Energizer 2000 Annual Report Download - page 30

ENERGIZER 2000 ANNUAL REPORT
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Recently Issued Accounting Pronouncements – In June
1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, “Accounting
for Derivative Instruments and Hedging Activities” (SFAS 133) and
in June 2000, issued Statement of Financial Accounting Standards
No. 138 (SFAS 138), an amendment of SFAS 133. These statements
are effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. The statements require the recognition of derivative
financial instruments on the balance sheet as assets or liabilities,
at fair value. Gains or losses resulting from changes in the value of
derivatives are accounted for depending on the intended use of the
derivative and whether it qualifies for hedge accounting. Accordingly,
Energizer has adopted the provisions of SFAS 133 as of the first
quarter of fiscal year 2001. Energizer has determined that the
implementation of this standard will not have a material effect
on its consolidated financial position or results of operations.
In December 1999, the Securities and Exchange Commission (SEC)
issued Staff Accounting Bulletin (SAB) 101, “Revenue Recognition
in Financial Statements.” SAB 101 provides guidance on recogni-
tion, presentation and disclosure of revenue in financial statements.
In addition, the Emerging Issues Task Force (EITF) issued EITF
00-10 and 00-14. EITF 00-10, “Accounting for Shipping and
Handling Fees and Costs,” provides guidance on earnings statement
classification of amounts billed to customers for shipping and
handling. EITF 00-14, “Accounting for Certain Sales Incentives,”
provides guidance on accounting for discounts, coupon, rebates
and free product. Energizer will be required to adopt SAB 101, EITF
00-10 and EITF 00-14 no later than the fourth quarter of fiscal year
2001. Energizer does not expect the adoption of these statements
to have a material effect on its results of operations, however, certain
reclassifications may be necessary.
In September 2000, FASB issued Statement of Financial Accounting
Standards No. 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities.” The statement
is effective for fiscal years ending after December 15, 2000. The
statement replaces FASB Statement No. 125 and revises the stan-
dards for accounting and disclosure for securitizations and other
transfers of financial assets and collateral. The statement carries
over most of SFAS 125’s provisions without reconsideration and,
as such, Energizer believes that the implementation of this standard
will not have a material effect on its consolidated financial position
or results of operations.
(3) RELATED PARTY ACTIVITY
Cash Management – Prior to the spin-off, Energizer participated
in a centralized cash management system administered by Ralston.
Cash deposits from Energizer were transferred to Ralston on a daily
basis and Ralston funded Energizer’s disbursement bank accounts
as required. Unpaid balances of checks were included in accounts
payable. No interest was charged or credited on transactions
with Ralston.
Shared Services – Energizer and Ralston have entered into a
Bridging Agreement under which Ralston has continued to provide
certain general and administrative services to Energizer, including
systems, benefits, advertising and facilities for Energizer’s headquar-
ters. Prior to the spin-off, the expenses related to shared services
listed above, as well as legal and financial support services, were
allocated to Energizer generally based on utilization, which manage-
ment believes to be reasonable. Costs of these shared services
charged to Energizer were $9.6, $20.0 and $20.9 for the six months
ended March 31, 2000 and years ended September 30, 1999 and
1998, respectively. Actual expenses paid by Energizer to Ralston
for such services were $4.0 for the six-month period subsequent
to the spin-off.
Ralston’s Net Investment – Included in Ralston’s Net Investment
are cumulative translation adjustments for non-hyperinflationary
countries of $84.6 as of March 31, 2000 representing net devaluation
of currencies relative to the U.S. dollar over the period of investment.
Also included in Ralston’s Net Investment are accounts payable and
receivable between Energizer and Ralston.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Dollars in millions except per share data)