Rayovac 2006 Annual Report Download - page 27

SPECTRUM BRANDS | 2006 ANNUAL REPORT 15
From time to time, we have been required to address the effect
of historic activities on the environmental condition of our proper-
ties. We have not conducted invasive testing at all our facilities to
identify all potential environmental liability risks. Given the age of
our facilities and the nature of our operations, there can be no
assurance that material liabilities will not arise in the future in con-
nection with our current or former facilities. If previously unknown
contamination of property underlying or in the vicinity of our man-
ufacturing facilities is discovered, we could be required to incur
material unforeseen expenses. If this occurs, it may have a material
adverse effect on our business, fi nancial condition and results of
operations. We are currently engaged in investigative or remedial
projects at a few of our facilities. There can be no assurance that our
liabilities in respect of investigative or remedial projects at our facil-
ities will not be material.
We are also subject to proceedings related to our disposal of
industrial and hazardous material at off-site disposal locations or
similar disposals made by other parties for which we are responsible
as a result of our relationship with such other parties. These pro-
ceedings are under CERCLA or similar state laws that hold persons
who “arranged for” the disposal or treatment of such substances
strictly liable for costs incurred in responding to the release or
threatened release of hazardous substances from such sites, regard-
less of fault or the lawfulness of the original disposal. Liability under
CERCLA is typically joint and several, meaning that a liable party
may be responsible for all of the costs incurred in investigating and
remediating contamination at a site. As a practical matter, liability at
CERCLA sites is shared by all of the viable responsible parties. We
occasionally are identifi ed by federal or state governmental agencies
as being a potentially responsible party for response actions con-
templated at an off-site facility. At the existing sites where we have
been notifi ed of our status as a potentially responsible party, it is
either premature to determine if our potential liability, if any, will
be material or we do not believe that our liability, if any, will be
material. We may be named as a potentially responsible party under
CERCLA or similar state laws in the future for other sites not cur-
rently known to us, and the costs and liabilities associated with
these sites may be material.
Compliance with various public health, consumer protec-
tion and other regulations applicable to our products and
facilities could increase our cost of doing business and
expose us to additional requirements with which we may
be unable to comply.
Certain of our products and facilities are regulated by the United
States Environmental Protection Agency (the “EPA”) and the United
States Food and Drug Administration (the “FDA”) or other federal
consumer protection and product safety agencies and are subject to
the regulations such agencies enforce, as well as similar state, for-
eign and multinational agencies and regulations. For example, in the
United States, all products containing pesticides must be registered
with the EPA and, in many cases, similar state and foreign agencies
before they can be manufactured or sold. The inability to obtain or
the cancellation of any registration could have an adverse effect on
our business, fi nancial condition and results of operations. The
severity of the effect would depend on which products were
involved, whether another product could be substituted and
whether our competitors were similarly affected. We attempt to
anticipate regulatory developments and maintain registrations of,
and access to, substitute chemicals and other ingredients. We may
not always be able to avoid or minimize these risks.
The Food Quality Protection Act established a standard for
food-use pesticides, which is that a reasonable certainty of no harm
will result from the cumulative effect of pesticide exposures. Under
this Act, the EPA is evaluating the cumulative effects from dietary
and non-dietary exposures to pesticides. The pesticides in certain of
our products continue to be evaluated by the EPA as part of this
program. It is possible that the EPA or a third party active ingredi-
ent registrant may decide that a pesticide we use in our products
will be limited or made unavailable to us. We cannot predict the
outcome or the severity of the effect of the EPA’s continuing evalu-
ations of active ingredients used in our products.
In addition, the use of certain pesticide and fertilizer products
may be regulated by various local, state, federal and foreign envi-
ronmental and public health agencies. These regulations may require
that only certifi ed or professional users apply the product or that
certain products be used only on certain types of locations (such as
“not for use on sod farms or golf courses”), or that users post notices
on properties to which products have been or will be applied, give
notifi cation to individuals in the vicinity that products will be applied
in the future, may provide that the product cannot be applied for aes-
thetic purposes, or may ban the use of certain ingredients. Compliance
with public health regulations could increase our cost of doing busi-
ness and expose us to additional requirements with which we may be
unable to comply.
Public perceptions that some of the products we produce
and market are not safe could adversely affect us.
We manufacture and market a number of complex chemical
products bearing our brands relating to our lawn and garden and
household insecticide and repellent products, such as fertilizers,
growing media, herbicides and pesticides. On occasion, customers
and some current or former employees have alleged that some prod-
ucts failed to perform up to expectations or have caused damage or
injury to individuals or property. Public perception that our products
are not safe, whether justifi ed or not, could impair our reputation,
damage our brand names and have a material adverse effect on our
business, fi nancial condition and results of operations.
ITEM 1B. UNRESOLVED
STAFF COMMENTS
None.
2006 Form 10-K Annual Report
Spectrum Brands, Inc.