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<SEC-DOCUMENT>0000912057-02-032039.txt : 20020814
<SEC-HEADER>0000912057-02-032039.hdr.sgml : 20020814
<ACCEPTANCE-DATETIME>20020814150330
ACCESSION NUMBER:		0000912057-02-032039
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20020630
FILED AS OF DATE:		20020814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			RAYOVAC CORP
		CENTRAL INDEX KEY:			0001028985
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690]
		IRS NUMBER:				222423556
		STATE OF INCORPORATION:			WI
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13615
		FILM NUMBER:		02735341

	BUSINESS ADDRESS:	
		STREET 1:		601 RAYOVAC DR
		CITY:			MADISON
		STATE:			WI
		ZIP:			53711-2497
		BUSINESS PHONE:		6082753340

	MAIL ADDRESS:	
		STREET 1:		601 RAYOVAC DRIVE
		CITY:			MADISON
		STATE:			WI
		ZIP:			53711-2497
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a2085904z10-q.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
<PAGE>



                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10Q



[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
    ACT OF 1934

    For the quarterly period ended          June 30, 2002

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the transition period from     ________     to     ________

    Commission File Number          001-13615
                                    ---------



                               Rayovac Corporation
                           --------------------------

             (Exact name of registrant as specified in its charter)



            Wisconsin                                         22-2423556
     -----------------------                                 -------------

    (State or other jurisdiction of                      (I.R.S. Employer
     incorporation or organization)                       Identification Number)



                   601 Rayovac Drive, Madison, Wisconsin 53711
                    -----------------------------------------

               (Address of principal executive offices) (Zip Code)


                                 (608) 275-3340
                  --------------------------------------------

              (Registrant's telephone number, including area code)


                                 Not Applicable
                  --------------------------------------------


   (Former name, former address and former fiscal year, if changed since last
                                    report.)



     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                               Yes ( X ) No ( )


     The number of shares outstanding of the Registrant's common stock, $.01 par
value, as of August 9, 2002, was 32,033,509.


<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                               RAYOVAC CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      June 30, 2002 and September 30, 2001
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                             JUNE 30,    SEPTEMBER 30,
                                                                                               2002          2001
                                                                                             ----------  -------------
<S>                                                                                          <C>          <C>
                                                       -ASSETS-
        Current assets:
             Cash and cash equivalents                                                        $  9,109    $  11,358
             Receivables                                                                       121,269      168,745
             Inventories                                                                        78,294       91,311
             Prepaid expenses and other                                                         26,378       31,674
                                                                                             ---------    ---------
                    Total current assets                                                       235,050      303,088

        Property, plant and equipment, net                                                     103,480      107,257
        Deferred charges and other, net                                                         44,902       37,080
        Intangible assets, net                                                                 119,034      119,074
                                                                                             ---------    ---------
                    Total  assets                                                            $ 502,466    $ 566,499
                                                                                             =========    =========
                                         -LIABILITIES AND SHAREHOLDERS' EQUITY-
        Current liabilities:
             Current maturities of long-term debt                                            $  19,740    $  24,436
             Accounts payable                                                                   52,401       81,990
             Accrued liabilities:
                  Wages and benefits and other                                                  28,437       32,232
                  Other special charges                                                          3,954        5,883
                                                                                             ---------    ---------
                    Total current liabilities                                                  104,532      144,541

        Long-term debt, net of current maturities                                              193,779      233,541
        Employee benefit obligations, net of current portion                                    20,936       19,648
        Other                                                                                   15,720       11,184
                                                                                             ---------    ---------
                    Total liabilities                                                          334,967      408,914

        Shareholders' equity:
        Common stock, $.01 par value, authorized 150,000 shares;
             issued 61,570 and 61,579 shares, respectively;
             outstanding 32,034 and 32,043 shares, respectively                                    616          616
        Additional paid-in capital                                                             180,510      180,752
        Retained earnings                                                                      136,080      119,984
        Accumulated other comprehensive loss                                                   (13,651)      (6,868)
        Notes receivable from officers/shareholders                                             (4,180)      (3,665)
                                                                                             ---------    ---------
                                                                                               299,375      290,819

        Less: Treasury stock, at cost, 29,536 shares                                          (130,070)    (130,070)
        Less: Unearned restricted stock compensation                                            (1,806)      (3,164)
                                                                                             ---------    ---------
                    Total shareholders' equity                                                 167,499      157,585
                                                                                             ---------    ---------
                    Total liabilities and shareholders' equity                               $ 502,466    $ 566,499
                                                                                             =========    =========
</TABLE>

SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THESE STATEMENTS.


                                       2

<PAGE>


                               RAYOVAC CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    For the three and nine month periods ended June 30, 2002 and July 1, 2001
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                 THREE MONTHS                    NINE MONTHS
                                                                         -------------------------        -----------------------
                                                                            2002           2001             2002             2001
<S>                                                                      <C>             <C>              <C>             <C>
Net sales                                                                $ 135,412       $ 146,969        $ 418,448       $ 445,955
Cost of goods sold                                                          78,392          85,586          248,746         260,379
Special charges                                                              2,619           2,279            2,635          18,539
                                                                         ---------       ---------        ---------       ---------
     Gross profit                                                           54,401          59,104          167,067         167,037

Selling                                                                     24,759          27,473           76,778          85,839
General and administrative                                                   5,351           9,379           42,985          32,489
Research and development                                                     3,206           2,990            9,836           9,010
Special charges                                                                 --             300               --             300
                                                                         ---------       ---------        ---------       ---------
     Total operating expenses                                               33,316          40,142          129,599         127,638

        Income from operations                                              21,085          18,962           37,468          39,399

Interest expense                                                             3,974           7,017           12,200          22,391
Other expense (income), net                                                    503            (180)             118             953
                                                                         ---------       ---------        ---------       ---------
Income before income taxes                                                  16,608          12,125           25,150          16,055
Income tax expense                                                           6,294           4,053            9,054           5,624
                                                                         ---------       ---------        ---------       ---------
        Income before extraordinary item                                    10,314           8,072           16,096          10,431

Extraordinary item, loss on early extinguishment of
    debt, net of income tax benefit of $3,279                                   --           5,350               --           5,350
                                                                         ---------       ---------        ---------       ---------
Net income                                                               $  10,314       $   2,722        $  16,096       $   5,081
                                                                         =========       =========        =========       =========
BASIC EARNINGS PER SHARE
Weighted average shares
  and equivalents outstanding                                               31,776          28,080           31,774          27,743

Income before extraordinary item                                         $    0.32       $    0.29        $    0.51       $    0.38
Extraordinary item                                                              --           (0.19)              --           (0.20)
                                                                         ---------       ---------        ---------       ---------
Net income                                                               $    0.32       $    0.10        $    0.51       $    0.18
                                                                         =========       =========        =========       =========
DILUTED EARNINGS PER SHARE
Weighted average shares
  and equivalents outstanding                                               32,554          29,128           32,437          28,776

Income before extraordinary item                                         $    0.32       $    0.28        $    0.50       $    0.36
Extraordinary item                                                              --           (0.19)              --           (0.18)
                                                                         ---------       ---------        ---------       ---------
Net income                                                               $    0.32       $    0.09        $    0.50       $    0.18
                                                                         =========       =========        =========       =========
</TABLE>

SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THESE STATEMENTS.


                                       3

<PAGE>


                               RAYOVAC CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
         For the nine month periods ended June 30, 2002 and July 1, 2001
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                                               NINE MONTHS
                                                                                                      -----------------------------
                                                                                                         2002                2001
                                                                                                      ---------           ---------
<S>                                                                                                   <C>                 <C>
      Cash flows from operating activities:
            Net income                                                                                $  16,096           $   5,081
            Non-cash adjustments to net income:
                 Extraordinary item, loss on early retirement of debt                                        --               8,628
                 Amortization                                                                             1,412               4,329
                 Depreciation                                                                            14,325              12,849
                 Other non-cash adjustments                                                               1,723               4,685
            Net changes in assets and liabilities                                                        19,991              (7,956)
                                                                                                      ---------           ---------
                     Net cash provided by operating activities                                           53,547              27,616

      Cash flows from investing activities:
            Purchases of property, plant and equipment                                                  (11,922)            (15,215)
            Proceeds from sale of property, plant and equipment                                              21                 509
            Purchases of and proceeds from sale of investments                                               --                 562
                                                                                                      ---------           ---------
                     Net cash used by investing activities                                              (11,901)            (14,144)

      Cash flows from financing activities:
            Reduction of debt                                                                          (168,589)           (320,619)
            Early retirement of debt                                                                         --             (69,693)
            Proceeds from debt financing                                                                124,500             310,601
            Issuance of common stock                                                                        171              67,781
            Other                                                                                        (1,246)             (1,246)
                                                                                                      ---------           ---------
                     Net cash used by financing activities                                              (45,164)            (13,176)
      Effect of exchange rate changes on cash and cash
            equivalents                                                                                   1,269                 207
                                                                                                      ---------           ---------
                     Net (decrease) increase in cash and cash equivalents                                (2,249)                503
      Cash and cash equivalents, beginning of period                                                     11,358               9,757
                                                                                                      ---------           ---------
      Cash and cash equivalents, end of period                                                        $   9,109           $  10,260
                                                                                                      =========           =========
</TABLE>

SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THESE STATEMENTS.


                                       4

<PAGE>

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

1        SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION: These financial statements have been prepared by
         Rayovac Corporation (the "Company"), without audit, pursuant to the
         rules and regulations of the Securities and Exchange Commission (the
         "SEC") and, in the opinion of the Company, include all adjustments
         (which are normal and recurring in nature) necessary to present fairly
         the financial position of the Company at June 30, 2002, results of
         operations and cash flows for the three and nine month periods ended
         June 30, 2002, and July 1, 2001. Certain information and footnote
         disclosures normally included in financial statements prepared in
         accordance with accounting principles generally accepted in the United
         States of America have been condensed or omitted pursuant to such SEC
         rules and regulations. These condensed consolidated financial
         statements should be read in conjunction with the audited financial
         statements and notes thereto as of September 30, 2001. Certain prior
         year amounts have been reclassified to conform with the current year
         presentation.

         SHIPPING AND HANDLING COSTS: The Company incurred shipping and handling
         costs of $5,419 and $6,934 and $17,809 and $20,865 for the three and
         nine months ended June 30, 2002 and July 1, 2001, respectively, which
         are included in selling expense.

         CONCENTRATION OF CREDIT RISK: Trade receivables potentially subject the
         Company to credit risk. The Company extends credit to its customers
         based upon an evaluation of the customer's financial condition and
         credit history and generally does not require collateral. The Company
         monitors its customer's credit and financial conditions based on
         changing economic conditions and will make adjustments to credit
         policies as required. The Company has historically incurred minimal
         credit losses but in the nine months ending June 30, 2002 experienced a
         significant loss resulting from the bankruptcy filing of a major
         retailer in the United States.

         The Company has a broad range of customers including many large retail
         outlet chains, one of which accounts for a significant percentage of
         our sales volume. This major customer represented approximately 23% and
         20%, respectively, of receivables as of June 30, 2002 and September 30,
         2001.

         Approximately 25% of the Company's sales occur outside of North
         America, and these sales and related receivables are subject to varying
         degrees of credit, currency, political and economic risk. The Company
         monitors these risks and makes appropriate provisions for
         collectability based on an assessment of the risks present. The
         Argentine Peso and Venezuelan Bolivars devaluation did not have a
         significant impact on the Company's estimate of collectability.

         ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS: In May 2000, the Emerging
         Issues Task Force (EITF) reached a consensus on Issue No. 00-14,
         "Accounting for Certain Sales Incentives". This Issue addresses the
         recognition, measurement, and income statement classification for
         various types of sales incentives including discounts, coupons, rebates
         and free products. In April 2001, the EITF reached a consensus on Issue
         No. 00-25, "Vendor Income Statement Characterization of Consideration
         Paid to a Reseller of the Vendor's Products or Services". This Issue
         addresses when consideration from a vendor to a retailer or distributor
         in connection with the purchase of the vendor's products to promote
         sales of the vendor's products should be classified in the vendor's
         income statement as a reduction of revenue or expense. The Company
         adopted EITF 00-14 and EITF 00-25 in the second fiscal quarter of 2002.

         The adoption resulted in the following reclassifications for the three
         and nine month periods ended June 30, 2002 and July 1, 2001 in the
         Company's results of operations. For the three months ended June 30,
         2002 and July 1, 2001, net sales were reduced by $9,215 and $12,163,
         respectively; cost of sales were increased by $3,849 and $3,259,
         respectively; and selling expenses were reduced by $13,064 and $15,422,
         respectively. For the nine months ended June 30, 2002 and July 1, 2001,
         net sales were reduced by $38,505 and $41,928, respectively; cost


                                       5
<PAGE>

         of sales were increased by $11,796 and $10,228, respectively; and
         selling expenses were reduced by $50,301 and $52,156, respectively.

         Concurrent with the adoption of EITF 00-25, the Company reclassified
         certain accrued trade incentives as a contra receivable versus the
         Company's previous presentation as a component of accounts payable.
         Historically, customers offset earned trade incentives when making
         payments on account. Therefore, the Company believes the
         reclassification of these accrued trade incentives as a contra
         receivable better reflects the underlying economics of the Company's
         net receivable due from trade customers.

         The reclassification results in a reduction in accounts receivable and
         accounts payable in our Consolidated Balance Sheets of $20,793 and
         $21,383 at June 30, 2002 and September 30, 2001, respectively.

         Effective October 1, 2001, the Company adopted Statement of Financial
         Accounting Standards (SFAS) 141, BUSINESS COMBINATIONS, and SFAS 142,
         GOODWILL AND OTHER INTANGIBLE ASSETS.

         Statement 141 requires that the purchase method of accounting be used
         for all business combinations initiated or completed after June 30,
         2001. Statement 141 also specifies criteria that intangible assets
         acquired in a purchase method business combination must meet to be
         recognized and reported apart from goodwill. Statement 142 requires
         that goodwill and intangible assets with indefinite useful lives no
         longer be amortized, but instead tested for impairment at least
         annually in accordance with the provisions of Statement 142. Statement
         142 also requires that intangible assets with estimable useful lives be
         amortized over their respective estimated useful lives to their
         estimated residual values, and reviewed for impairment in accordance
         with Statement 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
         AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. Upon the transition to
         Statement 142, no goodwill was deemed to be impaired.

         The impacts to date of adopting Statement 142 for the three and nine
         months ended June 30, 2002 and July 1, 2001 are as follows:

<TABLE>
<CAPTION>
                                                                     THREE MONTHS                NINE MONTHS
                                                                    -------------                -----------
                                                                  2002          2001          2002          2001
                                                                  ----          ----          ----          ----
<S>                                                               <C>           <C>          <C>            <C>
        Reported net income............................           $10,314       $2,722       $16,096        $5,081
        Add back: Goodwill amortization,  net of tax
          of $0........................................                --          254            --           790
        Add back: Trade name  amortization,  net of
          tax of $214 and $641, respectively...........                --          349            --         1,047
                                                                  -------       ------       -------        ------
        Adjusted net income............................           $10,314       $3,325       $16,096        $6,918
                                                                  =======       ======       =======        ======
        BASIC EARNINGS PER SHARE:
        Reported net income............................             $0.32        $0.10         $0.51         $0.18
        Goodwill amortization..........................                --         0.01            --          0.03
        Trade name amortization........................                --         0.01            --          0.04
                                                                  -------       ------       -------        ------
        Adjusted net income............................             $0.32        $0.12         $0.51         $0.25
                                                                  =======       ======       =======        ======
        DILUTED EARNINGS PER SHARE:
        Reported net income............................             $0.32        $0.09         $0.50         $0.18
        Goodwill amortization..........................                --         0.01            --          0.03
        Trade name amortization........................                --         0.01            --          0.03
                                                                  -------       ------       -------        ------
        Adjusted net income............................             $0.32        $0.11         $0.50         $0.24
                                                                  =======       ======       =======        ======
</TABLE>


                                       6
<PAGE>

         DERIVATIVE FINANCIAL INSTRUMENTS:

         Derivative financial instruments are used by the Company principally in
         the management of its interest rate, foreign currency and raw material
         price exposures. The Company does not hold or issue derivative
         financial instruments for trading purposes.

