Rayovac 2008 Annual Report Download - page 19

Table of Contents
Index to Financial Statements
RISK FACTORS
Any of the following factors could materially and adversely affect our business, financial condition and results of operations and 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.
Our substantial indebtedness could adversely affect our business, financial condition and results of operations and prevent us from fulfilling our
obligations under the terms of our indebtedness.
We have, and we will continue to have, a significant amount of indebtedness. As of September 30, 2008, we had total indebtedness of approximately $2.5
billion.
Our substantial indebtedness could make it more difficult for us to satisfy our obligations with respect to the terms of our indebtedness and has had and
could continue to have other material adverse consequences for our business, including:
• requiring 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;
• increasing our vulnerability to general adverse economic and industry conditions;
• limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
• restricting us from making strategic acquisitions, dispositions or exploiting business opportunities;
• placing us at a competitive disadvantage compared to our competitors that have less debt; and
• limiting our ability to borrow additional funds (even when necessary to maintain adequate liquidity) or dispose of assets.
In addition, a 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.
We have retained financial advisors to assist us in evaluating potential strategies which may be available to us to reduce or restructure our significant
outstanding indebtedness.
We continue to explore a wide variety of possible options to reduce or restructure our significant outstanding indebtedness. There can be no assurance that
any particular option or outcome will be identified or pursued or that we will be able to successfully implement any strategy or consummate any related
transaction on a timely basis, on terms acceptable to us or at all. Notwithstanding any actions we may undertake, our stock price could continue to decline. In
addition, we may be unsuccessful in implementing an option that is chosen by our board of directors or our implementation of any particular alternative could
present additional risks to our business, financial position and results of operations, or yield unexpected results. The process of continuing to review, and
potentially executing, options may be costly and time-consuming and may distract our management and otherwise disrupt our operations, which could have an
adverse effect on our business, financial condition and results of operations. There can be no assurances that any particular alternative or arrangement will lead to
increased stockholder value. Moreover, certain actions we could undertake may involve the issuance of common stock or preferred stock of the Company in a
transaction or series of transactions that could significantly dilute existing shareholders without requiring a shareholder vote. In addition, to the extent that we
elect to pursue a transaction or series of transactions that includes a sale of one or more corporate assets, our ability to sell any
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008