Rayovac 2004 Annual Report Download - page 54

Third-party infringement claims against us could adversely affect our business.
From time to time we have been subject to claims that we are infringing upon the intellectual property of
others and it is possible that third parties will assert infringement claims against us in the future. Any such
claims, with or without merit, could be time-consuming, result in costly litigation, cause product delays or
require us to enter into licensing or other agreements in order to secure continued access to required technology.
Licensing or other agreements, if required, may not be available on terms acceptable to us or at all. If claims of
infringement against us are successful, they may also require us to pay significant damages or subject us to an
injunction against the sale or use of our products. In the event of a ruling against us on any such claim, a license
or similar agreement may not be available to us on reasonable terms.
Remington is involved in a number of legal proceedings with Philips with respect to trademarks owned by
Philips relating to the shape of the head portion of Philips’ three-head rotary shaver. An adverse finding against
us in these or similar litigations may have a material adverse effect on our business, financial condition and
results of operations. For more information, see “Legal Proceedings—Litigation.”
We are dependent on a few suppliers located in Asia and one of our U.S. facilities for many of our electric
personal care products. A disruption in the supply of our products could have a material adverse effect on
our business, financial condition and results of operations.
Substantially all of our electric personal care products are manufactured by suppliers located in China and
Japan. Although we have long-established relationships with many of these suppliers, we do not have long-term
contracts with them. Any adverse change in any of the following could have a material adverse effect on our
business, financial condition and results of operations:
• relationships with our suppliers;
• the financial condition of our suppliers;
• the ability to import outsourced products; or
• our suppliers’ ability to manufacture and deliver outsourced products on a timely basis.
If our relationship with one of our key suppliers is adversely affected, we may not be able to quickly or
effectively replace such supplier and may not be able to retrieve tooling and molds possessed by such supplier.
In addition, we manufacture the majority of our foil cutting systems for our shaving product lines, using
specially designed machines and proprietary cutting technology, at one of our facilities. This manufacturing
facility is subject to the normal hazards that could result in any material damage to any such facility. Damage to
this facility, or prolonged interruption in the operations of this facility for repairs or other reasons, would have a
material adverse effect on our ability to manufacture and sell our shaving products.
Our dependence on, and the price of, raw materials may adversely affect our profits.
The principal raw materials used to produce our products — including zinc powder, electrolytic manganese
dioxide powder and steel — are sourced on a global or regional basis, and the prices of those raw materials are
susceptible to price fluctuations due to supply/demand trends, transportation costs, government regulations and
tariffs, changes in currency exchange rates, price controls, the economic climate and other unforeseen
circumstances. We regularly engage in forward purchase and hedging transactions to effectively manage our raw
materials costs for the next six to twelve months. These efforts may not be effective and, if we are unable to pass
on raw materials price increases to our customers, our future profitability may be materially adversely affected.
We depend on key personnel and may not be able to retain those employees or recruit additional qualified
personnel.
We are highly dependent on the continuing efforts of our current executive officers and we likely will
depend on the senior management of any business we acquire in the future. Our business, financial condition or
results of operations could be materially adversely affected by the loss of any of these persons and the inability to
attract and retain qualified replacements.
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