable, with profit of $5.3 million in fiscal 2002. However, this was a decrease of $11.6 million from the previous
year. This decrease was primarily attributable to the impact of the sales decline, partially offset by lower advertising expenses and a reduction in other operating expenses in the region. As of
October 1, 2001, we adopted FASB Statement No. 142 and were no longer required to amortize goodwill and certain intangibles with indefinite lives. This resulted in a reduction of
amortization expense of $3.0 million, within the segment, for the year. Segment profit margins decreased primarily due to an unfavorable customer mix compounded by relatively fixed operating
expenses spread over lower sales.

Europe/ROW

2001

2002Net sales from external customers

$
48.7

$
52.5Segment profit


4.1


5.1Segment profit as a % of net sales


8.4
%

9.7
%


Our
revenue from external customers increased $3.8 million, or 7.8%, to $52.5 million in fiscal 2002 from $48.7 million the previous year, primarily reflecting
increased sales of alkaline and hearing aid batteries, and favorable impacts of foreign currency movements.

Our
profitability increased $1.0 million, or 24.4%, due primarily to sales gains and a reduction in operating expenses due to the cost reduction initiatives described above under
the heading "Cost

23

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Reduction
InitiativesFiscal 2001" and the adoption of FASB Statement No. 142, which resulted in lower amortization expense.

Corporate Expenses.Our corporate expenses increased $6.6 million, or 26.3%, to $31.7 million in fiscal 2002
from $25.1 million the previous year. The increase was primarily due to higher legal expenses, technology spending, and compensation expense.

Restructuring and Related Charges.In fiscal 2002, we recorded net restructuring and related charges of $1.2 million
related to: (i) the closure of our manufacturing facility in Santo Domingo, Dominican Republic and transfer of production to our Guatemala City, Guatemala manufacturing facility and the
outsourcing of a portion of our zinc carbon battery production previously manufactured at our Mexico City, Mexico manufacturing facility, as more fully described above under the heading "Cost
Reduction InitiativesFiscal 2002" and (ii) the reversal of $1.3 million of expenses related to the December 2000 restructuring announcement which were not realized,
primarily reflecting a change in estimated termination benefits of $1.0 million, due to lower estimates of outplacement costs and costs attributable to fringe benefits, and the retention of
selected employees.

The
closure of the Dominican Republic manufacturing facility and outsourcing of Mexico zinc carbon production resulted in $1.2 million of employee termination benefits for
approximately 115 manufacturing employees, $0.9 million of charges from the abandonment of equipment and inventory, net of a change in estimate of $0.4 million, associated with the
closing of the manufacturing facility and $0.3 million of other expenses. The change in estimate reflected our ability to utilize more inventory and manufacturing equipment at our Guatemala
City, Guatemala manufacturing location than originally anticipated.

The
cost reduction initiatives undertaken in fiscal 2002 and described above are complete as of September 30, 2002. The remaining accrued termination benefits were paid before
December 2002. We believe cost reduction initiatives generated annual savings approximating the cash costs of the restructuring initiatives.

We
recorded restructuring and related charges of $22.3 million in fiscal 2001, reflecting $10.1 million of employee termination benefits for approximately 570 employees,
$10.2 million of equipment, inventory, and other asset write-offs and $2.0 million of other expenses associated with the cost reduction initiatives described above under the
heading "Cost Reduction InitiativesFiscal 2001," including: (i) an organizational restructuring in the U.S., (ii) the closure of the Tegucigalpa, Honduras facility and the
rationalization of our manufacturing and distribution processes in our Tegucigalpa, Honduras and Mexico City, Mexico manufacturing facilities and in our European operations, (iii) the closure
of our Wonewoc, Wisconsin manufacturing facility and (iv) the rationalization of inefficient manufacturing processes, packaging operations and product lines at our Fennimore, Wisconsin
manufacturing facility and Madison, Wisconsin packaging location. In addition, "Restructuring and Related Charges" also reflected costs associated with our June 2001 common stock offering.

The
cost reduction initiatives undertaken in fiscal 2001 are complete and we do not anticipate any further material charges to result from such initiatives.

Interest Expense.Interest expense decreased $11.2 million, or 41.2%, to $16.0 million in fiscal 2002 from
$27.2 million in the previous year primarily due to the retirement of $65.0 million of senior subordinated notes in June 2001 using proceeds from our common stock offering and the
repayment of $56.1 million in debt from our strong cash flow from operations.

Non-Operating Expense.In fiscal 2001, we recorded non-operating expense of $8.6 million
resulting from the premium on the repurchase of $65.0 million of Senior Subordinated Notes and the related write-off of unamortized debt issuance costs.

24

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Income Tax Expense.Our effective tax rate for fiscal 2002 was 36.0% compared to 34.1% for fiscal 2001. The higher rate for
fiscal 2002 primarily reflects a change in geographic profitability away from lower tax jurisdictions, primarily within Latin America, and proportionately higher income in the United States.

Liquidity and Capital Resources

For fiscal 2003, operating activities provided $76.2 million in net cash, an increase of $9.4 million over the previous year. Within operating cash
flow, we recognized lower net income of $13.8 million reflecting the impacts of the fiscal 2003 restructuring activities partially offset by the impacts of the VARTA acquisition. We also
experienced an increase in other non-cash adjustments primarily reflecting non-cash restructuring charges of $13.6 million, depreciation expense
of $12.3 million primarily reflecting the impacts of the VARTA acquisition, the write-off of the unamortized debt issuance costs of $3.1 million, and amortization of unearned
restricted stock compensation of $2.1 million partially offset by increases in deferred taxes of $13.8 million. Operating cash flow from changes in working capital was essentially
unchanged from the previous year.

Net
cash used by investing activities increased to $446.4 million for fiscal 2003, primarily reflecting payments associated with the VARTA and Remington acquisitions, net of cash
acquired, of $420.4 million. Capital expenditures of $26.1 million were primarily for improvements to alkaline battery manufacturing and leasehold improvements on the Dixon, Illinois
leased packaging and distribution center. Capital expenditures for fiscal 2004 are expected to be approximately $25.0 million, which are expected to include spending for continued investment in
our alkaline and hearing aid manufacturing operations, continued technology investments, and spending associated with our recent Remington acquisition.

During
fiscal 2003 we granted approximately 1.2 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 0.4 million shares of restricted stock on October 1, 2002, from the 1997 incentive
plan, to certain members of management. The majority of these shares will vest on September 30, 2005, with the remainder vesting on September 30, 2006, provided the recipient is still
employed by us. The total market value of the restricted shares on date of grant totaled approximately $4.8 million and has been recorded as unearned restricted stock compensation as a separate
component of shareholders' equity. Unearned compensation is being amortized to expense over the vesting period. During fiscal 2003, restricted shares with a value of approximately $0.3 million
on the grant date were forfeited.

The
Third Amended and Restated Credit Agreement ("Third Restated Agreement"), undertaken to acquire substantially all of the consumer battery business of VARTA AG, and subsequently
amended on January 29, 2003 ("First Amendment"), required, among other provisions, that the recording and incurrence of restructuring charges meet certain definitions and time constraints to
qualify as additions in calculating Adjusted EBITDA, as defined, that we were to transform the German subsidiary acquired from VARTA AG from a GmbH legal structure to a KGaA legal structure (the
"Transformation") on or before June 30, 2003, and that we obtain consent of the Required Lenders to effect releases or substitutions of collateral pledges. Effective June 27, 2003, the
Third Restated Agreement was amended ("Second Amendment"): (i) to re-define and permit acceleration, recording, and incurrence of certain Restructuring Charges, as defined in the
Third Restated Agreement, (ii) to extend the deadline for the Transformation to on or before March 31, 2004, and (iii) to consent to certain organizational restructurings
("Restructurings"), including releases and substitutions of collateral pledges, and disregarding application of certain basket amounts as necessary to effect the Restructurings. Effective
September 30, 2003, the Third Restated Agreement was amended ("Third Amendment") to (i) permit the Remington acquisition (the "Acquisition") including issuance of $350.0 million
of senior subordinated debt, increase the Dollar-denominated revolver by $20.0 million,

25

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decrease
the Euro-denominated revolver by €10.0 million and increase the Dollar-denominated Term B facility by $50.0 million, (ii) permit incurrence of
certain Restructuring Charges related to the Acquisition, (iii) amend certain covenant ratios to allow for the effect of financing of the Acquisition, (iv) allow for organizational
restructurings related to the Acquisition including necessary releases and substitutions of collateral pledges, and (v) increase certain covenant basket amounts to allow for operation of the
resulting larger business entity.

We
believe our cash flow from operating activities and periodic borrowings under our credit facilities will be adequate to meet the short-term and long-term
liquidity requirements of our existing business prior to the expiration of those credit facilities, although no assurance can be given in this regard. Our current senior secured credit facilities
include a revolving credit facility of $120.0 million, a revolving credit facility of €40.0 million, a term loan of $350.0 million, a term loan of
€125.0 million and a term loan of €50.0 million. As of September 30, 2003, the following amounts were outstanding under the senior secured
facilities: $317.0 million of the term loan and, €119.3 million and €42.5 million, respectively, of the Euro term loans. Approximately
$6.0 million of the availability under the U.S. Dollar revolver was utilized for outstanding letters of credit. As of September 30, 2003, our senior subordinated debt issued and
outstanding includes $350.0 million of 8.5% notes issued by Rayovac and $56.0 million of 11.0% notes issued by Remington (the "Remington Notes"). The Remington Notes were called for
redemption, effective September 30, 2003, and redeemed effective October 29, 2003, and consequently were reflected as current obligations at September 30, 2003. As of
September 30, 2003, we were in compliance with the provisions of our senior loan covenants and respective subordinated debt indentures. We believe our future results from operations will be
adequate to maintain compliance with such provisions although no assurance can be given in this regard.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

Critical Accounting Policies

Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States and fairly present our
financial position and results of operations. We believe the following accounting policies are critical to an understanding of our financial statements. The application of these policies requires
management judgment and estimates in areas that are inherently uncertain.

Valuation of Assets and Asset Impairment

We evaluate certain long-lived assets, such as property, plant and equipment, and certain intangibles for impairment based on the expected future cash
flows or earnings projections. An asset's value is deemed impaired if the discounted cash flows or earnings projections generated do not substantiate the carrying value of the asset. The estimation of
such amounts requires management judgment with respect to revenue and expense growth rates, changes in working capital, and selection of an appropriate discount rate, as applicable. The use of
different assumptions would increase or decrease discounted future operating cash flows or earnings projections and could, therefore, change impairment determination.

We
adopted FASB Statement No. 142,Goodwill and Other Intangible Assets, effective October 1, 2001. FASB Statement
No. 142 requires goodwill and other intangible assets with indefinite useful lives not be amortized, and that impairment of such assets be evaluated as discussed above at least annually.

26

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We
evaluate deferred tax assets based on future earnings projections. An asset's value is deemed impaired if the earnings projections do not substantiate the carrying value of the asset.
The estimation of such amounts requires significant management judgment with respect to revenue and expense growth rates, changes in working capital, and other assumptions, as applicable. The use of
different assumptions would increase or decrease future earnings projections and could, therefore, change the determination of whether an asset is realizable.

See
Note 2(h), Note 2(i), Note 2(x), Note 4, Note 5, and Note 9 to the Consolidated Financial Statements for more information about these assets.

Revenue Recognition and Concentration of Credit Risk

We recognize revenue from product sales upon shipment to the customer, which is the point at which all risks and rewards of ownership of the product are passed,
provided that: there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exists; the price to the buyer is fixed or determinable; and collectibility is deemed
reasonably assured. We are generally not obligated to allow for, and our general policy is not to accept, product returns.

We
enter into various promotional arrangements, primarily with retail customers, including arrangements entitling such retailers to cash rebates from us based on the level of their
purchases, which require us to estimate and accrue the estimated costs of the promotional programs. These costs are generally treated as a reduction of net sales.

We
also enter into promotional arrangements targeted to the consumer. Such arrangements are treated as either a reduction of net sales or an increase in cost of sales, based on the type
of promotional program. The income statement characterization of our promotional arrangements complies with EITF 01-09,Accounting for Consideration Given by a
Vendor to a Customer (Including A Reseller of the Vendor's Products).

Cash
consideration, or an equivalent thereto, given to a customer is generally classified as a reduction of net sales. If we provide a customer anything other than cash, the cost of the
consideration is classified as an expense and included in cost of sales.

For
all types of promotional arrangements and programs, we monitor our commitments and use statistical measures and past experience to determine the amounts to be recorded for the
estimate of the earned, but unpaid, promotional costs. The terms of our customer-related promotional arrangements and programs are individualized to each customer and are generally documented through
written contracts, correspondence or other communications with the individual customers.

We
also enter into various contractual arrangements, primarily with retail customers, which require us to make an upfront cash, or "slotting" payment, to secure the right to distribute
through such customer. We capitalize slotting payments, provided the payments are supported by a time or volume based contractual arrangement with the retailer, and will amortize the associated
payment over the appropriate time or volume based term of the contractual arrangement. The amortization of the
slotting payment is treated as a reduction in net sales and the corresponding asset is included in "Deferred charges and other" in our Consolidated Balance Sheets.

Our
trade receivables subject us to credit risk which is evaluated based on changing economic, political, and specific customer conditions. We assess these risks and make provisions for
collectibility based on our best estimate of the risks presented and information available at the date of the financial statements. The use of different assumptions may change the estimate of
collectibility. We extend credit to our customers based upon an evaluation of the customer's financial condition and credit history and generally do not require collateral. Our credit terms generally
range between 30 and 90 days from invoice date, depending upon the evaluation of the customer's financial condition and history. We monitor our customers' credit and financial conditions based
on changing economic conditions and

27

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adjust
our credit policies with respect to any individual customer as we determine appropriate. These adjustments may include, but are not limited to, restricting shipments to customers, reducing
credit limits, shortening credit terms, requiring cash payments in advance of shipment, or securing credit insurance. Our adjustments to our credit policies may not be effective in reducing our credit
risk associated with any particular customer. In 2002, we experienced a significant loss resulting from the bankruptcy filing of a large retailer in the United States to which we had extended credit
in accordance with our credit policy. In the future, we may experience additional losses due to changing economic, political and specific customer conditions that may adversely affect collectibility
of trade receivables.

See
Notes (2b), (2c), and (2e) to the Consolidated Financial Statements for more information about our revenue recognition and credit policies.

Pensions

Our accounting for pension benefits is primarily based on discount rate, expected and actual return on plan assets, and other assumptions made by management, and
is impacted by outside factors such as equity and fixed income market performance. Pension liability is principally the estimated present value of future benefits, net of plan assets. In calculating
the estimated present value of future benefits, net of plan assets, for 2002 and 2003, we used a discount rate of 7.0% and 5.0% to 6.0%, respectively. In lowering the discount rate from 2002 to 2003,
we considered the change in the general market interest rates of debt rated Aaa or Aa by Moody's Investors Service from June 2002 to June 2003 and solicited the advice of its independent
actuary. We believe the discount rate used is reflective of the rate at which the pension benefits could be effectively settled. The decrease in our discount rate in fiscal 2003 contributed to an
increase in our projected benefit obligation from the end of fiscal 2002 to the end of fiscal 2003.

Pension
expense is principally the sum of interest and service cost of the plan, less the expected return on plan assets and the amortization of the difference between our assumptions
and actual experience.
The expected return on plan assets is calculated by applying an assumed rate of return to the fair value of plan assets. In 2002 and 2003, we used an expected return on plan assets of 8.5% and 4.0% to
8.5%, respectively. Based on the advice of our independent actuary, we believe the expected rate of return is reflective of the long-term average rate of earnings expected on the funds
invested. An increase in the expected return on plan assets used by us would have the effect of decreasing future pension expense. If such expected return were overstated, it would ultimately increase
future pension expense. Similarly, an understatement of the expected return would ultimately decrease future pension expense. If plan assets decline due to poor performance by the markets and/or
interest rate declines our pension liability would increase, ultimately increasing future pension expense.

See
Note 11 to the Consolidated Financial Statements for a more complete discussion of our employee benefit plans.

Restructuring

Restructuring liabilities are recorded for estimated costs of facility closures, significant organizational adjustments, and measures undertaken by management to
exit certain activities. Costs for such activities are estimated by management after evaluating detailed analyses of the cost to be incurred. Such liabilities could include amounts for items such as
severance costs and related benefits (including settlements of pension plans), impairment of property and equipment and other current or long term assets, lease termination payments, plus any other
items directly related to the exit activities. While the actions are carried out as expeditiously as possible, restructuring charges are estimates. Changes in estimates resulting in an increase to or
a reversal of a previously recorded liability, may be required as management executes the restructuring plan. During fiscal 2003, we adopted the

28

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requirements
of FASB Statement No. 146,Accounting for Costs Associated with Exit or Disposal Activities, which impacts the timing of recognition
of certain exit or disposal costs.

We
report restructuring charges relating to manufacturing and related initiatives in cost of goods sold. Restructuring and related charges reflected in cost of goods sold include, but
are not limited to, termination and related costs associated with manufacturing employees, asset impairments relating to manufacturing initiatives, and other costs directly related to the
restructuring initiatives implemented.

We
report restructuring charges relating to administrative functions in operating expenses, such as, initiatives impacting sales, marketing, distribution, or other non-manufacturing
related functions. Restructuring and related charges reflected in operating expenses include, but are not limited to, termination and related costs, any asset impairments relating to the functional
area described above, and other costs directly related to the initiatives implemented.

See
Note 2(x) and Note 15 to the Consolidated Financial Statements for a more complete discussion of recent restructuring initiatives and related costs.

Loss Contingencies

Loss contingencies are recorded as liabilities when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The
outcome of existing litigation and the impact of environmental matters are examples of situations evaluated as loss contingencies. Estimating the probability and magnitude of losses is often dependent
upon management's judgment of potential actions by third parties and regulators. It is possible that changes in estimates or an increased probability of an unfavorable outcome could materially affect
future results of operations.

See
further discussion in Item 3, "Legal Proceedings," and Note 13 to the Consolidated Financial Statements.

Other Significant Accounting Policies

Other significant accounting policies, primarily those with lower levels of uncertainty than those discussed above, are also critical to understanding the
Consolidated Financial Statements. Notes to the Consolidated Financial Statements contain additional information related to our accounting policies and should be read in conjunction with this
discussion.

ITEM 7A.    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.

Interest Rate Risk

We have bank lines of credit at variable interest rates. The general level of U.S. interest rates, LIBOR, and Euro LIBOR primarily affects interest expense. We
use interest rate swaps to manage such risk. The net amounts to be paid or received under interest rate swap agreements are accrued as interest rates change, and are recognized over the life of the
swap agreements, as an adjustment to interest expense from the underlying debt to which the swap is designated. The related amounts payable to, or receivable from, the contract counter-parties are
included in accrued liabilities or accounts receivable.

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Foreign Exchange Risk

We are subject to risk from sales and loans to and from 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 Euros, Pounds Sterling, Colombian Pesos, and Mexican Pesos. Foreign currency
purchases are made primarily in Euros, Pounds Sterling, Guatemalan Quetzals, Colombian Pesos, and Mexican Pesos. We also have foreign currency sales and purchases in other currencies throughout the
world. We manage our foreign exchange exposure from anticipated sales, accounts receivable, inter-company loans, firm purchase commitments and credit obligations through the use of naturally occurring
offsetting positions (borrowing in local currency), forward foreign exchange contracts, foreign exchange rate swaps and foreign exchange options. The related amounts payable to, or receivable from,
the contract counter parties are included in accounts payable or accounts receivable.

Commodity Price Risk

We are exposed to fluctuations in market prices for purchases of zinc used in the manufacturing process. We use commodity swaps, calls and puts to manage such
risk. The maturity of, and the quantities covered by, the contracts are closely correlated to our anticipated purchases of the commodities. The cost of calls, and the premiums received from the puts,
are amortized over the life of the contracts and are recorded in cost of goods sold, along with the effects of the swap, put and call contracts. The related amounts payable to, or receivable from, the
counterparties are included in accounts payable or accounts receivable.

Sensitivity Analysis

The analysis below is hypothetical and should not be considered a projection of future risks. Earnings projections are before tax.

As
of September 30, 2003, 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 $3.9 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 loss of $0.8 million.

As
of September 30, 2003, the potential change in fair value of outstanding foreign exchange derivative instruments, assuming a 10% unfavorable shift in the underlying foreign
exchange rates would be a loss of $1.4 million. The net impact on future cash flows, after also including the gain in value on the related accounts receivable and accounts payable outstanding
at September 30, 2003 due to the same change in exchange rates, would be zero.

As
of September 30, 2003, 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 $1.0 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 $0.6 million.

A
discussion of our accounting policies for derivative financial instruments is included in Note 2(r) to the Consolidated Financial Statements.

Forward-Looking Statements

We have made or implied certain forward-looking statements in this Annual Report on Form 10-K. All statements other than statements of historical facts included
in this Annual Report, including the statements under "Management's Discussion and Analysis of Financial Condition and Results of

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Operations"
and "Business," regarding our business strategy, future operations, financial position, estimated revenues, projected costs, projected synergies, prospects, plans and objectives of
management, as well as information concerning expected actions of third parties, are forward-looking statements. When used in this Annual Report, the words "anticipate," "intend," "plan," "estimate,"
"believe," "expect," "project," "could," "will," "should," "may" and similar expressions are also intended to identify forward-looking statements, although not all forward-looking statements contain
such identifying words.

Since
these forward-looking statements are based upon current expectations of future events and projections and are subject to a number of risks and uncertainties, many of which are
beyond our control, actual results or outcomes may differ materially from those expressed or implied herein, and you should not place undue reliance on these statements. Important factors that could
cause our actual results to differ materially from those expressed or implied herein include, without limitation:



Some
of the above-mentioned factors are described in further detail in "Risk Factors" beginning on page 32. You should assume the information appearing in this Annual Report is
accurate only as of September 30, 2003 or as otherwise specified, as our business, financial condition, results of operations and prospects may have changed since that date. Except as required
by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to publicly update or revise
any forward-looking statement, whether as a result of new information, future events or otherwise to reflect actual results or changes in factors or assumptions affecting such forward-looking
statement.

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RISK FACTORS

Any of the following risks could materially and adversely affect our business, financial condition and results of operations and the risks
described below are not the only risks that we may face. Additional risks and uncertainties not currently known to us or that we currently view as immaterial may also materially and adversely affect
our business, financial condition or results of operations.

We participate in very competitive markets and we may not be able to compete successfully.

The consumer battery and electric personal care product markets in which we participate are very competitive. In the consumer battery market, our primary
competitors are Duracell (a brand of Gillette), Energizer and Panasonic (a brand of Matsushita). In the electric personal care products market, our primary competitors are Braun (a brand of Gillette)
and Philips/Norelco. We and our competitors compete for consumer acceptance and limited shelf space based upon brand name recognition, perceived quality, price, performance, product packaging and
design innovation, as well as creative marketing, promotion and distribution strategies. For example, in response to Duracell lowering its prices, we are currently introducing a comprehensive pricing
strategy for our alkaline product portfolio in the U.S. There can be no assurance that such program will achieve our objectives. Our ability to compete in these consumer product markets may be
adversely affected by a number of factors, including, but not limited to, the following:



Consolidation of retailers and our dependence on a small number of key customers for a significant percentage of our sales may negatively affect our profits.

