Rayovac 2010 Annual Report Download - page 75

Segment Results. Operating segment profits do not include restructuring and related charges, interest
expense, interest income, impairment charges, reorganization items and income tax expense. Expenses associated
with global operations, consisting of research and development, manufacturing management, global purchasing,
quality operations and inbound supply chain are included in the determination of operating segment profits. In
addition, certain general and administrative expenses necessary to reflect the operating segments on a standalone
basis have been included in the determination of operating segment profits. Corporate expenses include primarily
general and administrative expenses associated with corporate overhead and global long-term incentive
compensation plans.
All depreciation and amortization included in income from operations is related to operating segments or
corporate expense. Costs are allocated to operating segments or corporate expense according to the function of
each cost center. All capital expenditures are related to operating segments. Variable allocations of assets are not
made for segment reporting.
Global strategic initiatives and financial objectives for each reportable segment are determined at the
corporate level. Each reportable segment is responsible for implementing defined strategic initiatives and
achieving certain financial objectives and has a general manager responsible for the sales and marketing
initiatives and financial results for product lines within that segment. Financial information pertaining to our
reportable segments is contained in Note 12, Segment Information, of Notes to Consolidated Financial
Statements included in this Annual Report on Form 10-K.
Global Batteries & Personal Care
2009 2008
(in millions)
Net sales to external customers ................................................... $1,335 $1,494
Segment profit ................................................................ $ 165 $ 163
Segment profit as a % of net sales ................................................ 12.4% 10.9%
Assets as of September 30, ...................................................... $1,608 $1,183
Segment net sales to external customers in Fiscal 2009 decreased $159 million to $1,335 million from
$1,494 million during Fiscal 2008, representing an 11% decrease. Unfavorable foreign currency exchange
translation impacted net sales in Fiscal 2009 by approximately $118 million in comparison to Fiscal 2008.
Consumer battery sales for Fiscal 2009 decreased to $819 million when compared to Fiscal 2008 sales of $916
million, principally due to a negative foreign currency impact of $70 million coupled with a decline in zinc
carbon battery sales of $32 million. The $32 million decrease in zinc carbon batteries is primarily concentrated in
Latin America, as Latin American sales were down $35 million in Fiscal 2009 compared to Fiscal 2008 as a
result of a slowdown in economic conditions and inventory de-stocking at retailers mainly in Brazil. Excluding
the impact of foreign currency exchange translation, sales of alkaline batteries increased $5 million as we
experienced gains in North America of $37 million, which were offset by declines within Europe and Latin
America of $17 million and $15 million, respectively. The increased alkaline battery sales in North America
were driven by an increase in market share, as consumers opt for our value proposition during the weakening
economic conditions in the U.S. The decreased alkaline battery sales in Europe were the result of our continued
efforts to exit from unprofitable or marginally profitable private label battery sales, as well as certain second tier
branded battery sales. We are continuing our efforts to promote profitable growth and therefore, expect to
continue to exit certain low margin business as appropriate to create a more favorable mix of branded versus
private label products. The decrease in Latin American alkaline battery sales was again due to the slowdown in
economic activity coupled with inventory de-stocking at retailers mainly in Brazil. Net sales of electric shaving
and grooming products in Fiscal 2009 decreased by $21 million, or 8%, primarily as a result of negative foreign
exchange impacts of $19 and declines in North America of $7 million. These declines were partially offset by
increases within Europe and Latin America of $3 million and $2 million, respectively. The declines within North
America are primarily attributable to delayed inventory stocking at certain of our major customers for the 2009
holiday season which in turn resulted in a delay of our product shipments that historically would have been
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