Exhibit 10.64
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
This Change of Control Employment Agreement (the “Agreement”) by and between Energizer Holdings, Inc. (the “Company”), a Missouri corporation, and _________________ (“Executive”),
WITNESSETH:
WHEREAS
, the Company, on behalf of itself, its subsidiaries and its stockholders, and any successor or surviving entity, wishes to encourage Executive's continued service and dedication in the performance of his/her duties, notwithstanding the possibility, threat or occurrence of a Change of Control of the Company; and
WHEREAS
, the Board of Directors of the Company (the “Board”) believes that the prospect of a pending or threatened Change of Control inevitably creates distractions and personal risks and uncertainties for its executives, and that it is in the best interests of Company and its stockholders to minimize such distractions to certain executives, and the Board further believes that it is in the best interests of the Company to encourage its executives' full attention and dedication to their duties, both currently and in the event of any threatened or pending Change of Control; and
WHEREAS
, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued retention of certain members of the Company's management, including Executive, and the attention and dedication of management to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change of Control.
NOW, THEREFORE
, in order to induce Executive to remain in the employ of the Company and in consideration of his/her continued service to the Company, the Company agrees that Executive shall receive the benefits set forth in this Agreement in the event that Executive's employment with the Company is terminated subsequent to a Change of Control in the circumstances described herein, and the parties further agree as follows:
I.
Definitions
.
The meaning of each defined term that is used in this Agreement is set forth below.
(a)
AAA
. The American Arbitration Association.
(b)
Accounting Firm
. The meaning of this term is set forth in Subsection IV(f)(ii).
(c)
Additional Pay
. The meaning of this term is set forth in Subsection IV(c).
(d)
After-Tax Amount
. The meaning of the term is set forth in Subsection IV(f)(i).
(e)
Beneficiaries
. The meaning of this term is set forth in Subsection VI(b).
(f)
Board
. The meaning of this term is set forth in the second WHEREAS clause of this Agreement.
(g)
Business Combination
. The meaning of this term is set forth in Subsection I(i)(iii).
(h)
Cause
. For purposes of this Agreement, “Cause” shall mean Executive's willful breach or failure to perform his/her employment duties. For purposes of this Subsection I(h), no act, or failure to act, on the part of Executive shall be deemed “willful” unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that such action or omission was in the best interest of the Company. Notwithstanding the foregoing, Executive's employment shall not be treated as having been terminated for Cause unless the Company delivers to Executive, prior to or at Termination of Employment, a certificate of a resolution duly adopted by the affirmative vote of not less than seventy-five percent (75%) of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to Executive and an opportunity for Executive, together with Executive's counsel, to be heard before the Board), finding that in the good faith opinion of the Board, Executive has engaged in such willful conduct and specifying the details of such willful conduct.
(i)
Change of Control
. For purposes of this Agreement, a “Change of Control” shall be deemed to have occurred if there is a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided that, without limitation, such a Change of Control shall be deemed to have occurred if:
(i)
any “person” (as such term is used in Sections 13(d) and 14(d)(2) as currently in effect, of the Exchange Act) is or becomes a “beneficial owner” (as determined for purposes of Regulation 13D-G, as currently in effect, of the Exchange Act), directly or indirectly, of securities representing twenty percent (20%) or more of the total voting power of all of the Company's then outstanding voting securities. For purposes of this Agreement, the term “person” shall not include: (A) the Company or any of its Subsidiaries, (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries, or (C) an underwriter temporarily holding securities pursuant to an offering of said securities;
(ii)
during any period of two (2) consecutive calendar years, individuals who at the beginning of such period constitute the Board and any new director(s) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board;
(iii)
the stockholders of the Company approve a merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless following such Business Combination: (i) all or substantially all of the individuals and entities who were the “beneficial owners” (as determined for purposes of Regulation 13D-G, as currently in effect, of the Exchange Act) of the outstanding voting securities of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, securities representing more than fifty percent (50%) of the total voting power of the then outstanding voting securities of the corporation resulting from such Business Combination or the parent of such corporation (the “Resulting Corporation”); (ii) no “person” (as such term is used in Section 13(d) and 14(d)(2), as currently in effect, of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or the Resulting Corporation, is the “beneficial owner” (as determined for purposes of Regulation 13D-G, as currently in effect, of the Exchange Act), directly or indirectly, of voting securities representing twenty percent (20%) or more of the total voting power of then outstanding voting securities of the Resulting Corporation; and (iii) at least a majority of the members of the board of directors of the Resulting Corporation were members of the Board at the time of the execution of the initial agreement, or at the time of the action of the Board, providing for such Business Combination;
(iv)
the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company;
(v)
a Section 409A Change of Control; or
(vi)
any other event that a simple majority of the Board, in its sole discretion, shall determine constitutes a Change of Control.
(j)
Code
. For purposes of this Agreement, “Code” shall mean the Internal Revenue Code of 1986, as amended.
(k)
Company
. The meaning of this term is set forth in the first paragraph of this Agreement and in Subsection VI(a).
(l)
Controlled Group
. For purposes of this Agreement, “Controlled Group” shall mean a group including any corporation or other business entity that from time to time is, along with the Company, a member of a controlled group of businesses, as defined in sections 414(b) and 414(c) of the Code, provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in such test. A corporation or other business entity ceases to be a member of the Controlled Group when a sale or other disposition causes it to fall outside the definition of the term Controlled Group.
(m)
Disability
. For purposes of this Agreement, “Disability” shall mean an illness, injury or similar incapacity which 52 weeks after its commencement, continues to render Executive unable to perform the material and substantial duties of Executive's position or any substantially similar occupation or substantially similar employment for which Executive is qualified or may reasonably become qualified by training, education or experience. Any question as to the existence of a Disability upon which Executive and the Company cannot agree shall be determined by a qualified independent physician selected by Executive (or, if Executive is unable to make such selection, by any adult member of Executive's immediate family or Executive's legal representative), and approved by the Company, such approval not to be unreasonably withheld. The determination of such physician made in writing to both the Company and Executive shall be final and conclusive for all purposes of this Agreement.
(n)
Employer
. For purposes of this Agreement, “Employer” shall mean the Company or the Subsidiary, as the case may be, with which Executive has an employment relationship.
(o)
Exchange Act
. This term shall have the meaning set forth in Subsection I(i).
(p)
Executive
. This term shall have the meaning set forth in the first paragraph of this Agreement.
(q)
Excise Tax
. This term shall have the meaning set forth in Subsection IV(f)(i).
(r)
Good Reason
. For purposes of this Agreement, “Good Reason” shall mean the occurrence, without Executive's prior express written consent, of any of the following circumstances:
(i)
The assignment to Executive of any duties inconsistent with Executive's status or responsibilities as in effect immediately prior to a Change of Control, including imposition of travel obligations which differ materially from required business travel immediately prior to the Change of Control;
(ii)
(A) A reduction in Executive's annual base salary as in effect immediately before the Change of Control; or (B) the failure to pay a bonus award to which Executive is entitled under any short-term incentive plan(s) or program(s), any long-term incentive plan(s) or program(s), or any other incentive compensation plan(s) or program(s) of Company in which Executive participated immediately prior to the time of the Change of Control;
(iii)
A change in the principal place of Executive's employment, as in effect immediately prior to the Change of Control to a location more than fifty (50) miles distant from the location of such principal place at such time;
(iv)
The failure by the Company to offer Executive participation in incentive compensation or stock or stock option plans on at least a substantially equivalent basis, both in terms of the nature and amount of benefits provided and the level of Executive's participation, as is then being provided by the Company to similarly situated peer executives of the Company;
(v)
(A) Except as required by law, the failure by the Company to offer Executive benefits on at least a substantially equivalent basis, in the aggregate, to those then being provided by the Company to similarly situated peer executives of the Company under the qualified and non-qualified employee benefit and welfare plans of the Company, including, without limitation, any pension, deferred compensation, life insurance, medical, dental, health and accident, disability, retirement or
savings plan(s) or program(s) offered by the Company; (B) the taking of any action by the Company that would, directly or indirectly, materially reduce or deprive Executive of any other perquisite or benefit then being offered by the Company to similarly situated peer executives of the Company (including, without limitation, Company-paid and/or reimbursed club memberships, financial counseling fees and the like); or (C) the failure by the Company to treat Executive under the Company's vacation policy, past practice or special agreement in the same manner and to the same extent as then being provided by the Company to similarly situated peer executives of the Company;
(vi)
The failure of the Company to obtain a satisfactory written agreement from any successor prior to consummation of the Change of Control to assume and agree to perform this Agreement, as contemplated in Subsection VI(a); or
(vii)
Any purported Termination of Employment by the Company of Executive that is not effected pursuant to a Notice of Termination satisfying the requirements of Subsection III(c) or, if applicable, Subsection I(h). For purposes of this Agreement, no such purported Termination of Employment shall be effective except as constituting Good Reason.
Executive's continued employment with the Company or any Subsidiary shall not constitute a consent to, or a waiver of rights with respect to, any circumstances constituting Good Reason hereunder. Any good faith determination of “Good Reason” made by the Executive shall be conclusive for purposes of this Agreement.
(s)
Notice of Termination
. The meaning of this term is set forth in Subsection III(c).
(t)
Payments
. The meaning of this term is set forth in Subsection IV(f)(i).
(u)
Resulting Corporation
. The meaning of this term is set forth in Subsection I(i)(iii).
(v)
Retirement
. For purposes of this Agreement, “Retirement” shall mean Executive's voluntary Termination of Employment with the Company, other than for Good Reason, and in accordance with the Company's retirement policy generally applicable to its employees or in accordance with any prior or contemporaneous retirement agreement or arrangement between Executive and the Company.
(w)
Section 409A Change of Control
. For purposes of this Agreement, “Section 409A Change of Control” shall mean:
(i)
The acquisition by one person, or more than one person acting as a group, of ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. Notwithstanding the above, if any person or more than one person acting as a group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons will not constitute a Change of Control.;
(ii)
The acquisition by one person, or more than one person acting as a group, of ownership of stock of the Company, that together with stock of the Company acquired during the twelve-month period ending on the date of the most recent acquisition by such person or group, constitutes 30% or more of the total voting power of the stock of the Company. Notwithstanding the above, if any person or more than one person acting as a group is considered to own 30% or more the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons will not constitute a Change of Control.;
(iii)
A majority of the members of the Company's board of directors is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's board of directors before the date of the appointment or election;
(iv)
One person, or more than one person acting as a group, acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person or group) assets from the Company that have a total gross fair market value (determined without regard to any liabilities associated with such assets) equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions.
Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
This definition of Change in Control shall be interpreted in accordance with, and in a manner that will bring the definition into compliance with, the regulations under Section 409A of the Internal Revenue Code.
(x)
Severance Bonus Amount
. For purposes of this Agreement, “Severance Bonus Amount” means an amount determined by averaging the percentages of Executive's base salary which were actually awarded to Executive as incentive bonuses under short-term incentive plans of the Company or any of its Subsidiaries for the five most recently completed fiscal years prior to the fiscal year in which the Change of Control occurs, and multiplying such average percentage by the greater of (A) Executive's annual base salary in effect immediately prior to the Termination of Employment, or (B) Executive's annual base salary in effect as of the date of the Change of Control. If Executive was not employed by the Company or any of its Subsidiaries for the entire five-year period, the average shall be determined only for those years during which Executive was so employed.
(y)
Subsidiary
. For purposes of this Agreement, “Subsidiary” shall mean any corporation of which fifty percent (50%) or more of the voting stock is owned, directly or indirectly, by the Company.
(z)
Target Bonus
. For purposes of this Agreement, “Target Bonus” means the assigned bonus target for the Executive under any short-term incentive plan(s) of the Company, multiplied by his or her base salary, for the relevant fiscal year. If the Executive's base salary is changed during the relevant fiscal year, the Target Bonus shall be calculated by multiplying the Executive's assigned bonus target by the highest base salary in effect during that fiscal year.
(aa)
Termination Notice Date
. For purposes of this Agreement, “Termination Notice Date” shall mean:
(i)
In the case of Executive's Termination of Employment because of Disability, thirty (30) calendar days in advance of Executive's Termination of Employment; and
(ii)
In the case of Executive's Termination of Employment for Cause, a date not less than thirty (30) calendar days in advance of Executive's Termination of Employment and, in the case of Executive's Termination of Employment for Good Reason, a date not less than thirty (30) calendar days nor more than sixty (60) calendar days in advance of Executive's Termination of Employment.
(bb)
Termination of Employment
. For purposes of this Agreement, “Termination of Employment” shall mean Executive's separation from service with the Employer and all other members of the Controlled Group, as the term “separation from service” is defined in IRS regulations under Section 409A of the Code (generally, a decrease in the performance of services to no more than 20% of the average for the preceding 36-month period, and disregarding leave of absences up to six months where there is a reasonable expectation the Employee will return).
II.
Term of Agreement
.
(a)
General
. Upon execution by Executive, this Agreement shall commence effective as of February 13, 2012. This Agreement shall continue in effect through May 1, 2015; provided, however, that commencing on May 1, 2013, and every May 1 thereafter, the term of this Agreement shall automatically be extended for an additional year unless, not later than ninety (90) calendar days prior to the date on which this Agreement otherwise automatically would be extended, the Company shall have given notice to Executive that it does not wish to extend this Agreement; provided further, however, that if a Change of Control shall have occurred during the original or any extended term of this Agreement, this Agreement shall continue in effect for a period of thirty-six (36) months beyond the month in which the Change of Control occurred.
(b)
Disposition of Employer
. In the event Executive is employed by a Subsidiary, the terms of this Agreement shall expire if such Subsidiary is sold or otherwise disposed of prior to the date on which a Change of Control occurs, unless Executive continues in employment with the Controlled Group after such sale or other disposition. If Executive's Employer is sold or disposed of on or after the date on which a Change of Control occurs, this Agreement shall continue through its original term or any extended term then in effect.
(c)
Deemed Change of Control
. If Executive's Termination of Employment occurs prior to the date on which a Section 409A Change of Control occurs, and such Termination of Employment was at the request of a third party who has taken steps to effect a Section 409A Change of Control, or otherwise was in connection with the Section 409A Change of Control, then for all purposes of this Agreement, a Section 409A Change of Control shall be deemed to have occurred prior to such Termination of Employment.
(d)
Expiration of Agreement
. No termination or expiration of this Agreement shall affect any rights, obligations or liabilities of either party that shall have accrued on or prior to the date of such termination or expiration.
III.
Benefits Following Change of Control
.
(a)
Prorated Payout of Short Term Bonus
. If a Change of Control shall have occurred, Executive shall be entitled to, immediately upon the date of the Change of Control, payment in full of Executive's prorated bonus for the fiscal year in which the Change of Control occurs. The prorated bonus amount shall be calculated as Executive's Target Bonus for the fiscal year in which the Change of Control occurs, or, if greater, the actual bonus awarded to Executive under any short-term incentive plan(s) of the Company for the fiscal year immediately preceding the fiscal year in which the Change of Control occurs, divided by 365 and multiplied by the number of calendar days in said year immediately up to the day on which the Change of Control occurs. The payment described in this section III(a) shall be subject to any valid deferral election which was made prior to that time by the Executive under any Company qualified pension plan, nonqualified pension plan, 401(k), excess 401(k) or non-qualified deferred compensation plan then in effect. The payment of such prorated short-term bonus shall also be taken into consideration for purposes of computation of benefits under any qualified and/or nonqualified employee pension benefit plans or employee welfare benefit plans then maintained by the Company, and, if applicable, any agreement entered into between the Executive and the Company which is then in effect, in accordance with the terms and conditions of such plans and/or agreements.
(b)
Entitlement to Benefits Upon Termination of Employment
. If a Change of Control shall have occurred, Executive shall be entitled to, in addition to the benefits described in Subsection III(a), the benefits provided in Section IV hereof upon his/her subsequent Termination of Employment within three (3) years after the date of the Change of Control unless such Termination of Employment is (i) a result of Executive's death or Retirement, (ii) for Cause, (iii) a result of Executive's Disability, or (iv) by Executive other than for Good Reason. For purposes of Executive's entitlement to benefits under Section IV of this Agreement, “Termination of Employment” shall be limited to a Termination of Employment that is not as a result of Executive's death, Retirement or Disability and (x) if by the Company, is not for Cause, or (y) if by Executive, is for Good Reason.
(c)
Notice of Termination
. Any purported Termination of Employment by either the Company or Executive shall be communicated on the Termination Notice Date by written Notice of Termination to the other party hereto in accordance with Section VIII. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice that indicates the specific provision(s) of this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for Executive's Termination of Employment under the provision(s) so indicated. If Executive's Termination of Employment shall be for
Cause or by Executive for other than Good Reason, the Company shall pay Executive his/her full base salary through the Termination of Employment at the salary level in effect at the time Notice of Termination is given and shall pay any amounts to be paid to Executive pursuant to any other compensation or stock or stock option plan(s), program(s) or employment agreement(s) then in effect, at the time such payments are due under such plan(s), program(s) or agreement(s), and the Company shall have no further obligations to Executive under this Agreement.
If within thirty (30) calendar days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the grounds for Termination of Employment, then, amounts will be treated as paid upon Termination of Employment if paid on the date on which the dispute is finally resolved, whether by mutual written agreement of the parties or by a decision rendered pursuant to Section XI; provided that such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. In the event such dispute involves nonpayment of benefits under this Agreement, Executive must take further enforcement efforts within the period specified in Regulation §1.409A-3(g) in order to demonstrate reasonable diligence (generally within 180 days of the latest date on which payment could have been timely made absent such dispute). Notwithstanding the pendency of any such dispute, the Company will continue to pay Executive his/her full compensation including, without limitation, base salary, bonus, incentive pay and equity grants, in effect when the notice of the dispute was given, and continue Executive's participation in all benefits plans or other perquisites in which Executive was participating, or which Executive was enjoying, when the Notice of Termination giving rise to the dispute was given, until the dispute is finally resolved, provided that any amounts subject to Section 409A shall not commence to be paid until the sixth month anniversary of Executive's Termination of Employment. Amounts paid under this Subsection III(c) are in addition to and not in lieu of all other amounts due to Executive under this Agreement and shall not be offset against or reduce any other amounts due to Executive under this Agreement.
IV.
Compensation Upon a Termination of Employment
.
Following a Change of Control, upon Executive's Termination of Employment, Executive shall be entitled to the following benefits, provided that such Termination of Employment occurs during the three (3) year period immediately following the date of the Change of Control, and such Termination of Employment is not as a result of Executive's death, Retirement or Disability and (x) if by the Company, is not for Cause, or (y) if by Executive, is for Good Reason:
(a)
Accelerated Vesting of Equity Awards
. All unvested stock options and restricted stock and stock equivalent awards, including performance awards, that have been granted or sold to the Executive by the Company and which have not otherwise vested, shall immediately accelerate and vest in the manner and to the extent such awards would vest under the terms of the individual award agreements with respect to each of those equity awards as if a change of control, as defined in those individual award agreements, had occurred, notwithstanding that the definition of a change of control set forth in those award agreements may differ from the definition of Change of Control set forth in this Agreement, and notwithstanding that the terms of individual award agreements might otherwise provide for forfeiture of those awards upon Executive's Termination of Employment. With respect to stock equivalents, the acceleration and vesting described in this Subsection IV(a) shall be subject to any valid deferral election which was made prior to that time by the Executive under any Company non-qualified deferred compensation plan, program or permitted deferral arrangement then in effect. If Executive does not incur a Termination of Employment following a Change of Control, nothing herein shall be deemed to revise or amend the terms of the individual award agreements with respect to such equity awards.
(b)
Standard Benefits
. The Company shall pay Executive his/her full base salary through Termination of Employment at the rate in effect at the time the Notice of Termination is given, no later than the second business day following Termination of Employment, plus all other amounts to which Executive is entitled under any compensation plan(s) or program(s) of the Company applicable to Executive at the time such payments are due under such plan(s) or program(s). Without limitation, amounts payable pursuant to this Subsection IV(b) shall include, pursuant to the express terms of any short-term incentive plan(s) in which Executive participates or otherwise, Executive's Target Bonus for the then-current fiscal year, pro-rated to Termination of Employment. If Termination of Employment shall fall within the same short-term incentive period, as set forth by the express terms of any of the short-term incentive plan(s) in which Executive participates or otherwise, as of the Change of Control Date, and Executive has previously received the prorated bonus amount as described in Subsection III(a), then Executive shall be paid the difference between the prorated bonus amount as described here in Subsection IV(b) and the prorated bonus amount described in Subsection III(a).
(c)
Additional Benefits
. The Company shall pay to Executive as additional pay (“Additional Pay”), the product of three (3) multiplied by the sum of (x) the greater of (i) Executive's annual base salary in effect immediately prior to the Termination of Employment, or (ii) Executive's annual base salary in effect as of the date of the Change of Control, and (y) Executive's Severance Bonus Amount. The Company shall pay the Additional Pay to Executive in a lump sum, in cash, on the sixth month anniversary of Executive's
Termination of Employment. Subject to the provisions of Section XIII, the Company shall maintain for Executive all such perquisites and fringe benefits enjoyed by Executive immediately prior to Termination of Employment as are approved in writing by the Company's Chief Executive Officer for such period as is specified in such writing. The payment described in this section IV(c) shall not be deemed to be regular compensation which is subject to any deferral elections made by the Executive, or Company matching contributions, under any qualified pension plan, nonqualified pension plan, 401(k), excess 401(k) or nonqualified deferred compensation plan then maintained by the Company. Except as specifically set forth in section IV(d) below, such payment shall not be taken into consideration for purposes of computation of benefits under any qualified and/or non-qualified employee pension benefit plans or employee welfare benefit plans then maintained by the Company, and, if applicable, any agreement entered into between the Executive and the Company which is then in effect.
(d)
Retirement Plan Benefits
. If not already vested, Executive shall be deemed fully vested as of his or her Termination of Employment in any Company retirement plan(s) or other written agreement(s) between Executive and the Company relating to pay or other retirement income benefits upon retirement in which Executive was a participant, party or beneficiary immediately prior to the Change of Control, and any additional plan(s) or agreement(s) in which such Executive became a participant, party or beneficiary thereafter. In addition to the foregoing, for purposes of determining the amounts to be paid to Executive under such plan(s) or agreement(s), the years of service with the Company and the age of Executive under all such plans and agreements shall be deemed increased by thirty-six (36) months. For purposes of this Subsection IV(d), the term “plan(s)” includes, without limitation, the Company's qualified pension plan, non-qualified pension plans, 401(k) plans and excess 401(k) plans, and any companion, successor or amended plan(s), and the term “agreement(s)” encompasses, without limitation, the terms of any offer letter(s) leading to Executive's employment with the Company where Executive was a signatory thereto, any written amendment(s) to the foregoing and any subsequent agreements on such matters. In the event the terms of the plans referenced in this Subsection IV(d) do not for any reason coincide with the provisions of this Subsection IV(d) (e.g., if plan amendments would cause disqualification of qualified plans), Executive shall be entitled to receive from the Company, under the terms of this Agreement, an amount equal to all amounts Executive would have received, had all such plans continued in existence as in effect on the date of this Agreement after being amended to coincide with the terms of this Subsection IV(d), payable in 36 monthly installments, commencing on the first day of the month immediately following the sixth-month anniversary of Executive's Termination of Employment.
(e)
Health and Other Benefits
.