During the past decade, retail sales of consumer products, including battery, electric shaver and lighting products, have been increasingly consolidated into a
small number of regional and national mass merchandisers and warehouse clubs. This trend towards consolidation is occurring on a worldwide basis. As a result of this consolidation, a significant
percentage of our sales are attributable to a very limited group of retailer customers. Wal-Mart, our largest retailer customer, alone accounted for approximately 13% of our consolidated
net sales in fiscal 2003. Sales to Wal-Mart represented approximately 30% of Remington's consolidated net sales during its fiscal year ended December 31, 2002. Our sales generally are made
through the use of individual purchase orders, consistent with industry practice. Because of the importance of these key customers, price or promotional demands by such customers, reductions in their
purchases, change in their financial condition or loss of their accounts could have a material adverse effect on our business, financial condition and results of operations.

We cannot assure you that Remington will be successfully integrated.

If we cannot successfully integrate Remington's operations, we may experience material adverse consequences to our business, financial condition and results of
operations. The integration of

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companies
operating in two distinctly different markets that have previously been operated separately involves a number of risks, including, but not limited to, the following:



Prior
to the acquisition, Rayovac and Remington operated as separate entities. We may not be able to maintain the levels of revenue, earnings or operating efficiency that Rayovac or
Remington had achieved or might achieve separately. Successful integration of Remington's operations will depend on our ability to manage those operations, realize opportunities for revenue growth
presented by strengthened product offerings and expanded geographic market coverage and, to some degree, eliminate redundant and excess costs.

If we are unable to improve existing products and develop new, innovative products, our sales and market share may suffer.

We believe that our future success in both our battery and electric personal care product markets will depend, in part, upon our ability to continue making
innovations in our existing products and to develop, manufacture and market new products. If we fail to successfully introduce, market and manufacture new products or product innovations, our ability
to maintain or grow our market share
may be adversely affected, which in turn could materially adversely affect our business, financial condition or results of operations.

We
have made and continue to make significant investments in research and development, as have our competitors. If our competitors successfully introduce new or enhanced products that
eliminate technological advantages our products may have in a certain market segment or otherwise outperform our products, or are perceived by consumers as doing so, we may be unable to compete
successfully in market segments affected by these changes. In the battery market, we may be unable to compete if our competitors develop or apply technology which permits them to manufacture batteries
at a lower relative cost. The fact that our principal competitors have substantially greater resources than us increases this risk. Pre-emptive patent rights, restrictions on our ability
to expand or modify manufacturing capacity or constraints on our research and development activity may also limit our ability to introduce products that are competitive on a performance basis.

We may make other strategic acquisitions which may divert the attention of management and which may not be successfully integrated into our existing business.

We intend to pursue increased market penetration through additional strategic acquisitions. We cannot assure you that we will identify suitable acquisition
candidates, that acquisitions will be completed on acceptable terms or that we will be able to successfully integrate the operations of any acquired business into our existing business. Such
acquisitions could be of significant size and involve either domestic or international parties. To acquire and integrate a separate organization would divert

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management
attention from other business activities. This diversion, together with other difficulties we may encounter in integrating an acquired business, could have a material adverse effect on our
business, financial condition and results of operations. In addition, we may borrow money to finance acquisitions. Such funds might not be available on terms as favorable to us as our current
borrowing terms and will increase our leveraged position.

Our foreign operations may expose us to a number of risks related to conducting business in foreign countries.

Our international operations and exports and imports to and from foreign markets are subject to a number of special risks. These risks include, but are not
limited to:



In
many of the developing countries in which we operate, there has not been significant governmental regulation relating to the environment, occupational safety, employment practices or
other business matters routinely regulated in the U.S. As such economies develop, it is possible that new regulations may increase the expense and risk of doing business in such countries. In
addition, social legislation in many countries in which our business operates may result in significantly higher expenses associated with labor costs, terminating employees or distributors and with
closing manufacturing facilities.

We may face a number of risks related to foreign currencies.

Our foreign sales and certain of our expenses are transacted in foreign currencies. In fiscal 2003, approximately 61% of our revenues and 65% of our expenses were
denominated in currencies other than U.S. dollars. Significant increases in the value of the U.S. dollar in relation to foreign currencies could have a material adverse effect on our business,
financial condition and results of operations. While we generally hedge a portion of our foreign currency exposure, we are still vulnerable to the effects of currency exchange rate fluctuations.
Changes in currency exchange rates may also affect our sales to, purchases from and loans to our subsidiaries as well as sales to, purchases from and bank lines of credit with our customers, suppliers
and creditors that are denominated in foreign currencies. We expect that the amount of our revenues and expenses transacted in foreign currencies will increase as our Latin American and European
operations grow and our exposure to risks associated with foreign currencies could increase accordingly.

Sales of our products are seasonal and may cause our quarterly operating results and working capital requirements to fluctuate.

Sales of our products are highly seasonal, with a large percentage of net sales occurring during the fiscal quarters ending on or about September 30 and
December 31 due to the impact of the December holiday season. As a result of this seasonality, our inventory and working capital needs fluctuate significantly during the year. In addition,
orders from retailers are often made late in the year, making forecasting of production schedules and inventory purchases difficult. Furthermore, adverse business or economic conditions during these
quarters could materially adversely affect results of operations for the

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full
year. For a more detailed discussion of the seasonality of our product sales, see "Management's Discussion and Analysis of Financial Condition and Results of OperationsSeasonal
Product Sales."

We may not be able to adequately protect our intellectual property.

To establish and protect our technology and other intellectual property rights, we rely upon a combination of patent, trademark and trade secret laws, together
with licenses, confidentiality agreements and other contractual covenants. The measures we take to protect our technology and other intellectual property rights may prove inadequate to prevent
misappropriation of our technology or other intellectual property. In addition, our competitors may independently develop technologies that are substantially equivalent or superior to our technology.
Moreover, the laws of certain foreign countries in which we operate or may operate in the future do not protect intellectual property rights to the same extent as do the laws of the U.S. which may
negate our competitive or technological advantages in such markets. Also, some of the technology underlying our products is the subject of nonexclusive licenses from third parties. As a result, this
technology could be made available to our competitors at any time. If this technology were licensed to a competitor, it could have a material adverse effect on our business, financial condition and
results of operations.

We
do not have any right to the Rayovac trademark in Brazil, where the mark is owned by another battery manufacturer; this may negatively affect our ability to pursue growth
opportunities in Brazil.

Third-party infringement claims against us could adversely affect our business.

From time to time we have been subject to claims that we are infringing upon the intellectual property of others and it is possible that third parties will assert
infringement claims against us in the future.
Any such claims, with or without merit, could be time-consuming, result in costly litigation, cause product delays or require us to enter into licensing or other agreements in order to
secure continued access to required technology. Licensing or other agreements, if required, may not be available on terms acceptable to us or at all. If claims of infringement against us are
successful, they may also require us to pay significant damages or subject us to an injunction against the sale or use of our products. In the event of a ruling against us on any such claim, a license
or similar agreement may not be available to us on reasonable terms.

Remington
is involved in a number of legal proceedings with Philips with respect to trademarks owned by Philips relating to the shape of the head portion of Philips' three-head rotary
shaver. An adverse finding against us in these or similar litigations may have a material adverse effect on our business, financial condition and results of operations. For more information, see
"Legal ProceedingsLitigation."

We are dependent on a few suppliers located in Asia for many of our electric personal care products; certain of our razor products are manufactured at one U.S. facility.

The vast majority of our electric personal care products are manufactured by suppliers located in China and Japan. Although we have long-established
relationships with many of these suppliers, we do not have long-term contracts with them. Any adverse change in any of the following could have a material adverse effect on our business,
financial condition and results of operations:



35

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If
our relationship with one of our key suppliers is adversely affected, we may not be able to quickly or effectively replace such supplier and may not be able to retrieve tooling and
molds possessed by such supplier.

In
addition, we manufacture the majority of our foil cutting systems for our razor product lines, using specially designed machines and proprietary cutting technology, at our
manufacturing facility in Bridgeport, Connecticut. This manufacturing facility is subject to the normal hazards that could result in any material damage to any such facility. Damage to this facility,
or prolonged interruption in the operations of this facility for repairs or other reasons, would have a material adverse effect on our ability to manufacture and sell our razor products.

Our dependence on, and the price of, raw materials may adversely affect our profits.

The principal raw materials used to produce our products  including zinc powder, electrolytic manganese dioxide powder and steel  are
sourced on a global or regional basis, and the prices of those raw materials are susceptible to price fluctuations due to supply/demand trends, transportation costs, government regulations and
tariffs, changes in currency exchange rates, price controls, the economic climate and other unforeseen circumstances. We regularly engage in forward purchase and hedging transactions to effectively
manage our raw materials costs for the next six to twelve months. These efforts may not be effective and, if we are unable to pass on raw materials price increases to our customers, our future
profitability may be materially adversely affected.

We depend on key personnel and may not be able to retain those employees or recruit additional qualified personnel.

We are highly dependent on the continuing efforts of our current executive officers and we likely will depend on the senior management of any business we acquire
in the future. Our business, financial condition or results of operations could be materially adversely affected by the loss of any of these persons and the inability to attract and retain qualified
replacements.

Class action lawsuits, regardless of their merits, could have an adverse effect on our business, financial condition and results of operations.

Rayovac and certain of its officers and directors have been named, and we may be named in the future, as defendants of class action lawsuits. For more
information, see "Legal ProceedingsLitigation." Regardless of their subject matter or the merits, class action
lawsuits may result in significant cost to us, divert the attention of management or otherwise have an adverse effect on our business, financial condition and results of operations.

We may incur material capital and other costs due to environmental liabilities.

Because of the nature of our operations, our facilities are subject to a broad range of federal, state, local and foreign laws and regulations relating to the
environment. These include laws and regulations that govern:



Risk
of environmental liability is inherent in our business. As a result, material environmental costs may arise in the future. In particular, we may incur capital and other costs to
comply with increasingly stringent environmental laws and enforcement policies. Although we believe that we are substantially in compliance with applicable environmental regulations at our facilities,
we may not be in compliance

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with
such regulations in the future, which could have a material adverse effect upon our business, financial condition and results of operations.

We
have facilities that have been in operation by us or prior operators for decades and are constructed on fill that includes, among other things, battery materials containing various
heavy metals. From time to time, we have been required to address the effect of historic activities on the environmental condition of our properties, including without limitation, the effect of the
generation and disposal of wastes such as manganese, cadmium and mercury, which are or may be considered hazardous, and releases from underground storage tanks. We have not conducted invasive testing
to identify all potential environmental liability risks. Given the age of our facilities and the nature of our operations, we cannot assure you that material liabilities will not arise in the future
in connection with our current
or former facilities. If previously unknown contamination of property underlying or in the vicinity of our manufacturing facilities is discovered, we could be required to incur material unforeseen
expenses. If this occurs, it may have a material adverse effect on our business, financial condition and results of operations. We have accepted a deed restriction on one such property in lieu of
conducting remedial activities, and may consider similar actions at other properties if appropriate. Although we are currently engaged in investigative or remedial projects at a few of our facilities,
we do not expect that such projects will cause us to incur material expenditures, however, we cannot assure you that our liability will not be material.

We
have been, and in the future may be, subject to proceedings related to our disposal of industrial and hazardous material at off-site disposal locations. These proceedings
are under the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") or similar state laws that hold persons who "arranged for" the disposal or treatment of
such substances strictly liable for costs incurred in responding to the release or threatened release of hazardous substances from such sites, regardless of fault or the lawfulness of the original
disposal. Liability under CERCLA is typically joint and several, meaning that a liable party may be responsible for all of the costs incurred in investigating and remediating contamination at a site.
As a practical matter, liability at CERCLA sites is shared by all of the viable responsible parties. While we currently have no pending CERCLA or similar state matters, we may be named as a
potentially responsible party at sites in the future and the costs and liabilities associated with these sites may be material.

Our substantial indebtedness could adversely affect our business, financial condition and results of operations and prevent us from fulfilling our obligations under the terms
of our indebtedness.

We have, and we will continue to have, a significant amount of indebtedness. As of September 30, 2003, we had total indebtedness of $943.4 million.

Our
substantial indebtedness could have important consequences. For example, it could:



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In
addition, a substantial portion of our debt bears interest at variable rates. If market interest rates increase, variable-rate debt will create higher debt service
requirements, which would adversely affect our cash flow. While we may enter into agreements limiting our exposure to higher debt service requirements, any such agreements may not offer complete
protection from this risk.

We will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures and research and development efforts, will depend on
our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that may be beyond our control. We cannot assure you
that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior credit facilities or otherwise in an amount sufficient to enable
us to pay our debt or to fund our other liquidity needs. We may need to refinance all or a portion of our debt on or before maturity. We cannot assure you that we will be able to refinance any of our
debt on commercially reasonable terms or at all.

Despite our current significant level of indebtedness, we may still be able to incur substantially more indebtedness. This could further exacerbate the risks associated with
our substantial indebtedness.

We may be able to incur substantial additional indebtedness in the future. Although the terms governing our senior credit facility and the indenture governing our
outstanding senior subordinated notes contain restrictions on the incurrence of additional indebtedness, debt incurred in compliance with these restrictions could be substantial. As of
September 30, 2003, our senior credit facilities would have permitted additional borrowing of up to approximately $160.6 million. If new indebtedness is added to our and our
subsidiaries' current indebtedness levels, the related risks that we face would be magnified. In addition, the indenture does not prevent us from incurring obligations that do not constitute
indebtedness.

The terms of our indebtedness impose, or will impose, restrictions on us that may affect our ability to successfully operate our business and our ability to make payments on
our debt.

The agreement governing our senior credit facilities and the indenture governing our outstanding senior subordinated notes each contain covenants that, among
other things, limit our ability to:



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Our
senior credit facilities also require us to comply with specified financial ratios and tests, including, but not limited to, minimum interest coverage ratio, maximum leverage ratio
and minimum fixed charge coverage ratio.

These
covenants could materially and adversely affect our ability to finance our future operations or capital needs and to engage in other business activities that may be in our best
interest. These covenants may also restrict our ability to expand or pursue our business strategies. Our ability to comply with these covenants may be affected by events beyond our control, such as
prevailing economic conditions and changes in regulations, and if such events occur, we cannot be sure that we will be able to comply. A breach of these covenants could result in a default under the
indenture governing our senior subordinated notes and/or the agreement governing our senior credit facilities. If there were an event of default under the indenture for the notes and/or the agreement
governing our senior credit facilities, holders of such defaulted debt could cause all amounts borrowed under these instruments to be due and payable immediately. Additionally, if we fail to repay the
debt under the senior credit facilities when it becomes due, the lenders under the senior credit facilities could proceed against certain of our assets and capital stock which we have pledged to them
as security. We cannot assure you that our assets or cash flow will be sufficient to repay borrowings under the outstanding debt instruments in the event of a default thereunder.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required for this Item is included in this Annual Report on Form 10-K on pages F-1 through F-51, inclusive and is incorporated
herein by reference.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.Our management, with the participation of our principal executive officer
and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) pursuant to Rule 13a-15(c) under the Exchange Act as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures are effective to provide reasonable assurance that information required
to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable SEC rules and forms.

Changes in Internal Control Over Financial Reporting.There was no change in our internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

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PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the name, age and position of each of our executive officers and directors as of December 1, 2003:

|Name                  |  | Age |  | Position                                            
|--------------------- |  | --- |  | ----------------------------------------------------
|David A. Jones        |  | 54  |  | Chairman of the Board and Chief Executive Officer   
|Kent J. Hussey        |  | 57  |  | President and Chief Operating Officer and Director  
|Randall J. Steward    |  | 49  |  | Executive Vice President and Chief Financial Officer
|Kenneth V. Biller     |  | 55  |  | Executive Vice President of Operations              
|Remy E. Burel         |  | 52  |  | Executive Vice President-Europe                     
|Luis A. Cancio        |  | 63  |  | Executive Vice President-Latin America              
|Lester C. Lee         |  | 43  |  | President, Remington North America                  
|Stephen P. Shanesy    |  | 47  |  | Executive Vice President-North America              
|Paul G. Cheeseman     |  | 45  |  | Senior Vice President-Technology                    
|William P. Carmichael |  | 60  |  | Director                                            
|Neil P. DeFeo         |  | 57  |  | Director                                            
|John S. Lupo          |  | 57  |  | Director                                            
|Philip F. Pellegrino  |  | 63  |  | Director                                            
|Thomas R. Shepherd    |  | 73  |  | Director                                            
|Barbara S. Thomas     |  | 54  |  | Director                                            

Mr. Jones has served as Chairman of our Board of Directors and our Chief Executive Officer since September 1996. From
September 1996 to April 1998, Mr. Jones also served as our President. Between February 1995 and March 1996, Mr. Jones was Chief Operating Officer, Chief
Executive Officer and Chairman of the Board of Directors of Thermoscan, Inc., a manufacturer and marketer of infrared ear thermometers for consumer and professional use. From 1989 to
September 1994, Mr. Jones served as President and Chief Executive Officer of The Regina Company, a manufacturer of vacuum cleaners and other floor care equipment. In addition,
Mr. Jones serves as a director of United Industries Corp., Tyson Foods, Inc. and Pentair, Inc. Mr. Jones has over 30 years of experience working in the consumer products
industry.

Mr. Hussey
has served as a director of Rayovac since October 1996 and has served as our President and Chief Operating Officer since August 2002 and from
April 1998 until November 30, 2001. From December 1, 2001 through July 2002, Mr. Hussey served as our President and Chief Financial Officer. From October 1996
to April 1998, Mr. Hussey served as our Executive Vice President of Finance and Administration and our Chief Financial Officer. From 1994 to 1996, Mr. Hussey was Vice President
and Chief Financial Officer of ECC International, a producer of industrial minerals and specialty chemicals,
and from 1991 to July 1994 Mr. Hussey served as Vice President and Chief Financial Officer of The Regina Company. Mr. Hussey also serves as a director of American Woodmark
Corporation.

Mr. Steward
rejoined us as our Executive Vice President and Chief Financial Officer in August 2002, after leaving for personal family reasons in December 2001. He
served as our Executive Vice President of Administration and Chief Financial Officer from October 1999 to December 2001. Mr. Steward initially joined us in March of 1998 as our
Senior Vice President of Corporate Development and was named Senior Vice President of Finance and Chief Financial Officer in April 1998, a position Mr. Steward held until
October 1999. From October 1997 to March 1998, Mr. Steward worked as an independent consultant, primarily with Thermoscan, Inc. and Braun AG, assisting with
financial and operational issues. From March 1996 to September 1997, Mr. Steward served as President and General Manager of Thermoscan, Inc. From January 1992 to
March 1996,

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Mr. Steward
served as Executive Vice President of Finance and Administration and Chief Financial Officer of Thermoscan, Inc.

Mr. Biller
has served as our Executive Vice President of Operations since October 1999, as our Senior Vice President of Operations from August 1998 to
October 1999, as our Senior Vice President of Manufacturing/Supply Chain from January 1998 to August 1998, as our Senior Vice President and General Manager of Lighting
Products & Industrial from 1996 to January 1998 and as our Vice President and General Manager of Lighting Products & Industrial from 1995 to 1996. Mr. Biller joined us in
1972 and has held numerous other positions with us, including Director of Technology/Battery Products and Vice President of Manufacturing.

Mr. Burel
joined us as our Executive Vice President-Europe in October 2002 upon our acquisition of substantially all of the consumer battery division of VARTA AG. Before
the acquisition, Mr. Burel had been Chief Executive Officer of VARTA Geratebatterie GmbH since January 2, 2000. From May 1990 to December 1999, Mr. Burel held
positions of increasing responsibility at VARTA as International Marketing Manager, Geographical Area Manager (France, Spain and Portugal), Profit Center Manager (general purpose batteries) and
Divisional Board Member. Mr. Burel started his career at Gillette/Braun and held six different positions in controlling and marketing in the U.S., France and Germany from 1975 to 1988.

Mr. Cancio
has served as our Executive Vice President-Latin America since October 2000 and as our Senior Vice President and General Manager of Latin America from
August 1999 to October 2000. From 1980 to 1996, Mr. Cancio held positions of increasing responsibility at Duracell International Inc., beginning as Vice President in Latin
America and ending his tenure as Senior Vice President in other international markets.

Mr.
Lee joined us as our President, Remington North America in October 2003 upon our acquisition of Remington and he held this same position with Remington since January 2002. Effective
January 1, 2004, Mr. Lee will assume the position of President of Rayovac's North American business unit. Previously, Mr. Lee held the position of President, U.S. Shaver & Grooming
Division at Remington since January 2000 and was Senior Vice President Sales and Integrated Logistics of Remington since July 1997. From 1995 until 1997, Mr. Lee was employed by Pacific Bell Mobile
Services, a Division of Pacific Telesis, most recently as Vice President of Sales, and from 1989 until 1995, he was employed by Norelco Consumer Products Company in various sales positions, including
Director of Sales, Western Division.

Mr. Shanesy
has served as our Executive Vice President-North America since October 2002 and previously served as Executive Vice President of Global Brand Management since
April 1998. Effective January 1, 2004, Mr. Shanesy will assume the position of Executive Vice PresidentStrategic Initiatives. From December 1997,
Mr. Shanesy served as our Senior Vice President of Marketing and the General Manager of General Batteries and Lights. From December 1996 to December 1997, Mr. Shanesy was
our Senior Vice President of Marketing and General Manager of General Batteries. Prior to joining us, from 1993 to 1996, Mr. Shanesy was Vice President of Marketing of Oscar Mayer.

Dr. Cheeseman
has served as our Senior Vice President-Technology since November 2001 and as our Vice President-Technology from June 1998 to November 2001 and
has led all of our major technology initiatives since that time. From 1992 to 1998, Dr. Cheeseman held various positions of increasing responsibility at Duracell, Inc., a division of
Gillette, including Director of Operations from 1992 to 1995 and Director of Technology from 1995 to June 1998.

Mr. Carmichael
has served as a director of Rayovac since August 2002. From 1999 to 2001, Mr. Carmichael served as Senior Managing Director of the Succession Fund, a
company that provides strategic financial and tax consulting to closely held private companies. Mr. Carmichael also served as Senior Vice President of Sara Lee Corporation from 1991 to 1993,
Vice President from 1985 to 1990

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and
Chief Financial Officer from 1987 to 1990 of Beatrice Foods Company, Vice President of E-II Holdings from 1987 to 1988 and Vice President of Esmark, Inc. from 1976 to 1984.
Mr. Carmichael is a director of Cobra Electrics Corporation, Nations Funds and The Finish Line, Inc. Mr. Carmichael is the Chairperson of our Audit Committee.

Mr. DeFeo
has served as a director of Rayovac since September 30, 2003. Mr. DeFeo most recently served as President and Chief Executive Officer of Remington from
1997 to September 30, 2003 and as Chairman of the Board of Remington from 2001 to September 30, 2003. From 1993 to 1996, Mr. DeFeo served as Group Vice President of U.S. Operations of
the Clorox Company, and from 1968 to 1993 he held positions of increasing responsibility at Procter & Gamble. Mr. DeFeo also serves as a director of Cluett America, Inc., Driscoll Strawberry
Association, Inc. and American Woodmark Corporation.

