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Other Required Disclosures

9 Months Ended

Jul. 01, 2012

Other Required Disclosures [Abstract]

(16) Other Required Disclosures

Recent Accounting Pronouncements Not Yet Adopted

Presentation of Comprehensive Income

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” which amends current comprehensive income guidance. This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, comprehensive income must be reported in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. This guidance will be effective for the Company beginning in the fiscal year ending September 30, 2013. The Company does not expect the guidance to impact its consolidated financial statements, as such guidance only requires a change in the format of presentation.

Impairment Testing

In September 2011, the FASB issued new accounting guidance intended to simplify how an entity tests goodwill for impairment. The guidance will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity no longer will be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. This accounting guidance is effective for the Company for the annual and any interim goodwill impairment tests performed beginning in the fiscal year ending September 30, 2013. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a significant impact on its consolidated financial statements.

Additionally, in July 2012, the FASB issued new accounting guidance intended to simplify how an entity tests indefinite-lived intangible assets for impairment. The guidance will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. An entity will no longer be required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. This accounting guidance is effective for the Company for the annual and any interim indefinite-lived intangible asset impairment tests performed for the fiscal year ending September 30, 2013. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a significant impact on its consolidated financial statements.

Offsetting Assets and Liabilities

In December 2011, the FASB issued amended disclosure requirements for offsetting financial assets and financial liabilities to allow investors to better compare financial statements prepared under US GAAP with financial statements prepared under International Financial Reporting Standards. The new standards are effective for the Company beginning in the first quarter of its fiscal year ending September 30, 2014. The Company is currently evaluating the impact of this new accounting guidance on the disclosures included in its consolidated financial statements.

Receivables and Concentrations of Credit Risk

“Receivables, net” in the accompanying Condensed Consolidated Balance Sheets consist of the following:


	July 1, 2012		September 30, 2011
Trade accounts receivable	$	356,638	$	370,733
Contingent purchase price reduction receivable (see Note 14)		41,000		—
Other receivables		45,090		37,678

		442,728		408,411
Less: Allowance for doubtful trade accounts receivable		14,288		14,128

	$	428,440	$	394,283

Trade receivables subject Spectrum Brands to credit risk. Trade accounts receivable are carried at net realizable value. Spectrum Brands extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history, and generally does not require collateral. Spectrum Brands monitors its customers’ credit and financial condition based on changing economic conditions and makes adjustments to credit policies as required. Provision for losses on uncollectible trade receivables are determined based on ongoing evaluations of Spectrum Brands’ receivables, principally on the basis of historical collection experience and evaluations of the risks of nonpayment for a given customer.

Spectrum Brands 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 customer represented approximately 23% of Spectrum Brands’ net sales during both the three and nine month periods ended July 1, 2012, respectively. This customer represented approximately 25% and 23% of Spectrum Brands’ net sales during the three and nine month periods ended July 3, 2011, respectively. This customer also represented approximately 14% and 16% of Spectrum Brands’ trade accounts receivable, net at July 1, 2012 and September 30, 2011, respectively.

Approximately 40% and 44% of Spectrum Brands’ net sales during the three and nine month periods ended July 1, 2012, respectively, and 40% and 44% of Spectrum Brands’ net sales during the three and nine month periods ended July 3, 2011, respectively, occurred outside the United States. These sales and related receivables are subject to varying degrees of credit, currency, political and economic risk. Spectrum Brands monitors these risks and makes appropriate provisions for collectability based on an assessment of the risks present.

Inventories

Inventories of Spectrum Brands, which are stated at the lower of cost (using the first-in, first-out method) or market, consist of the following:


	July 1, 2012		September 30, 2011
Raw materials	$	78,116	$	59,928
Work in process		29,672		25,465
Finished goods		444,727		349,237

	$	552,515	$	434,630

Properties

Properties, net consist of the following:


	July 1, 2012		September 30, 2011
Total properties, at cost	$	336,372	$	314,281
Less accumulated depreciation		127,484		107,482

	$	208,888	$	206,799

Shipping and Handling Costs

Spectrum Brands incurred shipping and handling costs of $48,797 and $148,383 for the three and nine month periods ended July 1, 2012, respectively, and $51,172 and $150,140 for the three and nine month periods ended July 3, 2011, respectively. These costs are included in “Selling, general and administrative” expenses in the accompanying Condensed Consolidated Statements of Operations. Shipping and handling costs include costs incurred with third-party carriers to transport products to customers as well as salaries and overhead costs related to activities to prepare Spectrum Brands’ products for shipment from its distribution facilities.

Asset-Based Loans

The Company originated loans receivable through the asset based lending activities of Salus that had balances aggregating $73,974, net of $559 estimated allowance for loan loss, as of July 1, 2012. Of the $74,533 gross loans receivable outstanding at July 1, 2012, $4,890 has a maturity date of one year or less, and the remainder have maturity dates between one and three years. Such loans are included in “Asset-backed loans and other invested assets” in the “Insurance and Financial Services” section of the Condensed Consolidated Balance Sheet as of July 1, 2012. Of the $74,533 of receivables outstanding at July 1, 2012, loans to four individual customers represented 73% of the outstanding loans receivable balance, and loans to customers in the apparel industry represented 62% of outstanding loans. As of July 1, 2012, all outstanding loans were current and in compliance with their respective loan covenants. Outstanding loans are secured by collateral with an estimated value of $101,065, as of July 1, 2012.