Rayovac 2009 Annual Report Download - page 163

Table of Contents
Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
(r) Derivative Financial Instruments
Derivative financial instruments are used by the Company principally in the management of its interest rate, foreign currency and raw material price
exposures. The Company does not hold or issue derivative financial instruments for trading purposes. When hedge accounting is elected at inception, the
Company formally designates the financial instrument as a hedge of a specific underlying exposure if such criteria are met, and documents both the risk
management objectives and strategies for undertaking the hedge. The Company formally assesses, both at the inception and at least quarterly thereafter,
whether the financial instruments that are used in hedging transactions are effective at offsetting changes in the forecasted cash flows of the related
underlying exposure. Because of the high degree of effectiveness between the hedging instrument and the underlying exposure being hedged, fluctuations in
the value of the derivative instruments are generally offset by changes in the forecasted or cash flows of the underlying exposures being hedged. Any
ineffective portion of a financial instrument’s change in fair value is immediately recognized in earnings. For derivatives that are not designated as cash
flow hedges, or do not qualify for hedge accounting treatment, the change in the fair value is also immediately recognized in earnings.
Effective December 29, 2008, the Company adopted ASC Topic 815: “Derivatives and Hedging,” formerly SFAS No. 161, “Disclosures about
Derivative Instruments and Hedging Activities−an amendment to FASB Statement No. 133” (“ASC 815”). ASC 815 amends the disclosure requirements for
derivative instruments and hedging activities. Under the revised guidance entities are required to provide enhanced disclosures for derivative and hedging
activities.
The fair value of outstanding derivative contracts recorded as assets in the accompanying Consolidated Statements of Financial Position were as
follows:
Statement of Financial
Position Location
Successor
Company Predecessor Company
Asset Derivatives September 30, 2009 September 30, 2008
Derivatives designated as hedging instruments under ASC 815:
Commodity contracts Receivables—Other $ 2,861 $ 403
Commodity contracts Deferred charges and other 554 —
Foreign exchange contracts Receivables—Other 295 4,246
Foreign exchange contracts Deferred charges and other — 1,299
Total asset derivatives designated as hedging instruments under
ASC 815 $ 3,710 $ 5,948
Derivatives not designated as hedging instruments under ASC
815:
Foreign exchange contracts Receivables—Other 75 959
Total asset derivatives $ 3,785 $ 6,907
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