Mr. Lupo
has served as a director of Rayovac since July 1998 and is a principal in the consulting firm Renaissance Partners, LLC, which Mr. Lupo joined in
February 2000. From October 1998 until November 1999, Mr. Lupo served as Executive Vice President for Sales and Marketing for Bassett Furniture Industries, Inc. From
April 1998 to October 1998, Mr. Lupo served as a consultant in the consumer products industry. Prior to that time and since August 1996, Mr. Lupo served as Senior
Vice President and Chief Operating Officer for the international division of Wal-Mart Stores, Inc. From October 1990 to August 1996, Mr. Lupo served as Senior
Vice President  General Merchandise Manager of Wal-Mart Stores, Inc. Mr. Lupo is a member of our Corporate Governance and Nominating Committee.

Mr. Pellegrino
has served as a director of Rayovac since November 2000. Mr. Pellegrino currently serves as President of North American Sales for Kraft Foods, and has
held that position since April 1, 2003. From September 2000 to April 2003, he served as Senior Vice President and President of Sales for Kraft Foods. From 1995 to
September 2000, Mr. Pellegrino served as Senior Vice President of Sales and Customer Service for Kraft Foods. Mr. Pellegrino has been employed by Kraft Foods or its subsidiary,
Oscar Mayer, since 1964 in various management and executive positions. Mr. Pellegrino is a member of both our Audit Committee and our Compensation Committee.

Mr. Shepherd
has served as a director of Rayovac since our September 1996 recapitalization. Mr. Shepherd is Chairman of TSG Equity Partners, LLC, a private equity
investment firm, and is also a director of The Vermont Teddy Bear Company Inc. and various private corporations. Mr. Shepard currently serves as a Special Partner of Thomas H. Lee
Partners, L.P. From 1986 through 1998, Mr. Shepherd served as a Managing Director of Thomas H. Lee Company. Mr. Shepherd is our Presiding Director, the Chairperson of our Compensation Committee
and a member of our Audit Committee.

Ms. Thomas
has served as a director of Rayovac since May 2002. Ms. Thomas most recently served as Interim Chief Executive Officer of The Ocean Spray Company from
November 2002 to April 2003. Previously, Ms. Thomas was President of Warner-Lambert Consumer Healthcare, the over-the-counter pharmaceuticals business of
the Warner-Lambert Company, until its purchase by Pfizer Inc. in July 2000. From 1993 to 1997, Ms. Thomas was employed by the Pillsbury Company, serving last as President of
Pillsbury Canada Ltd. Prior to joining Pillsbury, Ms. Thomas served as Senior Vice President of Marketing for Nabisco Brands, Inc. Ms. Thomas also serves as a director of
Dial Corporation. Ms. Thomas is the Chairperson of our Corporate Governance and Nominating Committee.

Code of Ethics and Financial Expert

Code of Ethics.We have adopted the Code of Ethics for Principal Executive Officer and Senior Financial Officers, a code of
ethics that applies to our Chief Executive Officer, Chief Financial Officer and other senior finance organization employees. The Code of Ethics for Principal Executive Officer

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and
Senior Financial Officers is publicly available on our website at www.rayovac.com. If we make any substantive amendments to this code of ethics or grant any waiver, including any implicit waiver,
from a provision of the code to our Chief Executive Officer or Chief Financial Officer, we will disclose the nature of such amendment or waiver on that website or in a report on Form 8-K.

We
have also adopted a new Rayovac Corporation Code of Business Conduct and Ethics, a code of ethics that applies to all of our directors, officers and employees. The Rayovac Corporation
Code of Business Conduct and Ethics is publicly available on our website at www.rayovac.com. Any waiver of this code of ethics for executive officers or directors may be made only by our Board of
Directors or a committee of the Board of Directors and will be promptly disclosed to our shareholders.

Audit Committee Financial Expert.Our Board of Directors has determined that William P. Carmichael, Director, is our
Audit Committee Financial Expert, as defined under Section 407 of the Sarbanes-Oxley Act of 2002 and the rules promulgated by the Securities and Exchange Commission in furtherance of
Section 407. Mr. Carmichael is independent of our management.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, officers and persons who own more than 10% of a registered class of our equity securities to file
reports of ownership and changes in ownership with the Securities and Exchange Commission. Based solely upon review of Forms 3, 4 and 5 (and amendments thereto) furnished to us during or in respect of
the fiscal year ended September 30, 2003, we are not aware of any director or executive officer who has not timely filed reports required by Section 16(a) of the Exchange Act during or
in respect of such fiscal year, except for the inadvertent late reporting by Merrell M. Tomlin of one forfeiture of restricted stock, the inadvertent late reporting by Kent J. Hussey of one purchase
of stock and the inadvertent late reporting by Randall J. Steward of one grant of stock options.

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ITEM 11.    EXECUTIVE COMPENSATION

The following table sets forth the fiscal 2003, fiscal 2002 and fiscal 2001 compensation paid to our Chief Executive Officer, each of the other four most highly
compensated executive officers serving as of September 30, 2003 and one former executive officer who would have otherwise been included in this table (the "Named Executive Officers"). Certain
prior year amounts have been reclassified to conform with current year presentation.

|Name and Principal Position                                     |                                | Fiscal
Year    |      | Salary($) |                         | Bonus($) |   | Other
Annual
Compensation($) |         | Restricted
Stock
Awards($) |                       | Securities
Underlying
Options(#) |      | All Other
Compensation($) |          
|--------------------------------------------------------------- | ------------------------------ | -------------- | ---- | --------- | ----------------------- | -------- | - | ---------------------------- | ------- | -------------------------- | --------------------- | -------------------------------- | ---- | ------------------------- | ---------
|David A. Jones,                                                 |                                | 2003           |      | $         | 718,500                 |          | $ | 565,000                      |         | $                          | 407,000               | (1)                              | $    | 1,400,000                 | (2)      
|                                                                | Chairman of the Board and      |                | 2002 |           |                         | 568,500  |   |                              | 186,000 | (3)                        |                       | 349,000                          | (4)  |                           |          
|                                                                | Chief Executive Officer        |                | 2001 |           |                         | 568,500  |   |                              |         |                            |                       | 343,000                          | (5)  |                           | 1,180,000
|Kent J. Hussey,                                                 |                                | 2003           |      |           | 435,000                 |          |   | 116,000                      |         |                            | 198,000               | (8)                              |      | 761,000                   | (2)      
|                                                                | President and Chief Operating  |                | 2002 |           |                         | 385,000  |   |                              | 42,000  | (3)                        |                       | 154,000                          | (9)  |                           |          
|                                                                | Officer                        |                | 2001 |           |                         | 385,000  |   |                              |         |                            |                       | 125,000                          | (10) |                           | 826,000  
|Luis A. Cancio,                                                 |                                | 2003           |      |           | 325,000                 |          |   | 69,000                       |         |                            | 115,000               | (11)                             |      | 347,000                   | (2)      
|                                                                | Executive Vice PresidentLatin |                | 2002 |           |                         | 290,000  |   |                              | 42,000  | (3)                        |                       | 93,00                            | (12) |                           |          
|                                                                | America                        |                | 2001 |           |                         | 293,000  |   |                              |         |                            |                       | 80,000                           | (13) |                           | 538,000  
|Stephen P. Shanesy,                                             |                                | 2003           |      |           | 325,000                 |          |   | 73,000                       |         |                            | 120,000               | (14)                             |      | 347,000                   | (2)      
|                                                                | Executive Vice President      |                | 2002 |           |                         | 290,000  |   |                              | 48,000  | (3)                        |                       | 89,000                           | (15) |                           |          
|                                                                | North America                  |                | 2001 |           |                         | 290,000  |   |                              |         |                            |                       | 85,000                           | (16) |                           | 568,000  
|Kenneth V. Biller
Executive Vice President of
Operations        |                                | 2003
2002
2001 |      |           | 325,000
290,000
275,000 |          |   | 73,000
48,000                | (3)     |                            | 120,000
91,000
87,000 | (18)(19)(20)                     |      | 347,000
538,000           | (2)(6)   
|Merrell M. Tomlin,
Former Executive Vice President of
Sales(21) |                                | 2003
2002
2001 |      |           | 135,000
290,000
290,000 |          |   | 73,000
48,000                | (3)     |                            | 51,000
92,000
71,000  | (22)(25)(16)                     |      | 347,000
560,000           | (23)(6)  

---

44

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Option Grants and Exercises

In connection with our 1996 recapitalization, the Board of Directors adopted the Rayovac Corporation 1996 Stock Option Plan (the "1996 Plan"). Pursuant to the
1996 Plan, options may be granted with respect to an aggregate of 2,318,000 shares of Common Stock. At September 30, 2003 an aggregate of 1,186,367 options to purchase shares of Common Stock at
a weighted average exercise price of $7.04 per share, 508,181 of which relate to the 911,577 granted to David A. Jones in accordance with the terms of his employment agreement, were outstanding. See
"Employment Agreements". In September 1997, the Board of Directors adopted the 1997 Rayovac Incentive Plan (the "Incentive Plan"). Pursuant to the Incentive Plan, stock-based awards may be
granted, including options and restricted stock, to purchase up to 5,000,000 shares of Common Stock. At September 30, 2003 an aggregate of 3,736,854 options at a weighted average exercise price
of $15.61 were outstanding under the Incentive Plan.

The
following table discloses the grants of stock options during fiscal 2003 to the Named Executive Officers.

Option Grants in Fiscal 2003

|                      |  | Individual Grants |  | Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Option Term
|--------------------- |  | ----------------- |  | ----------------------------------------------------------------------------------------------
|
|
|
|
|David A. Jones        |  | 175,000           |  | 14.5                                                                                          
|Kent J. Hussey        |  | 75,000            |  | 6.2                                                                                           
|Luis A. Cancio        |  | 50,000            |  | 4.1                                                                                           
|Stephen P. Shanesy    |  | 50,000            |  | 4.1                                                                                           
|Kenneth V. Biller     |  | 50,000            |  | 4.1                                                                                           
|Merrell M. Tomlin (1) |  | 50,000            |  | 4.1                                                                                           

---

45

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The following table sets forth information concerning options to purchase Common Stock held by the Named Executive Officers.

Aggregated Option Exercises In Fiscal 2003 And Fiscal Year-End Option Values

|Name                  |  | Shares
Acquired
on Exercise |  | Value
Realized $ |  | Number of Securities
Underlying Unexercised
Options at
Fiscal Year End (#)
(Exercisable/Unexercisable) |  | Value of Unexercised
In-the-money
Options at
Fiscal Year End ($)(1)
(Exercisable/Unexercisable)
|--------------------- |  | --------------------------- |  | ---------------- |  | ------------------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------
|David A. Jones        |  |                            |  |                 |  | 576,243/331,938                                                                                        |  | $                                                                                              
|Kent J. Hussey        |  |                            |  |                 |  | 224,911/180,948                                                                                        |  | $                                                                                              
|Luis A. Cancio        |  |                            |  |                 |  | 152,750/147,250                                                                                        |  | $                                                                                              
|Stephen P. Shanesy    |  |                            |  |                 |  | 132,592/136,000                                                                                        |  | $                                                                                              
|Kenneth V. Biller     |  |                            |  |                 |  | 151,225/136,000                                                                                        |  | $                                                                                              
|Merrell M. Tomlin (2) |  |                            |  |                 |  | 122,763/58,625                                                                                         |  | $                                                                                              

---

Supplemental Executive Retirement Plan

We provide a supplemental executive retirement plan for eligible employees. Our Board of Directors determines which of our employees are eligible to participate
in this plan. Currently, only our Named Executive Officers and certain other executive officers participate in this plan. Pursuant to the plan, we establish an account for each plan participant. Each
October 1, we credit the account of each participant by an amount equal to 15% of the participant's salary. In addition, each quarter we credit each account by an amount equal to 2% of the
participant's account value. Each participant vests 20% per year in his account, with immediate full vesting occurring upon death, disability or a change in control of Rayovac.

Director Compensation

For fiscal 2004, Messrs. Carmichael, DeFeo, Lupo, Pellegrino and Shepherd and Ms. Thomas will each receive $7,500 per quarter for their service as
directors, plus $1,000 for each meeting of the Board of Directors that they attend ($500 if participating telephonically) and $1,000 for each meeting of a committee of the Board of Directors that they
attend ($500 if participating telephonically). Committee chairpersons will receive an additional $1,000 for attendance at each such committee meeting ($500 if participating telephonically).
Mr. Shepherd will receive an additional $1,250 per quarter starting the first calendar quarter of 2004 for service in the role of Presiding Director. Further, each of Messrs. Carmichael,
DeFeo, Lupo, Pellegrino and Shepherd and Ms. Thomas were each granted fully vested options to purchase 5,000 shares of our Common Stock on October 1, 2003 at an exercise price
of $14.60 per share and, on October 1, 2004, the Company expects to grant each of them fully vested options to purchase 5,000 shares of Common Stock (provided each director is still serving on
our Board of Directors) at an exercise price equal to the closing price of our Common Stock on the New York Stock Exchange on the trading day immediately preceding such grant. Also for serving in the
role of Presiding Director, Mr. Shepherd was granted 301 shares of our Restricted Common Stock on November 13, 2003, which restrictions lapse one year from the grant date provided he is
still serving in such capacity.

For
the first quarter of fiscal 2003, Messrs. Carmichael, Lupo, Pellegrino and Shepherd and Ms. Thomas each received $6,250 for their service as directors, plus $1,000 for
the meeting of the Board of Directors that they attended and $500 for each meeting of a committee of the Board of Directors that they attended, provided that committee chairpersons received an
additional $500 for attendance at each such committee meeting. For the other three quarters of fiscal 2003, Messrs. Carmichael, Lupo, Pellegrino and Shepherd and Ms. Thomas each received $7,500
per quarter for their

46

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service
as directors, plus $1,000 for each meeting of the Board of Directors that they attended and $1,000 for each meeting of a committee of the Board of Directors that they attended, provided that
committee chairpersons received and additional $1,000 for attendance of each such committee meeting. Mr. Carmichael received $38,750, Mr. Shepherd received $37,750, Mr. Lupo
received $36,750, Mr. Pellegrino received $36,750 and Ms. Thomas received $39,750 for their service as our directors and for attending meetings of our Board of Directors and committees
in fiscal 2003. In addition, on October 1, 2002, each of Messrs. Carmichael, Lupo, Pellegrino and Shepherd and Ms. Thomas were granted fully vested options to purchase 5,000
shares of our Common Stock at an exercise price of $12.20 per share. Our non-employee directors were also reimbursed for their out-of-pocket expenses in attending
meetings of the Board of Directors. Directors who are also our employees receive no compensation for serving on the Board of Directors.

Employment Agreements

On October 1, 2002, we entered into amended and restated employment agreements with David A. Jones (the "Jones Employment Agreement") and Kent J. Hussey
(the "Hussey Employment Agreement"), as well as amended and restated employment agreements with each of Kenneth V. Biller, Luis A. Cancio and Stephen P. Shanesy (together with the Jones Employment
Agreement and the Hussey Employment Agreement, the "Executive Employment Agreements").

Each
of the Executive Employment Agreements:



Under
their respective employment agreements, Mr. Jones became entitled to a base salary of $700,000 per annum beginning October 1, 2002, Mr. Hussey became entitled
to a base salary of $435,000 per annum beginning October 1, 2002, Mr. Biller, Mr. Shanesy and Mr. Cancio each became entitled to a base salary of $325,000 per annum
beginning October 1, 2002 (such base salaries may be adjusted from time to time at the discretion of the Board of Directors) and each Named Executive Officer is entitled to an annual bonus
based upon our achieving certain annual performance goals established by the Board of Directors. Effective October 1, 2003, the Board of Directors approved a $25,000 increase in
Mr. Hussey's annual base salary under his employment agreement.

In
addition, pursuant to the Jones Employment Agreement, Mr. Jones was paid a bonus of $400,000 on September 30, 2003 and will be paid an additional bonus of $2,200,000 on
October 1, 2005, should he remain with the Company as of such date. The Jones Employment Agreement grants Mr. Jones the
option to purchase his Rayovac-owned home for one dollar. Mr. Jones receives additional salary at a rate of $18,500 annually for miscellaneous expenses.

47

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The Jones Employment Agreement further provides that, upon termination of Mr. Jones' employment due to death or disability, we will pay him or his estate his base salary for the
24 months following termination and we will continue to pay him or his estate two times the pro rata portion of his annual bonus. In addition, we will continue to pay him additional salary of
$18,500 annually for the duration of the term of his agreement, and he shall be entitled to insurance and other specified benefits for the greater of 24 months or the remainder of the term. In
the event Mr. Jones is terminated "without cause" (as defined in the Jones Employment Agreement), he shall continue to be paid his annual bonus for the greater of 24 months or the
remainder of the term. Mr. Jones shall also be entitled to receive additional salary of $18,500 annually for miscellaneous expenses and insurance and other benefits for the greater of
24 months or the remainder of the term.

Compensation Committee Interlocks and Insider Participation

During fiscal 2003, the Compensation Committee of the Board of Directors was comprised of Thomas R. Shepherd and Philip F. Pellegrino. No member of our
Compensation Committee is currently or has been, at any time since our formation, one of our officers or employees. None of our executive officers serves a member of the board of directors or
compensation committee of any entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information regarding beneficial ownership of our Common Stock as of December 1, 2003, by:



Beneficial
ownership is determined in accordance with the rules of the SEC. Determinations as to the identity of 5% Shareholders are based upon filings with the SEC and other publicly
available information. Except as otherwise indicated, we believe, based on the information furnished or otherwise available to us, that each person or entity named in the table has sole voting and
investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to applicable community property laws. The percentage of beneficial ownership set forth below
is based upon 32,599,016 shares of Common Stock outstanding as of the close of business on December 1, 2003. In computing the number of shares of Common Stock beneficially owned by a person and
the percentage ownership of that person, shares of Common Stock that are subject to options held by that person that are currently exercisable or exercisable within 60 days of
December 1, 2003, are deemed outstanding. These shares are not, however, deemed outstanding for the purpose of computing the percentage

48

---

ownership
of any other person. Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o Rayovac Corporation, 601 Rayovac Drive, Madison, Wisconsin 53711.

|Names and Address of Beneficial Owner                                        |  | Number
of Shares |      | Number of
Shares Subject
to Options(1) |  | Percent |  
|---------------------------------------------------------------------------- |  | ---------------- | ---- | -------------------------------------- |  | ------- | -
|Wachovia Corporation(2)
One Wachovia Center
Charlotte, NC 28288-0137         |  | 2,396,455        |      |                                       |  | 7.4     | %
|Awad Asset Management, Inc.(3)
250 Park Avenue, 2nd Floor
New York, NY 10177 |  | 1,747,575        |      |                                       |  | 5.4     |  
|David A. Jones                                                               |  | 260,249          | (4)  | 731,431                                |  | 3.0     |  
|Kent J. Hussey                                                               |  | 183,952          | (5)  | 326,109                                |  | 1.5     |  
|Kenneth V. Biller                                                            |  | 88,894           | (6)  | 232,725                                |  | *       |  
|Luis A. Cancio                                                               |  | 85,757           | (7)  | 240,125                                |  | *       |  
|Stephen P. Shanesy                                                           |  | 75,364           | (8)  | 155,500                                |  | *       |  
|Merrell M. Tomlin(9)                                                         |  | 24,800           |      | 154,138                                |  | *       |  
|William P. Carmichael                                                        |  | 5,000            |      | 10,000                                 |  | *       |  
|Neil P. DeFeo                                                                |  |                 |      | 5,000                                  |  | *       |  
|Thomas R. Shepherd                                                           |  | 301              | (10) | 15,000                                 |  | *       |  
|John S. Lupo                                                                 |  | 2,500            |      | 20,000                                 |  | *       |  
|Philip F. Pellegrino                                                         |  | 2,000            |      | 17,000                                 |  | *       |  
|Barbara S. Thomas                                                            |  |                 |      | 10,000                                 |  | *       |  
|All directors and executive officers of the Company as a group
(15 persons)  |  | 913,869          | (11) | 1,164,252                              |  | 6.2     | %

---

49

---

Equity Compensation Plan Information

The following table sets forth information regarding our equity compensation plans as of September 30, 2003:

|Plan category                                              |  | Number of securities to be issued
upon the exercise of outstanding
options, warrants and rights |  | Weighted-average exercise price
of outstanding options,
warrants and rights |                | Number of securities remaining
available for future issuance under
equity compensation plans
(excluding securities reflected in
column (a))(1) |        
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- | -------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | -------
|
|Equity compensation plans approved by security holders     |  | 4,923,221                                                                                       |  | $                                                                           | 13.55          |                                                                                                                                                | 744,833
|Equity compensation plans not approved by security holders |  | None                                                                                            |  |                                                                             | Not Applicable |                                                                                                                                                | None   
|Total                                                      |  | 4,923,221                                                                                       |  | $                                                                           | 13.55          |                                                                                                                                                | 744,833

---

50

---



ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We hold various promissory notes described below (the "Executive Notes") from each of the Named Executive Officers.

Mr. Jones
previously executed a promissory note in the aggregate principal amount of $500,000 (the "Jones Equity Note") with an annual interest rate of 7% to partially fund his
purchase of certain shares of our common stock in connection with our 1996 recapitalization. The note matured and was paid in full in September 2003. Mr. Shanesy previously executed
three five-year promissory notes dated March 17, 1997, August 1, 1997, and September 16, 1997, in connection with his purchase of shares of Common Stock and exercise
of options to purchase shares of Common Stock for a total of $130,002. On May 1, 2002, Mr. Shanesy executed a promissory note replacing the three previous notes and in the amount of
$130,002. Interest on this promissory note is to be adjusted annually to the Internal Revenue Service minimum rate for 3-5 year maturities. This promissory note is secured by a
security interest in shares of our Common Stock (including vested options) owned by Mr. Shanesy.

On
July 20, 2000, the Board of Directors authorized loans to Messrs. Jones, Hussey, Shanesy, Biller and Cancio of up to the aggregate principal amounts of $1,950,000,
$800,000, $200,000, $400,000 and $200,000, respectively. As of August 11, 2000, Messrs. Jones, Hussey, Shanesy, Biller and Cancio had each executed a promissory note and, as of
September 30, 2003, had drawn aggregate principal amounts of $1,700,000, $750,000, $200,000, $400,000 and $200,000, respectively, under the authorized loan program. Interest on these promissory
notes is to be adjusted annually to the Internal Revenue Service minimum rate for 3-5 year maturities. The annual interest rate on each of these notes was 3.5% in fiscal year 2003.
Each of these promissory notes is secured by a security interest in shares of our Common Stock (including vested options) owned by the respective borrower.

Payments
of interest on the Executive Notes are due annually and the outstanding principal amount and any unpaid interest on the Executive Notes is payable at maturity. The Executive
Notes mature in September 2005.

The
purpose of the loans authorized by the Board of Directors in July 2000 was to provide the executive officers receiving the loans with access to funds as a component of their
compensation program. In July 2000, a significant percentage of the stock options and our Common Stock held by such executive officers was subject to transfer restrictions imposed by a
shareholders agreement among Rayovac, the
executive officers and the Thomas H. Lee Company (which agreement expired on September 12, 2002). The loans provided the executive officers with access to alternative funds in light of the
restrictions imposed by the shareholders agreement on the equity component of the executives' compensation.

