Energizer 2000 Annual Report Download - page 29

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Impairment of Long-Lived Assets – Energizer reviews long-
lived assets, including goodwill and other intangible assets, for
impairment whenever events or changes in business circumstances
indicate that the remaining useful life may warrant revision or that
the carrying amount of the long-lived asset may not be fully recov-
erable. Energizer performs undiscounted cash flow analyses to
determine if an impairment exists. If an impairment is determined to
exist, any related impairment loss is calculated based on fair value.
Impairment losses on assets to be disposed of, if any, are based on
the estimated proceeds to be received, less costs of disposal.
Revenue Recognition – Revenue is recognized upon shipment
of product to customers. Sales discounts, returns and allowances
are included in net sales, and the provision for doubtful accounts
is included in selling, general and administrative expenses in the
Consolidated Statement of Earnings.
Advertising and Promotion Costs – Energizer advertises
and promotes its products through national and regional media.
Products are also advertised and promoted through cooperative
programs with retailers. Energizer expenses advertising and promo-
tion costs as incurred. Due to the seasonality of the business, with
typically higher sales and volume during the holidays in the first
quarter, advertising and promotion costs incurred during interim
periods are generally expensed ratably in relation to revenues.
Research and Development Costs – Research and develop-
ment costs are expensed as incurred.
Income Taxes – Energizer follows the liability method of
accounting for income taxes. Deferred income taxes are recognized
for the effect of temporary differences between financial and tax
reporting. No additional U.S. taxes have been provided on earnings
of foreign subsidiaries expected to be reinvested indefinitely.
Additional income taxes are provided, however, on planned
repatriation of foreign earnings after taking into account tax-exempt
earnings and applicable foreign tax credits. Management assesses
the realizability of deferred tax assets and provides valuation
allowances as deemed necessary.
Earnings Per Share – Basic earnings per share is based on the
average number of shares outstanding during the period subsequent
to the spin-off. Diluted earnings per share is based on the average
number of shares used for the basic earnings per share calculation,
adjusted for the dilutive effect of stock options and restricted stock
equivalents. For all periods prior to the spin-off, shares used in the
earnings per share calculation are based on the weighted-average
number of shares of Ralston common stock outstanding adjusted
for the distribution of one share of Energizer stock for each three
shares of Ralston stock.
Accounting for Stock-Based Compensation – Energizer
accounts for stock options using the intrinsic value method as
prescribed by Accounting Principles Board Opinion No. 25 (APB
25). Pro forma disclosures required under Statement of Financial
Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based
Compensation,” as if Energizer had adopted the fair value based
method of accounting for stock options, are presented in Note 8 to
the Consolidated Financial Statements.
Environmental Remediation Liabilities – Accruals for
environmental remediation are recorded when it is probable that a
liability has been incurred and the amount of the liability can be
reasonably estimated, based on current law and existing technolo-
gies. These accruals are adjusted periodically as assessments take
place and remediation efforts progress, or as additional technical
or legal information becomes available.
Accruals for environmental remediation are included in other
current liabilities or other liabilities, depending on their nature,
in the Consolidated Balance Sheet and are recorded at
undiscounted amounts.
Reclassifications – Certain reclassifications have been
made to the prior year financial statements to conform to the
current presentation.