Rayovac 2010 Annual Report Download - page 71

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 2009 we recorded a non- cash pretax impairment charge of approximately $34 million. The tax impact,
prior to consideration of the current year valuation allowance, of the impairment charges was a deferred tax
benefit of approximately $13 million. 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.
In addition, our income tax provision for the year ended September 30, 2010 reflects the correction of a
prior period error which increases our income tax provision by approximately $6 million.
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. As a result, we recognized no cumulative effect adjustment at
the time of adoption. As of September 30, 2010 and September 30, 2009, the total amount of unrecognized tax
benefits that, if recognized, would affect the effective income tax rate in future periods was $13 million and $8
million, respectively. See Note 8, Income Taxes, of Notes to Consolidated Financial Statements included in this
Annual Report on Form 10-K for additional information.
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 included 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 9, 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 2010 and Fiscal 2009,
respectively (in millions):
2010 2009
Net sales ............................................................ $— $31.3
Loss from discontinued operations before income taxes ....................... $(2.5) $(90.9)
Provision for income tax benefit ......................................... 0.2 (4.5)
Loss from discontinued operations, net of tax ............................... $(2.7) $(86.4)
Fiscal Year Ended September 30, 2009 Compared to Fiscal Year Ended September 30, 2008
Fiscal 2009, when referenced within this Management’s Discussion and Analysis of Financial Condition
and Results of Operations included in this Annual Report on Form 10-K, includes the combined results of Old
Spectrum for the period from October 1, 2008 through August 30, 2009 and New Spectrum for the period from
August 31, 2009 through September 30, 2009.
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