The
largest aggregate amount of indebtedness outstanding at any time during fiscal 2003 for each of the executive officers was as follows: Mr. Jones, $2,200,000;
Mr. Hussey, $750,000; Mr. Shanesy, $330,002; Mr. Biller, $400,000; and Mr. Cancio, $200,000. The aggregate amount of indebtedness outstanding as of December 1, 2003,
for each of the executive officers was as follows: Mr. Jones, $1,700,000; Mr. Hussey, $750,000; Mr. Shanesy, $330,002; Mr. Biller, $400,000; and Mr. Cancio,
$200,000.

51

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K



52

---



53

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RAYOVAC CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE

|                                                |  | Page
|----------------------------------------------- |  | ----
|Independent Auditors' Report                    |  | F-2 
|Consolidated Balance Sheets                     |  | F-3 
|Consolidated Statements of Operations           |  | F-4 
|Consolidated Statements of Shareholders' Equity |  | F-5 
|Consolidated Statements of Cash Flows           |  | F-6 
|Notes to Consolidated Financial Statements      |  | F-7 
|Independent Auditors' Report                    |  | II-1
|Schedule II Valuation and Qualifying Accounts   |  | II-2

F-1

---



Independent Auditors' Report

The
Board of Directors and Shareholders
Rayovac Corporation:

We
have audited the accompanying consolidated balance sheets of Rayovac Corporation and subsidiaries as of September 30, 2002 and 2003, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the years in the three-year period ended September 30, 2003. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Rayovac Corporation and subsidiaries as of
September 30, 2002 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended September 30, 2003 in conformity
with accounting principles generally accepted in the United States of America.

As
discussed in Note 2(x) to the consolidated financial statements, the Company revised its presentation of loss on early extinguishment of debt in the accompanying consolidated
statement of operations for the year ended September 30, 2001 as required by Statement of Financial Accounting Standards No. 145,Recession of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections,and in 2002 the Company changed its method of accounting for
goodwill and indefinite-lived intangible assets to conform with Statement of Financial Accounting Standards No. 142,Goodwill and Other Intangible
Assets.

| |  | /s/ KPMG LLP
KPMG LLP
| |  | ---------------------

Chicago,
Illinois
November 7, 2003

F-2

---



RAYOVAC CORPORATION AND SUBSIDIARIES        Consolidated Balance Sheets        September 30, 2002 and 2003        (In thousands, except per share amounts)

|                                                     |                                                                                                                                                            | 2002                                                                                                      |                                            | 2003                      |        
|---------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------- | -------
|Assets                                               |                                                                                                                                                           
|Current assets:                                      |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|                                                     | Cash and cash equivalents                                                                                                                                  |                                                                                                           | $                                          | 9,881                     |        
|                                                     | Receivables:                                                                                                                                               |                                                                                                           |                                            |                           |        
|                                                     |                                                                                                                                                            | Trade accounts receivable, net of allowance for doubtful receivables of $3,293, and $22,911, respectively |                                            |                           | 128,927
|                                                     |                                                                                                                                                            | Other                                                                                                     |                                            |                           | 7,683  
|                                                     | Inventories                                                                                                                                                |                                                                                                           |                                            | 84,275                    |        
|                                                     | Deferred income taxes                                                                                                                                      |                                                                                                           |                                            | 8,586                     |        
|                                                     | Prepaid expenses and other                                                                                                                                 |                                                                                                           |                                            | 19,970                    |        
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | Total current assets                       |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|Property, plant and equipment, net                   |                                                                                                                                                            |                                                                                                           | 102,586                                    |                           |        
|Deferred charges and other                           |                                                                                                                                                            |                                                                                                           | 36,350                                     |                           |        
|Goodwill                                             |                                                                                                                                                            |                                                                                                           | 30,567                                     |                           |        
|Intangible assets, net                               |                                                                                                                                                            |                                                                                                           | 88,858                                     |                           |        
|Deferred income taxes                                |                                                                                                                                                            |                                                                                                           | 12,343                                     |                           |        
|Debt issuance costs                                  |                                                                                                                                                            |                                                                                                           | 3,207                                      |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | Total assets                               |                           | $      
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|Liabilities and Shareholders' Equity                 |                                                                                                                                                           
|Current liabilities:                                 |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|                                                     | Current maturities of long-term debt                                                                                                                       |                                                                                                           | $                                          | 13,400                    |        
|                                                     | Accounts payable                                                                                                                                           |                                                                                                           |                                            | 76,155                    |        
|                                                     | Accrued liabilities:                                                                                                                                       |                                                                                                           |                                            |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | Wages and benefits                         |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | Income taxes payable                       |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | Restructuring charges                      |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | Accrued interest                           |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | Other                                      |                           |        
|                                                     | Deferred income taxes                                                                                                                                      |                                                                                                           |                                            |                          |        
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           |                                            | Total current liabilities |        
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|Long-term debt, net of current maturities            |                                                                                                                                                            |                                                                                                           | 188,471                                    |                           |        
|Employee benefit obligations, net of current portion |                                                                                                                                                            |                                                                                                           | 24,009                                     |                           |        
|Deferred income taxes                                |                                                                                                                                                            |                                                                                                           | 20,957                                     |                           |        
|Other                                                |                                                                                                                                                            |                                                                                                           | 6,219                                      |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | Total liabilities                          |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|Shareholders' equity:                                |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|                                                     | Common stock, $.01 par value, authorized 150,000 shares; issued 61,594 and 61,999 shares, respectively; outstanding 32,058 and 32,463 shares, respectively |                                                                                                           |                                            | 616                       |        
|                                                     | Additional paid-in capital                                                                                                                                 |                                                                                                           |                                            | 180,823                   |        
|                                                     | Retained earnings                                                                                                                                          |                                                                                                           |                                            | 149,221                   |        
|                                                     | Accumulated other comprehensive loss                                                                                                                       |                                                                                                           |                                            | (19,859                   | )      
|                                                     | Notes receivable from officers/shareholders                                                                                                                |                                                                                                           |                                            | (4,205                    | )      
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | 306,596                                    |                           |        
|Less treasury stock, at cost, 29,536 shares          |                                                                                                                                                            |                                                                                                           | (130,070                                   | )                         |        
|Less unearned restricted stock compensation          |                                                                                                                                                            |                                                                                                           | (1,733                                     | )                         |        
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | Total shareholders' equity                 |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        
|                                                     |                                                                                                                                                            |                                                                                                           | Total liabilities and shareholders' equity |                           | $      
|                                                     |                                                                                                                                                            |                                                                                                           |                                            |                           |        

See accompanying notes to consolidated financial statements.

F-3

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RAYOVAC CORPORATION AND SUBSIDIARIES        Consolidated Statements of Operations        Years ended September 30, 2001, 2002 and 2003        (In thousands, except per share amounts)

|                                                                    |                                   | 2001 |         | 2002    |   | 2003    |        
|------------------------------------------------------------------- | --------------------------------- | ---- | ------- | ------- | - | ------- | -------
|Net sales                                                           |                                   | $    | 616,172 |         | $ | 572,736 |        
|Cost of goods sold                                                  |                                   |      | 361,173 |         |   | 334,147 |        
|Restructuring and related charges                                   |                                   |      | 22,103  |         |   | 1,210   |        
|                                                                    |                                   |      |         |         |   |         |        
|Gross profit                                                        |                                   |      | 232,896 |         |   | 237,379 |        
|Operating expenses:                                                 |                                   |      |         |         |   |         |        
|                                                                    | Selling                           |      |         | 119,606 |   |         | 104,374
|                                                                    | General and administrative        |      |         | 46,526  |   |         | 56,900 
|                                                                    | Research and development          |      |         | 12,191  |   |         | 13,084 
|                                                                    | Restructuring and related charges |      |         | 204     |   |         |       
|                                                                    |                                   |      |         |         |   |         |        
|                                                                    |                                   |      | 178,527 |         |   | 174,358 |        
|                                                                    |                                   |      |         |         |   |         |        
|Income from operations                                              |                                   |      | 54,369  |         |   | 63,021  |        
|                                                                    |                                   |      |         |         |   |         |        
|Interest expense                                                    |                                   |      | 27,189  |         |   | 16,048  |        
|Non-operating expense                                               |                                   |      | 8,587   |         |   |        |        
|Other expense (income), net                                         |                                   |      | 1,094   |         |   | 1,290   |        
|                                                                    |                                   |      |         |         |   |         |        
|Income before income taxes                                          |                                   |      | 17,499  |         |   | 45,683  |        
|Income tax expense                                                  |                                   |      | 5,965   |         |   | 16,446  |        
|                                                                    |                                   |      |         |         |   |         |        
|Net income                                                          |                                   | $    | 11,534  |         | $ | 29,237  |        
|                                                                    |                                   |      |         |         |   |         |        
|Basic net income per common share:                                  |                                   |      |         |         |   |         |        
|Net income                                                          |                                   | $    | 0.40    |         | $ | 0.92    |        
|                                                                    |                                   |      |         |         |   |         |        
|Weighted average shares of common stock outstanding                 |                                   |      | 28,746  |         |   | 31,775  |        
|                                                                    |                                   |      |         |         |   |         |        
|Diluted net income per common share:                                |                                   |      |         |         |   |         |        
|Net income                                                          |                                   | $    | 0.39    |         | $ | 0.90    |        
|                                                                    |                                   |      |         |         |   |         |        
|Weighted average shares of common stock and equivalents outstanding |                                   |      | 29,702  |         |   | 32,414  |        
|                                                                    |                                   |      |         |         |   |         |        

See
accompanying notes to consolidated financial statements.

F-4

---

RAYOVAC CORPORATION AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Years ended September 30, 2001, 2002 and 2003
(In thousands)

|                                                                     |  | Common Stock |   |   |     |  |   |         |   | Notes
Receivable from
Officers/
Shareholders |         |  |   |         |   |   |       
|-------------------------------------------------------------------- |  | ------------ | - | - | --- |  | - | ------- | - | -------------------------------------------- | ------- |  | - | ------- | - | - | ------
|
|
|Balances at September 30, 2000                                       |  | 27,570       |   | $ | 571 |  | $ | 104,197 |   | $                                            | 108,450 |  | $ | 650     |   | $ | (3,190
|                                                                     |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Net income                                                           |  |             |   |   |    |  |   |        |   |                                              | 11,534  |  |   |        |   |   |      
|Adjustment of additional minimum pension liability                   |  |             |   |   |    |  |   |        |   |                                              |        |  |   | (3,298  | ) |   |      
|Translation adjustment                                               |  |             |   |   |    |  |   |        |   |                                              |        |  |   | (1,141  | ) |   |      
|Cumulative effect of accounting change                               |  |             |   |   |    |  |   |        |   |                                              |        |  |   | (150    | ) |   |      
|Net loss on derivative instruments and available for sale securities |  |             |   |   |    |  |   |        |   |                                              |        |  |   | (2,929  | ) |   |      
|                                                                     |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Comprehensive income                                                 |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Sale of common stock                                                 |  | 3,500        |   |   | 35  |  |   | 64,144  |   |                                              |        |  |   |        |   |   |      
|Issuance of restricted stock                                         |  | 277          |   |   | 3   |  |   | 4,743   |   |                                              |        |  |   |        |   |   |      
|Treasury stock acquired                                              |  | (5           | ) |   |    |  |   |        |   |                                              |        |  |   |        |   |   |      
|Exercise of stock options                                            |  | 701          |   |   | 7   |  |   | 7,668   |   |                                              |        |  |   |        |   |   |      
|Notes receivable from officers/ shareholders                         |  |             |   |   |    |  |   |        |   |                                              |        |  |   |        |   |   | (475  
|Amortization of unearned compensation                                |  |             |   |   |    |  |   |        |   |                                              |        |  |   |        |   |   |      
|                                                                     |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Balances at September 30, 2001                                       |  | 32,043       |   |   | 616 |  |   | 180,752 |   |                                              | 119,984 |  |   | (6,868  | ) |   | (3,665
|                                                                     |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Net income                                                           |  |             |   |   |    |  |   |        |   |                                              | 29,237  |  |   |        |   |   |      
|Adjustment of additional minimum pension liability                   |  |             |   |   |    |  |   |        |   |                                              |        |  |   | (3,639  | ) |   |      
|Translation adjustment                                               |  |             |   |   |    |  |   |        |   |                                              |        |  |   | (7,875  | ) |   |      
|Net loss on derivative instruments and available for sale securities |  |             |   |   |    |  |   |        |   |                                              |        |  |   | (1,477  | ) |   |      
|                                                                     |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Comprehensive income                                                 |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Forfeiture of restricted stock                                       |  | (24          | ) |   |    |  |   | (413    | ) |                                              |        |  |   |        |   |   |      
|Issuance of restricted stock                                         |  | 24           |   |   |    |  |   | 313     |   |                                              |        |  |   |        |   |   |      
|Exercise of stock options                                            |  | 15           |   |   |    |  |   | 171     |   |                                              |        |  |   |        |   |   |      
|Notes receivable from officers/ shareholders                         |  |             |   |   |    |  |   |        |   |                                              |        |  |   |        |   |   | (540  
|Amortization of unearned compensation                                |  |             |   |   |    |  |   |        |   |                                              |        |  |   |        |   |   |      
|                                                                     |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Balances at September 30, 2002                                       |  | 32,058       |   |   | 616 |  |   | 180,823 |   |                                              | 149,221 |  |   | (19,859 | ) |   | (4,205
|                                                                     |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Net income                                                           |  |             |   |   |    |  |   |        |   |                                              | 15,482  |  |   |        |   |   |      
|Adjustment of additional minimum pension liability                   |  |             |   |   |    |  |   |        |   |                                              |        |  |   | (690    | ) |   |      
|Translation adjustment                                               |  |             |   |   |    |  |   |        |   |                                              |        |  |   | 7,753   |   |   |      
|Net gain on derivative instruments and available for sale securities |  |             |   |   |    |  |   |        |   |                                              |        |  |   | 339     |   |   |      
|                                                                     |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Comprehensive income                                                 |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Issuance of restricted stock                                         |  | 393          |   |   | 4   |  |   | 4,786   |   |                                              |        |  |   |        |   |   |      
|Forfeiture of restricted stock                                       |  | (28          | ) |   |    |  |   | (347    | ) |                                              |        |  |   |        |   |   |      
|Exercise of stock options                                            |  | 40           |   |   |    |  |   | 299     |   |                                              |        |  |   |        |   |   |      
|Note payments from officers/ shareholders                            |  |             |   |   |    |  |   |        |   |                                              |        |  |   |        |   |   | 600   
|Amortization of unearned compensation                                |  |             |   |   |    |  |   |        |   |                                              |        |  |   |        |   |   |      
|                                                                     |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       
|Balances at September 30, 2003                                       |  | 32,463       |   | $ | 620 |  | $ | 185,561 |   | $                                            | 164,703 |  | $ | (12,457 | ) | $ | (3,605
|                                                                     |  |              |   |   |     |  |   |         |   |                                              |         |  |   |         |   |   |       

See accompanying notes to consolidated financial statements.

F-5

---



RAYOVAC CORPORATION AND SUBSIDIARIES        Consolidated Statements of Cash Flows        Years ended September 30, 2001, 2002 and 2003        (In thousands)

|                                                             |                                                                                   | 2001 |         | 2002     |   | 2003    |         
|------------------------------------------------------------ | --------------------------------------------------------------------------------- | ---- | ------- | -------- | - | ------- | --------
|Cash flows from operating activities:                        |                                                                                   |      |         |          |   |         |         
|                                                             | Net income                                                                        |      | $       | 11,534   |   | $       | 29,237  
|                                                             | Adjustments to reconcile net income to net cash provided by operating activities: |      |         |          |   |         |         
|                                                             | Depreciation                                                                      |      |         | 17,667   |   |         | 18,828  
|                                                             | Non-cash restructuring charges                                                    |      |         | 9,958    |   |         | 542     
|                                                             | Loss on early retirement of debt                                                  |      |         | 8,587    |   |         |        
|                                                             | Amortization of debt issuance costs                                               |      |         | 2,055    |   |         | 1,642   
|                                                             | Amortization                                                                      |      |         | 3,473    |   |         | 173     
|                                                             | Amortization of unearned restricted stock compensation                            |      |         | 1,582    |   |         | 1,331   
|                                                             | Deferred income taxes                                                             |      |         | (3,751   | ) |         | 4,257   
|                                                             | Stock option income tax benefit                                                   |      |         | 4,348    |   |         | 37      
|                                                             | Loss on disposal of fixed assets and all other                                    |      |         | 187      |   |         | 224     
|Changes in assets and liabilities, net of acquisitions:      |                                                                                   |      |         |          |   |         |         
|                                                             | Accounts receivable                                                               |      |         | (35,844  | ) |         | 26,272  
|                                                             | Inventories                                                                       |      |         | 5,168    |   |         | 3,579   
|                                                             | Prepaid expenses and other assets                                                 |      |         | (1,577   | ) |         | (4,142  
|                                                             | Accounts payable and accrued liabilities                                          |      |         | (10,223  | ) |         | (11,310 
|                                                             | Accrued restructuring charges                                                     |      |         | 4,883    |   |         | (3,844  
|                                                             |                                                                                   |      |         |          |   |         |         
|Net cash provided by operating activities                    |                                                                                   |      | 18,047  |          |   | 66,826  |         
|                                                             |                                                                                   |      |         |          |   |         |         
|Cash flows from investing activities:                        |                                                                                   |      |         |          |   |         |         
|                                                             | Purchases of property, plant and equipment                                        |      |         | (19,693  | ) |         | (15,641 
|                                                             | Proceeds from sale of property, plant and equipment and investments               |      |         | 1,420    |   |         | 168     
|                                                             | Payments for acquisitions, net of cash acquired                                   |      |         |         |   |         |        
|                                                             |                                                                                   |      |         |          |   |         |         
|Net cash used by investing activities                        |                                                                                   |      | (18,273 | )        |   | (15,473 | )       
|                                                             |                                                                                   |      |         |          |   |         |         
|Cash flows from financing activities:                        |                                                                                   |      |         |          |   |         |         
|                                                             | Reduction of debt                                                                 |      |         | (416,699 | ) |         | (224,192
|                                                             | Proceeds from debt financing                                                      |      |         | 421,914  |   |         | 169,100 
|                                                             | Extinguishment of debt                                                            |      |         | (69,652  | ) |         | (239    
|                                                             | Debt issuance costs                                                               |      |         |         |   |         | (387    
|                                                             | Payments on capital lease obligations                                             |      |         | (837     | ) |         | (590    
|                                                             | (Loans to) payments from officers/shareholders                                    |      |         | (475     | ) |         | (540    
|                                                             | Proceeds from issuance of stock                                                   |      |         | 64,179   |   |         |        
|                                                             | Acquisition of treasury stock                                                     |      |         | (88      | ) |         |        
|                                                             | Proceeds from exercise of stock options                                           |      |         | 3,327    |   |         | 134     
|                                                             |                                                                                   |      |         |          |   |         |         
|Net cash provided (used) by financing activities             |                                                                                   |      | 1,669   |          |   | (56,714 | )       
|                                                             |                                                                                   |      |         |          |   |         |         
|Effect of exchange rate changes on cash and cash equivalents |                                                                                   |      | 158     |          |   | 3,884   |         
|                                                             |                                                                                   |      |         |          |   |         |         
|Net increase (decrease) in cash and cash equivalents         |                                                                                   |      | 1,601   |          |   | (1,477  | )       
|Cash and cash equivalents, beginning of period               |                                                                                   |      | 9,757   |          |   | 11,358  |         
|                                                             |                                                                                   |      |         |          |   |         |         
|Cash and cash equivalents, end of period                     |                                                                                   | $    | 11,358  |          | $ | 9,881   |         
|                                                             |                                                                                   |      |         |          |   |         |         
|Supplemental disclosure of cash flow information:            |                                                                                   |      |         |          |   |         |         
|                                                             | Cash paid for interest                                                            |      | $       | 28,938   |   | $       | 14,671  
|                                                             | Cash paid for income taxes                                                        |      |         | 8,166    |   |         | 11,373  

See accompanying notes to consolidated financial statements.

F-6

---



RAYOVAC CORPORATION AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        (In thousands, except per share amounts)

(1) Description of Business

Rayovac Corporation and its wholly owned subsidiaries ("Company") manufacture and market consumer batteries and electric personal care products. Consumer
batteries include general (alkaline, rechargeables, heavy duty, lantern and general purpose), button cell and lithium batteries. The Company also markets a variety of battery powered lighting devices
such as flashlights and lanterns.

On
October 1, 2002, the Company acquired substantially all of the consumer battery business ("VARTA") of VARTA AG for approximately $275,300, including acquisition related
expenditures. The acquisition consisted of the purchase of all of VARTA AG's consumer battery subsidiaries and business outside of Germany, excluding Brazil, and a controlling ownership and management
interest in a new joint venture entity that will operate the VARTA AG consumer battery business in Germany. The residual interest in the joint venture is held by VARTA AG. With the acquisition of
VARTA, the Company became a truly global battery manufacturer and marketer and acquired additional low-cost manufacturing capacity and battery technology. (See also Acquisitions and
Divestitures, footnote 16, for additional information on the VARTA acquisition).

On
September 30, 2003, the Company acquired all of the equity interests of Remington Products Company, L.L.C. ("Remington") for approximately $174,000, including acquisition
related expenditures, and the assumption of Remington's outstanding debt of approximately $180,400. Remington is now a wholly owned subsidiary of the Company. Remington is a leading designer and
marketer of electric shavers and accessories, electric grooming products and hair care appliances. (See also Acquisitions and Divestitures, footnote 16, for additional information on the Remington
acquisition).

The
Company's products are sold on a global basis in over a 100 countries in North America, Latin America, Europe, and the Far East through a variety of channels, including mass
merchandisers, home centers and hardware stores, consumer electronic stores, warehouse clubs, food, drug and convenience stores, department stores, hearing aid professionals, industrial distributors
and original equipment manufacturers.

(2) Significant Accounting Policies and Practices



F-7

---



F-8

---



Location

Expiration DateGuatemala City, Guatemala

March 2004Washington, UK

December 2004Fennimore, WI

March 2005Portage, WI

June 2006




F-9

---



Building and improvements

20-30 yearsMachinery, equipment and other

2-15 years




F-10

---



F-11

---



F-12

---



2001

2002

2003Basic

28,746

31,775

31,847Effect of restricted stock and assumed conversion of stock options

956

639

709Diluted

29,702

32,414

32,556




F-13

---







F-14

---



Pension
Adjustment

Cash
Flow Hedges

Total2001

$


$
(2,140
)
$
(2,140
)2002





(689
)

(689
)2003


(4,744
)

76


(4,668
)




F-15

---



2001

2002

2003Reported net income

$
11,534

$
29,237

$
15,482Add: Stock-based compensation expense included in reported net income, net of tax


965


812


2,090Deduct: Total stock-based compensation expense determined under fair value based method for all awards, net of tax


(4,567
)

(4,778
)

(6,739
)Pro forma net income

$
7,932

$
25,271

$
10,833Basic earnings per share:As reported

$
0.40

$
0.92

$
0.49Pro forma

$
0.28

$
0.80

$
0.34Diluted earnings per share:As reported

$
0.39

$
0.90

$
0.48Pro forma

$
0.27

$
0.78

$
0.34




2001

2002

2003Assumptions used:Volatility


34.7
%

37.6
%

40.3
%Risk-free interest rate


4.48
%

3.40
%

3.36
%Expected life


8 years


8 years


8 yearsDividend yield








Weighted-average grant-date fair value of options granted during period

$
7.27

$
6.89

$
5.99




F-16

---



F-17

---



2001

2002

2003Reported net income

$
11,534

$
29,237

$
15,482Add back: Goodwill amortization, net of tax of $0


1,050





Add back: Trade name amortization, net of tax of $855


1,395





Adjusted net income

$
13,979

$
29,237

$
15,482Basic Earnings Per Share:Reported net income

$
0.40

$
0.92

$
0.49Goodwill amortization


0.04





Trade name amortization


0.05





Adjusted net income

$
0.49

$
0.92

$
0.49Diluted Earnings Per Share:Reported net income

$
0.39

$
0.90

$
0.48Goodwill amortization


0.03





Trade name amortization


0.05





Adjusted net income

$
0.47

$
0.90

$
0.48




F-18

---



F-19

---



F-20

---





(3) Inventories

Inventories consist of the following:

September 30,2002

2003Raw materials

$
19,893

$
60,732Work-in-process


19,004


34,914Finished goods


45,378


123,608$
84,275

$
219,254


(4) Property, Plant and Equipment

Property, plant and equipment consist of the following:

September 30,2002

2003Land, buildings and improvements

$
34,559

$
51,195Machinery, equipment and other


184,087


242,184Construction in process


10,303


7,857228,949


301,236Less accumulated depreciation


126,363


150,824$
102,586

$
150,412


Property,
plant, and equipment includes equipment held under capitalized leases, net of amortization, totaling $615 and $20,420 at September 30, 2002 and 2003,
respectively. The significant increase in capital leases is due to leases assumed as part of the VARTA acquisition.