         The Company uses interest rate swaps to manage its interest rate risk.
         The swaps are designated as cash flow hedges with the fair value
         recorded in Other Comprehensive Income ("OCI") and as a hedge asset or
         liability, as applicable. The swaps settle periodically in arrears with
         the related amounts for the current settlement period payable to, or
         receivable from, the counter-parties included in accrued liabilities or
         accounts receivable and recognized in earnings as an adjustment to
         interest expense from the underlying debt to which the swap is
         designated. During the three and nine month periods ended June 30,
         2002, $1,319 and $3,667, respectively, of pretax derivative losses from
         such hedges were recorded as an adjustment to interest expense. At June
         30, 2002, the Company had a portfolio of interest rate swaps
         outstanding which effectively fixes the interest rates on floating rate
         debt at rates as follows: 6.404% for a notional principal amount of
         $75,000 through October 2002, 4.458% for a notional principal amount of
         $70,000 from October 2002 through July 2004 and 3.769% for a notional
         principal amount of $100,000 through August 2004. The derivative net
         losses on these contracts recorded in OCI at June 30, 2002 was an
         after-tax loss of $1,992.

         The Company enters into forward and swap foreign exchange contracts, to
         hedge the risk from forecasted settlement in local currencies of
         inter-company purchases and sales, trade sales, and trade purchases.
         These contracts generally require the Company to exchange foreign
         currencies for U.S. dollars or Pounds Sterling. These contracts are
         designated as cash flow hedges with the fair value recorded in OCI and
         as a hedge asset or liability, as applicable. Once the forecasted
         transaction has been recognized as a purchase or sale and a related
         liability or asset recorded in the balance sheet, the gain or loss on
         the related derivative hedge contract is reclassified from OCI into
         earnings as an offset to the change in value of the liability or asset.
         During the three and nine month periods ended June 30, 2002, $0 and
         $17, respectively, of pretax derivative losses were recorded as an
         adjustment to earnings for cash flow hedges related to an asset or
         liability. During the three and nine month periods ended June 30, 2002,
         $0 and $66, respectively, of pretax derivative gains were recorded as
         an adjustment to earnings for forward and swap contracts settled at
         maturity. At June 30, 2002, the Company had a series of swap contracts
         outstanding with a contract value of $493. The derivative net loss on
         these contracts at June 30, 2002 was immaterial.

         The Company periodically enters into forward foreign exchange
         contracts, to hedge the risk from changes in fair value from
         unrecognized firm purchase commitments. These firm purchase commitments
         generally require the Company to exchange U.S. dollars for foreign
         currencies. These hedge contracts are designated as fair value hedges
         with the fair value recorded in earnings on a pretax basis and as a
         hedge asset or liability, as applicable. To the extent effective,
         changes in the value of the forward contracts recorded in earnings will
         be offset by changes in the value of the hedged item, also recorded in
         earnings on a pretax basis and as an asset or liability, as applicable.
         Once the firm purchase commitment has been consummated, the firm
         commitment asset or liability balance will be reclassified as an
         addition to or subtraction from, the carrying value of the purchased
         asset. The Company previously entered into a series of forward
         contracts through October 2001 to hedge the exposure from a firm
         commitment to purchase certain battery manufacturing equipment
         denominated in Japanese Yen. During the three and nine month periods
         ended June 30, 2002, $0 and $63, respectively, of pretax derivative
         gains were recorded as an adjustment to earnings for fair value hedges
         of this firm purchase commitment and $0 and $63, respectively, of
         pretax losses were recorded as an adjustment to earnings for changes in
         fair value of this firm purchase commitment. During the three and nine
         month periods ended June 30, 2002, $0 and $78, respectively, of pretax
         derivative losses were recorded as an adjustment to earnings for fair
         value hedges of this firm purchase commitment that were settled at
         maturity and $0 and $78, respectively, of pretax gains were recorded as
         an adjustment to earnings for payments made against this firm purchase
         commitment.

         The Company is exposed to risk from fluctuating prices for zinc used in
         the manufacturing process. The Company hedges a portion of this risk
         through the use of commodity swaps. The swaps are designated as cash
         flow hedges with the fair value recorded in OCI and as a hedge asset or
         liability, as applicable. The fair value of the swaps is reclassified
         from OCI into earnings when the hedged purchase of zinc metal-based
         items also affects earnings. The swaps effectively fix the floating
         price on a specified quantity of zinc through a specified date.


                                       7
<PAGE>

         During the three and nine month periods ended June 30, 2002, $498 and
         $2,074, respectively, of pretax derivative losses were recorded as an
         adjustment to cost of sales for swap contracts settled at maturity. At
         June 30, 2002, the Company had a series of swap contracts outstanding
         through August 2003 with a contract value of $8,826. The derivative net
         losses on these contracts recorded in OCI at June 30, 2002 was an
         after-tax loss of $259.

2        INVENTORIES

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                            JUNE 30, 2002        SEPTEMBER 30, 2001
                                                                            -------------        ------------------
<S>                                                                         <C>                  <C>
        Raw material........................................                      $19,153                   $24,271
        Work-in-process.....................................                       20,061                    14,015
        Finished goods......................................                       39,080                    53,025
                                                                                  -------                   -------
                                                                                  $78,294                   $91,311
                                                                                  =======                   =======
</TABLE>

3        ACQUIRED INTANGIBLE ASSETS AND GOODWILL

<TABLE>
<CAPTION>

                                                        JUNE 30, 2002                           SEPTEMBER 30, 2001
                                           ---------------------------------------    --------------------------------------
                                            GROSS                                      GROSS
                                           CARRYING     ACCUMULATED         NET       CARRYING     ACCUMULATED        NET
                                            AMOUNT      AMORTIZATION    INTANGIBLE     AMOUNT     AMORTIZATION    INTANGIBLE
                                            ------      ------------    ----------     ------     ------------    ----------
<S>                                         <C>         <C>             <C>           <C>         <C>             <C>
        AMORTIZED INTANGIBLE ASSETS
        Non-compete agreement.........       $   700       $  595       $   105       $   700       $  490          $   210
        Proprietary technology........           525          300           225           525          275              250
                                             -------       ------       -------       -------       ------          -------
                                             $ 1,225       $  895       $   330       $ 1,225       $  765          $   460
                                             =======       ======       =======       =======       ======          =======
        PENSION INTANGIBLES
        Under-funded pension..........       $ 3,081       $   --       $ 3,081       $ 3,081       $   --          $ 3,081
                                             =======       ======       =======       =======       ======          =======
        UNAMORTIZED INTANGIBLE ASSETS
        Trade name....................       $90,000       $4,875       $85,125       $90,000       $4,875          $85,125
                                             =======       ======       =======       =======       ======          =======
</TABLE>

<TABLE>
<CAPTION>

                                                                NORTH        LATIN
                                                               AMERICA      AMERICA      EUROPE/ROW       TOTAL
                                                               -------      -------      ----------       -----
<S>                                                            <C>         <C>             <C>          <C>
        GOODWILL
        Balance as of October 1, 2001, net............          $1,035      $26,884         $2,489       $30,408
        Effect of translation.........................              --           --             89            89
                                                                ------      -------         ------       -------
        Balance as of June 30, 2002, net..............          $1,035      $26,884         $2,578       $30,497
                                                                ======      =======         ======       =======
</TABLE>

         The non-compete agreement is being amortized on a straight-line basis
         over 5 years. The proprietary technology assets are being amortized on
         a straight-line basis over 15 to 17 years.

         The trade name and Latin America segment goodwill 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
         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 is associated with the 1998 acquisition of Brisco GmbH
         in Germany and was being amortized on a straight-line basis over 15
         years.

         Pursuant to Statement 142, the Company ceased amortizing goodwill
         on October 1, 2001. Upon initial application of Statement 142, the
         Company reassessed the useful lives of its intangible assets and
         deemed only the trade name asset to have an indefinite useful life
         because it is expected to generate cash flows indefinitely. Based on
         this, the Company ceased amortizing the trade name on October 1, 2001.


                                       8
<PAGE>

         The amortization expense for the three and nine months ended June 30,
2002 and July 1, 2001 are as follows:

<TABLE>
<CAPTION>
                                                                      THREE MONTHS                       NINE MONTHS
                                                                 ----------------------            -----------------------
                                                                  2002             2001             2002             2001
                                                                  ----             ----             ----             ----
<S>                                                             <C>              <C>              <C>              <C>
        AMORTIZATION EXPENSE
        Goodwill amortization..........................          $   --           $  254           $   --           $  790
        Trade name amortization........................              --              563               --            1,688
        Non-compete and proprietary technology.........              43               43              130              130
                                                                 ------           ------           ------           ------
                                                                 $   43           $  860           $  130           $2,608
                                                                 ======           ======           ======           ======
</TABLE>

4        OTHER COMPREHENSIVE INCOME

         Comprehensive income and the components of other comprehensive income
         for the three and nine months ended June 30, 2002 and July 1, 2001 are
         as follows:

<TABLE>
<CAPTION>
                                                                         THREE MONTHS                        NINE MONTHS
                                                                   -------------------------          --------------------------
                                                                     2002              2001             2002              2001
                                                                     ----              ----             ----              ----
<S>                                                                <C>               <C>              <C>              <C>
        Net income......................................            $10,314           $2,722           $16,096          $ 5,081
        Other comprehensive income (loss):
           Foreign currency translation.................             (3,302)              44            (7,511)            (312)
           Net unrealized (loss) gain on available
           for-sale securities..........................                 (7)             105              (112)             105
           Cumulative effect of change in accounting
           principle....................................                 --               --                --             (150)
           Net unrealized (loss) gain on derivative
           instruments..................................             (2,031)            (490)              840           (2,182)
                                                                    -------           ------           -------          -------
        Comprehensive income............................            $ 4,974           $2,381           $ 9,313          $ 2,542
                                                                    =======           ======           =======          =======
</TABLE>

         Net exchange gains or losses resulting from the translation of assets
         and liabilities of foreign subsidiaries are accumulated in a separate
         section of shareholders' equity. Also included are the effects of
         exchange rate changes on intercompany balances of a long-term nature
         and transactions designated as hedges of net foreign investments. The
         changes in accumulated foreign currency translation for the three and
         nine months ended June 30, 2002 were primarily attributable to currency
         devaluation in Argentina, $247 and $2,630, respectively, and in
         Venezuela, $2,357 and $4,075, respectively and the weakening currency
         in Mexico, $376 and $644, respectively.

5        NET INCOME PER COMMON SHARE

         Net income per common share for the three and nine months ended June
         30, 2002 and July 1, 2001 is calculated based upon the following
         shares:

<TABLE>
<CAPTION>
                                                                     THREE MONTHS               NINE MONTHS
                                                                -----------------------    ----------------------
                                                                  2002          2001         2002          2001
                                                                  ----          ----         ----          ----
<S>                                                             <C>           <C>          <C>           <C>
        Basic...............................................      31,776        28,080       31,774        27,743
        Effect of restricted stock and assumed
        conversion of options...............................         778         1,048          663         1,033
                                                                 -------       -------      -------       -------
        Diluted.............................................      32,554        29,128       32,437        28,776
                                                                 =======       =======      =======       =======
</TABLE>

                                       9
<PAGE>


6        COMMITMENTS AND CONTINGENCIES

         In March 1998, the Company entered into an agreement to purchase
         certain equipment and to pay annual royalties. In connection with this
         1998 agreement, which supersedes previous agreements dated December
         1991, and March 1994, the Company committed to pay royalties of $2,000
         in 1998 and 1999, $3,000 in 2000 through 2002, and $500 in each year
         thereafter, as long as the related equipment patents are enforceable
         (2022). The Company incurred royalty expenses of $2,000 for 1999,
         $2,250 for 2000 and $3,000 for 2001. At June 30, 2002, the Company had
         commitments of approximately $400 for the acquisition of manufacturing
         equipment and inventory, all of which are expected to be incurred in
         calendar 2002.

         The Company has provided for the estimated costs associated with
         environmental remediation activities at some of its current and former
         manufacturing sites. In addition, the Company, together with other
         parties, has been designated a potentially responsible party of various
         third-party sites on the United States EPA National Priorities List
         (Superfund). The Company provides for the estimated costs of
         investigation and remediation of these sites when such losses are
         probable and the amounts can be reasonably estimated. The actual cost
         incurred may vary from these estimates due to the inherent
         uncertainties involved. The Company believes that any additional
         liability in excess of the amounts provided of $1,629, which may result
         from resolution of these matters, will not have a material adverse
         effect on the financial condition, liquidity, or cash flow of the
         Company.

         The Company has certain other contingent liabilities with respect to
         litigation, claims and contractual agreements arising in the ordinary
         course of business. In the opinion of management, 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.

7        OTHER

         During Fiscal 2001, the Company recorded special charges related to:
         (i) an organizational restructuring in the U.S, (ii) manufacturing and
         distribution cost rationalization initiatives in the Company's
         Tegucigalpa, Honduras and Mexico City, Mexico manufacturing facilities
         and in the Company's 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
         the Company's June 2001 secondary offering. The amount recorded
         includes $10,100 of employee termination benefits for approximately 570
         notified employees, $10,200 of equipment, inventory, and other asset
         write-offs, and $2,000 of other expenses. A summary of the 2001
         restructuring activities follows:

                           2001 RESTRUCTURING SUMMARY

<TABLE>
<CAPTION>
                                                                         TERMINATION     OTHER
                                                                           BENEFITS      COSTS         TOTAL
                                                                           --------      -----         -----
<S>                                                                        <C>         <C>           <C>
Expense accrued...............................................             $ 5,000      $11,000       $16,000

Change in estimate............................................               4,400          100         4,500
Expense as incurred...........................................                 700        1,100         1,800
Cash expenditures.............................................              (5,800)      (1,300)       (7,100)
Non-cash charges..............................................                  --       (9,300)       (9,300)
                                                                           -------      -------       -------
Balance September 30, 2001....................................              $4,300      $ 1,600       $ 5,900
Cash expenditures.............................................              (1,300)        (100)       (1,400)
Non-cash charges..............................................                  --         (100)         (100)
                                                                           -------      -------       -------
Balance December 30, 2001.....................................              $3,000      $ 1,400       $ 4,400
Cash expenditures.............................................              (1,500)        (100)       (1,600)
Non-cash charges..............................................                  --         (200)         (200)
                                                                           -------      -------       -------
Balance March 31, 2002........................................              $1,500      $ 1,100       $ 2,600
Cash expenditures.................................................            (100)          --          (100)
Non-cash charges..................................................              --         (100)         (100)
                                                                           -------      -------       -------
Balance June 30, 2002............................................          $ 1,400      $ 1,000       $ 2,400
                                                                           =======      =======       =======
</TABLE>


                                       10
<PAGE>

         During the three months ended June 30, 2002, the Company recorded
         special charges related to: (i) the closure of the Company's Santo
         Domingo, Dominican Republic plant, and (ii) manufacturing cost
         rationalization initiatives in the Company's Mexico City, Mexico
         facility. The amount recorded includes approximately $1,200 of
         employee termination benefits for approximately 110 notified
         employees, and approximately $1,400 of equipment, inventory and
         other asset write-offs. A summary of the 2002 restructuring
         activities follows:

                           2002 RESTRUCTURING SUMMARY

<TABLE>
<CAPTION>
                                                     TERMINATION        OTHER
                                                       BENEFITS         COSTS         TOTAL
                                                       --------         -----         -----
<S>                                                    <C>             <C>           <C>
Expense accrued............................             $1,200          $1,400        $2,600
                                                        ------          ------        ------
Balance June 30, 2002......................             $1,200          $1,400        $2,600
                                                        ======          ======        ======
</TABLE>

8        SEGMENT INFORMATION

         The Company manages operations in three reportable segments based upon
         geographic area. North America includes the United States and Canada;
         Latin America includes Mexico, Central America, and South America;
         Europe/Rest of World ("Europe/ROW") includes the United Kingdom, Europe
         and all other countries in which the Company does business.

         The Company manufactures and markets dry cell batteries including
         alkaline, zinc carbon, alkaline rechargeable, hearing aid, and other
         specialty batteries and lighting products throughout the world.

         Net sales and cost of sales to other segments have been eliminated. The
         gross contribution of inter segment sales is included in the segment
         selling the product to the external customer. Segment revenues are
         based upon the geographic area in which the product is sold.

         The reportable segment profits do not include interest expense,
         interest income, and income tax expense. Also, not included in the
         reportable segments, are corporate expenses including corporate
         purchasing expense, general and administrative expense and research and
         development expense. All depreciation and amortization included in
         income from operations is related to corporate or reportable segments.
         Costs are identified to reportable segments or corporate, according to
         the function of each cost center.

