Rayovac 2009 Annual Report Download - page 61

Table of Contents
Index to Financial Statements
longer required in Brazil and thus recorded a $31 million benefit to reverse the valuation allowance previously established. Our total valuation allowance,
established for the tax benefit of deferred tax assets that may not be realized, is approximately $496 million at September 30, 2008. Of this amount,
approximately $468 million relates to U.S. net deferred tax assets and approximately $28 million relates to foreign net deferred tax assets.
ASC 350 requires companies to test goodwill and indefinite−lived intangible assets for impairment annually, or more often if an event or
circumstance indicates that an impairment loss may have been incurred. During Fiscal 2009 and Fiscal 2008, we recorded non− cash pretax impairment
charges of approximately $34 million and $861 million, respectively. The tax impact, prior to consideration of the current year valuation allowance, of the
impairment charges was a deferred tax benefit of approximately $13 million and $143 million, respectively. See “Goodwill and Intangibles Impairment”
above, as well as Note 3(c), Significant Accounting Policies and Practices—Intangible Assets, of Notes to Consolidated Financial Statements included in
this Annual Report on Form 10−K for additional information regarding these non−cash impairment charges.
ASC 740, which clarifies the accounting for uncertainty in tax positions, requires that we recognize in our financial statements the impact of a tax
position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. We adopted this provision on
October 1, 2007. As a result of the adoption, we recognized no cumulative effect adjustment. As of September 30, 2009, August 30, 2009 and
September 30, 2008, the total amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate in future periods is $8
million, $8 million and $7 million, respectively. See Note 10, Income Taxes, of Notes to Consolidated Financial Statements included in this Annual Report
on Form 10−K for additional information.
Discontinued Operations. On November 5, 2008, the board of directors of Old Spectrum committed to the shutdown of the growing products portion
of the Home and Garden Business, which includes the manufacturing and marketing of fertilizers, enriched soils, mulch and grass seed, following an
evaluation of the historical lack of profitability and the projected input costs and significant working capital demands for the growing product portion of the
Home and Garden Business during Fiscal 2009. We believe the shutdown is consistent with what we have done in other areas of our business to eliminate
unprofitable products from our portfolio. We completed the shutdown of the growing products portion of the Home and Garden Business during the second
quarter of Fiscal 2009. Accordingly, the presentation herein of the results of continuing operations excludes the growing products portion of the Home and
Garden Business for all periods presented. See Note 10, Discontinued Operations, of Notes to Consolidated Financial Statements included in this Annual
Report on Form 10−K for further details on the disposal of the growing products portion of the Home and Garden Business. The following amounts related
to the growing products portion of the Home and Garden Business have been segregated from continuing operations and are reflected as discontinued
operations during Fiscal 2009 and Fiscal 2008, respectively:
2009 2008
Net sales $ 31.3 $261.4
Loss from discontinued operations before income taxes $(90.9) $ (27.1)
Provision for income tax benefit (4.5) (2.1)
Loss from discontinued operations, net of tax $(86.4) $ (25.0)
In accordance with ASC 360, long−lived assets to be disposed of are recorded at the lower of their carrying value or fair value less costs to sell.
During Fiscal 2008, we recorded a non−cash pretax charge of $6 million in discontinued operations to reduce the carrying value of intangible assets related
to the growing products portion of the Home and Garden Business in order to reflect the estimated fair value of this business.
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