Energizer 2014 Annual Report Download - page 17

financial condition and results of operations. Execution of the spin-off transaction presents a number of significant risks to our
internal processes, including the failure to maintain an adequate control environment due to changes to our IT systems and financial
reporting processes, both as we execute the transaction and following consummation. There may also be dis-synergies from
separating the businesses that could negatively impact the balance sheets, gross margins and profits of both businesses. Changes
to our commercial operating model, including outsourcing of certain support functions and the use of distributors in markets where
we have historically maintained a presence, could negatively impact our results of operations. Further, the combined value of the
common stock of the two publicly-traded companies may not be equal to or greater than what the value of our common stock
would have been had the proposed spin-off not occurred.
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 project. In January 2014, the Company's Board of Directors
authorized an expansion of scope of the previously announced project. We have incurred and expect to continue to incur additional
significant charges related to the restructuring project, 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 project, our financial
condition and results of operations may suffer further.
Execution of the restructuring project, or any potential future restructuring project, 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;
• loss of sales as we reduce or eliminate staffing on non-core product lines;
• diversion of management attention from ongoing business activities; and
• the failure to maintain employee morale and retain key employees while implementing benefit changes and reductions
in the workforce.
Because of these and other factors, we cannot predict whether we will realize the purpose and anticipated benefits of these
measures and, if we do not, our business and results of operations may be adversely affected.
Additionally, there may be delays in implementing the restructuring activities or a failure to achieve the anticipated levels of
cost savings and efficiency as a result of the restructuring activities, each of which could materially and adversely impact our
business and results of operations. Further restructuring or reorganization activities may also be required in the future beyond
what is currently planned, which could further enhance the risks associated with these activities.
Impairment of our goodwill and other intangible assets would result in a reduction in net income.
Energizer has a material amount of goodwill, trademarks and other intangible assets, as well as other long-lived assets,
which are periodically evaluated for impairment in accordance with current accounting standards. Declines in our profitability
and/or estimated cash flows related to specific intangible assets, as well as potential changes in market valuations for similar
assets and market discount rates may result in an impairment charge, which could have an adverse impact on our operating
results.
If Energizer cannot continue to develop new products in a timely manner, and at favorable margins, it may not be able to
compete effectively.
The battery and portable lighting products, wet shave, skin care, feminine care and infant care industries have been notable
for the pace of innovations in product life, product design and applied technology, and our success depends on future
innovations. The successful development and introduction of new products requires retail and consumer acceptance and
overcoming the reaction from competitors. New product introductions in categories where we have existing products will
likely also reduce the sales of our existing products. Our investments in research and development may not result in successful
products or innovation that will recover the costs of such investments. Our customers or end consumers may not purchase our
new products once introduced. Additionally, new products could require regulatory approval which may not be available or
may require modification to the product which could impact the product success. Our competitors may introduce new or
enhanced products that significantly outperform ours, or develop manufacturing technology which permits them to manufacture
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