         The reportable segment assets do not include cash, deferred tax
         benefits, investments, long-term intercompany receivables, most
         deferred charges, and miscellaneous assets. Capital expenditures are
         related to reportable segments or corporate. Variable allocations of
         assets are not made for segment reporting.


                                       11
<PAGE>

         Segment information for the three and nine months ended June 30, 2002
and July 1, 2001 is as follows:

<TABLE>
<CAPTION>
         REVENUES FROM EXTERNAL CUSTOMERS                                THREE MONTHS                       NINE MONTHS
                                                                         -------------                      -----------
                                                                     2002              2001             2002            2001
                                                                     ----              ----             ----            ----
         <S>                                                      <C>              <C>               <C>             <C>
         North America.................................            $100,867         $106,396          $312,984        $322,151
         Latin America.................................              22,710           28,869            67,077          88,886
         Europe/ROW....................................              11,835           11,704            38,387          34,918
                                                                   --------         --------          --------        --------
         Total segments................................            $135,412         $146,969          $418,448        $445,955
                                                                   ========         ========          ========        ========
</TABLE>

<TABLE>
<CAPTION>
         INTER SEGMENT REVENUES                                           THREE MONTHS                       NINE MONTHS
                                                                          -------------                      -----------
                                                                       2002             2001            2002            2001
                                                                       ----             ----            ----            ----
         <S>                                                        <C>              <C>              <C>             <C>
         North America.................................              $7,352           $6,724           $25,224         $23,664
         Latin America.................................               1,481            2,711             5,230           7,167
         Europe/ROW....................................                 534              574             1,706           1,755
                                                                     ------          -------           -------         -------
         Total segments................................              $9,367          $10,009           $32,160         $32,586
                                                                     ======          =======           =======         =======
</TABLE>

<TABLE>
<CAPTION>
         SEGMENT PROFIT                                                    THREE MONTHS                      NINE MONTHS
                                                                          -------------                      -----------
                                                                       2002              2001           2002             2001
                                                                       ----              ----           ----             ----
         <S>                                                       <C>              <C>               <C>             <C>
         North America.................................             $27,375          $21,771           $52,481         $59,390
         Latin America.................................               2,353            3,532             6,500          14,951
         Europe/ROW....................................                 845            1,582             3,097           2,875
                                                                    -------          -------           -------         -------
         Total segments................................              30,573           26,885            62,078          77,216

         Corporate.....................................               6,869            5,344            21,975          18,978
         Special charges...............................               2,619            2,579             2,635          18,839
         Interest expense..............................               3,974            7,017            12,200          22,391
         Other expense (income), net...................                 503            (180)               118             953
                                                                    -------          -------           -------         -------
         Income before income taxes....................             $16,608          $12,125           $25,150         $16,055
                                                                    =======          =======           =======         =======
</TABLE>

<TABLE>
<CAPTION>
         SEGMENT ASSETS                                                        JUNE 30, 2002       JULY 1, 2001
                                                                               -------------       ------------
         <S>                                                                   <C>                 <C>
         North America.................................                             $234,184           $266,280
         Latin America.................................                              194,566            207,287
         Europe/ROW....................................                               30,947             26,640
                                                                                    --------           --------
         Total segments................................                             $459,697           $500,207

         Corporate.....................................                               42,769             43,131
                                                                                    --------           --------
         Total assets at period end....................                             $502,466           $543,338
                                                                                    ========           ========
</TABLE>

                                       12
<PAGE>

9        SUBSEQUENT EVENTS

         ACQUISITION AGREEMENT: In July 2002, the Company entered into
         agreements to acquire the consumer business of Varta Geratebbatterie
         Gmbh (Varta) for approximately $262 million Euros ($262 million U.S.
         dollars at current exchange rates). The Company will acquire all of the
         Varta consumer subsidiaries located outside of Germany and will become
         the majority owner of a new joint venture entity that will conduct all
         consumer battery business within Germany. The transaction does not
         include Varta's Brazilian joint venture, its automotive or micro-power
         business.

         Varta is a leading global battery manufacturer and marketer in consumer
         battery markets with calendar 2001 sales of approximately $398 million
         Euros ($398 million U.S. dollars at current exchange rates). On
         closing of acquisition, Rayovac will control the Varta consumer battery
         products brand rights worldwide. The acquisition is expected to be
         completed during early fiscal 2003.

         The Company currently expects to finance this acquisition entirely with
         new senior credit facilities. The Company currently intends to replace
         its existing senior credit facilities with a $200 million six-year
         multicurrency revolving credit facility, a $100 million six-year
         amortizing term loan facility denominated in Euros and a $375 million
         seven-year amortizing term loan facility. In addition to financing the
         acquisition of the consumer business of Varta, the Company plans to use
         the proceeds of these new senior credit facilities to refinance the
         Company's outstanding senior indebtedness, to finance future
         acquisitions and for working capital and general corporate purposes.
         Indebtedness under these amended senior credit facilities will be
         secured.

         SERVICE PROVIDER BANKRUPTCY: On July 19, 2002, the Company's freight
         payment service provider (the provider) filed for bankruptcy protection
         under Chapter 11. Subsequent to the Chapter 11 bankruptcy filing, on
         July 31, 2002, the provider filed for bankruptcy protection under
         Chapter 7. At this time, the Company estimates the amount of loss
         resulting from payments made to the provider not subsequently paid,
         per binding contract, to the Company's freight carriers is at least
         $900. This amount has been recognized as a loss in the results of
         operations for the three and nine month periods ended June 30, 2002,
         and is reflected in General and administrative expenses. The resulting
         liability is classified as a current other accrued liability on the
         consolidated balance sheets as of June 30, 2002.

10       GUARANTOR SUBSIDIARIES (ROV HOLDING, INC. AND ROVCAL, INC.)

         The following condensed consolidating financial data illustrate the
         composition of the consolidated financial statements. Investments in
         subsidiaries are accounted for by the Company and the Guarantor
         Subsidiaries using the equity method for purposes of the consolidating
         presentation. Earnings of subsidiaries are therefore reflected in the
         Company's and Guarantor Subsidiaries' investment accounts and earnings.
         The principal elimination entries eliminate investments in subsidiaries
         and inter-company balances and transactions. Separate financial
         statements of the Guarantor Subsidiaries are not presented because
         management has determined that such financial statements would not be
         material to investors.


                                       13
<PAGE>

                        RAYOVAC CORPORATION AND SUBSIDIARIES
                       CONDENSED CONSOLIDATING BALANCE SHEET
                                As of June 30, 2002
                                    (Unaudited)
                                   (In thousands)

<TABLE>
<CAPTION>
                                                                                GUARANTOR    NONGUARANTOR              CONSOLIDATED
                                                                    PARENT     SUBSIDIARIES  SUBSIDIARIES  ELIMINATIONS    TOTAL
<S>                                                              <C>           <C>          <C>           <C>            <C>
                                   -ASSETS-
Current assets:
   Cash and cash equivalents                                      $   2,462     $      43     $   6,604     $      --     $   9,109
   Receivables                                                       26,052        57,709        57,587       (20,079)      121,269
   Inventories                                                       53,781            --        25,912        (1,399)       78,294
   Prepaid expenses and other                                        18,052           342         7,984            --        26,378
                                                                  ---------     ---------     ---------     ---------     ---------
      Total current assets                                          100,347        58,094        98,087       (21,478)      235,050

Property, plant and equipment, net                                   76,471            22        26,987            --       103,480
Deferred charges and other, net                                      68,203           631         6,278       (30,210)       44,902
Intangible assets, net                                               89,759            --        29,463          (188)      119,034
Investments in subsidiaries                                         147,846        89,723            --      (237,569)           --
                                                                  ---------     ---------     ---------     ---------     ---------
   Total assets                                                   $ 482,626     $ 148,470     $ 160,815     $(289,445)    $ 502,466
                                                                  =========     =========     =========     =========     =========
                    -LIABILITIES AND SHAREHOLDERS' EQUITY-

Current liabilities:
   Current maturities of long-term debt                           $  23,124     $      --     $   4,055     $  (7,439)    $  19,740
   Accounts payable                                                  42,507            --        21,717       (11,823)       52,401
   Accrued liabilities:
      Wages and benefits and other                                   23,082           383         4,972            --        28,437
      Other special charges                                           3,683            --           271            --         3,954
                                                                  ---------     ---------     ---------     ---------     ---------
           Total current liabilities                                 92,396           383        31,015       (19,262)      104,532

Long term debt, net of current maturities                           193,768            --        30,241       (30,230)      193,779
Employee benefit obligations, net of current portion                 20,378            --           558            --        20,936
Other                                                                 5,950           241         9,529            --        15,720
                                                                  ---------     ---------     ---------     ---------     ---------
         Total liabilities                                          312,492           624        71,343       (49,492)      334,967

Shareholders' equity:
   Common stock                                                         615             1        12,072       (12,072)          616
   Additional paid-in capital                                       180,391        62,788        54,157      (116,826)      180,510
   Retained earnings                                                138,869        93,539        31,422      (127,750)      136,080
   Accumulated other comprehensive loss                             (13,685)       (8,482)       (8,179)       16,695       (13,651)
   Notes receivable from officers/shareholders                       (4,180)           --            --            --        (4,180)
                                                                  ---------     ---------     ---------     ---------     ---------
                                                                    302,010       147,846        89,472      (239,953)      299,375

Less: Treasury stock, at cost                                      (130,070)           --            --            --      (130,070)
Less: Unearned restricted stock compensation                         (1,806)           --            --            --        (1,806)
                                                                  ---------     ---------     ---------     ---------     ---------
   Total shareholders' equity                                       170,134       147,846        89,472      (239,953)      167,499
                                                                  ---------     ---------     ---------     ---------     ---------
   Total liabilities & shareholders' equity                       $ 482,626     $ 148,470     $ 160,815     $(289,445)    $ 502,466
                                                                  =========     =========     =========     =========     =========
</TABLE>


                                       14

<PAGE>

                      RAYOVAC CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                 For the three month period ended June 30, 2002
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                GUARANTOR       NONGUARANTOR                   CONSOLIDATED
                                                 PARENT        SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
                                                --------       ------------     ------------    ------------   -------------
<S>                                            <C>              <C>              <C>              <C>              <C>
Net sales                                       $ 97,715         $ 10,141         $ 40,343         $(12,787)        $135,412
Cost of goods sold                                54,149            9,837           27,528          (13,122)          78,392
Special charges                                    2,625               --               (6)              --            2,619
                                                --------         --------         --------         --------         --------
   Gross profit                                   40,941              304           12,821              335           54,401

Selling expense                                   16,528              187            8,131              (87)          24,759
General and administrative                         4,383           (2,586)           3,554               --            5,351
Research and development                           3,206               --               --               --            3,206
                                                --------         --------         --------         --------         --------
   Total operating expenses                       24,117           (2,399)          11,685              (87)          33,316

Income from operations                            16,824            2,703            1,136              422           21,085

Interest expense                                   3,799               --              445             (270)           3,974
Equity (income) loss                              (2,684)              17               --            2,667               --
Other (income) expense, net                         (397)            (130)             760              270              503
                                                --------         --------         --------         --------         --------
Income (loss) before income taxes                 16,106            2,816              (69)          (2,245)          16,608

Income tax expense (benefit)                       6,214              132              (52)              --            6,294
                                                --------         --------         --------         --------         --------
Net income (loss)                               $  9,892         $  2,684         $    (17)        $ (2,245)        $ 10,314
                                                ========         ========         ========         ========         ========
</TABLE>


                                       15

<PAGE>

                      RAYOVAC CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                  For the nine month period ended June 30, 2002
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                         GUARANTOR       NONGUARANTOR                       CONSOLIDATED
                                          PARENT        SUBSIDIARIES     SUBSIDIARIES      ELIMINATIONS         TOTAL
                                          ------        ------------     ------------      ------------     ------------
<S>                                    <C>               <C>             <C>              <C>              <C>
Net sales                               $ 306,442         $  29,681         $ 123,588        $ (41,263)        $ 418,448
Cost of goods sold                        176,640            28,790            83,788          (40,472)          248,746
Special charges                             2,556                --                79               --             2,635
                                        ---------         ---------         ---------        ---------         ---------
   Gross profit                           127,246               891            39,721             (791)          167,067

Selling expense                            52,114               544            24,410             (290)           76,778
General and administrative                 40,346            (8,241)           10,880               --            42,985
Research and development                    9,836                --                --               --             9,836
                                        ---------         ---------         ---------        ---------         ---------
   Total operating expenses               102,296            (7,697)           35,290             (290)          129,599

Income from operations                     24,950             8,588             4,431             (501)           37,468

Interest expense                           11,639                --             1,754           (1,193)           12,200
Equity (income)                            (9,386)             (583)               --            9,969                --
Other (income) expense, net                (1,700)             (598)              973            1,443               118
                                        ---------         ---------         ---------        ---------         ---------
Income before income taxes                 24,397             9,769             1,704          (10,720)           25,150
Income tax expense                          7,550               383             1,121               --             9,054
                                        ---------         ---------         ---------        ---------         ---------
Net income                              $  16,847         $   9,386         $     583        $ (10,720)        $  16,096
                                        =========         =========         =========        =========         =========
</TABLE>


                                       16

<PAGE>

                      RAYOVAC CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                  For the nine month period ended June 30, 2002
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>

                                                              GUARANTOR       NONGUARANTOR                     CONSOLIDATED
                                                  PARENT     SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS        TOTAL
                                                ----------   ------------     ------------    ------------     ------------
<S>                                            <C>          <C>              <C>             <C>                <C>
Net cash provided by operating activities...    $  50,030    $       1        $   5,808       $  (2,292)         $  53,547

Cash flows from investing activities:
        Purchases of property, plant and
          equipment.........................      (10,612)          --           (1,310)             --            (11,922)
        Proceeds from sale of property,
          plant, and equipment..............           20           --                1              --                 21
                                                ---------    ---------        ---------       ---------          ---------
Net cash used by investing activities.......      (10,592)          --           (1,309)             --            (11,901)

Cash flows from financing activities:
        Reduction of debt...................     (163,407)          --           (5,182)             --           (168,589)
        Proceeds from debt financing........      124,500           --               --              --            124,500
        Issuance of stock...................          171           --               --              --                171
        Other...............................       (1,089)          --             (408)            251             (1,246)
                                                ---------    ---------        ---------       ---------          ---------
Net cash used by financing activities.......      (39,825)          --           (5,590)            251            (45,164)

Effect of exchange rate changes on cash
     and cash equivalents...................           --           --             (772)          2,041              1,269
                                                ---------    ---------        ---------       ---------          ---------
Net (decrease) increase in cash and cash
     equivalents............................         (387)           1           (1,863)             --             (2,249)

Cash and cash equivalents, beginning
     of period..............................        2,849           46            8,463              --             11,358
                                                ---------    ---------        ---------       ---------          ---------
Cash and cash equivalents, end of period....    $   2,462    $      47        $   6,600       $      --          $   9,109
                                                =========    =========        =========       =========          =========
</TABLE>


                                       17

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

FISCAL QUARTER AND NINE MONTHS ENDED JUNE 30, 2002 COMPARED TO
FISCAL QUARTER AND NINE MONTHS ENDED JULY 1, 2001

         NET SALES. Net sales for the three months ended June 30, 2002 (the
"Fiscal 2002 Quarter") decreased $11.6 million, or 7.9%, to $135.4 million from
$147.0 million in the three months ended July 1, 2001 (the "Fiscal 2001
Quarter"). The sales decline reflects continued economic weakness in Latin
America, and continued category promotional activity and a cautious retail
inventory environment in North America compounded by lower sales to a major
customer in bankruptcy.

            Net sales for the nine months ended June 30, 2002 (the "Fiscal 2002
Nine Months") decreased $27.6 million, or 6.2%, to $418.4 million from $446.0
million in the nine months ended July 1, 2001 (the "Fiscal 2001 Nine Months").
The sales decline primarily reflects continued economic weakness in the Latin
America region and continued category promotional activity and a cautious retail
inventory environment in North America partially offset by increased volume in
Europe/ROW.

         NET INCOME. Net income for the Fiscal 2002 Quarter increased $7.6
million to $10.3 million from $2.7 million in the Fiscal 2001 Quarter. The
Fiscal 2002 Quarter includes a $4.1 million bad debt recovery resulting from the
sale of a majority portion of the receivable written-off in the quarter ended
December 30, 2001, a $3.0 million reduction in interest expense versus the prior
year, offset by a decline in operating income in Latin America and Europe/ROW.
Additionally, the Fiscal 2001 quarter included $5.4 million extraordinary loss,
net of tax, related to the early retirement of debt.

