Energizer 2003 Annual Report Download - page 38

Page 36 ENR 2003 ANNUAL REPORT
The accumulated benefit obligation and fair value of plan assets for the
pension plans with accumulated benefit obligations in excess of plan
assets were $117.7 and $48.9, respectively, as of September 30,
2003 and $61.3 and $41.3, respectively, as of September 30, 2002.
Pension assets consist primarily of listed common stocks and bonds.
The U.S. plan held 1.5 million and 1.7 million shares of ENR stock at
September 30, 2003 and 2002, respectively, with a market value of
$55.0 and $52.6, respectively.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued
(Dollars in millions, except per share data)
The following table presents pension and postretirement expense:
Pension Postretirement
SEPTEMBER 30, 2003 2002 2001 2003 2002 2001
Service cost $ 20.5 $ 16.7 $ 16.7 $ 0.2 $ 0.1 $ 0.2
Interest cost 29.0 26.9 24.9 3.1 3.6 6.1
Expected return on plan assets (45.5) (48.9) (46.9) –– –
Amortization of unrecognized prior service cost (0.1) ––(2.4) (2.4) (0.3)
Amortization of unrecognized transition asset 0.3 0.3 0.3 –––
Recognized net actuarial (gain)/loss 2.0 (1.3) (3.3) –––
Net periodic benefit cost/(income) $ 6.2 $ (6.3) $ (8.3) $ 0.9 $ 1.3 $ 6.0
The following table presents assumptions, which reflect weighted-averages for the component plans, used in determining the above information:
Pension Postretirement
SEPTEMBER 30, 2003 2002 2003 2002
Discount rate 5.8% 6.2% 6.1% 6.5%
Expected return on plan assets 8.1% 8.3% – –
Compensation increase rate 4.4% 4.7% – –
Assumed healthcare cost trend rates have been used in the valuation of
postretirement health insurance benefits for the 2001 valuation. The
trend rate used for those periods was 6.5%. Due to the amendment to
the postretirement plan discussed above, cost trend rates no longer
materially impact the plan.
12. DEFINED CONTRIBUTION PLAN
Energizer sponsors a defined contribution plan, which extends participation
eligibility to substantially all United States employees. Energizer matches
50% of participants’ before-tax contributions up to 6% of eligible
compensation. In addition, participants can make after-tax contributions
into the plan. The participant’s first 1% of eligible compensation after-tax
contribution is matched with a 325% Energizer contribution to the
participant’s pension plan. Amounts charged to expense during fiscal
2003, 2002 and 2001 were $3.5, $4.0 and $3.8, respectively, and
are reflected in selling, general and administrative expense in the
Consolidated Statement of Earnings.
As of March 29, 2003, United States employees of the newly acquired
SWS business were eligible to participate in the Energizer defined contribu-
tion plan, but, as mandated by the terms of the Stock and Asset Purchase
Agreement with Pfizer, Inc. relating to the acquisition of SWS (the
Acquisition Agreement), until January 1, 2004, Energizer is required to
match 100% of the first 3% of compensation contributed and 50% of the
next 3% of compensation contributed, consistent with the terms of the
Pfizer-sponsored defined contribution plan in which they had previously
participated. Contributions can be on either a before-tax or after-tax basis.
Amounts charged to expense by Energizer for the six months it owned SWS
were $0.9. Commencing January 1, 2004, United States SWS employees
will receive matching contributions in accordance with the terms of
Energizer’s defined contribution plan, but, as dictated by the terms of the
Acquisition Agreement, will also receive, until April 1, 2005, an additional
contribution of 3.5% of compensation to the participant’s pension plan.
13. DEBT
Notes payable at September 30, 2003 and 2002 consisted of notes
payable to financial institutions with original maturities of less than one
year of $66.1 and $94.6, respectively, and had a weighted-average
interest rate of 3.7% and 3.8%, respectively.
In September 2003, Energizer prepaid $160.0 in long-term debt with
interest rates ranging from 7.8% to 8.0% and maturity dates in 2005,
2007 and 2010. The payment of the debt was funded with short-term
borrowings and available cash. Energizer recorded a $20.0 pre-tax
charge, or $12.4 after-tax, related to this prepayment, which is recorded
in other financing, net in the Consolidated Statement of Earnings.