During
2003, the Company closed its manufacturing operations in Mexico City, Mexico and its Madison, Wisconsin and Middleton, Wisconsin packaging and distribution locations. The
Company's owned properties in Mexico City, Mexico and Madison, Wisconsin, with an aggregate net book value of $8,680, are being treated as assets held for sale and are included in Prepaid expenses and
other in the Company's Consolidated Balance Sheet at September 30, 2003.

(5) Intangible Assets

Intangible assets consist of the following:

|                                            |  | September 30, 2002 |        | September 30, 2003
|------------------------------------------- |  | ------------------ | ------ | ------------------
|
|Non-compete agreement                       |  | $                  | 700    |                   
|Proprietary technology                      |  |                    | 525    |                   
|Customer lists                              |  |                    |       |                   
|                                            |  |                    |        |                   
|                                            |  | $                  | 1,225  |                   
|                                            |  |                    |        |                   
|Pension Intangibles                         |  |                    |        |                   
|Under-funded pension                        |  | $                  | 3,446  |                   
|                                            |  |                    |        |                   
|Unamortized Intangible Assets               |  |                    |        |                   
|Trade names balance as of beginning of year |  | $                  | 90,000 |                   
|Trade name acquired during year             |  |                    |       |                   
|Effect of translation                       |  |                    |       |                   
|                                            |  |                    |        |                   
|Trade names balance as of end of year       |  | $                  | 90,000 |                   
|                                            |  |                    |        |                   

F-21

---

|Goodwill                              |  | North
America |         | Latin
America |   | Europe/ROW |   | Total
|------------------------------------- |  | ------------- | ------- | ------------- | - | ---------- | - | -----
|Balance as of October 1, 2002, net    |  | $             | 1,035   |               | $ | 26,884     |   | $    
|Goodwill acquired during year         |  |               | 284,383 |               |   | 11,170     |   |      
|Effect of translation                 |  |               |        |               |   | (178       | ) |      
|                                      |  |               |         |               |   |            |   |      
|Balance as of September 30, 2003, net |  | $             | 285,418 |               | $ | 37,876     |   | $    
|                                      |  |               |         |               |   |            |   |      

During
2003, the Company completed the acquisitions of substantially all of the consumer battery business of VARTA AG and Remington Products Company, L.L.C. The Company recognized
intangible assets associated with the acquisitions, including proprietary manufacturing technology, customer lists, and VARTA trade name intangibles. The purchase price allocation for the VARTA
acquisition has been completed. The Company also recognized goodwill with both the VARTA and Remington acquisitions. The purchase price allocation of the Remington acquisition is not yet finalized.
Future allocation of the Remington purchase price will impact the amount and or segment allocation of goodwill and other intangible assets acquired during the year. (See also footnote 16, Acquisitions
and Divestitures, for additional discussion on the VARTA and Remington acquisitions). No allocation to trade name or other intangibles has been made in the Consolidated Balance Sheet as of
September 30, 2003 as valuations relating to Remington have not been completed.

The
non-compete agreement was amortized on a straight-line basis over 5 years, proprietary technology assets are being amortized on a
straight-line basis over 10 to 19 years, and the customer list asset is being amortized on a straight-line basis over 10 years. The Company has deemed that its
trade name intangible assets have indefinite lives because they are expected to generate cash flows indefinitely, the Company has no intention of selling the trade names and there are no legal,
regulatory, or contractual provisions that may limit the useful lives of the trade names. Goodwill and intangible assets deemed to have indefinite lives are tested for impairment annually.

During
2003, the Company wrote-off a $702 pension intangible asset related to the Madison, Wisconsin packaging facility pension plan. The write-off related to the
closure of operations at the facility and curtailment of the pension plan and is reflected in Restructuring
charges in cost of goods sold in our Consolidated Statement of Operations. (See also Restructuring Charges, footnote 15, for further discussion).

The
trade name asset and Latin America segment goodwill, prior to the adoption of FASB Statement No. 142, are associated with the 1999 acquisition of ROV Limited and were being
amortized on a straight-line basis over 40 years. The North America segment goodwill, prior to the adoption of FASB Statement No. 142, is associated with the 1998 acquisition
of Best Labs and was being amortized on a straight-line basis over 15 years. The Europe/ROW segment goodwill, prior to the adoption of FASB Statement No. 142, is associated
with the 1998 acquisition of Brisco GmbH in Germany and was being amortized on a straight-line basis over 15 years.

F-22

---

The
amortization expense for 2001, 2002, and 2003 are as follows:

2001

2002

2003Amortization ExpenseGoodwill amortization

$
1,050

$


$
Trade name amortization


2,250





Customer list amortization








195Non-compete and proprietary technology


173


173


243$
3,473

$
173

$
438


The
annual amortization expense (based on September 30, 2003 exchange rates) for the next five fiscal years, is estimated to be approximately:

2004

$
9502005

$
9502006

$
8502007

$
8502008

$
850


The
purchase price allocation for the Remington acquisition has not yet been finalized, consequently, changes in the purchase price allocation could impact estimates of
future amortization expense.

(6) Debt

Debt consists of the following:

September 30,2002

2003Revolving credit facility

$
174,500

$
Term loan facility


23,061


Euro revolving credit facility





Euro term A loan facility





49,563Euro term B loan facility





139,067Term B loan facility





317,000Series B Senior Subordinated Debentures, due May 15, 2006, with interest at 11% payable semi-annually





5,424Series D Senior Subordinated Debentures, due May 15, 2006, with interest at 11% payable semi-annually





50,586Senior Subordinated Notes, due September 30, 2013, with interest at 81/2% payable semi-annually





350,000Capitalized lease obligations


500


24,100Notes and obligations, weighted average interest rate of 51/2% at September 30, 2003


3,810


7,652201,871


943,392Less current maturities


13,400


72,852Long-term debt

$
188,471

$
870,540


F-23

---

In
connection with the acquisition of VARTA on October 1, 2002, the Company entered into an Amended and Restated Credit Agreement ("Third Restated Agreement"). The
Third Restated Agreement provides for senior bank facilities, including term and revolving credit facilities in an initial aggregate amount (assuming an exchange rate of the Euro to the Dollar of 1 to
1) of approximately $625,000. The Third Restated Agreement includes a $100,000 six year revolving credit facility, a €50,000 six year revolving credit facility, a $300,000 seven
year amortizing term loan, a €125,000 seven year amortizing term loan and a €50,000 six year amortizing term loan.

The
interest on Dollar-denominated borrowings is computed, at the Company's option, based on the base rate, as defined ("Base Rate"), or the London Interbank Offered Rate ("LIBOR") for
Dollar-denominated deposits. The Interest on Euro-denominated borrowings is computed on LIBOR for Euro-denominated deposits. The fees associated with these facilities were
capitalized and are being amortized over the term of the facilities. Indebtedness under these facilities is secured by substantially all of the assets of the Company, is guaranteed by certain of our
subsidiaries and the Euro-denominated revolving facility is subject to a borrowing base ("Borrowing Base") of certain European assets.

The
Third Restated Agreement required the Company to transform the German subsidiary, VARTA Geratebatterie, from a GmbH legal structure to a KgaA legal structure ("Transformation") on or
before December 30, 2002. Effective January 29, 2003, the agreement was amended ("First Amendment") to extend the deadline for Transformation to on or before June 30, 2003.
Effective June 27, 2003, the Third Restated Agreement was amended ("Second Amendment") (i) to re-define and permit acceleration, recording, and incurrence of certain
Restructuring Charges, as defined in the Third Restated Agreement, (ii) to extend the deadline for Transformation to on or before March 31, 2004 and (iii) to consent to certain
organizational restructurings ("Restructurings"), including releases and substitutions of collateral pledges, and disregarding application of certain basket amounts as necessary to effect the
Restructurings.

In
connection with the acquisition of Remington, the Third Restated Agreement was amended ("Third Amendment") effective September 30, 2003 to (i) permit the Remington
acquisition ("Acquisition") including issuance of $350,000 of senior subordinated debt, increase the Dollar-denominated revolver by $20,000, decrease the Euro-denominated revolver by
€10,000 and increase the Dollar-denominated seven-year term facility by $50,000, (ii) permit incurrence of certain Restructuring Charges related to the Acquisition,
(iii) amend certain covenant ratios to allow for the effect of financing of the Acquisition, (iv) allow for organizational restructurings related to the Acquisition including necessary
releases and substitutions of collateral pledges, and (v) increase certain covenant basket amounts to allow for operation of the resulting larger business entity.

The
term facilities, as amended in the Third Amendment, provide for quarterly amortization over their remaining terms (using the September 30, 2003 exchange rate of the Dollar to
the Euro of 1.16618 to 1) totaling approximately $6,818 in 2004, $16,276 in 2005, 2006 and 2007, $66,441 in 2008 and $383,543 in 2009. The term facility also provides for annual prepayments,
over and above the normal amortization. Such payments would be a portion of "Excess Cash Flow" (EBITDA, as defined, plus non-cash Restructuring Charges, less certain operating expenditures
including scheduled principal payments of long-term debt). The quarterly amortization is reduced pro-rata for the effect of prepayments made as a result of Excess Cash Flow.

F-24

---

Interest
on Dollar-denominated revolving borrowings is, at the Company's option, at the Base Rate plus a margin (1.25% to 2.50%) per annum (N/A at September 30, 2003) or
Dollar-denominated LIBOR plus a margin (2.25% to 3.50%) per annum (N/A at September 30, 2003). Interest on Euro-denominated revolving borrowings and the Euro-denominated
six-year term loan is Euro-denominated LIBOR plus a margin (2.25% to
3.50%) per annum (5.62% at September 30, 2003). Interest on the Dollar-denominated seven-year term loan is, at the Company's option, at the Base Rate plus a fixed 2.75% margin per
annum (N/A at September 30, 2003) or Dollar-denominated LIBOR plus a fixed 3.75% margin per annum (4.87% at September 30, 2003). Interest on the Euro-denominated
seven-year term loan is Euro-denominated LIBOR plus a fixed 3.75% margin per annum (5.87% at September 30, 2003). The Company is required to pay a commitment fee of
0.50% per annum on the average daily-unused portion of the revolving facilities. A fee (2.25% to 3.50%) per annum (3.50% at September 30, 2003) is payable on the outstanding letters of credit,
of which $6,005 were outstanding at September 30, 2003. The Company also incurs a fee of 0.25% per annum of the average daily maximum amount available to be drawn on each letter of credit
issued. The margin on the revolving facilities, six-year amortizing term loan, and fees on outstanding letters of credit may be adjusted if the Company's leverage ratio, as defined,
increases or decreases.

The
Third Restated Agreement contains financial covenants with respect to borrowings, which include maintaining minimum interest and fixed charge and maximum leverage ratios. In
accordance with the Agreement, the limits imposed by such ratios became more restrictive over time. In addition, the Third Restated Agreement restricts the Company's ability to incur additional
indebtedness, create liens, make investments or specified payments, give guarantees, pay dividends, make capital expenditures, and merge or acquire or sell assets.

Also
in connection with the acquisition of Remington, the Company completed a debt offering of $350,000 of 8.5% Senior Subordinated Notes due in 2013. The terms of the notes permit the
holders to require the Company to repurchase all or a portion of the notes in the event of a change of control. In addition, the terms of the notes restrict or limit the ability of the Company and its
subsidiaries to, among other things: (i) pay dividends or make other restricted payments, (ii) incur additional indebtedness and issue preferred stock, (iii) create liens,
(iv) incur dividend and other restrictions affecting subsidiaries, (v) enter into mergers, consolidations, or sales of all or substantially all of the assets of the Company,
(vi) make asset sales, (vii) enter into transactions with affiliates, and (viii) issue or sell capital stock of wholly owned subsidiaries of the Company. Payment obligations of
the notes are fully and unconditionally guaranteed on a joint and several basis by all of the Company's domestic subsidiaries, including ROV Holding, Inc. The foreign subsidiaries of the
Company, which do not guarantee the payment obligations under the notes, are directly and wholly owned by ROV Holding, Inc.

Also
in connection with the acquisition of Remington, the Company assumed $180,000 of 11.0% Senior Series B and D Subordinated Debentures due in 2006. Effective
September 30, 2003, $123,990 of the notes were tendered and redeemed leaving $56,010 outstanding. In connection with the tender process, the Company received consents sufficient to
substantially amend the indenture relating to the notes. The amendments became effective with the Acquisition. The $56,010 of notes outstanding at September 30, 2003, were called for
redemption, effective September 30, 2003, and redeemed effective

F-25

---

October 29,
2003, and consequently are reflected as current obligations in our Consolidated Balance Sheet as of September 30, 2003.

The
aggregate scheduled maturities of debt as of September 30, 2003 are as follows:

2004

$
72,8522005


17,7712006


17,4862007


17,3532008


67,5142009 and thereafter


750,416$
943,392


The
carrying value of the debt instruments noted above are approximately 99% of their estimated fair value.

Aggregate
capitalized lease obligations are payable in installments of $2,381 in 2004, $1,486 in 2005, $1,210 in 2006, $1,077 in 2007, $1,073 in 2008, and $16,873 thereafter.

(7) Shareholders' Equity

On October 1, 2000, the Company granted approximately 277 shares of restricted stock to certain members of management. The total market value of the
restricted shares on date of grant was approximately $4,746 which was recorded as unearned compensation as a separate component of shareholders' equity. During 2002, the Company recognized the
forfeiture of approximately 24 restricted shares of stock. The total market value on the date of grant for the forfeited shares was approximately $413 which was recorded as an adjustment to unearned
compensation. Approximately 186 of these shares vested on September 30, 2003 as the recipients were still employed by the Company. The remaining 67 shares vested one third each year from the
date of grant. Unearned compensation was amortized to expense over the three-year vesting period. As of September 30, 2003, all share restrictions for the October 1, 2000
grant have been removed.

On
June 22, 2001, the Company completed a primary offering of 3,500 shares of Common stock. The net proceeds of approximately $64,200 after deducting the underwriting discounts
and offering expenses, were used to repurchase approximately $64,800 principal amount of 10.25% Series B Senior Subordinated Notes.

Concurrently,
the Thomas H. Lee Group and its affiliates sold approximately 4,200 shares and certain Rayovac officers and employees sold approximately 900 shares in a secondary offering
of Common stock. The Company did not receive any proceeds from the sales of the secondary offering shares but incurred expenses for the offering of approximately $200, which are included in
Restructuring charges in Operating expenses in our Consolidated Statement of Operations.

On
August 16, 2002, the Company granted approximately 24 shares of restricted stock to a certain member of management. These shares vested on September 30, 2003, as the
recipient was still employed with the Company. The total market value of the restricted shares on the date of grant was

F-26

---

approximately
$313 which was recorded as unearned compensation as a separate component of shareholders' equity. Unearned compensation was amortized over the 13-month vesting period.

On
October 1, 2002, the Company granted approximately 393 shares of restricted stock to certain members of management. The total market value of the restricted shares on date of
grant was approximately $4,790 which was recorded as unearned compensation as a separate component of shareholders' equity. During 2003, the Company recognized the forfeiture of approximately 28
restricted shares of stock. The total market value on the date of grant for the forfeited shares was approximately $347 which was recorded as an adjustment to unearned compensation. Approximately 101
of these shares vest on September 30, 2004, 243 shares vest on September 30, 2005, and 21 shares vest on September 30, 2006, if the recipient is still employed by the Company.
Unearned compensation is being amortized to expense over the appropriate vesting period.

(8) Stock Option Plans

In 1996, the Company's Board of Directors ("Board") approved the Rayovac Corporation 1996 Stock Option Plan ("1996 Plan"). Under the 1996 Plan, stock options to
acquire up to 2,318 shares of Common stock, in the aggregate, may be granted to select employees and directors of the Company under either or both a time-vesting or a performance-vesting
formula at an exercise price equal to the market price of the Common stock on the date of grant. The time-vesting options become exercisable primarily in equal 20% increments over a
five-year period. The performance-vesting options become exercisable at the end of ten
years with accelerated vesting over each of the first five years if the Company achieves certain performance goals. Accelerated vesting may occur upon sale of the Company, as defined in the 1996 Plan.
As of September 30, 2003, there were options with respect to 1,186 shares of Common stock outstanding under the 1996 Plan.

In
1997, the Board adopted the 1997 Rayovac Incentive Plan ("Incentive Plan"). The Incentive Plan replaces the 1996 Plan and no further awards will be granted under the 1996 Plan other
than awards of options for shares up to an amount equal to the number of shares covered by options that terminate or expire prior to being exercised. Under the Incentive Plan, the Company may grant to
employees and non-employee directors stock options, stock appreciation rights ("SARs"), restricted stock, and other stock-based awards, as well as cash-based annual and
long-term incentive awards. Accelerated vesting will occur in the event of a change in control, as defined in the Incentive Plan. Up to 5,000 shares of Common stock may be issued under the
Incentive Plan. The Incentive Plan expires in August 2007. As of September 30, 2003, there were options with respect to 3,737 shares of Common stock outstanding under the Incentive Plan.

F-27

---

A
summary of the status of the Company's plans is as follows:

|                                   |  | 2001  |   | 2002 |       | 2003
|---------------------------------- |  | ----- | - | ---- | ----- | ----
|
|Outstanding, beginning of period   |  | 3,276 |   | $    | 12.15 |     
|Granted                            |  | 857   |   |      | 14.83 |     
|Exercised                          |  | (701  | ) |      | 4.75  |     
|Forfeited                          |  | (166  | ) |      | 18.43 |     
|                                   |  |       |   |      |       |     
|Outstanding, end of period         |  | 3,266 |   | $    | 14.12 |     
|                                   |  |       |   |      |       |     
|Options exercisable, end of period |  | 1,304 |   | $    | 11.81 |     
|                                   |  |       |   |      |       |     

The
Company also granted approximately 277, 24, and 393 shares of restricted stock during 2001, 2002, and 2003, respectively, under the Incentive Plan. The restrictions on the 2001 grant
lapsed over the three-year period ended September 30, 2003 and the restrictions on the 2002 grant lapsed over the two-year period ended September 30, 2003. The
restrictions on the 2003 grant lapse over the four-year period ending September 30, 2006. As of September 30, 2003, the restrictions had lapsed on 277 of these shares and the
Company recognized the forfeiture of 52 of these shares.

The
following table summarizes information about options outstanding and outstanding and exercisable as of September 30, 2003:

|                |  | Options Outstanding |  | Options Outstanding
and Exercisable
|--------------- |  | ------------------- |  | -----------------------------------
|
|$4.39           |  | 969                 |  | 3.1 years                          
|$11.32  $20.94 |  | 3,211               |  | 7.8                                
|$21.25  $29.50 |  | 743                 |  | 5.6                                

F-28

---



(9) Income Taxes

Pretax income (income before income taxes) and income tax expense consist of the following:

2001

2002

2003Pretax income (loss):United States

$
5,073

$
47,288

$
(52,456
)Outside the United States


12,426


(1,605
)

75,491Total pretax income

$
17,499

$
45,683

$
23,035Income tax expense (benefit):Current:Federal

$
3,614

$
10,484

$
(8,817
)Foreign


6,217


895


25,697State


(115
)

204


206Total current


9,716


11,583


17,086Deferred:Federal


(1,977
)

6,666


2,165Foreign


(1,638
)

(2,374
)

(9,356
)State


(136
)

571


(2,342
)Total deferred


(3,751
)

4,863


(9,533
)$
5,965

$
16,446

$
7,553


The
following reconciles the Federal statutory income tax rate with the Company's effective tax rate:

2001

2002

2003Statutory federal income tax rate

35.0
%
35.0
%
35.0
%Foreign Sales Corporation/Extraterritorial Income Exclusion benefit

(2.1
)
(0.6
)
(1.5
)Non US permanent items

2.2

(0.5
)
7.0Foreign rate vs. statutory rate

(1.0
)
0.4

6.6State income taxes and other

0.5

1.5

(6.0
)R&D credit, current and prior years





(7.2
)Non deductible interest expense





5.7Adjustment of prior year taxes

(0.6
)
(0.5
)
(7.5
)Other

0.1

0.7

0.734.1
%
36.0
%
32.8
%


F-29

---

The
tax effects of temporary differences, which give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

September 30,2002

2003Current deferred tax assets:Employee benefits

$
970

$
6,895Restructuring and asset impairments


212


911Inventories and receivables


2,105


7,917Marketing and promotional accruals


351


185Net operating loss carry forwards


1,861


4,432Currency hedges


1,370


40Other


1,717


6,833Valuation allowance





(201
)Total current deferred tax assets


8,586


27,012Current deferred tax liabilities:Property, plant and equipment held for sale





(3,896
)Inventory





(4,597
)Other





(18
)Total current deferred tax liabilities





(8,511
)Net current deferred tax assets

$
8,586

$
18,501Noncurrent deferred tax assets:Employee benefits

$
5,103

$
9,724Net operating loss and credit carry forwards


4,163


13,233Property, plant and equipment


147


2,170Other


2,930


9,752Valuation allowance





(3,843
)Total noncurrent deferred tax assets


12,343


31,036Noncurrent deferred tax liabilities:Property, plant, and equipment


(12,954
)

(9,458
)Intangibles


(4,488
)

(11,123
)Employee benefits


(2,200
)

Other


(1,315
)

(2,113
)Total noncurrent deferred tax liabilities


(20,957
)

(22,694
)Net noncurrent deferred tax (liabilities) assets

$
(8,614
)
$
8,342


Undistributed
earnings of the Company's foreign operations amounting to approximately $30,881 and $79,827 at September 30, 2002 and 2003, respectively, are
intended to remain permanently invested to finance future growth and expansion. Accordingly, no U.S. income taxes have been provided on those earnings at September 30, 2002 and 2003.

