Energizer 2009 Annual Report Download - page 45

ENERGIZER HOLDINGS INC. 2009 ANNUAL REPORT PAGE 43
See Note 8 of the Notes to Consolidated Financial Statements for
further discussion of deferred compensation liabilities.
Effective October 1, 2009, the Company adopted new fair value
guidance for nonfinancial assets and liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a
recurring basis.
At September 30, 2009 and 2008, the fair market value of fixed rate
long-term debt was $1,926.2 and $2,078.5, respectively, compared
to its carrying value of $1,930.0 and $2,230.0, respectively. The book
value of the Company’s variable rate debt approximates fair value.
The fair value of the long-term debt is estimated using yields
obtained from independent pricing sources for similar types of
borrowing arrangements.
At September 30, 2009, the fair value of foreign currency, interest
rate swap and commodity contracts is the amount that the Company
would receive or pay to terminate the contracts, considering first,
quoted market prices of comparable agreements, or in the absence
of quoted market prices, such factors as interest rates, currency
exchange rates and remaining maturities. For further information on
the fair value of these contracts, see the tables above.
Due to the nature of cash and cash equivalents and short-term bor-
rowings, including notes payable, carrying amounts on the balance
sheet approximate fair value.
15. Environmental and Legal Matters
Government Regulation and Environmental Matters The opera-
tions of the Company, like those of other companies engaged in the
Household Products and Personal Care businesses, are subject to
various federal, state, foreign and local laws and regulations intended
to protect the public health and the environment. These regulations
relate primarily to worker safety, air and water quality, underground fuel
storage tanks and waste handling and disposal. The Company has
received notices from the U.S. Environmental Protection Agency, state
agencies and/or private parties seeking contribution, that it has been
identified as a “potentially responsible party” (PRP) under the Compre-
hensive Environmental Response, Compensation and Liability Act, and
may be required to share in the cost of cleanup with respect to eight
federal “Superfund” sites. It may also be required to share in the cost
of cleanup with respect to state-designated sites or other sites outside
of the U.S.
Accrued environmental costs at September 30, 2009 were $9.1, of
which $1.8 is expected to be spent in fiscal 2010. This accrual is not
measured on a discounted basis. It is difficult to quantify with certainty
the cost of environmental matters, particularly remediation and future
capital expenditures for environmental control equipment. Neverthe-
less, based on information currently available, the Company believes
the possibility of material environmental costs in excess of the accrued
amount is remote.
As a result of the Playtex acquisition certain of the Company’s
products are subject to regulation by the United States Food
and Drug Administration (FDA).
Legal Proceedings The Company and its subsidiaries are parties to
a number of legal proceedings in various jurisdictions arising out of the
operations of its businesses. Many of these legal matters are in pre-
liminary stages and involve complex issues of law and fact, and may
proceed for protracted periods of time. The amount of liability, if any,
from these proceedings cannot be determined with certainty. However,
based upon present information, the Company believes that its ulti-
mate liability, if any, arising from pending legal proceedings, asserted
legal claims and known potential legal claims which are likely to be
asserted, should not be material to the Company’s financial position,
taking into account established accruals for estimated liabilities.
16. Other Commitments and Contingencies
An international affiliate of the Company has $7.9 of funds deposited
in a bank account that is acting as collateral for a bank loan. The
Company has reflected this bank deposit as restricted cash, which is
included in other current assets on the Consolidated Balance Sheets.
The loan was initiated in June 2004 for a three month period. At each
maturity, the Company renewed the agreement. As the loan amount
changes, the funds on deposit will be required to increase or decrease
with the loan amount. The impact of this transaction is reflected in the
investing section of the Consolidated Statements of Cash Flows.
Total rental expense less sublease rental income for all operating leases
was $32.2, $28.8 and $27.9 in 2009, 2008 and 2007, respectively.
Future minimum rental commitments under noncancellable operating
leases in effect as of September 30, 2009, were $23.1 in 2010,
$15.5 in 2011, $10.7 in 2012, $8.6 in 2013, $6.3 in 2014 and
$11.1 thereafter. These leases are primarily for office facilities.