Rayovac 2015 Annual Report Download - page 31

ITEM 1A. RISK FACTORS
Any of the following factors could materially and adversely affect our business, financial condition and
results of operations. The risks described below are not the only risks that we may face. Additional risks and
uncertainties not currently known to us or that we currently view as immaterial may also materially and
adversely affect our business, financial condition or results of operations.
Risks Related To Our Business
Our substantial indebtedness may limit our financial and operating flexibility, and we may incur additional
debt, which could increase the risks associated with our substantial indebtedness.
We have, and we expect to continue to have, a significant amount of indebtedness. As of September 30,
2015, we had total indebtedness under senior secured facilities, notes and other debt instruments of
approximately $4 billion. Our substantial indebtedness has had, and could continue to have, material adverse
consequences for our business, and may:
• require us to dedicate a large portion of our cash flow to pay principal and interest on our indebtedness,
which will reduce the availability of our cash flow to fund working capital, capital expenditures,
research and development expenditures and other business activities;
• increase our vulnerability to general adverse economic and industry conditions;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate;
• restrict our ability to make strategic acquisitions, dispositions or to exploit business opportunities;
• place us at a competitive disadvantage compared to our competitors that have less debt; and
• limit our ability to borrow additional funds (even when necessary to maintain adequate liquidity) or
dispose of assets.
Under the senior secured facilities and the indentures governing the notes (together, the “Indentures”), we
may incur additional indebtedness. If new debt is added to our existing debt levels, the related risks that we now
face would increase.
Furthermore, a substantial portion of our debt bears interest at variable rates. If market interest rates
increase, the interest rate on our variable rate debt will increase and will create higher debt service requirements,
which would adversely affect our cash flow and could adversely impact our results of operations. While we may
enter into agreements limiting our exposure to higher debt service requirements, any such agreements may not
offer complete protection from this risk.
Restrictive covenants in the senior secured facilities and the Indentures may restrict our ability to pursue
our business strategies.
The senior secured facilities and the Indentures each restrict, among other things, asset dispositions, mergers
and acquisitions, dividends, stock repurchases and redemptions, other restricted payments, indebtedness and
preferred stock, loans and investments, liens and affiliate transactions. The senior secured facilities and the
Indentures also contain customary events of default. These covenants could among other things, limit our ability
to fund future working capital and capital expenditures, engage in future acquisitions or development activities,
or otherwise realize the value of our assets and opportunities fully. In addition, the senior secured facilities and
the Indentures require us to dedicate a portion of cash flow from operations to payments on debt and the senior
secured facilities contain financial covenants relating to maximum leverage and minimum interest coverage.
Such requirements and covenants could limit the flexibility of our restricted entities in planning for, or reacting
to, changes in the industries in which they operate. Our ability to comply with these covenants is subject to
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