Energizer 2011 Annual Report Download - page 89

ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
Income Tax Valuation Allowance
Balance at beginning of year
Provision charged to expense
Reversal of provision charged to expense
Write-offs, translation, other
Balance at end of year
2011
$ 11.0
11.4
(4.6)
(5.2)
$ 12.6
2010
$ 10.3
2.7
(1.3)
(0.7)
$ 11.0
2009
$ 9.1
1.2
—
—
$ 10.3
Supplemental Disclosure of Cash Flow Information
Interest paid, including cost of early debt retirement
Income taxes paid
2011
$ 141.8
206.4
2010
$ 122.1
131.5
2009
$ 150.4
167.3
(19) Segment Information
Operations for the Company are managed via two segments - Personal Care (Wet Shave, Skin Care, Feminine Care and Infant
Care) and Household Products (Battery and Lighting Products). On November 23, 2010, which is in the first fiscal quarter of
2011, we completed the acquisition of American Safety Razor (ASR). ASR is a leading global manufacturer of private label/
value wet shaving razors and blades, and industrial and specialty blades and is part of the Company’s Personal Care segment.
Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based
compensation costs, costs associated with most restructuring, integration or business realignment activities, including the
Household Products restructuring activities in fiscal 2011 and amortization of intangible assets. Financial items, such as interest
income and expense, are managed on a global basis at the corporate level.
The Company’s operating model includes a combination of stand-alone and combined business functions between the Personal
Care and Household Products businesses, varying by country and region of the world. Shared functions include product
warehousing and distribution, various transaction processing functions, and in some countries, a combined sales force and
management. Such allocations do not represent the costs of such services if performed on a stand-alone basis. The Company
applies a fully allocated cost basis, in which shared business functions are allocated between the businesses.
The reduction in gross profit associated with the write-up and subsequent sale of the inventory acquired in the ASR acquisition
in November 2010, which was $7.0 for fiscal 2011 and the shave preparation acquisition in June 2009, which was $3.7 for
fiscal 2009, as well as the related expenses and integration costs for each of the acquisitions are not reflected in the Personal
Care segment, but rather presented below segment profit, as they are non-recurring items directly associated with the
acquisition. Such presentation reflects management’s view on how it evaluates segment performance.
For the year ended September 30, 2011, the Company recorded expense of $1.8 related to the devaluation of its net monetary
assets in Venezuela as a result of accounting for the translation of this affiliate under the accounting rules governing a highly
inflationary economy. These results reflect an exchange rate of 5.6 Venezuelan Bolivar Fuerte to one U.S. dollar. In the prior
fiscal year, the Company recorded a pre-tax loss of $18.3 due primarily to the devaluation of our Venezuela affiliates' U.S.
dollar based intercompany payable as a result of the official devaluation of the exchange rate between the U.S. dollar and the
Venezuelan Bolivar Fuerte. These impacts, which are included in Other financing on the Consolidated Statements of Earnings
and Comprehensive Income, are not considered in the evaluation of segment profit. However, normal operating results in
Venezuela, such as sales, gross profit and spending, have been negatively impacted in fiscal 2011 on a comparative basis to
fiscal 2010 by translating at less favorable exchange, primarily in the first fiscal quarter of 2011, and by the impact of
unfavorable economic conditions in the country. These operating results remain part of the reported segment totals. The
segment impacts of the Venezuela devaluation and the unfavorable economic impact on operating results are shown separately
in the tables provided in the division discussions.
On May 19, 2011, the Company completed the issuance of $600.0 principal amount of 4.7% Senior Notes due May 2021, with
interest paid semi-annually beginning November, 2011. The vast majority of the proceeds of the offering were used to repay
existing indebtedness including the early redemption of certain private placement notes. The early retirement of the certain
private placement notes resulted in the payment of “make whole” premiums totaling $19.9, pre-tax, which are reflected as a
separate line item on the Consolidated Statements of Earnings as well as the reconciliation of segment results to total earnings
before income taxes included in this footnote. See Note 12 to the Consolidated Financial Statements for further details.
In the fourth quarter of fiscal 2009, the Company implemented a voluntary employee retirement option (VERO) for eligible
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