Rayovac 2003 Annual Report Download - page 58

(15) RESTRUCTURING AND RELATED CHARGES
The Company reports restructuring charges relating to manufacturing and related initiatives in cost of goods sold. Restructuring
and related charges reflected in cost of goods sold include, but are not limited to, termination and related costs associated with
manufacturing employees, asset impairments relating to manufacturing initiatives, and other costs directly related to the restruc-
turing initiatives implemented.
The Company reports restructuring charges relating to administrative functions in operating expenses, such as, initiatives impact-
ing sales, marketing, distribution, or other non-manufacturing related functions. Restructuring and related charges reflected in
operating expenses include, but are not limited to, termination and related costs, any asset impairments relating to the functional
area described above, and other costs directly related to the initiatives implemented.
During 2001, the Company recorded restructuring and related charges related to: (i) an organizational restructuring in the U.S.,
(ii) manufacturing and distribution cost rationalization initiatives in the Company’s Tegucigalpa, Honduras and Mexico City, Mexico
manufacturing facilities and in our European operations, (iii) the closure of the Company’s Wonewoc, Wisconsin, manufacturing
facility, (iv) the rationalization of uneconomic manufacturing processes at the Company’s Fennimore, Wisconsin, manufacturing
facility, and rationalization of packaging operations and product lines, and (v) costs associated with our June 2001 secondary offer-
ing. The amount recorded includes $9,100 of employee termination benefits for approximately 570 employees, $9,900 of equipment,
inventory, and other asset write-offs, and $1,700 of other expenses, net of changes in estimates in 2002 and 2003. In 2003, the Company
revised its estimate, reducing restructuring and related costs, in cost of goods sold, by approximately $300 for the anticipated costs
to close its Wonewoc, Wisconsin facility. A summary of the 2001 restructuring activities follows:
Termination Other
2001 Restructuring Summary Benefits Costs Total
Expense accrued $ 5,000 $11,000 $16,000
Change in estimate 4,400 100 4,500
Expense as incurred 700 1,100 1,800
Cash expenditures (5,800) (1,300) (7,100)
Non cash charges — (9,300) (9,300)
Balance September 30, 2001 $ 4,300 $ 1,600 $ 5,900
Change in estimate (1,000) (300) (1,300)
Cash expenditures (3,100) — (3,100)
Non cash charges — (700) (700)
Balance September 30, 2002 200 600 800
Change in estimate — (300) (300)
Cash expenditures (200) (100) (300)
Balance September 30, 2003 $ — $ 200 $ 200
During 2002, the Company recorded restructuring and related charges related to: (i) the closure of the Company’s Santo Domingo,
Dominican Republic plant and transfer of production to the Company’s Guatemala City, Guatemala manufacturing facility, and
(ii) outsourcing a portion of the Company’s zinc carbon battery production previously manufactured at our Mexico City, Mexico
manufacturing facility. The amount recorded includes approximately $1,200 of employee termination benefits for approximately
115 manufacturing employees, $900 of charges from the abandonment of equipment and inventory, net of a change in estimate of
$400, associated with the closing of the manufacturing facility, and $300 of other expenses. The change in estimate reflected our
ability to utilize more inventory and manufacturing equipment at our Guatemala City, Guatemala manufacturing location than
Notes to Consolidated Financial Statements
Rayovac Corporation and Subsidiaries
(In thousands, except per share amounts)
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