Rayovac 2013 Annual Report Download - page 95

SPECTRUM BRANDS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(Amounts in thousands, except per share figures)
sold, based on the type of promotional program. The income statement presentation of the Company’s
promotional arrangements complies with Accounting Standards Codification (“ASC”) Topic 605: “Revenue
Recognition.” For all types of promotional arrangements and programs, the Company monitors its commitments
and uses various measures, including past experience, to determine amounts to be recorded for the estimate of the
earned, but unpaid, promotional costs. The terms of the Company’s customer-related promotional arrangements
and programs are tailored to each customer and are documented through written contracts, correspondence or
other communications with the individual customers.
The Company also enters into various arrangements, primarily with retail customers, which require the
Company to make upfront cash, or “slotting” payments, in order to secure the right to distribute through such
customers. The Company capitalizes slotting payments; provided the payments are supported by a time or
volume based arrangement with the retailer, and amortizes the associated payment over the appropriate time or
volume based term of the arrangement. The amortization of slotting payments is treated as a reduction in Net
sales and a corresponding asset is reported in Deferred charges and other in the accompanying Consolidated
Statements of Financial Position.
(d) Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(e) Cash Equivalents
For purposes of the accompanying Consolidated Statements of Financial Position and Consolidated Statements of
Cash Flows, the Company considers all highly liquid debt instruments purchased with original maturities of three
months or less to be cash equivalents.
(f) Concentrations of Credit Risk and Major Customers
Trade receivables subject the Company to credit risk. Trade accounts receivable are carried at net realizable
value. The Company extends credit to its customers based upon an evaluation of the customer’s financial
condition and credit history, but generally does not require collateral. The Company monitors its customers’
credit and financial condition based on changing economic conditions and will make adjustments to credit
policies as required. Provisions for losses on uncollectible trade receivables are determined based on ongoing
evaluations of the Company’s receivables, principally on the basis of historical collection experience and
evaluations of the risks of nonpayment for a given customer.
The Company has a broad range of customers including many large retail outlet chains, one of which
accounts for a significant percentage of its sales volume. This major customer represented approximately 18%,
23% and 24% of the Company’s Net sales during Fiscal 2013, Fiscal 2012 and Fiscal 2011, respectively. This
major customer also represented approximately 11% and 13% of the Company’s Trade accounts receivable, net
as of September 30, 2013 and September 30, 2012, respectively.
Approximately 41%, 46% and 44% of the Company’s Net sales during Fiscal 2013, Fiscal 2012 and Fiscal
2011, respectively, occurred outside of the United States. These sales and related receivables are subject to
varying degrees of credit, currency, and political and economic risk. The Company monitors these risks and
makes appropriate provisions for collectibility based on an assessment of the risks present.
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