Rayovac 2009 Annual Report Download - page 24

Table of Contents
Index to Financial Statements
inventory levels, there is a growing trend among them to purchase our products on a “just−in−time” basis. This requires us to shorten our lead−time for
production in certain cases and more closely anticipate their demand, which could in the future require us to carry additional inventories, increase our
working capital and related financing requirements or result in excess inventory becoming unusable or obsolete. Furthermore, we primarily sell branded
products and a move by one or more of our large customers to sell significant quantities of private label products, which we do not produce on their behalf
and which directly compete with our products, could have a material adverse effect on our business, financial condition and results of operations.
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.
Both we and our competitors make significant investments in research and development. If our competitors successfully introduce new or enhanced
products that present technological advantages over or otherwise outperform our products, or are perceived by consumers as doing so, we may be unable to
compete successfully in market segments affected by these changes. In addition, we may be unable to compete if our competitors develop or apply
technology which permits them to manufacture products at a lower relative cost. The fact that many of our principal competitors have substantially greater
resources than we do increases this risk. The patent rights or other intellectual property rights of third parties, restrictions on our ability to expand or modify
manufacturing capacity or financial and other constraints on our research and development activity may also limit our ability to introduce products that are
competitive on a performance basis.
Our future success will depend, in part, upon our ability to improve our existing products and to develop, manufacture and market new, innovative
products. If we fail to successfully develop, manufacture and market new or enhanced products or develop product innovations, our ability to maintain or
grow our market share may be adversely affected, which in turn could materially adversely affect our business, financial condition and results of operations.
As a result of our international operations, we face a number of risks related to exchange rates and foreign currencies.
Our international sales and certain of our expenses are transacted in foreign currencies. During Fiscal 2009, approximately 43% of our net sales and
45% of our operating expenses were denominated in foreign currencies prior to translation into U.S. dollars. We expect that the amount of our revenues and
expenses transacted in foreign currencies will increase as our Latin American, European and Asian operations grow and, as a result, our exposure to risks
associated with foreign currencies could increase accordingly. Significant changes in the value of the U.S. dollar in relation to foreign currencies could have
a material effect on our business, financial condition and results of operations. Changes in currency exchange rates may also affect our sales to, purchases
from and loans to our subsidiaries as well as sales to, purchases from and bank lines of credit with our customers, suppliers and creditors that are
denominated in foreign currencies.
Our international operations may expose us to a number of risks related to conducting business in foreign countries.
Our international operations and exports and imports to and from international markets are subject to a number of special risks which could have a
material adverse effect on our business, financial condition and results of operations. These risks include, but are not limited to:
• changes in the economic conditions or consumer preferences or demand for our products in these markets;
• economic and political destabilization, governmental corruption and civil and labor unrest;
• restrictive actions by multi−national governing bodies, foreign governments or subdivisions thereof (e.g., duties, quotas and restrictions on
transfer of funds);
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