Rayovac 2015 Annual Report Download - page 111

SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
Intangible Assets
Intangible assets are recorded at cost or at estimated fair value if acquired in a business combination.
Customer lists, proprietary technology and certain trade name intangibles are amortized, using the straight-line
method, over their estimated useful lives. The range and weighted average useful lives for definite-lived
intangibles assets are as follows:
Asset Type Range
Weighted
Average
Customer relationships .......................... 2-20 years 18.5 years
Technology assets ............................. 4-18 years 11.1 years
Tradenames .................................. 8-17 years 16.2 years
Definite-lived intangible assets held and used are reviewed for impairment when events or changes in
business circumstances indicate that the carrying amount of the assets may not be recoverable. If indicators of
potential impairment are identified, the Company performs undiscounted cash flow analysis to determine if
impairment exists. The asset value would be deemed impaired if the undiscounted cash flows expected to be
generated by the asset did not exceed its carrying value. If impairment is determined to exist, any related
impairment loss is calculated based on fair value. There were no triggering events identified during the years
ended September 30, 2015, 2014 and 2013 that necessitated an impairment test over definite-lived intangible
assets.
Certain trade name intangible assets have an indefinite life and are not amortized; but instead are assessed
for impairment at least annually and as triggering events or indicators of potential impairment are identified. The
Company performs its annual impairment test in the fourth quarter of its fiscal year. Impairment of indefinite
lived intangible assets is assessed by comparing the estimated fair value of the identified trade names to their
carrying value to determine if potential impairment exists. If the fair value is less than the carrying value, an
impairment loss is recorded for the excess. The fair value of indefinite-lived intangible assets is determined using
an income approach, the relief from royalty methodology, which requires us to make estimates and assumptions
about future revenues, royalty rates, and the discount rate, among others. The fair value of our indefinite life
tradenames exceeded their carrying values as of the date of our latest annual impairment testing and there was no
impairment of our indefinite lived intangible assets for the years ended September 30, 2015, 2014 and 2013.
See Note 8 “Goodwill and Intangible Assets” for further detail.
Debt Issuance Costs
Debt issuance costs are capitalized and amortized to interest expense using the effective interest method
over the lives of the related debt agreements. Debt issuance costs were $65.1 million and $51.1 million as of
September 30, 2015 and 2014, respectively, and are included in Deferred Charges and Other Assets in the
Consolidated Statements of Financial Position. Amortization of debt issuance costs is recognized as Interest
Expense in the Consolidated Statements of Operations.
Financial Instruments
Derivative financial instruments are used by the Company principally in the management of its interest rate,
foreign currency exchange rate and raw material price exposures. The Company does not hold or issue derivative
financial instruments for trading or speculative purposes. Derivative assets and liabilities are reported at fair
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