Rayovac 2003 Annual Report Download - page 37

(1) DESCRIPTION OF BUSINESS
Rayovac Corporation and its wholly owned subsidiaries (“Company”) manufacture and market consumer batteries and electric per-
sonal care products. Consumer batteries include general (alkaline, rechargeables, heavy duty, lantern and general purpose), button
cell and lithium batteries. The Company also markets a variety of battery powered lighting devices such as flashlights and lanterns.
On October 1, 2002, the Company acquired substantially all of the consumer battery business (“VA R TA ”) of VARTA AG for approx-
imately $275,300, including acquisition related expenditures. The acquisition consisted of the purchase of all of VARTA AG’s con-
sumer battery subsidiaries and business outside of Germany, excluding Brazil, and a controlling ownership and management interest
in a new joint venture entity that will operate the VARTA AG consumer battery business in Germany. The residual interest in the
joint venture is held by VARTA AG. With the acquisition of VARTA, the Company became a truly global battery manufacturer and
marketer and acquired additional low-cost manufacturing capacity and battery technology. (See also Acquisitions and Divestitures,
footnote 16, for additional information on the VARTA acquisition.)
On September 30, 2003, the Company acquired all of the equity interests of Remington Products Company, L.L.C. (“Remington”)
for approximately $174,000, including acquisition related expenditures, and the assumption of Remington’s outstanding debt of
approximately $180,400. Remington is now a wholly owned subsidiary of the Company. Remington is a leading designer and mar-
keter of electric shavers and accessories, electric grooming products and hair care appliances. (See also Acquisitions and Divestitures,
footnote 16, for additional information on the Remington acquisition.)
The Company’s products are sold on a global basis in over 100 countries in North America, Latin America, Europe, and the Far East
through a variety of channels, including mass merchandisers, home centers and hardware stores, consumer electronic stores, ware-
house clubs, food, drug and convenience stores, department stores, hearing aid professionals, industrial distributors and original
equipment manufacturers.
(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 intercompany transactions have been eliminated. The Company’s fiscal year ends September 30.
References herein to 2001, 2002 and 2003 refer to the fiscal years ended September 30, 2001, 2002 and 2003.
The Company’s Consolidated Balance Sheet as of September 30, 2003 and Consolidated Statement of Cash Flows for the year ended
September 30, 2003 give effect to the Remington acquisition, which occurred on September 30, 2003. Consequently, all Balance Sheet
footnote disclosures include the impacts of the Remington acquisition.
The Company’s Consolidated Statement of Operations for the year ended September 30, 2003, includes only the results attributable
to Rayovac and its subsidiaries prior to the Remington acquisition. Consequently, all Statement of Operations footnote disclosures
exclude the results of the Remington acquisition.
(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, provided that: there are no uncertainties regarding customer
acceptance; persuasive evidence of an arrangement exists; the price to the buyer is fixed or determinable; and collectibility is deemed
reasonably assured. The Company is not obligated to allow for, and the Company’s general policy is not to accept, product returns.
The Company enters into various promotional arrangements, primarily with retail customers, including arrangements entitling
such retailers to cash rebates from the Company based on the level of their purchases, which require the Company to estimate and
accrue the estimated costs of the promotional programs. These costs are generally treated as a reduction of net sales.
The Company also enters into promotional arrangements targeted to the ultimate consumer. Such arrangements are treated as
either a reduction of net sales or an increase of cost of sales, based on the type of promotional program. The income statement
characterization of the Company’s promotional arrangements complies with EITF 01-09, Accounting for Consideration Given by a Vendor
to a Customer (Including a Reseller of the Vendor’s Products).
Notes to Consolidated Financial Statements
Rayovac Corporation and Subsidiaries
(In thousands, except per share amounts)