(i)
For a period of thirty-six (36) months after Termination of Employment, the Company shall continue health, vision, dental, life insurance and long-term disability benefits, including executive benefits, to Executive and/or Executive's family as if Executive's employment with the Company had not been terminated as of Termination of Employment, in accordance with the Company's then-current plans, programs, practices and policies on terms and conditions (including the level of benefits, deductibles and employee payments for such benefits) not less favorable than those which are then being provided to peer executives of the Company. The full cost of health and dental coverage, less the portion of the cost that the Executive is required to pay for such benefits pursuant to the Company's health and dental plan or program, will be included in Executive's taxable income. The amount paid under this Section IV(e)(i) during a taxable year of Executive may not impact the amount paid by the Company under this Section IV(e)(i) during any other taxable year.
The Company will also pay Executive an amount equal to any federal, state and local taxes due on such taxable income such that Executive will be in tax-equivalent position after such payments to what Executive would have been in had Executive paid the full cost of the coverage. Such amount will be paid to the Executive on the later of (i) the due date for the Executive's tax return for the taxable year in which such taxable income is reported, and (ii) the sixth month anniversary of Executive's Termination of Employment. In no event shall such amount be paid later than the end of Executive's taxable year next following the taxable year in which such taxes are remitted to the applicable taxing authority.
(ii)
If pursuant to the terms and conditions of any such health or welfare plan or program, the Company is not able to continue Executive's and/or Executive's family participation in the plan or program for all or any portion of such thirty-six (36) month period, the Company will reimburse Executive for the cost of insurance for any such benefit for Executive and/or Executive's family, for such period as such benefits are not able to be continued pursuant to a plan or program of the Company, less the amount that would have been paid by Executive for such benefits pursuant to the Company's plan or program. Such amount will be payable in 36 monthly installments, commencing on the first day of the month immediately following Executive's Termination of Employment. In the event that Executive and the Company cannot agree upon the amount of such payments described in the previous two sentences, they shall mutually agree upon an independent third-party benefits consultant who shall determine, after an opportunity for both Executive and the Company to present evidence, the
amount of such payments which shall be made, which determination shall be binding upon Executive and the Company, absent manifest error.
In the event that the Executive, at the time of a Change of Control, is not eligible to participate as a retiree in the Company's health and dental plans that allow retiree participation, including executive plans, the Company shall immediately cause the eligibility requirements for participation as a retiree in such plans to be revised or waived so that Executive shall be entitled to participate as a retiree following Executive's Termination of Employment and the continuation of benefits period described in the preceding paragraph.
(f)
Alternatives in the Event of Excise Tax
.
(i)
In the event any payment(s) or the value of any benefit(s) received or to be received by Executive in connection with Executive's Termination of Employment or contingent upon a Change of Control (whether received or to be received pursuant to the terms of this Agreement or of any other plan, arrangement or agreement of the Company, its successors, any person whose actions result in a Change of Control, or any person affiliated with any of them (or which, as a result of the completion of the transaction(s) causing a Change of Control, will become affiliated with any of them) (collectively, the “Payments”)), are determined, under the provisions of Subsection IV(f)(ii), to be subject to an excise tax imposed by Section 4999 of the Code (any such excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), as determined in this Subsection IV(f)(i), then the Company shall reduce the aggregate amount of the Payments payable to the Executive such that no Excise Tax shall be payable by the Executive and the Payments shall not cease to be deductible by the Company by reason of Section 280G of the Code (or any successor provision thereto). Notwithstanding the foregoing, the Company shall not reduce the aggregate amount of the Payments payable to the Executive pursuant to the foregoing sentence if the After-Tax Amount (as defined below) of the unreduced Payments is greater than the After-Tax Amount that would have been paid had the Payments been reduced pursuant to the foregoing sentence. For purposes of this Agreement “After-Tax Amount” means the portion of a specified amount that would remain after payment of all Excise Taxes (if any), income taxes, payroll and withholding taxes, and other applicable taxes paid or payable by Executive in respect of such specified amount.
If there is a determination that the Payments payable to Executive must be reduced pursuant to the immediately preceding paragraph, the Company shall promptly give Executive notice to that
effect and a copy of the detailed calculation thereof and of the amount to be reduced. Executive may then elect which and how much of the Payments shall be eliminated or reduced as long as (i) the first such Payments to be reduced are not considered “deferred compensation” within the meaning of Section 409A of the Code (if any), (ii) if Payments described in (i) are exhausted and additional reductions are necessary, any cash Payments described in this Agreement are reduced next, and (iii) after such election the aggregate present value of the Payments equals the largest amount that would both (A) not cause any Excise Tax to be payable by Executive, and (B) not cause any Payments to become nondeductible by the Company by reason of Section 280G of the Code (or any successor provision thereto). Executive shall advise the Company in writing of Executive's election within ten (10) days of Executive's receipt of such notice from the Company. Notwithstanding the foregoing, if no election is made by Executive within the ten-day period, the Company may elect which and how much of the Payments shall be eliminated or reduced as long (i) the first such payments to be reduced are not considered “deferred compensation” within the meaning of Section 409A of the Code (if any), (ii) if Payments described in (i) are exhausted and additional reductions are necessary, any cash Payments described in this Agreement are reduced next, and (iii) after such election the aggregate present value of the Payments equals the largest amount that would both (A) not cause any Excise Tax to be payable by Executive, and (B) not cause any Payments to become nondeductible by the Company by reason of Section 280G of the Code (or any successor provision thereto). For purposes of this paragraph, present value shall be determined in accordance with Code Section 280G(d)(4).
(ii)
All determinations required to be made under this Subsection IV(f), including whether the aggregate amount of Payments shall be reduced, and the assumptions to be utilized in arriving at such determinations, unless otherwise set forth in this Agreement, shall be made by a nationally recognized certified public accounting firm selected by the Company and reasonably acceptable to Executive (the “Accounting Firm”). The Company shall cause the Accounting Firm to provide detailed supporting calculations to the Company and Executive within fifteen (15) business days after notice is given by Executive to the Company that any or all of the Payments have occurred, or such earlier time as is requested by the Company. Within two (2) business days after such notice is given to the Company, the Company shall instruct the Accounting Firm to timely provide the data required by this Subsection IV(f)(ii) to Executive. All fees and expenses of the Accounting Firm shall be paid in full by the Company. If the Accounting Firm determines that there is substantial authority (within the meaning of Section 6662 of the Code) that no Excise Tax is payable by Executive, the Accounting Firm shall furnish Executive with a written opinion that failure to disclose or report the Excise Tax on Executive's federal income tax return will not constitute a substantial understatement of tax or be
reasonably likely to result in the imposition of a negligence or any other penalty. Any determination by the Accounting Firm shall be binding upon the Company and Executive in the absence of material mathematical or legal error.
(g)
Legal Fees and Expenses
. The Company shall pay to Executive all legal fees and expenses as and when incurred by Executive in connection with this Agreement, including all such fees and expenses, if any, incurred in contesting or disputing any Termination of Employment or in seeking to obtain or enforce any right or benefit provided by this Agreement, regardless of the outcome, unless, in the case of a legal action brought by or in the name of Executive, a decision is rendered pursuant to Section XI, or in any other proper legal proceeding, that such action was not brought by Executive in good faith. Such reimbursements shall be made no later than the last day of the calendar year following the calendar year in which the expenses were incurred.
(h)
No Mitigation
. Executive shall not be required to mitigate the amount of any payment provided for in this Section IV by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section IV be reduced by any compensation earned by Executive as the result of employment by another employer or by retirement or other benefits received from whatever source after his/her Termination of Employment or otherwise, except as specifically provided in this Section IV. The Company's obligation to make payments to Executive provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company or Employer may have against Executive or other parties.
V
Death and Disability Benefits
.
In the event of the death or Disability of Executive after a Change of Control, Executive, or in the case of death, Executive's Beneficiaries (as defined below in Subsection VI(b)), shall receive the benefits to which Executive or his/her Beneficiaries are entitled under this Agreement and any and all retirement plans, pension plans, disability policies and other applicable plans, programs, policies, agreements or arrangements of the Company.
VI.
Successors; Binding Agreement
.
(a)
Obligations of Successors
. The Company will require any successor or assignee (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company is required to perform it. Accordingly, this Agreement shall be binding upon such successor or assignee, and the term “Company” shall include any surviving entity or successor to all or substantially all of its business and/or assets and the parent of any such surviving entity or successor. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Executive to pursue appropriate remedies for such breach. In particular, the parties agree that failure of the Company to obtain such assumption and agreement prior to the effectiveness of a Section 409A Change of Control shall entitle Executive to compensation from the Company in the same amount and on the same terms as Executive would be entitled hereunder if Executive had incurred a Termination of Employment for Good Reason following a Change of Control, except that for purposes of implementing the foregoing, the date of the Section 409A Change of Control shall be the payment event triggering the payment of benefits.
(b)
Enforceable by Beneficiaries
. This Agreement shall inure to the benefit of and be enforceable by Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees (the “Beneficiaries”). In the event of the death of Executive while any amount would still be payable hereunder if such death had not occurred, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Executive's Beneficiaries.
(c)
Employment
. Except in the event of a Change of Control and, thereafter, only as specifically set forth in this Agreement, nothing in this Agreement shall be construed to (i) limit in any way the right of the Company or a Subsidiary to terminate Executive's employment at any time for any reason or for no reason; or (ii) be evidence of any agreement or understanding, expressed or implied, that the Company or a Subsidiary will employ Executive in any particular position, on any particular terms or at any particular rate of remuneration.
VII.
Non-Competition; Non-Solicitation; Confidential Information
.
(a)
In consideration of the benefits provided under this Agreement upon Executive's Termination of Employment, Executive agrees that for a period of one year after Executive's Termination of Employment, Executive will not compete against the Company or any Employer within the Controlled Group in any Energizer Business. For purposes of this Agreement, “Energizer Business” shall mean any of the following business activities: all aspects of manufacturing, marketing, distributing, consulting with regard to, and/or operating a facility for the manufacturing, processing, marketing, or distribution of batteries, lighting products, rechargeable batteries, related battery and lighting products, wet-shave products, feminine care
products, infant care products and skin care products. For purposes of this Agreement, to “compete” means to accept or begin employment with, advise, finance, own (partially or in whole), consult with, or accept an assignment through an employer with any third party worldwide in a position involving or relating to an Energizer Business. This subparagraph, however, does not preclude Executive from buying or selling shares of stock in any company that is publicly listed and traded in any stock exchange or over-the-counter market.
(b)
For a period of one year following the Executive's Termination of Employment, Executive shall not (i) induce or attempt to induce any employee of the Company or any Employer within the Controlled Group to leave the employ of the Company or such Employer or in any way interfere with the relationship between the Company or any such Employer and its employees or (ii) induce or attempt to induce any customer, supplier, distributor, broker, or other business relation of the Company or any Employer within the Controlled Group to cease doing business with the Company or such Employer, or in any way interfere with the relationship between any customer, supplier, distributor, broker or other business relation and the Company or such Employer.
(c)
Executive shall hold in fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company, the Subsidiaries and their respective businesses, which shall have been obtained during Executive's employment with the Employer and which shall not be public knowledge (other than by acts by Executive or his/her representatives in violation of this Agreement). After Executive's Termination of Employment with the Company or any Employer within the Controlled Group, Executive shall not, without prior written consent of the Company or the Employer, communicate or divulge any such information, knowledge or data to anyone other than the Company, the Employer or those designated by them.
In no event shall an asserted violation of this Section VII constitute a basis for deferring or withholding any amounts otherwise payable to Executive under this Agreement.
VIII.
Notice
.
All notices and communications including, without limitation, any Notice of Termination hereunder, shall be in writing and shall be given by hand delivery to the other party, by registered or certified mail, return receipt requested, postage prepaid, or by overnight delivery service, addressed as follows:
If to Executive:
_________________
If to the Company:
Energizer Holdings, Inc.
533 Maryville University Drive
St. Louis, MO 63141
Attn: General Counsel
or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be deemed given and effective when actually received by the addressee.
IX.
Miscellaneous
.
No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and the Company's Chief Executive Officer or other authorized officer designated by the Board or an appropriate committee of the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any conditions or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Missouri. All references to sections of the Code or the Exchange Act shall be deemed also to refer to any successor provisions of such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law. The obligations of the Company under Sections IV and V shall survive the expiration of the term of this Agreement.
X.
Validity
.
The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
XI.
Arbitration
.
Any dispute that may arise directly or indirectly in connection with this Agreement, Executive's employment or Executive's Termination of Employment, whether arising in contract, statute, tort, fraud, misrepresentation, discrimination or other legal theory, shall be resolved by arbitration in St. Louis, Missouri under the applicable rules and procedures of the AAA. The only legal claims between Executive and the Company or any Subsidiary that would not be included in this agreement to arbitration are claims by Executive for workers' compensation or unemployment compensation benefits, claims for benefits under a Company or Subsidiary benefit plan if the plan does not provide for arbitration of such disputes, and claims by Executive that seek judicial relief in the form of specific performance of the right to be paid until Termination of Employment during the pendency of any applicable dispute or controversy. If this Article XI is in effect, any claim with respect to this Agreement, Executive's employment or Executive's Termination of Employment must be established by a preponderance of the evidence submitted to an impartial arbitrator. A single arbitrator engaged in the practice of law shall conduct any arbitration under the applicable rules and procedures of the AAA. The arbitrator shall have the authority to order a pre-hearing exchange of information by the parties including, without limitation, production of requested documents, and examination by deposition of parties and their authorized agents. If this Article XI is in effect, the decision of the arbitrator: (i) shall be final and binding, (ii) shall be rendered within ninety (90) days after the impanelment of the arbitrator, and (iii) shall be kept confidential by the parties to such arbitration. The arbitration award may be enforced in any court of competent jurisdiction. The Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., not state law, shall govern the arbitrability of all claims.
XII.
Entire Agreement
.
This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof.
XIII.
Key Employee Six Month Deferral
.
Notwithstanding anything to the contrary in this Agreement, if Executive qualifies as a “specified employee” as defined in Code Section 409A, a payment of nonqualified deferred compensation paid on account of a Termination of Employment may not be made until at least six months after such Termination of Employment. Any such payment otherwise due in such six month period shall be suspended and become payable at the end of such six month period.
XIV.
Compliance with Code Section 409A
.
No provision of this Agreement shall be operative to the extent that it will result in the imposition of the additional tax described in Code Section 409A(a)(1)(B)(i)(II) because of failure to satisfy the requirements of Code Section 409A and the regulations and guidance issued thereunder.
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement effective as of the ___ day of ________, ____.
Energizer Holdings, Inc.
Attest:
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By:
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By:
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Peter Conrad
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Mark S. LaVigne
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Vice President, Human Resources
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Vice President and Secretary
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Executive
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Witness
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ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
Exhibit 13
Management’s Discussion and Analysis of Results of Operations and Financial Condition
The following discussion is a summary of the key factors management considers necessary in reviewing Energizer Holdings, Inc.'s (the Company or Energizer) historical basis results of operations, operating segment results, and liquidity and capital resources. Statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations that are not historical may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. See “Forward-Looking Statements” presented later in this section. The Company reports results in two segments: Personal Care, which includes Wet Shave, Skin Care, Feminine Care and Infant Care products and Household Products, which includes batteries and portable lighting products. This discussion should be read in conjunction with the Consolidated Financial Statements and related notes.
Forward-Looking Statements
This document contains both historical and forward-looking statements. Forward-looking statements are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, statements regarding future company-wide or segment sales, earnings and earnings per share, investments, initiatives, capital expenditures, product launches, consumer trends, cost savings related to restructuring projects and the timing of such savings, improvements to working capital levels and the timing and savings associated with such improvements, the impact of price increases, advertising and promotional spending, the impact of foreign currency movements, category value and future growth in our businesses. These statements generally can be identified by the use of forward-looking words or phrases such as “believe,” “expect,” “anticipate,” “may,” “could,” “intend,” “belief,” “estimate,” “plan,” "predict," “likely,” “will,” “should” or other similar words or phrases. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results, performance or achievements to differ materially from those expressed in or indicated by those statements. We cannot assure you that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this document are only made as of the date of this document and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation:
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General market and economic conditions;
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The success of new products and the ability to continually develop new products;
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Energizer's ability to predict category and product consumption trends;
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Energizer's ability to continue planned advertising and other promotional spending;
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Energizer's ability to timely execute its strategic initiatives in a manner that will positively impact our financial condition and results of operations and does not disrupt our business operations;
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The impact of strategic initiatives on Energizer's relationships with its employees, its major customers and vendors;
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Energizer's ability to improve operations and realize cost savings including savings expected from our restructuring plan announced in November 2012;
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The impact of raw material and other commodity costs;
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The impact of foreign currency exchange rates and offsetting hedges on Energizer's profitability for the year with any degree of certainty;
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The impact of interest and principal repayment of our existing and any future debt;
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The impact of legislative or regulatory determinations or changes by federal, state, local and foreign authorities, including taxing authorities;
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The impact of currency movements.
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ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of any such forward-looking statements. The list of factors above is illustrative, but by no means exhaustive. The risk factors set forth in our Annual Report on Form 10-K, in the section entitled "Risk Factors," could affect future results, causing our results to differ materially from those expressed in our forward-looking statements.
All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Additional risks and uncertainties include those detailed from time to time in Energizer’s publicly filed documents.
Non-GAAP Financial Measures
While Energizer Holdings, Inc. reports financial results in accordance with accounting principles generally accepted in the U.S. ("GAAP"), this discussion includes certain non-GAAP financial measures. These non-GAAP measures, such as, but not limited to, historic and estimated future operating results, working capital as a percent of net sales, free cash flow, changes in organic net sales, segment profit and operating results, as adjusted to exclude the impact of certain charges and recoveries, such as the impact of changes in foreign currencies, the results of operations in Venezuela, the acquisition of American Safety Razor (ASR) and the related integration and transaction costs, the costs associated with restructuring and other realignment activities and refinancing costs. The Company believes these non-GAAP measures (which are accompanied by reconciliations to the comparable GAAP measures) provide a meaningful comparison to the corresponding reported period and assist investors in performing analysis. Investors should consider non-GAAP measures in addition to, not as a substitute for, or superior to, the comparable GAAP measures. Further, these non-GAAP measures may differ from similarly titled measures presented by other companies.
Company Overview
General
Energizer Holdings, Inc., incorporated in Missouri in 1999, is one of the world’s largest manufacturers and marketers of primary batteries, portable lighting and personal care products in the wet shave, skin care, feminine care and infant care categories. On April 1, 2000, all of the outstanding shares of common stock of Energizer were distributed in a tax-free spin-off to shareholders of Ralston Purina Company. The Company employed approximately 14,600 colleagues globally at September 30, 2012 and had fiscal 2012 net sales of approximately $4.6 billion. The Company manufactures and/or packages product in more than a dozen countries and sells products throughout the world.
Operations for the Company are managed via two segments - Personal Care (Wet Shave, Skin Care, Feminine Care and Infant Care Products) and Household Products (Battery and Portable Lighting Products).
The Company's two divisions have distinct priorities to enhance the combined enterprise and deliver strategic objectives. Personal Care is focused on maximizing sales and profit growth through innovation, product line extensions and share gains. Household Products is focused on stabilizing profitability in a challenging and declining battery category to deliver strong cash flows from our core battery and portable lights portfolio, while making select investments that provide near-term returns. Both divisions are targeting improved working capital management as a key business objective.
Personal Care includes Wet Shave products sold under the
Schick
,
Wilkinson Sword
,
Edge
,
Skintimate
and
Personna
brand names as well as value-priced private label razors, Skin Care products sold under the
Banana Boat
,
Hawaiian Tropic
,
Wet Ones
and
Playtex
brand names, Feminine Care products sold under the
Playtex
brand name and Infant Care products sold under the
Playtex
and
Diaper Genie
brand names.
We manufacture and distribute
Schick
and
Wilkinson Sword
razor systems (SWS), composed of razor handles and refillable blades, and disposable shave products for men and women. SWS's primary markets are the U.S., Japan and the larger countries of Western Europe. We believe SWS holds the #2 global market share position in wet shaving. We also believe that
Edge
and
Skintimate
, which are part of our wet shave portfolio, are U.S. market leading brands in shave preparation products, including shaving gels and creams.
In Skin Care, we market sun care products under the
Banana Boat
and
Hawaiian Tropic
brands. We believe these brands, on a combined basis, hold a leading market share position in the U.S. sun care category, and we have experienced meaningful growth in these product lines in markets outside the U.S. over the last several years. The sun care category varies by geographic region, but generally is segmented by product type such as general protection, tanning and babies; as well as by method of application such as lotions and sprays. We compete across this full spectrum of sun care products. Also in Skin Care, we offer
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
Wet Ones
hands and face wipes and
Playtex
household gloves, both of which are leading branded products in their respective categories in the U.S.
In Feminine Care, we believe
Playtex
is the second largest selling tampon brand overall in the U.S. We offer plastic applicator tampons under the
Playtex Gentle Glide
and
Playtex Sport
brands, and
Playtex
Personal Cleansing Cloths, a pre-moistened wipe for feminine hygiene.
In Infant Care, we market a broad range of products including bottles, cups, and mealtime products under the
Playtex
brand name. We also offer a line of pacifiers, including the Ortho-Pro and Binky pacifiers. We believe our
Playtex Diaper Genie
brand of diaper disposal systems leads the U.S. diaper pail category. The
Diaper Genie
brand consists of the diaper pail unit and refill liners. The refill liners individually seal diapers in an odor-proof plastic film. Recently, we extended this technology, including the pail and oder-proof plastic film refills via the launch of
Litter Genie
, a product designed to provide a more convenient and effective way for cat owners to dispose of litter.
Energizer's Household Products division manufactures and markets one of the most extensive product portfolios in household batteries, specialty batteries and portable lighting. Energizer is the successor to over 100 years of expertise in the battery and portable lighting products industry. Its brand names
Energizer
and
Eveready
have worldwide recognition for quality and dependability, and are marketed and sold around the world.
In household batteries, we offer batteries using carbon zinc, alkaline, rechargeable and lithium technologies. These products are marketed and sold in the price, premium and performance segments. This allows us to penetrate a broad range of the market and meet most consumer needs. We distribute our portfolio of household and specialty batteries and portable lighting products through a global distribution network, which also provides a platform for the distribution of our personal care products.
Unless we indicate otherwise, we base the information concerning our industry contained or incorporated by reference herein on our general knowledge of and expectations concerning the industry. Our market position, market share and industry market size is based on our estimates using our internal data and estimates based on data from various industry sources, our internal research and adjustments and assumptions that we believe to be reasonable. We have not independently verified data from industry sources and cannot guarantee their accuracy or completeness. In addition, we believe that data regarding the industry, market size and our market position and market share within such industry provide general insights but are inherently imprecise. Further, our estimates and assumptions involve risks and uncertainties and are subject to change based on various factors, including those discussed in the “Risk Factors” section of this Annual Report on Form 10-K. These and other factors could cause results to differ materially from those expressed in the estimates and assumptions.
Fiscal 2012 Summary
In fiscal 2012, the Company delivered net earnings of $408.9 and earnings per diluted share of $6.22 (adjusted earning per diluted share of $6.20 as shown in the reconciliation below), which was in line with the Company's earnings outlook for fiscal 2012, following a year of investment in fiscal 2011.
Personal Care net sales grew 1.2% including the negative impact of unfavorable currencies, which partially offset the increase due to the full year ownership of ASR. While organic sales growth in Personal Care was modest in fiscal 2012, this followed a year of mid-single digit growth in fiscal 2011 driven by the continuation of
Schick Hydro
launch activities. From a segment profit standpoint, Personal Care segment profit increased to $470.7, up 15.3% as gross margins improved post-launch and advertising and sales promotional spending returned closer to pre-launch levels.
