Energizer 2011 Annual Report Download - page 86

Download and view the complete annual report

Please find page 86 of the 2011 Energizer annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
Assets/(Liabilities) at fair value:
Deferred Compensation
Derivatives - Foreign Exchange
Derivatives - Commodity
Derivatives - Interest Rate Swap
Share Option
Total Assets/(Liabilities) at fair value
Level 2
September 30,
2011
$ (147.6)
3.7
(6.2)
(4.7)
(3.4)
$ (158.2)
2010
$ (136.4)
(14.0)
1.0
(7.8)
(2.9)
$ (160.1)
At September 30, 2011 and 2010 the Company had no level 1 or level 3 financial assets or liabilities.
See Note 9 of the Notes to Consolidated Financial Statements for further discussion of deferred compensation liabilities.
At September 30, 2011 and 2010, the fair market value of fixed rate long-term debt was $1,969.3 and $2,077.5, respectively,
compared to its carrying value of $1,865.0 and $1,835.0, 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, 2011, 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.
Japan Earthquake and Related Events On March 11, 2011, an earthquake struck off the northeast coast of Japan, triggering
a tsunami. Further compounding the situation, nuclear power plants were damaged causing concerns about the possible
meltdown of nuclear reactors and the release of harmful radioactive materials. The tragic events have severely disrupted the
Japanese economy, the third largest in the world.
The Company is party to several foreign exchange hedging contracts for the Japanese Yen, which are accounted for as cash
flow hedges. These contracts hedge the variability of cash flows resulting from changes to foreign currency exchange rates
related to the cash settlement of future inventory purchases. The contracts are established and based on a forecast of future
inventory purchases. At September 30, 2011, the Company had a pre-tax loss of approximately $7 included in Accumulated
Other Comprehensive Loss on the Balance Sheet related to hedging contracts in Japan. This loss relates to foreign exchange
contracts accounted for as cash flow hedges with maturities throughout fiscal 2012. As of September 30, 2011, contracts with
maturities extending into fiscal 2013 are not material. As noted previously, we continue to monitor activities in Japan, and, to
date, have not seen any material change in inventory purchasing to meet future consumer demand. However, a reduction of
forecasted inventory purchases may result in a portion of current or future foreign exchange contracts to no longer qualify as
cash flow hedges. This may result in an acceleration of the recognition of the amounts included in Accumulated other
comprehensive income in the consolidated balance sheet. At this time, we consider these forecasted inventory purchases to be
probable.
(16) 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, 2011 were $7.1, exclusive of accrued costs associated with the recent ASR
76