Rayovac 2013 Annual Report Download - page 21

higher profit margins than we do, which may enable them to compete more aggressively in advertising and in
offering retail discounts and other promotional incentives to retailers, distributors, wholesalers and, ultimately,
consumers.
Seasonality
On a consolidated basis our financial results are approximately equally weighted between quarters, however,
sales of certain product categories tend to be seasonal. Sales in the consumer battery, electric shaving and grooming
and electric personal care product categories, particularly in North America, tend to be concentrated in the
December holiday season (Spectrum’s first fiscal quarter). Demand for hardware and home improvement products
increases during the spring and summer construction period (Spectrum’s third and fourth fiscal quarters). Demand
for pet supplies products remains fairly constant throughout the year. Demand for home and garden control products
sold though the Home and Garden Business typically peaks during the first six months of the calendar year
(Spectrum’s second and third fiscal quarters). Small Appliances peaks from July through December primarily due to
the increased demand by customers in the late summer for “back-to-school” sales and in the fall for the holiday
season. For a more detailed discussion of the seasonality of our product sales, see Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations—“Seasonal Product Sales.”
Governmental Regulations and Environmental Matters
Due to the nature of our operations, our facilities are subject to a broad range of federal, state, local and
foreign legal and regulatory provisions relating to the environment, including those regulating the discharge of
materials into the environment, the handling and disposal of solid and hazardous substances and wastes and the
remediation of contamination associated with the releases of hazardous substances at our facilities. We believe
that compliance with the federal, state, local and foreign laws and regulations to which we are subject will not
have a material effect upon our capital expenditures, financial condition, earnings or competitive position.
From time to time, we have been required to address the effect of historic activities on the environmental
condition of our properties. We have not conducted invasive testing at all facilities to identify all potential
environmental liability risks. Given the age of our facilities and the nature of our operations, it is possible that
material liabilities may arise in the future in connection with our current or former facilities. If previously
unknown contamination of property underlying or in the vicinity of our manufacturing facilities is discovered, we
could incur material unforeseen expenses, which could have a material adverse effect on our financial condition,
capital expenditures, earnings and competitive position. Although we are currently engaged in investigative or
remedial projects at some of our facilities, we do not expect that such projects, taking into account established
accruals, will cause us to incur expenditures that are material to our business, financial condition or results of
operations; however, it is possible that our future liability could be material.
We have been, and in the future may be, 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 held
responsible as a result of our relationships with such other parties. In the U.S., these proceedings are under the
Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“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,
regardless 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 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 identified by federal or state governmental agencies as being a potentially
responsible party for response actions contemplated at an off-site facility. At the existing sites where we have
been notified of our status as a potentially responsible party, it is either premature to determine whether 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 for other sites not currently
known to us, and the costs and liabilities associated with these sites may be material.
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