We continue to face difficult category and competitive pressures in Household Products, which was evident in a decline in organic sales of more than 3%. However, despite the net sales decline, segment profit, excluding the negative impact of currencies of $22.5, increased somewhat due to improved product costs due primarily to savings generated from the 2011 Household Products manufacturing footprint restructuring and disciplined cost containment initiatives.
Key highlights for fiscal 2012 included:
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Earnings per diluted share of $6.22, and net earnings of $408.9,
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Gross margin of 46.8%, up 60 basis points from fiscal 2011, and up 100 basis points excluding the unfavorable impact of currencies, due to improved product costs including the impact of the 2011 battery manufacturing footprint restructuring, and reduced promotional activity, and favorable pricing and product costs in Personal Care, as the Schick Hydro launch further matures,
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ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
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Net cash flow from operating activities was $631.6, up $219.1 or 53% as compared to fiscal 2011 and returning to a more normalized level after a year of significant investments in fiscal 2011,
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Refinancing of the Company's maturing term loan and a matured private placement note via the issuance of $500.0 principal amount of 4.70% ten year notes,
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Improved working capital as a percent of net sales, which declined to 21.4% for fiscal 2012 as compared to 22.9% in fiscal 2011,
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Payment of the Company's first quarterly dividend of $0.40 per share of common stock in September, and
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The repurchase of 5.9 million shares of the Company's common stock at a cost of approximately $418.
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While the Company has made improvements to its battery manufacturing footprint, and has initiated efforts to reduce working capital investment in a meaningful way, continued competitive and growth challenges and a desire to ensure an appropriate level of operating flexibility has led to a comprehensive enterprise-wide review of the Company's cost structure and operating model.
2013 Restructuring Initiatives
In November 2012, which was in the first quarter of fiscal 2013, the Company's Board of Directors authorized an enterprise-wide restructuring plan and has delegated authority to the Company's management to determine the final plan with respect to these initiatives.
The Company expects to achieve gross annualized pre-tax cost savings of approximately $200 million as a result of this restructuring plan. The Company expects that nearly three quarters of the savings will improve profitability, and the remaining portion of the savings will be re-invested in the business to drive long-term growth. The Company estimates one-time charges associated with achieving these benefits to be near of $250, of which approximately 25% to 30% are estimated to be non-cash charges.
The Company expects that a substantial portion of the actions necessary to achieve the targeted savings should be completed by the end of fiscal 2014 and the total on-going savings are expected to be fully realized in fiscal 2015. A majority of the one-time charges associated with these initiatives are expected to be recorded within the next 12 to 20 months as restructuring costs will likely be incurred ahead of achieving estimated savings.
These actions are expected to reduce the global workforce by more than 10%, or approximately 1,500 colleagues.
In order to achieve these savings, we are undertaking efforts to:
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Rationalize and streamline operations facilities in the Household Products Division:
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Close Maryville, MO battery manufacturing facility
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Close St. Albans, VT battery manufacturing facility
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Close Tampoi, Malaysia battery packaging facility
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Streamline Asheboro, NC battery manufacturing and packaging facilities
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Streamline Walkerton, Canada packaging facility
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◦
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Streamline lights manufacturing in China
|
|
|
|
|
•
|
Consolidate G&A functional support across the organization;
|
|
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•
|
Streamline the Household Products Division product portfolio to enable increased focus on our core battery and portable lighting business;
|
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|
•
|
Streamline the marketing organization within our Household Products division;
|
|
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•
|
Optimize our go-to-market strategies and organization structures within our international markets;
|
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•
|
Reduce overhead spending including changes to benefit programs and other targeted spending reductions; and
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•
|
Create a center-led purchasing function to drive procurement savings.
|
The Company expects these savings will generate increased cash flow and improve key operating metrics, including gross
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
margin and overheads as a percent of sales. In addition, approximately a quarter of the gross savings will be used to increase investment in brand building and innovation to drive future growth, and enable investments in information technology systems to improve capabilities and reduce costs.
Financial Results
For the year ended
September 30, 2012
, net earnings were
$408.9
, or $
6.22
per diluted share, compared to net earnings of
$261.2
or $
3.72
per diluted share, in fiscal
2011
and
$403.0
, or
$5.72
per diluted share, in fiscal
2010
. Total average diluted shares outstanding were
65.7
million,
70.3
million and
70.5
million for fiscal
2012
,
2011
and
2010
, respectively. The decline in average diluted shares outstanding over the time period presented was the result of share repurchase activity.
Diluted earnings per share (EPS) for each fiscal year were impacted by certain items related to restructuring and realignment activities, costs associated with the acquisition and integration of acquired businesses, refinancing activities, certain tax adjustments to update prior year provisions/benefits and net deferred tax balances and recognize the tax benefit of certain foreign dividends and the devaluation and implementation of highly inflationary accounting in Venezuela. The impacts of these items on both reported net earnings and net earnings per diluted share are provided below as a reconciliation of net earnings and net earnings per diluted share to adjusted net earnings and adjusted net earnings per diluted share, which are non-GAAP measures.
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For The Years Ended September 30,
|
|
|
Net Earnings
|
|
Diluted EPS
|
|
|
2012
|
2011
|
2010
|
|
2012
|
2011
|
2010
|
|
Diluted Net Earnings/EPS - GAAP
|
$
|
408.9
|
|
$
|
261.2
|
|
$
|
403.0
|
|
|
$
|
6.22
|
|
$
|
3.72
|
|
$
|
5.72
|
|
|
Impacts, net of tax: expense (income)
|
|
|
|
|
|
|
|
|
Household Products restructuring
|
(5.7
|
)
|
63.3
|
|
—
|
|
|
(0.09
|
)
|
0.89
|
|
—
|
|
|
Early debt retirement / duplicate interest
|
—
|
|
14.4
|
|
—
|
|
|
—
|
|
0.21
|
|
—
|
|
|
Other realignment/integration
|
10.2
|
|
10.5
|
|
7.6
|
|
|
0.15
|
|
0.15
|
|
0.10
|
|
|
Acquisition inventory valuation
|
—
|
|
4.4
|
|
—
|
|
|
—
|
|
0.06
|
|
—
|
|
|
Venezuela (VZ) devaluation/other
|
—
|
|
1.8
|
|
14.2
|
|
|
—
|
|
0.03
|
|
0.20
|
|
|
Early termination of interest rate swap
|
1.1
|
|
—
|
|
—
|
|
|
0.02
|
|
—
|
|
—
|
|
|
Valuation allowance, other tax adjustments
|
(7.0
|
)
|
9.7
|
|
(29.6
|
)
|
|
(0.10
|
)
|
0.14
|
|
(0.42
|
)
|
|
Diluted Net Earnings/EPS - adjusted (Non-GAAP)
|
$
|
407.5
|
|
$
|
365.3
|
|
$
|
395.2
|
|
|
$
|
6.20
|
|
$
|
5.20
|
|
$
|
5.60
|
|
Operating Results
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales - Total Company
|
|
|
|
|
|
|
|
|
|
For the Years Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
% Chg
|
|
2011
|
% Chg
|
|
2010
|
|
Net sales - prior year
|
|
$
|
4,645.7
|
|
|
|
$
|
4,248.3
|
|
|
|
$
|
3,999.8
|
|
|
Organic
|
|
(55.6
|
)
|
(1.2
|
)%
|
|
42.0
|
|
1.0
|
%
|
|
80.7
|
|
|
Impact of currency
|
|
(69.1
|
)
|
(1.5
|
)%
|
|
108.4
|
|
2.6
|
%
|
|
101.4
|
|
|
Change in VZ - post devaluation
|
|
—
|
|
—
|
%
|
|
(15.3
|
)
|
(0.4
|
)%
|
|
(23.3
|
)
|
|
Incremental impact of acquisitions
|
|
46.2
|
|
1.0
|
%
|
|
262.3
|
|
6.2
|
%
|
|
89.7
|
|
|
Net sales - current year
|
|
$
|
4,567.2
|
|
(1.7
|
)%
|
|
$
|
4,645.7
|
|
9.4
|
%
|
|
$
|
4,248.3
|
|
Net sales for fiscal
2012
were
$4,567.2
, down $78.5 or
1.7%
, as compared to fiscal
2011
including the unfavorable impact of currencies of approximately
$69
. Excluding the unfavorable impact of currencies, sales were essentially flat as incremental sales related to the full year ownership of ASR and organic sales growth in Personal Care were offset by declines in Household Products. Organically, net sales grew
0.6%
in Personal Care, which was following mid-single digit organic growth in fiscal
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
2011 as the prior year included continued launch activities for
Schick Hydro
. Organically, net sales in Household Products declined
3.2%
in fiscal
2012
due, in part, to continued category softness and a loss in market share, primarily in the U.S., due to lost shelf space and display activities.
Net sales for fiscal
2011
were
$4,645.7
, an increase of $397.4, or
9.4%
, as compared to fiscal
2010
, due primarily to the inclusion of ASR and the favorable impacts of currencies. On an organic basis, net sales for the fiscal year increased
1.0%
as higher sales in Personal Care due, in part, to the
Schick Hydro
launch, higher sales of disposable razors and increased revenue in Skin Care were offset by declines in Household Products and legacy men's razor systems.
For further discussion regarding net sales in Personal Care and Household Products, please see the section titled “Segment Results” provided below.
Gross Profit
Gross profit dollars were
$2,137.9
in fiscal
2012
,
$2,145.7
in fiscal
2011
and
$2,019.3
in fiscal
2010
. The slight decrease in gross profit in fiscal
2012
as compared to fiscal
2011
was due to the decline in net sales noted above including the negative impact of unfavorable currencies, partially offset by improved gross margin as a percent of net sales.
Gross Margin as a percent of net sales for fiscal
2012
was
46.8%
, up approximately 60 basis points as compared to fiscal
2011
. This increase in gross margin as a percent of net sales was more pronounced excluding the unfavorable impact of currencies, which negatively impacted the year over year comparison by approximately 40 basis points. Exclusive of the unfavorable impact of currencies, gross margin as a percent of net sales improved approximately 100 basis points in fiscal
2012
due primarily to improved product costs, including savings from the 2011 Household Products manufacturing footprint changes, and the impact of favorable pricing and product costs in Personal Care.
Gross margin as a percent of net sales was
46.2%
in fiscal
2011
and 47.5% in fiscal
2010
. The decrease in fiscal
2011
was due primarily to the inclusion of lower margin ASR products, which reduced gross margin by approximately 130 basis points during the period as compared to fiscal 2010. In addition, higher commodity costs primarily in batteries, and higher introductory coupon and trade promotion related to the
Schick Hydro
launch were offset by favorable currencies and product mix.
Selling, General and Administrative
Selling, general and administrative expenses (SG&A) were
$895.1
, or
19.6%
of net sales as compared to
$856.1
, or
18.4%
of net sales for fiscal
2011
. The dollar increase of $39.0 includes approximately $7 for costs associated with the Company's recent enterprise-wide review of its operating model and cost structure. In addition, fiscal 2012 includes higher costs of approximately $13, as compared to fiscal 2011, related to the increase in the underlying value of the Company's unfunded deferred compensation liabilities due to the increase in the value of market securities. Other increases in SG&A for fiscal 2012 as compared to
2011
included pension expense, up approximately $7, due primarily to the impact of lower market interest rates on the value of pension liabilities and higher incentive compensation, as short and long term performance targets were achieved in fiscal 2012 and were not achieved in fiscal 2011 due, in part, to our prior year strategic investments.
Advertising and Sales Promotion
For fiscal
2012
, advertising and sales promotion (A&P) was
$449.5
, down $74.5 as compared to fiscal
2011
. A&P as a percent of net sales for fiscal
2012
was
9.8%
as compared to
11.3%
of net sales in fiscal
2011
. The prior fiscal year included significant A&P spending related to the continued launch of
Schick Hydro
. We planned for A&P spending to return closer to pre-launch levels in fiscal
2012
. The
Schick Hydro
launch was initiated in North America in April 2010.
A&P expense was
9.8%
,
11.3%
and 10.9% of sales for fiscal
2012
,
2011
and
2010
, respectively. The higher level of A&P spending in relation to net sales in fiscal 2011 and 2010 was due to significant launch activities for
Schick Hydro
. A&P expense may vary from year to year with new product launches, the impact of acquisitions, strategic brand support initiatives, the overall competitive environment, and the state of the global economy.
Research and Development
Research and development (R&D) expense was
$112.5
in fiscal
2012
,
$108.3
in fiscal
2011
and
$97.1
in fiscal
2010
. The increase in fiscal
2012
was due primarily to normal cost increases including salary merit increases. The increase in fiscal
2011
as compared to fiscal
2010
reflects the inclusion of ASR, which added approximately $7. As a percent of sales, R&D expense was approximately
2.5%
in fiscal
2012
and
2.3%
for both fiscal
2011
and
2010
.
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.
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
For Fiscal
2010
:
|
|
|
|
•
|
A
$23.5
tax benefit related to the favorable impact of a foreign tax credit;
|
|
|
|
|
•
|
Adjustments were recorded to reflect refinement of estimates of tax attributes to amounts in filed returns, settlement of tax audits and other tax adjustments. The fiscal 2010 adjustment decreased the income tax provision by
$6.1
, and
|
|
|
|
|
•
|
A $4.1 tax benefit was recorded in fiscal 2010 reflecting the local tax benefit of the Venezuela devaluation charge.
|
The Company's effective tax rate is highly sensitive to the mix of countries, from which earnings or losses are derived. Declines in earnings in lower tax rate countries, earnings increases in higher tax rate countries, repatriation of foreign earnings or operating losses in the future could increase future tax rates. Additionally, adjustments to prior year tax provision estimates could increase or decrease future tax provisions.
Segment Results
Operations for the Company are managed via two segments - Personal Care (Wet Shave, Skin Care, Feminine Care and Infant Care Products) and Household Products (Battery and Portable Lighting Products). On November 23, 2010, which was in the first quarter of fiscal 2011, we completed the acquisition of ASR. ASR is a leading global manufacturer of private label/value wet shaving razors and blades, and industrial and specialty blades and is part of the Company' s Personal Care segment. Due to the timing of the acquisition, we have a full year of operating results for ASR in fiscal 2012, but only ten months in fiscal 2011. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based compensation costs, costs associated with most restructuring, acquisition integration or business realignment activities, and amortization of intangible assets. Financial items, such as interest income and expense, are managed on a global basis at the corporate level. The exclusion from segment results of charges such as inventory write-up related to purchase accounting, other acquisition transaction and integration costs, and substantially all restructuring and realignment costs, reflects management’s view on how it evaluates segment performance.
The Company's operating model includes a combination of stand-alone and combined business functions between the Personal Care and Household Products businesses, varying by country and region of the world. Shared functions include product warehousing and distribution, various transaction processing functions, and in some countries, a combined sales force and management. The Company applies a fully allocated cost basis, in which shared business functions are allocated between the segments. Such allocations do not represent the costs of such services, if performed on a stand-alone basis.
For the fiscal year ended
September 30, 2012
, the 2011 Household Products restructuring activities, which were substantially completed by the end of fiscal 2011, generated pre-tax income of
$6.8
, which was driven by the gain on the sale of our former battery manufacturing facility in Switzerland. This plant was closed in fiscal 2011. This gain was partially offset by $6.0 of additional restructuring costs in fiscal 2012. For the fiscal year ended
September 30, 2011
, the 2011 Household Products restructuring activities generated pre-tax expense of
$79.0
.
This structure is the basis for the Company’s reportable operating segment information, as included in the tables in Note 17 to the Consolidated Financial Statements for the fiscal years ended
September 30,
2012
,
2011
and
2010
.
PERSONAL CARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales - Personal Care Products
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
|
|
|
|
|
|
|
2012
|
% Chg
|
|
2011
|
% Chg
|
|
2010
|
|
Net sales - prior year
|
|
$
|
2,449.7
|
|
|
|
$
|
2,048.6
|
|
|
|
$
|
1,890.3
|
|
|
Organic growth
|
|
15.0
|
|
0.6
|
%
|
|
91.9
|
|
4.5
|
%
|
|
34.8
|
|
|
Impact of currency
|
|
(31.4
|
)
|
(1.3
|
)%
|
|
53.5
|
|
2.6
|
%
|
|
43.7
|
|
|
Change in VZ - post devaluation
|
|
—
|
|
—
|
%
|
|
(6.6
|
)
|
(0.3
|
)%
|
|
(9.9
|
)
|
|
Incremental impact of acquisitions
|
|
46.2
|
|
1.9
|
%
|
|
262.3
|
|
12.8
|
%
|
|
89.7
|
|
|
Net sales - current year
|
|
$
|
2,479.5
|
|
1.2
|
%
|
|
$
|
2,449.7
|
|
19.6
|
%
|
|
$
|
2,048.6
|
|
Net sales for the fiscal year ended
September 30, 2012
increased
1.2%
, which includes a full twelve months for ASR in fiscal
2012
as compared to only ten months in fiscal
2011
due to the timing of the acquisition, partially offset by the unfavorable
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
impact of currencies of $31.4. On an organic basis, net sales increased $15.0, or
0.6%
. The year-to-date net sales growth was due to:
|
|
|
|
•
|
Net sales in Wet Shave, inclusive of the ASR impact, increased approximately
3%
, or approximately $50, on a reported basis, and approximately 5% excluding unfavorable currencies. This growth was driven by increased sales of
Schick Hydro
, and the launches of
Schick Hydro
5 Power Select and
Hydro Silk
women's systems, partially offset by lower sales of legacy branded men's and women's systems,
|
|
|
|
|
•
|
Net sales in Skin Care increased approximately $5, on a reported basis, on higher sales of Sun Care products in international markets,
|
|
|
|
|
•
|
In Infant Care, net sales decreased approximately $18 on a reported basis, due to category softness and competitive activity, and
|
|
|
|
|
•
|
Net sales in Feminine Care decreased approximately $10 on a reported basis, as
Playtex
Gentle Glide
declines were partially offset by continued growth in
Playtex
Sport
.
|
Net sales for fiscal
2011
were
$2,449.7
, up $401.1 or
19.6%
, as compared to fiscal
2010
. This increase included
4.5%
of organic sales growth and the remainder was driven by the inclusion of ASR and favorable currencies. The full year net sales growth was driven primarily by:
|
|
|
|
•
|
Net sales in Wet Shave increased approximately
29%
including the impact of ASR and favorable currencies, offset by a net sales decline in Venezuela. Organic sales grew approximately 6% in Wet Shave due to the launch of
Schick Hydro
men's systems and shave preparations, and higher sales of disposable razors, which were partially offset by lower sales of legacy men's systems, and
|
|
|
|
|
•
|
Skin Care net sales increased approximately
9%
(7% organic and 2% currencies) due to the favorable impact of lower prior year sun care returns and higher shipments for the current sun care season.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit - Personal Care Products
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
% Chg
|
|
2011
|
% Chg
|
|
2010
|
|
Segment profit - prior year
|
|
$
|
408.4
|
|
|
|
$
|
366.6
|
|
|
|
$
|
341.1
|
|
|
Operations
|
|
68.3
|
|
16.8
|
%
|
|
(11.9
|
)
|
(3.2
|
)%
|
|
(25.1
|
)
|
|
Impact of currency
|
|
(6.0
|
)
|
(1.5
|
)%
|
|
26.9
|
|
7.3
|
%
|
|
24.9
|
|
|
Change in VZ - post devaluation
|
|
—
|
|
—
|
%
|
|
(1.2
|
)
|
(0.3
|
)%
|
|
3.2
|
|
|
Incremental impact of acquisitions
|
|
—
|
|
—
|
%
|
|
28.0
|
|
7.6
|
%
|
|
22.5
|
|
|
Segment profit - current year
|
|
$
|
470.7
|
|
15.3
|
%
|
|
$
|
408.4
|
|
11.4
|
%
|
|
$
|
366.6
|
|
Segment profit for fiscal 2012 was
$470.7
, up $62.3, or
15.3%
. This increase was driven by lower A&P as spending levels reduced in comparison to fiscal 2011 as the
Schick Hydro
launch continues to mature. In addition, gross profit increased due to higher sales as noted above and improved gross margin as a percentage of net sales due primarily to favorable pricing and product costs. These segment profit gains were partially offset by the unfavorable impact of currencies and higher overheads due, in part, to the full year ownership of ASR.
Segment profit for fiscal
2011
was
$408.4
, up $41.8, or
11.4%
, due to the favorable impacts of the inclusion of ASR and currencies. This was partially offset by lower operational results of approximately
$12
, or
3%
, due to increased A&P as the
Schick Hydro
launch continued, partially offset by higher gross proft from the organic sales growth noted above.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
HOUSEHOLD PRODUCTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales - Household Products
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
% Chg
|
|
2011
|
% Chg
|
|
2010
|
|
Net sales - prior year
|
|
$
|
2,196.0
|
|
|
|
$
|
2,199.7
|
|
|
|
$
|
2,109.5
|
|
|
Organic Change
|
|
(70.6
|
)
|
(3.2
|
)%
|
|
(49.9
|
)
|
(2.3
|
)%
|
|
45.9
|
|
|
Impact of currency
|
|
(37.7
|
)
|
(1.7
|
)%
|
|
54.9
|
|
2.5
|
%
|
|
57.7
|
|
|
Change in VZ - post devaluation
|
|
—
|
|
—
|
%
|
|
(8.7
|
)
|
(0.4
|
)%
|
|
(13.4
|
)
|
|
Net sales - current year
|
|
$
|
2,087.7
|
|
(4.9
|
)%
|
|
$
|
2,196.0
|
|
(0.2
|
)%
|
|
$
|
2,199.7
|
|
Net Sales for the twelve months ended
September 30, 2012
decreased
4.9%
, inclusive of a
1.7%
decline due to unfavorable currencies. Excluding the impact of currencies, organic sales declined
3.2%
due primarily to a slow start to the fiscal year in the first fiscal quarter as net sales were adversely impacted by a shift in timing of retailer holiday deliveries, significant prior year hurricane response volumes that did not repeat at similar levels during fiscal 2012, increasing household battery category volume softness and the negative impact of lost shelf space and display activities, primarily in the U.S., in the second half of the fiscal year. We estimate that battery category unit volumes declined approximately 5% in the Company's global measured markets during fiscal 2012. In addition, we estimate that the Company's dollar market share declined by approximately one point during this same period, due primarily to lower market share in the U.S. as a result of the lost shelf space and display activities noted above.
For fiscal
2011
, net sales were
$2,196.0
, essentially flat as compared to
$2,199.7
for fiscal
2010
. Organic sales declined
2.3%
as compared to fiscal 2010 due to continued negative category value trends and increased retailer trade spending, primarily in the U.S. and Western Europe. We estimate that the dollar value of the battery category in global measured markets declined
in the low single digits in fiscal
2011
. This decline in organic sales on a year over year basis was offset by favorable currencies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit - Household Products
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
% Chg
|
|
2011
|
% Chg
|
|
2010
|
|
Segment profit - prior year
|
|
$
|
410.6
|
|
|
|
$
|
451.1
|
|
|
|
$
|
398.6
|
|
|
Operations
|
|
12.1
|
|
3.0
|
%
|
|
(71.3
|
)
|
(15.8
|
)%
|
|
28.5
|
|
|
Impact of currency
|
|
(22.5
|
)
|
(5.5
|
)%
|
|
28.1
|
|
6.2
|
%
|
|
30.6
|
|
|
Change in VZ - post devaluation
|
|
—
|
|
—
|
%
|
|
2.7
|
|
0.6
|
%
|
|
(6.6
|
)
|
|
Segment profit - current year
|
|
$
|
400.2
|
|
(2.5
|
)%
|
|
$
|
410.6
|
|
(9.0
|
)%
|
|
$
|
451.1
|
|
S
egment profit for fiscal
2012
was
$400.2
, a decrease of $10.4, or
2.5%
, due primarily to the unfavorable impact of currencies. Operationally, segment profit increased
$12.1
as reduced gross margin due to continued household battery volume softness and the market share loss noted above was more than offset by pricing gains, cost savings related to our 2011 Household Products manufacturing footprint restructuring and global cost containment efforts.
