Energizer 2004 Annual Report Download - page 38

ENR 2004 Annual Report
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13. Defined Contribution Plan
The Company sponsors a defined contribution plan, which extends
participation eligibility to substantially all U.S. employees. The Company
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% Company contribution to the
participant’s pension plan. Amounts charged to expense during fiscal
2004, 2003 and 2002 were $5.4, $4.4 and $4.0, respectively, and
are reflected in selling, general and administrative expense in the
Consolidated Statement of Earnings.
As of March 29, 2003, U.S. employees of the newly acquired SWS
business were eligible to participate in the Company’s defined contribution
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, the Company was
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 could be on either a
before-tax or after-tax basis. As of January 1, 2004, U.S. participants
received matching contributions in accordance with the terms of the
Company’s defined contribution plan, but, as dictated by the terms of
the Acquisition Agreement, will also receive, until March 28, 2005, an
additional contribution of 3.5% of compensation to the participant’s
pension plan.
14. Debt
Notes payable at September 30, 2004 and 2003 consisted of notes
payable to financial institutions with original maturities of less than one
year of $162.3 and $66.1, respectively, and had a weighted-average
interest rate of 3.0% and 3.7%, respectively.
In September 2003, the Company 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. In September 2003, the
Company 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.
The detail of long-term debt at September 30 is as follows:
2004 2003
Private Placement, fixed interest rates ranging from
2.3% to 4.3%, due 2006 to 2013 $ 375.0 $ 375.0
Private Placement, variable interest at LIBOR +
65 to 75 basis points, or ranging from 2.6% to
2.7% and 1.8% to 1.9%, at September 30,
2004 and 2003, respectively, due 2008 to 2013 325.0 325.0
Singapore Syndication, U.S. Dollar loan, variable
interest at SIBOR + 1%, or 2.2% and 2.1% at
September 30, 2004 and 2003, respectively, due
2004 to 2008 105.0 125.0
Singapore Dollar Revolving Credit Facility, variable
interest rate, 1.9% and 1.6% at September 30,
2004 and 2003, respectively, due 2006 39.6 78.6
Revolving Credit Facility, variable interest rate, 3.0%
and 1.9% at September 30, 2004 and 2003,
respectively, due 2006 235.0 30.0
1,079.6 933.6
Less current portion 20.0 20.0
Total long-term debt $ 1,059.6 $ 913.6
The Company maintains total committed debt facilities of $1,239.0, of
which $155.8 remained available as of September 30, 2004.
Under the terms of the facilities, the ratio of the Company’s total indebt-
edness to its EBITDA cannot be greater than 3.5 to 1 and the ratio of
its EBIT to total interest expense must exceed 3 to 1. Additional restric-
tive covenants exist under current debt facilities. Failure to comply with
the above ratios or other covenants could result in acceleration of matu-
rity, which could trigger cross defaults on other borrowings. The
Company believes that covenant violations resulting in acceleration of
maturity is unlikely. The Company’s fixed rate debt is callable by the
Company, subject to a “make whole” premium, which would be
required to the extent the underlying benchmark U.S. treasury yield has
declined since issuance.
Aggregate maturities on all long-term debt at September 30, 2004 are
as follows: $20.0 in 2005, $314.6 in 2006, $40.0 in 2007, $115.0
in 2008, $20.0 in 2009 and $570.0 thereafter.
In November 2004, the Company entered into two new financing agree-
ments. A $300.0 long-term debt financing was completed, with maturities
of three, five and seven years and with fixed rates ranging from 3.44% to
4.38%. Proceeds from these notes were used to pay down all existing
long-term debt in the revolving credit facility and to partially retire short-term
debt within the secured financing. In addition, the Company renegotiated
its existing revolving credit facility in order to extend the maturity to five
years and to realize more favorable borrowing spreads.
ENERGI ZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCI AL STATEMENTS Continued
(Dollars in millions, except per share data)