Energizer 2006 Annual Report Download - page 42

ENERGIZER HOLDINGS, INC.
Notes to Consolidated Financial Statements
(Dollars in millions, except per share and percentage data)
40 ENR 2006 ANNUAL REPORT
ALLOWANCE FOR DOUBTFUL ACCOUNTS
2006 2005 2004
Balance at beginning of year $ 12.5 $ 15.0 $ 9.8
Provision charged to expense, net of reversals –0.8 3.4
Write-offs, less recoveries (1.6) (3.3) (2.5)
Special purpose entity ––4.3
Balance at end of year $ 10.9 $ 12.5 $ 15.0
INCOME TAX VALUATION ALLOWANCE
2006 2005 2004
Balance at beginning of year $ 15.1 $ 24.7 $ 27.3
Provision charged to expense 1.8 4.9 13.5
Reversal of provision charged to expense (5.7) (14.7) (13.6)
Translation (0.5) 0.2 (2.5)
Balance at end of year $ 10.7 $ 15.1 $ 24.7
SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION
2006 2005 2004
Interest paid $ 66.7 $ 48.1 $ 32.0
Income taxes paid 113.3 86.4 72.9
17. Segment Information
Operations for the Company are managed via three major segments -
North America Battery (U.S. and Canada battery and lighting products),
International Battery (rest of world battery and lighting products) and
Razors and Blades (global razors, blades, and related products). The
Company reports segment results reflecting all profit derived from each
outside customer sale in the region in which the customer is located.
Research and development costs for the battery segments are com-
bined and included in the Total Battery segment results. Research and
development costs for Razors and Blades are included in that seg-
ment’s results. Segment performance is evaluated based on segment
operating profit exclusive of general corporate expenses, share-based
compensation costs, costs associated with most restructuring, integra-
tion or business realignment and amortization of intangible assets.
Financial items, such as interest income and expense, are managed on
a global basis at the corporate level. This structure is the basis for the
Company’s reportable operating segment information.
The Company’s operating model includes a combination of stand-
alone and combined business functions between the battery and razor
and blades businesses, varying by country and region of the world.
Shared functions include product warehousing and distribution, various
transaction processing functions, and environmental activities, and in
some countries, combined sales forces and management. Beginning in
fiscal 2006, the Company applied a fully allocated cost basis, in which
shared business functions are allocated between the businesses. Prior
years were adjusted to this same basis and reconciliations, including
the aforementioned SFAS 123R adjustment, are presented in Note 18
to the Consolidated Financial Statements. Such allocations do not rep-
resent the costs of such services if performed on a stand-alone basis.
Wal-Mart Stores, Inc. and its subsidiaries accounted for 18.5%, 17.5%
and 16.6% of total net sales in 2006, 2005 and 2004, respectively,
prima
rily in North America. Corporate assets shown in the following
table include all cash and cash equivalents, financial instruments,
pension assets and deferred tax assets that are managed outside of
operating segments.