Rayovac 2004 Annual Report Download - page 78

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RAYOVAC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
The carrying value of financial instruments approximate the fair value of those instruments due to the
applicable interest rates being substantially at market (“floating”), except for the $350,000 of Senior
Subordinated Notes due September 30, 2013 with interest payable semiannually at 8.5%. The fair value of the
Notes at September 30, 2004 was approximately $378,219. (See also Derivative Financial Instruments, Note 2(r),
and Debt, Note 6).
The carrying amounts and fair values of the Company’s financial instruments are summarized as follows
((liability)/asset):
September 30,
2004 2003
Carrying
Amount Fair Value
Carrying
Amount Fair Value
Long-term debt .......................... $(829,897) $(858,116) $(943,392) $(954,298)
Interest rate swap agreements .............. (3,816) (3,816) (9,245) (9,245)
Commodity swap agreements .............. 1,764 1,764 541 541
Currency forward agreements .............. — — 94 94
(t) Environmental Expenditures
Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations
are expensed or capitalized as appropriate. The Company determines its liability on a site-by-site basis and
records a liability at the time when it is probable that a liability has been incurred and such liability can be
reasonably estimated. The estimated liability is not reduced for possible recoveries from insurance carriers.
(u) Reclassifications
Certain prior year amounts have been reclassified to conform with the current year presentation.
(v) Comprehensive Income
Comprehensive income includes foreign currency translation of assets and liabilities of foreign subsidiaries,
effects of exchange rate changes on intercompany balances of a long-term nature and transactions designated as a
hedge of net foreign investments, derivative financial instruments designated as cash flow hedges, and additional
minimum pension liabilities associated with the Company’s pension plans. Except for the currency translation
impact of the Company’s intercompany debt of a long-term nature, the Company does not provide income taxes
on currency translation adjustments, as earnings from international subsidiaries are considered to be indefinitely
reinvested.
Amounts recorded in Accumulated other comprehensive income (loss) on the Consolidated Statements of
Shareholders’ Equity for the years ended September 30, 2004, 2003 and 2002 are net of tax expense (benefit) in
the amount of:
Pension
Adjustment
Cash
Flow Hedges
Translation
Adjustment Total
2004 ............................ $1,356 $3,009 $(2,378) $ 1,987
2003 ............................ (4,744) 76 — (4,668)
2002 ............................ — (689) — (689)
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