Energizer 2010 Annual Report Download - page 58

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Exhibit 13
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
48
2010, this spending occurred in the second half of the fiscal year. In 2011, higher comparative
A&P expense is likely in the first two quarters as compared to the prior year due to the timing of
the Schick Hydro launch in the additional markets noted. A&P spending is subject to change in
any given fiscal year due to the overall competitive and economic environment, changes in
strategic brand support objectives and shifts in the size and types of promotional campaigns.
Research and Development
Research and development (R&D) expense was $97.1 in fiscal 2010, $90.5 in fiscal 2009 and
$91.7 in fiscal 2008. The increased expense in fiscal 2010 reflects additional spending in
support of the Company’s growth initiatives. As a percent of sales, R&D expense was 2.3% in
fiscal 2010 and 2009 and 2.1% in fiscal 2008.
Interest and Other Financing Items
Interest expense for fiscal 2010 decreased $19.3 due primarily to lower average borrowings.
Other financing items, which include interest income and foreign exchange gains and losses
from the Company’s worldwide affiliates, were unfavorable $5.4 in fiscal 2010 as compared to
fiscal 2009. This result includes an exchange loss of $18.3, pre-tax, due primarily to the impact
of the devaluation of the Venezuela Bolivar Fuerte. The year-over-year change in other
financing items was favorable, exclusive of the Venezuela devaluation, as we did not repeat the
first quarter fiscal 2009 foreign exchange loss described in the next paragraph.
Interest expense for fiscal 2009 decreased $36.6 due primarily to lower average borrowings.
Other financing items were unfavorable $10.3 for fiscal 2009 as compared to fiscal 2008 due
primarily to exchange losses incurred as the U.S. dollar based payables for our foreign affiliates
were unfavorably impacted by the rapid and significant strengthening of the U.S. dollar versus
most local currencies during the first fiscal quarter of 2009 as a result of the impact of the
global recession.
Income Taxes
Income taxes, which include federal, state and foreign taxes, were 25.8%, 33.1% and 30.4% of
earnings before income taxes in fiscal 2010, 2009 and 2008, respectively. Income taxes
include the following items which impact the overall tax rate:
For Fiscal 2010:
• A $23.5 tax benefit related to the favorable impact of a foreign tax credit;
• Adjustments were recorded to revise previously recorded tax provisions to reflect
refinement of estimates of tax attributes to amounts in filed returns, settlement of tax
audits and other tax adjustments. The fiscal 2010 adjustment decreased the income
tax provision by $6.1, and
• A $4.1 tax benefit was recorded in fiscal 2010 reflecting the local tax benefit of the
Venezuela devaluation charge.
For Fiscal 2009:
• Adjustments were recorded to revise previously recorded tax provisions to reflect
refinement of estimates of tax attributes to amounts in filed returns, settlement of tax
audits and other tax adjustments. This adjustment increased the tax provision by $1.5
in fiscal 2009, and
• A tax benefit of $1.4 was recorded in fiscal 2009 associated with the write-up and
subsequent sale of inventory acquired in the Edge/Skintimate shave preparation
acquisition.