state-designated site. Liability under the applicable federal and state statutes which mandate cleanup is strict, meaning that liability may attach regardless of lack of fault, and joint and several, meaning that a liable party may be responsible for all of the costs incurred in investigating and cleaning up contamination at a site. However,  liability in such matters is typically shared by all of the financially viable responsible parties. The amount of Energizer’s ultimate liability in connection with those sites may depend on many factors, including the volume and toxicity of material contributed to the site, the number of other PRPs and their financial viability, and the remediation methods and technology to be used. In addition, Energizer undertook certain programs to reduce or eliminate the environmental contamination at the rechargeable  battery facility in Gainesville, Florida, which was divested in  1999. In the event that the buyer would become unable to continue such programs, Energizer could be required to bear financial responsibility for such programs as well as for other known and unknown environmental conditions at the site.  Many European countries, as well as the European Union, have been very active in adopting and enforcing environmental regulations. In many developing countries in which Energizer operates, there has not been significant governmental regulation relating to the environ- ment, occupational safety, employment practices or other business matters routinely regulated in the United States. As such economies develop, it is possible that new regulations may increase the risk and expense of doing business in such countries.  It is difficult to quantify with certainty the potential financial impact of actions regarding expenditures for environmental matters, particu- larly remediation and future capital expenditures for environmental control equipment. Nevertheless, based upon the information cur- rently available, Energizer believes that its ultimate liability arising from such environmental matters, taking into account established accruals of $3.6 for estimated liabilities, should not be material to  its financial position. Such liability could, however, be material  to results of operations or cash flows for a particular quarter or annual period.  Energizer’s hedging strategy involves the use of natural hedging  techniques, where possible, such as the offsetting or netting of  like foreign currency cash flows. Where natural hedging techniques are not possible, foreign currency derivatives with durations of gen- erally one year or less may be used, including forward exchange contracts, purchased put and call options, and zero-cost option  collars. Energizer policy allows foreign currency derivatives to be used only for identifiable foreign currency exposures and, therefore, Energizer employs a foreign currency hedging strategy which  focuses on mitigating potential losses in earnings or cash flows on foreign currency transactions, primarily anticipated intercompany purchase transactions and intercompany borrowings. External pur- chase transactions and intercompany dividends and service fees with foreign currency risk are also hedged from time to time. The primary currencies to which Energizer’s foreign affiliates are exposed include the U.S. dollar, euro, Singapore dollar, Indonesian rupiah and British pound, while domestic affiliates are primarily exposed  to the Swiss franc.  Foreign Currency Exchange Rates  Interest Rates 17 Energizer has interest-rate risk with respect to interest expense on variable rate debt. At September 30, 2000 and 1999, Energizer had $330.0 and $120.7 variable rate debt outstanding. A hypothetical 10% adverse change in all interest rates would have had an annual unfavorable impact of $2.6 and $.9 in 2000 and 1999, respectively, on Energizer’s earnings and cash flows based upon these year-end debt levels. The primary interest rate exposures on variable rate debt are with respect to U.S. rates and short-term local currency rates in certain Asian and Latin American countries.  The market risk inherent in Energizer’s financial instruments and positions represents the potential loss arising from adverse changes in interest rates and foreign currency exchange rates. The following risk management discussion and the estimated amounts generated from the sensitivity analyses are forward-looking statements of  market risk assuming certain adverse market conditions occur.  MARKET RISK SENSITIVE INSTRUMENTS  AND POSITIONS