Energizer 2008 Annual Report Download - page 36

34 ENERGIZER HOLDINGS, INC. 2008 Annual Report
Notes to Consolidated Financial Statements
(Dollars in millions, except per share and percentage data)
of $28.2 which represented employee severance, contract termina-
tions and other exit costs, as well as $9.2 for other costs related to the
project. In 2006, $8.0 of these costs were reflected in cost of products
sold and $29.4 in SG&A expense. The remaining exit cost liability for
these projects at September 30, 2008 is immaterial.
7. EARNINGS PER SHARE
For each period presented below, basic earnings per share is based on
the average number of shares outstanding during the period. Diluted
earnings per share is based on the average number of shares used for
the basic earnings per share calculation, adjusted for the dilutive effect
of stock options and restricted stock equivalents.
The following table sets forth the computation of basic and diluted
earnings per share (shares in millions):
FOR THE YEARS ENDED
SEPTEMBER 30, 2008
2007 2006
Numerator:
Net earnings for basic and
dilutive earnings per share
$329.3
$321.4 $260.9
Denominator:
Weighted-average shares –
basic
57.6 56.7
61.2
Effect of dilutive securities:
Stock options 0.7 1.0 1.4
Restricted stock equivalents 0.6 0.6 0.5
Total dilutive securities 1.3 1.6 1.9
Weighted-average shares –
diluted
58.9
58.3 63.1
Basic net earnings per share $ 5.71 $ 5.67 $ 4.26
Diluted net earnings per share $ 5.59 $ 5.51 $ 4.14
At September 30, 2008, approximately 0.4 million of the Company’s
outstanding restricted stock equivalents were not included in the
diluted net earnings per share calculation because to do so would
have been anti-dilutive. In the event the potentially dilutive securities are
anti-dilutive on net earnings per share (i.e., have the effect of increas-
ing EPS), the impact of the potentially dilutive securities is not included
in the computation. There were no anti-dilutive securities for the years
ended September 30, 2007 or 2006.
8. SHARE-BASED PAYMENTS
The Company’s 2000 Incentive Stock Plan (the Plan) was adopted by
the Board of Directors in March 2000 and approved by shareholders,
with respect to future awards, which may be granted under the Plan, at
the 2001 Annual Meeting of Shareholders. Under the Plan, awards of
restricted stock, restricted stock equivalents or options to purchase the
Company’s common stock (ENR stock) may be granted to directors,
officers and key employees. A maximum of 15.0 million shares of ENR
stock was approved to be issued under the Plan. At September 30,
2008, 2007 and 2006, respectively, there were 2.8 million, 3.3 million
and 3.7 million shares available for future awards.
Options under the Plan have been granted at the market price on the
grant date and generally vest ratably over four to seven years. These
awards have a maximum term of 10 years. Restricted stock and
restricted stock equivalent awards may also be granted under the Plan.
Under the terms of the Plan, option shares and prices, and restricted
stock and stock equivalent awards, are adjusted in conjunction with
stock splits and other recapitalizations so that the holder is in the same
economic position before and after these equity transactions.
The Company permits deferrals of bonus and salary and for directors,
retainers and fees, under the terms of its Deferred Compensation Plan.
Under this plan, employees or directors deferring amounts into the
Energizer Common Stock Unit Fund are credited with a number of
stock equivalents based on the fair value of ENR stock at the time of
deferral. In addition, the participants are credited with an additional
number of stock equivalents, equal to 25% for employees and 33 1/3%
for directors, of the amount deferred. This additional company match
vests immediately for directors and three years from the date of initial
crediting for employees. Amounts deferred into the Energizer Com-
mon Stock Unit Fund, and vested company matching deferrals, may
be transferred to other investment options offered under the plan after
specified restriction periods. At the time of termination of employment,
or for directors, at the time of termination of service on the Board, or
at such other time for distribution which may be elected in advance by
the participant, the number of equivalents then vested and credited to
the participant’s account is determined and then an amount in cash
equal to the fair value of an equivalent number of shares of ENR stock
is paid to the participant. This plan is reflected in Other Liabilities on the
Consolidated Balance Sheet.
The Company uses the straight-line method of recognizing compen-
sation cost. Total compensation cost charged against income for the
Company’s share-based compensation arrangements was $26.4,
$25.3 and $16.0 for the years ended September 30, 2008, 2007 and
2006, respectively, and was recorded in SG&A expense. The total
income tax benefit recognized in the Consolidated Statements of
Earnings for share-based compensation arrangements was $9.6, $9.2
and $5.9 for the years ended September 30, 2008, 2007 and 2006,
respectively. Restricted stock issuance and shares issued for stock
option exercises under the Company’s share-based compensation
program are generally issued from treasury shares.
Options As of September 30, 2008, the aggregate intrinsic value of
stock options outstanding and stock options exercisable was $77.5
and $74.0, respectively. The aggregate intrinsic value of stock options
exercised for the years ended September 30, 2008, 2007 and 2006
was $36.7, $107.8 and $34.0, respectively. When valuing new grants,
Energizer uses an implied volatility, which reflects the expected volatility
for a period equal to the expected life of the option. No new option
awards were granted in the years ended September 30, 2008,
2007 and 2006.
As of September 30, 2008, there was no unrecognized compensation
costs related to stock options granted. For outstanding nonqualified
stock options, the weighted average remaining contractual life is
3.8 years.