Rayovac 2008 Annual Report Download - page 134

Table of Contents
Index to Financial Statements
SPECTRUM BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
subject to a number of closing conditions, including, without limitation, consent of the Company’s lenders under its senior credit facilities. The Company was
unable to obtain the consent of the lenders under its senior credit facilities, and, on July 13, 2008, the Company entered into a termination agreement with Salton
and Applica to mutually terminate the definitive agreement. Pursuant to the termination agreement, as a condition to the termination, the Company paid Salton
and Applica $3,000 as a reimbursement of expenses.
On November 11, 2008, the Company announced the shutdown of the growing products portion of the Company’s Home and Garden Business, which
includes fertilizers, enriched soils, mulch and grass seed. See Note 17, Subsequent Events, for further details on the shutdown of the growing products portion of
the Company’s Home and Garden Business.
(2) Significant Accounting Policies and Practices
(a) Principles of Consolidation and Fiscal Year End
The consolidated financial statements include the financial statements of Spectrum Brands, Inc. and its subsidiaries and are prepared in accordance with generally
accepted accounting principles in the United States of America. All intercompany transactions have been eliminated. The Company’s fiscal year ends
September 30. References herein to Fiscal 2008, 2007 and 2006 refer to the fiscal years ended September 30, 2008, 2007 and 2006, respectively.
(b) Revenue Recognition
The Company recognizes revenue from product sales generally upon delivery to the customer or the shipping point in situations where the customer picks up the
product or where delivery terms so stipulate. This represents the point at which title and all risks and rewards of ownership of the product are passed, provided
that: there are no uncertainties regarding customer acceptance; there is persuasive evidence that an arrangement exists; the price to the buyer is fixed or
determinable; and collectibility is deemed reasonably assured. The Company is not obligated to allow for, and the Company’s general policy is not to accept,
product returns associated with battery sales. The Company does accept returns in specific instances related to its shaving, grooming, personal care, lawn and
garden, household and pet products. The provision for customer returns is based on historical sales and returns and other relevant information. The Company
estimates and accrues the cost of returns, which are treated as a reduction of Net sales.
The Company enters into various promotional arrangements, primarily with retail customers, including arrangements entitling such retailers to cash rebates
from the Company based on the level of their purchases, which require the Company to estimate and accrue the estimated costs of the promotional programs.
These costs are treated as a reduction of Net sales.
The Company also enters into promotional arrangements that target the ultimate consumer. Such arrangements are treated as either a reduction of Net sales
or an increase of Cost of goods sold, based on the type of promotional program. The income statement presentation of the Company’s promotional arrangements
complies with the Emerging Issues Task Force (EITF) No. 01-09, “Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the
Vendor’s Products).”
For all types of promotional arrangements and programs, the Company monitors its commitments and uses various measures, including past experience, to
determine amounts to be recorded for the estimate of the earned, but unpaid, promotional costs. The terms of the Company’s customer-related promotional
arrangements and programs are tailored to each customer and are documented through written contracts, correspondence or other communications with the
individual customers.
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008