Energizer 2007 Annual Report Download - page 38

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Energizer Holdings, Inc. 2007 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 contributions into the plan. The participant’s after-tax con-
tribution of 1% of eligible compensation is matched with a 325%
Company contribution to the participant’s pension plan account.
Amounts charged to expense during fiscal 2007, 2006 and 2005
were $5.6, $5.4 and $5.2, 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, 2007 and 2006 consisted of notes
payable to financial institutions with original maturities of less than
one year of $43.0 and $63.6, respectively, and had a weighted-
average interest rate of 6.7% and 6.0%, respectively.
The detail of long-term debt at September 30 is as follows:
2007 2006
Private Placement, fixed interest
rates ranging from 3.1% to 6.2%,
due 2007 to 2016 $1,475.0 $1,485.0
Singapore Bank Syndication, multi-currency
facility, variable interest at LIBOR
+ 80 basis points, or 6.7%, due 2010 107.0 225.0
Total long-term debt, including
current maturities 1,582.0 1,710.0
Less current portion 210.0 85.0
Total long-term debt $1,372.0 $1,625.0
The Company maintains total committed debt facilities of
$2,140.0, of which $558.0 remained available as of September 30,
2007.
Under the terms of the Company’s debt facilities, the ratio of
the Company’s indebtedness to its Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) cannot be greater than
4.0 to 1, and may not remain above 3.5 to 1 for more than four
consecutive quarters. In addition, the ratio of its current year
Earnings Before Interest and Taxes (EBIT) to total interest expense
must exceed 3.0 to 1. 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 matu-
rity 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,
2007 are as follows: $210.0 in 2008, $100.0 in 2009, $327.0 in 2010,
$165.0 in 2011, $225.0 in 2012 and $555.0 thereafter.
In October 2007, the Company borrowed $1,500 under a bridge
loan facility which, together with cash on hand was used to acquire
Playtex. The Company subsequently refinanced $890 of the bridge
loan with long-term debt financing, with maturities ranging from
three to ten years and fixed rates ranging from 5.71% to 6.55%.
The Company expects to replace the remaining outstanding bridge
loan with permanent financing during the December quarter. As a
result of the new financing arrangement, total outstanding debt in
October was approximately $3,300 and the Company has $387.0 of
additional available committed debt facilities to meet its ongoing
liquidity needs.
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, 2007, 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 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.
Notes to Consolidated Financial Statements
(Dollars in millions, except per share and percentage data)
The following table presents assumptions, which reflect weighted-averages for the component plans, used in determining
the above information:
Pension Postretirement
September 30, 2007 2006 2007 2006
Plan obligations:
Discount rate 5.8% 5.3% 6.0% 5.7%
Compensation increase rate 3.9% 3.8% 3.5% 3.6%
Net Periodic Benefit Cost:
Discount rate 5.3% 5.2% 5.7% 5.5%
Expected long-term rate of return on plan assets 8.0% 8.0% 5.5% 5.5%
Compensation increase rate 3.8% 3.7% 3.6% 3.5%
The expected return on plan assets was determined based on historical and expected future returns of the various asset classes, using the
target allocations described below. Specifically, the expected return on equities (U.S. and foreign combined) is 9.6%, and the expected
return on debt securities (including higher-quality and lower-quality bonds) is 5.1%.