Rayovac 2011 Annual Report Download - page 66

not be realized. We base these estimates on projections of future income, including tax planning strategies, in
certain jurisdictions. Changes in industry conditions and other economic conditions may impact our ability to
project future income. ASC Topic 740: “Income Taxes” (“ASC 740”) requires the establishment of a valuation
allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
In accordance with ASC 740, we periodically assess the likelihood that our deferred tax assets will be realized
and determine if adjustments to the valuation allowance are required.
Our total valuation allowance for the tax benefit of deferred tax assets that may not be realized is
approximately $374 million at September 30, 2011. Of this amount, approximately $339 million relates to U.S.
net deferred tax assets and approximately $35 million relates to foreign net deferred tax assets. During Fiscal
2011, we also determined that a valuation allowance is required against deferred tax assets related to net
operating losses in Brazil and thus recorded a $26 million charge. Our total valuation allowance was
approximately $331 million at September 30, 2010. Of this amount, approximately $300 million related to U.S.
net deferred tax assets and approximately $31 million related to foreign net deferred tax assets.
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 to be sustained on audit,
based on the technical merits of the position. As of September 30, 2011 and September 30, 2010, the total
amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate in future
periods was $9 million and $13 million, respectively. See Note 9, Income Taxes, of Notes to Consolidated
Financial Statements included in this Annual Report on Form 10-K for additional information.
Fiscal Year Ended September 30, 2010 Compared to Fiscal Year Ended September 30, 2009
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.
Highlights of Consolidated Operating Results
We have presented the growing products portion of the Home and Garden Business as discontinued
operations. The board of directors of Old Spectrum committed to the shutdown of this business in November
2008 and the shutdown was completed during the second quarter of our Fiscal 2009. See Note 16, Discontinued
Operations of Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for
additional information regarding the shutdown of the growing products portion of the Home and Garden
Business. As a result, and unless specifically stated, all discussions regarding Fiscal 2010 and Fiscal 2009 only
reflect results from our continuing operations.
Year over year historical comparisons are influenced by the acquisition of Russell Hobbs, which is included
in our Fiscal 2010 Consolidated Financial Statements of Operations from June 16, 2010, the date of the Merger,
through the end of the period. The results of Russell Hobbs are not included in our Fiscal 2009 Consolidated
Financial Statement of Operations. See Note 15, Acquisitions of Notes to Consolidated Financial Statements,
included in this Annual Report on Form 10-K for supplemental pro forma information providing additional year
over year comparisons of the impact of the acquisition.
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