Rayovac 2009 Annual Report Download - page 71

Table of Contents
Index to Financial Statements
deferred tax assets that may not be realized, is approximately $496 million at September 30, 2008. Of this amount, approximately $468 million relates to
U.S. net deferred tax assets and approximately $28 million relates to foreign net deferred tax assets.
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. During Fiscal 2008 and 2007, the Company recorded non− cash pretax impairment
charges of approximately $861 million and $362 million, respectively. The tax impact, prior to consideration of the current year valuation allowance, of the
impairment charges was a deferred tax benefit of approximately $143 million and $77 million respectively, because a significant portion of the impaired
assets are not deductible for tax purposes . See “Goodwill and Intangibles Impairment” above, as well as Note 3(c), Significant Accounting Policies and
Practices—Intangible Assets, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10−K for additional information
regarding these non−cash impairment charges.
ASC 740, which clarifies the accounting for uncertainty in tax positions, requires that we recognize in our financial statements the impact of a tax
position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. We adopted this provision on
October 1, 2007. As a result of the adoption, we recognized no cumulative effect adjustment. As of October 1, 2007 and September 30, 2008 we had
approximately $8 million and $7 million of unrecognized tax benefits, respectively, of which approximately $5 million, for both October 1, 2007 and
September 30, 2008, would affect our effective tax rate if recognized and approximately $3 million and $2 million, respectively, of which would result in a
reduction in goodwill if recognized. The change from October 1, 2007 to September 30, 2008 is primarily a result of the accrual of additional interest and
penalties and the settlement of a tax examination in Germany. See Note 10, Income Taxes, of Notes to Consolidated Financial Statements included in this
Annual Report on Form 10−K for additional information regarding the settlement of the tax examination in Germany.
Discontinued Operations. On November 5, 2008, the board of directors of Old Spectrum committed to the shutdown of the growing products portion
of the Home and Garden Business, which includes the manufacturing and marketing of fertilizers, enriched soils, mulch and grass seed, following an
evaluation of the historical lack of profitability and the projected input costs and significant working capital demands for the growing product portion of the
Home and Garden Business during Fiscal 2009. We believe the shutdown is consistent with what we have done in other areas of our business to eliminate
unprofitable products from our portfolio. We completed the shutdown of the growing products portion of the Home and Garden Business during the second
quarter of Fiscal 2009. Accordingly, the presentation herein of the results of continuing operations excludes the growing products portion of the Home and
Garden Business for all periods presented. See Note 10, Discontinued Operations, of Notes to Consolidated Financial Statements included in this Annual
Report on Form 10−K for further details on the disposal of the growing products portion of the Home and Garden Business.
The following amounts related to the growing products portion of the Home and Garden Business have been segregated from continuing operations
and are reflected as discontinued operations during Fiscal 2008 and Fiscal 2007, respectively:
2008 2007
Net sales $261.4 $232.0
Loss from discontinued operations before income taxes $ (27.1) $ 6.3
Provision for income tax benefit (2.1) —
Loss from discontinued operations, net of tax $ (25.0) $ 6.3
In accordance with ASC 360, long−lived assets to be disposed of are recorded at the lower of their carrying value or fair value less costs to sell.
During Fiscal 2008, we recorded a non−cash pretax charge of $6 million in discontinued operations to reduce the carrying value of intangible assets related
to the growing products portion of the Home and Garden Business in order to reflect the estimated fair value of this business.
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