Energizer 2010 Annual Report Download - page 65

Exhibit 13
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
55
spending including capital associated with new product initiatives. See Note 17 to the
Consolidated Financial Statements for capital expenditures by segment.
In fiscal 2009, the Company paid $275.0 for the acquisition of the shave preparation brands
and, in fiscal 2008 the Company paid $1,875.7 for the acquisition of Playtex. See “Financing
Activities” below for discussion of the financing of the Playtex transaction.
At the beginning of fiscal 2008, the Company held a net-cash settled prepaid share option with
a major financial institution to mitigate the impact of changes in the Company’s deferred
compensation liabilities. In fiscal 2008, the prepaid feature was removed from the transaction
and the Company received cash of $60.5, which was used to repay existing debt. Of the $60.5
received in fiscal 2008, $46.0 was a return of investment and was classified within investing
activities on the Consolidated Statements of Cash Flows. The remaining $14.5 was a return on
investment and was classified as a cash inflow from operations on the Consolidated
Statements of Cash Flows.
Capital expenditures of approximately $110 to $120 are anticipated in fiscal 2011 with
disbursements for new product and cost reduction-related capital driving the largest
components of projected capital spending. Such capital expenditures are expected to be
financed with funds generated from operations.
Financing Activities
The Company’s total borrowings were $2,313.4 at September 30, 2010, including $478.4 tied
to variable interest rates of which $300 is hedged via the interest rate swap agreements
described later in this discussion. The Company maintained total committed debt facilities of
$2,588.4, exclusive of available borrowings under the receivables securitization program, of
which $259.7 remained available as of September 30, 2010. During fiscal 2010, the Company
repaid approximately $250 in debt, including approximately $148 of outstanding borrowings
under the receivables securitization program.
On May 20, 2009, the Company completed the sale of an additional 10.925 million shares of
common stock for $49.00 per share. Net proceeds from the sale of the additional shares were
$510.2. The Company used $275 of the net proceeds to complete the purchase of the shave
preparation brands on June 5, 2009 and used $100 to repay private placement notes, which
matured on June 30, 2009. The remaining proceeds contributed significantly to the increase in
cash on hand at September 30, 2009 and the repayment of an additional $200 of private
placement notes on September 28, 2009.
Under the terms of the Company’s credit agreements, the ratio of the Company’s indebtedness
to its EBITDA, as defined in the agreements and detailed below, cannot be greater than 4.00 to
1, and may not remain above 3.50 to 1 for more than four consecutive quarters. If and so long
as the ratio is above 3.50 to 1 for any period, the Company is required to pay additional interest
expense for the period in which the ratio exceeds 3.50 to 1. The interest rate margin and
certain fees vary depending on the indebtedness to EBITDA ratio. Under the Company’s
private placement note agreements, the ratio of indebtedness to EBITDA may not exceed 4.0
to 1. However, if the ratio is above 3.50 to 1, the Company is required to pay an additional 75
basis points in interest for the period in which the ratio exceeds 3.50 to 1. In addition, under the
credit agreements, the ratio of its current year EBIT, as defined in the agreements, to total
interest expense must exceed 3.00 to 1. The Company’s ratio of indebtedness to its EBITDA
was 2.70 to 1, and the ratio of its EBIT to total interest expense was 5.72 to 1, as of September
30, 2010. The Company anticipates that it will remain in compliance with its debt covenants for