Rayovac 2010 Annual Report Download - page 36

Our dependence on a few suppliers and one of our U.S. facilities for certain of our products makes us
vulnerable to a disruption in the supply of our products.
Although we have long-standing relationships with many of our suppliers, we generally do not have long-
term contracts with them. An adverse change in any of the following could have a material adverse effect on our
business, financial condition and results of operations:
• our ability to identify and develop relationships with qualified suppliers;
• the terms and conditions upon which we purchase products from our suppliers, including applicable
exchange rates, transport costs and other costs, our suppliers’ willingness to extend credit to us to
finance our inventory purchases and other factors beyond our control;
• the financial condition of our suppliers;
• political instability in the countries in which our suppliers are located;
• our ability to import outsourced products;
• our suppliers’ noncompliance with applicable laws, trade restrictions and tariffs; or
• our suppliers’ ability to manufacture and deliver outsourced products according to our standards of
quality on a timely and efficient basis.
If our relationship with one of our key suppliers is adversely affected, we may not be able to quickly or
effectively replace such supplier and may not be able to retrieve tooling, molds or other specialized production
equipment or processes used by such supplier in the manufacture of our products.
In addition, we manufacture the majority of our foil cutting systems for our shaving product lines, using
specially designed machines and proprietary cutting technology, at our Portage, Wisconsin facility. Damage to
this facility, or prolonged interruption in the operations of this facility for repairs, as a result of labor difficulties
or for other reasons, could have a material adverse effect on our ability to manufacture and sell our foil shaving
products which could in turn harm our business, financial condition and results of operations.
We face risks related to our sales of products obtained from third-party suppliers.
We sell a significant number of products that are manufactured by third party suppliers over which we have
no direct control. While we have implemented processes and procedures to try to ensure that the suppliers we use
are complying with all applicable regulations, there can be no assurances that such suppliers in all instances will
comply with such processes and procedures or otherwise with applicable regulations. Noncompliance could
result in our marketing and distribution of contaminated, defective or dangerous products which could subject us
to liabilities and could result in the imposition by governmental authorities of procedures or penalties that could
restrict or eliminate our ability to purchase products from non-compliant suppliers. Any or all of these effects
could adversely affect our business, financial condition and results of operations.
Class action and derivative action lawsuits and other investigations, regardless of their merits, could have
an adverse effect on our business, financial condition and results of operations.
We and certain of our officers and directors have been named in the past, and may be named in the future, as
defendants of class action and derivative action lawsuits. In the past, we have also received requests for
information from government authorities. Regardless of their subject matter or merits, class action lawsuits and
other government investigations may result in significant cost to us, which may not be covered by insurance, may
divert the attention of management or may otherwise have an adverse effect on our business, financial condition
and results of operations.
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