Energizer 2014 Annual Report Download - page 15

• we may lose market share to private label brands sold by retail chains, which are typically sold at lower prices than our
products.
Loss of reputation of our leading brands or failure of our marketing plans could have an adverse effect on our business.
We depend on the continuing reputation and success of our brands, particularly the Energizer, Eveready, Schick, Wilkinson
Sword, Edge, Skintimate, Playtex, Diaper Genie, Wet Ones, Banana Boat, Hawaiian Tropic, Stayfree, Carefree and o.b. brands.
Our operating results could be adversely affected if one of our leading brands suffers damage to its reputation due to real or
perceived quality issues.
Further, the success of these brands can suffer if our marketing plans or new product offerings do not have the desired impact
on our brand's image or ability to attract and retain consumers. Additionally, claims made in our marketing campaigns may
become subject to litigation alleging false advertising, which if successful could cause us to alter our marketing plans in ways
that may materially and adversely affect sales, or result in the imposition of significant damages against us. Further, a boycott
or other campaign critical of Energizer, through social media or otherwise, could negatively impact product sales.
Loss of any of our principal customers could significantly decrease our sales and profitability.
Wal-Mart, together with its subsidiaries, is our largest customer, accounting for approximately 17.2% of net sales in fiscal
2014. Generally, sales to our top customers are made pursuant to purchase orders and we do not have supply agreements or
guarantees of minimum purchases from them. As a result, these customers may cancel their purchase orders or reschedule or
decrease their level of purchases from us at any time. The loss or a substantial decrease in the volume of purchases by any of
our top customers would harm our sales and profitability. For example, our net sales and earnings beginning in the fourth
quarter of fiscal 2013 and continuing into fiscal 2014 were negatively impacted by distribution losses at two U.S. retail
customers. Additionally, increasing retailer customer concentration could result in reduced sales outlets for our products, as
well as greater negotiating pressures and pricing requirements on Energizer.
The performance of the primary battery product category may be impacted by further changes in technology and device
trends, which could impair Energizer's operating results and growth prospects.
We believe an increasing number of devices are using built-in rechargeable battery systems, particularly in developed
markets, leading to a declining volume trend in the battery category, which we expect will continue. This has and will likely
continue to have a negative impact on the demand for primary batteries. This trend has and will continue to put additional
pressure on segment results going forward, both directly through reduced consumption and indirectly as manufacturers
aggressively price and promote their products to seek to retain market share or gain battery shelf space. Development and
commercialization of new battery or device technologies not available to Energizer could also negatively impact our results and
prospects.
Energizer is subject to risks related to its international operations, including currency fluctuations, which could adversely
affect our results of operations. Such risks are currently particularly acute in Venezuela.
Energizer's businesses are currently conducted on a worldwide basis, with nearly 50% of our sales in fiscal 2014 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., either at all or 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, particularly in Venezuela and Argentina;
• restrictions on and taxation of international imports and exports;
• currency fluctuations, including the impact of hyper-inflationary conditions in certain economies, particularly where
exchange controls limit or eliminate our ability to convert from local currrency;
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