Energizer 2004 Annual Report Download - page 39

ENR 2004 Annual Report 37
15. Sale of Accounts Receivable
The Company routinely sells a pool of U.S. accounts receivable through a
financing arrangement between Energizer Receivables Funding
Corporation (the SPE), which is a bankruptcy-remote special purpose
entity subsidiary of the Company, and an outside party (the Conduit).
The terms of the arrangement were amended in April 2004 providing,
among other things, the ability of the Company to repurchase accounts
receivable sold to the Conduit if it so chooses. Under the amended
structure, funds received from the Conduit are treated as borrowings
rather than proceeds of accounts receivables sold for accounting purposes.
Prior to the amendment, this financing arrangement was required to be
accounted for as a sale of receivables, representing “off balance sheet
financing.” Under accounting required for the former agreement, reported
balance sheet captions were higher or lower than such amounts would
have been reported under the amended structure as presented below.
SEPTEMBER 30, 2003
Additional accounts receivable $ 175.7
Additional notes payable 75.0
Lower other current assets 100.7
16. Preferred Stock
The Company’s Articles of Incorporation authorize the Company to issue
up to 10 million shares of $.01 par value of preferred stock. During the
three years ended September 30, 2004, there were no shares of pre-
ferred stock outstanding.
17. Shareholders Equity
On March 16, 2000, the Board of Directors declared a dividend of one
share purchase right (Right) for each outstanding share of ENR common
stock. Each Right entitles a shareholder of ENR stock to purchase an
additional share of ENR stock at an exercise price of $150.00, which
price is subject to anti-dilution adjustments. Rights, however, may only
be exercised if a person or group has acquired or commenced a public
tender for 20% or more of the outstanding ENR stock, unless the acqui-
sition is pursuant to a tender or exchange offer for all outstanding shares
of ENR stock and a majority of the Board of Directors determines that
the price and terms of the offer are adequate and in the best interests of
shareholders (a Permitted Offer). At the time that 20% or more of the
outstanding ENR stock is actually acquired (other than in connection
with a Permitted Offer), the exercise price of each Right will be adjusted
so that the holder (other than the person or member of the group that
made the acquisition) may then purchase a share of ENR stock at one-
third of its then-current market price. If the Company merges with any
other person or group after the Rights become exercisable, a holder of a
Right may purchase, at the exercise price, common stock of the surviving
entity having a value equal to twice the exercise price. If the Company
transfers 50% or more of its assets or earnings power to any other
person or group after the Rights become exercisable, a holder of a Right
may purchase, at the exercise price, common stock of the acquiring
entity having a value equal to twice the exercise price.
The Company can redeem the Rights at a price of $.01 per Right at any
time prior to the time a person or group actually acquires 20% or more
of the outstanding ENR stock (other than in connection with a Permitted
Offer). In addition, following the acquisition by a person or group of at
least 20%, but not more than 50% of the outstanding ENR stock (other
than in connection with a Permitted Offer), the Company may exchange
each Right for one share of ENR stock. The Company’s Board of
Directors may amend the terms of the Rights at any time prior to the
time a person or group acquires 20% or more of the outstanding ENR
stock (other than in connection with a Permitted Offer) and may amend
the terms to lower the threshold for exercise of the Rights. If the thresh-
old is reduced it cannot be lowered to a percentage that is less than 10%
or, if any shareholder holds 10% or more of the outstanding ENR stock
at that time, the reduced threshold must be greater than the percentage
held by that shareholder. The Rights will expire on April 1, 2010.
At September 30, 2004, there were 300 million shares of ENR stock
authorized, of which approximately 10.8 million shares were reserved
for issuance under the 2000 Incentive Stock Plan.
Beginning in September 2000, Energizer’s Board of Directors has
approved a series of resolutions authorizing the repurchase of shares of
Energizer’s common stock, with no commitments by the Company to
repurchase such shares. Most recently, the Board of Directors approved
the repurchase of up to an additional 10 million shares, which resolution
replaced all previous authorizations. During fiscal year 2004, approxi-
mately 13.4 million shares were purchased for $546.7. Subsequent to
September 30, 2004 and through November 15, 2004, approximately
0.6 million shares were purchased for $25.0 under the most recent
authorization, pursuant to the terms of a Rule 10b5-1 Repurchase Plan
entered into with an independent broker. As of November 15, 2004,
there are 7.7 million shares remaining under the current authorization.
18. Financial I nstruments and Risk Management
Foreign Currency Contracts At times, the Company 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