Rayovac 2009 Annual Report Download - page 21

Table of Contents
Index to Financial Statements
• enter into or engage in transactions with affiliates;
• merge, consolidate or sell all or substantially all of our assets; or
• under the senior credit facility agreements, pay cash interest on our 12% Notes until the date that is 18 months from the effective date of the
Plan, or February 28, 2011.
In addition, our senior secured term credit agreement and the senior asset−based revolving credit agreement each require us to meet a number of
financial ratios and tests. Noncompliance with these covenants could materially and adversely affect our ability to finance our operations or capital needs
and to engage in other business activities that may be in our best interest and may also restrict our ability to expand or pursue our business strategies. We
may not be able to comply with all of our covenants and obligations in all our debt instruments.
We face risks related to the current economic crisis.
The continued credit crisis and related turmoil in the global financial system has had and may continue to have an impact on our business and our
financial condition. Global economic conditions have significantly impacted economic markets within certain sectors, with the financial sector and retail
businesses being particularly impacted. Our ability to generate revenue, in particular from sales of home and garden products, pet supplies, electric shaving
and grooming and electric personal care products, depends significantly on discretionary consumer spending. It is difficult to predict new general economic
conditions that could impact consumer and customer demand for our products or our ability to manage normal commercial relationships with our customers,
suppliers and creditors. The recent continuation of a number of negative economic factors, including heightened investor concerns about the credit quality of
mortgages, constraints on the supply of credit to households, continuing increases in energy prices, lower equity prices, softening home values, uncertainty
and perceived weakness in the labor market and general consumer fears of a shallow recovery or renewed recession could have a negative impact on
discretionary consumer spending. If the current situation deteriorates significantly, our business could be negatively impacted, including as a result of
reduced demand for our products or supplier or customer disruptions. Any significant decrease in discretionary consumer spending could have a material
adverse effect on our revenues, results of operations and financial condition. In addition, our ability to access the capital markets may be severely restricted
at a time when we would like, or need, to do so, which could have an impact on our flexibility to react to changing economic and business conditions.
We participate in very competitive markets and we may not be able to compete successfully.
The markets in which we participate are very competitive. In the consumer battery market, our primary competitors are Duracell (a brand of Procter &
Gamble), Energizer and Panasonic (a brand of Matsushita). In the electric shaving and grooming and electric personal care product markets, our primary
competitors are Braun (a brand of Procter & Gamble), Norelco (a brand of Philips), and Vidal Sassoon and Revlon (brands of Helen of Troy). In the pet
supplies market, our primary competitors are Mars, Hartz and Central Garden & Pet. In the Home and Garden Business our principal national competitors
are the Scotts Company, Central Garden & Pet and S.C. Johnson. In each of our markets, we also face competition from numerous other companies.
We and our competitors compete for consumer acceptance and limited shelf space based upon brand name recognition, perceived quality, price,
performance, product packaging and design innovation, as well as creative marketing, promotion and distribution strategies. Our ability to compete in these
consumer product markets may be adversely affected by a number of factors, including, but not limited to, the following:
• We compete against many well established companies that may have substantially greater financial and other resources, including personnel
and research and development, and greater overall market share than we do.
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