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Exhibit 13
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
80
the previous official rate prior to the devaluation. As noted above, the Company determined,
prior to this official devaluation, that the parallel rate was the appropriate rate to use for the
translation of our Venezuela affiliate’s financial statements, so this action did not result in any
further devaluation charges.
In May 2010, the Venezuela government introduced additional exchange controls over securities
transactions in the parallel market. It established the Central Bank of Venezuela as the only
legal intermediary through which parallel market transactions can be executed and established
government control over the parallel exchange rate, which was set at approximately 5.30 to 1
U.S. dollar at September 30, 2010. At the same time, it significantly reduced the notional
amount of transactions that run through this Central Bank controlled, parallel market mechanism.
This has eliminated our ability to access the historical parallel market to pay for imported goods
and to most effectively manage our local monetary asset balances.
Since foreign exchange is no longer available in the historical parallel market, the Company is
now using the Central Bank of Venezuela controlled parallel market rate of 5.30, as the
translation rate for our Venezuela affiliate’s financial statements for the purposes of
consolidation. This includes the translation of monthly operating results (beginning in June
2010) and the valuation of our net monetary assets under highly inflationary accounting. Since
this rate is somewhat favorable to the historical parallel rate, which was previously adopted as
the appropriate rate for translation purposes on December 31, 2009 as noted above, we have
recorded a gain, included in other financing, of approximately $2, pre-tax, to reflect the improved
translation rate for the carrying value of our Venezuela affiliate’s net monetary assets under
highly inflationary accounting. However, due to the level of uncertainty in Venezuela, we cannot
predict the exchange rate that will ultimately be used to convert our local currency monetary
assets to U.S. dollars in the future. As a result, further charges reflecting a less favorable
exchange rate outcome are possible.
(4) Goodwill and Intangible Assets
Goodwill and intangible assets deemed to have an indefinite life are not amortized, but reviewed
annually for impairment of value or when indicators of a potential impairment are present. The
Company monitors changing business conditions, which may indicate that the remaining useful
life of goodwill and other intangible assets may warrant revision or carrying amounts may require
adjustment. As part of our business planning cycle, we performed our annual impairment test in
the fourth quarter of fiscal 2010, 2009 and 2008. Impairment testing was performed for each of
the Company’s reporting units: Household Products, Wet Shave and Playtex. No impairments
were identified and no adjustments were deemed necessary in fiscal 2010, 2009 and 2008.
However, future changes in the judgments, assumptions and estimates that are used in our
impairment testing including discount and tax rates or future cash flow projections, could result in
significantly different estimates of the fair values in the future. A reduction in the estimated fair
values could result in impairment charges that could materially affect our financial statements in
any given year. The recorded value of goodwill and intangible assets from recently acquired
businesses are derived from more recent business operating plans and macroeconomic
environmental conditions and therefore are more susceptible to an adverse change that could
require an impairment charge.
For example, because the Playtex intangible and goodwill amounts represent values of a
relatively more recent acquisition date, such amounts are more susceptible to an impairment
risk, if operating results or macroeconomic conditions deteriorate. Playtex indefinite-lived
intangible assets, exclusive of goodwill, represent approximately 77% of total indefinite-lived
intangible assets and approximately 63% of total goodwill at September 30, 2010. We utilized a