Rayovac 2013 Annual Report Download - page 79

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Commodity Price Risk
We are exposed to fluctuations in market prices for purchases of zinc and brass used in our manufacturing
processes. We use commodity swaps and calls to manage such risk. The maturity of, and the quantities covered
by, the contracts are closely correlated to our anticipated purchases of the commodity. The cost of calls is
amortized over the life of the contracts and recorded in cost of goods sold, along with the effects of the swap and
call contracts. The related amounts payable to, or receivable from, the counter-parties are included in accounts
payable or accounts receivable.
Sensitivity Analysis
The analysis below is hypothetical and should not be considered a projection of future risks. Earnings
projections are before tax.
At September 30, 2013, assuming a 1 percent unfavorable shift in interest rates of our variable rate Term
Loan, there would be no financial impact as the underlying interest rates are currently greater than 1 percent
below the floor of our variable rate Term Loan. At September 30, 2013, there were no outstanding interest rate
derivative instruments.
At September 30, 2013, the potential change in fair value of outstanding foreign exchange derivative
instruments, assuming a 10% unfavorable change in the underlying exchange rates, would be a loss of
$35 million. The net impact on reported earnings, after also including the effect of the change in the underlying
foreign currency-denominated exposures, would be a net gain of $17 million.
At September 30, 2013, the potential change in fair value of outstanding commodity price derivative
instruments, assuming a 10% unfavorable change in the underlying commodity prices, would be a loss of
$2 million. The net impact on reported earnings, after also including the reduction in cost of one year’s purchases
of the related commodities due to the same change in commodity prices, would be a gain of $1 million.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required for this Item is included in this Annual Report on Form 10-K within Item 15,
Exhibits, Financial Statements and Schedules, inclusive and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our principal
executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) pursuant to Rule
13a-15(b) under the Exchange Act as of the end of the period covered by this Annual Report on Form 10-K.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such
date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by
us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in applicable SEC rules and forms, and is accumulated and communicated to
the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure.
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