Energizer 2006 Annual Report Download - page 38

ENERGIZER HOLDINGS, INC.
Notes to Consolidated Financial Statements
(Dollars in millions, except per share and percentage data)
36 ENR 2006 ANNUAL REPORT
9. 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 contribu-
tions into the plan. The participant’s after-tax contribution of 1% of
eligible compensation is matched with a 325% Company contribution
to the participant’s pension plan. Amounts charged to expense during
fiscal 2006, 2005 and 2004 were $5.4, $5.2 and $5.4, respectively,
and are reflected in SG&A and cost of products sold in the Consolidated
Statement of Earnings.
10. Debt
Notes payable at September 30, 2006 and 2005 consisted of notes
payable to financial institutions with original maturities of less than one
year of $63.6 and $101.2, respectively, and had a weighted-average
interest rate of 6.0% and 4.7%, respectively.
The detail of long-term debt at September 30 is as follows:
2006 2005
Private Placement, fixed interest rates ranging
from 2.7% to 6.2%, due 2007 to 2016 $ 1,485.0 $ 1,000.0
Singapore Bank Syndication, multi-currency
facility, variable interest at LIBOR + 55 basis
points, or 6.7%, due 2010 225.0 310.0
Total long-term debt, including current maturities 1,710.0 1, 310.0
Less current portion 85.0 15 . 0
Total long-term debt $ 1,625.0 $ 1,295.0
The Company maintains total committed debt facilities of $2,185.0,
of which $475.0 remained available as of September 30, 2006.
Under the terms of the facilities, the ratio of the Company’s total
indebtedness to its EBITDA generally cannot be greater than 3.5 to 1
and the ratio of its EBIT to total interest expense must exceed 3 to 1.
Additional restrictive covenants exist under current debt facilities.
Failure to comply with the above ratios or other covenants could result
in acceleration of maturity, 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, 2006
are as follows: $85.0 in 2007, $135.0 in 2008, $100.0 in 2009, $445.0
in 2010, $165.0 in 2011, and $780.0 thereafter.
In July 2006, the Company completed a new $500.0 long-term
financing agreement. Maturities on the new debt are as follows: $80.0
in 2009 and $140.0 each in 2011, 2014 and 2016 with fixed rates ranging
from 6.0% to 6.2%. Approximately $420 of the proceeds from these
notes were used to pay down existing variable rate debt with the
remaining proceeds being held for general corporate purposes.
11. Preferred Stock
The Company’s Articles of Incorporation authorize the Company to
issue up to 10 million shares of $0.01 par value of preferred stock.
During the three years ended September 30, 2006, there were no
shares of preferred stock outstanding.
12. 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 com-
mon 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 deter-
mines 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 $0.01 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 threshold is reduced, it cannot be lowered to a per-
centage 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, 2006, there were 300 million shares of ENR stock
authorized, of which approximately 4.7 million shares were reserved for
issuance under the 2000 Incentive Stock Plan.
Beginning in September 2000, the Company’s Board of Directors
has approved a series of resolutions authorizing the repurchase of