Rayovac 2009 Annual Report Download - page 20

Table of Contents
Index to Financial Statements
Risks Related To Our Business
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 expect to continue to have, a significant amount of indebtedness. As of September 30, 2009, we had total indebtedness under our
senior subordinated notes, senior credit facilities and other senior debt of approximately $1.7 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 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.
The terms of our indebtedness impose restrictions on us that may affect our ability to successfully operate our business.
Our senior secured term credit agreement and senior asset−based revolving credit agreement and the indenture governing our outstanding 12% Notes
contain covenants that, among other things, limit our ability to:
• incur additional indebtedness;
• borrow money or sell preferred stock;
• create liens;
• pay dividends on or redeem or repurchase stock;
• make certain types of investments;
• issue or sell stock in our subsidiaries;
• restrict dividends or other payments from our subsidiaries;
• issue guarantees of debt;
• transfer or sell assets and utilize proceeds of any such sales;
• enter into agreements that restrict our restricted subsidiaries from paying dividends, making loans or otherwise transferring assets to us or to
any of our other restricted subsidiaries;
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