Rayovac 2003 Annual Report Download - page 45

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In May 2003, the Emerging Issues Task Force (EITF) issued EITF Consensus No. 01-8, Determining Whether an Arrangement Contains a Lease.
Consensus No. 01-8 requires capital lease treatment for arrangements containing an embedded lease, thereby conveying the right
to control the use of property, plant or equipment (collectively, “the property”) whether the property is explicitly or implicitly
specified. The right is conveyed if the purchaser obtains physical or operational control of the property or takes substantially all
of its output. Consensus No. 01-8 applies prospectively to new or modified arrangements beginning after May 28, 2003. Adoption
of Consensus No. 01-8 did not have a significant impact on the consolidated financial statements of the Company.
In May 2003, the FASB issued Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. State-
ment No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of
both liabilities and equity. The Statement requires that certain types of freestanding financial instruments be treated as liabilities and
measured at fair value. The Statement is effective for financial instruments entered into or modified after May 21, 2003, and other-
wise is effective at the beginning of the first interim period beginning after June 15, 2003. Certain provisions of the Statement were
delayed indefinitely. Adoption of the implemented sections of the Statement did not have a significant impact on the consolidated
financial statements of the Company.
(3) INVENTORIES
Inventories consist of the following:
September 30,
2002 2003
Raw materials $ 19,893 $ 60,732
Work-in-process 19,004 34,914
Finished goods 45,378 123,608
$ 84,275 $219,254
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
September 30,
2002 2003
Land, buildings and improvements $ 34,559 $ 51,195
Machinery, equipment and other 184,087 242,184
Construction in process 10,303 7,857
228,949 301,236
Less accumulated depreciation 126,363 150,824
$102,586 $150,412
Property, plant, and equipment includes equipment held under capitalized leases, net of amortization, totaling $615 and $20,420 at
September 30, 2002 and 2003, respectively. The significant increase in capital leases is due to leases assumed as part of the VARTA
acquisition.
During 2003, the Company closed its manufacturing operations in Mexico City, Mexico and its Madison, Wisconsin and Middleton,
Wisconsin packaging and distribution locations. The Company’s owned properties in Mexico City, Mexico and Madison, Wisconsin,
with an aggregate net book value of $8,680, are being treated as assets held for sale and are included in Prepaid expenses and other
in the Company’s Consolidated Balance Sheet at September 30, 2003.
Notes to Consolidated Financial Statements
Rayovac Corporation and Subsidiaries
(In thousands, except per share amounts)