         Net income for the Fiscal 2002 Nine Months increased $11.0 million to
$16.1 million from $5.1 million in the Fiscal 2001 Nine Months. The increase
reflects a $10.2 reduction in interest expense, a $16.2 reduction in special
charges, and improved profitability in North America compared to the Fiscal 2001
Nine Months, excluding bad debt impacts. These improvements were offset by a bad
debt reserve, net of recovery, of $12.0 million related to the bankruptcy filing
of a major customer, and declines in profitability in the Latin America segment.
The Fiscal 2001 Nine Months included a $5.4 million extraordinary loss, net of
tax, attributable to the early retirement of debt.

         SEGMENT RESULTS. The Company manages operations in three reportable
segments based upon geographic area. North America includes the United States
and Canada; Latin America includes Mexico, Central America, and South America;
Europe/ROW includes the United Kingdom, Europe and all other countries in which
the company does business. We evaluate segment profitability based on income
from operations before corporate expense. Corporate expense includes corporate
purchasing expense, general and administrative expense, and research and
development expense.

<TABLE>
<CAPTION>
                                              FISCAL QUARTER              NINE MONTHS
                                            -------------------       -------------------
NORTH AMERICA                                2002         2001         2002        2001
                                             ----         ----         ----        ----
<S>                                          <C>        <C>            <C>        <C>
Revenue from external customers.......       $100.9      $106.4        $312.9     $322.2
Profitability.........................         27.4        21.8          52.5       59.4
Profitability as a % of net sales.....         27.2%       20.5%         16.8%      18.4%
Assets................................       $234.2      $266.3        $234.2     $266.3
</TABLE>

         Our sales to external customers decreased $5.5 million, or 5.2%, to
$100.9 million in the Fiscal 2002 Quarter from $106.4 million the previous year
due primarily to weakness in alkaline and heavy duty batteries partially offset
by strong sales in rechargeable and specialty batteries and lighting products.
Alkaline sales decreases were primarily attributable to the decline in sales to
a major customer in bankruptcy, a cautious retail inventory environment and
continued promotional activity, and our inability to anniversary sales to an OEM
customer in the prior year. Heavy duty sales decreases reflect reduced
distribution and general industry trends. Rechargeable battery and lighting


                                       18
<PAGE>


product sales growth was primarily attributable to the success of new products.
Specialty battery sales growth resulted from higher sales of lithium batteries
to the OEM channel.

         In the Fiscal 2002 Nine Months, our sales to external customers
decreased $9.3 million, or 2.9%, to $312.9 million in the Fiscal 2002 Nine
Months from $322.2 million the previous year as a result of growth in overall
sales of alkaline batteries, rechargeable batteries and lighting products offset
by weakness in heavy duty and specialty batteries. Alkaline sales increases were
primarily attributable to new distribution offset by the decline in sales to a
major customer in bankruptcy, and a cautious retail inventory environment and
continued promotional activity. Rechargeable batteries and lighting products
increases were primarily attributable to product line extension and the
introduction of new products. Heavy duty sales decreases reflect the industry
trend toward alkaline in place of heavy duty and reduced distribution. Specialty
batteries sales decreases versus last year primarily reflect a decline in
camcorder battery sales due to the transition to a product licensing
agreement.

         Our profitability increased $5.6 million, or 25.7%, to $27.4 million in
the Fiscal 2002 Quarter from $21.8 million in the Fiscal 2001 Quarter. The
increase in profitability in the Fiscal 2002 Quarter was primarily attributable
to a $4.1 million recovery of bad debt resulting from the sale of a majority
portion of the receivables of a bankrupt customer in addition to lower operating
expenses, partially offset by a reduction in gross profit due to the sales
decrease. Excluding the impacts of the bad debt recovery, our profitability
margins increased 260 basis points to 23.1% from 20.5% in the same quarter last
year.

         In the Fiscal 2002 Nine Months, our profitability decreased $6.9
million, or 11.6%, to $52.5 million in the Fiscal 2002 Nine Months from $59.4
million in the Fiscal 2001 Nine Months. The decrease in profitability in the
Fiscal 2002 Nine Months was primarily attributable to a $12.0 million bad debt
reserve, net of recovery, attributable to the bankruptcy filing of a major
customer. Excluding the impact of this reserve, profitability increased $5.1
million, or 8.6%, versus the same period last year due to lower operating
expenses. Our profitability margins, excluding the net bad debt reserve impacts,
increased 220 basis points to 20.6% from 18.4% in the previous year. The
increase primarily reflects lower operating expenses as a percentage of sales
partially offset by a reduction in gross profit margins reflecting a shift in
customer mix and increased promotional activity.

         Our assets decreased $32.1 million, or 12.1%, to $234.2 million in the
Fiscal 2002 Quarter from $266.3 million the previous year. The decrease was
primarily attributable to a decrease in receivables and inventory.

<TABLE>
<CAPTION>

                                                                FISCAL QUARTER             NINE MONTHS
                                                              -------------------      -------------------
LATIN AMERICA                                                  2002         2001        2002         2001
                                                               ----         ----        ----         ----
<S>                                                             <C>         <C>          <C>         <C>
Revenue from external customers...........................     $ 22.7      $ 28.9       $ 67.1      $ 88.9
Profitability.............................................        2.4         3.5          6.5        14.9
Profitability as a % of net sales.........................       10.6%       12.1%         9.7%       16.8%
Assets....................................................     $194.6      $207.3       $194.6      $207.3
</TABLE>

         Our sales to external customers decreased $6.2 million, or 21.5% to
$22.7 million in the Fiscal 2002 Quarter from $28.9 million in the same period
last year, and decreased $21.8 million, or 24.5%, to $67.1 million in the Fiscal
2002 Nine Months from $88.9 million the same period last year due primarily to
decreased sales of zinc carbon and alkaline batteries. Net sales were impacted
by unfavorable economic conditions, continued curtailment of shipments to
certain distributors and wholesalers who were delinquent in payments, political
uncertainties in Argentina and Venezuela, and the unfavorable impact of currency
devaluation which contributed approximately 10.7% and 6.4%, respectively, to the
sales decline versus the prior year periods.

         Profitability in the Latin America segment was $2.4 million and $6.5
million in the Fiscal 2002 Quarter and Nine Months, respectively. The decrease
in profitability versus the same period last year was primarily attributable to
the sales and gross profit margin decline and the unfavorable impact of currency
devaluation, partially offset by a reduction in operating expenses primarily
reflecting a reduction in advertising expense and the adoption of SFAS 142 which
resulted in a reduction of amortization expense. Profitability margins in the
Fiscal 2002 Quarter and Fiscal


                                       19
<PAGE>

2002 Nine Months decreased primarily due to our relatively fixed operating
expenses spread over lower sales compounded by an unfavorable product line mix.

         Our assets decreased $12.7 million, or 6.1%, to $194.6 million in the
Fiscal 2002 Quarter from $207.3 million the previous year due to decreases in
accounts receivable, inventory, and prepaid advertising and other assets.

<TABLE>
<CAPTION>
                                            FISCAL QUARTER         NINE MONTHS
                                           -----------------    -----------------
EUROPE/ROW                                 2002        2001     2002        2001
                                           ----        ----     ----        ----
<S>                                       <C>        <C>       <C>        <C>
Revenue from external customers.........   $11.8      $11.7     $38.4      $34.9
Profitability...........................     0.8        1.6       3.1        2.9
Profitability as a % of net sales.......     6.8%      13.7%      8.1%       8.3%
Assets..................................   $30.9      $26.6     $30.9      $26.6
</TABLE>

         Our sales to external customers increased $0.1 million, or 0.9%, to
$11.8 million in the Fiscal 2002 Quarter from $11.7 million the same period last
year and increased $3.5 million, or 10.0%, to $38.4 million in the Fiscal 2002
Nine Months from $34.9 million the same period last year primarily reflecting
strong sales of alkaline and hearing aid batteries attributable to distribution
gains and the favorable impact of foreign exchange rates.

         Our profitability decreased $0.8 million in the Fiscal 2002 Quarter and
increased $0.2 million in the Fiscal 2002 Nine Months. Profitability in the
Fiscal 2002 Quarter was impacted by increased operating expenses and unfavorable
gross profit margins due to an unfavorable product line mix. The increase in
profitability in the Fiscal 2002 Nine Months primarily reflects the benefits of
volume gains and favorable foreign exchange rates partially offset by increased
operating expenses. Our profitability margin decreased, as a percentage of
sales, in the Fiscal 2002 Quarter, primarily due to higher operating expenses.

         Our assets increased $4.3 million, or 16.2%, to $30.9 million from
$26.6 million the previous year due to an increase in inventory and receivables
reflecting the sales growth and due to foreign exchange rate impacts.

         CORPORATE EXPENSE. Our corporate expense increased $1.6 million, or
30.2%, to $6.9 million in the Fiscal 2002 Quarter from $5.3 million in the
Fiscal 2001 Quarter and increased $3.1 million, or 16.4%, to $22.0 million in
the Fiscal 2002 Nine Months from $18.9 million the same period last year. The
increase in the Fiscal 2002 Quarter primarily reflects higher technology
spending, legal expenses, and the loss recorded related to the bankruptcy of
the Company's freight payment service provider, offset by lower management
incentives compared to the prior year.

         The increased expense in the Fiscal 2002 Nine Months was
attributable to increased technology spending, and the loss recorded relating
to the bankruptcy of the Company's freight payment service provider. The
Fiscal 2001 Quarter and Nine Months reflected a gain on the sale of an
investment which was not repeated in the current year periods. As a
percentage of total sales, our corporate expense was 5.1% and 3.6% in the
Fiscal 2002 and Fiscal 2001 Quarters, respectively, and 5.3% and 4.2% in the
Fiscal 2002 and Fiscal 2001 Nine Months, respectively.

         SPECIAL CHARGES. The Fiscal 2002 Quarter and Nine Months reflects $2.6
million of special charges related to the closure of the Santo Domingo,
Dominican Republic manufacturing facility and other cost rationalizations in our
Mexico City, Mexico manufacturing facility. The Fiscal 2001 Quarter and Nine
Months reflects $2.6 million and $18.8 million, respectively, in special charges
primarily associated with the closure of our Wonewoc, Wisconsin, manufacturing
facility and restructuring initiatives in Latin America and North America.

         INCOME FROM OPERATIONS. Our income from operations increased $2.1
million, or 11.1%, to $21.1 million in the Fiscal 2002 Quarter from $19.0
million the same period last year. The increase was primarily attributable to
increased profitability in North America due to the bad debt recovery, improved
gross margins, and lower operating expenses, partially offset by the
profitability decline in Latin America and Europe/ROW, and higher corporate
expenses.

          In the Fiscal 2002 Nine Months, our income from operations decreased
$1.9 million, or 4.8%, to $37.5 million from $39.4 million the previous year.
The decrease was primarily attributable to the profitability decline in Latin
America. A bad debt reserve and related recovery associated with the bankruptcy
filing of a major customer was recognized in the Fiscal 2002 Nine Months, while
the Fiscal 2001 Nine Months reflects the special charge reserve.


                                       20
<PAGE>

         INTEREST EXPENSE. Interest expense decreased $3.0 million to $4.0
million in the Fiscal 2002 Quarter and decreased $10.2 million to $12.2 million
in the Fiscal 2002 Nine Months due to the retirement of $65.0 million in Senior
Subordinated Notes following the June 2001 stock offering combined with lower
effective interest rates and better global working capital management.

         OTHER EXPENSE (INCOME). Other expense increased $0.7 million to a $0.5
million net expense in the Fiscal 2002 Quarter. The increase in the Fiscal 2002
Quarter was attributable to foreign exchange losses reflecting the unfavorable
impacts of currency devaluations in Argentina and Venezuela.

         Other expense decreased $0.8 million to $0.1 million in the Fiscal 2002
Nine Months. The decrease in the Fiscal 2002 Nine Months was attributable to the
unfavorable impacts of currency devaluations in Venezuela and Argentina,
partially offset by foreign exchange gains versus foreign exchange losses in the
same period last year, primarily in Mexico.

         INCOME TAX EXPENSE. Our effective tax rate was 37.9% and 33.4% for the
Fiscal 2002 Quarter and the Fiscal 2001 Quarter, respectively. Our effective tax
rate was 36.0% for the Fiscal 2002 Nine Months compared to 35.0% for the Fiscal
2001 Nine Months. The effective tax rate for the prior year reflects a larger
percentage of our income being derived from foreign jurisdictions.

ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

         Effective October 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) 141, BUSINESS COMBINATIONS, and SFAS 142, GOODWILL
AND OTHER INTANGIBLE ASSETS. Statement 141 requires that the purchase method of
accounting be used for all business combinations initiated or completed after
June 30, 2001. Statement 141 also specifies criteria that intangible assets
acquired in a purchase method business combination must meet to be recognized
and reported apart from goodwill. Statement 142 requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead be tested for impairment at least annually in accordance with the
provisions of Statement 142. Statement 142 also requires that intangible assets
with estimable useful lives be amortized over their respective estimated useful
lives to their estimated residual values, and reviewed for impairment in
accordance with Statement 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.

         The adoption of Statement 142 resulted in an increase to pre-tax income
of $0.8 million ($0.6 million after-tax) versus the previous year's quarter and
$2.5 million ($1.8 million after-tax) versus the Fiscal 2001 Nine Months. The
increase is attributable to the discontinuation of amortization of the trade
name and Latin America, North America, and Europe/ROW segment goodwill. These
assets were being amortized on a straight-line basis over 15 to 40 years. Upon
initial application of Statement 142, the Company reassessed the useful lives of
its intangible assets and deemed only the trade name to have an indefinite
useful life because it is expected to generate cash flows indefinitely. The
unamortized book value of these assets is $115.6 million. Upon the transition to
Statement 142, no goodwill was deemed to be impaired.

         Effective January 1, 2002, the Company adopted Emerging Issues Task
Force (EITF) Issue No. 00-14, "Accounting for Certain Sales Incentives" and
Issue No. 00-25, "Vendor Income Statement Characterization of Consideration
Paid to a Reseller of the Vendor's Products or Services". These Issues
address the recognition, measurement, and income statement classification for
various types of sales incentives including discounts, coupons, rebates and
free products and when consideration from a vendor to a retailer or
distributor in connection with the purchase of the vendor's products to
promote sales of the vendor's products should be classified in the vendor's
income statement as a reduction of revenue or expense.

         The adoption of these EITF's resulted in the following
reclassifications in the Company's results of operations. For the Fiscal 2002
and 2001 Quarters, net sales were reduced by $9.2 and $12.1 million,
respectively; cost of sales were increased by $3.8 and $3.3 million,
respectively; and selling expenses were reduced by $13.0 and $15.4 million,
respectively. For the For the Fiscal 2002 and 2001 Nine Months, net sales were
reduced by $38.5 and $41.9 million, respectively; cost of sales were increased
by $11.8 and $10.2 million, respectively; and selling expenses were reduced by
$50.3 and $52.1 million, respectively.


                                       21
<PAGE>

         Concurrent with the adoption of EITF 00-25, the Company reclassified
certain accrued trade incentives as a contra receivable versus the Company's
previous presentation as a component of accounts payable. Historically,
customers offset earned trade incentives when making payments on account.
Therefore, the Company believes the reclassification of these accrued trade
incentives as a contra receivable better reflects the underlying economics of
the Company's net receivable due from out trade customers.

         The reclassification results in a reduction in accounts receivable and
accounts payable in our Consolidated Balance Sheets of $20.8 million and $21.4
million at June 30, 2002 and September 30, 2001, respectively.

LIQUIDITY AND CAPITAL RESOURCES

         For the Fiscal 2002 Nine Months, operating activities provided $53.5
million in net cash compared with $27.6 million the previous year. Operating
cash flow increases versus the previous year primarily reflect the reduction of
interest payments due to the retirement of $65.0 million in Senior Subordinated
Notes as well as a lower investment in working capital reflecting lower
investment in receivables.

         Net cash used by investing activities decreased $2.2 million versus the
same period a year ago reflecting a decrease in capital expenditures.
Expenditures in the Fiscal 2002 Nine Months were primarily for improvements to
alkaline battery manufacturing. Capital expenditures for fiscal 2002 are
expected to be approximately $20.0 million which will include continued
performance upgrades to our alkaline and zinc air manufacturing and packaging
operations and continued investment in technology.

         During the Fiscal 2002 Nine Months we granted approximately 1.0 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.

