Energizer 2013 Annual Report Download - page 73

ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share)
The Company offers a variety of programs, such as consumer coupons and similar consumer rebate programs, primarily to its
retail customers, designed to promote sales of its products. Such programs require periodic payments and allowances based on
estimated results of specific programs and are recorded as a reduction to net sales. The Company accrues, at the time of sale,
the estimated total payments and allowances associated with each transaction. Additionally, the Company offers programs
directly to consumers to promote the sale of its products. Promotions which reduce the ultimate consumer sale prices are
recorded as a reduction of net sales at the time the promotional offer is made, generally using estimated redemption and
participation levels. Taxes we collect on behalf of governmental authorities, which are generally included in the price to the
customer, are also recorded as a reduction of net sales. The Company continually assesses the adequacy of accruals for
customer and consumer promotional program costs not yet paid. To the extent total program payments differ from estimates,
adjustments may be necessary. Historically, these adjustments have not been material.
Advertising and Sales Promotion Costs – The Company advertises and promotes its products through national and regional
media and expenses such activities as incurred.
Share-Based Payments – The Company grants restricted stock equivalents, which generally vest over three to four years. A
portion of the restricted stock equivalents granted provide for the issuance of common stock to certain managerial staff and
executive management, if the Company achieves specified performance targets. The estimated fair value of each grant issued
is estimated on the date of grant based on the current market price of the stock, as adjusted for the impact to the grant date fair
value of the inclusion of a total shareholder return modifier for those performance awards containing such a provision. The
total amount of compensation expense recognized reflects the initial assumption that target performance goals will be achieved.
Compensation expense may be adjusted during the life of the performance grant based on management’s assessment of the
probability that performance targets will be achieved. If such targets are not met or, it is determined that achievement of
performance goals is not probable, compensation expense is adjusted to reflect the reduced expected payout level in the period
the determination is made. If it is determined that the performance targets will be exceeded, additional compensation expense is
recognized.
Estimated Fair Values of Financial Instruments – Certain financial instruments are required to be recorded at the estimated
fair value. Changes in assumptions or estimation methods could affect the fair value estimates; however, we do not believe any
such changes would have a material impact on our financial condition, results of operations or cash flows. Other financial
instruments including cash and cash equivalents and short-term borrowings, including notes payable, are recorded at cost,
which approximates estimated fair value. The estimated fair values of long-term debt and financial instruments are disclosed in
Note 14 of the Notes to Consolidated Financial Statements.
Reclassifications – Certain reclassifications have been made to the prior year financial statements to conform to the current
presentation.
Recently Issued Accounting Pronouncements – No new accounting pronouncement issued or effective during the fiscal year
has had or is expected to have a material impact on the consolidated financial statements.
On January 31, 2013, the Financial Accounting Standards Board (FASB) issued a new accounting standard update (ASU) to
clarify the scope of disclosures about offsetting assets and liabilities. The standard limits the scope of the new balance sheet
offsetting disclosures to derivatives, repurchase agreements and securities lending transactions to the extent they are offset in
the financial statements or subject to an enforceable master netting arrangement or similar agreement. This standard will be
applied on a retrospective basis beginning on October 1, 2013 and the impact will not be material to the Company's financial
statements.
On February 5, 2013, the FASB issued a new ASU on reporting of amounts reclassified out of accumulated other
comprehensive income. The standard requires that public companies present information about reclassification adjustments
from accumulated other comprehensive income in their interim and annual financial statements in a single note or on the face
of the financial statements or cross reference to the related footnote for additional information. This standard will be applied on
a prospective basis beginning on October 1, 2013 and the impact will not be material to the Company's financial statements.
(3) Restructuring
2013 Restructuring
In November 2012, the Company’s Board of Directors authorized an enterprise-wide restructuring plan and delegated authority
to the Company’s management to determine the final actions with respect to this plan.
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