Rayovac 2011 Annual Report Download - page 121

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SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(In thousands, except per share amounts)
At September 30, 2010, the Company had aggregate borrowing availability of approximately $225,255, net
of lender reserves of $28,972 and outstanding letters of credit of $36,969.
(7) Derivative Financial Instruments
Derivative financial instruments are used by the Company principally in the management of its interest rate,
foreign currency exchange rate 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 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.
The Company discloses its derivative instruments and hedging activities in accordance with ASC Topic
815: “Derivatives and Hedging,” (“ASC 815”).
The fair value of outstanding derivative contracts recorded as assets in the accompanying Consolidated
Statements of Financial Position were as follows:
Asset Derivatives
September 30,
2011
September 30,
2010
Derivatives designated as hedging instruments under
ASC 815:
Commodity contracts .......................... Receivables—Other $ 274 $2,371
Commodity contracts .......................... Deferred charges and other — 1,543
Foreign exchange contracts ..................... Receivables—Other 3,189 20
Foreign exchange contracts ..................... Deferred charges and other — 55
Total asset derivatives designated as hedging
instruments under ASC 815 ............... $3,463 $3,989
Derivatives not designated as hedging
instruments under ASC 815:
Foreign exchange contracts ................. Receivables—Other — —
Total asset derivatives ......................... $3,463 $3,989
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