         As a result of the bad debt reserve for Kmart receivables in the
quarter ended December 30, 2001, the Company was out of compliance with the
leverage ratio covenant of its senior bank credit agreement ("Second Amended
Restated Credit Agreement"). On February 12, 2002, the Company amended the
Second Amended Restated Credit Agreement ("Fourth Amendment") which placed it in
compliance with an amended leverage ratio based on an amended definition of
EBITDA (see Exhibit 4.11). The Company recorded $0.3 million of fees paid as a
result of the amendment as a debt issuance cost which will be amortized over the
remaining life of the agreement.

         The Company believes that cash flow from operating activities and
periodic borrowings under its amended credit facilities will be adequate to
meet the Company's short-term and long-term operating liquidity requirements
prior to the maturity of those credit facilities, although no guarantee can
be given in this regard. The Company's current credit facilities include a
revolving credit facility of $250.0 million and term loan of $75.0 million.
As of June 30, 2002, $25.7 million of the term loan remained outstanding and
$183.2 million was outstanding under the revolving facility with
approximately $6.0 million of the remaining availability utilized for
outstanding letters of credit.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK FACTORS

         We have market risk exposure from changes in interest rates, foreign
currency exchange rates and commodity prices. We use derivative financial
instruments for purposes other than trading to mitigate the risk from such
exposures.

         A discussion of our accounting policies for derivative financial
instruments is included in Note 1 "Significant Accounting Policies" in Notes to
our consolidated financial statements.

INTEREST RATE RISK

         We have bank lines of credit at variable interest rates. The general
level of U.S. interest rates, LIBOR, IBOR, and to a lesser extent European Base
rates, primarily affects interest expense. We use interest rate swaps to manage


                                       22
<PAGE>

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.

FOREIGN EXCHANGE RISK

         We are subject to risk from sales and loans to our subsidiaries as well
as sales to, purchases from and bank lines of credit with, third-party
customers, suppliers and creditors, respectively, denominated in foreign
currencies. Foreign currency sales are made primarily in Pounds Sterling,
Canadian Dollars, Euros, Mexican Pesos, Guatemalan Quetzals, Dominican Pesos,
Venezuelan Bolivars, Argentine Pesos, Chilean Pesos and Honduran Lempira.
Foreign currency purchases are made primarily in Pounds Sterling, Euros, Mexican
Pesos, Dominican Pesos, and Guatemalan Quetzals. We manage our foreign exchange
exposure from anticipated sales, accounts receivable, intercompany 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 fluctuation 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 June 30, 2002, 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 $1.5 million.

         As of June 30, 2002, the potential change in fair value of outstanding
foreign exchange rate derivative instruments, assuming a 10% unfavorable change
in the underlying foreign exchange rates would be immaterial. The net impact on
future cash flows, after also including the gain in value on the related
accounts receivable and contractual payment obligations outstanding at June 30,
2002 due to the same change in exchange rates, would be a net gain of $0.6
million.

         As of June 30, 2002, the potential change in fair value of outstanding
commodity price derivative instruments, assuming a 10% unfavorable change in the
underlying commodity prices would be a loss of $0.8 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 immaterial.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

         In August 2001, the FASB issued Statement No. 143, ACCOUNTING FOR ASSET
RETIREMENT OBLIGATIONS. Statement No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The Company is required to
adopt no later than its fiscal year beginning October 1, 2002. Management is
currently evaluating the impact of adoption on the consolidated financial
statements.


                                       23
<PAGE>

         In October 2001, the FASB issued Statement No. 144, ACCOUNTING FOR THE
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS. This statement supersedes FASB
Statement No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR
LONG-LIVED ASSETS TO BE DISPOSED OF, and the accounting and reporting provisions
of APB Opinion No. 30, REPORTING THE RESULTS OF OPERATIONS - REPORTING THE
EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSUAL AND
INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS, for the disposal of a segment of
a business. The Company is required to adopt no later than its fiscal year
beginning October 1, 2002. Management is currently evaluating the impact of
adoption on the consolidated financial statements.

         In April 2002, the FASB issued Statement No. 145, RESCISSION OF FASB
STATEMENTS NO. 4, 44, AND 64, AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL
CORRECTIONS. The Statement addresses, among other things, the income statement
treatment of gains and losses related to debt extinguishments, requiring such
expenses to no longer be treated as extraordinary items, unless the items meet
the definition of extraordinary per APB Opinion No. 30, REPORTING THE RESULTS OF
OPERATIONS - REPORTING THE EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS, AND
EXTRAORDINARY, UNUSUAL AND INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS. The
Company is required to adopt no later than its fiscal year beginning October 1,
2002. Management is currently evaluating the impact of adoption on the
consolidated financial statements.

         In July 2002, the FASB issued Statement No. 146, ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES. The Statement requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
The Statement replaces EITF Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)." The Company is required to apply
this Statement prospectively to exit or disposal activities initiated after
December 31, 2002. Management is currently evaluating the impact of adoption on
the consolidated financial statements.

FORWARD LOOKING STATEMENTS

         Certain of the information contained in this Form 10-Q, including
without limitation statements made under Part I, Item 1, "Financial Statements"
and Part I, Item 2, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Part I, Item 3, "Quantitative and Qualitative
Disclosures about Market Risk" which are not historical facts, may include
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act, as amended. In reviewing such information, you should
note that our actual results may differ materially from those set forth in such
forward-looking statements.

         Important factors that could cause our actual results to differ
materially from those included in the forward-looking statements made herein
include, without limitation, (1) significant changes in consumer demand and
buying practices for household batteries, hearing aid batteries or other
products we manufacture or sell in North America, Latin America or Europe/ROW;
(2) the loss of, or a significant reduction in, sales through a significant
retail customer; (3) the successful introduction or expansion of competitive
brands into the marketplace, including private label offerings; (4) the
introduction of new product features or new battery technologies by a
competitor; (5) promotional campaigns and spending by a competitor; (6)
difficulties or delays in the integration of operations of acquired companies;
(7) our ability to successfully implement manufacturing and distribution cost
efficiencies and improvements; (8) delays in manufacturing or distribution due
to work stoppages, problems with suppliers, natural causes or other factors; (9)
the enactment or imposition of unexpected environmental regulations negatively
impacting consumer demand for certain of our battery products or increasing our
cost of manufacture or distribution; (10) the costs and effects of unanticipated
legal, tax or regulatory proceedings; (11) the effects of competitors' patents
or other intellectual property rights; (12) interest rate, exchange rate and raw
material price fluctuations; (13) impact of unusual items resulting from
evaluation of business strategies, acquisitions and divestitures and
organizational structure; (14) changes in accounting standards applicable to our
business; and (15) the effects of changes in trade, monetary or fiscal policies
and regulations by governments in countries where we do business.

         Additional factors and assumptions that could generally cause our
actual results to differ materially from those included in the forward-looking
statements made herein include, without limitation, (1) our ability to develop
and introduce new products; (2) the effects of general economic conditions in
North America, Europe, Latin America or other countries where we do business,
including inflation, labor costs and stock market volatility; (3) the effects of
political or economic


                                       24
<PAGE>

conditions, unrest or volatility in Latin America and other international
markets; (4) the sufficiency of our production and distribution capacity to meet
future demand for our products; (5) our ability to keep pace with the product
and manufacturing technological standards in our industry; (6) our ability to
continue to penetrate and develop new distribution channels for our products;
and (7) various other factors, including those discussed herein and those set
forth in our most recent Annual Report on Form 10-K and the prospectus
supplement for our most recent public offering of common stock. Other factors
and assumptions not identified above were also involved in the derivation of the
forward-looking statements contained in this Form 10-Q and the failure of such
other assumptions to be realized, as well as other factors, may also cause
actual results to differ materially from those projected. We assume no
obligations to update these forward-looking statements to reflect actual results
or changes in factors or assumptions affecting such forward-looking statements.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         There have been no significant changes in the status of Rayovac's legal
proceedings since the filing of Rayovac's Annual Report on Form 10-K for its
fiscal year ended September 30, 2001, other than the item mentioned below.

         On May 31, 2002, a plaintiff represented by the law firm of Milberg
Weiss Bershad Hynes & Lerach filed a class action lawsuit in the United
States District Court for the Western District of Wisconsin against
defendants Rayovac Corporation and several of its current and former
executive officers and directors alleging that the defendants violated
Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder (ELI FRIEDMAN V. RAYOVAC CORPORATION, KENNETH V. BILLER, KENT J.
HUSSEY, DAVID A. JONES, SCOTT A. SCHOEN, STEPHEN P. SHANESY, THOMAS R.
SHEPARD, RANDALL J. STEWARD, WARREN C. SMITH, JR., AND MERRELL TOMLIN, CASE
NO. 02 C 0308 C, UNITED STATES DISTRICT COURT, WESTERN DISTRICT OF
WISCONSIN). The complaint alleges that defendants made various false and
misleading statements which had the alleged effect of artifically inflating
the price of Rayovac stock during the period from April 26, 2001 until
September 19, 2001. Substantially similar lawsuits were subsequently filed on
June 11, 2002 (RICHARD SLATTEN V. RAYOVAC CORPORATION, KENNETH V. BILLER,
KENT J. HUSSEY, DAVID A. JONES, SCOTT A. SCHOEN, STEPHEN P. SHANESY, THOMAS
R. SHEPARD, RANDALL J. STEWARD, WARREN C. SMITH, JR., AND MERRELL TOMLIN,
CASE NO. 02 C 0325 C, UNITED STATES DISTRICT COURT, WESTERN DISTRICT OF
WISCONSIN) and on June 28, 2002 (DAVID HAYES V. RAYOVAC CORPORATION, KENNETH
V. BILLER, KENT J. HUSSEY, DAVID A. JONES, SCOTT A. SCHOEN, STEPHEN P.
SHANESY, THOMAS R. SHEPARD, RANDALL J. STEWARD, WARREN C. SMITH, JR., MERRELL
TOMLIN, AND LUIS CANCIO CASE NO. 02 C 0370 C, UNITED STATES DISTRICT COURT,
WESTERN DISTRICT OF WISCONSIN). Rayovac and the individual defendants have
not yet answered these complaints, but they intend to deny all material
allegations and vigorously defend themselves in these actions.

                                       25
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

<TABLE>
<CAPTION>
EXHIBIT NUMBER         DESCRIPTION
<S>                   <C>
2.1++++                Share Purchase Agreement made as of June 11, 1999, by and
                       among the Company, Vidor Battery Company, Rayovac Latin
                       America, Ltd., the shareholders of ROV Limited, ROV
                       Limited, ESB ROV Ltd., Duranmas, S.A., certain
                       second-tier subsidiaries of ROV Limited, Ray-O-Vac
                       Overseas Corporation, and Alfredo J. Diez and Richard T.
                       Doyle, Jr., as selling group representatives.

2.2++++                Form of Stock Purchase Agreement entered into on or
                       around June 11, 1999, by and among the Company, Rayovac
                       Latin America, Ltd. and certain persons who hold minority
                       interests in certain of the operating subsidiaries of
                       Ray-O-Vac Overseas Corporation.

3.1+                   Amended and Restated Articles of Incorporation of the
                       Company.

3.2******              Amended and Restated By-laws of the Company, as amended
                       through May 17, 1999.

4.1**                  Indenture, dated as of October 22, 1996, by and among the
                       Company, ROV Holding, Inc. and Marine Midland Bank, as
                       trustee, relating to the Company's 10 1/4% Senior
                       Subordinated Notes due 2006.

4.2******              First Supplemental Indenture, dated as of February 26,
                       1999, by and among the Company, ROV Holding, Inc. and
                       HSBC Bank USA (formerly known as Marine Midland Bank) as
                       trustee, relating to the Company's 10 1/4% Senior
                       Subordinated Notes due 2006.

 4.3++++               Second Supplemental Indenture, dated as of August 6,
                       1999, by and among the Company, ROV Holding, Inc. and
                       HSBC Bank USA (formerly known as Marine Midland Bank) as
                       trustee, relating to the Company's 10 1/4% Senior
                       Subordinated Notes due 2006.

4.4*******             Third Supplemental Indenture, dated as of June 13, 2001,
                       by and among the Company, ROV Holding, Inc., ROVCAL, Inc.
                       and HSBC Bank USA (formerly known as Marine Midland Bank)
                       as trustee, relating to the Company's 101/4% Senior
                       Subordinated Notes due 2006.

4.5**                  Specimen of the Notes (included as an exhibit to Exhibit
                       4.1)

4.6****                Amended and Restated Credit Agreement, dated as of
                       December 30, 1997, by and among the Company, the lenders
                       party thereto and Bank of America National Trust and
                       Savings Association ("BofA"), as Administrative Agent.

4.7++++                Second Amended and Restated Credit Agreement, dated as of
                       August 9, 1999, by and among the Company, the lenders
                       party thereto and Bank of America, NA as Administrative
                       Agent.

4.8+++++               The First Amendment dated as of July 28, 2000 to the
                       Second Amended and Restated Credit Agreement, dated as of
                       August 9, 1999, by and among the Company, the lenders
                       party thereto and Bank of America, NA as Administrative
                       Agent.

4.9+++++++             The Second Amendment dated as of December 31, 2000 to the
                       Second Amended and Restated Credit Agreement, dated as of
                       August 9, 1999, by and among the Company, various
                       financial institutions, and Bank of America, NA as
                       Administrative Agent.

4.10++++++++           The Third Amendment dated as of June 11, 2001, to the
                       Second Amended and Restated Credit Agreement, dated as of
                       August 9, 1999, by and among the Company, various
                       financial institutions, and Bank of America, NA as
                       Administrative Agent.

4.11+++++++++          The Fourth Amendment dated as of February 12, 2002, to
                       the Second Amended and Restated Credit Agreement, dated
                       as of August 9, 1999, by and among the Company, various
                       financial institutions, and Bank of America, NA as
                       Administrative Agent.

4.12**                 The Security Agreement, dated as of September 12, 1996,
                       by and among the Company, ROV Holding, Inc. and Bank of
                       America, NA.


                                       26
<PAGE>

<S>                   <C>

4.13**                 The Company Pledge Agreement, dated as of September 12,
                       1996, by and between the Company and Bank of America, NA.

4.14                   Amended and Restated Shareholders Agreement, dated as
                       of July 31, 2002, by and among the Company and the
                       shareholders of the Company referred to therein.

4.15*                  Specimen certificate representing the Common Stock.

10.1**                 Management Agreement, dated as of September 12, 1996, by
                       and between the Company and Thomas H. Lee Company.

10.2**                 Confidentiality, Non-Competition and No-Hire Agreement,
                       dated as of September 12, 1996, by and between the
                       Company and Thomas F. Pyle.

10.3+++++              Amended and Restated Employment Agreement, dated as of
                       October 1, 2000, by and between the Company and David A.
                       Jones.

10.4+++++              Amended and Restated Employment Agreement, dated as of
                       October 1, 2000, by and between the Company and Kent J.
                       Hussey.

10.5+++++              Employment Agreement, dated as of October 1, 2000, by and
                       between the Company and Kenneth V. Biller.

10.6+++++              Employment Agreement, dated as of October 1, 2000, by and
                       between the Company and Stephen P. Shanesy.

10.7+++++              Employment Agreement, dated as of October 1, 2000, by and
                       between the Company and Merrell M. Tomlin.

10.8+++++              Employment Agreement, dated as of October 1, 2000, by and
                       between the Company and Luis A. Cancio.

10.9                   Employment Agreement, dated as of November 1, 2001, by and
                       between the Company and Dr. Paul G. Cheeseman.

10.10**                Technology, License and Service Agreement between Battery
                       Technologies (International) Limited and the Company,
                       dated June 1, 1991, as amended July 19, 1993, and
                       December 31, 1995.

10.11**                Building Lease between the Company and SPG Partners dated
                       May 14, 1985, as amended June 24, 1986, and June 10,
                       1987.

10.12*****             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.

10.13***               Rayovac Corporation 1996 Stock Option Plan.

10.14*                 1997 Rayovac Incentive Plan.

10.15*                 Rayovac Profit Sharing and Savings Plan.

10.16+++               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.

99                     Certification of CEO and CFO Pursuant to 18 U.S.C.
                       Section 1350, as Adopted Pursuant to Section 906 of the
                       Sarbanes-Oxley Act of 2002.

</TABLE>

- --------------

*                      Incorporated by reference to the Company's Registration
                       Statement on Form S-1 (Registration No. 333-35181) filed
                       with the Commission.


                                       27
<PAGE>

**                     Incorporated by reference to the Company's Registration
                       Statement on Form S-1 (Registration No. 333-17895) filed
                       with the Commission.

