Rayovac 2010 Annual Report Download - page 25

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.
Risks Related to the Merger
Significant costs have been incurred in connection with the consummation of the Merger and are expected
to be incurred in connection with the integration of Spectrum Brands and Russell Hobbs into a combined
company, including legal, accounting, financial advisory and other costs.
We expect to incur one-time costs of approximately $23 million in connection with integrating the
operations, products and personnel of Spectrum Brands and Russell Hobbs into a combined company, in addition
to costs related directly to completing the Merger described below. These costs may include costs for:
• employee redeployment, relocation or severance;
• integration of information systems;
• combination of research and development teams and processes; and
• reorganization or closures of facilities.
In addition, we expect to incur a number of non-recurring costs associated with combining our operations
with those of Russell Hobbs, which cannot be estimated accurately at this time. We incurred approximately $85
million of transaction fees and other costs related to the Merger. Additional unanticipated costs may yet be
incurred as we integrate our business with that of Russell Hobbs. Although we expect that the elimination of
duplicative costs, as well as the realization of other efficiencies related to the integration of our operations with
those of Russell Hobbs, may offset incremental transaction and transaction-related costs over time, this net
benefit may not be achieved in the near term, or at all. There can be no assurance that we will be successful in
our integration efforts. In addition, while we expect to benefit from leveraging distribution channels and brand
names across both companies, we cannot assure you that we will achieve such benefits.
We may not realize the anticipated benefits of the Merger.
The Merger involved the integration of two companies that previously operated independently. The
integration of our operations with those of Russell Hobbs is expected to result in financial and operational
benefits, including increased revenues and cost savings. There can be no assurance, however, regarding when or
the extent to which we will be able to realize these increased revenues, cost savings or other benefits. Integration
may also be difficult, unpredictable, and subject to delay because of possible company culture conflicts and
different opinions on technical decisions and product roadmaps. We must integrate or, in some cases, replace,
numerous systems, including those involving management information, purchasing, accounting and finance,
sales, billing, employee benefits, payroll and regulatory compliance, many of which are dissimilar. In some
instances, we and Russell Hobbs have served the same customers, and some customers may decide that it is
desirable to have additional or different suppliers. Difficulties associated with integration could have a material
adverse effect on our business, financial condition and operating results.
Integrating our business with that of Russell Hobbs may divert our management’s attention away from
operations.
Successful integration of our and Russell Hobbs’ operations, products and personnel may place a significant
burden on our management and other internal resources. The diversion of management’s attention, and any
difficulties encountered in the transition and integration process, could harm our business, financial conditions
and operating results.
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