Rayovac 2004 Annual Report Download - page 91

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RAYOVAC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
The Company has recorded an additional minimum pension liability of $16,209 and $14,942 at September
30, 2004 and 2003, respectively, to recognize the underfunded position of its benefit plans. An intangible asset of
$2,288 and $2,405 at September 30, 2004 and 2003, respectively, equal to the unrecognized prior service cost
and net transition obligation of these plans, has also been recorded. The excess of the additional minimum
liability over the unrecognized prior service cost, net of tax, $9,961 and $7,679 at September 30, 2004 and 2003,
respectively, has been recorded as a component of Accumulated other comprehensive income (loss).
The Company sponsors a supplemental executive retirement plan for eligible employees. Each October 1,
the account of each participant is credited by an amount equal to 15% of the participant’s salary. In addition,
each quarter each account is credited by an amount equal to 2% of the participant’s account value. Each
participant vests 20% per year in his account, with immediate full vesting occurring upon death, disability or a
change in control of the Company. As of September 30, 2004 and 2003, the Company had recorded an obligation
of $2,649 and $1,812, respectively, related to the plan.
The Company sponsors a defined contribution pension plan for its domestic salaried employees, which
allows participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue
Code. The Company contributes annually from 3% to 6% of participants’ compensation based on age, and may
make additional discretionary contributions. The Company also sponsors defined contribution pension plans for
employees of certain foreign subsidiaries. Company contributions charged to operations, including discretionary
amounts, for 2004, 2003 and 2002 were $1,896, $1,729, and 1,804, respectively.
For measurement purposes, annual rates of increase of 10.0% in the per capita costs of covered health care
benefits were assumed for 2004, 2003 and 2002, gradually decreasing to 4.0% for 2004 and 5.25% for 2003 and
2002. The health care cost trend rate assumption has a moderate effect on the amounts reported. For example,
increasing the assumed health care cost trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of September 30, 2004 by $180 and the aggregate of the service
and interest cost components of net periodic postretirement benefit cost for the year ended September 30, 2004
by $45. Decreasing the assumed health care cost trend rates by one percentage point in each year would decrease
the accumulated postretirement benefit obligation as of September 30, 2004 by $165 and the aggregate of the
service and interest cost components of net periodic postretirement benefit cost for the year ended September 30,
2004, by $40.
(12) Segment Information
The Company manages operations in three reportable segments based upon geographic area. North America
includes the United States and Canada; Latin America includes Mexico, Central America, South America and the
Caribbean; Europe/Rest of World (“Europe/ROW”) includes the United Kingdom, continental Europe, China,
Australia and all other countries in which the Company does business.
The Company manufactures and markets dry cell batteries including alkaline, zinc carbon, alkaline
rechargeable, hearing aid, other specialty batteries and lighting products throughout the world. These product
lines are sold in all geographic areas. In addition, electric shaving and grooming products and personal care
products are sold in the North America and Europe/ROW geographies.
Net sales and Cost of goods sold to other segments have been eliminated. The gross contribution of
intersegment sales is included in the segment selling the product to the external customer. Segment net sales are
based upon the geographic area from which the product is shipped.
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