Segment profit for fiscal
2011
was
$410.6
, down $40.5, or
9.0%
. The favorable impact of currencies was offset by operational results, which declined
$71.3
, or
15.8%
, due primarily to category value declines, increased retailer trade spending, the unfavorable impact of higher commodity prices, and investments in growth initiatives.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
GENERAL CORPORATE AND OTHER EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Years Ended September 30,
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
General corporate expenses
|
|
$
|
151.2
|
|
|
$
|
116.9
|
|
|
$
|
97.6
|
|
|
Integration/other realignment
|
|
7.8
|
|
|
3.0
|
|
|
10.8
|
|
|
Sub-Total
|
|
159.0
|
|
|
119.9
|
|
|
108.4
|
|
|
Household Products restructuring
|
|
(6.8
|
)
|
|
79.0
|
|
|
—
|
|
|
ASR costs:
|
|
|
|
|
|
|
|
Deal expenses
|
|
—
|
|
|
4.2
|
|
|
0.5
|
|
|
Severance/other integration
|
|
8.4
|
|
|
9.3
|
|
|
—
|
|
|
Acquisition inventory valuation
|
|
—
|
|
|
7.0
|
|
|
—
|
|
|
General corporate and other expenses
|
|
$
|
160.6
|
|
|
$
|
219.4
|
|
|
$
|
108.9
|
|
|
% of net sales
|
|
3.5
|
%
|
|
4.7
|
%
|
|
2.6
|
%
|
General Corporate and Other Expenses
For fiscal
2012
, general corporate expenses, including integration/other realignment, were
$159.0
an increase of $39.1 as compared to fiscal
2011
, due primarily to higher corporate expenses including:
|
|
|
|
•
|
increased costs of approximately $13 due to the year over year change in the underlying value of the Company's unfunded deferred compensation liabilities driven by the increase in the value of market securities,
|
|
|
|
|
•
|
higher pension costs of approximately $7 due primarily to the unfavorable impact of lower market discount rates on the actuarial value of pension liabilities due to the changes in the value of market securities,
|
|
|
|
|
•
|
higher annual bonus and stock award compensation of approximately $14 as short and long term performance targets were achieved in fiscal 2012 and were not achieved in fiscal 2011 due, in part, to our prior year strategic investments, and
|
|
|
|
|
•
|
higher integration/other realignment costs in fiscal 2012, which included approximately $7 associated with the assessment phase of our 2013 restructuring plan.
|
The increase in general corporate expenses inclusive of integration/other realignment costs in fiscal 2012 as compared to fiscal 2011was more than offset by significantly lower costs in fiscal 2012 associated with the 2011 Household Products restructuring and lower ASR transaction, integration and inventory write-up costs.
For fiscal
2011
, general corporate expenses, including integration/other realignment, were
$119.9
, an increase of $11.3 as compared to fiscal
2010
, due primarily to higher corporate compensation expenses, most notably higher stock award amortization and higher pension expenses due primarily to the decline in market discount rates, which results in an increase in the actuarial value of pension liabilities. This was partially offset by lower integration and other realignment costs, exclusive of the 2011 Household Products restructuring, which is included on a separate line in the above table. In fiscal
2011
, the Company incurred $13.5 of ASR transaction and integration expenses and $7.0 of costs associated with the write-up and subsequent sale of the acquired ASR inventory.
Liquidity and Capital Resources
At
September 30, 2012
, the Company had
$718.5
in available cash, the vast majority of which was outside of the U.S. and
$438.9
available under its committed debt facilities, exclusive of available borrowings under the receivables securitization program.
Advances under the Company's existing receivables securitization program, which may not exceed
$200
, are not considered debt for purposes of the Company’s debt compliance covenants. At
September 30, 2012
,
$140.0
was outstanding under this facility.
The 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.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
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.
At this time, the Company has a remaining term loan outstanding of
$106.5
, which will mature in December 2012. We expect to fund this repayment with available cash and other borrowing capacity.
As a result of the permanent repayment of
$335
of our existing term loan, the Company terminated a then-existing interest rate swap agreement, which previously hedged our interest rate exposure on
$200
of our then-existing term loan balance. The interest rate swap agreement was terminated following repayment of the debt associated with the interest rate swap derivative. A charge of $1.7 was included in interest expense in fiscal 2012 related to the early termination of this hedging instrument. The Company remains a party to an interest rate swap agreement with one major financial institution that fixes the variable benchmark component (LIBOR) of the Company’s interest rate on
$100.0
of the Company’s remaining variable rate term loan debt through December 2012 at an interest rate of
1.9%
.
Operating Activities
Cash flow from operating activities is the primary funding source for operating needs and capital investments. Cash flow from operating activities was
$631.6
in fiscal
2012
, an increase of $219.1, or 53%, as compared to fiscal
2011
. Cash flow from operating activities was
$412.5
in fiscal
2011
, a decrease of $239.9 as compared to
$652.4
for fiscal
2010
. The increase in cash flow from operating activities in fiscal
2012
was due primarily to higher operating cash flow before changes in working capital as fiscal 2011 included significant costs in support of the continued
Schick Hydro
launch as well as the 2011 Household Products restructuring. These same factors were the drivers for the decrease in fiscal 2011 as compared to fiscal 2010.
From a working capital perspective, changes in assets and liabilities used in operations (working capital) resulted in a positive cash flow of approximately $45 in fiscal
2012
as compared to fiscal 2011. The most significant impact was in accounts payable due to an improvement in year over year days payable outstanding during fiscal 2012. The changes in the remaining components of working capital essentially offset, with lower accounts receivable offset by slightly higher inventory and other current assets.
From a working capital perspective, changes in assets and liabilities used in operations (working capital) resulted in a negative cash flow of approximately $110 in fiscal
2011
as compared to fiscal 2010. The most significant impact was in accounts payable and other current liabilities, which decreased collectively by approximately $120 in fiscal
2011
due primarily to the level of promotional activities and the timing of payments. The unfavorable cash flow impact due to lower levels of accounts payable and other current liabilities at the end of fiscal
2011
was partially offset by lower inventory of approximately $65 as we anniversary the inventory build to support the initial
Schick Hydro
launch and the impact of hurricane-related inventory reduction in the fourth quarter of fiscal
2011
.
Investing Activities
Net cash used by investing activities was
$94.9
,
$363.5
and
$113.3
in fiscal
2012
,
2011
and
2010
, respectively. Capital expenditures were
$111.0
,
$98.0
and
$108.7
in fiscal
2012
,
2011
and
2010
, respectively. These capital expenditures were funded by cash flow from operations. In addition to cash outflows related to capital expenditures, the most significant impact to cash flow used by investing activities in fiscal 2011 was the acquisition of ASR for net cash of $267, which reflects a cash purchase price of $301, net of $34 of acquired cash. The Company financed this acquisition with available cash of approximately $129 and borrowings from our receivables securitization program. See Note 17 to the Consolidated Financial Statements for capital expenditures by segment.
Exclusive of our recently announced restructuring plan, capital expenditures of approximately $90 to $100 are anticipated in fiscal
2013
with disbursements for new product and cost reduction-related capital driving the largest components of projected capital spending. Also, we expect to incur additional capital expenditures of approximately $50 over the next two years to enable certain aspects of our restructuring plan. This will include certain manufacturing and packaging investments as well as improvements in our information technology platform. Total capital expenditures, including incremental investments related to our restructuring plan, are expected to be financed with funds generated from operations.
Financing Activities
The Company’s total borrowings were
$2,532.5
at September 30, 2012, including
$268.9
tied to variable interest rates, of which
$100
is hedged via the interest rate swap discussed above. The Company maintains total debt facilities of
$2,982.5
. The
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.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
A summary of the Company’s contractual obligations at
September 30, 2012
is shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
|
Long-term debt, including current maturities
|
|
$
|
2,371.5
|
|
|
$
|
231.5
|
|
|
$
|
370.0
|
|
|
$
|
360.0
|
|
|
$
|
1,410.0
|
|
|
Interest on long-term debt
|
|
753.4
|
|
|
121.8
|
|
|
221.6
|
|
|
169.6
|
|
|
240.4
|
|
|
Minimum pension funding
(1)
|
|
133.8
|
|
|
58.6
|
|
|
34.1
|
|
|
41.1
|
|
|
—
|
|
|
Operating leases
|
|
127.2
|
|
|
26.8
|
|
|
36.4
|
|
|
25.9
|
|
|
38.1
|
|
|
Purchase obligations and other
(2) (3)
|
|
70.7
|
|
|
54.5
|
|
|
16.2
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
3,456.6
|
|
|
$
|
493.2
|
|
|
$
|
678.3
|
|
|
$
|
596.6
|
|
|
$
|
1,688.5
|
|
|
|
|
|
|
|
1
|
Globally, total pension contributions for the Company in the next twelve months are estimated to be approximately $59. The U.S. pension plans constitute 80% of the total benefit obligations and plan assets for the Company’s pension plans. The estimates beyond 2012 represent future pension payments to comply with local funding requirements in the U.S. only. The projected payments beyond fiscal year 2017 are not currently determinable.
|
|
2
|
The Company has estimated approximately $5.2 of cash settlements associated with unrecognized tax benefits within the next year, which are included in the table above. As of September 30, 2012, the Company’s Consolidated Balance Sheet reflects a liability for unrecognized tax benefits of $41.0, excluding $11.8 of interest and penalties. The contractual obligations table above does not include this liability beyond one year. Due to the high degree of uncertainty regarding the timing of future cash outflows of liabilities for unrecognized tax benefits beyond one year, a reasonable estimate of the period of cash settlement for periods beyond the next twelve months cannot be made, and thus is not included in this table.
|
|
3
|
Included in the table above are approximately $17 of fixed costs related to third party logistics contracts.
|
Purchase obligations set forth in the table above represent contractual obligations that generally have longer terms, and are non-routine in nature. The Company also has contractual purchase obligations for future purchases, which generally extend one to three months. These obligations are primarily individual, short-term purchase orders for routine goods and services at estimated fair value that are part of normal operations and are reflected in historical operating cash flow trends. In addition, the Company has various commitments related to service and supply contracts that contain penalty provisions for early termination. As of
September 30, 2012
, we do not believe such purchase obligations or termination penalties will have a significant effect on our results of operations, financial position or liquidity position in the future. As such, these obligations have been excluded from the table above.
Market Risk Sensitive Instruments and Positions
The market risk inherent in the Company’s financial instruments and positions represents the potential loss arising from adverse changes in currency rates, commodity prices, interest rates and the Company’s stock price. The following risk management discussion and the estimated amounts generated from the sensitivity analysis are forward-looking statements of market risk assuming certain adverse market conditions occur. Company policy allows derivatives to be used only for identifiable exposures and, therefore, the Company does not enter into hedges for trading purposes where the sole objective is to generate profits.
Currency Rate Exposure
A significant portion of our product cost is more closely tied to the U.S. dollar and, to a lesser extent, the Euro, than to the local currencies in which the product is sold. As such, a weakening of currencies relative to the U.S. dollar and, to a lesser extent, the Euro, results in margin declines unless mitigated through pricing actions, which are not always available due to the competitive environment. Conversely, strengthening of currencies relative to the U.S. dollar and, to a lesser extent, the Euro, can improve margins. This margin impact coupled with the translation of foreign operating results to the U.S. dollar, our financial reporting currency, has an impact on reported operating profits. Changes in the value of local currencies in relation to the U.S. dollar, and, to a lesser extent, the Euro may continue to impact reported sales and segment profitability in the future, and we cannot predict the direction or magnitude of future changes.
The Company generally views its investments in foreign subsidiaries with a functional currency other than the U.S. dollar as long-term. As a result, the Company does not generally hedge these net investments. Capital structuring techniques are used to manage the net investment in foreign currencies, as necessary. Additionally, the Company attempts to limit its U.S. dollar net monetary liabilities in countries with unstable currencies.
From time to time the Company may employ foreign currency hedging techniques to mitigate potential losses in earnings or cash flows on foreign currency transactions, which primarily consist of anticipated intercompany purchase transactions and intercompany borrowings. External purchase transactions and intercompany dividends and service fees with foreign currency risk may also be hedged. The primary currencies to which the Company’s foreign affiliates are exposed include the U.S. dollar,
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
the Euro, the Yen, the British pound, the Canadian dollar and the Australian dollar.
The Company uses natural hedging techniques, such as offsetting like foreign currency cash flows and foreign currency derivatives with durations of generally one year or less, including forward exchange contracts. Certain of the foreign exchange contracts have been designated and are accounted for as cash flow hedges.
The Company enters into foreign currency derivative contracts to hedge certain existing balance sheet exposures. Any losses on these contracts would be fully offset by exchange gains on the underlying exposures, thus they are not subject to significant market risk. The change in estimated fair value of the foreign currency contracts for fiscal
2012
and
2011
resulted in expense of
$1.9
and income of
$4.5
, respectively, and was recorded in Other financing expense, net on the Consolidated Statements of Earnings and Comprehensive Income. In addition, the Company has entered into a series of forward currency contracts to hedge the cash flow uncertainty of forecasted inventory purchases due to short term currency fluctuations. These transactions are accounted for as cash flow hedges. At
September 30, 2012
and
2011
, the Company had an unrealized pre-tax loss on these forward currency contracts accounted for as cash flow hedges of
$5.9
and and unrealized pre-tax gain of
$3.3
, respectively, included in Accumulated other comprehensive loss on the Consolidated Balance Sheets. Contract maturities for these hedges extend into
2014
. There were
61
open contracts at
September 30, 2012
with a total notional value of approximately
$359
.
The Company has investments in Venezuelan affiliates. Venezuela has been considered highly inflationary under GAAP since January 1, 2010. In addition, the conversion of local monetary assets to U.S. dollars is restricted by the Venezuelan government. We continue to monitor this situation including the impact such restrictions may have on our future business operations. At this time, we are unable to predict with any degree of certainty how recent and future developments in Venezuela will affect our Venezuela operations, if at all. At
September 30, 2012
, the Company had approximately $40 in net monetary assets in Venezuela. Due to the level of uncertainty in Venezuela, we cannot predict the exchange rate that will ultimately be used to convert our local currency net monetary assets to U.S. dollars in the future.
Our ability to effectively manage sales and profit levels in Venezuela will be impacted by several factors, including the Company's ability to mitigate the effect of any potential future devaluation, further actions of the Venezuelan government, economic conditions in Venezuela, such as inflation and consumer spending, the availability of raw materials, utilities and energy and the future state of exchange controls in Venezuela, including the availability of U.S. dollars at the official foreign exchange rate.
Commodity Price Exposure
The Company uses raw materials that are subject to price volatility. At times, the Company has used, and may in the future use, hedging instruments to reduce exposure to variability in cash flows associated with future purchases of certain materials and commodities.
In September 2012, the Company discontinued hedge accounting treatment for its existing zinc contracts. These contracts no longer meet the accounting requirements for classification as cash flow hedges because of an ineffective correlation to the underlying zinc exposure being hedged. The zinc forward hedges were designed to offset movement in our purchased zinc supplies, which include indium and certain conversion components. These two ancillary components of the Company's purchased zinc supplies have been highly volatile, and have negatively impacted the correlation between the zinc hedging contracts and the change in the cost of our zinc supplies. Due to this volatility, the zinc forward contracts no longer meet the effectiveness requirements for treatment as cash flow hedges under the accounting guidelines.
The pre-tax gain recognized on these zinc contracts that were no longer considered cash flow hedges was $1.6 at September 30, 2012 and was included in other financing in the Consolidated Statement of Earnings and Comprehensive Income.
Contract maturities for these hedges extend into
2014
. There were
17
open contracts at
September 30, 2012
with a total notional value of approximately
$31
.
Interest Rate Exposure
At
September 30, 2012
and
2011
, the fair market value of the Company's fixed rate debt is estimated at
$2,438.0
and
$1,969.3
, respectively, using yields obtained from independent pricing sources for similar types of borrowing arrangements. The estimated fair value of debt is greater than the carrying value of the Company's debt by $174.4 and $104.3 at
September 30, 2012
and
2011
, respectively. A 10% decrease in interest rates on fixed-rate debt would have increased the fair market value by
$53.6 and $48.1 at
September 30, 2012
and
2011
, respectively. See Note 10 to the Consolidated Financial Statements for additional information regarding the Company’s debt.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
The Company has interest rate risk with respect to interest expense on variable rate debt. At
September 30, 2012
, the Company has a remaining variable rate term loan outstanding of
$106.5
, which will mature in December 2012. The Company remains party to an interest rate swap agreement with one major financial institution that fixes the variable benchmark component (LIBOR) of the Company’s interest rate on
$100
of the Company’s remaining variable rate term loan debt through December 2012. Given the fact that the remaining portion of the term loan matures in December 2012, the Company's outstanding debt at September 30, 2012 was not subject to material interest rate risk.
At
September 30, 2012
and
2011
, respectively, the Company had an unrealized pre-tax loss on interest rate swap agreements of
$0.3
and
$4.7
included in Accumulated other comprehensive loss on the Consolidated Balance Sheets. Over the next three months the interest rate swap agreement will be fully settled and the total
$0.3
pre-tax loss included in Accumulated other comprehensive loss is expected to be included in earnings, based on current market conditions.
Stock Price Exposure
At
September 30, 2012
, the Company held a share option with a major financial institution to mitigate the impact of changes in certain of the Company’s unfunded deferred compensation liabilities, which are tied to the Company’s common stock price. The fair market value of the share option was
$2.5
as included in other current assets and
$3.4
as included in other current liabilities at
September 30, 2012
and
2011
, respectively. The change in estimated fair value of the total share option for fiscal
2012
and
2011
resulted in income of
$6.1
and expense of
$0.6
respectively, and was recorded in SG&A. Period activity related to the share option is classified in the same category in the Consolidated Statements of Cash Flows as the period activity associated with the Company’s deferred compensation liability, which was in cash flow from operations.
Seasonal Factors
The Company's Household Products segment results are typically impacted in the first quarter of the fiscal year by the additional sales volume associated with the December holiday season, particularly in North America. First quarter sales accounted for 30% of total Household Products net sales in fiscal
2012
and
2011
and 32% in fiscal
2010
. In addition, natural disasters, such as hurricanes, can create conditions that drive exceptional needs for portable power and spike battery and lighting products sales.
Customer orders for the Company’s sun care products are highly seasonal, which has historically resulted in higher sun care sales in the second and third quarters of our fiscal year and lower sales in the first and fourth quarters of our fiscal year. As a result, sales, operating income, working capital and cash flows for the Personal Care segment can vary significantly between quarters of the same and different years due to the seasonality and timing of orders for sun care products.
Other factors may also have an impact on the timing and amounts of sales, operating income, working capital and cash flows. They include: the timing of new product launches by competitors or by the Company, the timing of advertising, promotional, merchandising or other marketing activities by competitors or by the Company, and the timing of retailer merchandising decisions and actions.
Other Matters
Environmental Matters
The operations of the Company, like those of other companies, are subject to various federal, state, foreign and local laws and regulations intended to protect the public health and the environment. These regulations relate primarily to worker safety, air and water quality, underground fuel storage tanks and waste handling and disposal. The Company has received notices from the U.S. Environmental Protection Agency, state agencies and/or private parties seeking contribution, that it has been identified as a “potentially responsible party” (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act, and may be required to share in the cost of cleanup with respect to eight federal “Superfund” sites. It may also be required to share in the cost of cleanup with respect to state-designated sites or other sites outside of the U.S.
Accrued environmental costs at
September 30, 2012
were
$19.9
, of which
$4.5
is expected to be spent in fiscal
2013
. It is difficult to quantify with certainty the cost of environmental matters, particularly remediation and future capital expenditures for environmental control equipment. Total environmental capital expenditures and operating expenses are not expected to have a material effect on our total capital and operating expenditures, consolidated earnings or competitive position. However, current environmental spending estimates could be modified as a result of changes in our plans, changes in legal requirements, including any requirements related to global climate change, or other factors.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
Inflation
Management recognizes that inflationary pressures may have an adverse effect on the Company through higher material, labor and transportation costs, asset replacement costs and related depreciation, and other costs. In general, the Company has been able to offset or minimize inflation effects through other cost reductions and productivity improvements. We can provide no assurance that such mitigation will be available in the future.
Legal and other contingencies
The Company and its subsidiaries are parties to a number of legal proceedings in various jurisdictions arising out of the operations of the Company's businesses. Many of these legal matters are in preliminary stages and involve complex issues of law and fact, and may proceed for protracted periods of time. The amount of liability, if any, from these proceedings cannot be determined with certainty. However, based upon present information, the Company believes that its liability, if any, arising from such pending legal proceedings, asserted legal claims and known potential legal claims which are likely to be asserted, are not reasonably likely to be material to the Company's financial position, results of operations, or cash flows, taking into account established accruals for estimated liabilities.
In January 2011, Munchkin, Inc. commenced an action against a subsidiary of the Company in the United States District Court for the Central District of California seeking a declaration that certain Munchkin, Inc. advertising claims were valid and alleging false advertising claims by the Company. A jury trial resulted in an adverse verdict in July 2012 in the amount of approximately
$13.5
million. As a result of the jury verdict, the Company recorded an accrual of
$13.5
million as of June 30, 2012. In September 2012, the court ordered a new trial with respect to the claims on which the jury awarded damages, which set aside the previous jury verdict. Based on this development and our current assessment of the matter, the Company reversed the previously established litigation reserve.
In October 2012, after receiving five reports from consumers, the Company announced a voluntary market withdrawal of certain continuous spray Banana Boat sun care products due to a potential risk of product igniting on the skin if contact was made with a source of ignition before the product was completely dry. The Company is voluntarily removing these products from retail outlets because of this potential safety concern. The Company has provided for the costs associated with the voluntary withdrawal in its fiscal 2012 financial statements, and is unable to determine with any degree of certainty what, if any, other liabilities may arise.
Critical Accounting Policies
The methods, estimates, and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results the Company reports in its consolidated financial statements. Specific areas, among others, requiring the application of management's estimates and judgment include assumptions pertaining to accruals for consumer and trade-promotion programs, pension and postretirement benefit costs, share-based compensation, future cash flows associated with impairment testing of goodwill and other long-lived assets, credit worthiness of customers, uncertain tax positions, tax valuation allowances, and legal and environmental matters. On an ongoing basis, the Company evaluates its estimates, but actual results could differ from those estimates.
The Company's most critical accounting policies are: revenue recognition; pension and other postretirement benefits, share-based compensation, the valuation of long-lived assets including property, plant and equipment, income taxes including uncertain tax positions and the carrying value of intangible assets and the related impairment testing of goodwill and other indefinite-lived intangible assets. The Company's critical accounting policies have been reviewed with the Audit Committee of the Board of Directors. A summary of the Company's significant accounting policies is contained in Note 2 of the Notes to Consolidated Financial Statements. This listing is not intended to be a comprehensive list of all of the Company's accounting policies.
