Rayovac 2015 Annual Report Download - page 112

SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
value in the Consolidated Statements of Financial Position. When hedge accounting is elected at inception, the
Company formally designates the financial instrument as a hedge of a specific underlying exposure and
documents both the risk management objectives and strategies for undertaking the hedge. Depending on the
nature of derivatives designated as hedging instruments, changes in fair value are either offset against the change
in fair value of the hedged assets or liability through earnings or recognized in shareholders’ equity through other
comprehensive income until the hedged item is recognized. Any ineffective portion of a financial instrument’s
change in fair value is recognized in earnings. For derivatives that do not qualify for hedge accounting treatment,
the change in the fair value is recognized in earnings. See Note 11, “Derivatives” for further detail.
Treasury Stock
Treasury stock purchases are stated at cost and presented as a separate reduction of shareholders’ equity.
Revenue Recognition
The Company recognizes revenue from product sales generally upon delivery to the customer, or at the
shipping point in situations where the customer picks up the product or where delivery terms so stipulate. This
represents the point at which title and all risks and rewards of ownership of the product are passed, provided that:
there are no uncertainties regarding customer acceptance, there is persuasive evidence that an arrangement exists,
the price to the buyer is fixed or determinable and ability to collect is deemed reasonably assured. The provision
for customer returns is based on historical sales and returns and other relevant information. The Company
estimates and accrues the cost of returns, which are treated as a reduction of Net Sales.
The Company enters into promotional arrangements, primarily with retail customers, that entitle such
retailers to earn cash rebates from the Company. These arrangements require the Company to estimate and
accrue the costs of these programs, which are treated as a reduction of Net Sales.
The Company enters into promotional arrangements that target the ultimate consumer. The costs associated
with such arrangements are treated as either a reduction in Net Sales or an increase in Cost of Goods Sold, based
on the type of promotional program. The Company monitors its commitments under all promotion arrangements
and uses various measures, including past experience, to estimate the earned, but unpaid, promotional costs. The
terms of the Company’s customer-related promotional arrangements and programs are tailored to each customer
and documented through written contracts, correspondence or other communications with the individual
customers.
The Company also enters into various arrangements, primarily with retail customers, which require the
Company to make upfront cash, or “slotting” payments, in order to secure the right to distribute through such
customers. The Company capitalizes slotting payments provided the payments are supported by a time or volume
based arrangement with the retailer, and amortizes the associated payment over the appropriate time or volume-
based term of the arrangement. Capitalized slotting payments are reported in the Consolidated Statements of
Financial Position as Deferred Charges and Other Assets and related amortization is treated as a reduction in Net
Sales.
Shipping and Handling Costs
Shipping and handling costs include costs incurred with third-party carriers to transport products to customers
and salaries and overhead costs related to activities to prepare the Company’s products for shipment at the
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