Energizer 2001 Annual Report Download - page 48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
(Dollars in millions except per share data)
At September 30, 2001, there were 300 million shares of ENR stock authorized, of which approximately
8.4 million shares were reserved for issuance under the 2000 Incentive Stock Plan.
In September 2000, Energizer's Board of Directors approved a share repurchase plan authorizing the
repurchase of up to 5 million shares of Energizer's common stock, of which approximately 3.8 million shares
have been repurchased.
(16) Financial Instruments and Risk Management
Foreign currency contracts Ó Energizer enters into foreign exchange forward contracts and, to a lesser
extent, purchases options and enters into zero-cost option collars to mitigate potential losses in earnings or
cash Öows on foreign currency transactions. Energizer has not designated any Ñnancial instruments as hedges
for accounting purposes. Foreign currency exposures are primarily related to anticipated intercompany
purchase transactions and intercompany borrowings. Other foreign currency transactions to which Energizer is
exposed include external purchase transactions and intercompany receivables, dividends and service fees.
The table below summarizes, by instrument and by major currency, the contractual amounts of
Energizer's forward exchange contracts and purchased currency options in U.S. dollar equivalents at year-end.
These contractual amounts represent transaction volume outstanding and do not represent the amount of
Energizer's exposure to credit or market loss. Foreign currency contracts are generally for one year or less.
2001 2000
Instrument
Forwards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $121.3 $122.5
Options ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16.0 25.0
Currency
Swiss franc ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 105.7 117.2
Canadian dollar ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 25.0
EuroÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27.5 Ì
Other currenciesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.1 5.3
Concentration of Credit Risk Ó The counterparties to foreign currency contracts consist of a number of
major international Ñnancial institutions and are generally institutions with which Energizer maintains lines of
credit. Energizer does not enter into foreign exchange contracts through brokers nor does it trade foreign
exchange contracts on any other exchange or over-the-counter markets. Risk of currency positions and
market-to-market valuation of positions are strictly monitored at all times.
Energizer continually monitors positions with, and credit ratings of, counterparties both internally and by
using outside rating agencies. Energizer has implemented policies that limit the amount of agreements it
enters into with any one party. While nonperformance by these counterparties exposes Energizer to potential
credit losses, such losses are not anticipated due to the control features mentioned.
Energizer sells to a large number of customers primarily in the retail trade, including those in mass
merchandising, drugstore, supermarket and other channels of distribution throughout the world. Energizer
performs ongoing evaluations of its customers' Ñnancial condition and creditworthiness, but does not generally
require collateral. While the competitiveness of the retail industry presents an inherent uncertainty, Energizer
does not believe a signiÑcant risk of loss from a concentration of credit risk exists with respect to accounts
receivable.
Financial Instruments Ó Energizer's Ñnancial instruments include cash and cash equivalents, short-term
and long-term debt, foreign currency contracts, and interest rate swap agreements. Due to the nature of cash
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