Nine Months Ended June 30,
Note 3 – The Company’s operations are managed via three major segments - North America Battery (United States and Canada battery and lighting products), International Battery (rest of world battery and lighting products) and Razors and Blades (global razors, blades, and related products). The Company reports segment results reflecting all profit derived from each outside customer sale in the region in which the customer is located. Research and development costs for the battery segments are combined and included in the Total Battery segment results. Research and development costs for Razors and Blades are included in that segment’s results. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, major restructuring charges and amortization of intangible assets. Financial items, such as interest income and expense, are managed on a global basis at the corporate lev el.
Note 5 – Basic earnings per share is based on the average number of common shares outstanding during the period. Diluted earnings per share is based on the average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of stock options and restricted stock equivalents.
A final adjustment was made in 2004 to the SWS purchase allocation between goodwill and intangible assets by country. Because local tax treatment of goodwill and intangible assets varies by local statute, such allocations impacted the required level of related deferred taxes. The recording of such deferred tax adjustments resulted in a corresponding increase in recorded goodwill.
Changes in indefinite-lived intangible assets are currency related. Estimated amortization expense for amortized intangible assets for each year ended September 30, 2004 through 2008 is $5.0.
Net sales to customers for the third quarter increased $14.7, or 7%, primarily on higher volume. Alkaline unit volumes increased 11% in the quarter.
Net sales for the quarter increased $19.0, or 11%, on higher volume and favorable currency impacts of $8.4. Segment profit increased $6.9 for the quarter, including a $4.2 benefit of favorable currencies and higher sales, which were partially offset by higher advertising, promotion and overhead expenses.
Subsequent Events In July 2004, the Company announced a Voluntary Enhanced Retirement Option (VERO) available to approximately 600 eligible employees in the United States. If all eligible employees elect to participate, it would result in a pre-tax charge of $22.0, or $0.18 per diluted share, after-tax, in the fourth quarter of 2004. However, it is currently not possible to accurately predict how many eligible employees will elect to participate. The Company anticipates that many employees electing the VERO will not be replaced. Cost savings resulting from the VERO cannot be predicted until the number and specific employees accepting the offer are known. It is expected that cost savings realized will offset program costs in less than one year.
(1) On January 26, 2004, the Company announced Board approval of an authorization for the Company to acquire up to 10,000,000 shares of its common stock, which replaced in its entirety a previous Board authorization. Following that date and through the third fiscal quarter, approximately 3.2 million shares of common stock were acquired by the Company under the new authorization. On May 28, 2004, the Company entered into a Rule 10b5-1 Repurchase Plan with an independent broker, authorizing the broker to acquire shares on behalf of the Company. Purchases by the Company during the month of June, 2004 were pursuant to the Plan, which, by its terms, expired on July 31, 2004. The Company has purchased, through July 27, 2004, an additional 1.4 million shares under the terms of the Repurchase Plan, leaving 5.4 million shares authorized for repurchase.