Energizer 2010 Annual Report Download - page 105

Exhibit 13
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
95
Under the credit agreements, EBITDA is defined as net earnings, as adjusted to add-back
interest expense, income taxes, depreciation and amortization, all of which are determined in
accordance with GAAP. In addition, the credit agreement allows certain non-cash charges such
as stock award amortization and asset write-offs or impairments to be “added-back” in
determining EBITDA for purposes of the indebtedness ratio. Severance and other cash charges
incurred as a result of restructuring and realignment activities as well as expenses incurred in
acquisition integration activities are included as reductions in EBITDA for calculation of the
indebtedness ratio. In the event of an acquisition, the EBITDA is calculated on a pro forma basis
to include the trailing twelve-month EBITDA of the acquired company or brands. Total debt is
calculated in accordance with GAAP, but excludes outstanding borrowings under the receivable
securitization program. EBIT is calculated in a fashion identical to EBITDA except that
depreciation and amortization are not “added-back”. Total interest expense is calculated in
accordance with GAAP.
On May 3, 2010, the Company amended and renewed its existing receivables securitization
program, under which the Company routinely sells a pool of U.S. accounts receivable through a
financing arrangement between Energizer Receivables Funding Corporation, which is a
bankruptcy-remote special purpose entity subsidiary of the Company, and outside parties (the
Conduits). Under the current structure, funds received from the Conduit are treated as
borrowings rather than proceeds of accounts receivables sold for accounting purposes.
Borrowings under this program, which may not exceed $200, receive favorable treatment in the
Company’s debt compliance covenants. The program renews annually in May. We can provide
no assurance that the facility will be renewed on an annual basis, or if renewed, it may be done
so on less favorable terms. At September 30, 2010, there were no borrowings outstanding
under this facility.
The counterparties to long-term committed borrowings consist of a number of major financial
institutions. The Company continually monitors positions with, and credit ratings of,
counterparties both internally and by using outside ratings agencies. The Company has
staggered long-term borrowing maturities through 2017 to reduce refinancing risk in any single
year and to optimize the use of cash flow for repayment.
Aggregate maturities of long-term debt, including current maturities, at September 30, 2010 are
as follows for the fiscal years’ noted: $266.0 in 2011, $231.0 in 2012, $701.5 in 2013, $190.0 in
2014, $230.0 in 2015 and $670.0 thereafter. At this time, the Company intends to repay only
scheduled debt maturities over the course of the next fiscal year with the intent to preserve
committed liquidity.
(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, 2010, there
were no shares of preferred stock outstanding.
(12) Shareholders’ Equity
At September 30, 2010, there were 300 million shares of ENR stock authorized, of which
approximately 2.0 million shares were reserved for issuance under the 2000 Incentive Stock
Plan and 1.0 million shares were reserved for issuance under the 2009 Incentive Stock Plan.
Beginning in September 2000, the Company’s Board of Directors has approved a series of
resolutions authorizing the repurchase of shares of ENR common stock, with no commitments by
the Company to repurchase such shares. On July 24, 2006, the Board of Directors approved the