To Our Shareholders:
At Rayovac Corporation, we ascribe to the simple belief that if something’s worth doing, it’s worth doing right. This uncomplicated approach to our business is not only inherent in Rayovac’s culture, it’s evident in every activity we pursue. We demonstrated this fact in fiscal 2004 by carefully executing our growth strategy, taking a number of steps to become a larger, more diversified consumer products company that can serve the increasingly global demands of the world’s top retailers. In the process, we delivered a host of impressive operating achievements and posted record financial results. As a result, we succeeded in making 2004 another year in which we not only did things right, we did them extremely well.

Capitalizing on Our Remington Acquisition
One of our most noteworthy accomplishments during the year was our successful integration of Remington Products Company, a leading designer and distributor of shaving and personal care products. Our careful execution of this process resulted in a powerful combined enterprise with a richer brand portfolio and a more diverse range of products. We leveraged the full potential of our new organization, combining distribution, manufacturing, sales and marketing, and administrative organizations; raising our profile with suppliers and customers; and generating increased operating efficiencies.

Rayovac has a successful track record in acquiring and integrating companies, and Remington is a model example of the disciplines we use as we execute these processes. We begin by carefully selecting companies that offer Rayovac a good strategic fit. We finance our acquisitions by prudently accessing the capital markets. We plan thoroughly, laying out each facet of the anticipated integration, and we work diligently to retain the “corporate DNA” of the acquired company—the talented managers upon whom we rely to support its future growth. Finally, we execute to plan, aggressively integrating the acquisition, leveraging each company’s strengths, and driving new productivity and efficiencies. These collective measures account for Rayovac’s exceptional acquisition record.

Rayovac’s integration of Remington encompassed a series of challenging initiatives that required us to draw on all of our skills as an experienced acquirer. These initiatives included merging Remington’s North American and European businesses with Rayovac’s existing operations, rationalizing the two companies’ manufacturing and distribution facilities, and converting Remington’s information systems to Rayovac’s SAP platform. We also formed a global product innovation group that we charged with developing a range of groundbreaking new products to help us maintain our status as a leading innovator in our industry.

By applying our proven disciplines to our integration of Remington, we completed the process ahead of schedule, generating approximately $35 million in annual cost savings. At the same time, we capitalized on the strength of the Remington brand to drive an 18 percent increase in Remington’s revenues. We expect Remington’s products to be our fastest growing product line over the next several years.

Completing Our Globalization
While we devoted significant management attention to the integration of Remington, we simultaneously executed two smaller, strategically important acquisitions that completed our globalization and consolidated the Rayovac brand worldwide. Combined with our acquisition of Varta in 2002, these acquisitions have provided Rayovac with a significant presence in North America, Latin America, Europe and Asia Pacific.

In March, we acquired 85 percent of Ningbo Baowang Battery Company in Ninghai, China. Ningbo Baowang provides us with a modern manufacturing facility that we believe to be among the lowest cost battery manufacturing operations in the world. This facility will have manufacturing capacity of up to a billion batteries per year with access to export markets around the globe. In addition, Baowang is a leading brand in China, so our acquisition added an established name to our growing brand portfolio. It also provided us with an established sales and marketing organization that will help us to penetrate the rapidly growing battery market in China.

In May, we acquired Microlite, a low-cost battery manufacturer headquartered in São Paulo, Brazil. Microlite is Brazil’s leading battery company with $53 million in net sales and a 49 percent market share. Rayovac’s acquisition of Microlite provided us with new regional manufacturing capabilities and an even stronger number-one market position in Latin America. Moreover, since Microlite owned the Rayovac brand name in Brazil, this acquisition secured our right to the Rayovac name worldwide, enabling us to present a united front to our customers around the globe.

We are now working diligently to integrate Ningbo and Microlite, applying many of the same disciplines that we used in our integrations of Varta and Remington. At Ningbo, we are upgrading financial and reporting systems; expanding alkaline battery capacity; improving the quality and performance of its products; and expanding its sales and distribution network. At Microlite, we have hired experienced new leadership and strengthened the capital structure; we are now producing improved, higher margin products and expanding capacity and production levels. We expect to complete the integration of both companies by fiscal year-end 2005.

During the year, we also relocated our corporate headquarters from Madison, Wisconsin to Atlanta, Georgia. This move provided our leadership team with convenient new access to the major global markets in which we compete. It also provided us with the opportunity to strengthen our management capabilities by attracting corporate professionals with multi-national experience to support Rayovac’s future growth.

Benefiting from Healthier Battery Markets in North America
During the year, we benefited from improved market dynamics in the North American alkaline battery business. After several years of challenging competitive conditions, we saw renewed pricing stability, a reduction in promotional activity, and a resumption of marketplace momentum, which helped to fuel a 12 percent increase in net sales for Rayovac’s North American battery business. These encouraging developments support our conviction that the consumer battery industry in North America has regained its stability and health, and is poised for solid long-term growth.

Delivering Record Financial Performance
In a fitting conclusion to an exciting fiscal 2004, we are pleased to report substantial increases in net sales; net income; earnings before interest, taxes, depreciation and amortization (EBITDA); and diluted earnings per share (EPS), as well as improvements in all of our debt metrics. These record results stand as compelling testimony to the strength of our growing family of brands and to the enthusiastic support of retailers and consumers around the world.

Specifically, as a result of the Remington acquisition, our outstanding operating performance and solid sales growth in our major product categories:

• Net sales climbed to $1.4 billion, compared with $922.1 million in fiscal 2003.

• Net income grew to $55.8 million from $15.5 million last year.

• Pro forma EBITDA increased to $202.1 million from $133.8 million in fiscal 2003.

• Diluted earnings per share were $1.61, compared with $0.48 in the prior year.

