Energizer 2001 Annual Report Download - page 35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
(Dollars in millions except per share data)
The FASB issued SFAS No. 144, ""Accounting for the Impairment or Disposal of Long-Lived Assets,''
which provides guidance on the accounting for the impairment or disposal of long-lived assets. The provisions
of this statement are eÅective for Ñnancial statements issued for Ñscal years beginning after December 15,
2001, and interim periods within those Ñscal years, although early adoption is allowed. Energizer is currently
evaluating the impact of SFAS 144 on its Ñnancial statements.
The Emerging Issues Task Force (EITF) issued EITF 00-10, ""Accounting for Shipping and Handling
Fees and Costs,'' which provides guidance on earnings statement classiÑcation of amounts billed to customers
for shipping and handling. Energizer adopted EITF 00-10 in its fourth quarter of Ñscal 2001. ReclassiÑcations
were necessary from net sales to cost of products sold and were $34.4, $36.1 and $32.7 for 2001, 2000 and
1999, respectively. In addition, warehousing costs in selling, general and administrative expense of $31.1, $33.2
and $28.9 in 2001, 2000 and 1999, respectively, were reclassiÑed to cost of products sold. There was no impact
to net earnings.
The EITF also issued EITF 00-14 and 00-25. EITF 00-14, ""Accounting for Certain Sales Incentives,''
provides guidance on accounting for discounts, coupons, rebates and free product. EITF 00-25, ""Vendor
Income Statement Characterization of Consideration from a Vendor to a Retailer,'' provides guidance on
accounting for considerations other than those directly addressed in EITF 00-14. Energizer adopted
EITF 00-14 and 00-25 in its fourth quarter of Ñscal 2001. ReclassiÑcations were necessary from advertising
and promotion expense to net sales and were $28.3, $22.7 and $26.5 for 2001, 2000 and 1999, respectively.
There was no impact to net earnings.
(3) Related Party Activity
Cash Management Ó Prior to the spin-oÅ, 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 Ó 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, beneÑts
and advertising. Ralston also provided facilities for Energizer's headquarters through July 31, 2001, when
Energizer relocated its headquarters. Prior to the spin-oÅ, the expenses related to shared services listed above,
as well as legal and Ñnancial support services, were allocated to Energizer generally based on utilization, which
management believes to be reasonable. Costs of these shared services charged to Energizer were $9.6 and
$20.0 for the six months ended March 31, 2000, and year ended September 30, 1999, respectively.
Ralston's Net Investment Ó Included in Ralston's Net Investment are cumulative translation adjustments
for non-hyperinÖationary 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.
(4) Discontinued Operations
On November 1, 1999, the OEM business was sold to Moltech Corporation for approximately $20.0. This
segment is accounted for as a discontinued operation in Energizer's consolidated Ñnancial statements.
In Ñscal 2000, Energizer recognized an after-tax gain of $1.2 on the disposition of discontinued operations
related to the Ñnal settlement of the sale transaction.
Included in the Ñscal year 1999 Net Loss on Disposition of Discontinued Operations are estimated
operating losses during the divestment period of $15.0 pre-tax, or $9.6 after-tax, and a loss on disposition of
$95.6 pre-tax, or $64.6 after-tax. Actual pre-tax operating losses during the divestment period through
September 30, 1999 totaled $12.5.
32