Rayovac 2003 Annual Report Download - page 55

Pension plan assets and obligations are measured at June 30 each year. The contributions to the pension plans between July 1 and
September 30 were $2,814 and $— in 2002 and 2003, respectively.
The Company has recorded an additional minimum pension liability of $10,435 and $14,942 at September 30, 2002 and 2003, respec-
tively, to recognize the under funded position of its benefit plans. An intangible asset of $3,446 and $2,405 at September 30, 2002 and
2003, respectively, equal to the unrecognized prior service cost of these plans, has also been recorded. The excess of the additional
minimum liability over the unrecognized prior service cost of $6,989 and $7,679 at September 30, 2002 and 2003, respectively, has
been recorded as a component of accumulated other comprehensive income, net of tax.
The Company sponsors a supplemental executive retirement plan for eligible employees. Currently, only our executive management
participate in the plan. Each October 1, we credit the account of each participant by an amount equal to 15% of the participant’s
salary. In addition, each quarter we credit each account by an amount equal to 2% of the participant’s account value. Each partici-
pant 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, 2002 and 2003, the Company had recorded an obligation of $929 and $1,812, respectively, related to
the plan. Participants will fully vest on September 30, 2005.
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 2001, 2002 and 2003 were $2,147, $1,804 and $1,729 respectively.
For measurement purposes, annual rates of increase of 8.0% in the per capita costs of covered health care benefits were assumed for
2001, with annual increases of 10.0% assumed for 2002 and 2003, gradually decreasing to 5.5% for 2001 and 5.25% for 2002 and 2003.
The health care cost trend rate assumption has a significant 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, 2003 by $176 and the aggregate of the service and interest cost components of net periodic postretirement benefit
cost for the year ended September 30, 2003 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, 2003 by $161 and the aggregate of
the service and interest cost components of net periodic postretirement benefit cost for the year ended September 30, 2003, 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 and all other countries in which the Company does business.
The Company, prior to the acquisition of Remington, manufactures and markets dry cell batteries including alkaline, zinc carbon,
alkaline rechargeable, hearing aid, and other specialty batteries and lighting products throughout the world. These product lines
are sold in all geographic areas. Latin America net sales have historically been derived primarily from zinc carbon and alkaline
batteries. With the acquisition of Remington, the Company also sells personal care products.
Net sales and cost of sales to other segments have been eliminated. The gross contribution of inter segment sales is included in the
segment selling the product to the external customer. Segment net sales are based upon the geographic area in which the product
is sold.
The reportable segment profits do not include interest expense, interest income, and income tax expense. Also not included in the
reportable segments are corporate expenses including corporate purchasing expense, general and administrative expense, certain
research and development expense, and restructuring charges. All depreciation and amortization included in income from operations
is related to reportable segments or corporate. Costs are identified to reportable segments or corporate, according to the function
of each cost center.
Notes to Consolidated Financial Statements
Rayovac Corporation and Subsidiaries
(In thousands, except per share amounts)