Rayovac 2002 Annual Report Download - page 42

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28
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Rayovac Corporation and Subsidiaries
(In thousands, except per share amounts)
(1) Description of Business
Rayovac Corporation and its wholly owned subsidiaries (Company) manufacture and market batteries. Products include general (alkaline, rechargeables,
heavy duty, lantern and general purpose), button cell and lithium batteries. The Company also produces a variety of battery powered lighting devices such
as flashlights and lanterns. The Company’s products are sold primarily to retailers in the United States, Canada, Latin America, Europe, and the Far East.
(2) Significant Accounting Policies and Practices
(a) Principles of Consolidation and Fiscal Year End The consolidated financial statements include the financial statements of Rayovac Corporation and
its wholly owned subsidiaries and are prepared in accordance with accounting principles generally accepted in the United States of America. All inter-
company transactions have been eliminated. The Company’s fiscal year ends September 30. References herein to 2000, 2001 and 2002 refer to the
fiscal years ended September 30, 2000, 2001 and 2002.
(b) Revenue Recognition The Company recognizes revenue from product sales upon shipment to the customer which is the point at which all risks and
rewards of ownership of the product is passed. The Company is not obligated to allow for returns.
(c) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(d) Cash Equivalents For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with original
maturities of three months or less to be cash equivalents.
(e) Concentrations of Credit Risk, Major Customers and Employees Trade receivables potentially subject the Company to credit risk. The Company
extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history and generally does not require collat-
eral. The Company monitors its customer’s credit and financial conditions based on changing economic conditions and will make adjustments to credit
policies as required. The Company has historically incurred minimal credit losses, but in 2002 experienced a significant loss resulting from the bank-
ruptcy filing of a large retailer in the United States.
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 approximately 20% and 23%, respectively, of receivables as of September 30, 2001 and September 30, 2002.
Approximately 25% of the Company’s sales occur outside of North America, and these sales and related receivables are subject to varying degrees of
credit, currency, political and economic risk. The Company monitors these risks and makes appropriate provisions for collectability based on an assess-
ment of the risks present. The Argentine Peso and Venezuelan Bolivars devaluation did not have a significant impact on the Company’s estimate of
collectability.
The Company has one customer that represented over 10% of its net sales. The Company derived 22%, 27% and 26% of its net sales from this
customer during 2000, 2001 and 2002, respectively.
Approximately 45% of the total labor force is covered by collective bargaining agreements. The Company believes its relationship with its employees is
good and there have been no work stoppages involving Company employees since 1981 in North America and since 1991 in the United Kingdom.
The Company has entered into collective bargaining agreements with expiration dates as follows:
Location Expiration Date
Mexico City, Mexico February 2003
Madison, WI August 2003
Washington, UK Production December 2003
Guatemala City, Guatemala March 2004
Fennimore, WI March 2005
Portage, WI June 2006