Earnings Per Share – Basic earnings per share is based on the average number of shares outstanding during the period subsequent to the spin-off. 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. For all periods prior to the spin-off, shares used in the earnings per share calculation are based on the weighted-average number of shares of Ralston common stock outstanding adjusted  for the distribution of one share of Energizer stock for each three shares of Ralston stock. Impairment of Long-Lived Assets – Energizer reviews long- lived assets, including goodwill and other intangible assets, for impairment whenever events or changes in business circumstances indicate that the remaining useful life may warrant revision or that the carrying amount of the long-lived asset may not be fully recov- erable. Energizer performs undiscounted cash flow analyses to determine if an impairment exists. If an impairment is determined to exist, any related impairment loss is calculated based on fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.  Revenue Recognition – Revenue is recognized upon shipment  of product to customers. Sales discounts, returns and allowances  are included in net sales, and the provision for doubtful accounts  is included in selling, general and administrative expenses in the Consolidated Statement of Earnings.  Accounting for Stock-Based Compensation – Energizer accounts for stock options using the intrinsic value method as  prescribed by Accounting Principles Board Opinion No. 25 (APB 25). Pro forma disclosures required under Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” as if Energizer had adopted the fair value based method of accounting for stock options, are presented in Note 8 to  the Consolidated Financial Statements. Advertising and Promotion Costs – Energizer advertises  and promotes its products through national and regional media. Products are also advertised and promoted through cooperative  programs with retailers. Energizer expenses advertising and promo- tion costs as incurred. Due to the seasonality of the business, with typically higher sales and volume during the holidays in the first quarter, advertising and promotion costs incurred during interim periods are generally expensed ratably in relation to revenues.  Research and Development Costs – Research and develop- ment costs are expensed as incurred.  Income Taxes – Energizer follows the liability method of  accounting for income taxes. Deferred income taxes are recognized for the effect of temporary differences between financial and tax reporting. No additional U.S. taxes have been provided on earnings of foreign subsidiaries expected to be reinvested indefinitely. Additional income taxes are provided, however, on planned  repatriation of foreign earnings after taking into account tax-exempt earnings and applicable foreign tax credits. Management assesses the realizability of deferred tax assets and provides valuation allowances as deemed necessary. Accruals for environmental remediation are included in other  current liabilities or other liabilities, depending on their nature,  in the Consolidated Balance Sheet and are recorded at  undiscounted amounts. Reclassifications – Certain reclassifications have been  made to the prior year financial statements to conform to the  current presentation. Environmental Remediation Liabilities – Accruals for  environmental remediation are recorded when it is probable that a  liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technolo- gies. These accruals are adjusted periodically as assessments take place and remediation efforts progress, or as additional technical  or legal information becomes available.  27