Rayovac 2011 Annual Report Download - page 29

• labor unrest;
• political and economic instability, as a result of terrorist attacks, natural disasters or otherwise;
• lack of developed infrastructure;
• longer payment cycles and greater difficulty in collecting accounts;
• restrictions on transfers of funds;
• import and export duties and quotas, as well as general transportation costs;
• changes in domestic and international customs and tariffs;
• changes in foreign labor laws and regulations affecting our ability to hire and retain employees;
• inadequate protection of intellectual property in foreign countries;
• unexpected changes in regulatory environments;
• difficulty in complying with foreign law;
• difficulty in obtaining distribution and support; and
• adverse tax consequences.
The foregoing factors may have a material adverse effect on our ability to increase or maintain our supply of
products, financial condition or results of operations.
Adverse weather conditions during our peak selling season for our home and garden control products could
have a material adverse effect on our Home and Garden Business.
Weather conditions in the U.S. have a significant impact on the timing and volume of sales of certain of our
lawn and garden and household insecticide and repellent products. Periods of dry, hot weather can decrease
insecticide sales, while periods of cold and wet weather can slow sales of herbicides.
Our products utilize certain key raw materials; any increase in the price of, or change in supply and
demand for, these raw materials could have a material and adverse effect on our business, financial
condition and profits.
The principal raw materials used to produce our products—including zinc powder, electrolytic manganese
dioxide powder, petroleum-based plastic materials, steel, aluminum, copper and corrugated materials (for
packaging)—are sourced either on a global or regional basis by us or our suppliers, and the prices of those raw
materials are susceptible to price fluctuations due to supply and demand trends, energy costs, transportation
costs, government regulations, duties and tariffs, changes in currency exchange rates, price controls, general
economic conditions and other unforeseen circumstances. In particular, during 2008 and 2010, and to date in
2011, we experienced extraordinary price increases for raw materials, particularly as a result of strong demand
from China. Although we may increase the prices of certain of our goods to our customers, we may not be able to
pass all of these cost increases on to our customers. As a result, our margins may be adversely impacted by such
cost increases. We cannot provide any assurance that our sources of supply will not be interrupted due to changes
in worldwide supply of or demand for raw materials or other events that interrupt material flow, which may have
an adverse effect on our profitability and results of operations.
We regularly engage in forward purchase and hedging derivative transactions in an attempt to effectively
manage and stabilize some of the raw material costs we expect to incur over the next 12 to 24 months; however,
our hedging positions may not be effective, or may not anticipate beneficial trends, in a particular raw material
market or may, as a result of changes in our business, no longer be useful for us. In addition, for certain of the
principal raw materials we use to produce our products, such as electrolytic manganese dioxide powder, there are
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