Rayovac 2015 Annual Report Download - page 35

period before returns on these investments, if any, are realized. Our international operations are subject to risks
including, among others:
• currency fluctuations, including, without limitation, fluctuations in the foreign exchange rate of the
Euro, British Pound, Brazilian Real, Canadian Dollar, Australian Dollar, Japanese Yen and the
Mexican Peso;
• changes in the economic conditions or consumer preferences or demand for our products in these
markets;
• the risk that because our brand names may not be locally recognized, we must spend significant
amounts of time and money to build brand recognition without certainty that we will be successful;
• labor unrest;
• political and economic instability, as a result of war, terrorist attacks, pandemics, natural disasters or
otherwise;
• lack of developed infrastructure;
• longer payment cycles and greater difficulty in collecting accounts;
• restrictions on transfers of funds;
• import and export duties and quotas, as well as general transportation costs;
• changes in domestic and international customs and tariffs;
• changes in foreign labor laws and regulations affecting our ability to hire and retain employees;
• inadequate protection of intellectual property in foreign countries;
• unexpected changes in regulatory environments;
• difficulty in complying with foreign law; and
• adverse tax consequences.
The foregoing factors may have a material adverse effect on our ability to increase or maintain our supply of
products, financial condition or results of operations.
Our products utilize certain key raw materials; any significant increase in the price of, or change in supply
and demand for, these raw materials could have a material and adverse effect on our business, financial
condition and profits.
The principal raw materials used to produce our products—including zinc powder, brass, electrolytic
manganese dioxide powder, petroleum-based plastic materials, steel, aluminum, copper and corrugated materials
(for packaging)—are sourced either on a global or regional basis by us or our suppliers, and the prices of those
raw materials are susceptible to price fluctuations due to supply and demand trends, energy costs, transportation
costs, government regulations, duties and tariffs, changes in currency exchange rates, price controls, general
economic conditions and other unforeseen circumstances. In particular, during the years 2012 and 2013, we
experienced extraordinary price increases for raw materials, particularly as a result of strong demand from China.
Although we may increase the prices of certain of our goods to our customers, we may not be able to pass all of
these cost increases on to our customers. As a result, our margins may be adversely impacted by such cost
increases. We cannot provide any assurance that our sources of supply will not be interrupted due to changes in
worldwide supply of or demand for raw materials or other events that interrupt material flow, which may have an
adverse effect on our profitability and results of operations.
We regularly engage in forward purchase and hedging derivative transactions in an attempt to effectively
manage and stabilize some of the raw material costs we expect to incur over the next 12 to 24 months. However,
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