Rayovac 2010 Annual Report Download - page 37

We may be exposed to significant product liability claims which our insurance may not cover and which
could harm our reputation.
In the ordinary course of our business, we may be named as a defendant in lawsuits involving product
liability claims. In any such proceeding, plaintiffs may seek to recover large and sometimes unspecified amounts
of damages and the matters may remain unresolved for several years. Any such matters could have a material
adverse effect on our business, results of operations and financial condition if we are unable to successfully
defend against or settle these matters or if our insurance coverage is insufficient to satisfy any judgments against
us or settlements relating to these matters. Although we have product liability insurance coverage and an excess
umbrella policy, our insurance policies may not provide coverage for certain, or any, claims against us or may
not be sufficient to cover all possible liabilities. Additionally, we do not maintain product recall insurance. We
may not be able to maintain such insurance on acceptable terms, if at all, in the future. Moreover, any adverse
publicity arising from claims made against us, even if the claims were not successful, could adversely affect the
reputation and sales of our products. In particular, product recalls or product liability claims challenging the
safety of our products may result in a decline in sales for a particular product. This could be true even if the
claims themselves are ultimately settled for immaterial amounts. This type of adverse publicity could occur and
product liability claims could be made in the future.
We may incur material capital and other costs due to environmental liabilities.
We are subject to a broad range of federal, state, local, foreign and multi-national laws and regulations
relating to the environment. These include laws and regulations that govern:
• discharges to the air, water and land;
• the handling and disposal of solid and hazardous substances and wastes; and
• remediation of contamination associated with release of hazardous substances at our facilities and at
off-site disposal locations.
Risk of environmental liability is inherent in our business. As a result, material environmental costs may
arise in the future. In particular, we may incur capital and other costs to comply with increasingly stringent
environmental laws and enforcement policies, such as the EU Directives: Restriction of the Use of Hazardous
Substances in Electrical and Electronic Equipment, Waste of Electrical and Electronic Equipment and the
Directive on Batteries and Accumulators and Waste Batteries, discussed above. Moreover, there are proposed
international accords and treaties, as well as federal, state and local laws and regulations, that would attempt to
control or limit the causes of climate change, including the effect of greenhouse gas emissions on the
environment. In the event that the U.S. government or foreign governments enact new climate change laws or
regulations or make changes to existing laws or regulations, compliance with applicable laws or regulations may
result in increased manufacturing costs for our products, such as by requiring investment in new pollution control
equipment or changing the ways in which certain of our products are made. We may incur some of these costs
directly and others may be passed on to us from our third-party suppliers. Although we believe that we are
substantially in compliance with applicable environmental laws and regulations at our facilities, we may not
always be in compliance with such laws and regulations or any new laws and regulations in the future, which
could have a material adverse effect on our business, financial condition and results of operations.
From time to time, we have been required to address the effect of historic activities on the environmental
condition of our properties or former properties. We have not conducted invasive testing at all of our facilities to
identify all potential environmental liability risks. Given the age of our facilities and the nature of our operations,
material liabilities may arise in the future in connection with our current or former facilities. If previously
unknown contamination of property underlying or in the vicinity of our manufacturing facilities is discovered, we
could be required to incur material unforeseen expenses. If this occurs, it may have a material adverse effect on
our business, financial condition and results of operations. We are currently engaged in investigative or remedial
projects at a few of our facilities and any liabilities arising from such investigative or remedial projects at such
facilities may have a material effect on our business, financial condition and results of operations.
27