Rayovac 2007 Annual Report Download - page 64

62 SPECTRUM BRANDS | 2007 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Spectrum Brands, Inc.
The Company’s Other portfolio consists of all pension assets
in the United Kingdom, Germany and the Netherlands.
The Company expects to make minimal contributions to its pen-
sion plans in 2008. The Company’s expected future pension benefi t
payments for Fiscal 2008 through Fiscal 2017 are as follows:
2008 $ 3,949
2009 3,845
2010 4,040
2011 4,279
2012 4,466
2013 to 2017 $27,986
Prior to the adoption of SFAS No. 158 “Employers’ Accounting
for Defi ned Benefi t Pension and Other Postretirement Plans – an
amendment of FASB Statements No. 87, 88, 106, and 132(R)”
(SFAS 158), the Company recorded an additional minimum
pension liability of $19,409 at September 30, 2006 to recog-
nize the underfunded position of its benefi t plans. An intangible
asset of $2,773 at September 30, 2006 equal to the unrecog-
nized prior service cost and net transition obligation of these
plans had also been recorded. The excess of the additional mini-
mum liability over the unrecognized prior service cost, net of
tax, of $9,668 at September 30, 2006 was recorded as a com-
ponent of AOCI.
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 partici-
pant’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. During Fiscal 2007, the Company began funding
this plan; however, prior to Fiscal 2007 the plan was unfunded. As
of September 30, 2007 and 2006, the Company had recorded an
obligation of $468 and $3,848, respectively, related to the plan.
The Company sponsors a defi ned 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 or ser-
vice, and may make additional discretionary contributions. The
Company also sponsors defi ned contribution pension plans for
employees of certain foreign subsidiaries. Company contributions
charged to operations, including discretionary amounts, for 2007,
2006 and 2005 were $4,109, $5,900 and $4,193, respectively.
(13) Segment Information
In Fiscal 2007, the Company began managing its business in
three operating segments: (i) Global Batteries & Personal Care,
(ii) Global Pet Supplies; and (iii) the Home and Garden Busi-
ness. The presentation of all historical segment reporting herein
has been reclassifi ed to conform to this segment structure.
Global strategic initiatives and fi nancial objectives for each
reportable segment are determined at the corporate level. Each
reportable segment is responsible for implementing defi ned stra-
tegic initiatives and achieving certain fi nancial objectives and has
a general manager responsible for the sales and marketing initia-
tives and fi nancial results for product lines within that segment.
Net sales and Cost of goods sold to other business segments
have been eliminated. The gross contribution of intersegment
sales is included in the segment selling the product to the exter-
nal customer. Segment net sales are based upon the segment
from which the product is shipped.
The operating segment profi ts do not include restructuring
and related charges, interest expense, interest income, impair-
ment charges and income tax expense. In connection with the
realignment of operating segments discussed above in Fiscal
2007 expenses associated with the Company’s global operations
group, which consisted of research and development, manufac-
turing management, global purchasing, quality operations and
inbound supply chain, which were previously refl ected in corpo-
rate expenses, are now included in the determination of operating
segment profi ts. In addition, certain general and administrative
expenses necessary to refl ect the operating segments on a stand-
alone basis and which were previously refl ected as corporate
expenses, have been included in the determination of operating
segment profi ts. Accordingly, corporate expenses include primar-
ily general and administrative expenses associated with corporate
overhead and global long-term incentive compensation plans.
Segment reporting results for Fiscal 2006 and 2005 have been
reclassifi ed to conform to the changes described above. All depre-
ciation and amortization included in income from operations is
related to operating segments or corporate expense. Costs are
identifi ed 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.
Segment information for Fiscal 2007, 2006 and 2005 is as
follows:
Net Sales to External Customers
2007 2006 2005
Global Batteries &
Personal Care $ 1,431,475 $ 1,351,518 $ 1,476,536
Global Pet Supplies 563,047 543,223 285,643
Total segments $ 1,994,522 $ 1,894,741 $ 1,762,179