Energizer 2009 Annual Report Download - page 33

ENERGIZER HOLDINGS INC. 2009 ANNUAL REPORT PAGE 31
concentration risk within or across the plan asset categories and
disclosure on fair value measurements similar to those required
in the accounting guidance related to Fair Value Measurements.
These disclosures will be applied on a prospective basis beginning
October 1, 2009 for Energizer.
On June 30, 2009, we adopted new accounting guidance on sub-
sequent events. This new guidance is intended to establish general
standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued.
This new guidance requires the disclosure of the date through
which an entity has evaluated subsequent events and the basis
for that date. The Company has included this disclosure in Note 1
of the Notes to Consolidated Financial Statements.
On June 30, 2009, we adopted new accounting guidance on interim
disclosures about Fair Value of Financial Instruments. This guidance
requires companies to include disclosures about the fair value of its
financial instruments whenever it issues summarized financial informa-
tion for interim reporting periods. These disclosures include the fair
value of all financial instruments for which it is practicable to estimate
that value and the methods and significant assumptions used to
estimate the fair value of financial instruments. The Company has
included this disclosure in Note 14 of the Notes to Consolidated
Financial Statements.
On September 30, 2009, we adopted new accounting guidance for
the “FASB Accounting Standards Codification” as the single official
source of authoritative, nongovernmental U.S. Generally Accepted
Accounting Principles (GAAP). The Codification is applied to all of
the Notes to Consolidated Financial Statements.
3. Shave Preparation Acquisition
On June 5, 2009, the Company completed its acquisition of the Edge
and Skintimate shave preparation brands (the Acquisition) from S.C.
Johnson & Son, Inc. (SCJ) for $275.0. The Acquisition was funded
with proceeds from the completed common stock offering on May
20, 2009. See Note 13 of the Notes to Consolidated Financial State-
ments for further information. As leading brands in the U.S. men’s
and women’s shave preparation category, Edge and Skintimate are
a logical adjacency to the Company’s existing wet shave business
conducted in the United States (U.S.) under the Schick brand. The
Acquisition consists primarily of intellectual property, finished goods
inventory and equipment directly associated with the manufacture
of the shave preparation products. SCJ will continue to manufacture
product for Energizer under a supply agreement with an initial term of
3 years, with two optional one-year renewals. No SCJ employees are
employed by Energizer and there are no contigent payments, options
or commitments associated with the Acquisition.
We have determined the fair values of assets acquired and liabilities
assumed for purposes of allocating the purchase price, in accordance
with accounting guidance for business combinations. For purposes of
the final allocation, the Company has estimated a fair value adjustment
for inventory based on the estimated selling price of the finished goods
acquired at the closing date less the sum of (a) costs of disposal and
(b) a reasonable profit allowance for the selling effort of the acquiring
entity. The fair value adjustment for the acquired equipment was
established using a cost approach. The fair values of the identifiable
intangible assets were estimated using various valuation methods
including discounted cash flows using both an income and
cost approach.
The allocation of the purchase price is as follows:
Inventory $ 12.2
Goodwill 120.9
Other intangible assets 135.0
Property, plant and equipment, net 8.0
Other current liabilities (1.1)
Net assets acquired $275.0
The purchased identifiable intangible assets are as follows:
Total
Amortization
Period
Tradenames/Brands $114.5 indefinite-lived
Patents 11.5 5 years
Customer Relationships 9.0 10 years
Total $135.0
4. Goodwill and Intangible Assets
Goodwill and intangible assets deemed to have an indefinite life are
not amortized, but reviewed annually for impairment of value. The
Company 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. As
part of its business planning cycle, the Company performed its annual
impairment test in the fourth quarter of fiscal 2009, 2008 and 2007.
Impairment testing was performed for each of the Company’s reporting
units: Household Products, Wet Shave and Playtex. No impairments
were identified and no adjustments were deemed necessary.
The following table represents the carrying amount of goodwill by
segment at September 30, 2009:
Household
Products
Personal
Care Total
Balance at October 1, 2008 $38.8 $1,167.6 $1,206.4
Acquisitions – 119.3 119.3
Cumulative translation
adjustment (1.7) 2.2 0.5
Balance at September 30,
2009 $37.1 $1,289.1 $1,326.2
The Company had indefinite-lived trademarks and tradenames of
$1,709.2 at September 30, 2009 and $1,591.0 at September 30, 2008.
Changes in indefinite-lived trademarks and tradenames are due primarily
to the valuation of assets acquired in the shave preparation acquisition and
changes in foreign currency translation.
Total amortizable intangible assets at September 30, 2009 are as follows:
Gross
Carrying
Amount
Accumulated
Amortization
Net
Tradenames $ 11.8 $ (7.9) $ 3.9
Technology and patents 53.4 (24.5) 28.9
Customer-related 64.5 (17.9) 46.6
Total amortizable intangible
assets $129.7 $(50.3) $79.4