The
Company, as of September 30, 2003, has state net operating loss carryforwards of approximately $30,033 which will expire between 2008 and 2018. The Company has foreign net
operating loss carryforwards, primarily relating to the Company's Mexico operations, of approximately $31,793, which will expire between 2006 and 2013. At September 30, 2003, the Company has
recorded a deferred tax asset for the benefit of these losses.

F-30

---

A
valuation allowance is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax
assets depends on the ability to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions. For the year ended September 30,
2003, the Company has established a valuation allowance for operating loss carryforwards in certain non-U.S. jurisdictions in the amount of $366.

As
part of the Remington acquisition, the Company acquired foreign subsidiaries with foreign operating loss carryforwards of approximately $18,408. A valuation allowance has been
established for the deferred income tax benefits related to certain Remington foreign subsidiary loss carryforwards that may not be realized in the amount of approximately $3,678.

(10) Leases

Future minimum rental commitments under non-cancelable leases, principally pertaining to land, buildings and equipment, are as follows:

Operating Leases

Capital Leases2004

$
14,395

$
3,5872005


12,154


2,6422006


9,681


2,3112007


7,864


2,1222008


6,760


2,060Thereafter


34,386


24,190Total minimum lease payments

$
85,240

$
36,912Less: amount representing interest





12,812Present value of minimum lease payments




$
24,100


Of
the annual lease payments shown above, $4,122 are subject to inflationary increases each year. All of the leases expire during the years 2004 through 2013.

Total
rental expenses were $7,137, $7,341 and $12,315 for 2001, 2002 and 2003, respectively.

(11) Employee Benefit Plans

Pension Benefits

The Company has various defined benefit pension plans covering substantially all of its employees in the United States and certain employees in other countries.
Plans generally provide benefits of stated amounts for each year of service. The Company's practice is to fund pension costs at amounts within the acceptable ranges established by the Employee
Retirement Income Security Act of 1974, as amended.

The
Company also sponsors or participates in a number of other non-U.S. pension arrangements, including various retirement and termination benefit plans, some of which are covered by
local law or

F-31

---

coordinated
with government-sponsored plans, which are not significant in the aggregate and therefore are not included in the information presented below.

The
Company also has various nonqualified deferred compensation agreements with certain of its employees. Under certain agreements, the Company has agreed to pay certain amounts annually
for the first 15 years subsequent to retirement or to a designated beneficiary upon death. It is management's intent that life insurance contracts owned by the Company will fund these
agreements. Under the other agreements, the Company has agreed to pay such deferral amounts in up to 15 annual installments beginning on a date specified by the employee, subsequent to retirement or
disability, or to a designated beneficiary upon death. The Company established a rabbi trust to fund these agreements.

Other Benefits

The Company provides certain health care and life insurance benefits to eligible retired employees. Participants earn retiree health care benefits after reaching
age 45 over the next 10 succeeding years of service and remain eligible until reaching age 65. The plan is contributory; retiree contributions have
been established as a flat dollar amount with contribution rates expected to increase at the active medical trend rate. The plan is unfunded. The Company is amortizing the transition obligation over a
20-year period.

|                                 |                                              | Pension and Deferred Compensation Benefits |         | Other Benefits |  
|-------------------------------- | -------------------------------------------- | ------------------------------------------ | ------- | -------------- | -
|
|Change in benefit obligation     |                                              |                                            |         |                |  
|                                 | Benefit obligation, beginning of year        |                                            | $       | 20,619         |  
|                                 | Liabilities assumed with acquisitions        |                                            |         |               |  
|                                 | Service cost                                 |                                            |         | 693            |  
|                                 | Interest cost                                |                                            |         | 1,512          |  
|                                 | Amendments                                   |                                            |         | 677            |  
|                                 | Actuarial loss (gain)                        |                                            |         | 1,132          |  
|                                 | Loss (gain) on curtailment                   |                                            |         |               |  
|                                 | Benefits paid                                |                                            |         | (879           | )
|                                 | Foreign currency exchange rate changes       |                                            |         |               |  
|                                 |                                              |                                            |         |                |  
|                                 | Benefit obligation, end of year              |                                            | $       | 23,754         |  
|                                 |                                              |                                            |         |                |  
|Change in plan assets            |                                              |                                            |         |                |  
|                                 | Fair value of plan assets, beginning of year |                                            | $       | 12,316         |  
|                                 | Assets acquired with acquisitions            |                                            |         |               |  
|                                 | Actual return on plan assets                 |                                            |         | (1,279         | )
|                                 | Employer contributions                       |                                            |         | 1,414          |  
|                                 | Employee contributions                       |                                            |         |               |  
|                                 | Benefits paid                                |                                            |         | (879           | )
|                                 | Plan expenses paid                           |                                            |         | (78            | )
|                                 | Foreign currency exchange rate changes       |                                            |         |               |  
|                                 |                                              |                                            |         |                |  
|                                 | Fair value of plan assets, end of year       |                                            | $       | 11,494         |  
|                                 |                                              |                                            |         |                |  
|Funded status                    |                                              | $                                          | (12,260 | )              | $
|                                 | Unrecognized net transition obligation       |                                            |         | 168            |  
|                                 | Unrecognized prior service cost              |                                            |         | 3,278          |  
|                                 | Unrecognized net actuarial loss (gain)       |                                            |         | 6,985          |  
|Adjustment for minimum liability |                                              |                                            | (10,435 | )              |  
|                                 |                                              |                                            |         |                |  
|                                 | Accrued benefit cost                         |                                            | $       | (12,264        | )
|                                 |                                              |                                            |         |                |  
|Weighted-average assumptions:    |                                              |                                            |         |                |  
|                                 | Discount rate                                |                                            |         | 7.0            | %
|                                 | Expected return on plan assets               |                                            |         | 8.5            | %

F-32

---

|                                        |                                      | Pension Benefits |   | Other Benefits |  
|--------------------------------------- | ------------------------------------ | ---------------- | - | -------------- | -
|
|Components of net periodic benefit cost |                                      |                  |   |                |  
|                                        | Service cost                         |                  | $ | 616            |  
|                                        | Interest cost                        |                  |   | 1,415          |  
|                                        | Actual return on assets              |                  |   | 1,252          |  
|                                        | Amortization of prior service cost   |                  |   | 311            |  
|                                        | Loss/(gain) on curtailments          |                  |   |               |  
|                                        | Recognized net actuarial (gain) loss |                  |   | (2,368         | )
|                                        |                                      |                  |   |                |  
|                                        | Net periodic benefit cost            |                  | $ | 1,226          |  
|                                        |                                      |                  |   |                |  

Pension plan assets and obligations are measured at June 30 each year. The contributions to the pension plans between July 1 and
September 30 were $2,814 and $ in 2002 and 2003, respectively.

The
Company has recorded an additional minimum pension liability of $10,435 and $14,942 at September 30, 2002 and 2003, respectively, to recognize the under funded position of its
benefit plans. An intangible asset of $3,446 and $2,405 at September 30, 2002 and 2003, respectively, equal to the unrecognized prior service cost of these plans, has also been recorded. The
excess of the additional minimum liability over the unrecognized prior service cost of $6,989 and $7,679 at September 30, 2002 and 2003, respectively, has been recorded as a component of
accumulated other comprehensive income, net of tax.

The
Company sponsors a supplemental executive retirement plan for eligible employees. Currently, only our executive management participate in the plan. Each October 1, we credit
the account of each participant by an amount equal to 15% of the participant's salary. In addition, each quarter we credit each account by an amount equal to 2% of the participant's account value.
Each participant vests 20% per year in his account, with immediate full vesting occurring upon death, disability or a change in control of the Company. As of September 30, 2002 and 2003, the
Company had recorded an obligation of $929 and $1,812, respectively, related to the plan. Participants will fully vest on September 30, 2005.

The
Company sponsors a defined contribution pension plan for its domestic salaried employees, which allows participants to make contributions by salary reduction pursuant to
Section 401(k) of the Internal Revenue Code. The Company contributes annually from 3% to 6% of participants' compensation based on age, and may make additional discretionary contributions. The
Company also sponsors defined
contribution pension plans for employees of certain foreign subsidiaries. Company contributions charged to operations, including discretionary amounts, for 2001, 2002 and 2003 were $2,147, $1,804 and
$1,729 respectively.

For
measurement purposes, annual rates of increase of 8.0% in the per capita costs of covered health care benefits were assumed for 2001, with annual increases of 10.0% assumed for 2002
and 2003, gradually decreasing to 5.5% for 2001 and 5.25% for 2002 and 2003. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of September 30, 2003 by $176 and the aggregate of
the service

F-33

---

and
interest cost components of net periodic postretirement benefit cost for the year ended September 30, 2003 by $45. Decreasing the assumed health care cost trend rates by one percentage
point in each year would decrease the accumulated postretirement benefit obligation as of September 30, 2003 by $161 and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for the year ended September 30, 2003, by $40.

(12) 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, South America and the Caribbean; Europe/Rest of World ("Europe/ROW") includes the United Kingdom, continental Europe and all other countries in which the Company does
business.

The
Company, prior to the acquisition of Remington, manufactures and markets dry cell batteries including alkaline, zinc carbon, alkaline rechargeable, hearing aid, and other specialty
batteries and lighting products throughout the world. These product lines are sold in all geographic areas. Latin America net sales have historically been derived primarily from zinc carbon and
alkaline batteries. With the acquisition of Remington, the Company also sells personal care products.

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 net sales 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, certain research and development expense, and restructuring charges. All depreciation and amortization included in income from
operations is related
to reportable segments or corporate. 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.

Net sales from external customers

2001

2002

2003Europe/ROW

$
48,719

$
52,459

$
421,143North America


448,788


435,600


375,957Latin America


118,665


84,677


125,022Total segments

$
616,172

$
572,736

$
922,122


F-34

---

Inter segment net sales

2001

2002

2003Europe/ROW

$
2,593

$
2,504

$
29,571North America


30,634


34,069


32,298Latin America


9,518


5,556


54Total segments

$
42,745

$
42,129

$
61,923


Depreciation and amortization

2001

2002

2003Europe/ROW

$
1,573

$
715

$
13,531North America


14,174


15,407


15,464Latin America


5,393


2,879


2,576Total segments

$
21,140

$
19,001

$
31,571


Segment profit

2001

2002

2003Europe/ROW

$
4,061

$
5,087

$
49,727North America


80,774


85,490


64,829Latin America


16,913


5,330


17,673Total segments


101,748


95,907


132,229Corporate expenses


25,072


31,676


40,035Restructuring and related charges


22,307


1,210


32,552Interest expense


27,189


16,048


37,182Non-operating expense


8,587





3,072Other expense (income), net


1,094


1,290


(3,647
)Income before income taxes

$
17,499

$
45,683

$
23,035


Segment assets

September 30,2001

2002

2003Europe/ROW

$
30,010

$
31,356

$
537,400North America


289,215


256,446


625,463Latin America


205,918


191,002


203,909Total segments


525,143


478,804


1,366,772Corporate


41,356


54,429


209,720Total assets at year end

$
566,499

$
533,233

$
1,576,492


F-35

---

Expenditures for segment assets

2001

2002

2003Europe/ROW

$
411

$
969

$
9,494North America


17,521


13,158


14,607Latin America


1,761


1,514


2,024Total segments

$
19,693

$
15,641

$
26,125


Product line net sales

2001

2002

2003Alkaline

$
302,900

$
295,700

$
454,900Zinc carbon


139,100


96,500


152,500Rechargeables


29,800


31,800


69,700Hearing aid batteries


65,300


67,600


80,600Specialty batteries


17,800


15,300


74,600Lighting products


61,300


65,800


89,800Total revenues from external customers

$
616,200

$
572,700

$
922,100


(13) 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 (until 2022). In December 2002, this agreement was modified such that royalty payments in 2003 through 2022 will be
$250.

The
Company has provided for the estimated costs associated with environmental remediation activities at some of its current and former manufacturing sites. The Company believes that any
additional liability in excess of the amounts provided of approximately $5,500, which may result from resolution of these matters, will not have a material adverse effect on the financial condition,
results of operations, 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. Such litigation includes
shareholder lawsuits, patent infringement claims by the Gillette Company and its subsidiary Braun Gmbh, and a lawsuit alleging misleading advertising, filed by Norelco Consumer Products Company
against the Company's subsidiary, Remington Products Company, L.L.C. In the opinion of management, it is either not likely or premature to determine whether such contingent liabilities will have a
material adverse effect on the financial condition, liquidity or cash flow of the Company.

The
suit filed against the Company by Eveready Battery Company was settled in December 2002, and the impact of such settlement is included in results of operations for the year
ended September 30, 2003. The net settlement, of $1.5 million, did not materially impact the financial condition, results of operations, or cash flow of the Company.

F-36

---



(14) Related Party Transactions

The Company and Thomas H. Lee Company (THL Co.) were parties to a Management Agreement pursuant to which the Company engaged THL Co. to provide consulting and
management advisory services for an initial period of five years through September 2001. The agreement was renewed for another year through 2002. The agreement was not renewed upon expiration
in September 2002. The Company paid THL Co. aggregate fees and expenses of $473 and $364 for 2001 and 2002, respectively.

The
Company has notes receivable from officers/shareholders in the amount of $4,205 and $3,605 at September 30, 2002 and 2003, respectively, payable in fiscal 2005, which bear
interest at 3.5%. Since the officers utilized the proceeds of the notes to purchase common stock of the Company, directly or through the exercise of stock options, the notes have been recorded as a
reduction of shareholders' equity.

(15) Restructuring and Related Charges

The Company reports restructuring charges relating to manufacturing and related initiatives in cost of goods sold. Restructuring and related charges reflected in
cost of goods sold include, but are not limited to, termination and related costs associated with manufacturing employees, asset impairments relating to manufacturing initiatives, and other costs
directly related to the restructuring initiatives implemented.

The
Company reports restructuring charges relating to administrative functions in operating expenses, such as, initiatives impacting sales, marketing, distribution, or other
non-manufacturing related functions. Restructuring and related charges reflected in operating expenses include, but are not limited to, termination and related costs, any asset impairments relating to
the functional area described above, and other costs directly related to the initiatives implemented.

During
2001, the Company recorded restructuring and related charges related to: (i) an organizational restructuring in the U.S., (ii) manufacturing and distribution cost
rationalization initiatives in the Company's Tegucigalpa, Honduras and Mexico City, Mexico manufacturing facilities and in our European operations, (iii) the closure of the Company's Wonewoc,
Wisconsin, manufacturing facility, (iv) the rationalization of uneconomic manufacturing processes at the Company's Fennimore, Wisconsin, manufacturing facility, and rationalization of packaging
operations and product lines, and (v) costs associated with our June 2001 secondary offering. The amount recorded includes $9,100 of employee termination benefits for approximately 570
employees, $9,900 of equipment, inventory, and other asset write-offs, and $1,700 of other expenses, net of changes in estimates in 2002 and 2003. In 2003, the Company revised its
estimate, reducing restructuring and related costs, in cost of

F-37

---

goods
sold, by approximately $300 for the anticipated costs to close its Wonewoc, Wisconsin facility. A summary of the 2001 restructuring activities follows:

2001 Restructuring Summary

Termination
Benefits

Other
Costs

TotalExpense accrued

$
5,000

$
11,000

$
16,000Change in estimate


4,400


100


4,500Expense as incurred


700


1,100


1,800Cash expenditures


(5,800
)

(1,300
)

(7,100
)Non cash charges





(9,300
)

(9,300
)Balance September 30, 2001

$
4,300

$
1,600

$
5,900Change in estimate.


(1,000
)

(300
)

(1,300
)Cash expenditures


(3,100
)




(3,100
)Non cash charges





(700
)

(700
)Balance September 30, 2002


200


600


800Change in estimate





(300
)

(300
)Cash expenditures


(200
)

(100
)

(300
)Balance September 30, 2003

$


$
200

$
200


During
2002, the Company recorded restructuring and related charges related to: (i) the closure of the Company's Santo Domingo, Dominican Republic plant and
transfer of production to the Company's Guatemala City, Guatemala manufacturing facility, and (ii) outsourcing a portion of the Company's zinc carbon battery production previously manufactured
at our Mexico City, Mexico manufacturing facility. The amount recorded includes approximately $1,200 of employee termination benefits for approximately 115 manufacturing employees, $900 of charges
from the abandonment of equipment and inventory, net of a change in estimate of $400, associated with the closing of the manufacturing facility, and $300 of other expenses. The change in estimate
reflected our ability to utilize more inventory and manufacturing equipment at our Guatemala City, Guatemala manufacturing location than we originally anticipated. All activities associated with the
2002 restructuring activities have been completed. A summary of the 2002 restructuring activities follows:

2002 Restructuring Summary

Termination
Benefits

Other
Costs

TotalExpense accrued

$
1,200

$
1,400

$
2,600Change in estimate





(400
)

(400
)Expense as incurred





200


200Cash expenditures


(1,100
)

(200
)

(1,300
)Non cash charges





(1,000
)

(1,000
)Balance September 30, 2002


100





100Cash expenditures


(100
)




(100
)Balance September 30, 2003

$


$


$



F-38

---

During
2003, the Company recorded restructuring and related charges including: (i) approximately $13,000 of employee termination benefits for approximately 650
notified employees and non cash costs of approximately $700 associated with the write-off of pension intangible assets reflecting the curtailment of the Company's Madison, Wisconsin
packaging facility pension plan, (ii) approximately $12,800 of equipment, inventory and other asset write-offs primarily reflecting the abandonment of equipment and inventory
associated with the closure of the Mexico City, Mexico plant and inventory and fixed asset impairments related to the closure of the Company's Wisconsin packaging and distribution locations,
(iii) approximately $6,400 of other expenses which
include, distributor termination costs of approximately $900, research and development contract termination costs of approximately $500, and other legal and facility shutdown expenses of approximately
$5,000.

During
2003, restructuring and related charges include amounts related to: (i) the closure in October 2002 of the Company's Mexico City, Mexico plant and integration of
production into the Company's Guatemala City, Guatemala manufacturing location, resulting in charges of approximately $6,200, including termination payments of approximately $1,400, fixed asset and
inventory impairments of approximately $4,300, and other shutdown related expenses of approximately $500, (ii) the closure of operations at the Company's Madison, Wisconsin packaging facility
and Middleton, Wisconsin distribution center and combination of the two operations into a new leased complex currently being built in Dixon, Illinois resulting in charges of approximately $13,800,
including termination costs of approximately $2,700 and non cash costs of approximately $700 associated with the write-off of pension intangible assets reflecting the curtailment of the
Company's Madison, Wisconsin packaging facility pension plan, fixed asset and inventory impairments of approximately $7,200, and relocation expenses and other shutdown related expenses of
approximately $3,200, and (iii) a series of restructuring initiatives impacting the Company's sales, marketing, operations and administrative functions in Europe, North America, and Latin
America resulting in charges of approximately $12,900, including termination benefits of approximately $8,900, inventory and asset impairments of approximately $1,300, distributor termination costs of
approximately $900, research and development contract termination costs of approximately $500, and other costs primarily reflecting legal and other expenses of approximately $1,300.

During
2003, restructuring and related charges included in cost of goods sold of approximately $21,400 include amounts related to: (i) the closure in October 2002 of the
Company's Mexico City, Mexico plant and integration of production into the Company's Guatemala City, Guatemala manufacturing location, resulting in charges of approximately $6,200, including
termination payments of approximately $1,400, fixed asset and inventory impairments of approximately $4,300, and other shutdown related expenses of approximately $500, (ii) the closure of
operations at the Company's Madison, Wisconsin packaging facility and combination with the Company's Middleton, Wisconsin distribution center into a new leased complex in Dixon, Illinois resulting in
charges of approximately $12,400, including termination costs of approximately $2,400 and non cash pension curtailment costs of approximately $700, fixed asset and inventory impairments of
approximately $6,900, and relocation expenses and other shutdown related expenses of approximately $2,400, and (iii) a series of restructuring initiatives impacting the Company's manufacturing
functions in Europe, North America, and Latin America resulting in charges of approximately $2,800, including termination benefits of approximately $1,800 and inventory and asset impairments of
approximately $1,000.

F-39

---

During
2003, restructuring and related charges included in operating expenses of approximately $11,500 include amounts related to: (i) the closure of operations at the Company's
Middleton, Wisconsin distribution center and combination with our Madison, Wisconsin packaging facility into a new leased complex in Dixon, Illinois resulting in charges of approximately $1,400,
including termination costs of approximately $300, fixed asset impairments of approximately $300, and relocation expenses and other
shutdown related expenses of approximately $800, and (ii) a series of restructuring initiatives impacting the Company's sales, marketing, and administrative functions in Europe, North America,
and Latin America resulting in charges of approximately $10,100, including termination costs of approximately $7,100, distributor termination costs of approximately $900, research and development
contract termination costs of approximately $500, fixed asset impairments of $300, and legal and other expenses of approximately $1,300.

The
move to the new combined distribution and packaging facility was completed in the third quarter of 2003 and the closure of the Madison, Wisconsin and Middleton, Wisconsin facilities
occurred in the fourth quarter of 2003. The sales, marketing, operations and administrative restructuring initiatives were completed during the fourth quarter of 2003.

All
activities associated with the 2003 restructuring activities have been completed, and the remaining cash payments and the disposition of impaired assets are expected to be
substantially complete by September 30, 2004.

The
Company has reflected the carrying value of its Mexico City, Mexico manufacturing plant and the Company's Madison, Wisconsin packaging facility as assets held for sale. The carrying
value of assets held for sale relating to restructuring initiatives is $8,680 and is included in Prepaid expenses and other in the Company's Consolidated Balance Sheet at September 30, 2003.

2003 Restructuring Summary

Termination
Benefits

Other
Costs

TotalExpense accrued

$
9,800

$
15,600

$
25,400Expense as incurred


3,200


4,300


7,500Cash expenditures


(9,800
)

(4,500
)

(14,300
)Non cash charges





(9,400
)

(9,400
)Balance September 30, 2003

$
3,200

$
6,000

$
9,200


(16) Acquisitions and Divestitures

In 2002, the Company entered into agreements with a Hong Kong company for the cordless product line and licensing agreements on other product lines not currently
sold by the Company. The Company received promissory notes in the amount of $800 payable over terms of up to five years. The Company will receive variable royalties on sales of product lines licensed.
As a result of these transactions, the Company recognized a pretax gain of $701.

On
October 1, 2002, the Company acquired substantially all of the consumer battery business of VARTA AG. The acquisition consisted of the purchase of all of VARTA AG's consumer
battery subsidiaries and business outside of Germany, excluding Brazil, and a controlling ownership and

F-40

---

management
interest in a new joint venture entity that will operate the VARTA AG consumer battery business in Germany. The residual interest in the joint venture is held by VARTA AG. With the
acquisition of VARTA, the Company became a truly global battery manufacturer and marketer and acquired additional low-cost manufacturing capacity and battery technology. As a result of the
acquisition of the VARTA AG consumer battery business, the Company is now selling in more than 100 countries and is one of the largest consumer battery companies in the world.

The
results of VARTA's operations, since the acquisition on October 1, 2002, are included in the Company's Statement of Operations for the year ended September 30, 2003.

The
aggregate cash purchase price was approximately $275,300, which includes approximately $7,600 of acquisition related expenditures. The following table summarizes the fair value of
the assets acquired and liabilities assumed as of the date of the acquisition.

