Rayovac 2007 Annual Report Download - page 52

50 SPECTRUM BRANDS | 2007 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Spectrum Brands, Inc.
to be measured at fair value but does not expand the use of fair
value in any new circumstances. Under SFAS 157, fair value
refers to the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market
participants in the market in which the reporting entity trans-
acts. In SFAS 157, the FASB clarifi es the principle that fair value
should be based on the assumptions market participants would
use when pricing the asset or liability. In support of this princi-
ple, SFAS 157 establishes a fair value hierarchy that prioritizes
the information used to develop those assumptions. The fair
value hierarchy gives the highest priority to quoted prices in
active markets and the lowest priority to unobservable data, for
example, the reporting entity’s own data. Under SFAS 157, fair
value measurements would be separately disclosed by level
within the fair value hierarchy. The provisions of SFAS 157 for
fi nancial assets and liabilities, as well as any other assets and
liabilities that are carried at fair value on a recurring basis in
fi nancial statements, are effective for fi nancial statements
issued for fi scal years beginning after November 15, 2007, and
interim periods within those fi scal years. The FASB did, how-
ever, provide a one-year deferral for the implementation of
SFAS 157 for other non-fi nancial assets. Earlier application is
encouraged, provided that the reporting entity has not yet
issued fi nancial statements for that fi scal year, including any
fi nancial statements for an interim period within that fi scal
year. The Company is currently evaluating the impact that
SFAS 157 will have on its fi nancial condition, results of opera-
tions and cash fl ows.
(3) Inventories
Inventories consist of the following:
September 30,
2007 2006
Raw materials $ 76,082 $ 121,793
Work-in-process 28,821 36,205
Finished goods 212,566 302,674
$317,469 $460,672
(4) Property, Plant and Equipment
Property, plant and equipment consist of the following:
September 30,
2007 2006
Land, buildings and improvements $ 105,660 $102,147
Machinery, equipment and other 379,660 423,862
Construction in progress 8,382 24,046
493,702 550,055
Less accumulated depreciation 243,900 238,216
$249,802 $311,839
(5) Assets Held for Sale
At September 30, 2007, assets totaling $572,859 were included
in Assets held for sale in the Consolidated Balance Sheets. At
September 30, 2007, the Company had $564,188 and $47,688
related to certain assets and liabilities, respectively, of the Com-
pany’s Home and Garden Business included in Assets held for
sale and Liabilities held for sale, respectively, in its Consolidated
Balance Sheets. (See Note 11, Discontinued Operations, for addi-
tional information relating to discontinued operations). All rele-
vant criteria of SFAS 144 allowing for the classifi cation of assets
held for sale have been met for the assets and liabilities of the
Home and Garden Business. The following table details the com-
ponents of the assets and liabilities held for sale related to the
Company’s Home and Garden Business at September 30, 2007:
Amount
Receivables, net of allowance for doubtful accounts $ 50,596
Inventories 92,721
Other current assets 6,932
Property, plant and equipment, net 36,538
Goodwill 161,078
Intangible assets, net 212,747
Other assets 3,576
Total assets held for sale 564,188
Accounts payable 32,705
Other current liabilities 14,983
Total liabilities held for sale 47,688
Total Home and Garden Business net assets held for sale $516,500
In accordance with SFAS 144, long-lived assets to be disposed
of by sale are recorded at the lower of their carrying value or fair
value less costs to sell. During Fiscal 2007, the Company recorded
a non-cash pretax charge of $168,520 in discontinued operations
to reduce the carrying value of certain assets, principally consist-
ing of goodwill and intangible assets, related to the Home and
Garden Business in order to refl ect the estimated fair value of
this business. Such estimated fair value was based on a range of
estimated sales values, taking into account current market con-
ditions, provided by independent third-party advisors. If and
when a sale is consummated the actual fair value at that time
may vary from the estimated fair value as refl ected herein.
On September 27, 2007 we signed a defi nitive agreement to
sell the Canadian division of the Home and Garden Business,
which operates under the name Nu-Gro, to a new company formed
by RoyCap Merchant Banking Group and Clarke Inc. The trans-
action closed on November 1, 2007. (See also Note 18, Subsequent
Events for additional information regarding this divestiture).