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•
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Revenue Recognition
The Company derives revenues from the sale of its products. Revenue is recognized when title, ownership and risk of loss pass to the customer. When discounts are offered to customers for early payment, an estimate of the discounts is recorded as a reduction of net sales in the same period as the sale. Standard sales terms are final and, except for seasonal sun care returns, which are discussed in detail in the next paragraph, returns or exchanges are not permitted unless a special exception is made; reserves are established and recorded in cases where the right of return exists for a particular sale.
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Under certain circumstances, we allow customers to return sun care products that have not been sold by the end of the sun care season, which is normal practice in the sun care industry. We record sales at the time the title, ownership and risk of loss pass to the customer. The terms of these sales vary but, in all instances, the following conditions are met:
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
the sales arrangement is evidenced by purchase orders submitted by customers; the selling price is fixed or determinable; title to the product has transferred; there is an obligation to pay at a specified date without any additional conditions or actions required by the Company; and collection is reasonably assured. Simultaneous with the sale, we reduce sales and cost of sales, and reserve amounts on our consolidated balance sheet for anticipated returns based upon an estimated return level, in accordance with GAAP. Customers are required to pay for the sun care product purchased during the season under the required terms. We generally receive returns of U.S. sun care products from September through January following the summer sun care season. We estimate the level of sun care returns using a variety of inputs including historical experience, consumption trends during the sun care season and inventory positions at key retailers as the sun care season progresses. We monitor shipment activity and inventory levels at key retailers during the season in an effort to more accurately estimate potential returns. This allows the Company to manage shipment activity to our customers, especially in the latter stages of the sun care season, to reduce the potential for returned product. The level of returns may fluctuate from our estimates due to several factors including weather conditions, customer inventory levels, and competitive activity. Based on our fiscal
2012
sun care shipments, each percentage point change in our returns rate would have impacted our reported net sales by $3.0 and our reported operating income by $2.7.
The Company offers a variety of programs, primarily to its retail customers, designed to promote sales of its products. Such programs require periodic payments and allowances based on estimated results of specific programs and are recorded as a reduction to net sales. The Company accrues, at the time of sale, the estimated total payments and allowances associated with each transaction. Additionally, the Company offers programs directly to consumers to promote the sale of its products. Promotions which reduce the ultimate consumer sale prices are recorded as a reduction of net sales at the time the promotional offer is made, generally using estimated redemption and participation levels. Taxes we collect on behalf of governmental authorities, which are generally included in the price to the customer, are also recorded as a reduction of net sales.
The Company continually assesses the adequacy of accruals for customer and consumer promotional program costs not yet paid. To the extent total program payments differ from estimates, adjustments may be necessary. Historically, these adjustments have not been material to annual results.
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•
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Pension Plans and Other Postretirement Benefits
The determination of the Company’s obligation and expense for pension and other postretirement benefits is dependent on certain assumptions developed by the Company and used by actuaries in calculating such amounts. Assumptions include, among others, the discount rate, future salary increases and the expected long-term rate of return on plan assets. Actual results that differ from assumptions made are recognized on the balance sheet and subsequently amortized to earnings over future periods. Significant differences in actual experience or significant changes in macroeconomic conditions resulting in changes to assumptions may materially affect pension and other postretirement obligations. This has been evident in recent periods, as market discount rates utilized to determine the actuarial valuation of plan liabilities have moved significantly lower. This has resulted in higher actuarial pension liabilities and contributed to higher net periodic pension costs. We expect this trend to continue in fiscal
2013
based on market rates at October 1,
2012
, which is the valuation date for the Company's pension plans. In determining the discount rate, the Company generally uses the yield on high-quality bonds that coincide with the cash flows of its plans’ estimated payouts. For the U.S. plans, which represent the Company’s most significant obligations, we consider the Mercer yield curves in determining the discount rates.
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Of the assumptions listed above, changes in the expected long-term rate of return on plan assets and changes in the discount rate used in developing plan obligations will likely have the most significant impact on the Company’s annual earnings, prospectively. Based on plan assets at
September 30, 2012
, a one percentage point decrease or increase in expected asset returns would decrease or increase the Company’s pre-tax pension expense by approximately $9. In addition, it may increase and accelerate the rate of required pension contributions in the future. Uncertainty related to economic markets and the availability of credit may produce changes in the yields on corporate bonds rated as high-quality. As a result, discount rates based on high-quality corporate bonds may increase or decrease leading to lower or higher, respectively, pension obligations. A one percentage point decrease in the discount rate would increase pension obligations by approximately $135.2 at
September 30, 2012
.
As allowed under GAAP, the Company’s U.S. qualified pension plan uses Market Related Value, which recognizes market appreciation or depreciation in the portfolio over five years so it reduces the short-term impact of market fluctuations.
In November 2012, which is the first fiscal quarter of 2013, the Company approved and communicated changes to its U.S. pension plan, which is the most significant of the Company's pension obligations. Effective January 1, 2014, the pension benefit earned to date by active participants under the legacy Energizer U.S. pension plan will be frozen and
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
future service benefits will no longer be accrued under this retirement program. It is expected that the Company will provide an enhanced defined contribution benefit in conjunction with this action, but this change is expected to result in an overall reduction in the costs of retirement benefits for U.S. colleagues. We expect to recognize a curtailment gain in pre-tax earnings of between $30 to $40 in the first fiscal quarter of 2013 as a result of this plan change. This estimate may vary from the actual curtailment gain due primarily to changes in market interest rates and other factors.
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•
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Share-Based Compensation
The Company grants restricted stock equivalents, which generally vest over three to four years. A portion of the restricted stock equivalents granted provide for the issuance of common stock to certain managerial staff and executive management if the Company achieves specified performance targets. The estimated fair value of each grant issued is estimated on the date of grant based on the current market price of the stock. The total amount of compensation expense recognized reflects the initial assumption that target performance goals will be achieved. Compensation expense may be adjusted during the life of the performance grant based on management’s assessment of the probability that performance goals will be achieved. If such goals are not met or it is determined that achievement of performance goals is not probable, compensation expense is adjusted to reflect the reduced expected payout level. If it is determined that the performance goals will be exceeded, additional compensation expense is recognized.
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•
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Valuation of Long-Lived Assets
The Company periodically evaluates its long-lived assets, including property, plant and equipment, goodwill and intangible assets, for potential impairment indicators. Judgments regarding the existence of impairment indicators, including lower than expected cash flows from acquired businesses, are based on legal factors, market conditions and operational performance. Future events could cause the Company to conclude that impairment indicators exist. The Company estimates fair value using valuation techniques such as discounted cash flows. This requires management to make assumptions regarding future income, working capital and discount rates, which would affect the impairment calculation. See the discussion on “Acquisitions, Goodwill and Intangible Assets” included later in this section for further information.
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In November 2012, which is the first quarter of fiscal 2013, the Company's Board of Directors authorized an enterprise-wide restructuring plan and has delegated authority to the company's management to determine the final plan with respect to these initiatives.
The Company estimates one-time charges associated with the restructuring will include accelerated depreciation and asset impairment charges on certain manufacturing assets including property, plant and equipment located at the facilities targeted for closing or some form of streamlining in our recently announced restructuring plan. Based on our initial assessment, we estimate that we will incur an impairment charge in fiscal 2013 in the range of $10 to $15, pre-tax, which we expect to record in the first quarter of fiscal 2013. Additionally, we estimate accelerated depreciation on this specific property, plant and equipment will be in the range of $50 to $60, and will be incurred over the next 12 to 18 months as facilities are closed or streamlined. We do not believe our restructuring plan will result in the impairment of any other material long-lived assets, other than the identified property, plant and equipment. For further discussion see the Company overview section above.
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•
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Income Taxes
Our annual tax rate is determined based on our income, statutory tax rates and the tax impacts of items treated differently for tax purposes than for financial reporting purposes. Tax law requires certain items be included in the tax return at different times than the items are reflected in the financial statements. Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences are temporary, reversing over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities.
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Deferred tax assets generally represent the tax effect of items that can be used as a tax deduction or credit in future years for which we have already recorded the tax benefit in our income statement. Deferred tax liabilities generally represent tax expense recognized in our financial statements for which payment has been deferred, the tax effect of expenditures for which a deduction has already been taken in our tax return but has not yet been recognized in our financial statements or assets recorded at estimated fair value in business combinations for which there was no corresponding tax basis adjustment.
We regularly repatriate a portion of current year earnings from select non U.S. subsidiaries. Generally, these non-U.S. subsidiaries are in tax jurisdictions with effective tax rates that do not result in materially higher U.S. tax provisions related to the repatriated earnings. No provision is made for additional taxes on undistributed earnings of foreign affiliates that are intended and planned to be indefinitely invested in the affiliate. We intend to, and have plans to, reinvest these earnings indefinitely in our foreign subsidiaries to fund local operations, fund pension and other post retirement obligations and fund capital projects.
The Company estimates income taxes and the income tax rate in each jurisdiction that it operates. This involves
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
estimating taxable earnings, specific taxable and deductible items, the likelihood of generating sufficient future taxable income to utilize deferred tax assets, the portion of the income of foreign subsidiaries that is expected to be remitted to the U.S. and be taxable and possible exposures related to future tax audits. Deferred tax assets are evaluated on a subsidiary by subsidiary basis to ensure that the asset will be realized. Valuation allowances are established when the realization is not deemed to be more likely than not. Future performance is monitored, and when objectively measurable operating trends change, adjustments are made to the valuation allowances accordingly. To the extent the estimates described above change, adjustments to income taxes are made in the period in which the estimate is changed.
The Company operates in multiple jurisdictions with complex tax and regulatory environments, which are subject to differing interpretations by the taxpayer and the taxing authorities. At times, we may take positions that management believes are supportable, but are potentially subject to successful challenges by the appropriate taxing authority. The Company evaluates its tax positions and establishes liabilities in accordance with guidance governing accounting for uncertainty in income taxes. The Company reviews these tax uncertainties in light of the changing facts and circumstances, such as the progress of tax audits, and adjusts them accordingly.
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•
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Acquisitions, Goodwill and Intangible Assets
The Company allocates the cost of an acquired business to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess value of the cost of an acquired business over the estimated fair value of the assets acquired and liabilities assumed is recognized as goodwill. The valuation of the acquired assets and liabilities will impact the determination of future operating results. The Company uses a variety of information sources to determine the value of acquired assets and liabilities including: third-party appraisers for the values and lives of property, identifiable intangibles and inventories; actuaries for defined benefit retirement plans; and legal counsel or other experts to assess the obligations associated with legal, environmental or other claims.
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Significant judgment is required in estimating the fair value of intangible assets and in assigning their respective useful lives. The fair value estimates are based on historical available information and on future expectations and assumptions deemed reasonable by management, but are inherently uncertain. Determining the useful life of an intangible asset also requires judgment. Certain brand intangibles are expected to have indefinite lives based on their history and our plans to continue to support and build the acquired brands. Other intangible assets are expected to have determinable useful lives. Our assessment of intangible assets that have an indefinite life and those that have a determinable life is based on a number of factors including the competitive environment, market share, brand history, underlying product life cycles, operating plans and the macroeconomic environment. Our estimates of the useful lives of determinable-lived intangible assets are primarily based on the same factors. The costs of determinable-lived intangible assets are amortized to expense over the estimated useful life. The value of indefinite-lived intangible assets and residual goodwill is not amortized, but is tested at least annually for impairment.
However, future changes in the judgments, assumptions and estimates that are used in our impairment testing including discount and tax rates or future cash flow projections, could result in significantly different estimates of the fair values in the future. A reduction in the estimated fair values could result in impairment charges that could materially affect our financial statements in any given year. The recorded value of goodwill and intangible assets from recently acquired businesses are derived from more recent business operating plans and macroeconomic environmental conditions and, therefore, are more susceptible to an adverse change that could require an impairment charge.
During fiscal 2012, we tested goodwill for impairment for both the Energizer and Personal Care reporting units. There were no indications of impairment of goodwill noted during this testing.
In addition, we completed impairment testing on indefinite-lived intangible assets other than goodwill, which are trademarks/brand names used in our various product categories. No impairment was indicated as a result of this testing. However, the recorded values for two brands,
Playtex
and
Wet Ones
, were relatively close to the carrying value at approximately
115%
of the carrying value (approximately $
650
) for the
Playtex
brand and approximately
106%
of the carrying value (approximately
$200
) for the
Wet Ones
brand. Key assumptions included in the testing of these brand values were a discount rate of
8.00%
and a terminal growth rate of
2.75%
.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
Recently Issued Accounting Standards
There are no new accounting pronouncements issued or effective that had or will have a material impact on our Consolidated Financial Statements.
On July 27, 2012, the Financial Accounting Standards Board (FASB) issued new guidance to simplify how entities test indefinite-lived intangible assets for impairment. The new guidance allows an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative indefinite-lived intangible asset impairment test. The new guidance is effective for annual indefinite-lived intangible asset impairment tests to be performed in fiscal year 2013, with early adoption permitted.
Summary Selected Historical Financial Information
(In millions, except per share data)
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Statements of Earnings Data
(a)
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FOR THE YEARS ENDED SEPTEMBER 30,
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|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
Net sales
|
|
$
|
4,567.2
|
|
|
$
|
4,645.7
|
|
|
$
|
4,248.3
|
|
|
$
|
3,999.8
|
|
|
$
|
4,331.0
|
|
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Depreciation and amortization
|
|
162.2
|
|
|
181.3
|
|
|
139.2
|
|
|
130.4
|
|
|
141.3
|
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Earnings before income taxes (d)
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565.4
|
|
|
406.0
|
|
|
543.4
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|
|
445.3
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|
|
473.2
|
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Income taxes
|
|
156.5
|
|
|
144.8
|
|
|
140.4
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|
|
147.5
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|
|
143.9
|
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Net earnings (e)
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$
|
408.9
|
|
|
$
|
261.2
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|
|
$
|
403.0
|
|
|
$
|
297.8
|
|
|
$
|
329.3
|
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Earnings per share:
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Basic
|
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$
|
6.30
|
|
|
$
|
3.75
|
|
|
$
|
5.76
|
|
|
$
|
4.77
|
|
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$
|
5.71
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Diluted
|
|
$
|
6.22
|
|
|
$
|
3.72
|
|
|
$
|
5.72
|
|
|
$
|
4.72
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|
|
$
|
5.59
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Average shares outstanding:
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Basic
|
|
64.9
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|
|
69.6
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|
|
70.0
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|
|
62.4
|
|
|
57.6
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Diluted
|
|
65.7
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|
|
70.3
|
|
|
70.5
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|
|
63.1
|
|
|
58.9
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|
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Balance Sheet Data
|
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AT SEPTEMBER 30,
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|
|
2012
|
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2011
|
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2010
|
|
2009
|
|
2008
|
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Working capital (b)
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$
|
1,215.1
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|
|
$
|
1,233.3
|
|
|
$
|
1,176.0
|
|
|
$
|
966.3
|
|
|
$
|
665.1
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Property, plant and equipment, net
|
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848.5
|
|
|
885.4
|
|
|
840.6
|
|
|
863.4
|
|
|
835.5
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Total assets (c)
|
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6,731.2
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|
|
6,531.5
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|
|
6,255.8
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|
|
6,017.3
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|
|
5,667.7
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Long-term debt
|
|
2,138.6
|
|
|
2,206.5
|
|
|
2,022.5
|
|
|
2,288.5
|
|
|
2,589.5
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(a) Year over year comparatives may be impacted in varying degrees by acquisitions.
(b) Working capital is current assets less current liabilities.
(c) The Company has made two reclassifications for financial reporting purposes that impact the balance sheets only. See Note 16 of the Notes to
Consolidated Financial Statements for further information.
(d) Earnings before income taxes were (reduced)/increased by the following items:
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FOR THE YEARS ENDED SEPTEMBER 30,
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2012
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2011
|
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2010
|
|
2009
|
|
2008
|
|
ASR integration/transaction costs
|
|
$
|
(8.4
|
)
|
|
$
|
(13.5
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other realignment/integration costs
|
|
(7.8
|
)
|
|
(3.0
|
)
|
|
(11.0
|
)
|
|
(13.6
|
)
|
|
(21.1
|
)
|
|
Early termination of interest rate swap
|
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Household Products restructuring
|
|
6.8
|
|
|
(79.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Early debt retirement/duplicate interest
|
|
—
|
|
|
(22.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Acquisition inventory valuation
|
|
—
|
|
|
(7.0
|
)
|
|
—
|
|
|
(3.7
|
)
|
|
(27.5
|
)
|
|
Venezuela devaluation/other impacts
|
|
—
|
|
|
(1.8
|
)
|
|
(18.3
|
)
|
|
—
|
|
|
—
|
|
|
Voluntary retirement/reduction in force costs
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
(38.6
|
)
|
|
—
|
|
|
Paid time off adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24.1
|
|
|
—
|
|
|
Total
|
|
$
|
(11.1
|
)
|
|
$
|
(127.2
|
)
|
|
$
|
(29.6
|
)
|
|
$
|
(31.8
|
)
|
|
$
|
(48.6
|
)
|
(e) Net earnings were (reduced)/increased by the following items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE YEARS ENDED SEPTEMBER 30,
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
ASR integration/transaction costs
|
|
$
|
(5.3
|
)
|
|
$
|
(8.5
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other realignment/integration costs
|
|
(4.9
|
)
|
|
(2.0
|
)
|
|
(7.4
|
)
|
|
(8.9
|
)
|
|
(13.4
|
)
|
|
Early termination of interest rate swap
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Household Products restructuring
|
|
5.7
|
|
|
(63.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Early debt retirement/duplicate interest
|
|
—
|
|
|
(14.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Acquisition inventory valuation
|
|
—
|
|
|
(4.4
|
)
|
|
—
|
|
|
(2.3
|
)
|
|
(16.5
|
)
|
|
Venezuela devaluation/other impacts
|
|
—
|
|
|
(1.8
|
)
|
|
(14.2
|
)
|
|
—
|
|
|
—
|
|
|
Voluntary retirement/reduction in force costs
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
(24.3
|
)
|
|
—
|
|
|
Paid time off adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.2
|
|
|
—
|
|
|
Adjustments to valuation allowances and prior years tax accruals
|
|
7.0
|
|
|
(9.7
|
)
|
|
6.1
|
|
|
(1.5
|
)
|
|
(1.1
|
)
|
|
Tax benefits - special foreign dividend
|
|
—
|
|
|
—
|
|
|
23.5
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
1.4
|
|
|
$
|
(104.1
|
)
|
|
$
|
8.1
|
|
|
$
|
(21.8
|
)
|
|
$
|
(31.0
|
)
|
Responsibility for Financial Statements
The preparation and integrity of the financial statements of Energizer Holdings, Inc. (the Company) are the responsibility of its management. These statements have been prepared in conformance with generally accepted accounting principles in the United States of America, and in the opinion of management, fairly present the Company’s financial position, results of operations and cash flows.
The Company maintains accounting and internal control systems, which it believes are adequate to provide reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition and that the financial records are reliable for preparing financial statements. The selection and training of qualified personnel, the establishment and communication of accounting and administrative policies and procedures, and an extensive program of internal audits are important elements of these control systems.
The Board of Directors, through its Audit Committee consisting solely of non-management directors, meets periodically with management, internal audit and the independent auditors to discuss audit and financial reporting matters. To assure independence, PricewaterhouseCoopers LLP has direct access to the Audit Committee.
Management’s Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles for external purposes. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Internal control over financial reporting, because of its inherent limitations, may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework set forth in
Internal Control – Integrated Framework
, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the Company’s assessment, management has concluded that internal control over financial reporting as of
September 30, 2012
was effective. The Company’s internal control over financial reporting as of
September 30, 2012
has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report that appears herein.
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Energizer Holdings, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings and comprehensive income, cash flows and shareholders' equity present fairly, in all material respects, the financial position of Energizer Holdings, Inc. and its subsidiaries at
September 30, 2012
and
2011
and the results of their operations and their cash flows for each of the three years in the period ended
September 30, 2012
in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
September 30, 2012
, based on criteria established in
Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
St. Louis, Missouri
November 20, 2012
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(Dollars in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE YEARS ENDED SEPTEMBER 30,
|
|
Statement of Earnings
|
|
2012
|
|
2011
|
|
2010
|
|
Net sales
|
|
$
|
4,567.2
|
|
|
$
|
4,645.7
|
|
|
$
|
4,248.3
|
|
|
Cost of products sold
|
|
2,429.3
|
|
|
2,500.0
|
|
|
2,229.0
|
|
|
Gross profit
|
|
2,137.9
|
|
|
2,145.7
|
|
|
2,019.3
|
|
|
Selling, general and administrative expense
|
|
895.1
|
|
|
856.1
|
|
|
765.7
|
|
|
Advertising and sales promotion expense
|
|
449.5
|
|
|
524.0
|
|
|
461.3
|
|
|
Research and development expense
|
|
112.5
|
|
|
108.3
|
|
|
97.1
|
|
|
Household Products restructuring
|
|
(6.8
|
)
|
|
79.0
|
|
|
—
|
|
|
Interest expense
|
|
127.3
|
|
|
121.4
|
|
|
125.4
|
|
|
Cost of early debt retirements
|
|
—
|
|
|
19.9
|
|
|
—
|
|
|
Other financing (income)/expense, net
|
|
(5.1
|
)
|
|
31.0
|
|
|
26.4
|
|
|
Earnings before income taxes
|
|
565.4
|
|
|
406.0
|
|
|
543.4
|
|
|
Income taxes
|
|
156.5
|
|
|
144.8
|
|
|
140.4
|
|
|
Net earnings
|
|
$
|
408.9
|
|
|
$
|
261.2
|
|
|
$
|
403.0
|
|
|
Earnings Per Share
|
|
|
|
|
|
|
|
Basic net earnings per share
|
|
$
|
6.30
|
|
|
$
|
3.75
|
|
|
$
|
5.76
|
|
|
Diluted net earnings per share
|
|
$
|
6.22
|
|
|
$
|
3.72
|
|
|
$
|
5.72
|
|
|
|
|
|
|
|
|
|
|
Statement of Comprehensive Income
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
408.9
|
|
|
$
|
261.2
|
|
|
$
|
403.0
|
|
|
Other comprehensive (loss)/income, net of tax
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
(11.9
|
)
|
|
(8.7
|
)
|
|
(43.2
|
)
|
|
Pension/postretirement activity, net of tax of $(14.4) in 2012,
$(25.6) in 2011 and $(19.8) in 2010
|
|
(24.8
|
)
|
|
(26.4
|
)
|
|
(47.5
|
)
|
|
Deferred (loss)/gain on hedging activity, net of tax of $1.6 in
2012 $5.3 in 2011 and $(6.9) in 2010
|
|
(0.4
|
)
|
|
11.7
|
|
|
(11.7
|
)
|
|
Comprehensive income
|
|
$
|
371.8
|
|
|
$
|
237.8
|
|
|
$
|
300.6
|
|
The above financial statements should be read in conjunction with the Notes To Consolidated Financial Statements.
