Rayovac 2004 Annual Report Download - page 42

with the VARTA and Remington acquisitions. 2004 capital expenditures were consistent with the level of
spending in fiscal 2003.
During 2004, approximately 1.8 million options to purchase common stock were exercised, resulting in cash
proceeds to us of approximately $21.1 million.
We believe our cash flow from operating activities and periodic borrowings under our credit facilities will
be adequate to meet the short-term and long-term liquidity requirements of our existing business prior to the
expiration of those credit facilities, although no assurance can be given in this regard.
Our Senior Credit Facilities include a term loan of $257 million, the “Term C loan facility”; a Euro
denominated term loan of €114 million ($142 million at September 30, 2004), the “Euro term C loan facility”; a
revolving credit facility of $120 million, the “Revolving credit facility”; and a Euro denominated revolving credit
facility of €40 million ($50 million at September 30, 2004), the “Euro revolving credit facility”.
As of September 30, 2004, the following amounts were outstanding under these facilities: $257 million
under the Term C loan facility, $142 million under the Euro term C loan facility, and $37 million under the
Revolving credit facility. No borrowings were outstanding under the Euro revolving credit facility. In addition,
approximately $21 million of the remaining availability under the Revolving credit facility was utilized for
outstanding letters of credit. Approximately $112 million remains available under these facilities as of September
30, 2004.
During 2004, we redeemed the remaining $56 million of Series B and D Senior Subordinated Debentures
assumed in connection with the acquisition of Remington. The notes were redeemed with the cash remaining
following our debt offering of the $350 million 8.5% Senior Subordinated Notes. We also made net payments of
$60 million, which represented gross payments of $257 million offset by borrowings of $197 million, on the
Term B loan facility using a combination of cash remaining following the debt offering of the Senior
Subordinated Notes and cash generated from operating activities. In addition, we made payments of $59 million
on the Euro term A and B Loan facilities using cash generated from our operating activities. Additional payments
of approximately $20 million were made in connection with other senior debt and capitalized lease obligations.
Also during this period, we borrowed approximately $45 million under our Revolving credit facility
primarily for the acquisitions of Ningbo and Microlite. See Note 16 to the Consolidated Financial Statements for
further information on these acquisitions. The remaining increase in indebtedness for the period of $36 million is
primarily related to debt acquired with the aforementioned acquisitions and unfavorable foreign exchange effects.
In addition to principal payments, we have annual interest payment obligations of approximately $30
million associated with our debt offering of the $350 million 8.5% Senior Subordinated Notes due in 2013. We
also incur interest on our borrowings associated with the Senior Credit Facilities, and such interest would
increase borrowings under the Revolving credit facilities if cash were not otherwise available for such payments.
Based on amounts currently outstanding under the Senior Credit Facilities, and using market interest rates and
foreign exchange rates in effect as of September 30, 2004, we estimate annual interest payments of
approximately $20 million would be required assuming no further principal payments were to occur and
excluding any payments associated with outstanding interest rate swaps.
The Third Restated Agreement, as amended, to the Senior Credit Facilities (“the Third Agreement”)
contains financial covenants with respect to borrowings, which include maintaining minimum interest, fixed
charge ratios and maximum leverage ratios. In accordance with the Third Agreement, the limits imposed by such
ratios become more restrictive over time. In addition, the Third Agreement restricts our ability to incur additional
indebtedness, create liens, make investments or specified payments, give guarantees, pay dividends, make capital
expenditures, and enter into a merger or acquisition or sell assets.
The terms of the $350 million 8.5% Senior Subordinated Notes permit the holders to require us to
repurchase all or a portion of the notes in the event of a change of control. In addition, the terms of the notes
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