Energizer 2007 Annual Report Download - page 32

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Energizer Holdings, Inc. 2007 Annual Report
The deferred tax assets and deferred tax liabilities recorded on
the balance sheet as of September 30 are as follows and include
current and noncurrent amounts:
2007 2006
Deferred tax liabilities:
Depreciation and property differences $ (71.0) $ (80.8)
Intangible assets (39.4) (41.7)
Pension plans (33.8) (30.9)
Other tax liabilities (9.8) (3.2)
Gross deferred tax liabilities (154.0) (156.6)
Deferred tax assets:
Accrued liabilities 73.3 63.9
Deferred and stock-related compensation 92.3 69.7
Tax loss carryforwards and tax credits 21.2 24.0
Intangible assets 35.3 36.7
Postretirement benefits other than pensions 10.6 28.4
Inventory differences 19.4 18.9
Other tax assets 19.0 31.2
Gross deferred tax assets 271.1 272.8
Valuation allowance (4.9) (10.7)
Net deferred tax assets $ 112.2 $ 105.5
There were no material tax loss carryforwards that expired in
2007. Future expirations of tax loss carryforwards and tax credits,
if not utilized, are as follows: 2008, $1.0; 2009, $0.6; 2010, $0.4;
2011, $1.5; 2012, $0.2; thereafter or no expiration, $17.5. The
valuation allowance is attributed to tax loss carryforwards and tax
credits outside the U.S. The valuation allowance decreased $5.8 in
2007 primarily due to projected utilization in future years that are
deemed more likely than not.
At September 30, 2007, approximately $510 of foreign sub-
sidiary retained earnings was considered indefinitely invested in
those businesses. U.S. income taxes have not been provided for
such earnings. It is not practicable to determine the amount of
unrecognized deferred tax liabilities associated with such earnings.
5. Restructuring and Related Charges
The Company continually reviews its battery and razors and
blades business models to identify potential improvements and
cost savings. A project commenced in 2006 to improve effective-
ness and reduce costs of European packaging, warehouse and
distribution activities, including the closing of the Company’s
battery packaging facility in Caudebec, France, as well as consoli-
dation of warehouse and distribution activities. The Company also
commenced a project to integrate battery and razors and blades
commercial management, sales and administrative functions in
certain European countries. In 2007, total pre-tax charges related
to these projects were $18.2, and include exit costs of $7.0 which
represent employee severance and contract terminations, as well
as $11.2 for other non-exit costs related to the project. Virtually
all of these costs in 2007 were recorded in SG&A expense. Total
pre-tax charges related to the projects were $37.4 in fiscal 2006,
and include exit costs of $28.2 which represented employee sever-
ance, contract terminations and other exit costs, as well as $9.2
for other costs related to the project. In 2006, $8.0 of these costs
were reflected in cost of products sold and $29.4 on SG&A
expense.
Total Contract Other Exit Total Exit
Severance Terminations Costs Costs
Provision $ 23.0 $ 3.1 $ 2.1 $ 28.2
Activity (5.6) (0.1) (0.4) (6.1)
Balance at September 30, 2006 $ 17.4 $ 3.0 $ 1.7 $ 22.1
Provision 5.7 1.3 – 7.0
Activity (18.1) (2.9) (1.7) (22.7)
Balance at September 30, 2007 $ 5.0 $ 1.4 – $ 6.4
Notes to Consolidated Financial Statements
(Dollars in millions, except per share and percentage data)