Energizer 2011 Annual Report Download - page 81

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ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
There were no Level 3 pension and other postretirement plan assets at September 30, 2011 and 2010.
Our investment objective for defined benefit retirement plan assets is to satisfy the current and future pension benefit
obligations. The investment philosophy is to achieve this objective through diversification of the retirement plan assets. The
goal is to earn a suitable return with an appropriate level of risk while maintaining adequate liquidity to distribute benefit
payments. The diversified asset allocation includes equity positions, as well as a fixed income allocation. The increased
volatility associated with equities is offset with higher expected returns, while the long duration fixed income positions help
dampen the volatility of the overall portfolio. Risk exposure is controlled by rebalancing the retirement plan assets back to
target allocations, as needed. Investment firms managing retirement plan assets carry out investment policy within their stated
guidelines. Investment performance is monitored against benchmark indices, which reflect the policy and target allocation of
the retirement plan assets.
Effective January 1, 2010, the pension benefit earned to date by active participants under the legacy Energizer U.S. pension
plan was frozen and future retirement benefits accrue to active non-ASR participants using a new retirement accumulation
formula. Under this new formula, active non-ASR participants earn a retirement benefit equal to 6% per annum of their
pensionable earnings during a calendar year. In addition, an interest credit is applied to the benefits earned under this revised
formula at a rate equal to a 30 year U.S. Treasury note. Finally, active non-ASR participants that met certain age and service
criteria as of December 31, 2009, receive a transitional benefit in addition to the pension credit of 6% per annum. This
transitional benefit provides an additional pension credit of 2% to 4% per annum of pensionable earnings plus the applicable
interest credit, through 2014. As part of the ASR acquisition in early fiscal 2011, Energizer assumed the legacy benefits under
the two frozen ASR pension plans.
In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010
(the Acts) were signed into law in the United States. This legislation extends health care coverage to many uninsured
individuals and expands coverage to those already insured. We have evaluated the effect of the Acts on our U.S. retiree medical
obligation. Under the structure of our U.S. plan, the Company has limited its financial commitment for the benefits provided
under the plan; all costs in excess of the Company's commitment are allocated to the retirees. Any increased costs from the Acts
will also be allocated to the retirees and will not change the Company's financial commitment. As such, we have not added any
additional obligation related to the Acts to the Company's postretirement benefit obligation.
(11) Defined Contribution Plan
The Company sponsors a defined contribution plan, which extends participation eligibility to substantially all U.S. employees,
other than legacy ASR employees. The Company matches 50% of participant’s before-tax contributions up to 6% of eligible
compensation. Prior to January 1, 2010, after-tax contributions not exceeding 1% of participant's compensation were matched
325% by the Company. Amounts charged to expense during fiscal 2011, 2010, and 2009 were $9.2, $8.0, and $8.1,
respectively, and are reflected in SG&A and Cost of products sold in the Consolidated Statements of Earnings. Also included
in the fiscal 2011 expense was $0.9 related to the matching components of two legacy ASR plans. These plans were part of the
ASR acquisition that occurred in early fiscal 2011.
(12) Debt
Notes payable at September 30, 2011 and 2010 consisted of notes payable to financial institutions with original maturities of
less than one year of $56.0 and $24.9, respectively, and had a weighted-average interest rate of 3.1% and 5.7%, respectively.
The detail of long-term debt at September 30 for the year indicated is as follows:
Private Placement, fixed interest rates ranging from 4.1% to 6.6%, due 2012 to 2017
Senior Notes, fixed interest rate of 4.7%, due 2021
Term Loan, variable interest at LIBOR + 75 basis points, or 1.0%, due December 2012
Total long-term debt, including current maturities
Less current portion
Total long-term debt
2011
$1,265.0
600.0
447.5
2,312.5
106.0
$2,206.5
2010
$1,835.0
$0.0
453.5
2,288.5
266.0
$2,022.5
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