Rayovac 2004 Annual Report Download - page 52

such as prevailing economic, financial and competitive conditions and changes in regulations, and if such events
occur, we cannot be sure that we will be able to comply. A breach of these covenants could result in a default
under the indenture governing our senior subordinated notes and/or the agreement governing our senior credit
facilities. If there were an event of default under the indenture for the notes and/or the agreement governing our
senior credit facilities, holders of such defaulted debt could cause all amounts borrowed under these instruments
to be due and payable immediately. Additionally, if we fail to repay the debt under the senior credit facilities
when it becomes due, the lenders under the senior credit facilities could proceed against certain of our assets and
capital stock which we have pledged to them as security. We cannot assure you that our assets or cash flow will
be sufficient to repay borrowings under the outstanding debt instruments in the event of a default thereunder.
We may fail to identify suitable acquisition candidates, our acquisition strategy may divert the attention of
management and our acquisitions may not be successfully integrated into our existing business.
We intend to pursue increased market penetration and expansion of our current product offerings through
additional strategic acquisitions. We may fail to identify suitable acquisition candidates, and even if we do,
acquisitions may not be completed on acceptable terms or successfully integrated into our existing business. Any
acquisition we make could be of significant size and involve either domestic or international parties. The
acquisition and integration of a separate organization would divert management attention from other business
activities. This diversion, together with other difficulties we may encounter in integrating an acquired business
could have a material adverse effect on our business, financial condition and results of operations. In addition, we
may borrow money or issue additional stock to finance acquisitions. Such funds might not be available on terms
as favorable to us as our current borrowing terms and could increase our leveraged position or be dilutive to our
stockholders.
If we are unable to improve existing products and develop new, innovative products, our sales and market
share may suffer.
We believe that our future success in both our battery and electric personal care product markets will
depend, in part, upon our ability to continue making innovations in our existing products and to develop,
manufacture and market new products. If we fail to successfully introduce, market and manufacture new products
or product innovations, our ability to maintain or grow our market share may be adversely affected, which in turn
could materially adversely affect our business, financial condition or results of operations.
We have made and continue to make significant investments in research and development, as have our
competitors. If our competitors successfully introduce new or enhanced products that eliminate technological
advantages our products may have in a certain market segment or otherwise outperform our products, or are
perceived by consumers as doing so, we may be unable to compete successfully in market segments affected by
these changes. In the battery market, we may be unable to compete if our competitors develop or apply
technology which permits them to manufacture batteries at a lower relative cost. The fact that our principal
competitors have substantially greater resources than us increases this risk. Pre-emptive patent rights, restrictions
on our ability to expand or modify manufacturing capacity or constraints on our research and development
activity may also limit our ability to introduce products that are competitive on a performance basis.
Our foreign operations may expose us to a number of risks related to conducting business in foreign
countries.
Our international operations and exports and imports to and from foreign markets are subject to a number of
special risks. These risks include, but are not limited to:
• economic and political destabilization, governmental corruption and civil unrest;
• restrictive actions by foreign governments (e.g., duties, quotas and restrictions on transfer of funds);
• changes in foreign labor laws and regulations affecting our ability to hire and retain employees;
37