Rayovac 2014 Annual Report Download - page 34

We license various trademarks, trade names and patents from third parties for certain of our products. These
licenses generally place marketing obligations on us and require us to pay fees and royalties based on net sales or
profits. Typically, these licenses may be terminated if we fail to satisfy certain minimum sales obligations or if
we breach the terms of the license. The termination of these licensing arrangements could adversely affect our
business, financial condition and results of operations.
In our Global Batteries & Appliances segment, we license the use of the Black & Decker brand for
marketing in certain small household appliances in North America, South America (excluding Brazil) and the
Caribbean. In July 2014, The Black & Decker Corporation (“BDC”) extended the license agreement through
December 2018. The failure to renew the license agreement with BDC or to enter into a new agreement on
acceptable terms could have a material adverse effect on our financial condition, liquidity and results of
operations. Additionally, in connection with our acquisition of the HHI Business, we received a limited right to
use certain Stanley Black & Decker trademarks, brand names and logos in marketing our products and services
for only five years. Pursuant to a transitional trademark license agreement, Stanley Black & Decker granted us
the right to use the “Stanley” and “Black & Decker” marks and logos, and certain other marks and logos, for up
to five years after the completion of the HHI Business acquisition in connection with certain products and
services. When our right to use these Stanley Black & Decker trademarks, brand names and logos expires, we
may not be able to maintain or enjoy comparable name recognition or status under our new brand. If we are
unable to successfully manage the transition of our business to our new brand, our reputation among our
customers could be adversely affected, and our revenue and profitability could decline.
Claims by third parties that we are infringing their intellectual property and other litigation could adversely
affect our business.
From time to time in the past we have been subject to claims that we are infringing the intellectual property
of others. We currently are the subject of such claims and it is possible that third parties will assert infringement
claims against us in the future. An adverse finding against us in these or similar trademark or other intellectual
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 and other costs, our suppliers’ willingness to extend credit to us to finance our
inventory purchases and other factors beyond our control;
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