Rayovac 2014 Annual Report Download - page 75

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Pension expense is principally the sum of interest and service cost of the plan, less the expected return on
plan assets and the amortization of the difference between our assumptions and actual experience. The expected
return on plan assets is calculated by applying an assumed rate of return to the fair value of plan assets. We used
expected returns on plan assets of 2.0% to 7.5% in Fiscal 2014 and 3.6% to 7.8% in Fiscal 2013. Based on the
advice of our independent actuary, we believe the expected rates of return are reflective of the long-term average
rate of earnings expected on the funds invested. If such expected returns were overstated, it would ultimately
increase future pension expense and required funding contributions. Similarly, an understatement of the expected
return would ultimately decrease future pension expense and required funding contributions. If plan assets
decline due to poor performance by the markets and/or interest rates decline resulting in a lower discount rate,
our pension liability will increase, ultimately increasing future pension expense and required funding
contributions.
See Note 10, “Employee Benefit Plans,” of Notes to Consolidated Financial Statements included in this
Annual Report on Form 10-K for a more complete discussion of our employee benefit plans.
Restructuring and Related Charges
Restructuring charges are recognized and measured in accordance with the provisions of ASC Topic 420:
“Exit or Disposal Cost Obligations,” (“ASC 420”) and ASC Topic 712: “Compensation—Nonretirement Post-
Employment Benefits,” (ASC 712”). Under ASC 420 and ASC 712, restructuring charges include, but are not
limited to, termination and related costs consisting primarily of one-time termination benefits such as severance
costs and retention bonuses, and contract termination costs consisting primarily of lease termination costs.
Related charges, as defined by us, include, but are not limited to, other costs directly associated with exit and
integration activities, including impairment of property and other assets, departmental costs of full-time
incremental integration employees, and any other items related to the exit or integration activities. Costs for such
activities are estimated by us after evaluating detailed analyses of the costs to be incurred. We present
restructuring and related charges on a combined basis.
Liabilities from restructuring and related charges are recorded for estimated costs of facility closures,
significant organizational adjustments and measures undertaken by us to exit certain activities. Costs for such
activities are estimated by us after evaluating detailed analyses of the costs to be incurred. Such liabilities could
include amounts for items such as severance costs and related benefits (including settlements of pension plans),
impairment of property and equipment and other current or long term assets, lease termination payments and any
other items directly related to the exit activities. While the actions are carried out as expeditiously as possible,
restructuring and related charges are estimates. Changes in estimates resulting in an increase to or a reversal of a
previously recorded liability may be required as we execute a restructuring plan.
We report restructuring and related charges associated with manufacturing and related initiatives in cost of
goods sold. Restructuring and related charges reflected in cost of goods sold include, but are not limited to,
termination and related costs associated with manufacturing employees, asset impairments relating to
manufacturing initiatives and other costs directly related to the restructuring initiatives implemented.
We report restructuring and related charges associated with administrative functions in operating expenses,
such as initiatives impacting sales, marketing, distribution or other non-manufacturing related functions.
Restructuring and related charges reflected in operating expenses include, but are not limited to, termination and
related costs, any asset impairments relating to the administrative functions and other costs directly related to the
initiatives implemented.
See Note 14, “Restructuring and Related Charges” of Notes to Consolidated Financial Statements included
in this Annual Report on Form 10-K for a more complete discussion of our restructuring initiatives and related
costs.
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