Rayovac 2013 Annual Report Download - page 27

• In some key product lines, our competitors may have lower production costs and higher profit margins
than us, which may enable them to compete more aggressively in offering retail discounts, rebates and
other promotional incentives.
• Product improvements or effective advertising campaigns by competitors may weaken consumer
demand for our products.
• Consumer purchasing behavior may shift to distribution channels where we do not have a strong
presence.
• Consumer preferences may change to lower margin products or products other than those we market.
• We may not be successful in the introduction, marketing and manufacture of any new products or
product innovations or be able to develop and introduce, in a timely manner, innovations to our
existing products that satisfy customer needs or achieve market acceptance.
Some competitors may be willing to reduce prices and accept lower profit margins to compete with us. As a
result of this competition, we could lose market share and sales, or be forced to reduce our prices to meet
competition. If our product offerings are unable to compete successfully, our sales, results of operations and
financial condition could be materially and adversely affected.
We may not be able to realize expected benefits and synergies from future acquisitions of businesses or
product lines.
We may acquire partial or full ownership in businesses or may acquire rights to market and distribute
particular products or lines of products. The acquisition of a business or the rights to market specific products or
use specific product names may involve a financial commitment by us, either in the form of cash or equity
consideration. In the case of a new license, such commitments are usually in the form of prepaid royalties and
future minimum royalty payments. There is no guarantee that we will acquire businesses or product distribution
rights that will contribute positively to our earnings. Anticipated synergies may not materialize, cost savings may
be less than expected, sales of products may not meet expectations, and acquired businesses may carry
unexpected liabilities.
Sales of certain of our products are seasonal and may cause our operating results and working capital
requirements to fluctuate.
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)
and demand for pet supplies products remains fairly constant throughout the year. Demand for home and garden
control products 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. As a result of this
seasonality, our inventory and working capital needs fluctuate significantly throughout 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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