Rayovac 2013 Annual Report Download - page 39

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We may not realize the anticipated benefits of the Hardware Acquisition and may become responsible for
certain liabilities.
The Hardware Acquisition involves the integration of two companies that have previously operated
independently. The integration of our operations with those of the HHI Business is expected to result in financial
and operational benefits, including increased top line growth, margins, revenues and cost savings and be
accretive to earnings per share, earnings before interest, taxes, depreciation and amortization and free cash flow
before synergies. There can be no assurance, however, regarding when or the extent to which we will be able to
realize these increased top line growth, margins, revenues, cost savings or accretions to earnings per share,
earnings before interest, taxes, depreciation and amortization or free cash flow or other benefits. Integration may
also be difficult, unpredictable, and subject to delay because of possible company culture conflicts and different
opinions on technical decisions and product roadmaps. We must integrate or, in some cases, replace, numerous
systems, including those involving management information, purchasing, accounting and finance, sales, billing,
employee benefits, payroll and regulatory compliance, many of which are dissimilar. In some instances, we and
the HHI Business have served the same customers, and some customers may decide that it is desirable to have
additional or different suppliers. Difficulties associated with integration could have a material adverse effect on
our business.
In addition, in connection with the Hardware Acquisition, we have assumed certain potential liabilities
relating to the HHI Business. To the extent we have not identified such liabilities or to the extent the
indemnifications obtained from Stanley Black & Decker are insufficient to cover known liabilities, these
liabilities could have a material adverse effect on our business.
Integrating our business and the HHI Business may divert our management’s attention away from
operations.
Successful integration of our and the HHI Business’ operations, products and personnel may place a
significant burden on our management and other internal resources. The diversion of management’s attention,
and any difficulties encountered in the transition and integration process, could harm our business, financial
conditions and operating results.
We are required to supply certain products and services to Stanley Black & Decker and its subsidiaries
pursuant to the terms of certain supply agreements for a period of time after the completion of the
Hardware Acquisition. Our provision of products and services under these agreements require us to
dedicate resources of the HHI Business and the TLM Residential Business and may result in liabilities to
us.
Certain products and services currently used by Stanley Black & Decker are produced and provided using
equipment of the HHI Business and the TLM Residential Business that we acquired or certain equipment
belonging to Stanley Black & Decker and its subsidiaries that will continue to be located for a period of time
after the completion of the Hardware Acquisition at facilities operated by the HHI Business and the TLM
Residential Business and maintained by us pursuant to certain specifications. We and Stanley Black & Decker
entered into supply agreements (each, a “Supply Agreement”), whereby we provide Stanley Black & Decker and
its subsidiaries with certain of these products and services for a period of time. This requires us to dedicate
resources of the HHI Business and the TLM Residential Business towards the provision of these products and
services and may result in liabilities to us. These Supply Agreements are an accommodation to Stanley Black &
Decker and its subsidiaries as part of the Hardware Acquisition, and the pricing of the products and services is on
terms more favorable to Stanley Black & Decker and its subsidiaries than it would be in the ordinary course of
business.
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