Graco 2007 Annual Report Download - page 47

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Newell Rubbermaid Inc. 2007 Annual Report
45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOOTNOTE 1
Description of Business and Significant Accounting Policies
Description of Business
Newell Rubbermaid is a global marketer of consumer and commercial products that touch the lives of people where they work, live and play. The Company’s
strong portfolio of brands includes Sharpie,
® Paper Mate,
® Dymo,
® Expo,
® Waterman,
® Parker,
® Rolodex,
® Irwin,
® Lenox,
® BernzOmatic,
® Rubbermaid,
® Levolor,
®
Graco,
® Calphalon® and Goody.® The Company’s multi-product offering consists of well known name-brand consumer and commercial products in four
business segments: Cleaning, Organization & Décor; Office Products; Tools & Hardware; and Other (Home & Family).
Principles of Consolidation
The Consolidated Financial Statements include the accounts of the Company, its majority owned subsidiaries and variable interest entities where the
Company is the primary beneficiary, after elimination of intercompany transactions.
Use of Estimates
The preparation of these financial statements requires the use of certain estimates by management in determining the Company’s assets, liabilities,
revenues and expenses and related disclosures. Actual results could differ from those estimates.
Reclassifications
Certain 2006 and 2005 amounts have been reclassified to conform to the 2007 presentation.
Concentration of Credit Risk
The Company sells products to customers in diversified industries and geographic regions and, therefore, has no significant concentrations of credit risk.
The Company continuously evaluates the creditworthiness of its customers and generally does not require collateral.
The Company evaluates the collectibility of accounts receivable based on a combination of factors. When aware of a specific customer’s inability
to meet its financial obligations, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position, the
Company records a specific reserve for bad debt to reduce the related receivable to the amount the Company reasonably believes is collectible. The
Company also records reserves for bad debt for all other customers based on a variety of factors, including the length of time the receivables are past due
and historical collection experience. Accounts are also reviewed for potential write-off on a case by case basis. Accounts deemed uncollectible are written
off, net of expected recoveries. If circumstances related to specific customers change, the Company’s estimates of the recoverability of receivables could
be further adjusted.
The Company’s forward exchange contracts, long-term cross currency interest rate swaps, and option contracts do not subject the Company to risk
due to foreign exchange rate movement, because gains and losses on these instruments generally offset gains and losses on the assets, liabilities, and
other transactions being hedged. The Company is exposed to credit-related losses in the event of non-performance by counterparties to certain derivative
financial instruments. The Company does not obtain collateral or other security to support derivative financial instruments subject to credit risk, but
monitors the credit standing of the counterparties.
The credit exposure that results from commodity, interest rate, and foreign exchange risk is the fair value of contracts with a positive fair value as
of the reporting date. The credit exposure on the Company’s interest rate derivatives and foreign currency derivatives at December 31, 2007 was $1.2 million
and $2.1 million, respectively. The credit exposure on the Company’s commodity derivatives at December 31, 2007 was immaterial.
Sales Recognition
Sales of merchandise and freight billed to customers are recognized when title passes and all substantial risks of ownership change, which generally occurs
either upon shipment or upon delivery based upon contractual terms. Sales are net of provisions for cash discounts, returns, customer discounts (such as
volume or trade discounts), cooperative advertising and other sales related discounts.