Rayovac 2012 Annual Report Download - page 76

Spectrum Brands upon the First Closing. The net proceeds from the offering will be used to fund a portion
of the purchase price and related fees and expenses for the Hardware Acquisition. Spectrum Brands intends
to finance the remaining portion of the Hardware Acquisition, as well as refinance its existing Term Loan
with a new $800 million senior secured term loan, which is expected to close concurrently with the First
Closing. See Note 17, “Subsequent Events,” to our Consolidated Financial Statements included in this
Annual Report on Form 10-K for additional information regarding our 2020 Notes and 2022 Notes.
(2) Capital lease payments due by fiscal year include executory costs and imputed interest not reflected in the
Consolidated Statements of Financial Position included in this Annual Report on Form 10-K.
(3) Employee benefit obligations represent the sum of our estimated future minimum required funding for our
qualified defined benefit plans based on actuarially determined estimates and projected future benefit
payments from our unfunded postretirement plans. For additional information about our employee benefit
obligations, see Note 10, “Employee Benefit Plans”, of Notes to Consolidated Financial Statements,
included in this Annual Report on Form 10-K.
(4) At September 30, 2012, our consolidated balance sheet includes tax reserves for uncertain tax
positions. However, it is not possible to predict or estimate the timing of payments for these obligations. The
Company cannot predict the ultimate outcome of income tax audits currently in progress for certain of our
companies; however, it is reasonably possible that during the next 12 months some portion of our
unrecognized tax benefits could be recognized.
Other Commercial Commitments
The following table summarizes our other commercial commitments as of September 30, 2012, consisting
entirely of standby letters of credit that back the performance of certain of our entities under various credit
facilities, insurance policies and lease arrangements (in millions):
Other Commercial Commitments
Amount of Commitment Expiration by Fiscal Year
2013 2014 2015 2016 2017 Thereafter Total
Letters of credit .................................. $19 $7 $— $— $— $— $26
Total Other Commercial Commitments ................ $19 $7 $— $— $— $— $26
Critical Accounting Policies
Our Consolidated Financial Statements included in this Annual Report on Form 10-K have been prepared in
accordance with GAAP and fairly present our financial position and results of operations. We believe the
following accounting policies are critical to an understanding of our financial statements. The application of
these policies requires management’s judgment and estimates in areas that are inherently uncertain.
Valuation of Assets and Asset Impairment
We evaluate certain long-lived assets to be held and used, such as property, plant and equipment and
definite-lived intangible assets for impairment based on the expected future cash flows or earnings projections
associated with such assets. Impairment reviews are conducted at the judgment of management when it believes
that a change in circumstances in the business or external factors warrants a review. Circumstances such as the
discontinuation of a product or product line, a sudden or consistent decline in the sales forecast for a product,
changes in technology or in the way an asset is being used, a history of operating or cash flow losses or an
adverse change in legal factors or in the business climate, among others, may trigger an impairment review. An
asset’s value is deemed impaired if the discounted cash flows or earnings projections generated do not support
the carrying value of the asset. The estimation of such amounts requires management’s judgment with respect to
revenue and expense growth rates, changes in working capital and selection of an appropriate discount rate, as
applicable. The use of different assumptions would increase or decrease discounted future operating cash flows
or earnings projections and could, therefore, change impairment determinations.
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