ENERGIZER HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except par values)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEPTEMBER 30,
|
|
|
|
2012
|
|
2011
|
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
718.5
|
|
|
$
|
471.2
|
|
|
Trade receivables, net
|
|
676.7
|
|
|
709.8
|
|
|
Inventories
|
|
672.4
|
|
|
653.4
|
|
|
Other current assets
|
|
455.0
|
|
|
426.3
|
|
|
Total current assets
|
|
2,522.6
|
|
|
2,260.7
|
|
|
Property, plant and equipment, net
|
|
848.5
|
|
|
885.4
|
|
|
Goodwill
|
|
1,469.5
|
|
|
1,475.3
|
|
|
Other intangible assets, net
|
|
1,853.7
|
|
|
1,878.2
|
|
|
Other assets
|
|
36.9
|
|
|
31.9
|
|
|
Total assets
|
|
$
|
6,731.2
|
|
|
$
|
6,531.5
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
231.5
|
|
|
$
|
106.0
|
|
|
Notes payable
|
|
162.4
|
|
|
56.0
|
|
|
Accounts payable
|
|
325.2
|
|
|
289.6
|
|
|
Other current liabilities
|
|
588.4
|
|
|
575.8
|
|
|
Total current liabilities
|
|
1,307.5
|
|
|
1,027.4
|
|
|
Long-term debt
|
|
2,138.6
|
|
|
2,206.5
|
|
|
Other liabilities
|
|
1,215.6
|
|
|
1,196.3
|
|
|
Total liabilities
|
|
4,661.7
|
|
|
4,430.2
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value, none outstanding
|
|
—
|
|
|
—
|
|
|
Common stock, $.01 par value, issued 108,008,682 shares at
|
|
|
|
|
|
|
|
2012 and 2011
|
|
1.1
|
|
|
1.1
|
|
|
Additional paid-in capital
|
|
1,621.7
|
|
|
1,593.6
|
|
|
Retained earnings
|
|
2,993.2
|
|
|
2,613.0
|
|
|
Common stock in treasury, at cost, 46,486,595 shares at 2012
|
|
|
|
|
|
40,932,950 shares at 2011
|
|
(2,328.7
|
)
|
|
(1,925.7
|
)
|
|
Accumulated other comprehensive loss
|
|
(217.8
|
)
|
|
(180.7
|
)
|
|
Total shareholders' equity
|
|
2,069.5
|
|
|
2,101.3
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
6,731.2
|
|
|
$
|
6,531.5
|
|
The above financial statements should be read in conjunction with the Notes To Consolidated Financial Statements.
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE YEARS ENDED SEPTEMBER 30,
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
Cash Flow from Operating Activities
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
408.9
|
|
|
$
|
261.2
|
|
|
$
|
403.0
|
|
|
Adjustments to reconcile net earnings to net cash flow from operations:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
162.2
|
|
|
181.3
|
|
|
139.2
|
|
|
Deferred income taxes
|
|
(2.9
|
)
|
|
26.4
|
|
|
(1.3
|
)
|
|
Other non-cash charges
|
|
55.0
|
|
|
84.2
|
|
|
71.9
|
|
|
Other, net
|
|
(37.1
|
)
|
|
(30.4
|
)
|
|
12.8
|
|
|
Operating cash flow before changes in working capital
|
|
586.1
|
|
|
522.7
|
|
|
625.6
|
|
|
Changes in assets and liabilities used in operations, net of effects of
|
|
|
|
|
|
|
|
business acquisitions:
|
|
|
|
|
|
|
|
Decrease/(increase) in accounts receivable, net
|
|
38.2
|
|
|
(19.7
|
)
|
|
(17.4
|
)
|
|
(Increase)/decrease in inventories
|
|
(17.6
|
)
|
|
65.1
|
|
|
(2.3
|
)
|
|
Increase in other current assets
|
|
(11.6
|
)
|
|
(33.8
|
)
|
|
(2.9
|
)
|
|
Increase/(decrease) in accounts payable
|
|
47.1
|
|
|
(12.0
|
)
|
|
41.3
|
|
|
(Decrease)/increase in other current liabilities
|
|
(10.6
|
)
|
|
(109.8
|
)
|
|
8.1
|
|
|
Net cash flow from operating activities
|
|
631.6
|
|
|
412.5
|
|
|
652.4
|
|
|
Cash Flow from Investing Activities
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(111.0
|
)
|
|
(98.0
|
)
|
|
(108.7
|
)
|
|
Proceeds from sale of assets
|
|
19.3
|
|
|
7.6
|
|
|
0.8
|
|
|
Acquisitions, net of cash acquired
|
|
—
|
|
|
(267.1
|
)
|
|
—
|
|
|
Other, net
|
|
(3.2
|
)
|
|
(6.0
|
)
|
|
(5.4
|
)
|
|
Net cash used by investing activities
|
|
(94.9
|
)
|
|
(363.5
|
)
|
|
(113.3
|
)
|
|
Cash Flow from Financing Activities
|
|
|
|
|
|
|
|
Cash proceeds from issuance of debt with original maturities
greater than 90 days, net of discount
|
|
498.6
|
|
|
600.0
|
|
|
—
|
|
|
Payment of debt issue cost
|
|
(4.3
|
)
|
|
(7.6
|
)
|
|
—
|
|
|
Cash payments on debt with original maturities greater than 90 days
|
|
(441.0
|
)
|
|
(576.0
|
)
|
|
(101.0
|
)
|
|
Net increase/(decrease) in debt with original maturities of 90 days or less
|
|
100.9
|
|
|
45.7
|
|
|
(151.9
|
)
|
|
Common stock purchased
|
|
(417.8
|
)
|
|
(276.0
|
)
|
|
—
|
|
|
Cash dividends paid
|
|
(24.9
|
)
|
|
—
|
|
|
—
|
|
|
Proceeds from issuance of common stock
|
|
3.0
|
|
|
8.2
|
|
|
12.6
|
|
|
Excess tax benefits from share-based payments
|
|
2.2
|
|
|
3.7
|
|
|
5.8
|
|
|
Net cash used by financing activities
|
|
(283.3
|
)
|
|
(202.0
|
)
|
|
(234.5
|
)
|
|
Effect of exchange rate changes on cash
|
|
(6.1
|
)
|
|
(5.5
|
)
|
|
(34.2
|
)
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
247.3
|
|
|
(158.5
|
)
|
|
270.4
|
|
|
Cash and cash equivalents, beginning of period
|
|
471.2
|
|
|
629.7
|
|
|
359.3
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
718.5
|
|
|
$
|
471.2
|
|
|
$
|
629.7
|
|
The above financial statements should be read in conjunction with the Notes To Consolidated Financial Statements.
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in millions, shares in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOLLARS
|
|
SHARES
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|
2010
|
|
Common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
1.1
|
|
|
$
|
1.1
|
|
|
$
|
1.1
|
|
|
108,009
|
|
|
108,009
|
|
|
108,009
|
|
|
Activity under stock plans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Ending balance
|
|
1.1
|
|
|
1.1
|
|
|
1.1
|
|
|
108,009
|
|
|
108,009
|
|
|
108,009
|
|
|
Additional paid-in capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
1,593.6
|
|
|
1,569.5
|
|
|
1,555.3
|
|
|
|
|
|
|
|
|
Activity under stock plans
|
|
28.1
|
|
|
24.1
|
|
|
14.2
|
|
|
|
|
|
|
|
|
Ending balance
|
|
1,621.7
|
|
|
1,593.6
|
|
|
1,569.5
|
|
|
|
|
|
|
|
|
Retained earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
2,613.0
|
|
|
2,353.9
|
|
|
1,963.2
|
|
|
|
|
|
|
|
|
Net earnings
|
|
408.9
|
|
|
261.2
|
|
|
403.0
|
|
|
|
|
|
|
|
|
Dividends to shareholders
|
|
(25.6
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
Activity under stock plans
|
|
(3.1
|
)
|
|
(2.1
|
)
|
|
(12.3
|
)
|
|
|
|
|
|
|
|
Ending balance
|
|
2,993.2
|
|
|
2,613.0
|
|
|
2,353.9
|
|
|
|
|
|
|
|
|
Common stock in treasury:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
(1,925.7
|
)
|
|
(1,667.6
|
)
|
|
(1,702.4
|
)
|
|
(40,933
|
)
|
|
(37,653
|
)
|
|
(38,487
|
)
|
|
Treasury stock purchased
|
|
(417.8
|
)
|
|
(276.0
|
)
|
|
—
|
|
|
(5,924
|
)
|
|
(3,749
|
)
|
|
—
|
|
|
Activity under stock plans
|
|
14.8
|
|
|
17.9
|
|
|
34.8
|
|
|
370
|
|
|
469
|
|
|
834
|
|
|
Ending balance
|
|
(2,328.7
|
)
|
|
(1,925.7
|
)
|
|
(1,667.6
|
)
|
|
(46,487
|
)
|
|
(40,933
|
)
|
|
(37,653
|
)
|
|
Accumulated other comprehensive (loss)/income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
12.1
|
|
|
20.8
|
|
|
64.0
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
(11.9
|
)
|
|
(8.7
|
)
|
|
(43.2
|
)
|
|
|
|
|
|
|
|
Ending balance
|
|
0.2
|
|
|
12.1
|
|
|
20.8
|
|
|
|
|
|
|
|
|
Pension/postretirement liability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
(189.1
|
)
|
|
(162.7
|
)
|
|
(115.2
|
)
|
|
|
|
|
|
|
|
Pension/postretirement activity
|
|
(24.8
|
)
|
|
(26.4
|
)
|
|
(47.5
|
)
|
|
|
|
|
|
|
|
Ending balance, net of tax of $(113.8) in 2012,
$(99.3) in 2011 and $(73.7) in 2010
|
|
(213.9
|
)
|
|
(189.1
|
)
|
|
(162.7
|
)
|
|
|
|
|
|
|
|
Deferred (loss)/gain on hedging activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
(3.7
|
)
|
|
(15.4
|
)
|
|
(3.7
|
)
|
|
|
|
|
|
|
|
Activity
|
|
(0.4
|
)
|
|
11.7
|
|
|
(11.7
|
)
|
|
|
|
|
|
|
|
Ending balance, net of tax of $(2.1) in 2012,
$(3.7) in 2011 and $(9.0) in 2010
|
|
(4.1
|
)
|
|
(3.7
|
)
|
|
(15.4
|
)
|
|
|
|
|
|
|
|
Total accumulated other comprehensive loss
|
|
(217.8
|
)
|
|
(180.7
|
)
|
|
(157.3
|
)
|
|
|
|
|
|
|
|
Total shareholders' equity
|
|
$
|
2,069.5
|
|
|
$
|
2,101.3
|
|
|
$
|
2,099.6
|
|
|
|
|
|
|
|
The above financial statements should be read in conjunction with the Notes To Consolidated Financial Statements.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
(1)
Basis of Presentation and Use of Estimates
The financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions are eliminated. The Company has no material equity method or variable interests.
Preparation of the financial statements in conformity with generally accepted accounting principles in the U.S. (GAAP) requires Energizer Holdings, Inc. and its subsidiaries (the Company) to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. On an ongoing basis, the Company evaluates its estimates, including those related to customer programs and incentives, product returns, bad debts, inventories, intangible and other long-lived assets, income taxes, financing, pensions and other postretirement benefits, share-based compensation, contingencies and acquisitions. Actual results could differ materially from those estimates. However, in regard to ongoing impairment testing of goodwill and indefinite-lived intangible assets, significant deterioration in future cash flow projections or other assumptions used in estimating fair values, versus those anticipated at the time of the initial valuations, could result in impairment charges that may materially affect the financial statements in a given year.
(2)
Summary of Significant Accounting Policies
The Company's significant accounting policies, which conform to GAAP and are applied on a consistent basis among all years presented, except as indicated, are described below.
Foreign Currency Translation
- Financial statements of foreign operations where the local currency is the functional currency are translated using end-of-period exchange rates for assets and liabilities, and average exchange rates during the period for results of operations. Related translation adjustments are reported as a component within accumulated other comprehensive income in the shareholders’ equity section of the Consolidated Balance Sheets.
For foreign operations that are considered highly inflationary, translation practices differ in that inventories, properties, accumulated depreciation and depreciation expense are translated at historical rates of exchange, and translation adjustments for monetary assets and liabilities are included in earnings. Gains and losses from foreign currency transactions are generally included in earnings.
Effective January 1, 2010, the financial statements for our Venezuela subsidiary are consolidated under the rules governing the translation of financial information in a highly inflationary economy based on the use of the blended National Consumer Price Index in Venezuela. Under GAAP, an economy is considered highly inflationary if the cumulative inflation rate for a three year period meets or exceeds
100
percent. If a subsidiary is considered to be in a highly inflationary economy, the financial statements of the subsidiary must be re-measured into our reporting currency (U.S. dollar) and future exchange gains and losses from the re-measurement of monetary assets and liabilities are reflected in current earnings, rather than exclusively in the equity section of the balance sheet, until such time as the economy is no longer considered highly inflationary. At September 30, 2012, the Company has net monetary assets in Venezuela of approximately
$40
.
Financial Instruments and Derivative Securities
- The Company uses financial instruments, from time to time, in the management of foreign currency, interest rate and other risks that are inherent to its business operations. Such instruments are not held or issued for trading purposes.
Foreign exchange (F/X) instruments, including currency forwards, are used primarily to reduce cash transaction exposures and, to a lesser extent, to manage other translation exposures. F/X instruments used are selected based on their risk reduction attributes, costs and the related market conditions. The Company has designated certain foreign currency contracts as cash flow hedges for accounting purposes as of
September 30, 2012
.
The Company also holds a derivative instrument contract to mitigate a portion of the risk associated with the change in the market value of its unfunded deferred compensation liabilities, which is tied to the Company's common stock.
The Company uses raw materials that are subject to price volatility. The Company may use hedging instruments as it desires to reduce exposure to variability in cash flows associated with future purchases of commodities. At
September 30, 2012
, the Company has certain forward contracts for the purchase of zinc, but these derivatives are not designated as cash flow hedges. See Note 13 of the Notes to Consolidated Financial Statements for further details.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
The Company has interest rate risk with respect to interest expense on variable rate debt. The Company is party to an interest rate swap agreement with one major financial institution that fixes the variable benchmark component (LIBOR) of the Company’s interest rate on the vast majority of the remaining term loan balance of
$100
at September 30, 2012.
For further discussion see Note 13 of the Notes to Consolidated Financial Statements.
Cash Equivalents
- For purposes of the Consolidated Statements of Cash Flows, cash equivalents are all considered to be highly liquid investments with a maturity of three months or less when purchased. At
September 30, 2012
, the Company had
$718.5
in available cash, the vast majority of which was outside of the U.S.
Cash Flow Presentation
- The Consolidated Statement of Cash Flows are prepared using the indirect method, which reconciles net earnings to cash flow from operating activities. The reconciliation adjustments include the removal of timing differences between the occurrence of operating receipts and payments and their recognition in net earnings. The adjustments also remove cash flows arising from investing and financing activities, which are presented separately from operating activities. Cash flows from foreign currency transactions and operations are translated at an average exchange rate for the period. Cash flows from hedging activities are included in the same category as the items being hedged, which is primarily operating activities. Cash payments related to income taxes are classified as operating activities.
Accounts Receivable Valuation
– Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. Bad debt expense is included in Selling, general and administrative expense (SG&A) in the Consolidated Statements of Earnings and Comprehensive Income.
Inventories
- Inventories are valued at the lower of cost or market, with cost generally being determined using average cost or the first-in, first-out (FIFO) method.
As part of the American Safety Razor (ASR) acquisition in fiscal 2011, the Company recorded an increase in the estimated fair value of inventory of
$7.0
, to bring the carrying value of the inventory purchased to an amount which approximated the estimated selling price of the finished goods on hand at the acquisition closing date less the sum of (a) costs to sell and distribute and (b) a reasonable profit allowance for these efforts by the acquiring entity. As the inventory was sold during the first and second quarter of fiscal 2011 the adjustments were charged to cost of products sold in those respective periods.
Capitalized Software Costs
- Capitalized software costs are included in other assets. These costs are amortized using the straight-line method over periods of related benefit ranging from
three
to
seven
years. Expenditures related to capitalized software are included in the Capital expenditures caption in the Consolidated Statements of Cash Flows. Amortization expense was
$2.7
,
$5.2
, and
$5.8
in fiscal
2012
,
2011
and
2010
, respectively.
Property, Plant and Equipment, net
– Property, plant and equipment, net is stated at historical costs. Property, plant and equipment acquired as part of a business combination is recorded at estimated fair value. Expenditures for new facilities and expenditures that substantially increase the useful life of property, including interest during construction, are capitalized and reported in the Capital expenditures caption in the Consolidated Statements of Cash Flows. Maintenance, repairs and minor renewals are expensed as incurred. When property is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and gains or losses on the disposition are reflected in earnings. Depreciation is generally provided on the straight-line basis by charges to pre-tax earnings at rates based on estimated useful lives. Estimated useful lives range from
two
to
25
years for machinery and equipment and
three
to
30
years for buildings and building improvements. Depreciation expense was
$136.7
,
$154.5
, and
$119.3
in fiscal
2012
,
2011
and
2010
, respectively.
Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.
For further discussion regarding asset impairment and the change in the useful life of certain assets due to our 2013 restructuring plan, see Note 20 of the Notes to Consolidated Financial Statements.
Goodwill and Other Intangible Assets
- Goodwill and indefinite-lived intangibles are not amortized, but are evaluated annually
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
for impairment as part of the Company's annual business planning cycle in the fourth quarter, or when indicators of a potential impairment are present. The estimated fair value of each reporting unit is estimated using valuation models that incorporate assumptions and projections of expected future cash flows and operating plans. Intangible assets with finite lives, and a remaining weighted average life of approximately
thirteen
years, are amortized on a straight-line basis over expected lives of
3
years to
20
years. Such intangibles are also evaluated for impairment including ongoing monitoring of potential impairment indicators.
Impairment of Long-Lived Assets
– The Company reviews long-lived assets, other than goodwill and other intangible assets for impairment, when events or changes in business circumstances indicate that the remaining useful life may warrant revision or that the carrying amount of the long-lived asset may not be fully recoverable. The Company performs undiscounted cash flow analysis to determine if impairment exists. If impairment is determined to exist, any related impairment loss is calculated based on estimated fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less cost of disposal.
In November 2012, which is the first fiscal quarter of fiscal 2013, the Company's Board of Directors authorized an enterprise-wide restructuring plan and has delegated authority to the company's management to determine the final plan with respect to these initiatives.
The Company estimates one-time charges associated with the restructuring will include accelerated depreciation and asset impairment charges on certain property, plant and equipment at facilities targeted for closing or some form of streamlining. Based on our initial assessment, we estimate that we will incur an impairment charge in fiscal 2013 in the range of
$10
to
$15
, pre-tax, which we expect to record in the first quarter of fiscal 2013. Additionally, we estimate accelerated depreciation will be in the range of
$50
to
$60
, and will be incurred over the next 12 to 18 months as production ceases and the facilities are closed or streamlined.
Revenue Recognition
- The Company's revenue is from the sale of its products. Revenue is recognized when title, ownership and risk of loss pass to the customer. Discounts are offered to customers for early payment and an estimate of the discounts is recorded as a reduction of net sales in the same period as the sale. Our standard sales terms are final and returns or exchanges are not permitted unless a special exception is made; reserves are established and recorded in cases where the right of return does exist for a particular sale.
Under certain circumstances, we allow customers to return sun care products that have not been sold by the end of the sun care season, which is normal practice in the sun care industry. We record sales at the time the title, ownership and risk of loss pass to the customer. The terms of these sales vary but, in all instances, the following conditions are met: the sales arrangement is evidenced by purchase orders submitted by customers; the selling price is fixed or determinable; title to the product has transferred; there is an obligation to pay at a specified date without any additional conditions or actions required by the Company; and collectability is reasonably assured. Simultaneously with the sale, we reduce sales and cost of sales, and reserve amounts on our consolidated balance sheet for anticipated returns based upon an estimated return level, in accordance with GAAP. Customers are required to pay for the sun care product purchased during the season under the required terms. We generally receive returns of U.S. sun care products from September through January following the summer sun care season. We estimate the level of sun care returns using a variety of inputs including historical experience, consumption trends during the sun care season and inventory positions at key retailers as the sun care season progresses. We monitor shipment activity and inventory levels at key retailers during the season in an effort to identify potential returns issues. This allows the Company to manage shipment activity to our customers, especially in the latter stages of the sun care season, to reduce the potential for returned product.
The Company offers a variety of programs, such as consumer coupons and similar consumer rebate programs, primarily to its retail customers, designed to promote sales of its products. Such programs require periodic payments and allowances based on estimated results of specific programs and are recorded as a reduction to net sales. The Company accrues, at the time of sale, the estimated total payments and allowances associated with each transaction. Additionally, the Company offers programs directly to consumers to promote the sale of its products. Promotions which reduce the ultimate consumer sale prices are recorded as a reduction of net sales at the time the promotional offer is made, generally using estimated redemption and participation levels. Taxes we collect on behalf of governmental authorities, which are generally included in the price to the customer, are also recorded as a reduction of net sales. The Company continually assesses the adequacy of accruals for customer and consumer promotional program costs not yet paid. To the extent total program payments differ from estimates, adjustments may be necessary. Historically, these adjustments have not been material.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
Advertising and Sales Promotion Costs
– The Company advertises and promotes its products through national and regional media and expenses such activities in the year incurred.
Share-Based Payments
- The Company grants restricted stock equivalents, which generally vest over three to four years. A portion of the restricted stock equivalents granted provide for the issuance of common stock to certain managerial staff and executive management, if the Company achieves specified performance targets. The estimated fair value of each grant issued is estimated on the date of grant based on the current market price of the stock. The total amount of compensation expense recognized reflects the initial assumption that target performance goals will be achieved. Compensation expense may be adjusted during the life of the performance grant based on management’s assessment of the probability that performance targets will be achieved. If such targets are not met or, it is determined that achievement of performance goals is not probable, compensation expense is adjusted to reflect the reduced expected payout level in the period the determination is made. If it is determined that the performance targets will be exceeded, additional compensation expense is recognized.
Estimated Fair Values of Financial Instruments
- Certain financial instruments are required to be recorded at the estimated fair value. Changes in assumptions or estimation methods could affect the fair value estimates; however, we do not believe any such changes would have a material impact on our financial condition, results of operations or cash flows. Other financial instruments including cash and cash equivalents and short-term borrowings, including notes payable, are recorded at cost, which approximates estimated fair value. The estimated fair values of long-term debt and financial instruments are disclosed in Note 13 of the Notes to Consolidated Financial Statements.
Reclassifications
- Certain reclassifications have been made to the prior year financial statements to conform to the current presentation. See Note 16 of the Notes to Consolidated Financial Statements for further information.
Recently Issued Accounting Pronouncements
–
No new accounting pronouncement issued or effective during the fiscal year has had or is expected to have a material impact on the consolidated financial statements.
On July 27, 2012, the Financial Accounting Standards Board (FASB) issued new guidance to simplify how entities test indefinite-lived intangible assets for impairment. The new guidance allows an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative indefinite-lived intangible asset impairment test. The new guidance is effective for annual indefinite-lived intangible asset impairment tests to be performed in fiscal year 2013, with early adoption permitted.
(3) Restructuring
2011 Household Products Restructuring
On March 7, 2011, the Company determined that, as part of its November 2010 restructuring initiative, it would close its carbon zinc battery manufacturing facility in Cebu, Philippines and its alkaline battery manufacturing facility in La Chaux De Fonds (LCF), Switzerland. The carbon zinc and alkaline batteries previously supplied by the Cebu and LCF facilities are now produced in other manufacturing facilities.