***                    Incorporated by reference to the Company's Quarterly
                       Report on Form 10-Q for the quarterly period ended June
                       29, 1997, filed with the Commission on August 13, 1997.

****                   Incorporated by reference to the Company's Registration
                       Statement on Form S-3 (Registration No. 333-49281) filed
                       with the Commission.

*****                  Incorporated by reference to the Company's Quarterly
                       Report on Form 10-Q for the quarterly period ended
                       January 3, 1999, filed with the Commission on February
                       17, 1999.

******                 Incorporated by reference to the Company's Quarterly
                       Report on Form 10-Q for the quarterly period ended April
                       4, 1999, filed with the Commission on May 17, 1999.

*******                Incorporated by reference to the Company's Report on Form
                       8-K filed with the Commission on June 19, 2001.

+                      Incorporated by reference to the Company's Annual Report
                       on Form 10-K for the fiscal year ended September 30,
                       1997, filed with the Commission on December 23, 1997.

++                     Incorporated by reference to the Company's Quarterly
                       Report on Form 10-Q for the Quarterly period ended June
                       27, 1998, filed with the Commission on August 4, 1998.

+++                    Incorporated by reference to the Company's Quarterly
                       Report on Form 10-Q for the quarterly period ended March
                       28, 1998, filed with the Commission on May 5, 1998.

++++                   Incorporated by reference to the Company's Current Report
                       on Form 8-K filed with the Commission on August 24, 1999,
                       as subsequently amended on October 26, 1999.

+++++                  Incorporated by reference to the Company's Annual Report
                       on Form 10-K for the fiscal year ended September 30,
                       2000, filed with the Commission on December 19, 2000.

+++++++                Incorporated by reference to the Company's Quarterly
                       Report on Form 10-Q for the quarterly period ended June
                       30, 2001, filed with the Commission on May 14, 2001.

++++++++               Incorporated by reference to the Company's Quarterly
                       Report on Form 10-Q for the quarterly period ended July
                       1, 2001, filed with the Commission on August 9, 2001.

+++++++++              Incorporated by reference to the Company's Quarterly
                       Report on Form 10-Q for the quarterly period ended
                       December 30, 2001, filed with the Commission on February
                       13, 2002.

(b)   Reports on Form 8-K. The Company has not filed any reports on Form 8-K
      during the three month period ended June 30, 2002.


                                       28


<PAGE>


                                   Signatures


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


DATE: August 14, 2002


                                 RAYOVAC CORPORATION



                                 By:  /s/ Kent J. Hussey
                                      -------------------------------------
                                      Kent J. Hussey
                                      President and Chief Financial Officer



                                       29

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.14
<SEQUENCE>3
<FILENAME>a2085904zex-4_14.txt
<DESCRIPTION>EXHIBIT 4.14
<TEXT>
<PAGE>


                                                                    Exhibit 4.14


                   AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

         This Amended and Restated Shareholders Agreement is entered into as of
July 31, 2002 by and among Rayovac Corporation, a Wisconsin corporation (the
"Company"), Thomas H. Lee Equity Fund III, L.P., Thomas H. Lee Foreign Fund III,
L.P. and Thomas H. Lee Investors Limited Partnership (collectively, the "Lee
Group Shareholders") and those persons listed as Management Shareholders on the
signature pages hereof (the "Management Shareholders"). Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Original Shareholders Agreement referred to below.

         WHEREAS, the Company, the Lee Group Shareholders and the Management
Shareholders are parties to the Shareholders Agreement, dated as of September
12, 1996, as amended (the "Original Shareholders Agreement");

         WHEREAS, the parties hereto desire to amend and restate the Original
Shareholders Agreement in its entirety to modify the rights and obligations of
the parties thereunder;

         WHEREAS, pursuant to Section 4.2 of the Original Shareholders
Agreement, the Shareholders Agreement may be amended by a written instrument
duly executed by a majority in interest of the Shareholders and, if the Lee
Group Shareholders, the Management Shareholders or the Non-Management
Shareholders are adversely affected by such amendment, by a majority in interest
of each such adversely affected group; and

         WHEREAS, the signatories hereto represent holders of the requisite
interest to effect the amendment and restatement of the Original Shareholders
Agreement provided for hereby.

         NOW, THEREFORE, in consideration of the foregoing, the Original
Shareholders Agreement is hereby amended and restated to read in its entirety as
follows:

                                    ARTICLE I

                                   DEFINITIONS

         For the purposes of this Amended and Restated Shareholders Agreement,
the following terms shall be defined as follows:

         1933 ACT. The "1933 Act" shall mean the Securities Act of 1933, as
amended.

         COMMON STOCK. "Common Stock" shall mean the Company's common stock,
$.01 par value, that the Company may be authorized to issue from time to time,
any other securities of the Company into which such Common Stock may hereafter
be

<PAGE>


changed or for which such Common Stock may be exchanged after giving effect to
the terms of such change or exchange (by way of reorganization,
recapitalization, merger, consolidation or otherwise) and shall also include any
common stock of the Company hereafter authorized and any capital stock of the
Company of any other class hereafter authorized which is not preferred as to
dividends or distribution of assets in liquidation over any other class of
capital stock of the Company and which has ordinary voting power for the
election of directors of the Company.

         REGISTRABLE SECURITIES. "Registrable Securities" shall mean (a) all
shares of Common Stock held by the Lee Group Shareholders prior to the close of
trading on the New York Stock Exchange on the date immediately preceding the
date hereof and (b) securities of the Company issued in exchange for, upon
reclassification of, or as a distribution in respect of, the Common Stock
referred to in (a). As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (a) a registration statement with
respect to the sale of such securities shall have become effective under the
1933 Act and such securities shall have been disposed of in accordance with such
registration statement, (b) such securities shall have been sold pursuant to
Rule 144 under the 1933 Act or (c) such securities shall have ceased to be
outstanding.

         SEC. "SEC" shall mean the United States Securities and Exchange
Commission.

                                   ARTICLE II

                               REGISTRATION RIGHTS

         Section 2.1 GENERAL. For purposes of this Article II the terms
"register", "registered" and "registration" refer to a registration effected by
preparing and filing a registration statement in compliance with the 1933 Act;
and the declaration or ordering of effectiveness of such registration statement.

         Section 2.2 DEMAND REGISTRATION. (a) If the Company shall receive a
written request (specifying that it is being made pursuant to this Section 2.2)
from the Lee Group Shareholders that the Company file a registration statement
under the 1933 Act, or a similar document pursuant to any other statute then in
effect corresponding to the 1933 Act, covering the registration of Common Stock,
then the Company shall, not later than ninety (90) days after receipt by the
Company of a written request for a demand registration pursuant to this Section
2.2, file a registration statement with the SEC relating to such Registrable
Securities as to which such request for a demand registration relates (the
"Requested Shares"), and the Company shall use its best efforts to cause the
offering of such Requested Shares to be registered under the 1933 Act. The
Company shall be obligated to effect only one (1) registration of Registrable
Securities pursuant to this Section 2.2.


                                       2
<PAGE>


         (b) If, pursuant to Section 2.2, the total amount of securities that
the Lee Group Shareholders and all other holders of securities which have
applicable registration rights request to be included in an offering made
pursuant to this Section 2.2 exceeds the amount of securities that the
underwriters reasonably believe compatible with the success of the offering,
then the Company will include in such registration only the number of securities
which, in the good faith opinion of such underwriters, can be sold, selected
from the securities requested to be included by the Lee Group Shareholders and
such other holders pro rata based on the number of securities which each of them
owns.

         Section 2.3 PIGGYBACK REGISTRATION. If, at any time, the Company
determines to register for its own account or for the account of others any of
its equity securities (including securities convertible into equity securities,
but excluding equity securities being registered pursuant to a registration
statement on Form S-8 and equity securities issued in connection with mezzanine
debt or senior bank financing of the Company or equity securities issued upon
conversion or exchange thereof) under the 1933 Act in connection with the public
offering of such securities, the Company shall, at such time, promptly give the
Lee Group Shareholders written notice of such determination no later than ten
(10) days before the effective date of any such registration. Upon the written
request of any Lee Group Shareholder received by the Company within five (5)
days after the giving of any such notice by the Company, the Company shall use
its best efforts to cause to be registered under the 1933 Act all of the
Registrable Securities that such Lee Group Shareholder has requested be
registered. Subject to the foregoing, if the total amount of securities that are
to be included by the Company (or other person for whose account the
registration is made) for its own account, at the request of Lee Group
Shareholders pursuant to this Section 2.3 and on behalf of all other
shareholders who or which have applicable registration rights or who or which
are otherwise participating in the registration exceeds the amount of securities
that the underwriters reasonably believe compatible with the success of the
offering, then the Company will include in such registration only the number of
securities which in the opinion of such underwriters can be sold, selected from
the securities requested to be included by the Lee Group Shareholders and all
such other shareholders pro rata based on the number of securities (including
for any shareholder participating in such registration who is an employee or
director of the Company, securities underlying outstanding options granted to
such shareholder to the extent exercisable) which each of them owns. The Company
shall be required to include Registrable Securities held by the Lee Group
Shareholders in only one (1) registration under this Section 2.3.

         Section 2.4 OBLIGATIONS OF THE COMPANY.

         (a) When required under Section 2.2 or 2.3 hereof to use its best
efforts to effect the registration of any Registrable Securities, the Company
shall:

                  (1) Prepare and file with the SEC a registration statement
         with respect to such Registrable Securities and use its best efforts to
         cause such registration statement to become and remain effective,
         including, without limitation, filing of post-effective amendments and
         supplements to any registration statement


                                       3
<PAGE>


         or prospectus necessary to keep the registration statement current;
         provided, however, that if such registration statement does not become
         effective, then any demand registration pursuant to Section 2.2
         prompting such undertaking by the Company shall be deemed to be
         rescinded and retracted and shall not be counted as, or deemed or
         considered to be or to have been, a demand registration pursuant to
         Section 2.2 for any purpose;

                  (2) as expeditiously as reasonably possible, prepare and file
         with the SEC such amendments and supplements to such registration
         statement and the prospectus used in connection with such registration
         statement as may be necessary to comply with the provisions of the 1933
         Act with respect to the disposition of all Registrable Securities
         covered by such registration statement and to keep the registration
         effective (and in compliance with the 1933 Act) by such actions as may
         be necessary or appropriate for a period of up to 180 days (if, in the
         reasonable discretion of the Lee Group Shareholders selling Registrable
         Securities covered by such registration statement, such period of time
         is necessary for the successful completion of the offering of such
         Registrable Securities) after the effective date of such registration
         statement, all as requested by such Lee Group Shareholders;

                  (3) as expeditiously as reasonably possible, furnish to the
         Lee Group Shareholders such numbers of copies of a prospectus,
         including a preliminary prospectus, in conformity with the requirements
         of the 1933 Act, and such other documents as they may reasonably
         request in order to facilitate the disposition of Registrable
         Securities owned by them;

                  (4) as expeditiously as reasonably possible, use its best
         efforts to register and qualify the Registrable Securities covered by
         such registration statement under the securities or "blue sky" laws of
         such jurisdictions as shall be reasonably appropriate for the
         distribution of the Registrable Securities covered by the registration
         statement, provided that the Company shall not be required in
         connection therewith or as a condition thereto to qualify to do
         business or to file a general consent to service of process in any such
         jurisdiction, and further provided that (anything in this Amended and
         Restated Shareholders Agreement to the contrary notwithstanding with
         respect to the bearing of expenses) if any jurisdiction in which the
         Registrable Securities shall be qualified shall require that expenses
         incurred in connection with the qualification of the Registrable
         Securities in that jurisdiction be borne by selling shareholders, then
         such expenses shall be payable by the selling shareholders pro rata to
         the extent required by such jurisdiction;

                  (5) use its best efforts to cause all Registrable Securities
         covered by such registration statement to be registered with or
         approved by such other governmental agencies or authorities as may be
         necessary to enable the seller or sellers thereof to consummate the
         disposition of such Registrable Securities;


                                       4
<PAGE>


                  (6) notify each seller of Registrable Securities covered by
         such registration statement, at any time when a prospectus relating
         thereto is required to be delivered under the 1933 Act, upon discovery
         that, or upon the happening of any event as a result of which, the
         prospectus included in such registration statement, as then in effect,
         includes an untrue statement of a material fact or omits to state any
         material fact required to be stated therein or necessary to make the
         statements therein not misleading in light of the circumstances under
         which they were made, and at the request of any such seller promptly
         prepare to furnish to such seller a reasonable number of copies of a
         supplement to or an amendment of such prospectus as may be necessary so
         that, as thereafter delivered to the purchasers of such Registrable
         Securities, such prospectus shall not include an untrue statement of a
         material fact or omit to state a material fact required to be stated
         therein or necessary to make the statements therein not misleading in
         light of the circumstances under which they were made;

                  (7) otherwise use its best efforts to comply with all
         applicable rules and regulations of the SEC, and make available to its
         security holders, as soon as reasonably practicable, an earnings
         statement covering a period of at least twelve (12) months, but not
         more than eighteen (18) months, beginning with the first full calendar
         month after the effective date of such registration statement, which
         earnings statement shall satisfy the provisions of Section 11(a) of the
         1933 Act, and will furnish to each such seller at least two (2)
         business days prior to the filing thereof a copy of any post-effective
         amendment or supplement to such registration statement or prospectus
         and shall not file any thereof to which any such seller shall have
         reasonably objected, except to the extent required by law, on the
         grounds that such amendment or supplement does not comply in all
         material respects with the requirements of the 1933 Act or of the rules
         or regulations thereunder;

                  (8) provide and cause to be maintained a transfer agent and
         registrar for all Registrable Securities covered by such registration
         statement from and after a date not later than the effective date of
         such registration statement; and

                  (9) use its best efforts to list all Registrable Securities
         covered by such registration statement on any securities exchange on
         which the Common Stock is then listed.

         (b) The Company will furnish to each Lee Group Shareholder on whose
behalf Registrable Securities have been registered pursuant to this Amended and
Restated Shareholders Agreement a signed counterpart, addressed to such Lee
Group Shareholder, of an opinion of counsel for the Company dated the effective
date of such registration statement, and such opinion of counsel shall cover
those matters which are customarily covered in opinions of issuer's counsel
delivered to underwriters in connection with underwritten public offerings of
securities.


                                       5
<PAGE>


         (c) In connection with the preparation and filing of a registration
statement registering Registrable Securities under this Amended and Restated
Shareholders Agreement, the Company will give the Lee Group Shareholders on
whose behalf such Registrable Securities are to be so registered and their
underwriters, if any, and their respective counsel and accountants, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the SEC, and each amendment
thereof or supplement thereto, and will give each of them such access to its
books and records and such opportunities to discuss the business of the Company
with its officers, its counsel and the independent public accountants who have
certified its financial statements, as shall be necessary, in the opinion of
such Lee Group Shareholder or such underwriters or their respective counsel, in
order to conduct a reasonable and diligent investigation within the meaning of
the 1933 Act.

         Section 2.5 FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Article II
that the Lee Group Shareholders shall furnish to the Company such information
regarding them, the Registrable Securities held by them, and the intended method
of disposition of such Registrable Securities as the Company shall reasonably
request and as shall be required in connection with the action to be taken by
the Company.

         Section 2.6 EXPENSES OF REGISTRATION. All expenses incurred in
connection with a registration pursuant to Section 2.2 or 2.3 hereof (excluding
underwriters' discounts and commissions, which shall be borne by the sellers),
including without limitation all registration and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel for the selling Lee Group
Shareholders shall be borne by the Company.

         Section 2.7 UNDERWRITING REQUIREMENTS. In connection with a
registration of Registrable Securities under this Amended and Restated
Shareholders Agreement, the Company will, if requested by the underwriters for
any Registrable Securities included in such registration, enter into an
underwriting agreement with such underwriters for such offering, such agreement
to contain such representations and warranties by the Company, and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
provisions relating to indemnification and contribution. The Lee Group
Shareholders on whose behalf Registrable Securities are to be distributed by
such underwriters shall be parties to any such underwriting agreement, and the
representations and warranties by the Company and the other agreements on the
part of the Company to and for the benefit of such underwriters shall be also
made to and for the benefit of such Lee Group Shareholders. The Company shall
use its reasonable best efforts to cause the underwriting agreement to comply
with Section 2.8. Such underwriters shall be selected by (i) the Company, in the
case of a registration pursuant to Section 2.3 or (ii) by the Lee Group
Shareholders requesting a demand registration, in the case of a registration
pursuant to Section 2.2.