• Pro forma diluted earnings per share increased to $1.83, compared with $1.27 in 2003.

• Total debt declined to $829.9 million from $943.3 million at the end of fiscal 2003.

Note: Click here to see Table for reconciliation to U.S. GAAP financial results.

These results, while impressive in any year, are particularly rewarding in the context of fiscal 2004’s challenging global economy, which was characterized by low economic growth, and political instability and currency devaluation in a number of world markets. Our ability to overcome these obstacles, expand our global operations, and deliver strong financial performance was duly recognized by the investment community: Our stock price rose from $14.60 per share at fiscal year-end 2003 to $26.35 at the close of fiscal 2004, a gain of 80 percent—an impressive increase in shareholder value by any measure.

Refining Our Growth Strategy
Rayovac’s record of success has been predicated on our highly effective growth strategy. Since our management team took the helm at Rayovac in 1996, we have more than tripled our annual net sales, and we have transformed our business into a global enterprise with a broad portfolio of products and a worldwide customer base. We have achieved this growth primarily through acquisitions that advanced our geographic expansion and gave us premier brand positions—a timely strategy in light of the global nature of retailing today. We are now able to offer the world’s largest retailers the innovative products and the stringent customer service levels they require to compete on a worldwide basis. Our vision is to grow alongside these large customers so that we can support them virtually anywhere in the world they choose to operate.

Rayovac has enjoyed an excellent track record in achieving symbiotic growth with our customers, and we are confident that we can realize our vision. Rayovac’s products, for example, were offered in Sam Walton’s first Wal-Mart and in every Wal-Mart since then. Our resounding success in supporting sophisticated retailers is reflected in our quality relationships with 19 of the world’s top 20 retailers, including Ahold, Aldi, Albertsons, Carrefour, Costco, Intermarche, Kroger, Metro, Sears, Target, Tesco, and The Home Depot, among others. Our goal is to maintain mutually rewarding relationships with 100 percent of the world’s top retailers, making our branded consumer products ubiquitous within the world’s mass retail channels.

In fiscal 2004, we successfully positioned ourselves to achieve this goal. By acquiring Microlite and Ningbo Baowang, we completed our global expansion and extended our footprint to every geographic market where we wish to operate. Our powerful new infrastructure now spans the world with an integrated global manufacturing, distribution and information services platform, supported by a worldwide sales and marketing organization that is managed regionally and executed by country-based teams. In sum, Rayovac is today one of few companies of our size with the expansive manufacturing and supply capabilities that global retailers so eagerly seek—a distinction that positions us well to continue to grow our Company and win new business.

With our global footprint firmly in place, we have shifted our focus to organic growth and diversification through acquisition into new growth categories. We are now concentrating on strengthening our brands and introducing new strategic marketing initiatives. We are dedicating additional resources to product development efforts. We are working to leverage our global information technology infrastructure, distribution channels, purchasing power and operating structure to drive efficiencies and further reduce costs. Finally, we are laying the groundwork to expand our distribution profitably in every market where we compete. We firmly believe that our success in implementing these measures will yield maximum value from our current portfolio of businesses.

At the same time, we will continue to seek attractive acquisition candidates, like Remington, that can further diversify our product categories. This diversification will improve our risk profile and allow us to leverage our global infrastructure across a broader range of consumer product categories, thereby positioning us to deliver increased profitability. Our goal is for Rayovac to offer a broad range of branded consumer products and become an even more significant competitor in growing market categories around the world. As we work to realize this goal, we have set a new benchmark by which to measure our progress: To double our annual revenues to $3 billion within three to five years.

Leveraging the Power Behind Our Brands
Though doubling our revenues in such a short period may seem like an ambitious target, we are confident that we can achieve it while driving bottom-line growth and creating shareholder value. Our conviction is rooted in Rayovac’s unique strengths, which serve as the power behind our portfolio of global brands. These strengths encompass qualities that distinguish our Company not only as an outstanding consumer products supplier, but as a well-run corporate entity, and a rewarding place to work.

•	As a supplier, we have excellent relationships with major retailers worldwide. We offer products that consumers need and want, our market shares in our key product lines are at all-time highs, and we have a robust new product pipeline. Moreover, we have a global infrastructure that provides the logistics required to deliver our products whenever and wherever our customers need them. We possess the scale and scope to be a significant player in every market in which we compete.
•	As a corporation, we have a solid balance sheet to fuel our growth, ready access to capital and debt markets, and a reputation for responsible debt management. We are led by experienced, capable and committed executives, and we are guided by a well-balanced board, made up of directors with backgrounds rich in consumer products experience.
•	As a workplace, we have a sound strategy for long-term growth, along with a dedication to continuous process and cost improvements. We have solid acquisition disciplines and a track record of success in acquiring and integrating companies. Finally, we have a culture of entrepreneurship and empowerment, as well as a performance-oriented environment that puts personal success within the grasp of every Rayovac employee.

With these strengths as our security, it’s clear why the Rayovac team is enthusiastic about our future prospects. Indeed, we believe that, when combined with good momentum in our major business segments and continued improvement in the global economy, our strengths will drive the continued growth and success of our recognized consumer brands throughout the world.

As we move ahead, we will strive to apply the time, effort and focus necessary to do everything at Rayovac the way we always have—the right way. While that may seem like a simple formula, we know first-hand that doing it consistently demands unwavering focus, hard work and intense commitment. But we also know that it yields the kind of winning results that we are out to achieve in fiscal 2005 and beyond. As we pursue our goal, you can be assured that we will continue to work diligently to leverage the power behind our brands to generate significant future value for our loyal shareholders.

David A. Jones Chairman and Chief Executive Officer	Kent J. Hussey President and Chief Operating Officer