Rayovac 2009 Annual Report Download - page 59

Table of Contents
Index to Financial Statements
“Ningbo Exit Plan”). We recorded approximately $11 million and $16 million of pretax restructuring and related charges during Fiscal 2009 and Fiscal
2008, respectively, in connection with the Ningbo Exit Plan. We have recorded pretax and restructuring and related charges of approximately $27 million
since the inception of the Ningbo Exit Plan.
During Fiscal 2009, we implemented a series of initiatives within the Global Batteries & Personal Care segment and the Global Pet Supplies segment
to reduce operating costs as well as evaluate our opportunities to improve our capital structure (the “Global Cost Reduction Initiatives”). These initiatives
include headcount reductions within all our segments and the exit of certain facilities in the U.S. related to the Global Pet Supplies segment. These
initiatives also included consultation, legal and accounting fees related to the evaluation of our capital structure. We recorded $20 million of pretax
restructuring and related charges during Fiscal 2009 related to the Global Cost Reduction Initiatives. Costs associated with these initiatives, which are
expected to be incurred through September 30, 2013, are projected at approximately $55 million.
Goodwill and Intangibles Impairment. ASC 350 requires companies to test goodwill and indefinite−lived intangible assets for impairment annually,
or more often if an event or circumstance indicates that an impairment loss may have been incurred. In Fiscal 2009 and 2008, we tested our goodwill and
indefinite−lived intangible assets. As a result of this testing, we recorded a non−cash pretax impairment charge of $34 million and $861 million in Fiscal
2009 and Fiscal 2008, respectively. The $34 million non−cash pretax impairment charge incurred in Fiscal 2009 reflects trade name intangible asset
impairments of the following: $18 million related to Global Pet Supplies; $15 million related to the Global Batteries and Personal Care segment; and $1
million related to the Home and Garden Business. The $861 million non−cash pretax impairment charge incurred in Fiscal 2008 reflects $602 million
related to the impairment of goodwill and $259 million related to the impairment of trade name intangible assets. Of the $602 million goodwill impairment;
$426 million was associated with our Global Pet Supplies segment, $160 million was associated with the Home and Garden Business and $16 million was
associated with our Global Batteries and Personal Care segment. Of the $259 million trade name intangible assets impairment; $98 million was within our
Global Pet Supplies segment, $86 million was within our Global Batteries and Personal Care segment and $75 million was within the Home and Garden
segment. See Note 3(i), Significant Accounting Policies and Practices—Intangible Assets, of Notes to Consolidated Financial Statements included in this
Annual Report on Form 10−K for further details on these impairment charges.
Interest Expense. Interest expense in Fiscal 2009 decreased to $190 million from $229 million in Fiscal 2008. The decrease in Fiscal 2009 is
primarily due to ceasing the accrual of interest on Old Spectrum’s Senior Subordinated Notes, partially offset by the accrual of the default interest on our
U.S. Dollar Term B Loan and Euro facility and ineffectiveness related to interest rate derivative contracts. Contractual interest not accrued on the Senior
Subordinated Notes during Fiscal 2009 was $56 million. See Liquidity and Capital Resources –Debt Financing Activities and Note 8, Debt, of Notes to
Consolidated Financial Statements included in this Annual Report on Form 10−K for additional information regarding our outstanding debt.
Reorganization Items. During Fiscal 2009, Old Spectrum, in connection with our reorganization under Chapter 11 of the Bankruptcy Code, recorded
Reorganization items expense (income), net, which represents a gain of approximately $(1,143) million. Reorganization items expense (income), net
included the following: (i) gain on cancellation of debt of $(147) million; (ii) gains in connection with fresh−start reporting adjustments of $(1,088) million;
(iii) legal and professional fees of $75 million; (iv) write off deferred financing costs related to the Senior Subordinated Notes of $11 million; and (v) a
provision for rejected leases of $6 million. During Fiscal 2009, New Spectrum recorded Reorganization items expense (income), net which represents
expense of $4 million related to professional fees. See Note 2, Voluntary Reorganization Under Chapter 11, of Notes to Consolidated Financial Statements
included in this Annual Report on Form 10−K for more information related to our reorganization under Chapter 11 of the Bankruptcy Code.
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