Rayovac 2010 Annual Report Download - page 55

• On our Consolidated Statements of Operations included in this Annual Report on Form 10-K, we have
distinguished transactions and events that are directly associated with the reorganization from the
ongoing operations of the business;
• On our Consolidated Statements of Cash Flows included in this Annual Report on Form 10-K, we have
separately disclosed Reorganization items expense (income), net;
• Ceased accruing interest on the Senior Subordinated Notes; and
Fresh-Start Reporting
As required by ASC 852 we adopted fresh-start reporting upon emergence from Chapter 11 of the
Bankruptcy Code as of our monthly period ended August 30, 2009 as is reflected in this Annual Report on
Form 10-K.
Since the reorganization value of the assets of Old Spectrum immediately before the date of confirmation of
the Plan was less than the total of all post-petition liabilities and allowed claims and the holders of Old
Spectrum’s voting shares immediately before confirmation of the Plan received less than 50 percent of the voting
shares of the emerging entity the Company adopted fresh-start reporting as of the close of business on August 30,
2009 in accordance with ASC 852. The Consolidated Statement of Financial Position as of August 30, 2009
gives effect to allocations to the carrying value of assets or amounts and classifications of liabilities that were
necessary when adopting fresh-start reporting.
We analyzed the transactions that occurred during the two-day period from August 29, 2009, the day after
the Effective Date, through August 30, 2009, the fresh-start reporting date, and concluded that such transactions
were not material individually or in the aggregate as they represented less than one-percent of the total Net sales
for the entire fiscal year ended September 30, 2009. As such, we determined that August 30, 2009, would be an
appropriate fresh-start reporting date to coincide with our normal financial period close for the month of August
2009. Upon adoption of fresh-start reporting, the recorded amounts of assets and liabilities were adjusted to
reflect their estimated fair values. Accordingly, the reported historical financial statements of Old Spectrum prior
to the adoption of fresh-start reporting for periods ended prior to August 30, 2009 are not comparable to those of
New Spectrum.
Cost Reduction Initiatives
We continually seek to improve our operational efficiency, match our manufacturing capacity and product
costs to market demand and better utilize our manufacturing resources. We have undertaken various initiatives to
reduce manufacturing and operating costs.
Fiscal 2009. In connection with our announcement to reduce our headcount within each of our segments and
the exit of certain facilities in the U.S. related to the Global Pet Supplies segment, we implemented a number of
cost reduction initiatives (the “Global Cost Reduction Initiatives”). These initiatives also included consultation,
legal and accounting fees related to the evaluation of our capital structure.
Fiscal 2008. In connection with our decision to exit our zinc carbon and alkaline battery manufacturing and
distribution facility in Ninghai, China, we undertook cost reduction initiatives (the “Ningbo Exit Plan”). These
initiatives include fixed cost savings by integrating production equipment into our remaining production facilities
and headcount reductions.
Fiscal 2007. In connection with our announcement that we would manage our business in three vertically
integrated, product-focused reporting segments our costs related to research and development, manufacturing
management, global purchasing, quality operations and inbound supply chain, which had previously been
included in our corporate reporting segment are now included in each of the operating segments on a direct as
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