In fiscal 2012 and
2011
, the Company recorded pre-tax income for the 2011 Household Products restructuring of
$6.8
and charges of
$79.0
, respectively. The fiscal 2012 pre-tax income was driven by the gain on the sale of our former battery manufacturing facility in Switzerland of
$13.0
, which was partially offset by
$6.0
of additional restructuring costs in fiscal 2012, including severance and termination related costs of
$1.2
, pension settlement costs of
$2.0
and related exit costs of
$2.8
. The prior year charges included severance and termination related costs of
$41.8
, accelerated depreciation on property, plant and equipment of
$16.1
, pension settlement costs of
$6.1
and other related exit costs of
$15.0
. These costs, net of the gain on the sale of the former LCF property in fiscal 2012, are included as a separate line item on the Consolidated Statements of Earnings and Comprehensive Income.
The remaining accrual balance for the 2011 Household Products Restructuring at
September 30, 2012
and
2011
, was
$0.9
and
$7.1
, respectively.
In November 2012, which was the first quarter of fiscal 2013, the Company's Board of Directors authorized an enterprise-wide restructuring plan and has delegated authority to the company's management to determine the final plan with respect to these initiatives. See Note 20 of the Notes to Consolidated Financial Statements for further information.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
(4)
Goodwill and Intangible Assets
Goodwill and intangible assets deemed to have an indefinite life are not amortized, but reviewed annually for impairment of value or when indicators of a potential impairment are present. As part of our business planning cycle, we performed our annual impairment testing in the fourth quarter of fiscal
2012
,
2011
and
2010
. There were no indications of impairment of goodwill noted during this testing.
The following table represents the carrying amount of goodwill by segment at
September 30, 2012
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Household
Products
|
|
Personal
Care
|
|
Total
|
|
Balance at October 1, 2011
|
|
$
|
36.9
|
|
|
$
|
1,438.4
|
|
|
$
|
1,475.3
|
|
|
Cumulative translation adjustment
|
|
0.4
|
|
|
(6.2
|
)
|
|
(5.8
|
)
|
|
Balance at September 30, 2012
|
|
$
|
37.3
|
|
|
$
|
1,432.2
|
|
|
$
|
1,469.5
|
|
The Company had indefinite-lived intangible assets of $
1,701.9
at
September 30, 2012
and $
1,703.6
at
September 30, 2011
. Changes in indefinite-lived intangible assets are due primarily to changes in foreign currency translation.
In addition, we completed impairment testing on indefinite-lived intangible assets other than goodwill, which are trademarks/brands used in our various product categories. No impairment was indicated as a result of this testing. However, the recorded values of such intangible assets from more recent acquisitions, such as the Playtex acquisition, are often more susceptible to an impairment risk, if operating results or macroeconomic conditions deteriorate. We utilized a discounted cash flow model using an excess earnings valuation technique to test the brands acquired in the Playtex acquisition for impairment. Key assumptions included a discount rate of
8.00%
and a terminal growth rate of
2.75%
. While no impairment was indicated during this testing, the indicated estimated fair value for two brands,
Playtex
and
Wet Ones
, were relatively close to the carrying value at approximately
115%
of the carrying value (approximately $
650
) for the
Playtex
brand and approximately
106%
of the carrying value (approximately
$200
) for the
Wet Ones
brand.
Total amortizable intangible assets at
September 30, 2012
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Carrying Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Tradenames / Brands
|
|
$
|
18.7
|
|
|
$
|
11.6
|
|
|
$
|
7.1
|
|
|
Technology and patents
|
|
76.7
|
|
|
49.0
|
|
|
27.7
|
|
|
Customer-related / Other
|
|
164.0
|
|
|
47.0
|
|
|
117.0
|
|
|
Total amortizable intangible assets
|
|
$
|
259.4
|
|
|
$
|
107.6
|
|
|
$
|
151.8
|
|
Amortizable intangible assets, with a weighted average remaining life of approximately thirteen years, are amortized on a straight-line basis over expected lives of
3
years to
20
years.
Amortization expense for intangible assets totaled
$22.8
for the current year. Estimated amortization expense for amortizable intangible assets for the years ending
September 30,
2013
,
2014
,
2015
,
2016
and
2017
is approximately
$20.7
,
$17.4
,
$15.2
,
$15.2
and
$14.8
, respectively, and
$68.5
thereafter.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
(5)
Income Taxes
The provisions for income taxes consisted of the following for the years ended September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
Currently payable:
|
|
|
|
|
|
|
United States - Federal
|
$
|
72.8
|
|
|
$
|
34.0
|
|
|
$
|
67.0
|
|
|
State
|
6.5
|
|
|
4.6
|
|
|
8.4
|
|
|
Foreign
|
80.1
|
|
|
79.8
|
|
|
66.3
|
|
|
Total current
|
159.4
|
|
|
118.4
|
|
|
141.7
|
|
|
Deferred:
|
|
|
|
|
|
|
United States - Federal
|
(2.9
|
)
|
|
36.4
|
|
|
(7.8
|
)
|
|
State
|
(0.2
|
)
|
|
2.4
|
|
|
(0.3
|
)
|
|
Foreign
|
0.2
|
|
|
(12.4
|
)
|
|
6.8
|
|
|
Total deferred
|
(2.9
|
)
|
|
26.4
|
|
|
(1.3
|
)
|
|
Provision for income taxes
|
$
|
156.5
|
|
|
$
|
144.8
|
|
|
$
|
140.4
|
|
The source of pre-tax earnings was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
United States
|
$
|
178.3
|
|
|
$
|
191.6
|
|
|
$
|
225.5
|
|
|
Foreign
|
387.1
|
|
|
214.4
|
|
|
317.9
|
|
|
Pre-tax earnings
|
$
|
565.4
|
|
|
$
|
406.0
|
|
|
$
|
543.4
|
|
A reconciliation of income taxes with the amounts computed at the statutory federal income tax rate follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
Computed tax at federal statutory rate
|
$
|
197.9
|
|
|
35.0
|
%
|
|
$
|
142.1
|
|
|
35.0
|
%
|
|
$
|
190.2
|
|
|
35.0
|
%
|
|
State income taxes, net of federal tax benefit
|
4.1
|
|
|
0.7
|
|
|
4.5
|
|
|
1.1
|
|
|
5.3
|
|
|
1.0
|
|
|
Foreign tax less than the federal rate
|
(55.6
|
)
|
|
(9.8
|
)
|
|
(15.9
|
)
|
|
(3.9
|
)
|
|
(38.9
|
)
|
|
(7.2
|
)
|
|
Tax benefits - special foreign dividend
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23.5
|
)
|
|
(4.3
|
)
|
|
Adjustments to prior years' tax accruals
|
(7.0
|
)
|
|
(1.2
|
)
|
|
(1.7
|
)
|
|
(0.4
|
)
|
|
(6.1
|
)
|
|
(1.1
|
)
|
|
Other taxes including repatriation of foreign earnings
|
16.2
|
|
|
2.9
|
|
|
15.3
|
|
|
3.8
|
|
|
11.0
|
|
|
2.0
|
|
|
Nontaxable share option
|
(2.0
|
)
|
|
(0.4
|
)
|
|
0.2
|
|
|
—
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
Other, net
|
2.9
|
|
|
0.5
|
|
|
0.3
|
|
|
0.1
|
|
|
2.6
|
|
|
0.5
|
|
|
Total
|
$
|
156.5
|
|
|
27.7
|
%
|
|
$
|
144.8
|
|
|
35.7
|
%
|
|
$
|
140.4
|
|
|
25.8
|
%
|
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
The deferred tax assets and deferred tax liabilities recorded on the balance sheet at September 30 for the years indicated are as follows and include current and noncurrent amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
Deferred tax liabilities:
|
|
|
|
|
|
Depreciation and property differences
|
|
$
|
(101.1
|
)
|
|
$
|
(112.9
|
)
|
|
Intangible assets
|
|
(574.3
|
)
|
|
(566.7
|
)
|
|
Other tax liabilities
|
|
(6.4
|
)
|
|
(6.6
|
)
|
|
Gross deferred tax liabilities
|
|
(681.8
|
)
|
|
(686.2
|
)
|
|
Deferred tax assets:
|
|
|
|
|
|
Accrued liabilities
|
|
105.7
|
|
|
108.1
|
|
|
Deferred and stock-related compensation
|
|
103.6
|
|
|
88.7
|
|
|
Tax loss carryforwards and tax credits
|
|
13.9
|
|
|
23.1
|
|
|
Intangible assets
|
|
17.3
|
|
|
22.1
|
|
|
Postretirement benefits other than pensions
|
|
11.6
|
|
|
15.5
|
|
|
Pension plans
|
|
155.3
|
|
|
142.1
|
|
|
Inventory differences
|
|
31.7
|
|
|
28.5
|
|
|
Other tax assets
|
|
6.6
|
|
|
6.1
|
|
|
Gross deferred tax assets
|
|
445.7
|
|
|
434.2
|
|
|
Valuation allowance
|
|
(11.9
|
)
|
|
(12.6
|
)
|
|
Net deferred tax liabilities
|
|
$
|
(248.0
|
)
|
|
$
|
(264.6
|
)
|
There were no material tax loss carryforwards that expired in fiscal
2012
. Future expirations of tax loss carryforwards and tax credits, if not utilized, are not material from
2013
through
2016
. For years subsequent to 2016 or for tax loss carryforwards and tax credits that have no expiration, the value at September 30, 2012 was $
13.9
. The valuation allowance is attributed to tax loss carryforwards and tax credits outside the U.S.
We regularly repatriate a portion of current year earnings from select non U.S. subsidiaries. Generally, these non-U.S. subsidiaries are in tax jurisdictions with effective tax rates that do not result in materially higher U.S. tax provisions related to the repatriated earnings. No provision is made for additional taxes on undistributed earnings of foreign affiliates that are intended and planned to be indefinitely invested in the affiliate. We intend to, and have plans to, reinvest these earnings indefinitely in our foreign subsidiaries to, amongst other things, fund local operations, fund pension and other post retirement obligations and fund capital projects. At
September 30, 2012
, approximately
$1,250
of foreign subsidiary retained earnings was considered indefinitely invested in those businesses. We estimate that the U.S. federal income tax liability that could potentially arise if indefinitely invested retained earnings of foreign subsidiaries were repatriated in full to the U.S. would be significant. While it is not practical to calculate a specific potential U.S. tax exposure due to changing statutory rates in foreign jurisdictions over time, as well as other factors, we estimate the range of potential U.S. tax may be in excess of
$150
, if all undistributed earnings were repatriated. Applicable U.S. income and foreign withholding taxes would be provided on these earnings in the periods in which they are no longer considered indefinitely reinvested.
Unrecognized tax benefits activity for the years ended
September 30, 2012
and
2011
are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
Unrecognized tax benefits, beginning of year
|
|
$
|
41.2
|
|
|
$
|
48.7
|
|
|
Additions based on current year tax positions and acquisitions
|
|
3.3
|
|
|
8.1
|
|
|
Reductions for prior year tax positions
|
|
(0.8
|
)
|
|
(0.7
|
)
|
|
Settlements with taxing authorities/statute expirations
|
|
(2.7
|
)
|
|
(14.9
|
)
|
|
Unrecognized tax benefits, end of year
|
|
$
|
41.0
|
|
|
$
|
41.2
|
|
Included in the unrecognized tax benefits noted above are
$35.5
of uncertain tax positions that would affect the Company’s
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
effective tax rate, if recognized. The Company does not expect any significant increases or decreases to their unrecognized tax benefits within twelve months of this reporting date. In the Consolidated Balance Sheets, unrecognized tax benefits are classified as Other liabilities (non-current) to the extent that payments are not anticipated within one year.
The Company classifies accrued interest and penalties related to unrecognized tax benefits in the income tax provision. The accrued interest and penalties are not included in the table above. The Company accrued approximately
$9.0
of interest and
$2.8
of penalties at
September 30, 2012
and
$7.6
of interest and
$2.8
of penalties at
September 30, 2011
. Interest was computed on the difference between the tax position recognized in accordance with GAAP and the amount previously taken or expected to be taken in the Company’s tax returns.
The Company files income tax returns in the U.S. federal jurisdiction, various cities and states, and more than
50
foreign jurisdictions where the Company has operations. U.S. federal income tax returns for tax years ended September 30, 2007 and after remain subject to examination by the Internal Revenue Service. With few exceptions, the Company is no longer subject to state and local income tax examinations for years before September 30, 2003. The status of international income tax examinations varies by jurisdiction. The Company does not anticipate any material adjustments to its financial statements resulting from tax examinations currently in progress.
(6)
Earnings Per Share
For each period presented below, basic earnings per share is based on the average number of shares outstanding during the period. Diluted earnings per share is based on the average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of stock options and restricted stock equivalents.
The following table sets forth the computation of basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share data)
|
|
FOR THE YEARS ENDED SEPTEMBER 30,
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
Numerator:
|
|
|
|
|
|
|
|
Net earnings for basic and dilutive earnings per share
|
|
$
|
408.9
|
|
|
$
|
261.2
|
|
|
$
|
403.0
|
|
|
Denominator:
|
|
|
|
|
|
|
|
Weighted-average shares - basic
|
|
64.9
|
|
|
69.6
|
|
|
70.0
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
Stock options
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
|
Restricted stock equivalents
|
|
0.6
|
|
|
0.5
|
|
|
0.3
|
|
|
Total dilutive securities
|
|
0.8
|
|
|
0.7
|
|
|
0.5
|
|
|
Weighted-average shares - diluted
|
|
65.7
|
|
|
70.3
|
|
|
70.5
|
|
|
Basic net earnings per share
|
|
$
|
6.30
|
|
|
$
|
3.75
|
|
|
$
|
5.76
|
|
|
Diluted net earnings per share
|
|
$
|
6.22
|
|
|
$
|
3.72
|
|
|
$
|
5.72
|
|
At
September 30, 2012
, approximately
0.4
of the Company’s outstanding restricted stock equivalents and stock options were not included in the diluted net earnings per share calculation because to do so would have been anti-dilutive. In the event the potentially dilutive securities are anti-dilutive on net earnings per share (i.e., have the effect of increasing earnings per share), the impact of the potentially dilutive securities is not included in the computation. There were approximately
0.7
and
1.2
anti-dilutive securities at
September 30, 2011
and
2010
, respectively, which were not included in the diluted net earnings per share calculations for the reason noted above.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
(7)
Share-Based Payments
The Company's Incentive Stock Plan was initially adopted by the Board of Directors in March 2000 and approved by shareholders at the 2001 Annual Meeting of Shareholders. This plan was superseded in January 2009 as the Board of Directors approved a new plan, which was approved by shareholders at the 2009 Annual Meeting of Shareholders (the "2009 Plan"). New awards granted after January 2009 are issued under the 2009 Plan. Under the 2009 Plan, awards of restricted stock, restricted stock equivalents or options to purchase the Company's common stock (ENR stock) may be granted to directors, officers and employees. The 2009 Plan was amended and restated by approval of the shareholders at the January 2011 Annual Meeting of Shareholders to set the maximum number of shares authorized for issuance under the plan to
8.0
million. For purposes of determining the number of shares available for future issuance under the 2009 Plan, as amended and restated, awards of restricted stock and restricted stock equivalents reduces the shares available for future issuance by
1.95
for every one share awarded. Options awarded reduces the number of shares available for future issuance on a one-for-one basis. At
September 30, 2012
,
2011
, and
2010
there were
3.3
million,
4.6
million and
2.0
million shares, respectively, available for future awards under the 2009 Plan, as amended and restated. Since the original plan has been superseded, no further shares under this original plan were available for future awards after the adoption of the 2009 plan, as amended and restated.
Options are granted at the market price on the grant date and generally have vested ratably over
three
to
seven
years. These awards typically have a maximum term of
10
years. Restricted stock and restricted stock equivalent awards may also be granted. Option shares and prices, and restricted stock and stock equivalent awards, are adjusted in conjunction with stock splits and other recapitalizations so that the holder is in the same economic position before and after these equity transactions.
Through December 31, 2012, the Company permits employee deferrals of bonus and, in the past, permitted deferrals of retainers and fees for directors, under the terms of its Deferred Compensation Plan. Under this plan, employees or directors, that defer amounts into the Energizer Common Stock Unit Fund are credited with a number of stock equivalents based on the estimated fair value of ENR stock at the time of deferral. In addition, the participants are credited with an additional number of stock equivalents, equal to
25%
for employees and
33 1/3%
for directors, of the amount deferred. This additional match vested immediately for directors and vests three years from the date of initial crediting for employees. Effective January 1, 2011, the
33 1/3%
match for directors was eliminated for future deferrals. Effective January 1, 2013, future deferrals of compensation will no longer be permitted, thus eliminating the
25%
Company match for employees as well. Amounts deferred into the Energizer Common Stock Unit Fund, and vested matching deferrals, may be transferred to other investment options offered under the plan after specified restriction periods. At the time of termination of employment, or for directors, at the time of termination of service on the Board, or at such other time for distribution, which may be elected in advance by the participant, the number of equivalents then vested and credited to the participant's account is determined and an amount in cash equal to the estimated fair value of an equivalent number of shares of ENR stock is paid to the participant. This plan is reflected in Other liabilities on the Consolidated Balance Sheets.
The Company uses the straight-line method of recognizing compensation cost. Total compensation cost charged against income for the Company’s share-based compensation arrangements was
$44.9
,
$37.3
, and
$28.2
for the years ended
September 30, 2012
,
2011
and
2010
, respectively, and was recorded in SG&A expense. The total income tax benefit recognized in the Consolidated Statements of Earnings and Comprehensive Income for share-based compensation arrangements was
$16.8
,
$13.9
, and
$10.2
for the years ended
September 30, 2012
,
2011
and
2010
, respectively. Restricted stock issuance and shares issued for stock option exercises under the Company’s share-based compensation program are generally issued from treasury shares.
Options
In October 2009, the Company granted non-qualified stock options to purchase
266,750
shares of ENR stock to certain executives and employees of the Company. Total options of approximately
215,500
vested on the third anniversary of the date of the grant. The options remain exercisable for 10 years from the date of grant. However, this term may be reduced under certain circumstances including the recipient’s termination of employment.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
As of
September 30, 2012
, the aggregate intrinsic value of stock options outstanding and stock options exercisable was
$14.8
and
$12.8
respectively. The aggregate intrinsic value of stock options exercised for the years ended
September 30, 2012
,
2011
and
2010
was
$3.4
,
$8.3
, and
$21.1
, respectively. When valuing new grants, Energizer uses an implied volatility, which reflects the expected volatility for a period equal to the expected life of the option. No new option awards were granted in the fiscal years ended
September 30, 2012
and
2011
.
As of
September 30, 2012
, there are no unrecognized compensation costs related to stock options granted. For outstanding nonqualified stock options, the weighted-average remaining contractual life is
3.4
years.
The following table summarizes nonqualified ENR stock option activity during the current fiscal year (shares in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted-Average
Exercise Price
|
|
Outstanding on October 1, 2011
|
|
0.77
|
|
|
$
|
50.36
|
|
|
Canceled
|
|
(0.04
|
)
|
|
64.03
|
|
|
Exercised
|
|
(0.09
|
)
|
|
35.99
|
|
|
Outstanding on September 30, 2012
|
|
0.64
|
|
|
$
|
51.59
|
|
|
Exercisable on September 30, 2012
|
|
0.42
|
|
|
$
|
44.48
|
|
Restricted Stock Equivalents (RSE)
In October 2007, the Company granted RSE awards to certain employees which included approximately
234,800
shares, of which
210,000
vested and granted an additional
11,000
shares, all of which fully vested. At the same time, the Company granted RSE awards to senior executives totaling approximately
268,700
shares which vested as follows: 1)
25%
of the total restricted stock equivalents granted, or
67,000
net of forfeitures, vested on the third anniversary of the date of grant; 2) the remainder of the RSE did not vest because the Company performance target was not achieved.
In October 2008, the Company granted RSE awards to certain employees which included approximately
265,200
shares that in most cases vest ratably over four years or upon death, disability or change of control. At the same time, the Company granted RSE awards to senior executives totaling approximately
374,600
which vested as follows: 1)
25%
of the total restricted stock equivalents granted, or
91,900
, net of forfeitures, vested on the third anniversary of the date of grant; 2) the remainder of the RSE did not vest because the Company performance target was not achieved.
In February 2009, the Company granted RSE awards to senior executives totaling approximately
296,000
shares. These awards were granted in lieu of (i) each executive’s continued participation in the 2009 annual cash bonus program, (ii) his or her right to receive accruals under the Company’s Supplemental Executive Retirement Plan (an excess pension plan) for calendar year 2009, and (iii) his or her right to receive Company matching accruals under the Company’s Executive Savings Investment Plan (an excess 401(k) plan) for the 2009 calendar year. Vesting of the equivalents occurred on November 16, 2009, and the number of shares vested, which was
142,466
, was determined based on achievement of individual and Company performance targets for the period from October 1, 2008 through September 30, 2009. The total award which vested was amortized over the vesting period.
In October 2009, the Company granted RSE awards to certain employees which included approximately
266,300
shares that in most cases vest ratably over four years or upon death, disability or change of control. At the same time, the Company granted two RSE awards to senior executives totaling approximately
485,600
shares which vested as follows: 1)
30%
of the total restricted stock equivalents granted, or approximately
130,000
, net of forfeitures, vested on the third anniversary of the date of grant; 2) approximately
201,700
shares vested on November 8, 2012 based on the Company’s compound annual growth rate for earnings per share as defined in the incentive plan (EPS CAGR) for the three year period ended on September 30, 2012. Under the terms of the performance award,
66.7%
of the performance grant vested based on a
9.33%
three year EPS CAGR.
In October 2010, the Company granted RSE awards to certain employees which included approximately
313,300
shares that in most cases vest ratably over four years or upon death, disability or change of control. At the same time, the Company granted two RSE awards to key executives. One grant includes approximately
86,700
shares and vests on the third anniversary of the date of grant or upon death, disability or change of control. The second grant includes approximately
202,300
shares which vests on the date that the Company publicly releases its earnings for its 2013 fiscal year contingent upon the Company’s EPS
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
CAGR for the three year period ending on September 30, 2013. Under the terms of the award,
100%
of the grant vests if an EPS CAGR of at least
12%
is achieved, with smaller percentages vesting if the Company achieves an EPS CAGR between
5%
and
12%
. In addition, the terms of the performance awards provide that the awards vest upon death, disability and in some instances upon change of control. The total performance award expected to vest is being amortized over the vesting period.
In November 2010, the Company granted two RSE awards to executive officers. One grant includes approximately
47,900
shares and vests on the third anniversary of the date of grant or upon death, disability or change of control. The second grant includes approximately
111,700
shares which vests on the date that the Company publicly releases its earnings for its 2013 fiscal year contingent upon the Company’s EPS CAGR for the three year period ending on September 30, 2013. Under the terms of the award,
100%
of the grant vests if an EPS CAGR of at least
12%
is achieved, with smaller percentages vesting if the Company achieves an EPS CAGR between
5%
and
12%
. In addition, the terms of the performance awards provide that the awards vest upon death, disability and in some instances upon change of control. The total performance award expected to vest is being amortized over the vesting period.
In November 2011, the Company granted RSE awards to certain employees which included approximately
310,000
shares that in most cases vest ratably over four years or upon death, disability or change of control. At the same time, the Company granted two RSE awards to key executives. One grant includes approximately
130,700
shares and vests on the third anniversary of the date of grant or upon death, disability or change of control. The second grant includes approximately
305,000
shares which vests on the date that the Company publicly releases its earnings for its 2014 fiscal year contingent upon the Company’s EPS CAGR for the three year period ending on September 30, 2014. Under the terms of the award,
100%
of the grant vests if an EPS CAGR of at least
12%
is achieved, with smaller percentages vesting if the Company achieves an EPS CAGR between
5%
and
12%
. In addition, the terms of the performance awards provide that the awards vest upon death, disability and in some instances upon change of control. The total performance award expected to vest is being amortized over the vesting period.
