Rayovac 2011 Annual Report Download - page 34

property litigations may have a material adverse effect on our business, financial condition and results of
operations. Any such claims, with or without merit, could be time consuming and expensive, and may require us
to incur substantial costs, including the diversion of the resources of management and technical personnel, cause
product delays or require us to enter into licensing or other agreements in order to secure continued access to
necessary or desirable intellectual property. If we are deemed to be infringing a third party’s intellectual property
and are unable to continue using that intellectual property as we had been, our business and results of operations
could be harmed if we are unable to successfully develop non-infringing alternative intellectual property on a
timely basis or license non-infringing alternatives or substitutes, if any exist, on commercially reasonable terms.
In addition, an unfavorable ruling in intellectual property litigation could subject us to significant liability, as
well as require us to cease developing, manufacturing or selling the affected products or using the affected
processes or trademarks. Any significant restriction on our proprietary or licensed intellectual property that
impedes our ability to develop and commercialize our products could have a material adverse effect on our
business, financial condition and results of operations.
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
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