Rayovac 2005 Annual Report Download - page 97

In December 2004, the FASB issued FSP FAS
109-1, “Application of FASB Statement No. 109,
‘Accounting for Income Taxes’ to the Tax Deduction
on Qualifi ed Production Activities Provided by the
American Jobs Creation Act of 2004” (“FSP FAS
109-1”). The American Jobs Creation Act of 2004
(the “Jobs Act”), enacted October 22, 2004, pro-
vides a tax deduction for income from qualifi ed
domestic production activities. FSP FAS 109-1 pro-
vides the treatment for the deduction as a special
deduction as described in SFAS 109. FSP FAS 109-1
is effective prospectively as of January 1, 2005.
FSP FAS 109-1 did not have a material impact on
the fi nancial condition, results of operations, or cash
fl ow of the Company.
In December 2004, the FASB issued FSP FAS
109-2, “Accounting and Disclosure Guidance for the
Foreign Earnings Repatriation Provision within the
American Jobs Creation Act of 2004” (“FSP FAS
109-2”). This Act provides for a special one-time
deduction of 85% of certain foreign earnings that
are repatriated to a U.S. taxpayer. Given the lack of
clarifi cation of certain provisions within the Act, this
Staff Position allowed companies additional time
to evaluate the fi nancial statement implications of
repatriating foreign earnings. Undistributed earnings
of the Company’s foreign operations are intended to
fi nance future growth and expansion. Accordingly,
FSP FAS 109-2 is not expected to have a material
impact on the fi nancial condition, results of
operations, or cash fl ow of the Company.
In November 2004, the FASB issued SFAS 151,
“Inventory Costs – An Amendment of ARB No. 43,
Chapter 4” (“SFAS 151”). SFAS 151 amends the
guidance in ARB No. 43, Chapter 4, “Inventory Pricing,”
to clarify the accounting for abnormal amounts of
idle facility expense, freight, handling costs and
wasted material (spoilage). Among other provisions,
the new rule requires that items such as idle facility
expense, excessive spoilage, double freight, and
re-handling costs be recognized as current-period
charges regardless of whether they meet the crite-
rion of “so abnormal” as stated in ARB No. 43.
Additionally, SFAS 151 requires that the allocation of
fi xed production overhead to the costs of conversion
be based on the normal capacity of the production
facilities. SFAS 151 is effective for fi scal years
beginning after June 15, 2005. The Company is cur-
rently evaluating SFAS 151 and does not expect it to
have a material impact on the fi nancial condition,
results of operations, or cash fl ow of the Company.
(3) Inventories
Inventories consist of the following:
September 30,
2005 2004
Raw materials $117,175 $ 47,882
Work-in-process 37,931 31,382
Finished goods 296,447 185,462
$451,553 $264,726
(4) Property, Plant and Equipment
Property, plant and equipment consist
of the following:
September 30,
2005 2004
Land, buildings and improvements $ 73,649 $ 74,440
Machinery, equipment and other 394,148 265,688
Construction in progress 37,948 15,231
505,745 355,359
Less accumulated depreciation 201,422 172,963
$304,323 $182,396
At September 30, 2005 and 2004, assets held
for sale totaling $108,174 and $9,870, respectively,
were included in Assets held for sale in the Consoli-
dated Balance Sheets. As of September 30, 2005,
the Company had $101,485 included in Assets held
for sale and $22,294 included in Liabilities held for
sale in its Consolidated Balance Sheets related to
the certain assets of the Nu-Gro Corporation being
solicited for sale. (See Note 17, Subsequent Events,
where the subsequent sale of the assets is discussed.)
All relevant criteria of SFAS 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets,” allowing
for assets held for sale classifi cation have been met.
The following table details the components of the
Nu-Gro assets held for sale at September 30, 2005:
Amount
Trade receivables, net of allowance
for doubtful accounts $13,555
Inventories 17,810
Property, plant and equipment, net 18,862
Goodwill 29,228
Intangible assets, net 21,499
Other current assets 531
Total assets held for sale 101,485
Accounts payable 8,678
Accrued liabilities and other 6,130
Deferred income taxes 7,486
Total liabilities held for sale 22,294
Total Nu-Gro net assets held for sale $79,191
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
2005 ANNUAL REPORT 77