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48 SPECTRUM BRANDS | 2007 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Spectrum Brands, Inc.
Prior to the adoption of SFAS 123(R), the Company presented
all tax benefi ts of deductions resulting from the exercise of stock
options as operating cash fl ows in the statement of cash fl ows.
Beginning on October 1, 2005, the Company changed its cash
fl ow presentation in accordance with SFAS 123(R) and FSP FAS
123(R)-3 which require the cash fl ows resulting from the tax
benefi ts for these options to be classifi ed as fi nancing cash fl ows.
The Company also elected to calculate its initial pool of excess
tax benefi ts under the alternative transition method described
in FSP FAS 123(R)-3.
The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair value
recognition provisions of SFAS 123(R) during 2005 to options
granted under the Company’s stock option plans. For purposes
of this pro forma disclosure, the value of the options is amortized
to expense on a straight-line basis over a three year vesting period,
and forfeitures are recognized as they occur. The Company’s pro
forma information follows for 2005:
2005
Net income, as reported $ 46,832
Add: Stock-based compensation expense included in
reported net income, net of tax 5,801
Deduct: Total stock-based compensation expense
determined under fair value based method for all
awards, net of tax (7,562)
Pro forma net income $ 45,071
Basic earnings per share as reported $ 1.07
Basic earnings per share pro forma $ 1.03
Diluted earnings per share as reported $ 1.03
Diluted earnings per share pro forma $ 0.99
The following table summarizes the stock option transactions:
2007 2006 2005
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
Outstanding, beginning of period 1,911 $14.65 1,988 $14.64 3,300 $14.56
Granted – – – – – –
Exercised (149) 4.39 (28) 13.08 (1,276) 14.44
Forfeited (252) 13.68 (49) 15.46 (36) 14.03
Outstanding, end of period 1,510 $15.82 1,911 $14.65 1,988 $14.64
Options exercisable, end of period 1,384 $15.98 1,659 $14.74 1,467 $14.97
The following table summarizes information about options outstanding and options outstanding and exercisable as of
September 30, 2007:
Options Outstanding Options Outstanding and Exercisable
Weighted average Weighted average Weighted average
Number of Remaining Exercise Number of Exercise
Range of Exercise Prices Shares Contractual Life Price Shares Price
$11.32 – $14.60 1,041 4.61 years $13.48 925 $13.53
$16.19 – $21.50 202 0.86 18.75 199 18.73
$21.63 – $28.70 267 1.74 22.72 260 22.57
1,510 3.60 $15.82 1,384 $15.98