                                       6
<PAGE>


         Section 2.8 INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Article II:

         (a) To the fullest extent permitted by law, the Company will indemnify
and hold harmless each Lee Group Shareholder requesting or joining in a
registration, any other shareholder joining in a registration, any underwriter
(as defined in the 1933 Act) for it, and each person, if any, who controls such
Lee Group Shareholder, such other shareholder or such underwriter within the
meaning of the 1933 Act, from and against any losses, claims, damages, expenses
(including reasonable attorneys' fees and expenses and reasonable costs of
investigation) or liabilities, joint or several, to which they or any of them
may become subject under the 1933 Act or otherwise, insofar as such losses,
claims, damages, expenses or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based on any
untrue or alleged untrue statement of any material fact contained in such
registration statement including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading, or arise out of any alleged violation by the Company of any rule or
regulation promulgated under the 1933 Act applicable to the Company and relating
to action or inaction required of the Company in connection with any such
registration; provided, however, that the indemnity agreement contained in this
Section 2.8(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable to anyone for any such loss claim, damage, liability
or action to the extent that it arises out of or is based upon an untrue
statement or omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements thereto in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Lee Group Shareholder, other
shareholder, underwriter or control person. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Lee Group Shareholder, other shareholder, underwriter or control person and
shall survive the transfer of such securities by such Lee Group Shareholder.

         (b) To the fullest extent permitted by law, each Lee Group Shareholder
requesting or joining in a registration will indemnify and hold harmless the
Company, as the case may be, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act, each agent and any underwriter for the
Company and any person who controls any such agent or underwriter and each other
shareholder selling shares under the registration statement and any person who
controls such other shareholder within the meaning of the 1933 Act against any
losses, claims, damages or liabilities to which the Company or any such
director, officer, control person, agent, underwriter, or other shareholder may
become subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon an untrue statement of any material fact contained in such registration
statement, including


                                       7
<PAGE>


any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or omission was made
in such registration statement, preliminary or final prospectus, or amendments
or supplements thereto, in reliance upon and in conformity with written
information furnished by such Lee Group Shareholder with respect to such Lee
Group Shareholder expressly for use in connection with such registration; and
such Lee Group Shareholder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, control person, agent,
underwriter, or other shareholder in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
indemnity obligation of each such Lee Group Shareholder hereunder shall be
limited to and shall not exceed the proceeds actually received by such Lee Group
Shareholder upon a sale of Registrable Securities pursuant to a registration
statement hereunder; and provided, further, that the indemnity agreement
contained in this Section 2.8(b) shall not apply to amounts paid in settlements
effected without the consent of such Lee Group Shareholder (which consent shall
not be unreasonably withheld). Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
any such director, officer, other shareholder, underwriter or control person and
shall survive the transfer of such securities by such Lee Group Shareholder.

         (c) Any person seeking indemnification under this Section 2.8 will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification (but the failure to give such notice will not affect
the right to indemnification hereunder, unless the indemnifying party is
materially prejudiced by such failure) and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest may exist between such
indemnified and indemnifying parties with respect to such claim, permit such
indemnifying party, and other indemnifying parties similarly situated, jointly
to assume the defense of such claim with counsel reasonably satisfactory to the
parties. In the event that the indemnifying parties cannot mutually agree as to
the selection of counsel, each indemnifying party may retain separate counsel to
act on its behalf and at its expense. The indemnified party shall in all events
be entitled to participate in such defense at its expense through its own
counsel. If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the reasonable fees and expenses of such additional counsel.


                                       8
<PAGE>


         (d) If for any reason the foregoing indemnification is unavailable to
any party or insufficient to hold it harmless as and to the extent contemplated
by the preceding paragraphs of this Section 2.8, then each indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage, expense or liability in such proportion as
is appropriate to reflect the relative benefits received by the Company, on the
one hand, and the applicable indemnified party, as the case may be, on the other
hand, and also the relative fault of the Company and any applicable indemnified
party, as the case may be, as well as any other relevant equitable
considerations.

         Section 2.9 LOCK-UP AGREEMENT. If required by the underwriter, each Lee
Group Shareholder agrees not to sell or otherwise transfer or dispose of any
Common Stock (or other securities) of the Company held by such Lee Group
Shareholder (other than Registrable Securities included in the applicable
registration statement or shares purchased in the public market after the
effective date of registration) or any interest or future interest therein
during such period (not to exceed 180 days) as is acceptable to the underwriter
following the effective date of the registration statement of the Company filed
under the 1933 Act which includes securities to be sold to the public in an
underwritten offering. The Company may impose stop transfer instructions with
respect to the shares of Common Stock (or other securities) subject to the
foregoing restriction until the end of said period.

         Section 2.10 NO INCONSISTENT AGREEMENTS. The Company agrees that it has
not entered into, and it will not hereafter enter into, any agreement with
respect to the registration of its securities that is inconsistent with (or
superior to) the registration rights granted to the Lee Group Shareholders
pursuant to this Amended and Restated Shareholders Agreement.

                                   ARTICLE III

                                  MISCELLANEOUS

         Section 3.1 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Amended and
Restated Shareholders Agreement sets forth the entire understanding of the
parties and supersedes all prior agreements and all other arrangements and
communications, whether oral or written, with respect to the subject matter
hereof, including, without limitation, the Original Shareholders Agreement,
which shall cease to be of any further force or effect. This Amended and
Restated Shareholders Agreement may not be amended except by an instrument in
writing signed by the Company and a majority in interest of the Lee Group
Shareholders. Notwithstanding any provisions to the contrary contained herein,
any party may waive any rights with respect to which such party is entitled to
the benefits under this Amended and Restated Shareholders Agreement. No waiver
of or consent to any departure from any provision of this Amended and Restated
Shareholders Agreement shall be effective unless signed in writing by the party
entitled to the benefit thereof.


                                       9
<PAGE>


         Section 3.2 SEVERABILITY. The invalidity or unenforceability of any
particular provision of this Amended and Restated Shareholders Agreement shall
not affect the other provisions hereof, and this Amended and Restated
Shareholders Agreement shall be construed in all respects as if the invalid or
unenforceable provision were omitted.

         Section 3.3 NOTICES. All notices and other communications necessary or
contemplated under this Amended and Restated Shareholders Agreement shall be in
writing and shall be delivered in the manner specified herein or, in the absence
of such specification, shall be deemed to have been duly given three (3)
business days after mailing by certified mail, when delivered by hand, upon
confirmation of receipt by telecopy, or one (1) day after sending by overnight
delivery service, to the respective addresses of the parties set forth below:

         (a) for notices and communications to the Company:

             Rayovac Corporation
             601 Rayovac Drive
             Madison, Wisconsin 53711-2497
             Attn: President
             Facsimile No.: (608) 278-6666

         (b) for notices and communications to the Lee Group Shareholders, to:

             Thomas H. Lee Partners, L.P.
             75 State Street
             Boston, Massachusetts 02109
             Attn: Scott A. Schoen
             Facsimile No.: (617) 227-3514

By notice complying with the foregoing provisions of this Section 3.3, each
party shall have the right to change the mailing address for future notices and
communications to such party.

         Section 3.4 BINDING EFFECT; ASSIGNMENT. This Amended and Restated
Shareholders Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective successors and assigns; provided,
however, that the rights and obligations under this Amended and Restated
Shareholders Agreement may not be assigned except as expressly provided herein,
it being understood that the Company's rights and obligations hereunder may be
assigned by the Company to any corporation which is the surviving entity in a
merger, consolidation or like event involving the Company.

         Section 3.5 GOVERNING LAW. This Agreement shall be governed by the laws
of the Commonwealth of Massachusetts (regardless of the laws that might
otherwise govern under applicable Massachusetts principles of conflicts of law)
as to all matters,


                                       10
<PAGE>


including but not limited to matters of validity, construction, effect,
performance and remedies.

         Section 3.6 TERMINATION. This Amended and Restated Shareholders
Agreement shall terminate and shall have no further force or effect at such time
as the Lee Group Shareholders cease to own in the aggregate at least 10% of the
outstanding Common Stock on a fully diluted basis.

         Section 3.7 ACTION NECESSARY TO EFFECTUATE THE AGREEMENT. The parties
hereto agree to take or cause to be taken all such corporate and other action as
may be necessary to effect the intent and purposes of this Amended and Restated
Shareholders Agreement.

         Section 3.8 PURCHASE FOR INVESTMENT; LEGEND ON CERTIFICATE. Each of the
Lee Group Shareholders acknowledges that all of the Registrable Securities held
by such Lee Group Shareholder have been acquired for investment and not with a
view to the distribution thereof and that no transfer of Registrable Securities
may be made except in compliance with applicable federal and state securities
laws. Each of the certificates representing Registrable Securities which are
held by the Lee Group Shareholders shall bear all legends required by federal
and state securities laws.

         Section 3.9 COUNTERPARTS. This Amended and Restated Shareholders
Agreement may be executed in two or more counterparts each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.

         Section 3.10 HEADINGS. All headings and captions in this Amended and
Restated Shareholders Agreement are for purposes of reference only and shall not
be construed to limit or affect the substance of this Amended and Restated
Shareholders Agreement.

         Section 3.11 NUMBER; GENDER. When the context so requires, the singular
shall include the plural and the plural shall include the singular and the
gender of any pronoun shall include the other gender.


            [The remainder of this page is intentionally left blank.]



                                       11
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Shareholders Agreement as of the date first written above.


                                  RAYOVAC CORPORATION

                                  By: /s/ David A. Jones
                                      -----------------------------------
                                  Name:  David A. Jones
                                  Title: Chief Executive Officer

                                  LEE GROUP SHAREHOLDERS:

                                  THOMAS H. LEE EQUITY FUND III, L.P.

                                  By: THL Equity Advisors III Limited
                                  Partnership, as General Partner

                                  By: THL Equity Trust III, as General
                                  Partner

                                  By: /s/ Scott A. Schoen
                                      -----------------------------------
                                  Name:  Scott A. Schoen
                                  Title: Trustee

                                  THOMAS H. LEE FOREIGN FUND III, L.P.

                                  By: THL Equity Advisors III Limited
                                  Partnership, as General Partner

                                  By: THL Equity Trust III, as General
                                  Partner

                                  By: /s/ Scott A. Schoen
                                      -----------------------------------
                                  Name:  Scott A. Schoen
                                  Title: Trustee

                                  THOMAS H. LEE INVESTORS LIMITED
                                  PARTNERSHIP

                                  By: THL Investment Management Corp., as
                                  General Partner

                                  By: /s/ Scott A. Schoen
                                      -----------------------------------
                                  Name:  Scott A. Schoen
                                  Title: Vice President



                                       12
<PAGE>


                                  MANAGEMENT SHAREHOLDERS:

                                  /s/ David A. Jones
                                  ---------------------------------------
                                  David A. Jones

                                  /s/ Kent J. Hussey
                                  ---------------------------------------
                                  Kent J. Hussey

                                  /s/ Kenneth V. Biller
                                  ---------------------------------------
                                  Kenneth V. Biller

                                  /s/ Stephen P. Shanesy
                                  ---------------------------------------
                                  Stephen P. Shanesy

                                  /s/ Merrell M. Tomlin
                                  ---------------------------------------
                                  Merrell M. Tomlin

                                  /s/ Dale R. Tetzlaff
                                  ---------------------------------------
                                  Dale R. Tetzlaff



                                       13

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>4
<FILENAME>a2085904zex-10_9.txt
<DESCRIPTION>EXHIBIT 10.9
<TEXT>
<PAGE>


                                                                    Exhibit 10.9


                              EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the
1st day of November, 2001, by and between Rayovac Corporation, a Wisconsin
corporation (the "Company"), and Dr. Paul G. Cheeseman (the "Executive").

         WHEREAS, the Company and the Executive wish to terminate Executive's
Severance Agreement with the Company, dated October 1, 1998, because the Company
desires to employ the Executive upon the terms and conditions set forth herein;
and

         WHEREAS, the Executive is willing and able to accept such employment on
such terms and conditions.

         NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby agree as follows:

1.       EMPLOYMENT DUTIES AND ACCEPTANCE. The Company hereby employs the
         Executive, and the Executive agrees to serve and accept employment with
         the Company as Senior Vice President - Technology. During the Term (as
         defined below), the Executive shall devote all of his working time to
         such employment and appointment, shall devote his best efforts to
         advance the interests of the Company and shall not engage in any other
         business activities, as an employee, director, consultant or in any
         other capacity, whether or not he receives any compensation therefor,
         without the prior written consent of the Board.

2.       TERM OF EMPLOYMENT. Subject to Section 4 hereof, the Executive's
         employment and appointment hereunder shall be for a term commencing on
         the date hereof and expiring on September 30, 2003 (the "Term"). Upon
         expiration of the Term, this Agreement shall automatically extend for
         successive periods of one (1) year, unless the Executive or the Company
         shall give notice to the other at least ninety (90) days prior to the
         end of the Term (or any annual extension thereof) indicating that it
         does not intend to renew the Agreement.

3.       COMPENSATION. In consideration of the performance by the Executive of
         his duties hereunder, the Company shall pay or provide to the Executive
         the following compensation which the Executive agrees to accept in full
         satisfaction for his services, it being understood that necessary
         withholding taxes, FICA contributions and the like shall be deducted
         from such compensation:

         (a)      BASE SALARY. The Executive shall receive a base salary equal
                  to Two Hundred Twenty-Five Thousand Dollars ($225,000) per
                  annum effective November 15, 2001 for the duration of the Term
                  ("Base Salary"), which Base Salary shall be paid in equal
                  semi-monthly installments each year, to be paid semi-monthly
                  in arrears. The


                                       1
<PAGE>


                  Board will review from time to time the Base Salary payable to
                  the Executive hereunder and may, in its discretion, increase
                  the Executive's Base Salary. Any such increased Base Salary
                  shall be and become the "Base Salary" for purposes of this
                  Agreement.

         (b)      BONUS. The Executive shall receive a bonus for each fiscal
                  year ending during the Term, payable annually in arrears,
                  which shall be based on fifty percent (50%) of Base Salary,
                  provided the Company achieves certain annual performance goals
                  established by the Board from time to time (the "Bonus"). The
                  Board may, in its discretion, increase the annual Bonus. Any
                  such increased annual Bonus shall be and become the "Bonus"
                  for such fiscal year for purposes of this Agreement.

         (c)      INSURANCE COVERAGES AND PENSION PLANS. The Executive shall be
                  entitled to such insurance, pension and all other benefits as
                  are generally made available by the Company to its executive
                  officers from time to time.

         (d)      STOCK OPTIONS. All stock options previously granted to the
                  Executive shall remain in full force and effect in accordance
                  with their terms. If the Company implements a new stock option
                  program in the future, the Executive may participate to the
                  extent authorized by the Board.

         (e)      VACATION. The Executive shall be entitled to three (3) weeks
                  vacation each year.

         (f)      OTHER EXPENSES. The Executive shall be entitled to
                  reimbursement of all reasonable and documented expenses
                  actually incurred or paid by the Executive in the performance
                  of the Executive's duties under this Agreement, upon
                  presentation of expense statements, vouchers or other
                  supporting information in accordance with Company policy. All
                  expense reimbursements and other perquisites of the Executive
                  are reviewable periodically by the Compensation Committee of
                  the Board, if there be one, or the Board.

         (g)      VEHICLE. Pursuant to the Company's policy for use of vehicles
                  by executives, Executive shall be provided the use of a leased
                  vehicle. Unless the Executive's employment is terminated by
                  the Company for Cause or by the Executive pursuant to Section
                  5(c), Executive shall be permitted to drive his Company
                  vehicle for the duration of the 12-month period following
                  termination; at the end of such 12-month period, Executive
                  will be permitted to purchase his Company vehicle at book
                  value as of such date.

         (h)      D&O INSURANCE. The Executive shall be entitled to
                  indemnification from the Company to the maximum extent
                  provided by law, but not for any action, suit, arbitration or
                  other proceeding (or portion thereof) initiated by the
                  Executive, unless authorized or ratified by the Board. Such
                  indemnification shall be covered by the terms of the Company's
                  policy of insurance for directors and officers in effect from
                  time to time (the "D&O Insurance"). Copies of the Company's


                                       2
<PAGE>


                  charter, by-laws and D&O Insurance will be made available to
                  the Executive upon request.

         (i)      LEGAL FEES. The Company shall pay the Executive's actual and
                  reasonable legal fees incurred in connection with the
                  preparation of this Agreement.

