Rayovac 2015 Annual Report Download - page 109

SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
Receivables
Trade accounts receivable are carried at net realizable value. The Company extends credit to its customers
based upon an evaluation of the customer’s financial condition and credit history, but generally does not require
collateral. The Company monitors its customers’ credit and financial condition based on changing economic
conditions and will make adjustments to credit policies as required. Provisions for losses on uncollectible trade
receivables are determined based on ongoing evaluations of the Company’s receivables, principally on the basis
of historical collection experience and evaluations of the risks of nonpayment or return for a given customer. The
allowance for uncollectible receivables as of September 30, 2015 and 2014 was $44.0 million and $48.6 million,
respectively. The following is a rollforward of the allowance for the years ended September 30, 2015, 2014 and
2013:
Beginning
Balance
Charged to
Profit & Loss Deductions
Other
Adjustments
Ending
Balance
(in millions)
September 30, 2015 ........................... $48.6 $ 6.0 $(6.3) $(4.3) $44.0
September 30, 2014 ........................... $37.4 $ 7.4 $(2.4) $ 6.2 $48.6
September 30, 2013 ........................... $21.9 $15.5 $— $— $37.4
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 15%, 16% and 18% of
the Company’s Net Sales during years ended September 30, 2015, 2014 and 2013, respectively. This major
customer also represented 16% and 14% of the Company’s Trade Receivables as of September 30, 2015 and
2014, respectively.
Inventories
The Company’s inventories are valued at the lower of cost or net realizable value. Cost of inventories is
determined using the first-in, first-out (FIFO) method. See Note 6, “Inventory” for further detail.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is calculated on the straight-line basis over
the estimated useful lives of the assets. Plant and equipment held under capital leases are amortized on a straight-
line basis over the shorter of the lease term or estimated useful life of the asset; such amortization is included in
depreciation expense. The Company uses accelerated depreciation methods for income tax purposes. Useful lives
for property, plant and equipment are as follows:
Asset Type Range
Buildings and improvements ....................... 20-40 years
Machinery and equipment ......................... 2-15 years
Expenditures which substantially increase value or extend useful lives are capitalized. Expenditures for
maintenance and repairs are charged to operations as incurred. The Company records gains and losses on the
disposition or retirement of property, plant and equipment based on the net book value and any proceeds
received.
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