Rayovac 2011 Annual Report Download - page 140

SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(In thousands, except per share amounts)
Segment profit
Successor
Company
Predecessor
Company
2011 2010
Period from
August 31, 2009
through
September 30,
2009
Period from
October 1, 2008
through
August 30,
2009
Global Batteries & Appliances .................... $238,864 $ 171,298 $ 6,242 $165,633
Global Pet Supplies ............................. 75,564 57,675 3,269 62,365
Home and Garden Business ...................... 65,180 51,192 (4,573) 46,458
Total segments ................................ 379,608 280,165 4,938 274,456
Corporate expenses ............................. 53,967 48,817 3,100 39,180
Acquisition and integration related charges .......... 36,603 38,452 — —
Restructuring and related charges .................. 28,644 24,118 1,729 44,080
Intangible asset impairment ...................... 32,450 — — 34,391
Interest expense ................................ 208,329 277,015 16,962 172,940
Other expense (income), net ...................... 2,491 12,300 (815) 3,320
Income (loss) from continuing operations before
reorganization items income taxes ............... $ 17,124 $(120,537) $(16,038) $ (19,455)
The Global Batteries & Appliances segment does business in Venezuela through a Venezuelan subsidiary.
At January 4, 2010, the beginning of the Company’s second quarter of Fiscal 2010, the Company determined that
Venezuela met the definition of a highly inflationary economy under GAAP. As a result, beginning January 4,
2010, the U.S. dollar is the functional currency for the Company’s Venezuelan subsidiary. Accordingly, going
forward, currency remeasurement adjustments for this subsidiary’s financial statements and other transactional
foreign exchange gains and losses are reflected in earnings. Through January 3, 2010, prior to being designated
as highly inflationary, translation adjustments related to the Venezuelan subsidiary were reflected in
Shareholders’ equity as a component of AOCI.
In addition, on January 8, 2010, the Venezuelan government announced its intention to devalue its currency,
the Bolivar fuerte, relative to the U.S. dollar. As a result, the Company remeasured the local statement of
financial position of its Venezuela entity during the second quarter of Fiscal 2010 to reflect the impact of the
devaluation to the official exchange rate of 4.3 Bolivar fuerte per U.S. dollar. Based on actual exchange activity
as of September 30, 2010, the Company determined that the most likely method of exchanging its Bolivar fuertes
for U.S. dollars would be to formally apply with the Venezuelan government to exchange through commercial
banks at the SITME rate specified by the Central Bank of Venezuela. The SITME rate as of September 30, 2010
was quoted at 5.3 Bolivar fuerte per U.S. dollar. Therefore, the Company changed the rate used to remeasure
Bolivar fuerte denominated transactions as of September 30, 2010 from the official exchange rate to the 5.3
SITME rate in accordance with ASC Topic 830: “Foreign Currency Matters” (“ASC 830) as it was the expected
rate at which exchanges of Bolivar fuerte to U.S. dollars would be settled.
The designation of the Company’s Venezuela entity as a highly inflationary economy and the devaluation of
the Bolivar fuerte resulted in a $1,486 reduction to the Company’s operating income during Fiscal 2010. The
Company also reported a foreign exchange loss in Other expense (income), net, of $10,102 during Fiscal 2010
related to Bolivar fuerte denominated transactions.
130