Energizer 2010 Annual Report Download - page 88

Exhibit 13
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
78
during the season under the required terms. We generally receive returns of U.S. sun care
products from September through January following the summer sun care season. We estimate
the level of sun care returns using a variety of inputs including historical experience,
consumption trends during the sun care season and inventory positions at key retailers as the
sun care season progresses. We monitor shipment activity and inventory levels at key retailers
during the season in an effort to gauge potential returns issues. This allows the Company to
manage shipment activity to our customers, especially in the latter stages of the sun care
season, to reduce the potential for returned product.
The Company offers a variety of programs, such as consumer coupons and similar consumer
rebate programs, primarily to its retail customers, designed to promote sales of its products.
Such programs require periodic payments and allowances based on estimated results of specific
programs and are recorded as a reduction to net sales. The Company accrues, at the time of
sale, the estimated total payments and allowances associated with each transaction.
Additionally, the Company offers programs directly to consumers to promote the sale of its
products. Promotions which reduce the ultimate consumer sale prices are recorded as a
reduction of net sales at the time the promotional offer is made, generally using estimated
redemption and participation levels. Taxes we collect on
behalf of governmental authorities, which are generally included in the price to the customer, are
also recorded as a reduction of net sales. The Company continually assesses the adequacy of
accruals for customer and consumer promotional program costs not yet paid. To the extent total
program payments differ from estimates, adjustments may be necessary. Historically, these
adjustments have not been material.
Advertising and Promotion Costs – The Company advertises and promotes its products
through national and regional media and expenses such activities in the year incurred.
Fair Values of Financial Instruments – Certain financial instruments are required to be
recorded at fair value. Changes in assumptions or estimation methods could affect the fair value
estimates; however, we do not believe any such changes would have a material impact on our
financial condition, results of operations or cash flows. Other financial instruments including
cash and cash equivalents and short-term borrowings, including notes payable, are recorded at
cost, which approximates fair value. The fair values of long-term debt and financial instruments
are disclosed in Note 13 of the Notes to Consolidated Financial Statements.
Reclassifications – Certain reclassifications have been made to the prior year financial
statements to conform to the current presentation.
Recently Issued Accounting Pronouncements – Other than as described below, no new
accounting pronouncement issued or effective during the fiscal year has had or is expected to
have a material impact on the consolidated financial statements.
On 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. Assets and liabilities subject to this guidance primarily include goodwill and
indefinite-lived intangible assets measured at fair value for impairment assessments, long-lived
assets measured at fair value for impairment assessments, and non-financial assets and
liabilities measured at fair value in business combinations. The adoption of this new guidance
did not affect our financial position, results of operations or cash flows for the periods presented.