As of October 1, 2002(in 000's)Current assets

$
168,000Property, plant, and equipment


52,400Intangible assets


140,200Goodwill


75,100Other assets


2,700Total assets acquired

$
438,400Current liabilities

$
90,700Long-term liabilities


72,400Total liabilities assumed

$
163,100Net assets acquired

$
275,300


Of
the approximately $140,200 of acquired intangible assets, approximately $128,600 was assigned to registered trademarks which are not subject to amortization. The
remaining acquired intangible assets of approximately $11,600 have a weighted-average useful life of approximately 18 years. The intangibles comprising the $11,600 of amortizable intangible
assets include a manufacturing technology asset of approximately $9,900 (nineteen-year weighted-average useful life) and a customer list intangible asset of approximately $1,700
(ten-year average useful life). The goodwill of approximately $75,100 was assigned to the North America, Latin America, and Europe/ROW segments in the amounts of approximately $1,400,
$11,200, and $62,500, respectively. Of the approximately $75,100 of goodwill, none is expected to be deductible for tax purposes.

On
September 30, 2003, the Company acquired all of the equity interests of Remington Products Company, L.L.C. Remington is a leading consumer products company focusing on the
development and marketing of personal care products. Remington designs and distributes electric shavers and accessories, grooming products, hair care appliances and other small electrical consumer
products.

The
Company's results of operations for the year ended September 30, 2003 do not include the impacts of the Remington transaction, as the transaction took place after the close of
business on September 30, 2003.

F-41

---

The
cash purchase price was approximately $174,000, which includes approximately $9,000 of acquisition related expenditures, and the Company assumed Remington's debt of approximately
$180,400. The following table summarizes the fair value of the assets acquired and liabilities assumed as of the date of the acquisition. The Company is in the process of obtaining third-party
valuations of certain tangible and intangible assets; thus the allocation of the purchase price is subject to change.

As of September 30,
2003(in 000's)Current assets

$
167,000Property, plant, and equipment


6,700Intangible assets


Goodwill


283,000Other assets


8,100Total assets acquired

$
464,800Current liabilities

$
105,900Long-term liabilities


184,900Total liabilities assumed

$
290,800Net assets acquired

$
174,000


The
goodwill of approximately $283,000 was assigned to the North America segment and will be subject to change, pending the completion of the third-party valuations of
certain tangible and intangible assets. Of the approximately $283,000 of goodwill, a portion is expected to be deductible for tax purposes. The amount deductible is not available at the time of these
filings and will be available upon the completion of the third-party valuations.

Supplemental Pro Forma information (unaudited):The following reflects the Company's unaudited pro forma results had the
results of the VARTA and Remington acquisitions been included in our results of operations in 2002 and 2003. The VARTA pro forma adjustments reflect the results of operations and related pro forma
adjustments for the year ended September 30, 2002 and the Remington pro forma adjustments for 2002 reflect the results of operations and related pro forma

F-42

---

adjustments
for the year ending December 31, 2002 and for 2003 reflect the results of operation and related pro forma adjustments for the year ending June 30, 2003.

2002

2003Net salesReported net sales

$
572,736

$
922,122VARTA pro forma adjustments


370,506


Remington pro forma adjustments


365,061


360,259Pro forma net sales

$
1,308,303

$
1,282,381Net incomeReported net income

$
29,237

$
15,482VARTA pro forma adjustments


(2,657
)

Remington pro forma adjustments


5,688


8,613Pro forma net income

$
32,268

$
24,095Basic Earnings Per ShareReported net income

$
0.92

$
0.49VARTA pro forma adjustments


(0.08
)

Remington pro forma adjustments


0.18


0.27Pro forma net income

$
1.02

$
0.76Diluted Earnings Per ShareReported net income

$
0.90

$
0.48VARTA pro forma adjustments


(0.08
)

Remington pro forma adjustments


0.18


0.26Pro forma net income

$
1.00

$
0.74


F-43

---



(17) Quarterly Results (unaudited)

|                                           |  | Quarter Ended
|------------------------------------------ |  | -------------
|
|Net sales                                  |  | $            
|Gross profit                               |  |              
|Net (loss) income                          |  |              
|Basic net (loss) income per common share   |  |              
|Diluted net (loss) income per common share |  |              

|                                    |  | Quarter Ended
|----------------------------------- |  | -------------
|
|Net sales                           |  | $            
|Gross profit                        |  |              
|Net income                          |  |              
|Basic net income per common share   |  |              
|Diluted net income per common share |  |              

(18) Condensed Consolidating Financial Statements

The
following condensed consolidating financial data illustrates the composition of the consolidated financial statements. Investments in subsidiaries are accounted for using the equity
method for purposes of the consolidating presentation. Earnings of subsidiaries are therefore reflected in the Company's and Guarantor Subsidiaries' investment accounts and earnings. The principal
elimination entries eliminate investments in subsidiaries and intercompany 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.

Payment
obligations of the notes are fully and unconditionally guaranteed on a joint and several basis by all of the Company's domestic subsidiaries, including ROV Holding, Inc.
The foreign subsidiaries of the Company, which do not guarantee the payment obligations under the notes, are directly and wholly owned by ROV Holding, Inc.

F-44

---

Condensed Consolidating Balance Sheet  September 30, 2003

|                                                     |                                               | Parent                                                             |         | Guarantor
Subsidiaries |         | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated
Total |        
|---------------------------------------------------- | --------------------------------------------- | ------------------------------------------------------------------ | ------- | ---------------------- | ------- | ------------------------- | ------- | ------------ | ------- | ------------------ | -------
|ASSETS                                               |                                              
|Current assets:                                      |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     | Cash and cash equivalents                     |                                                                    | $       | 80,016                 |         | $                         | 6,039   |              | $       | 21,719             |        
|                                                     | Receivables:                                  |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     |                                               | Trade accounts receivables, net of allowance for doubtful accounts |         |                        | 65,870  |                           |         | 24,714       |         |                    | 164,621
|                                                     |                                               | Other                                                              |         |                        | 91,302  |                           |         | 130,583      |         |                    | 50,097 
|                                                     | Inventories                                   |                                                                    |         | 54,490                 |         |                           | 50,590  |              |         | 119,405            |        
|                                                     | Deferred income taxes                         |                                                                    |         | 8,197                  |         |                           | 9,986   |              |         | 6,654              |        
|                                                     | Prepaid expenses and other                    |                                                                    |         | 20,367                 |         |                           | 8,435   |              |         | 21,903             |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     | Total current assets                          |                                                                    |         | 320,242                |         |                           | 230,347 |              |         | 384,399            |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|Property, plant and equipment, net                   |                                               |                                                                    | 72,586  |                        |         | 5,341                     |         |              | 72,485  |                    |        
|Deferred charges and other                           |                                               |                                                                    | 72,639  |                        |         | 1,092                     |         |              | 212,631 |                    |        
|Goodwill                                             |                                               |                                                                    | 19,115  |                        |         | 271,950                   |         |              | 107,315 |                    |        
|Intangible assets, net                               |                                               |                                                                    | 87,902  |                        |         |                          |         |              | 165,353 |                    |        
|Deferred income taxes                                |                                               |                                                                    | 22,041  |                        |         | 4,556                     |         |              | 15,071  |                    |        
|Debt issuance costs                                  |                                               |                                                                    | 28,111  |                        |         |                          |         |              |        |                    |        
|Investments in subsidiaries                          |                                               |                                                                    | 660,730 |                        |         | 434,984                   |         |              |        |                    |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     | Total assets                                  |                                                                    | $       | 1,283,366              |         | $                         | 948,270 |              | $       | 957,254            |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|LIABILITIES AND SHAREHOLDERS' EQUITY                 |                                              
|Current liabilities:                                 |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     | Current maturities of long-term debt          |                                                                    | $       | 45,209                 |         | $                         | 56,095  |              | $       | 9,780              |        
|                                                     | Accounts payable                              |                                                                    |         | 89,407                 |         |                           | 180,484 |              |         | 124,928            |        
|                                                     | Accrued liabilities:                          |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     |                                               | Wages and benefits                                                 |         |                        | 9,171   |                           |         | 5,190        |         |                    | 22,219 
|                                                     |                                               | Income taxes payable                                               |         |                        | 2,992   |                           |         | 22           |         |                    | 17,555 
|                                                     |                                               | Restructuring charges                                              |         |                        | 4,080   |                           |         |             |         |                    | 1,670  
|                                                     |                                               | Accrued interest                                                   |         |                        | 3,309   |                           |         | 2,270        |         |                    | (685   
|                                                     |                                               | Other                                                              |         |                        | 7,471   |                           |         | 31,432       |         |                    | 44,834 
|                                                     | Deferred income taxes                         |                                                                    |         |                       |         |                           |        |              |         | 8,511              |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     |                                               | Total current liabilities                                          |         |                        | 161,639 |                           |         | 275,493      |         |                    | 228,812
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|Long-term debt, net of current maturities            |                                               |                                                                    | 848,811 |                        |         | 44                        |         |              | 263,990 |                    |        
|Employee benefit obligations, net of current portion |                                               |                                                                    | 28,832  |                        |         | 691                       |         |              | 33,521  |                    |        
|Deferred income taxes                                |                                               |                                                                    | 14,413  |                        |         | 10,631                    |         |              | 8,282   |                    |        
|Other                                                |                                               |                                                                    | 7,953   |                        |         | 681                       |         |              | 4,053   |                    |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     | Total liabilities                             |                                                                    |         | 1,061,648              |         |                           | 287,540 |              |         | 538,658            |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|Shareholders' equity:                                |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     | Common stock                                  |                                                                    |         | 619                    |         |                           | 1       |              |         | 12,716             |        
|                                                     | Additional paid-in capital                    |                                                                    |         | 185,442                |         |                           | 492,450 |              |         | 348,353            |        
|                                                     | Retained earnings                             |                                                                    |         | 161,163                |         |                           | 165,735 |              |         | 68,017             |        
|                                                     | Accumulated other comprehensive income (loss) |                                                                    |         | 10,919                 |         |                           | 2,544   |              |         | (10,490            | )      
|                                                     | Notes receivable from officers/shareholders   |                                                                    |         | (3,605                 | )       |                           |        |              |         |                   |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     |                                               |                                                                    | 354,538 |                        |         | 660,730                   |         |              | 418,596 |                    |        
|                                                     | Less treasury stock, at cost                  |                                                                    |         | (130,070               | )       |                           |        |              |         |                   |        
|                                                     | Less unearned restricted stock compensation   |                                                                    |         | (2,750                 | )       |                           |        |              |         |                   |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     | Total shareholders' equity                    |                                                                    |         | 221,718                |         |                           | 660,730 |              |         | 418,596            |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        
|                                                     | Total liabilities and shareholders' equity    |                                                                    | $       | 1,283,366              |         | $                         | 948,270 |              | $       | 957,254            |        
|                                                     |                                               |                                                                    |         |                        |         |                           |         |              |         |                    |        

F-45

---

Condensed Consolidating Statement of Operations  Year Ended September 30, 2003

|                                  |                                   | Parent |         | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated
Total |  
|--------------------------------- | --------------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | ------- | ------------ | ------- | ------------------ | -
|Net sales                         |                                   | $      | 364,348 |                        | $ | 41,562                    |         | $            | 592,366 |                    | $
|Cost of goods sold                |                                   |        | 209,121 |                        |   | 40,314                    |         |              | 373,495 |                    |  
|Restructuring and related charges |                                   |        | 12,497  |                        |   |                          |         |              | 8,568   |                    |  
|                                  |                                   |        |         |                        |   |                           |         |              |         |                    |  
|                                  | Gross profit                      |        |         | 142,730                |   |                           | 1,248   |              |         | 210,303            |  
|Operating expenses:               |                                   |        |         |                        |   |                           |         |              |         |                    |  
|                                  | Selling                           |        |         | 70,205                 |   |                           | 818     |              |         | 114,506            |  
|                                  | General and administrative        |        |         | 51,077                 |   |                           | (10,550 | )            |         | 40,348             |  
|                                  | Research and development          |        |         | 12,096                 |   |                           |        |              |         | 2,268              |  
|                                  | Restructuring and related charges |        |         | 7,693                  |   |                           |        |              |         | 3,794              |  
|                                  |                                   |        |         |                        |   |                           |         |              |         |                    |  
|                                  |                                   |        | 141,071 |                        |   | (9,732                    | )       |              | 160,916 |                    |  
|                                  |                                   |        |         |                        |   |                           |         |              |         |                    |  
|Income from operations            |                                   |        | 1,659   |                        |   | 10,980                    |         |              | 49,387  |                    |  
|Interest expense                  |                                   |        | 34,780  |                        |   |                          |         |              | 15,284  |                    |  
|Equity income                     |                                   |        | (57,423 | )                      |   | (61,090                   | )       |              |        |                    |  
|Non-operating expense             |                                   |        | 3,072   |                        |   |                          |         |              |        |                    |  
|Other expense (income), net       |                                   |        | 28,236  |                        |   | (1,244                    | )       |              | (43,771 | )                  |  
|                                  |                                   |        |         |                        |   |                           |         |              |         |                    |  
|(Loss) income before income taxes |                                   |        | (7,006  | )                      |   | 73,314                    |         |              | 77,874  |                    |  
|Income tax (benefit) expense      |                                   |        | (22,236 | )                      |   | 15,891                    |         |              | 16,784  |                    |  
|                                  |                                   |        |         |                        |   |                           |         |              |         |                    |  
|Net income                        |                                   | $      | 15,230  |                        | $ | 57,423                    |         | $            | 61,090  |                    | $
|                                  |                                   |        |         |                        |   |                           |         |              |         |                    |  

F-46

---

Condensed Consolidating Statement of Cash Flows  Year Ended September 30, 2003

|                                                             |                                                               | Parent |          | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |          | Eliminations |          | Consolidated
Total |  
|------------------------------------------------------------ | ------------------------------------------------------------- | ------ | -------- | ---------------------- | - | ------------------------- | -------- | ------------ | -------- | ------------------ | -
|Net cash (used) provided by operating activities             |                                                               | $      | 14,227   |                        | $ | -                         |          | $            | 60,527   |                    | $
|Cash flows from investing activities:                        |                                                               |        |          |                        |   |                           |          |              |          |                    |  
|                                                             | Purchases of property, plant and equipment                    |        |          | (14,598                | ) |                           |         |              |          | (11,527            | )
|                                                             | Proceeds from sale of property, plant, and equipment          |        |          |                       |   |                           |         |              |          | 132                |  
|                                                             | Payments for acquisitions, net of cash acquired               |        |          | (444,231               | ) |                           | (237,853 | )            |          | (239,945           | )
|                                                             |                                                               |        |          |                        |   |                           |          |              |          |                    |  
|Net cash (used) provided by investing activities             |                                                               |        | (458,829 | )                      |   | (237,853                  | )        |              | (251,340 | )                  |  
|                                                             |                                                               |        |          |                        |   |                           |          |              |          |                    |  
|Cash flows from financing activities:                        |                                                               |        |          |                        |   |                           |          |              |          |                    |  
|                                                             | Reduction of debt                                             |        |          | (431,592               | ) |                           |         |              |          | (2,240             | )
|                                                             | Proceeds from debt financing                                  |        |          | 1,059,821              |   |                           |         |              |          | 2,759              |  
|                                                             | Extinguishment of debt                                        |        |          |                       |   |                           | (126,573 | )            |          |                   |  
|                                                             | Debt issuance costs                                           |        |          | (29,933                | ) |                           |         |              |          |                   |  
|                                                             | Payments of capital lease obligations                         |        |          | (287                   | ) |                           |         |              |          | (880               | )
|                                                             | (Advances related to) proceeds from intercompany transactions |        |          | (107,525               | ) |                           | 370,419  |              |          | 238,732            |  
|                                                             | Payments from officers/shareholders                           |        |          | 600                    |   |                           |         |              |          |                   |  
|                                                             | Proceeds from exercise of stock options                       |        |          | 176                    |   |                           |         |              |          |                   |  
|                                                             |                                                               |        |          |                        |   |                           |          |              |          |                    |  
|Net cash provided (used) by financing activities             |                                                               |        | 491,260  |                        |   | 243,846                   |          |              | 238,371  |                    |  
|                                                             |                                                               |        |          |                        |   |                           |          |              |          |                    |  
|Effect of exchange rate changes on cash and cash equivalents |                                                               |        | 29,840   |                        |   |                          |          |              | (32,156  | )                  |  
|                                                             |                                                               |        |          |                        |   |                           |          |              |          |                    |  
|Net increase in cash and cash equivalents                    |                                                               |        | 76,498   |                        |   | 5,993                     |          |              | 15,402   |                    |  
|Cash and cash equivalents, beginning of period               |                                                               |        | 3,518    |                        |   | 46                        |          |              | 6,317    |                    |  
|                                                             |                                                               |        |          |                        |   |                           |          |              |          |                    |  
|Cash and cash equivalents, end of period                     |                                                               | $      | 80,016   |                        | $ | 6,039                     |          | $            | 21,719   |                    | $
|                                                             |                                                               |        |          |                        |   |                           |          |              |          |                    |  

F-47

---

(18) Condensed Consolidating Financial Statements

Condensed Consolidating Balance Sheet
September 30, 2002

|                                                     |                                             | Parent                                                             |         | Guarantor
Subsidiaries |         | Nonguarantor
Subsidiaries |         | Eliminations |        | Consolidated
Total |        
|---------------------------------------------------- | ------------------------------------------- | ------------------------------------------------------------------ | ------- | ---------------------- | ------- | ------------------------- | ------- | ------------ | ------ | ------------------ | -------
|ASSETS                                               |                                            
|Current assets:                                      |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     | Cash and cash equivalents                   |                                                                    | $       | 3,518                  |         | $                         | 46      |              | $      | 6,317              |        
|                                                     | Receivables:                                |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     |                                             | Trade accounts receivables, net of allowance for doubtful accounts |         |                        | 27,246  |                           |         | 51,117       |        |                    | 50,564 
|                                                     |                                             | Other                                                              |         |                        | 17,418  |                           |         | 10,762       |        |                    | 7,107  
|                                                     | Inventories                                 |                                                                    |         | 58,619                 |         |                           |        |              |        | 28,142             |        
|                                                     | Deferred income taxes                       |                                                                    |         | 5,607                  |         |                           |        |              |        | 2,979              |        
|                                                     | Prepaid expenses and other                  |                                                                    |         | 14,452                 |         |                           |        |              |        | 5,518              |        
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     | Total current assets                        |                                                                    |         | 126,860                |         |                           | 61,925  |              |        | 100,627            |        
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|Property, plant and equipment, net                   |                                             |                                                                    | 75,838  |                        |         |                          |         |              | 26,748 |                    |        
|Deferred charges and other                           |                                             |                                                                    | 65,413  |                        |         | 1                         |         |              | 1,224  |                    |        
|Goodwill                                             |                                             |                                                                    | 1,035   |                        |         |                          |         |              | 29,532 |                    |        
|Intangible assets, net                               |                                             |                                                                    | 89,046  |                        |         |                          |         |              |       |                    |        
|Deferred income taxes                                |                                             |                                                                    | 6,079   |                        |         | 1,598                     |         |              | 4,666  |                    |        
|Debt issuance costs                                  |                                             |                                                                    | 3,207   |                        |         |                          |         |              |       |                    |        
|Investments in subsidiaries                          |                                             |                                                                    | 149,329 |                        |         | 86,673                    |         |              |       |                    |        
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     |                                             | Total assets                                                       |         | $                      | 516,807 |                           | $       | 150,197      |        | $                  | 162,797
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|LIABILITIES AND SHAREHOLDERS' EQUITY                 |                                            
|Current liabilities:                                 |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     | Current maturities of long-term debt        |                                                                    | $       | 16,985                 |         | $                         |        |              | $      | 3,854              |        
|                                                     | Accounts payable                            |                                                                    |         | 68,188                 |         |                           |        |              |        | 27,688             |        
|                                                     | Accrued liabilities:                        |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     |                                             | Wages and benefits                                                 |         |                        | 7,182   |                           |         |             |        |                    | 1,728  
|                                                     |                                             | Income taxes payable                                               |         |                        | 4,696   |                           |         | 860          |        |                    | 1,587  
|                                                     |                                             | Accrued interest                                                   |         |                        | 1,657   |                           |         |             |        |                    | 7      
|                                                     |                                             | Restructuring charges                                              |         |                        | 1,639   |                           |         |             |        |                    | 62     
|                                                     |                                             | Other                                                              |         |                        | 7,331   |                           |         | 3            |        |                    | 2,477  
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     |                                             | Total current liabilities                                          |         |                        | 107,678 |                           |         | 863          |        |                    | 37,403 
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|Long-term debt, net of current maturities            |                                             |                                                                    | 188,461 |                        |         |                          |         |              | 30,298 |                    |        
|Employee benefit obligations, net of current portion |                                             |                                                                    | 23,603  |                        |         |                          |         |              | 406    |                    |        
|Deferred income taxes                                |                                             |                                                                    | 13,549  |                        |         | 5                         |         |              | 7,403  |                    |        
|Other                                                |                                             |                                                                    | 5,354   |                        |         |                          |         |              | 865    |                    |        
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     |                                             | Total liabilities                                                  |         |                        | 338,645 |                           |         | 868          |        |                    | 76,375 
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|Shareholders' equity:                                |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     | Common stock                                |                                                                    |         | 615                    |         |                           | 1       |              |        | 12,072             |        
|                                                     | Additional paid-in capital                  |                                                                    |         | 180,704                |         |                           | 62,788  |              |        | 54,157             |        
|                                                     | Retained earnings                           |                                                                    |         | 152,745                |         |                           | 95,099  |              |        | 28,449             |        
|                                                     | Accumulated other comprehensive loss        |                                                                    |         | (19,894                | )       |                           | (8,559  | )            |        | (8,256             | )      
|                                                     | Notes receivable from officers/shareholders |                                                                    |         | (4,205                 | )       |                           |        |              |        |                   |        
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     |                                             |                                                                    | 309,965 |                        |         | 149,329                   |         |              | 86,422 |                    |        
|                                                     | Less treasury stock, at cost                |                                                                    |         | (130,070               | )       |                           |        |              |        |                   |        
|                                                     | Less unearned restricted stock compensation |                                                                    |         | (1,733                 | )       |                           |        |              |        |                   |        
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     | Total shareholders' equity                  |                                                                    |         | 178,162                |         |                           | 149,329 |              |        | 86,422             |        
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        
|                                                     | Total liabilities and shareholders' equity  |                                                                    | $       | 516,807                |         | $                         | 150,197 |              | $      | 162,797            |        
|                                                     |                                             |                                                                    |         |                        |         |                           |         |              |        |                    |        

