Rayovac 2009 Annual Report Download - page 25

Table of Contents
Index to Financial Statements
• changes in foreign labor laws and regulations affecting our ability to hire and retain employees;
• changes in U.S. and foreign laws regarding trade and investment;
• noncompliance by our business partners with, or a failure by our business partners to enforce, rules and regulations targeting fraudulent
conduct; and
• difficulty in obtaining distribution and support for our products.
There are three particular EU Directives, Restriction of the Use of Hazardous Substances in Electrical and Electronic Equipment, Waste of Electrical
and Electronic Equipment and the Directive on Batteries and Accumulators and Waste Batteries that may have a material impact on our business.
Restriction of the Use of Hazardous Substances in Electrical and Electronic Equipment requires us to eliminate specified hazardous materials from products
we sell in EU member states. Waste of Electrical and Electronic Equipment requires us to collect and treat, dispose of or recycle certain products we
manufacture or import into the EU at our own expense. The Directive on Batteries and Accumulators and Waste Batteries bans heavy metals in batteries by
establishing maximum quantities of heavy metals in batteries and mandates waste management of these batteries, including collection, recycling and
disposal systems, with the costs imposed upon producers and importers such as us. Complying or failing to comply with the EU directives may harm our
business. For example:
• Although contractually assured with our suppliers, we may be unable to procure appropriate Restriction of the Use of Hazardous Substances in
Electrical and Electronic Equipment compliant material in sufficient quantity and quality and/or be able to incorporate it into our product
procurement processes without compromising quality and/or harming our cost structure.
• We may face excess and obsolete inventory risk related to non−compliant inventory that we may continue to hold in Fiscal 2010 for which
there is reduced demand and we may need to write down the carrying value of such inventories.
• We may be unable to sell certain existing inventories of our batteries in Europe.
Many of the developing countries in which we operate do not have significant governmental regulation relating to environmental safety, occupational
safety, employment practices or other business matters routinely regulated in the U.S. or may not rigorously enforce such regulation. As these countries and
their economies develop, it is possible that new regulations or increased enforcement of existing regulations may increase the expense of doing business in
these countries. In addition, social legislation in many countries in which we operate may result in significantly higher expenses associated with labor costs,
terminating employees or distributors and closing manufacturing facilities. Increases in our costs as a result of increased regulation, legislation or
enforcement could materially and adversely affect our business, results of operations and financial condition.
Sales of certain of our products are seasonal and may cause our quarterly operating results and working capital requirements to fluctuate.
Sales of our battery and electric shaving and grooming and personal care products are seasonal. A large percentage of sales for these products
generally occur during our first fiscal quarter that ends on or about December 31, due to the impact of the December holiday season. Sales of our lawn and
garden and household insect control products that are offered through the Home and Garden Business are also seasonal. A large percentage of our sales of
these products occur during the spring and summer, typically our second and third fiscal quarters. As a result of this seasonality, our inventory and working
capital needs relating to these products fluctuate significantly during the year. In addition, orders from retailers are often made late in the period preceding
the applicable peak season, making forecasting of production schedules and inventory purchases difficult. If we are unable to accurately forecast and
prepare for customer orders or our working capital needs, or there is a general downturn in business or economic conditions during these periods, our
business, financial condition and results of operations could be materially and adversely affected.
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