Rayovac 2008 Annual Report Download - page 141

Table of Contents
Index to Financial Statements
SPECTRUM BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
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 $48,675, $58,622 and $50,568 in Fiscal 2008, 2007 and 2006, respectively, which are included in Selling
expenses.
(p) Research and Development Costs
Research and development costs are charged to expense in the period they are incurred.
(q) Net Loss Per Common Share
Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares
outstanding for the period. Basic net loss per common share does not consider common stock equivalents. Diluted net loss per common share reflects the dilution
that would occur if 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 loss of the entity. The computation of diluted net loss 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 loss per common share is calculated based upon the following shares:
2008 2007 2006
Basic 50,921 50,909 49,459
Effect of restricted stock and assumed conversion of stock options — — —
Diluted 50,921 50,909 49,459
The Company has not assumed the exercise of common stock equivalents in either Fiscal 2008, 2007 or 2006 as the impact would be antidilutive.
(r) Derivative Financial Instruments
Derivative financial instruments are used by the Company principally in the management of its interest rate, foreign currency and raw material price exposures.
The Company does not hold or issue derivative financial instruments for trading purposes. When entered into, the Company formally designates the financial
instrument as a hedge of a specific underlying exposure if such criteria are met, and documents both the risk management objectives and strategies for
undertaking the hedge. The Company formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments that are used in
hedging transactions are effective at
offsetting changes in either the fair value or cash flows of the related underlying exposure. Because of the high degree of effectiveness between the hedging
instrument and the underlying exposure being hedged, fluctuations in the value of the derivative instruments are generally offset by changes in the fair values or
cash flows of the underlying exposures being hedged. Any ineffective portion of a financial instrument’s change in fair value is immediately recognized in
earnings.
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Source: Spectrum Brands, Inc, 10-K, December 10, 2008