Energizer 2009 Annual Report Download - page 36

PAGE 34 ENERGIZER HOLDINGS INC. 2009 ANNUAL REPORT
In 2009, total pre-tax charges related to the VERO and RIF were $38.6,
which represented employee separation and related costs. Virtually
all of these costs in 2009 were recorded in SG&A expense. We do
not expect any material charges related to this VERO and RIF in fiscal
2010. To date, payments of $5.8 have been made related to the VERO
and RIF. We expect that the majority of the remaining payments of
$32.8 will be made by the end of the second quarter of fiscal 2010.
In the current global recessionary environment, we continue to see
cautious retailer inventory investments and unfavorable device trends,
primarily in developed markets. It remains difficult to determine how
much of the recent category weakness is due to each of these factors
as well as other category and competitive dynamics. The Company
believes this restructuring plan is advisable to reduce the Company’s
overhead cost structure for its Household Products business, right-size
manufacturing and sales operations in light of market conditions and
ensure alignment with its overall investment strategies. The VERO
resulted in the voluntary separation of 289 hourly and 101 salaried U.S.
colleagues and the RIF resulted in the termination of 46 colleagues in
the U.S. and certain foreign affiliates.
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, 2009 2008
2007
Numerator:
Net earnings for basic and
dilutive earnings per share
$297.8
$329.3 $321.4
Denominator:
Weighted-average shares –
basic
62.4
57.6 56.7
Effect of dilutive securities:
Stock options 0.4 0.7 1.0
Restricted stock equivalents 0.3 0.6 0.6
Total dilutive securities 0.7 1.3 1.6
Weighted-average shares –
diluted
63.1
58.9 58.3
Basic net earnings per share $ 4.77 $ 5.71 $ 5.67
Diluted net earnings per share $ 4.72 $ 5.59 $ 5.51
At September 30, 2009, approximately 0.8 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 approximately 0.4 million anti-dilutive
securities for the year ended September 30, 2008 and no anti-dilutive
securities for the year ended September 30, 2007.
8. Share-Based Payments
The Company’s Incentive Stock Plan was initially adopted by the Board
of Directors in March 2000 and approved by shareholders at the 2001
Annual Meeting of Shareholders. This plan was superseded in Janu-
ary 2009 as the Board of Directors approved a new plan, which was
approved by shareholders at the 2009 Annual Meeting of Sharehold-
ers. New awards granted after January 2009 will be issued under the
recently adopted plan. Under the recently adopted 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 4.0 million shares of ENR
stock was approved to be issued under the recently adopted plan. For
purposes of determining the number of shares available for future issu-
ance under the recently adopted plan, awards of restricted stock and
restricted stock equivalents will reduce the shares available for future
issuance by 1.95 for every one share awarded. Options awarded will
reduce the number of shares available for future issuance on a one
for one basis. At September 30, 2009, there were 3.4 million shares
available for future awards under the recently adopted plan. At
September 30, 2008 and 2007, there were 2.8 million and 3.3 million
shares, respectively, available for future awards under the original plan
adopted in March 2001. Since the original plan has been superseded,
no further shares under this original plan were available for future
awards after the adoption of the recently approved plan.
Options are granted at the market price on the grant date and gener-
ally have vested ratably over three to seven years. These awards
typically have a maximum term of 10 years. Restricted stock and
restricted stock equivalent awards may also be granted. 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 direc-
tors, 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
Common 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 employ-
ment, 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 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 Sheets.
Notes to Consolidated Financial Statements
(Dollars in millions, except per share and percentage data)