Rayovac 2015 Annual Report Download - page 34

• 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. In addition, we may be unable to implement
changes to our products or otherwise adapt to changing consumer trends. If we are unable to respond to changing
consumer trends, our operating results and financial condition could be adversely affected.
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 (the Company’s first fiscal quarter). Demand for hardware and home improvement
products increases during the spring and summer construction period (the Company’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 (the Company’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. Demand for auto care products is generally at its highest during the period from March to June
(Spectrum’s second and third fiscal quarters) based upon historical customer seasonal purchasing patterns and
timing of promotional activities. 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.
Adverse weather conditions during our peak selling seasons for our home and garden control and auto care
products could have a material adverse effect on our home and garden business and auto care business.
Weather conditions have a significant impact on the timing and volume of sales of certain of our lawn and
garden and household insecticide and repellent products. For example, periods of dry, hot weather can decrease
insecticide sales, while periods of cold and wet weather can slow sales of herbicides. Adverse weather conditions
during the first six months of the calendar year (the Company’s second and third fiscal quarters), when demand
for home and garden control products typically peaks, could have a material adverse effect on our home and
garden business and our financial results during such period. Weather can also influence customer behavior for
our auto care products, especially with appearance products, which sell best during warm, dry weather. There
could be a material adverse effect on the auto care segment if the weather is cold or wet, especially during peak
sales season.
We are subject to significant international business risks that could hurt our business and cause our results
of operations to fluctuate.
Approximately 40% of our net sales for the fiscal year ended September 30, 2015 were to customers outside
of the U.S. Our pursuit of international growth opportunities may require significant investments for an extended
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