Energizer 2013 Annual Report Download - page 22

Energizer is subject to risks related to its international operations, including currency fluctuations, which could adversely
affect our results of operations.
Energizer's businesses are currently conducted on a worldwide basis, with nearly 50% of our sales in fiscal 2013 arising
from foreign countries, and a significant portion of our production capacity and cash located overseas. Consequently, Energizer
is subject to a number of risks associated with doing business in foreign countries, including:
• the possibility of expropriation, confiscatory taxation or price controls;
• the inability to repatriate foreign-based cash, which constitutes substantially all of our overall cash, for strategic needs
in the U.S. without incurring significant income tax and earnings consequences, as well as the heightened counter-
party, internal control and country-specific risks associated with holding cash overseas;
• the effect of foreign income taxes, value-added taxes and withholding taxes, including the inability to recover amounts
owed to Energizer by a government authority without extended proceedings or at all;
• the effect of the U.S. tax treatment of foreign source income and losses, and other restrictions on the flow of capital
between countries;
• adverse changes in local investment or exchange control regulations;
• restrictions on and taxation of international imports and exports;
• currency fluctuations, including the impact of hyper-inflationary conditions in certain economies;
• political or economic instability, government nationalization of business or industries, government corruption, and
civil unrest, including political or economic instability in the countries of the Eurozone, Egypt and the Middle East
and across Latin America, including Venezuela and Argentina;
• legal and regulatory constraints, including tariffs and other trade barriers; and
• difficulty in enforcing contractual and intellectual property rights.
A significant portion of Energizer's sales are denominated in local currencies but reported in U.S. dollars, and a high
percentage of product costs for such sales are denominated in U.S. dollars. Therefore, although we may hedge a portion of the
exposure, the strengthening of the U.S. dollar relative to such currencies can negatively impact our reported sales and operating
profits.
A failure of a key information technology system could adversely impact our ability to conduct business.
We rely extensively on information technology systems, including some which are managed by third-party service
providers, in order to conduct business. These systems include, but are not limited to, programs and processes relating to
communicating within Energizer and with other parties, ordering and managing materials from suppliers, converting materials
to finished products, shipping products to customers, processing transactions, summarizing and reporting results of operations,
and complying with regulatory, legal or tax requirements. These information technology systems could be damaged or cease to
function properly due to the poor performance or failure of third-party service providers, catastrophic events, power outages,
security breaches, network outages, failed upgrades or other similar events. If our business continuity plans do not effectively
resolve such issues on a timely basis, we may suffer interruptions in conducting our business which may adversely impact our
operating results. In addition, we are undertaking a significant implementation of information technology systems globally to
facilitate business processes and generate cost savings in connection with our multi-year restructuring, and during this
implementation, we face a heightened risk of system interruptions and deficiencies or failures in our internal controls involving
our information systems and processes.
We face risks arising from the restructuring of our operations and uncertainty with respect to our ability to achieve the
estimated cost savings.
In November 2012, we announced a company-wide restructuring plan. We have incurred and expect to continue to incur
additional significant charges related to the restructuring plan, which will reduce our profitability in the periods incurred. If we
incur unexpected charges related to the restructuring, or in connection with any potential future restructuring program, our financial
condition and results of operations may suffer further.
Execution of the restructuring plan, or any potential future restructuring program, presents a number of significant risks,
including:
• actual or perceived disruption of service or reduction in service standards to customers;
• the failure to preserve adequate internal controls as we restructure our general and administrative functions, including
our information technology and financial reporting infrastructure;
• the failure to preserve supplier relationships and distribution, sales and other important relationships and to resolve
conflicts that may arise;
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