Rayovac 2005 Annual Report Download - page 64

to repay the debt under the Senior Credit Facilities
when it becomes due, the lenders under the senior
credit facilities could proceed against certain of our
assets and capital stock which we have pledged to
them as security. We cannot assure you that our
assets or cash fl ow will be suffi cient to repay borrow-
ings under the outstanding debt instruments in the
event of a default thereunder.
We cannot assure you that United and Tetra will
be successfully integrated.
If we cannot successfully integrate the operations
of United, including the operations of United Pet
Group and Nu-Gro, and Tetra, we may experience
material adverse consequences to our business,
fi nancial condition and results of operations. The
integration of separately-managed companies operat-
ing in distinctly different markets involves a number
of risks, including, but not limited to, the following:
• the risks of entering markets in which we have
no prior experience;
• the diversion of management’s attention from
the management of daily operations to the
integration of operations;
• demands on management related to the
signifi cant increase in our size after the
acquisitions of United and Tetra;
• diffi culties in the assimilation and retention
of employees;
• diffi culties in the assimilation of different
corporate cultures and practices, and of broad
and geographically dispersed personnel
and operations;
• diffi culties in the integration of departments,
information technology systems, accounting
systems, technologies, books and records and
procedures, as well as in maintaining uniform
standards and controls, including internal
accounting controls, procedures and
policies; and
• expenses of any undisclosed or potential
legal liabilities.
Prior to the acquisitions of United and Tetra,
Spectrum, United and Tetra operated as separate
entities. In addition, United Pet Group and Nu-Gro
operated as separate entities until acquired by
United in 2004. We may not be able to maintain the
levels of revenue, earnings or operating effi ciency
that any one of these entities had achieved or might
achieve separately. The fi nancial statements included
in this report cover periods during which United and
Tetra were not under the same management and,
therefore, may not be indicative of our future fi nancial
condition or operating results. Successful integration
of each company’s operations will depend on our
ability to manage those operations, realize opportu-
nities for revenue growth presented by strengthened
product offerings and expanded geographic market
coverage and, to some degree, eliminate redundant
and excess costs. The anticipated savings opportu-
nities are based on projections and assumptions, all
of which are subject to change. We may not realize
anticipated benefi ts or savings to the extent or in the
time frame anticipated, if at all, or such benefi ts and
savings may require higher costs than anticipated.
We may fail to identify suitable acquisition
candidates, our acquisition strategy may divert
the attention of management and our acquisitions
may not be successfully integrated into our
existing business.
We intend to pursue increased market penetration
and expansion of our current product offerings through
additional strategic acquisitions. We may fail to iden-
tify suitable acquisition candidates, and even if we
do, acquisitions may not be completed on accept-
able terms or successfully integrated into our exist-
ing business. Any acquisition we make could be of
signifi cant size and involve either domestic or inter-
national parties. The acquisition and integration of a
separate organization could divert management atten-
tion from other business activities. Such a diversion,
together with other diffi culties we may encounter in
integrating an acquired business, could have a mate-
rial adverse effect on our business, fi nancial condi-
tion and results of operations. In addition, we may
borrow money or issue additional stock to fi nance
acquisitions. Such funds might not be available on
terms as favorable to us as our current borrowing
terms and could increase our leveraged position.
If we are unable to improve existing products
and develop new, innovative products, or if our
competitors introduce new or enhanced products,
our sales and market share may suffer.
Our future success will depend, in part, upon
our ability to improve our existing products and to
develop, manufacture and market new innovative
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
SPECTRUM BRANDS, INC.44