Rayovac 2011 Annual Report Download - page 88

Restructuring and related charges reflected in operating expenses include, but are not limited to, termination and
related costs, any asset impairments relating to the administrative functions and other costs directly related to the
initiatives implemented.
See Note 14, Restructuring and Related Charges, of Notes to Consolidated Financial Statements included in
this Annual Report on Form 10-K for a more complete discussion of our restructuring initiatives and related costs.
Acquisition and Integration Related Charges
The costs of plans to (i) exit an activity of an acquired company,(ii) involuntarily terminate employees of
an acquired company or (iii) relocate employees of an acquired company are measured and recorded in
accordance with the provisions of the ASC 805. Under ASC 805, if certain conditions are met, such costs are
recognized as a liability assumed as of the consummation date of the purchase business combination and
included in the allocation of the acquisition cost. Costs related to terminated activities or employees of the
acquired company that do not meet the conditions prescribed in ASC 805 are treated as acquisition and
integration related charges and expensed as incurred.
Loss Contingencies
Loss contingencies are recorded as liabilities when it is probable that a loss has been incurred and the
amount of the loss can be reasonably estimated. The outcome of existing litigation, the impact of environmental
matters and pending or potential examinations by various taxing authorities are examples of situations evaluated
as loss contingencies. Estimating the probability and magnitude of losses is often dependent upon management’s
judgment of potential actions by third parties and regulators. It is possible that changes in estimates or an
increased probability of an unfavorable outcome could materially affect our business, financial condition or
results of operations.
See further discussion in Item 3, Legal Proceedings, and Note 12, Commitments and Contingencies, of
Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Other Significant Accounting Policies
Other significant accounting policies, primarily those with lower levels of uncertainty than those discussed
above, are also critical to understanding the Consolidated Financial Statements included in this Annual Report on
Form 10-K. The Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K
contain additional information related to our accounting policies, including recent accounting pronouncements,
and should be read in conjunction with this discussion.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk Factors
We have market risk exposure from changes in interest rates, foreign currency exchange rates and
commodity prices. We use derivative financial instruments for purposes other than trading to mitigate the risk
from such exposures.
A discussion of our accounting policies for derivative financial instruments is included in Note 7, Derivative
Financial Instruments, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Interest Rate Risk
We have bank lines of credit at variable interest rates. The general level of U.S. interest rates, LIBOR and
EURIBOR affect interest expense. We use interest rate swaps to manage such risk. The net amounts to be paid or
received under interest rate swap agreements are accrued as interest rates change, and are recognized over the life
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