F-48

---

Condensed Consolidating Statement of Operations
Year Ended September 30, 2002

|                                  |                            | Parent |         | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated
Total
|--------------------------------- | -------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | ------- | ------------ | ------- | ------------------
|Net sales                         |                            | $      | 424,199 |                        | $ | 42,132                    |         | $            | 160,926 |                   
|Cost of goods sold                |                            |        | 237,431 |                        |   | 40,869                    |         |              | 108,742 |                   
|Restructuring and related charges |                            |        | (1,063  | )                      |   |                          |         |              | 2,273   |                   
|                                  |                            |        |         |                        |   |                           |         |              |         |                   
|                                  | Gross profit               |        |         | 187,831                |   |                           | 1,263   |              |         | 49,911            
|Operating expenses:               |                            |        |         |                        |   |                           |         |              |         |                   
|                                  | Selling                    |        |         | 71,389                 |   |                           | 818     |              |         | 32,557            
|                                  | General and administrative |        |         | 53,543                 |   |                           | (11,328 | )            |         | 14,685            
|                                  | Research and development   |        |         | 13,084                 |   |                           |        |              |         |                  
|                                  |                            |        |         |                        |   |                           |         |              |         |                   
|                                  |                            |        | 138,016 |                        |   | (10,510                   | )       |              | 47,242  |                   
|                                  |                            |        |         |                        |   |                           |         |              |         |                   
|Income from operations            |                            |        | 49,815  |                        |   | 11,773                    |         |              | 2,669   |                   
|Interest expense                  |                            |        | 15,390  |                        |   |                          |         |              | 2,216   |                   
|Equity (income) loss              |                            |        | (10,697 | )                      |   | 2,389                     |         |              |        |                   
|Other (income) expense, net       |                            |        | (2,180  | )                      |   | (469                      | )       |              | 2,131   |                   
|                                  |                            |        |         |                        |   |                           |         |              |         |                   
|Income (loss) before income taxes |                            |        | 47,302  |                        |   | 9,853                     |         |              | (1,678  | )                 
|Income tax expense (benefit)      |                            |        | 16,579  |                        |   | (844                      | )       |              | 711     |                   
|                                  |                            |        |         |                        |   |                           |         |              |         |                   
|                                  | Net income (loss)          |        | $       | 30,723                 |   | $                         | 10,697  |              | $       | (2,389            
|                                  |                            |        |         |                        |   |                           |         |              |         |                   

F-49

---

Condensed Consolidating Statement of Cash Flows
Year Ended September 30, 2002

|                                                             |                                                      | Parent |         | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |   | Eliminations |        | Consolidated
Total |  
|------------------------------------------------------------ | ---------------------------------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | - | ------------ | ------ | ------------------ | -
|Net cash provided by operating activities                    |                                                      | $      | 65,250  |                        | $ |                          |   | $            | 6,615  |                    | $
|Cash flows from investing activities:                        |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|                                                             | Purchases of property, plant and equipment           |        |         | (13,154                | ) |                           |  |              |        | (2,487             | )
|                                                             | Proceeds from sale of property, plant, and equipment |        |         | 42                     |   |                           |  |              |        | 126                |  
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Net cash used by investing activities                        |                                                      |        | (13,112 | )                      |   |                          |   |              | (2,361 | )                  |  
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Cash flows from financing activities:                        |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|                                                             | Reduction of debt                                    |        |         | (219,343               | ) |                           |  |              |        | (5,088             | )
|                                                             | Proceeds from debt financing                         |        |         | 169,100                |   |                           |  |              |        |                   |  
|                                                             | Issuance of stock and exercise of stock options      |        |         | 134                    |   |                           |  |              |        |                   |  
|                                                             | Other                                                |        |         | (1,360                 | ) |                           |  |              |        | (408               | )
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Net cash used by financing activities                        |                                                      |        | (51,469 | )                      |   |                          |   |              | (5,496 | )                  |  
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Effect of exchange rate changes on cash and cash equivalents |                                                      |        |        |                        |   |                          |   |              | (904   | )                  |  
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Net increase (decrease) in cash and cash equivalents         |                                                      |        | 669     |                        |   |                          |   |              | (2,146 | )                  |  
|Cash and cash equivalents, beginning of period               |                                                      |        | 2,849   |                        |   | 46                        |   |              | 8,463  |                    |  
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Cash and cash equivalents, end of period                     |                                                      | $      | 3,518   |                        | $ | 46                        |   | $            | 6,317  |                    | $
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  

F-50

---

Condensed Consolidating Statement of Operations
Year Ended September 30, 2001

|                                  |                                   | Parent |         | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated
Total
|--------------------------------- | --------------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | ------- | ------------ | ------- | ------------------
|Net sales                         |                                   | $      | 431,602 |                        | $ | 45,223                    |         | $            | 194,157 |                   
|Cost of goods sold                |                                   |        | 249,496 |                        |   | 43,866                    |         |              | 121,902 |                   
|Restructuring and related charges |                                   |        | 17,399  |                        |   |                          |         |              | 4,704   |                   
|                                  |                                   |        |         |                        |   |                           |         |              |         |                   
|                                  | Gross profit                      |        |         | 164,707                |   |                           | 1,357   |              |         | 67,551            
|Operating expenses:               |                                   |        |         |                        |   |                           |         |              |         |                   
|                                  | Selling                           |        |         | 82,340                 |   |                           | 681     |              |         | 36,585            
|                                  | General and administrative        |        |         | 43,384                 |   |                           | (11,640 | )            |         | 14,782            
|                                  | Research and development          |        |         | 12,191                 |   |                           |        |              |         |                  
|                                  | Restructuring and related charges |        |         | 204                    |   |                           |        |              |         |                  
|                                  |                                   |        |         |                        |   |                           |         |              |         |                   
|                                  |                                   |        | 138,119 |                        |   | (10,959                   | )       |              | 51,367  |                   
|                                  |                                   |        |         |                        |   |                           |         |              |         |                   
|Income from operations            |                                   |        | 26,588  |                        |   | 12,316                    |         |              | 16,184  |                   
|Interest expense                  |                                   |        | 25,860  |                        |   |                          |         |              | 3,033   |                   
|Non operating expense             |                                   |        | 8,587   |                        |   |                          |         |              |        |                   
|Equity (income)                   |                                   |        | (20,008 | )                      |   | (6,640                    | )       |              |        |                   
|Other (income) expense, net       |                                   |        | (1,491  | )                      |   | (584                      | )       |              | 1,465   |                   
|                                  |                                   |        |         |                        |   |                           |         |              |         |                   
|Income before income taxes        |                                   |        | 13,640  |                        |   | 19,540                    |         |              | 11,686  |                   
|                                  | Income tax expense (benefit)      |        |         | 1,387                  |   |                           | (468    | )            |         | 5,046             
|                                  |                                   |        |         |                        |   |                           |         |              |         |                   
|Net income                        |                                   | $      | 12,253  |                        | $ | 20,008                    |         | $            | 6,640   |                   
|                                  |                                   |        |         |                        |   |                           |         |              |         |                   

F-51

---

Condensed Consolidating Statement of Cash Flows
Year Ended September 30, 2001

|                                                             |                                                      | Parent |         | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |   | Eliminations |        | Consolidated
Total |  
|------------------------------------------------------------ | ---------------------------------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | - | ------------ | ------ | ------------------ | -
|Net cash provided by operating activities                    |                                                      | $      | 12,293  |                        | $ | 2                         |   | $            | 5,752  |                    | $
|Cash flows from investing activities:                        |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|                                                             | Purchases of property, plant and equipment           |        |         | (17,475                | ) |                           |  |              |        | (2,218             | )
|                                                             | Purchases of investments                             |        |         | (500                   | ) |                           |  |              |        | (297               | )
|                                                             | Proceeds from sale of investments                    |        |         |                       |   |                           |  |              |        | 1,354              |  
|                                                             | Proceeds from sale of property, plant, and equipment |        |         | 78                     |   |                           |  |              |        | 785                |  
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Net cash used by investing activities                        |                                                      |        | (17,897 | )                      |   |                          |   |              | (376   | )                  |  
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Cash flows from financing activities:                        |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|                                                             | Reduction of debt                                    |        |         | (412,815               | ) |                           |  |              |        | (3,884             | )
|                                                             | Extinguishment of debt                               |        |         | (69,652                | ) |                           |  |              |        |                   |  
|                                                             | Proceeds from debt financing                         |        |         | 421,914                |   |                           |  |              |        |                   |  
|                                                             | Issuance of stock and exercise of stock options      |        |         | 67,506                 |   |                           |  |              |        |                   |  
|                                                             | Other                                                |        |         | (1,191                 | ) |                           |  |              |        | (209               | )
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Net cash provided (used) by financing activities             |                                                      |        | 5,762   |                        |   |                          |   |              | (4,093 | )                  |  
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Effect of exchange rate changes on cash and cash equivalents |                                                      |        |        |                        |   |                          |   |              | 158    |                    |  
|Net increase in cash and cash equivalents                    |                                                      |        | 158     |                        |   | 2                         |   |              | 1,441  |                    |  
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Cash and cash equivalents, beginning of period               |                                                      |        | 2,691   |                        |   | 44                        |   |              | 7,022  |                    |  
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  
|Cash and cash equivalents, end of period                     |                                                      | $      | 2,849   |                        | $ | 46                        |   | $            | 8,463  |                    | $
|                                                             |                                                      |        |         |                        |   |                           |   |              |        |                    |  

F-52

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Independent Auditors' Report

The
Board of Directors and Shareholders
Rayovac Corporation:

On
November 7, 2003, we reported on the consolidated balance sheets of Rayovac Corporation and subsidiaries as of September 30, 2002 and 2003, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the years in the three-year period ended September 30, 2003, which are included in the 2003 Annual Report
on Form 10-K. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedule as listed in Item
14(a)2. The financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits.

In
our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects,
the information set forth therein.

| | /s/ KPMG LLP
KPMG LLP
| | ---------------------

Chicago, Illinois
November 7, 2003

II-1

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RAYOVAC CORPORATION AND SUBSIDIARIES        SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS        For the years ended September 30, 2003, 2002 and 2001        (In thousands)

|Column A            |                                 | Column B |   | Column C Additions |  | Column D |        | Column E
|------------------- | ------------------------------- | -------- | - | ------------------ |  | -------- | ------ | --------
|
|September 30, 2003: |                                 |          |   |                    |  |          |        |         
|                    | Allowance for doubtful accounts |          | $ | 3,293              |  | $        | 3,494  |         
|September 30, 2002: |                                 |          |   |                    |  |          |        |         
|                    | Allowance for doubtful accounts |          | $ | 2,139              |  | $        | 14,869 |         
|September 30, 2001: |                                 |          |   |                    |  |          |        |         
|                    | Allowance for doubtful accounts |          | $ | 1,020              |  | $        | 5,149  |         

See
accompanying Independent Auditors' Report

II-2

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Signatures

Pursuant to the requirements of Section 13 or 15(d) 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.

| |  |  |  | RAYOVAC CORPORATION                                             
| |  |  |  | ----------------------------------------------------------------
| |  |  |  | /s/DAVID A. JONES                                               
| |  |  |  | David A. Jones
Chairman of the Board
and Chief Executive Officer

DATE:
December 29, 2003

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
indicated and on the above-stated date.

|Signature                                     |  | Title                                                                                            
|--------------------------------------------- |  | -------------------------------------------------------------------------------------------------
|                                              |  |                                                                                                  
|/s/DAVID A. JONESDavid A. Jones               |  | Chairman of the Board and Chief Executive Officer (Principal Executive Officer)                  
|/s/RANDALL J. STEWARDRandall J. Steward       |  | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|/s/KENT J. HUSSEYKent J. Hussey               |  | Chief Operating Officer and Director                                                             
|/s/WILLIAM P. CARMICHAELWilliam P. Carmichael |  | Director                                                                                         
|/s/NEIL P. DEFEONeil P. DeFeo                 |  | Director                                                                                         
|/s/JOHN S. LUPOJohn S. Lupo                   |  | Director                                                                                         
|/s/PHILIP F. PELLEGRINOPhilip F. Pellegrino   |  | Director                                                                                         
|/s/THOMAS R. SHEPHERDThomas R. Shepherd       |  | Director                                                                                         
|/s/BARBARA S. THOMASBarbara S. Thomas         |  | Director                                                                                         

II-3

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EXHIBIT INDEX

|Exhibit 2.1  |  | Purchase Agreement, dated August 21, 2003 by and among Rayovac Corporation, Remington Products Company, L.L.C., Vestar Equity Partners, L.P., Investors/RP, L.L.C. and RPI Corp. (filed by incorporation by reference to the
Current Report on Form 8-K, File No. 001-13615, dated August 22, 2003) filed September 3, 2003.                                                                                                                                                                                                            
|------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 2.2  |  | Amendment No. 1 to Purchase Agreement dated August 21, 2003 by and among Rayovac Corporation, Remington Products Company, L.L.C., Vestar Equity Partners, L.P., Investors/RP, L.L.C. and RPI Corp. (filed by incorporation by
reference to the Current Report on Form 8-K, File No. 001-13615, dated September 30, 2003) filed October 15, 2003.                                                                                                                                                                                        
|Exhibit 2.3  |  | Joint Venture Agreement, dated July 28, 2002, by and among Rayovac Corporation, VARTA AG and ROV German Limited GmbH, as amended (filed by incorporation by reference to the Current Report on Form 8-K, File
No 001-13615, dated October 1, 2002) filed October 16, 2002.                                                                                                                                                                                                                                                              
|Exhibit 3.1  |  | Amended and Restated Articles of Incorporation of Rayovac Corporation (filed by incorporation by reference to the Annual Report on Form 10-K for the fiscal year ended September 30, 1997, File No. 333-17895) filed
December 23, 1997.                                                                                                                                                                                                                                                                                                 
|Exhibit 3.2  |  | Amended and Restated By-laws of Rayovac Corporation, as amended through July 24, 2002 (filed by incorporation by reference to the Annual Report on Form 10-K for the fiscal year ended September 30, 2003, File
No. 001-13615) filed December 16, 2002.                                                                                                                                                                                                                                                                                 
|Exhibit 4.1  |  | Registration Rights Agreement, dated September 30, 2003, by and among Rayovac Corporation, ROV Holding, Inc., Rovcal, Inc., Vestar Shaver Corp., Vestar Razor Corp., Remington Products Company, L.L.C., Remington Capital
Corporation, Remington Rand Corporation, Remington Corporation, L.L.C., Banc of America Securities LLC, Citigroup Global Markets Inc. and ABN AMRO Incorporated (filed by incorporation by reference to the Current Report on Form 8-K, File
No. 001-13615, dated September 30, 2003) filed October 15, 2003.
|Exhibit 4.2  |  | Indenture, dated September 30, 2003, by and among Rayovac Corporation, ROV Holding, Inc., Rovcal, Inc., Vestar Shaver Corp., Vestar Razor Corp., Remington Products Company, L.L.C., Remington Capital Corporation, Remington
Rand Corporation, Remington Corporation, L.L.C. and U.S. Bank National Association (filed by incorporation by reference to the Current Report on Form 8-K, File No. 001-13615, dated September 30, 2003) filed October 15, 2003.                                                                          
|Exhibit 4.3  |  | Supplemental Indenture, dated October 24, 2003, by and among Rayovac Corporation, ROV Holding, Inc., Rovcal, Inc., Remington Products Company, L.L.C. and U.S. Bank National Association (filed by incorporation by reference
to the Registration Statement on Form S-4, File No. 333-110290, dated November 6, 2003) filed November 6, 2003.                                                                                                                                                                                           
|Exhibit 4.4  |  | Form of Note (included in Exhibit 4.2) (filed by incorporation by reference to the Current Report on Form 8-K, File No. 001-13615, dated September 30, 2003) filed October 15, 2003.                                                                                                                                                                                                                                                                                                                                                    
|Exhibit 10.1 |  | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between the Company and David A. Jones (filed by incorporation by reference to Amendment No. 1 to the Quarterly Report on Form 10-Q/A for the
quarterly period ended December 29, 2002, File No. 001-13615) filed May 2, 2003.                                                                                                                                                                                                                           
|             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

E-1

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|Exhibit 10.2  |  | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between the Company and Kent J. Hussey (filed by incorporation by reference to the Annual Report on Form 10-K for the fiscal year ended
September 30, 2003, File No. 001-13615) filed December 16, 2002.                                                                        
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 10.3  |  | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between the Company and Kenneth V. Biller (filed by incorporation by reference to the Annual Report on Form 10-K for the fiscal year ended
September 30, 2003, File No. 001-13615) filed December 16, 2002.                                                                     
|Exhibit 10.4  |  | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between the Company and Stephen P. Shanesy (filed by incorporation by reference to the Annual Report on Form 10-K for the fiscal year ended
September 30, 2003, File No. 001-13615) filed December 16, 2002.                                                                    
|Exhibit 10.5* |  | Employment Agreement, dated as of October 7, 2003, by and between the Company and Lester C. Lee.                                                                                                                                                                                                                                                               
|Exhibit 10.6  |  | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between the Company and Luis A. Cancio (filed by incorporation by reference to the Annual Report on Form 10-K for the fiscal year ended
September 30, 2003, File No. 001-13615) filed December 16, 2002.                                                                        
|Exhibit 10.7  |  | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between the Company and Dr. Paul G. Cheeseman (filed by incorporation by reference to the Annual Report on Form 10-K for the fiscal year
ended September 30, 2003, File No. 001-13615) filed December 16, 2002.                                                                 
|Exhibit 10.8  |  | Employment Agreement, dated as of August 19, 2002, by and between the Company and Randall J. Steward (filed by incorporation by reference to the Annual Report on Form 10-K for the fiscal year ended September 30, 2003,
 File No. 001-13615) filed December 16, 2002.                                                                                        
|Exhibit 10.9  |  | Registered Director's Agreement, effective as of October 1, 2002, by and between ROV German Holding GmbH and Remy Burel (filed by incorporation by reference to the Annual Report on Form 10-K for the fiscal year ended
September 30, 2003, File No. 001-13615) filed December 16, 2002.                                                                      
|Exhibit 10.10 |  | Building Lease between the Company and SPG Partners dated May 14, 1985, as amended June 24, 1986, and June 10, 1987 (filed by incorporation by reference to the Registration Statement on form S-1, File No. 333-17895) filed
December 13, 1996.                                                                                                               
|Exhibit 10.11 |  | Amendment, dated December 31, 1998, between the Company and SPG Partners, to the Building Lease, between the Company and SPG Partners, dated May 14, 1985 (filed by incorporation by reference to the Quarterly Report on
Form 10-Q for the quarterly period ended January 3, 1999, File No. 001-13615) filed February 17, 1999.                               
|Exhibit 10.12 |  | Build-To-Suit Lease Agreement, dated as of May 2, 2002, by and among 200 Corporate Drive, L.L.C., as Landlord, the Company, as Tenant, and Higgins Development Partners, L.L.C., as Developer (filed by incorporation by
reference to the Annual Report on Form 10-K for the fiscal year ended September 30, 2003, File No. 001-13615) filed December 16, 2002.
|              |  |                                                                                                                                                                                                                                                                                                                                                                

E-2

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|Exhibit 10.13 |  | Real Estate Lease, dated September 1, 2001, by and between VARTA Gerätebatterie GmbH, as Tenant, and Paula Grundstucksverwaltungsgesellschaft mbH and Co. Vermietungs-KG, as Landlord, as amended (filed by
incorporation by reference to the Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2002, File No. 001-13615) filed February 12, 2003.                                                                                                                                       
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 10.14 |  | Real Property Leasing Agreement, dated December 21, 2000, by and between VARTA Gerätebatterie GmbH, as Tenant, and ROSATA Grudstücks-Vermietungsgesellschaft mbH and Co. object Dischingin KG, as Landlord, as
amended (filed by incorporation by reference to the Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2002, File No. 001-13615) filed February 12, 2003.                                                                                                                  
|Exhibit 10.15 |  | Addendum No. 2 to Real Property Leasing Agreement, dated December 21, 2000, by and between VARTA Geratebatterie GmbH, as Tenant, and ROSATA Grudstücks-Vermietungsgesellschaft mbH and Co. object Dischingin KG, as
Landlord, as amended (filed by incorporation by reference to the Registration Statement on Form S-4, File No. 333-110290, dated November 6, 2003) filed November 6, 2003.                                                                                                                    
|Exhibit 10.16 |  | Third Amended and Restated Credit Agreement, dated October 1, 2002, by and among the Company, VARTA Geratebatterie GmbH, the lenders party thereto, LaSalle Bank National Association, as documentation agent, Citicorp North
America, Inc., as syndication agent, and Bank of America, N.A., as administrative agent (filed by incorporation by reference to the Current Report on Form 8-K, File No. 333-17895, dated October 1, 2002) filed October 16, 2002.                                                 
|Exhibit 10.17 |  | Amendment No. 1 to Third Amended and Restated Credit Agreement, dated October 1, 2002, by and among the Company, VARTA Geratebatterie GmbH, the lenders party thereto, LaSalle Bank National Association, as documentation
agent, Citicorp North America, Inc., as syndication agent, and Bank of America, N.A., as administrative agent (filed by incorporation by reference to the Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2002, File No.
001-13615) filed February 12, 2003.
|Exhibit 10.18 |  | Amendment No. 2 to Third Amended and Restated Credit Agreement, dated October 1, 2002, by and among the Company, VARTA Geratebatterie GmbH, the lenders party thereto, LaSalle Bank National Association, as documentation
agent, Citicorp North America, Inc., as syndication agent, and Bank of America, N.A., as administrative agent (filed by incorporation by reference to the Current Report on Form 8-K, File No. 001-13615, dated September 30, 2003) filed October 15,
2003.                           
|Exhibit 10.19 |  | Rayovac Corporation 1996 Stock Option Plan (filed by incorporation by reference to Quarterly Report on Form 10-Q for the quarterly period ended June 29, 1997, File No. 333-17895) filed August 13, 1997.                                                                                                                                                                                                                                                                                                        
|Exhibit 10.20 |  | 1997 Rayovac Incentive Plan (filed by incorporation by reference to the Registration Statement on Form S-1, File No. 333-35181) filed September 8, 1997.                                                                                                                                                                                                                                                                                                                                                         
|Exhibit 10.21 |  | Rayovac Profit Sharing and Savings Plan (filed by incorporation by reference to the Registration Statement on Form S-1, File No. 333-35181) filed September 8, 1997.                                                                                                                                                                                                                                                                                                                                             
|Exhibit 10.22 |  | Rayovac Corporation Supplemental Executive Retirement Plan (filed by incorporation by reference to the Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2002, File No. 001-13615) filed
February 12, 2003.                                                                                                                                                                                                                                                                              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

E-3

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|Exhibit 10.23 |  | Rayovac Corporation Deferred Compensation Plan, as amended (filed by incorporation by reference to the Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2002, File No. 001-13615) filed
February 12, 2003.                                                                                                                          
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 10.24 |  | Technical Collaboration, Sale and Supply Agreement, dated as of March 5, 1998, by and among the Company. Matsushita Battery Industrial Co., Ltd. and Matsushita Electric Industrial Co., Ltd. (filed by incorporation by
reference to the Quarterly Report on Form 10-Q for the quarterly period ended March 28, 1998, File No. 333-17895) filed May 5, 1998.
|Exhibit 12.1  |  | Statement of Computation of Ratio of Earnings to Fixed Charges (filed by incorporation by reference to the Registration Statement on Form S-4, File No. 333-110290, dated November 6, 2003) filed
November 6, 2003.                                                                                                                                          
|Exhibit 21.1* |  | List of subsidiaries of Rayovac Corporation (filed by incorporation by reference to the Registration Statement on Form S-4, File No. 333-110290, dated November 6, 2003) filed November 6,
2003.                                                                                                                                                             
|Exhibit 23.1* |  | Consent of KPMG LLP.                                                                                                                                                                                                                                                                                                                                         
|Exhibit 31.1* |  | Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                      
|Exhibit 31.2* |  | Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 the Sarbanes-Oxley Act of 2002.                                                                                                                                                         
|Exhibit 32.1* |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                           
|Exhibit 32.2* |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                       

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