Rayovac 2013 Annual Report Download - page 28

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We are subject to significant international business risks that could hurt our business and cause our results
of operations to fluctuate.
Approximately 41% of our net sales for the fiscal year ended September 30, 2013 were to customers outside
of the U.S. Our pursuit of international growth opportunities may require significant investments for an extended
period before returns on these investments, if any, are realized. Our international operations are subject to risks
including, among others:
• currency fluctuations, including, without limitation, fluctuations in the foreign exchange rate of the
Euro, British Pound, Brazilian Real and the Mexican Peso;
• changes in the economic conditions or consumer preferences or demand for our products in these
markets;
• the risk that because our brand names may not be locally recognized, we must spend significant
amounts of time and money to build brand recognition without certainty that we will be successful;
• 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. For example, 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, brass, 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 2011, 2012 and 2013, we
experienced extraordinary price increases for raw materials, particularly as a result of strong demand from China.
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