Rayovac 2009 Annual Report Download - page 155

Table of Contents
Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
no uncertainties regarding customer acceptance; there is persuasive evidence that 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
associated with battery sales. The Company does accept returns in specific instances related to its shaving, grooming, personal care, home and garden and
pet products. The provision for customer returns is based on historical sales and returns and other relevant information. The Company estimates and accrues
the cost of returns, which are treated as a reduction of Net sales.
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 treated as a reduction of Net sales.
The Company also enters into promotional arrangements that target the ultimate consumer. Such arrangements are treated as either a reduction of Net
sales or an increase of Cost of goods sold, based on the type of promotional program. The income statement presentation of the Company’s promotional
arrangements complies with ASC Topic 605: “Revenue Recognition,” formerly the Emerging Issues Task Force (“EITF”) No. 01−09, “Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products).”
For all types of promotional arrangements and programs, the Company monitors its commitments and uses various measures, including past
experience, to determine amounts to be recorded for the estimate of the earned, but unpaid, promotional costs. The terms of the Company’s
customer−related promotional arrangements and programs are tailored to each customer and are documented through written contracts, correspondence or
other communications with the individual customers.
The Company also enters into various arrangements, primarily with retail customers, which require the Company to make upfront cash, or “slotting”
payments, to secure the right to distribute through such customers. The Company capitalizes slotting payments; provided the payments are supported by a
time or volume based arrangement with the retailer, and amortizes the associated payment over the appropriate time or volume based term of the
arrangement. The amortization of slotting payments is treated as a reduction in Net sales and a corresponding asset is reported in Deferred charges and other
in the accompanying Consolidated Statements of Financial Position.
(c) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(d) Cash Equivalents
For purposes of the accompanying Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with
original maturities of three months or less to be cash equivalents.
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