4.       TERMINATION.

         (a)      TERMINATION BY THE COMPANY WITH CAUSE. The Company shall have
                  the right at any time to terminate the Executive's employment
                  hereunder without prior notice upon the occurrence of any of
                  the following (any such termination being referred to as a
                  termination for "Cause"):

                  (i)      the commission by the Executive of any deliberate and
                           premeditated act taken by the Executive in bad faith
                           against the interests of the Company;

                  (ii)     the Executive has been convicted of, or pleads NOLO
                           CONTENDERE with respect to, any felony, or of any
                           lesser crime or offense having as its predicate
                           element fraud, dishonesty or misappropriation of the
                           property of the Company;

                  (iii)    the habitual drug addiction or intoxication of the
                           Executive which negatively impacts his job
                           performance or the Executive's failure of a
                           Company-required drug test;

                  (iv)     the willful failure or refusal of the Executive to
                           perform his duties as set forth herein or the willful
                           failure or refusal to follow the direction of the
                           President, the CEO or the Board, provided such
                           failure or refusal continues after thirty (30) days
                           of the receipt of notice in writing from the
                           President, the CEO or the Board of such failure or
                           refusal, which notice refers to this Section 4(a) and
                           indicates the Company's intention to terminate the
                           Executive's employment hereunder if such failure or
                           refusal is not remedied within such thirty (30) day
                           period; or

                  (v)      the Executive breaches any of the terms of this
                           Agreement or any other agreement between the
                           Executive and the Company which breach is not cured
                           within thirty (30) days subsequent to notice from the
                           Company to the Executive of such breach, which notice
                           refers to this Section 4(a) and indicates the
                           Company's intention to terminate the Executive's
                           employment hereunder if such breach is not cured
                           within such thirty (30) day period.

                  If the definition of termination for "Cause" set forth above
                  conflicts with such definition in the Executive's time-based
                  or performance- based Stock Option Agreements pursuant to the
                  1997 Plan or the Rayovac Corporation 1996 Stock Option Plan
                  (collectively, the


                                       3
<PAGE>


                  "Stock Option Agreements") or any agreements referred to
                  therein, the definition set forth herein shall control.

         (b)      TERMINATION BY COMPANY FOR DEATH OR DISABILITY. The Company
                  shall have the right at any time to terminate the Executive's
                  employment hereunder upon thirty (30) days prior written
                  notice upon the Executive's inability to perform his duties
                  hereunder by reason of any mental, physical or other
                  disability for a period of at least six (6) consecutive months
                  (for purposes hereof, "disability" has the same meaning as in
                  the Company's disability policy), if within 30 days after such
                  notice of termination is given, the Executive shall not have
                  returned to the full-time performance of his duties. The
                  Company's obligations hereunder shall, subject to the
                  provisions of Section 5(b), also terminate upon the death of
                  the Executive.

         (c)      TERMINATION BY COMPANY WITHOUT CAUSE. The Company shall have
                  the right at any time to terminate the Executive's employment
                  for any other reason without Cause upon sixty (60) days prior
                  written notice to the Executive.

         (d)      VOLUNTARY TERMINATION BY EXECUTIVE. The Executive shall be
                  entitled to terminate his employment and appointment hereunder
                  upon sixty (60) days prior written notice to the Company. Any
                  such termination shall be treated as a termination by the
                  Company for "Cause" under Section 5.

         (e)      NOTICE OF TERMINATION. Any termination by the Company for
                  Cause shall be communicated by Notice of Termination to the
                  other party hereto given in accordance with Section 8. For
                  purposes of this Agreement, a "Notice of Termination" means a
                  written notice given prior to the termination which (i)
                  indicates the specific termination provision in this Agreement
                  relied upon, (ii) sets forth in reasonable detail the facts
                  and circumstances claimed to provide a basis for termination
                  of the Executive's employment under the provision so indicated
                  and (iii) if the termination date is other than the date of
                  receipt of such notice, specifies the termination date of this
                  Agreement (which date shall be not more than fifteen (15) days
                  after the giving of such notice). The failure by the Company
                  to set forth in the Notice of Termination any fact or
                  circumstance which contributes to a showing of Cause shall not
                  waive any right of the Company hereunder or preclude the
                  Company from asserting such fact or circumstance in enforcing
                  its rights hereunder.

5.       EFFECT OF TERMINATION OF EMPLOYMENT.

         (a)      WITH CAUSE. If the Executive's employment is terminated with
                  Cause, the Executive's salary and other benefits specified in
                  Section 3 shall cease at the time of such termination, and the
                  Executive shall not be entitled to any compensation specified
                  in Section 3 which was not required to be paid prior to such
                  termination; provided, however, that the Executive shall be
                  entitled to continue to participate in the Company's medical
                  benefit plans to the extent required by law.


                                       4
<PAGE>


         (b)      WITHOUT CAUSE, DEATH OR DISABILITY. If the Executive's
                  employment is terminated by the Company without Cause or by
                  reason of death or disability, then the Company shall pay the
                  Executive the amounts and provide the Executive the benefits
                  as follows:

                  (i)      The Company shall pay to the Executive as severance,
                           an amount in cash equal to double the sum of (i) the
                           Executive's Base Salary, and (ii) the annual Bonus
                           (if any) earned by the Executive pursuant to any
                           annual bonus or incentive plan maintained by the
                           Company in respect of the fiscal year ending
                           immediately prior to the fiscal year in which the
                           termination occurs, such cash amount to be paid to
                           the Executive ratably monthly in arrears over the
                           Non-Competition Period (as defined below).

                  (ii)     For the greater of (i) the 24-month period
                           immediately following such termination or (ii) the
                           remainder of the Term, the Company shall arrange to
                           provide the Executive and his dependents the
                           additional benefits specified in Section 3(c).
                           Benefits otherwise receivable by the Executive
                           pursuant to this Section 5(b)(ii) shall cease
                           immediately upon the discovery by the Company of the
                           Executive's breach of the covenants contained in
                           Section 6 or 7 hereof.

                  (iii)    The Executive's accrued vacation (determined in
                           accordance with Company policy) at the time of
                           termination shall be paid as soon as reasonably
                           practicable.

                  (iv)     Any payments provided for hereunder shall be paid net
                           of any applicable withholding required under federal,
                           state, or local law and any additional withholding to
                           which the Executive has agreed.

                  (v)      If the Executive's employment with the Company
                           terminates during the Term, the Executive shall not
                           be required to seek other employment or to attempt in
                           any way to reduce any amounts payable to the
                           Executive by the Company pursuant to this Section 5.

6.       AGREEMENT NOT TO COMPETE.

         (a)      The Executive agrees that during the Non-Competition Period
                  (as defined below), he will not, directly or indirectly, in
                  any capacity, either separately, jointly or in association
                  with others, as an officer, director, consultant, agent,
                  employee, owner, principal, partner or stockholder of any
                  business, or in any other capacity, engage or have a financial
                  interest in any business which is involved in the design,
                  manufacturing, marketing or sale of batteries or battery
                  operated lighting devices (excepting only the ownership of not
                  more than 5% of the outstanding securities of any class listed
                  on an exchange or the Nasdaq Stock Market). The
                  "Non-Competition Period" is (a) the longer of the Executive's
                  employment hereunder or time


                                       5
<PAGE>


                  period which he serves as a director of the Company plus (b) a
                  period of one (1) year thereafter.

         (b)      Without limiting the generality of clause (a) above, the
                  Executive further agrees that during the Non-Competition
                  Period, he will not, directly or indirectly, in any capacity,
                  either separately, jointly or in association with others,
                  solicit or otherwise contact any of the Company's customers or
                  prospects, as shown by the Company's records, that were
                  customers or prospects of the Company at any time during the
                  Non-Competition Period if such solicitation or contact is for
                  the general purpose of selling products that satisfy the same
                  general needs as any products that the Company had available
                  for sale to its customers or prospects during the
                  Non-Competition Period.

         (c)      The Executive agrees that during the Non-Competition Period,
                  he shall not, other than in connection with employment for the
                  Company, solicit the employment or services of any employee of
                  Company who is or was an employee of Company at any time
                  during the Non-Competition Period. During the Non-Competition
                  Period, the Executive shall not hire any employee of Company
                  for any other business.

         (d)      If a court determines that the foregoing restrictions are too
                  broad or otherwise unreasonable under applicable law,
                  including with respect to time or space, the court is hereby
                  requested and authorized by the parties hereto to revise the
                  foregoing restrictions to include the maximum restrictions
                  allowed under the applicable law.

         (e)      For purposes of this Section 6 and Section 7, the "Company"
                  refers to the Company and any incorporated or unincorporated
                  affiliates of the Company.

7.       SECRET PROCESSES AND CONFIDENTIAL INFORMATION.

         (a)      The Executive agrees to hold in strict confidence and, except
                  as the Company may authorize or direct, not disclose to any
                  person or use (except in the performance of his services
                  hereunder) any confidential information or materials received
                  by the Executive from the Company and any confidential
                  information or materials of other parties received by the
                  Executive in connection with the performance of his duties
                  hereunder. For purposes of this Section 7(a), confidential
                  information or materials shall include existing and potential
                  customer information, existing and potential supplier
                  information, product information, design and construction
                  information, pricing and profitability information, financial
                  information, sales and marketing strategies and techniques and
                  business ideas or practices. The restriction on the
                  Executive's use or disclosure of the confidential information
                  or materials shall remain in force until such information is
                  of general knowledge in the industry through no fault of the
                  Executive or any agent of the Executive. The Executive also
                  agrees to return to the Company promptly upon its request any
                  Company


                                       6
<PAGE>


                  information or materials in the Executive's possession or
                  under the Executive's control.

         (b)      The Executive will promptly disclose to the Company and to no
                  other person, firm or entity all inventions, discoveries,
                  improvements, trade secrets, formulas, techniques, processes,
                  know-how and similar matters, whether or not patentable and
                  whether or not reduced to practice, which are conceived or
                  learned by the Executive during the period of the Executive's
                  employment with the Company, either alone or with others,
                  which relate to or result from the actual or anticipated
                  business or research of the Company or which result, to any
                  extent, from the Executive's use of the Company's premises or
                  property (collectively called the "Inventions"). The Executive
                  acknowledges and agrees that all the Inventions shall be the
                  sole property of the Company, and the Executive hereby assigns
                  to the Company all of the Executive's rights and interests in
                  and to all of the Inventions, it being acknowledged and agreed
                  by the Executive that all the Inventions are works made for
                  hire. The Company shall be the sole owner of all domestic and
                  foreign rights and interests in the Inventions. The Executive
                  agrees to assist the Company at the Company's expense to
                  obtain and from time to time enforce patents and copyrights on
                  the Inventions.

         (c)      Upon the request of, and, in any event, upon termination of
                  the Executive's employment with the Company, the Executive
                  shall promptly deliver to the Company all documents, data,
                  records, notes, drawings, manuals and all other tangible
                  information in whatever form which pertains to the Company,
                  and the Executive will not retain any such information or any
                  reproduction or excerpt thereof.

8.       NOTICES. All notices or other communications hereunder shall be in
         writing and shall be deemed to have been duly given (a) when delivered
         personally, (b) upon confirmation of receipt when such notice or other
         communication is sent by facsimile or telex, (c) one day after delivery
         to an overnight delivery courier, or (d) on the fifth day following the
         date of deposit in the United States mail if sent first class, postage
         prepaid, by registered or certified mail. The addresses for such
         notices shall be as follows:

         (a)      For notices and communications to the Company:
                           Rayovac Corporation
                           601 Rayovac Drive
                           Madison, WI  53711
                           Facsimile: (608) 278-6666
                           Attention: James T. Lucke

         (b)      For notices and communications to the Executive:
                           Dr. Paul G. Cheeseman
                           3779 Swoboda Road
                           Verona, WI  53593

         Any party hereto may, by notice to the other, change its address for
receipt of notices hereunder.


                                       7
<PAGE>


9.       GENERAL.

         9.1      GOVERNING LAW. This Agreement shall be construed under and
                  governed by the laws of the State of Wisconsin, without
                  reference to its conflicts of law principles.

         9.2      AMENDMENT; WAIVER. This Agreement may be amended, modified,
                  superseded, canceled, renewed or extended, and the terms
                  hereof may be waived, only by a written instrument executed by
                  all of the parties hereto or, in the case of a waiver, by the
                  party waiving compliance. The failure of any party at any time
                  or times to require performance of any provision hereof shall
                  in no manner affect the right at a later time to enforce the
                  same. No waiver by any party of the breach of any term or
                  covenant contained in this Agreement, whether by conduct or
                  otherwise, in any one or more instances, shall be deemed to
                  be, or construed as, a further or continuing waiver of any
                  such breach, or a waiver of the breach of any other term or
                  covenant contained in this Agreement.

         9.3      SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
                  the Executive, without regard to the duration of his
                  employment by the Company or reasons for the cessation of such
                  employment, and inure to the benefit of his administrators,
                  executors, heirs and assigns, although the obligations of the
                  Executive are personal and may be performed only by him. This
                  Agreement shall also be binding upon and inure to the benefit
                  of the Company and its subsidiaries, successors and assigns,
                  including any corporation with which or into which the Company
                  or its successors may be merged or which may succeed to their
                  assets or business.

         9.4      COUNTERPARTS. This Agreement may be executed in two
                  counterparts, each of which shall be deemed an original but
                  which together shall constitute one and the same instrument.

         9.5      ATTORNEYS' FEES. In the event that any action is brought to
                  enforce any of the provisions of this Agreement, or to obtain
                  money damages for the breach thereof, and such action results
                  in the award of a judgment for money damages or in the
                  granting of any injunction in favor of one of the parties to
                  this Agreement, all expenses, including reasonable attorneys'
                  fees, shall be paid by the non-prevailing party.

         9.6      NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
                  prevent or limit the Executive's continuing or future
                  participation during his employment hereunder in any benefit,
                  bonus, incentive or other plan or program provided by the
                  Company or any of its affiliates and for which the Executive
                  may qualify. Amounts which are vested benefits or which the
                  Executive is otherwise entitled to receive under any plan or
                  program of the Company or any affiliated company at or
                  subsequent to the date of the Executive's termination of
                  employment with the Company shall, subject to the terms hereof
                  or any other agreement entered into by the Company and the
                  Executive on or


                                       8
<PAGE>


                  subsequent to the date hereof, be payable in accordance with
                  such plan or program.

         9.7      MITIGATION. In no event shall the Executive be obligated to
                  seek other employment by way of mitigation of the amounts
                  payable to the Executive under any of the provisions of this
                  Agreement.

         9.8      EQUITABLE RELIEF. The Executive expressly agrees that breach
                  of any provision of Sections 6 or 7 of this Agreement would
                  result in irreparable injuries to the Company, that the remedy
                  at law for any such breach will be inadequate and that upon
                  breach of such provisions, the Company, in addition to all
                  other available remedies, shall be entitled as a matter of
                  right to injunctive relief in any court of competent
                  jurisdiction without the necessity of proving the actual
                  damage to the Company.

         9.9      SEVERANCE AGREEMENT. The Severance Agreement between the
                  parties dated October 1, 1998 is hereby terminated and all
                  rights and obligations thereunder are of no further force or
                  effect.

         9.10     ENTIRE AGREEMENT. This Agreement and the schedule hereto
                  constitute the entire understanding of the parties hereto with
                  respect to the subject matter hereof and supersede all prior
                  negotiations, discussions, writings and agreements between
                  them with respect to the subject matter hereof.


                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.


                                            RAYOVAC CORPORATION



                                            By: /s/ David A. Jones
                                                -----------------------------
                                                David A. Jones
                                                Chief Executive Officer



EXECUTIVE:


/s/ Dr. Paul G. Cheeseman
- ----------------------------------
Name:  Dr. Paul G. Cheeseman



                                       9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>a2085904zex-99.txt
<DESCRIPTION>EXHIBIT 99
<TEXT>
<PAGE>


                                                                      Exhibit 99


                    CERTIFICATION OF CEO AND CFO PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Rayovac Corporation
(the "Company") for the quarterly period ended June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"),
David A. Jones, as Chairman and Chief Executive Officer of the Company, and
Kent J. Hussey, as President and Chief Financial Officer of the Company, each
hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his
knowledge:

     (1) The Report fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

/s/ David A. Jones
- ------------------------------
David A. Jones
Chairman and Chief Executive Officer
August 14, 2002

/s/ Kent J. Hussey
- ------------------------------
Kent J. Hussey
President and Chief Financial Officer
August 14, 2002

This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by
the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended.


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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