Energizer 2003 Annual Report Download - page 32

Page 30 ENR 2003 ANNUAL REPORT
5. ACCOUNTS RECEIVABLE WRITE-DOWN
On January 23, 2002, Kmart filed for Chapter 11 bankruptcy protection.
Energizer’s Special Purpose Entity (SPE) (see Note 14) had pre-petition
accounts receivable from Kmart Corporation of $20.0. In the year ended
September 30, 2002, Energizer recorded total charges related to such
receivables of $15.0 pre-tax, or $9.3 after-tax. A tentative settlement
with pre-petition creditors was approved by the bankruptcy court. The
tentative settlement would result in minimal additional write-off of the
remaining receivable. The final settlement has not yet occurred.
6. INTELLECTUAL PROPERTY RIGHTS INCOME
Energizer entered into agreements to license certain intellectual property
to other parties in three separate transactions. Such agreements do not
require any future performance by Energizer. Thus, all committed consider-
ation was recorded as income at the time each agreement was executed.
Energizer recorded income related to such agreements of $8.5 pre-tax, or
$5.2 after-tax, and $20.0 pre-tax, or $12.3 after-tax, in the years ended
September 30, 2003 and 2001, respectively.
7. GOODWILL AND INTANGIBLE ASSETS AND AMORTIZATION
Energizer monitors changing business conditions, which may indicate
that the remaining useful life of goodwill and other intangible assets
may warrant revision or carrying amounts may require adjustment.
Continuing unfavorable business trends in Europe and the unfavorable
costs of U.S. dollar-based products resulting from currency declines rep-
resented such conditions. As part of its annual business planning cycle,
Energizer performed an evaluation of its European business in the fourth
quarter of fiscal 2001, which resulted in a provision for goodwill impair-
ment of $119.0. As of September 30, 2001, the remaining carrying
amount of goodwill related to Energizer’s European business after the
provision for impairment was $8.5.
On October 1, 2001, Energizer adopted SFAS 142, “Goodwill and
Intangible Assets.” SFAS 142 eliminates the amortization of goodwill
and instead requires that goodwill be tested for impairment at least
annually. Intangible assets deemed to have an indefinite life under
SFAS 142 are no longer amortized, but instead reviewed at least
annually for impairment. Intangible assets with finite lives are amor-
tized over those useful lives.
As businesses have been acquired in the past, Energizer has allocated
goodwill and other intangible assets to reporting units within each
operating segment. Energizer’s intangible assets are comprised of
trademarks related to the Energizer name, which are deemed indefi-
nite-lived intangibles. Thus beginning in fiscal 2002, these trademarks
are no longer amortized.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued
(Dollars in millions, except per share data)
The following table presents, by major cost component and by year of provision, activity related to the restructuring charges discussed above during
fiscal years 2003, 2002 and 2001, including any adjustments to the original charges:
2001 Rollforward 2002 Rollforward 2003 Rollforward
Beginning Provision/ Ending Beginning Provision/ Ending Beginning Provision/ Ending
Balance (Reversals) Activity Balance Balance (Reversals) Activity Balance Balance (Reversals) Activity Balance
2001 PLAN
Termination benefits $ – $ 14.6 $ (9.3) $ 5.3 $ 5.3 $ 1.3 $ (5.7) $ 0.9 $ 0.9 $ – $ (0.9) $ –
Other cash costs – 4.1 (0.2) 3.9 3.9 0.1 (3.8) 0.2 0.2 – (0.2) –
Fixed asset impairments – 11.1 (11.1) – – (0.4) 0.4 – – – – –
Total – 29.8 (20.6) 9.2 9.2 1.0 (9.1) 1.1 1.1 – (1.1) –
2002 PLAN
Termination benefits – – – – – 5.7 (0.3) 5.4 5.4 (1.1) (3.2) 1.1
Other cash costs – – – – – 1.0 (0.2) 0.8 0.8 – (0.8) –
Total – – – – – 6.7 (0.5) 6.2 6.2 (1.1) (4.0) 1.1
2003 PLAN
Termination benefits – – – – – – – – – 1.2 – 1.2
Other cash costs – – – – – – – – – 0.1 – 0.1
Total ––––––––– 1.3 – 1.3
Grand Total $ – $ 29.8 $ (20.6) $ 9.2 $ 9.2 $ 7.7 $ (9.6) $ 7.3 $ 7.3 $ 0.2 $ (5.1) $ 2.4