Rayovac 2006 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2006 Rayovac annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

SPECTRUM BRANDS | 2006 ANNUAL REPORT 73
(s) Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, accounts
and notes receivable, accounts payable and short-term debt
approximate fair value. The fair values of long-term debt and
derivative fi nancial instruments are generally based on quoted
market prices.
The carrying value of fi nancial instruments approximate the
fair value of those instruments due to the applicable interest rates
being substantially at market (“fl oating”), except for $350,000 of
Senior Subordinated Notes due September 30, 2013 with inter-
est payable semiannually at 8.5% and $700,000 of Senior
Subordinated Notes due February 1, 2015 with interest payable
semiannually at 7.375%. The total fair value of these Notes at
September 30, 2006 was approximately $894,283. (See also
Note 2(r), Signifi cant Accounting Policies—Derivative Financial
Instruments, and Note 7, Debt).
The carrying amounts and fair values of the Company’s fi nan-
cial instruments are summarized as follows ((liability)/asset):
September 30,
2006 2005
Carrying Carrying
Amount Fair Value Amount Fair Value
Total debt $(2,277,171) $(2,121,454) $(2,307,333) $(2,226,833)
Interest rate
swap
agreements 11,584 11,584 2,180 2,180
Commodity
swap and option
agreements 5,347 5,347 478 478
Foreign exchange
forward
agreements 963 963 – –
(t) Environmental Expenditures
Environmental expenditures that relate to current ongoing
operations or to conditions caused by past operations are expensed
or capitalized as appropriate. The Company determines its liability
on a site-by-site basis and records a liability at the time when it is
probable that a liability has been incurred and such liability can be
reasonably estimated. The estimated liability is not reduced for
possible recoveries from insurance carriers. Estimated environ-
mental remediation expenditures are included in the determina-
tion of the net realizable value recorded for assets held for sale.
(u) Reclassifications
As of October 1, 2005, the Company began managing its
business in four reportable segments: (i) North America, which
consists of its legacy battery, shaving and grooming, personal care
and portable lighting business (the “Legacy Businesses”) in the
United States and Canada and the acquired United lawn and gar-
den and household insect control business (“North America”);
(ii) Latin America, which consists of the Legacy Businesses in
Mexico, Central America, South America and the Caribbean
(“Latin America”); (iii) Europe/ROW, which consists of the
Legacy Businesses in the United Kingdom, continental Europe,
China, Australia and all other countries in which the Company
conducts Legacy Businesses (“Europe/ROW”); and (iv) Global
Pet, which consists of the acquired United Pet Group, Tetra and
Jungle Labs businesses (together, “Global Pet”). The presentation
of all historical segment reporting herein has been changed to
conform to this segment reporting.
In addition, as of October 1, 2005, the Company began
reporting the results of operations of its fertilizer technology and
Canadian professional fertilizer products businesses of Nu-Gro
(“Nu-Gro Pro and Tech”) as discontinued operations. The presen-
tation of continuing operations has been reclassifi ed to exclude
Nu-Gro Pro and Tech.
On October 1, 2005 the Company adopted SFAS No. 123
(Revised 2004), “Share-Based Payment” (“SFAS 123(R)”) requiring
the Company to recognize expense related to the fair value of its
employee stock option awards. Prior to the adoption of SFAS
123(R), the Company presented all tax benefi ts of deductions
resulting from the exercise of stock options as operating cash
fl ows in the statement of cash fl ows. Beginning on October 1,
2005, the Company changed its cash presentation in accordance
with SFAS 123(R) and FASB Staff Position (“FSP”) FAS 123(R)-3,
“Transition Election Related to Accounting for Tax Effects of Share-Based
Payment Awards” (“FSP FAS 123(R)-3”) which require the cash
fl ows resulting from the tax benefi ts for these options to be clas-
sifi ed as fi nancing cash fl ows. The Company has reclassifi ed the
benefi t of deductions resulting from the exercise of stock options
from operating cash fl ows to fi nancing cash fl ows to conform to
this presentation.
Certain prior year amounts have been reclassifi ed to con-
form with the current year presentation. These reclassifi cations
had no effect on previously reported results of operations or
retained earnings.
2006 Form 10-K Annual Report
Spectrum Brands, Inc.