Energizer 2012 Annual Report Download - page 46

Download and view the complete annual report

Please find page 46 of the 2012 Energizer annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
Interest, Other Financing, net and Cost of Early Debt Retirements
Interest expense for fiscal 2012 was $127.3, an increase of $5.9 as compared to fiscal 2011 due primarily to the combined
affects of higher average borrowings and a slightly higher average borrowing rate.
On May 24, 2012, the Company issued $500.0 aggregate principal amount of 4.70% Senior Notes due in May 2022, with
interest paid semi-annually each May and November. The net proceeds of $495 were used to repay existing indebtedness,
including approximately $335 of the Company's term loan, which matures in December 2012, $100 of private placement notes,
which matured in June 2012 and a portion of the then-outstanding balance under the Company's receivables securitization
program.
In addition, the Company terminated a then-existing interest rate swap agreement, which previously hedged our interest rate
exposure on $200 of its then-existing term loan, which was reported as noted above. A charge of $1.7 is included in interest
expense in the third fiscal quarter of 2012 related to the early termination of this instrument.
Interest expense for fiscal 2011 was $121.4, a decrease of $4.0 as compared to fiscal 2010 due primarily to lower average
borrowings. In May 2011, the Company issued $600.0 principal amount of 4.70% senior notes due May 2021, with interest
paid semi-annually beginning in November 2011. A significant portion of the net proceeds from the issuance of the senior notes
were used for the early redemption of certain private placement notes. This early redemption required a notice period, which
delayed our repayment of the private placement notes. We incurred approximately $3 of duplicate interest expense as a result of
this notice period. Exclusive of this duplicate cost, total interest expense for the full fiscal year in 2011 was down $7.0
compared to fiscal 2010.
The Company utilized a majority of the proceeds from its Senior Note issuance in May 2011 to repay existing indebtedness
including $475 of private placement notes with maturities ranging from 2011 to 2013. The early retirement of certain of the
private placement notes resulted in make-whole payments totaling $19.9, pre-tax, which is reflected as a separate line item in
fiscal 2011 on the attached Statements of Earnings and Comprehensive Income.
Other financing, net was income of $5.1 in fiscal 2012 due primarily to $4.5 of interest income. In fiscal 2011, other
financing, net was $31.0 of expense due primarily to losses on foreign exchange hedging contracts of approximately $25,
which were more than offset by the impact of favorable currencies included in divisional segment profit for fiscal 2011 as
compared to fiscal 2010.
Income Taxes
Income taxes, which include federal, state and foreign taxes, were 27.7%, 35.7% and 25.8% of earnings before income taxes in
fiscal 2012, 2011 and 2010, respectively. Income taxes include the following items which impacted the overall tax rate in the
fiscal years' indicated.
For Fiscal 2012, adjustments were recorded to reflect refinement of estimates of tax attributes to amounts in filed returns,
settlement of tax audits and other tax adjustments. These fiscal 2012 adjustments decreased the income tax provision by $7.0.
For Fiscal 2011:
• The Household Products restructuring included significant costs incurred in countries with comparatively low
effective tax rates, which has the effect of increasing our overall effective tax rate due to a lower tax benefit associated
with these costs,
• Establishment of an estimated valuation allowance for certain tax loss carryforwards of $4.5 related to costs incurred
from the fiscal 2011 closure of the Swiss plant as part of the Household Products restructuring,
• Tax expense of $6.9 due to the establishment of a valuation allowance for certain foreign tax loss carryforwards,
which are no longer likely to be utilized, based on a recent evaluation,
• Adjustments were recorded to reflect refinement of estimates of tax attributes to amounts in filed returns, settlement of
tax audits and other tax adjustments. These fiscal 2011 adjustments decreased the income tax provision by $1.7, and
• A tax benefit of $2.6 was recorded in fiscal 2011 associated with the write-up and subsequent sale of inventory
acquired in the ASR acquisition.
36