Rayovac 2010 Annual Report Download - page 153

SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
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 the
period from October 1, 2008 through August 30, 2009 and Fiscal 2008, the Predecessor Company, as a result of
its testing, recorded non-cash pre tax impairment charges of $34,391 and $861,234, respectively. The tax impact,
prior to consideration of the current year valuation allowance, of the impairment charges was a deferred tax
benefit of $12,965 and $142,877 during the period from October 1, 2008 through August 30, 2009 and Fiscal
2008, respectively, as a result of a significant portion of the impaired assets not being deductible for tax purposes
in 2008.
During Fiscal 2010 we recorded the correction of an immaterial prior period error in our consolidated
financial statements related to deferred taxes in certain foreign jurisdictions. We believe the correction of this
error to be both quantitatively and qualitatively immaterial to our annual results for fiscal 2010 or to any of our
previously issued financial statements. The impact of the correction was an increase to income tax expense and a
decrease to deferred tax assets of approximately $5,900.
(9) Discontinued Operations
On November 1, 2007, the Predecessor Company sold the Canadian division of the Home and Garden Business,
which operated under the name Nu-Gro, to a new company formed by RoyCap Merchant Banking Group and
Clarke Inc. Cash proceeds received at closing, net of selling expenses, totaled $14,931 and were used to reduce
outstanding debt. These proceeds are included in net cash provided by investing activities of discontinued
operations in the accompanying Consolidated Statements of Cash Flows. On February 5, 2008, the Predecessor
Company finalized the contractual working capital adjustment in connection with this sale which increased
proceeds received by the Predecessor Company by $500. As a result of the finalization of the contractual
working capital adjustments the Predecessor Company recorded a loss on disposal of $1,087, net of tax benefit.
On November 11, 2008, the Predecessor Board approved the shutdown of the growing products portion of
the Home and Garden Business, which included the manufacturing and marketing of fertilizers, enriched soils,
mulch and grass seed. The decision to shutdown the growing products portion of the Home and Garden Business
was made only after the Predecessor Company was unable to successfully sell this business, in whole or in part.
The shutdown of the growing products portion of the Home and Garden Business was completed during the
second quarter of Fiscal 2009.
The presentation herein of the results of continuing operations has been changed to exclude the growing
products portion of the Home and Garden Business for all periods presented. The following amounts have been
segregated from continuing operations and are reflected as discontinued operations for Fiscal 2010, the period
from August 31, 2009 through September 30, 2009, the period from October 1, 2008 through August 30, 2009
and Fiscal 2008, respectively:
Successor
Company
Predecessor
Company
2010
Period From
August 31, 2009
through
September 30,
2009
Period from
October 1, 2008
through
August 30,
2009 2008
Net sales ........................................ $ — $— $31,306 $261,439
Income (loss) from discontinued operations before income
taxes ......................................... $(2,512) $408 $(91,293) $ (27,124)
Provision for income tax expense (benefit) ............. 223 — (4,491) (2,182)
Income (loss) from discontinued operations, net of tax .... $(2,735) $408 $(86,802) $ (24,942)
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