Energizer 2010 Annual Report Download - page 110

Exhibit 13
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
100
At September 30, 2010 and 2009 the Company had no level 1 or level 3 financial assets or
liabilities.
See Note 7 of the Notes to Consolidated Financial Statements for further discussion of deferred
compensation liabilities.
At September 30, 2010 and 2009, the fair market value of fixed rate long-term debt was $2,077.5
and $1,926.2, respectively, compared to its carrying value of $1,835.0 and $1,930.0,
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.
Due to the nature of cash and cash equivalents and short-term borrowings, including notes
payable, carrying amounts on the balance sheets approximate fair value.
At September 30, 2010, 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.
(14) Environmental and Legal Matters
Government Regulation and Environmental Matters – The operations 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 Comprehensive 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, 2010 were $10.2, of which $2.8 is expected to be
spent in fiscal 2011. 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. Nevertheless, based on information currently
available, the Company believes the possibility of material environmental costs in excess of the
accrued amount is remote.
Certain of the Company’s products are subject to regulation by the United States Food and Drug
Administration (FDA), including tampons and sun care products.
Legal Proceedings – The Company and its subsidiaries are parties to a number of legal
proceedings in various jurisdictions arising out of the operations of the Energizer business.
Many of these legal matters are in preliminary 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 ultimate liability, if any, arising from pending legal proceedings,
asserted legal claims and known potential legal claims which are likely to be asserted, are not
reasonably likely to be material to the Company’s financial position, results of operations, or cash
flows, taking into account established accruals for estimated liabilities.