Energizer 2012 Annual Report Download - page 52

ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
Company's Revolving Credit Agreement currently provides for revolving credit loans and the issuance of letters of credit in an
aggregate amount of up to $450. We have no outstanding borrowings under our revolving credit facility, and $438.9 remains
available as of September 30, 2012, including $11.1 of outstanding letters of credit.
Under the terms of the Company’s credit agreements, the ratio of the Company’s indebtedness to its earnings before interest
taxes depreciation and amortization (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, indebtedness to EBITDA may not be greater than 4.00 to 1; if the ratio is above 3.50 to 1, for any
quarter, the Company is required to pay additional interest on the private placement notes of 0.75% per annum for each quarter
until the ratio is reduced to not more than 3.50 to 1. In addition, under the credit agreements, the ratio of its current year
earnings before interest and taxes (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 2.64 to 1, and the ratio of its EBIT to total interest expense was 5.86 to 1,
as of September 30, 2012. These ratios are impacted by pre-tax cash charges associated with restructuring activities as such
charges reduce both EBITDA and EBIT as defined in the agreements. The ratios at September 30, 2012 did not include material
restructuring charges. However, these ratios will be negatively impacted in the next two fiscal years as we execute our recently
announced restructuring plan in fiscal 2013 and 2014. In addition to the financial covenants described above, the credit
agreements and the note purchase agreements contain customary representations and affirmative and negative covenants,
including limitations on liens, sales of assets, subsidiary indebtedness, mergers and similar transactions, changes in the nature
of the business of the Company and transactions with affiliates. If the Company fails to comply with the financial covenants
referred to above or with other requirements of the credit agreements or private placement note agreements, the lenders would
have the right to accelerate the maturity of the debt. Acceleration under one of these facilities would trigger cross defaults on
other borrowings.
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. However, unusual gains, such as those resulting from the sale of
certain assets, would be excluded from the calculation of EBITDA. 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, 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.
The counterparties to long-term committed borrowings consist of a number of major financial institutions. The Company
consistently monitors positions with, and credit ratings of, counterparties both internally and by using outside ratings agencies.
Beginning in September 2000, the Company’s Board of Directors has approved a series of resolutions authorizing the
repurchase of shares of Energizer common stock, with no commitments by the Company to repurchase such shares. On April
30, 2012, the Board of Directors approved the repurchase of up to ten million shares. This authorization replaces a prior stock
repurchase authorization, which was approved in July 2006. In fiscal 2012, the Company repurchased 5.9 million shares of the
Company's common stock, exclusive of a small number of shares related to the net settlement of certain stock awards for tax
withholding purposes, for a total cost of approximately $418. All the shares were purchased in the open market and
approximately 2 million were repurchased under the prior Board authorization and approximately 4 million were repurchased
under the new Board resolution. The Company has approximately 6 million shares remaining on the April 2012 Board
authorization to repurchase its common stock in the future.
On July 30, 2012, the Company announced that its Board of Directors declared the payment of its first quarterly dividend of
$0.40 per share of common stock, which was paid on September 13, 2012. The dividend paid totaled $24.9.
On November 5, 2012, the Company's Board of Directors declared a dividend for the first quarter of fiscal 2013 of $0.40 per
share of Common Stock, payable December 12, 2012 to all shareholders of record on the close of business on November 20,
2012.
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