Rayovac Corporation produces batteries.

The original Complaint alleges that 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, by issuing a series of material misrepresentations to the market between April 26, 2001 and September 19, 2001, thereby artificially inflating the price of Rayovac securities. Throughout the Class Period, as alleged in the Complaint, Defendants issued materially false and misleading statements, including a materially false and misleading Registration Statement and Prospectus issued in connection with its Secondary Offering of shares to the public, regarding the demand for the Company's products and the Company's future prospects.

Specifically, the Complaint alleges that these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (a) that the Company was experiencing declining demand for its products and in order to stimulate demand and create the impression that the Company was performing according to analyst expectations, Rayovac was extending generous credit terms to customers in order to induce them to purchase additional products, thereby pulling sales in from the future. As a result, Rayovac created the appearance of earnings growth, when Defendants knew, or recklessly disregarded that future sales would be negatively impacted by the aforementioned practices; (b) that the Company's expansion in Latin America was the result of aggressive sales practices whereby the Company extended generous payment terms and induced customers to take additional unneeded inventory; and (c) based on the foregoing, Defendants lacked a reasonable basis for their statements that the Company would grow by 8-9% in the third and fourth quarter of 2001. On September 20, 2001, before the market opened for trading, Rayovac issued a press release announcing that the Company's fiscal fourth quarter results would be negatively impacted by a purported slowdown in battery sales in its U.S. and Latin American markets. As a result, contrary to Defendants' bullish Class Period statements, Rayovac's earnings for the quarter would be flat to down slightly from the same period for the previous year. The market's reaction to this announcement was immediate and punitive, with shares of Rayovac common stock falling more than 23% to a Class Period low of $12.74 per share on almost eight times the normal trading volume.

According to a Dow Jones News Service article dated January 2, 2004, a federal judge ruled that the Plaintiffs were barred from adding non-fraud securities claims against an additional Defendant because that the claims were time-barred and couldn't be saved by the legislative extension through Sarbanes. The Plaintiffs plan to appeal the decision.

In a press release dated March 26, 2004, pending final court approval, Rayovac has reached an agreement in principle to settle the shareholder class action lawsuits. Under the terms of the proposed settlement, and subject to approval by the court, the settlement amount of $4 million would be principally funded by the Company's insurance carriers. This settlement will not affect the Company's previously announced earnings guidance.

According to the Company's FORM 10-Q for the quarterly period ended June 27, 2004, the parties have agreed to a settlement in which Rayovac will pay Plaintiff class $4 million in consideration for dismissal of all claims brought under this suit. The parties filed a Stipulation of Settlement with the Court to this effect in March, 2004 and the Court granted its preliminary approval of this Stipulation in April, 2004 and its final approval of the Stipulation in July, 2004. A majority of the $4 million settlement will be covered by the Company’s insurers.