Rayovac 2010 Annual Report Download - page 121

SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
credit and financial condition based on changing economic conditions and will make adjustments to credit
policies as required. Provision for losses on uncollectible trade receivables are determined principally on the
basis of past collection experience applied to ongoing evaluations of the Company’s receivables and evaluations
of the risks of nonpayment for a given customer.
The Company has a broad range of customers including many large retail outlet chains, one of which
accounts for a significant percentage of its sales volume. This major customer represented approximately 22%
and 23% of the Successor Company’s Net sales during Fiscal 2010 and the period from August 31, 2009 through
September 30, 2009, respectively, and approximately 23% and 20% of Net sales during the Predecessor
Company’s period from October 1, 2008 through August 30, 2009 and Fiscal 2008, respectively. This major
customer also represented approximately 15% and 14% of the Successor Company’s Trade account receivables,
net as of September 30, 2010 and September 30, 2009, respectively.
Approximately 44% and 48% of the Successor Company’s Net sales during Fiscal 2010 and the period from
August 31, 2009 through September 30, 2009, respectively, occurred outside of the United States and
approximately 42% and 48% of the Predecessor Company’s Net sales during the period from October 1, 2008
through August 30, 2009 and Fiscal 2008, respectively, occurred outside of the United States. These sales and
related receivables are subject to varying degrees of credit, currency, and political and economic risk. The
Company monitors these risks and makes appropriate provisions for collectibility based on an assessment of the
risks present.
(f) Displays and Fixtures
Temporary displays are generally disposable cardboard displays shipped to customers to facilitate display of the
Company’s products. Temporary displays are generally disposed of after a single use by the customer.
Permanent fixtures are permanent in nature, generally made from wire or other permanent racking, which
are shipped to customers for display of the Company’s products. These permanent fixtures are restocked with the
Company’s product multiple times over the fixture’s useful life.
The costs of both temporary and permanent displays are capitalized as a prepaid asset and are included in
Prepaid expenses and other in the accompanying Consolidated Statements of Financial Position. The costs of
temporary displays are expensed in the period in which they are shipped to customers and the costs of permanent
fixtures are amortized over an estimated useful life of one to two years once they are shipped to customers and
are reflected in Deferred charges and other in the accompanying Consolidated Statements of Financial Position.
(g) Inventories
The Company’s inventories are valued at the lower of cost or market. Cost of inventories is determined using the
first-in, first-out (FIFO) method.
(h) Property, Plant and Equipment
Property, plant and equipment are recorded at cost or at fair value if acquired in a purchase business combination.
Depreciation on plant and equipment is calculated on the straight-line method over the estimated useful lives of
the assets. Depreciable lives by major classification are as follows:
Building and improvements ........................................ 20-40 years
Machinery, equipment and other .................................... 2-15 years
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