Rayovac 2004 Annual Report Download - page 76

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RAYOVAC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
Adjustments resulting from translation of the financial statements are recorded as a component of Accumulated
other comprehensive income (loss) (“AOCI”). Also included in AOCI are the effects of exchange rate changes on
intercompany balances of a long-term nature.
The strengthening of the Euro versus the U.S. Dollar had a significant positive impact on AOCI in 2004 and
2003, primarily related to the translation of the Company’s Euro denominated net assets. Currency devaluations
in Argentina and Venezuela, along with the weakening currency in Mexico had negative impacts on AOCI in
2004, 2003 and 2002.
As of September 30, 2004 and 2003, foreign currency translation adjustment balances of $19,998 and
$(561), respectively, were reflected in the Consolidated Balance Sheets in Accumulated other comprehensive
income (loss).
Exchange losses (gains) on foreign currency transactions aggregating $949, $(2,637), and $2,412 for 2004,
2003 and 2002, respectively, are included in Other expense (income), net, in the Consolidated Statements of
Operations.
(n) Shipping and Handling Costs
The Company incurred shipping and handling costs of $65,784, $45,573 and $24,081 in 2004, 2003 and 2002,
respectively, which are included in Selling expenses. Shipping and handling costs include costs incurred with
third-party carriers to transport products to customers and salaries and overhead costs related to activities to
prepare the Company’s products for shipment at the Company’s distribution facilities.
(o) Advertising Costs
The Company incurred expenses for advertising of $51,321, $11,458 and $10,317 in 2004, 2003 and 2002,
respectively, which are included in Selling expenses.
(p) Research and Development Costs
Research and development costs are charged to expense in the year they are incurred.
(q) Net Income Per Common Share
Basic net income per common share is computed by dividing net income available to common shareholders by
the weighted-average number of common shares outstanding for the period. Basic net income per common share
does not consider common stock equivalents. Diluted net income per common share reflects the dilution that
would occur if convertible debt securities, employee stock options, and restricted stock awards were exercised or
converted into common shares or resulted in the issuance of common shares that then shared in the net income of
the entity. The computation of diluted net income per common share uses the “if converted” and “treasury stock”
methods to reflect dilution. The difference between the basic and diluted number of shares is due to the effects of
restricted stock and assumed conversion of employee stock options awards.
Net income per common share is calculated based upon the following shares:
2004 2003 2002
Basic ..................................................... 33,433 31,847 31,775
Effect of restricted stock and assumed conversion of stock options .... 1,187 709 639
Diluted ................................................... 34,620 32,556 32,414
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