The Company records estimated expense for the performance based grants based on target achievement for the three year period for each respective program unless evidence exists that a different ultimate EPS CAGR is likely to occur. The estimated fair value of the award is determined using the closing share price of the Company's common stock on the date of the grant.
The following table summarizes RSE activity during the current year (shares in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted-Average
Grant Date Estimated Fair
Value
|
|
Nonvested RSE at October 1, 2011
|
|
1.98
|
|
|
$
|
69.86
|
|
|
Granted
|
|
0.76
|
|
|
70.26
|
|
|
Vested
|
|
(0.45
|
)
|
|
68.13
|
|
|
Canceled
|
|
(0.33
|
)
|
|
69.12
|
|
|
Nonvested RSE at September 30, 2012
|
|
1.96
|
|
|
$
|
70.38
|
|
As of
September 30, 2012
, there was an estimated
$48.4
of total unrecognized compensation costs related to RSE granted to date, which will be recognized over a weighted-average period of approximately
1.3
years. The amount recognized may vary as vesting for a portion of the awards depends on the achievement of the established EPS CAGR targets. The weighted-average estimated fair value for RSE granted in fiscal
2012
,
2011
and
2010
was
$70.3
,
$74.9
, and
$65.6
, respectively. The estimated fair value of RSE vested in fiscal
2012
,
2011
and
2010
was
$29.3
,
$25.3
, and
$25.8
, respectively.
(8)
Pension Plans and Other Postretirement Benefits
The Company has several defined benefit pension plans covering substantially all of its employees in the U.S. and certain employees in other countries. The plans provide retirement benefits based, in certain circumstances, on years of service and on earnings.
In November 2012, which is the first fiscal quarter of 2013, the Company approved and communicated changes to its U.S. pension plan, which is the most significant of the Company's pension obligations. Effective January 1, 2014, the pension benefit earned to date by active participants under the legacy Energizer U.S. pension plan will be frozen and future service benefits will no longer be accrued under this retirement program. It is expected that the Company will provide an enhanced
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
defined contribution benefit in conjunction with this action, but this change is expected to result in an overall reduction in the costs of retirement service benefits for U.S. colleagues. We expect to recognize a curtailment gain in pre-tax earnings of between
$30
to
$40
in the first fiscal quarter of 2013 as a result of this plan change. This estimate may vary from the actual curtailment gain recorded due primarily to changes in market interest rates and other factors.
The Company also sponsors or participates in a number of other non-U.S. pension arrangements, including various retirement and termination benefit plans, some of which are required by local law or coordinated with government-sponsored plans, which are not significant in the aggregate and, therefore, are not included in the information presented in the following tables.
The Company currently provides other postretirement benefits, consisting of health care and life insurance benefits for certain groups of retired employees. Certain retirees are eligible for a fixed subsidy, provided by the Company, toward their total cost of health care benefits. Retiree contributions for health care benefits are adjusted periodically to cover the entire increase in total plan costs. Cost trend rates no longer materially impact the Company’s future cost of the plan due to the fixed nature of the subsidy.
The following tables present the benefit obligation, plan assets and funded status of the plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
Pension
|
|
Postretirement
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Change in Projected Benefit Obligation
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
1,261.5
|
|
|
$
|
1,046.9
|
|
|
$
|
50.5
|
|
|
$
|
44.4
|
|
|
Service cost
|
|
26.7
|
|
|
28.9
|
|
|
0.5
|
|
|
0.5
|
|
|
Interest cost
|
|
55.8
|
|
|
55.9
|
|
|
2.3
|
|
|
2.7
|
|
|
Plan participants' contributions
|
|
0.4
|
|
|
1.1
|
|
|
5.6
|
|
|
5.0
|
|
|
Actuarial loss/(gain)
|
|
124.1
|
|
|
15.0
|
|
|
(2.9
|
)
|
|
(7.1
|
)
|
|
Benefits paid, net
|
|
(71.7
|
)
|
|
(78.1
|
)
|
|
(8.1
|
)
|
|
(7.3
|
)
|
|
Plan amendments
|
|
—
|
|
|
—
|
|
|
(8.9
|
)
|
|
—
|
|
|
Special termination benefits
|
|
—
|
|
|
9.6
|
|
|
—
|
|
|
—
|
|
|
Net transfer primarily due to acquisition
|
|
—
|
|
|
177.7
|
|
|
—
|
|
|
12.5
|
|
|
Foreign currency exchange rate changes
|
|
0.1
|
|
|
4.5
|
|
|
0.7
|
|
|
(0.2
|
)
|
|
Projected Benefit Obligation at end of year
|
|
$
|
1,396.9
|
|
|
$
|
1,261.5
|
|
|
$
|
39.7
|
|
|
$
|
50.5
|
|
|
Change in Plan Assets
|
|
|
|
|
|
|
|
|
|
Estimated fair value of plan assets at beginning of year
|
|
$
|
815.0
|
|
|
$
|
752.8
|
|
|
$
|
0.7
|
|
|
$
|
1.0
|
|
|
Net transfer primarily due to acquisition
|
|
—
|
|
|
72.5
|
|
|
—
|
|
|
—
|
|
|
Actual return on plan assets
|
|
125.9
|
|
|
12.3
|
|
|
—
|
|
|
—
|
|
|
Company contributions
|
|
63.2
|
|
|
52.7
|
|
|
2.2
|
|
|
2.0
|
|
|
Plan participants' contributions
|
|
0.4
|
|
|
1.1
|
|
|
5.6
|
|
|
5.0
|
|
|
Benefits paid
|
|
(71.7
|
)
|
|
(78.1
|
)
|
|
(8.1
|
)
|
|
(7.3
|
)
|
|
Foreign currency exchange rate changes
|
|
4.4
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
Estimated fair value of plan assets at end of year
|
|
$
|
937.2
|
|
|
$
|
815.0
|
|
|
$
|
0.4
|
|
|
$
|
0.7
|
|
|
Funded status at end of year
|
|
$
|
(459.7
|
)
|
|
$
|
(446.5
|
)
|
|
$
|
(39.3
|
)
|
|
$
|
(49.8
|
)
|
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
The following table presents the amounts recognized in the Consolidated Balance Sheets and Consolidated Statements of Shareholders’ Equity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
Pension
|
|
Postretirement
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Amounts Recognized in the Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
Noncurrent assets
|
|
$
|
3.8
|
|
|
$
|
1.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Current liabilities
|
|
(7.9
|
)
|
|
(7.0
|
)
|
|
(2.4
|
)
|
|
(2.6
|
)
|
|
Noncurrent liabilities
|
|
(455.6
|
)
|
|
(440.7
|
)
|
|
(36.9
|
)
|
|
(47.2
|
)
|
|
Net amount recognized
|
|
$
|
(459.7
|
)
|
|
$
|
(446.5
|
)
|
|
$
|
(39.3
|
)
|
|
$
|
(49.8
|
)
|
|
Amounts Recognized in Accumulated Other
Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
Net loss/(gain)
|
|
$
|
411.4
|
|
|
$
|
371.2
|
|
|
$
|
(24.9
|
)
|
|
$
|
(24.1
|
)
|
|
Prior service credit
|
|
(37.1
|
)
|
|
(42.7
|
)
|
|
(26.5
|
)
|
|
(20.3
|
)
|
|
Transition obligation
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
Net amount recognized, pre-tax
|
|
$
|
374.3
|
|
|
$
|
328.6
|
|
|
$
|
(51.4
|
)
|
|
$
|
(44.4
|
)
|
Changes recognized in other comprehensive income for the year ended
September 30, 2012
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
Postretirement
|
|
Changes in plan assets and benefit obligations recognized in other comprehensive loss
|
|
|
|
|
|
Prior service cost from plan recent amendment
|
|
$
|
—
|
|
|
$
|
(8.9
|
)
|
|
Net loss arising during the year
|
|
61.1
|
|
|
(2.8
|
)
|
|
Effect of exchange rates
|
|
1.4
|
|
|
(0.1
|
)
|
|
Amounts recognized as a component of net periodic benefit cost
|
|
|
|
|
|
Amortization or curtailment recognition of prior service credit
|
|
5.5
|
|
|
2.7
|
|
|
Amortization or settlement recognition of net loss/gain
|
|
(22.3
|
)
|
|
2.1
|
|
|
Total recognized in other comprehensive income
|
|
$
|
45.7
|
|
|
$
|
(7.0
|
)
|
The Company expects to contribute
$58.6
to its pension plans and
$2.8
to its postretirement plans in fiscal
2013
.
The Company’s expected future benefit payments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Years Ending September 30,
|
|
|
|
Pension
|
|
Postretirement
|
|
2013
|
|
$
|
75.1
|
|
|
$
|
2.8
|
|
|
2014
|
|
$
|
77.2
|
|
|
$
|
2.7
|
|
|
2015
|
|
$
|
82.7
|
|
|
$
|
2.6
|
|
|
2016
|
|
$
|
84.2
|
|
|
$
|
2.6
|
|
|
2017
|
|
$
|
84.6
|
|
|
$
|
2.4
|
|
|
2018 to 2022
|
|
$
|
442.8
|
|
|
$
|
10.8
|
|
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
The accumulated benefit obligation for defined benefit pension plans was
$1,365.3
and
$1,235.3
at
September 30, 2012
and
2011
, respectively. The following table shows pension plans with an accumulated benefit obligation in excess of plan assets at the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
2012
|
|
2011
|
|
Projected benefit obligation
|
|
$
|
1,270.1
|
|
|
$
|
1,158.9
|
|
|
Accumulated benefit obligation
|
|
$
|
1,254.0
|
|
|
$
|
1,146.3
|
|
|
Estimated fair value of plan assets
|
|
$
|
810.0
|
|
|
$
|
711.3
|
|
Pension plan assets in the U.S. plan represent
81%
of assets in all of the Company’s defined benefit pension plans. Investment policy for the U.S. plan includes a mandate to diversify assets and invest in a variety of asset classes to achieve that goal. The U.S. plan's assets are currently invested in several funds representing most standard equity and debt security classes. The broad target allocations are: (a) equities, including U.S. and foreign:
61%
, (b) debt securities, U.S. bonds:
38%
and (c) other:
1%
. Actual allocations at
September 30, 2012
approximated these targets. The U.S. plan held no shares of ENR stock at
September 30, 2012
. Investment objectives are similar for non-U.S. pension arrangements, subject to local regulations.
The following table presents pension and postretirement expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE YEARS ENDED SEPTEMBER 30,
|
|
|
|
Pension
|
|
Postretirement
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|
2010
|
|
Service cost
|
|
$
|
26.7
|
|
|
$
|
28.9
|
|
|
$
|
32.7
|
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
Interest cost
|
|
55.8
|
|
|
55.9
|
|
|
50.2
|
|
|
2.3
|
|
|
2.7
|
|
|
2.5
|
|
|
Expected return on plan assets
|
|
(63.0
|
)
|
|
(63.3
|
)
|
|
(62.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
Amortization of unrecognized prior service cost
|
|
(5.5
|
)
|
|
(5.6
|
)
|
|
(6.1
|
)
|
|
(2.6
|
)
|
|
(2.7
|
)
|
|
(2.7
|
)
|
|
Amortization of unrecognized transition asset
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Recognized net actuarial loss/(gain)
|
|
20.3
|
|
|
14.5
|
|
|
7.7
|
|
|
(2.1
|
)
|
|
(1.3
|
)
|
|
(1.5
|
)
|
|
Curtailment loss recognized
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Special termination benefits recognized
|
|
—
|
|
|
9.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Settlement loss recognized
|
|
2.0
|
|
|
5.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net periodic benefit cost
|
|
$
|
36.3
|
|
|
$
|
46.3
|
|
|
$
|
22.6
|
|
|
$
|
(1.9
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
(1.3
|
)
|
Amounts expected to be amortized from accumulated other comprehensive loss into net period benefit cost during the year ending
September 30,
2013
, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
Postretirement
|
|
Net actuarial (loss)/gain
|
|
$
|
(29.7
|
)
|
|
$
|
2.0
|
|
|
Prior service credit
|
|
$
|
5.5
|
|
|
$
|
3.5
|
|
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
The following table presents assumptions, which reflect weighted-averages for the component plans, used in determining the above information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
Pension
|
|
Postretirement
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Plan obligations:
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
3.6
|
%
|
|
4.6
|
%
|
|
3.9
|
%
|
|
4.8
|
%
|
|
Compensation increase rate
|
|
2.5
|
%
|
|
2.7
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
4.6
|
%
|
|
4.7
|
%
|
|
4.8
|
%
|
|
5.1
|
%
|
|
Expected long-term rate of return on plan assets
|
|
7.3
|
%
|
|
7.3
|
%
|
|
3.0
|
%
|
|
3.2
|
%
|
|
Compensation increase rate
|
|
2.7
|
%
|
|
3.4
|
%
|
|
N/A
|
|
|
N/A
|
|
The expected return on plan assets was determined based on historical and expected future returns of th
e various asset classes, using the target allocations described above. Specifically, the expected return on equities (U.S. and foreign combined) is
7.19%
, and the expected return on debt securities (including higher-quality and lower-quality bonds) is
3.43%
.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
The following table sets forth the estimated fair value of the Company’s pension assets as of
September 30, 2012
and
2011
segregated by level within the estimated fair value hierarchy. Refer to Note 13 of the Notes to Consolidated Financial Statements for further discussion on the estimated fair value hierarchy and estimated fair value principles.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 Pension Assets
|
|
ASSETS AT ESTIMATED FAIR VALUE
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
EQUITY
|
|
|
|
|
|
|
|
U.S. Equity
|
|
$
|
259.1
|
|
|
$
|
51.9
|
|
|
$
|
311.0
|
|
|
International Equity
|
|
15.3
|
|
|
248.3
|
|
|
263.6
|
|
|
DEBT
|
|
|
|
|
|
|
|
U.S. Gov't
|
|
—
|
|
|
294.8
|
|
|
294.8
|
|
|
Other Gov't
|
|
—
|
|
|
8.8
|
|
|
8.8
|
|
|
Corporate
|
|
—
|
|
|
49.2
|
|
|
49.2
|
|
|
CASH & CASH EQUIVALENTS
|
|
1.3
|
|
|
—
|
|
|
1.3
|
|
|
OTHER
|
|
—
|
|
|
8.5
|
|
|
8.5
|
|
|
TOTAL
|
|
$
|
275.7
|
|
|
$
|
661.5
|
|
|
$
|
937.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 Pension Assets
|
|
ASSETS AT ESTIMATED FAIR VALUE
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
EQUITY
|
|
|
|
|
|
|
|
U.S. Equity
|
|
$
|
168.1
|
|
|
$
|
109.9
|
|
|
$
|
278.0
|
|
|
International Equity
|
|
41.7
|
|
|
134.2
|
|
|
175.9
|
|
|
DEBT
|
|
|
|
|
|
|
|
U.S. Gov't
|
|
—
|
|
|
230.4
|
|
|
230.4
|
|
|
Other Gov't
|
|
—
|
|
|
29.5
|
|
|
29.5
|
|
|
Corporate
|
|
—
|
|
|
61.2
|
|
|
61.2
|
|
|
CASH & CASH EQUIVALENTS
|
|
8.2
|
|
|
22.3
|
|
|
30.5
|
|
|
OTHER
|
|
—
|
|
|
9.5
|
|
|
9.5
|
|
|
TOTAL
|
|
$
|
218.0
|
|
|
$
|
597.0
|
|
|
$
|
815.0
|
|
In addition to the pension plan assets detailed above, the Company had
$0.4
and
$0.7
of postretirement assets, which were classified as Level 1 at both periods presented.
There were
no
Level 3 pension and other postretirement plan assets at
September 30, 2012
and
2011
.
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 investments. The increased volatility associated with equities is offset with higher expected returns, while the long duration fixed income investments 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.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
(9)
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. Amounts charged to expense during fiscal
2012
,
2011
, and
2010
were
$9.3
,
$9.2
, and
$8.0
, respectively, and are reflected in SG&A and Cost of products sold in the Consolidated Statements of Earnings, and Comprehensive Income. The fiscal
2012
and
2011
expense amounts include
$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.
(10)
Debt
Notes payable at
September 30, 2012
and
2011
consisted of notes payable to financial institutions with original maturities of less than one year of
$162.4
and
$56.0
, respectively, and had a weighted-average interest rate of
2.2%
and
3.1%
, respectively.
The detail of long-term debt at September 30 for the year indicated is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
Private Placement, fixed interest rates ranging from 4.3% to 6.6%, due 2013 to 2017
|
|
$
|
1,165.0
|
|
|
$
|
1,265.0
|
|
|
Senior Notes, fixed interest rate of 4.7%, due 2021
|
|
600.0
|
|
600.0
|
|
|
Senior Notes, fixed interest rate of 4.7%, due 2022, net of discount
|
|
498.6
|
|
—
|
|
|
Term Loan, variable interest at LIBOR +63 basis points, or 0.9%, due December 2012
|
|
106.5
|
|
447.5
|
|
Total long-term debt, including current maturities
|
|
2,370.1
|
|
2,312.5
|
|
Less current portion
|
|
231.5
|
|
106.0
|
|
Total long-term debt
|
|
$
|
2,138.6
|
|
|
$
|
2,206.5
|
|
The Company’s total borrowings were
$2,532.5
at September 30, 2012, including
$268.9
tied to variable interest rates, of which
$100
is hedged via the interest rate swap discussed below. The Company maintains total debt facilities of
$2,982.5
. The Company's Amended and Restated Revolving Credit Agreement, which matures in 2016, 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
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
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.
Advances under the Company's existing receivables securitization program, as amended, which may not exceed
$200
, are not considered debt for purposes of the Company’s debt compliance covenants. At
September 30, 2012
and
2011
,
$140.0
and
$35.0
, respectively, was outstanding under this facility.
On May 24, 2012, the Company issued
$500.0
aggregate principal amount of
4.70%
senior notes due in May 2022 with interest payable semi-annually in May and November (the "2012 Notes"). The net proceeds of
$495
were used to repay existing indebtedness including approximately
$335
of our term loan, which matures in December 2012,
$100
of private placement notes, which matured in June 2012, and a portion of our outstanding balance under our receivables securitization program. The 2012 Notes contain the same provisions as the senior notes issued in 2011 and described below.
At this time, the Company has a remaining term loan outstanding of
$106.5
, which will mature in December 2012. We expect to fund this repayment with available cash and other borrowing capacity.
As a result of the permanent repayment of
$335
of our existing term loan, the Company terminated a then-existing interest rate swap agreement, which previously hedged our interest rate exposure on
$200
of our then-existing term loan balance. The interest rate swap agreement was terminated following repayment of the debt associated with the interest rate swap derivative. A charge of
$1.7
is included in interest expense in the third fiscal quarter related to the early termination of this hedging instrument. The Company remains a party to an interest rate swap agreement with one major financial institution that fixes the variable benchmark component (LIBOR) of the Company’s interest rate on
$100
of the Company’s remaining variable rate term loan debt through December 2012 at an interest rate of
1.9%
.
On May 19, 2011, the Company issued
$600.0
aggregate principal amount of senior, unsecured notes with interest paid semi-annually in May and November at an annual fixed interest rate of
4.70%
(the "2011 Notes"). The 2011 Notes mature in May 2021, and are guaranteed by all of our existing and future subsidiaries that are guarantors under any of our credit agreements or other indebtedness, and such subsidiaries will remain guarantors of the 2011 Notes for as long as they remain a guarantor on other indebtedness. The 2011 Notes are redeemable at our option from time to time in accordance with the optional redemption provisions of the notes, including potential make-whole premiums. In addition, upon the occurrence of a change in control, the holders of the 2011 Notes have the right to require the Company to repurchase all or a portion of the notes at a specified redemption price. The 2011 Notes also contain certain limitations regarding the merger, consolidation or sale of the Company's assets.
Aggregate maturities of long-term debt, including current maturities, at
September 30, 2012
are as follows for the fiscal years’ noted:
$231.5
in
2013
,
$140.0
in
2014
,
$230.0
in
2015
,
$210.0
in
2016
,
$150.0
in
2017
and
$1,410.0
thereafter. At this time, the Company intends to repay only scheduled debt maturities over the course of the next fiscal year with the intent to preserve committed liquidity.
(11)
Preferred Stock
The Company’s Articles of Incorporation authorize the Company to issue up to
10
million shares of
$0.01
par value of preferred stock. During the three years ended
September 30, 2012
, there were no shares of preferred stock outstanding.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
(12)
Shareholders’ Equity
At
September 30, 2012
, there were
300
million shares of ENR stock authorized, of which approximately
0.8
million shares were reserved for issuance under the 2000 Incentive Stock Plan and
2.1
million shares were reserved for issuance under the 2009 Incentive Stock Plan.
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. At September 30, 2012, 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.
(13)
Financial Instruments and Risk Management
The market risk inherent in the Company’s financial instruments and positions represents the potential loss arising from adverse changes in currency rates, commodity prices, interest rates and the Company’s stock price. Company policy allows derivatives to be used only for identifiable exposures and, therefore, the Company does not enter into hedges for trading purposes where the sole objective is to generate profits.
Concentration of Credit Risk
The counterparties to derivative contracts consist of a number of major financial institutions and are generally institutions with which the Company maintains lines of credit. The Company does not enter into derivative contracts through brokers nor does it trade derivative contracts on any other exchange or over-the-counter markets. Risk of currency positions and mark-to-market valuation of positions are strictly monitored at all times.
The Company continually monitors positions with, and credit ratings of, counterparties both internally and by using outside rating agencies. The Company has implemented policies that limit the amount of agreements it enters into with any one party. While nonperformance by these counterparties exposes the Company to potential credit losses, such losses are not anticipated.
The Company sells to a large number of customers primarily in the retail trade, including those in mass merchandising, drugstore, supermarket and other channels of distribution throughout the world. Wal-Mart Stores, Inc. and its subsidiaries accounted for
20.3%
,
19.5%
and
20.1%
of total net sales in fiscal
2012
,
2011
and
2010
, respectively, primarily in North America. The Company performs ongoing evaluations of its customers' financial condition and creditworthiness, but does not generally require collateral. The Company’s largest customer had obligations to the Company with a carrying value of
$120.9
at
September 30, 2012
. While the competitiveness of the retail industry presents an inherent uncertainty, the Company does not believe a significant risk of loss from a concentration of credit risk exists with respect to accounts receivable.
In the ordinary course of business, the Company enters into contractual arrangements (derivatives) to reduce its exposure to foreign currency, interest rate and commodity price risks. The section below outlines the types of derivatives that existed at
September 30, 2012
and
2011
as well as the Company’s objectives and strategies for holding these derivative instruments.
Commodity Price Risk
The Company uses raw materials that are subject to price volatility. At times, The Company has used, and may in the future use, hedging instruments to reduce exposure to variability in cash flows associated with future purchases of certain materials and commodities.
In September 2012, the Company discontinued hedge accounting treatment for its existing zinc contracts. These contracts no longer meet the accounting requirements for classification as cash flow hedges because of an ineffective correlation to the underlying zinc exposure being hedged. The zinc forward hedges were designed to offset movement in our purchased zinc supplies, which include indium and certain conversion components. These two ancillary components of the Company's purchased zinc supplies have been highly volatile, and have negatively impacted the correlation between the zinc hedging
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
contracts and the change in the cost of our zinc supplies. Due to this volatility, the zinc forward contracts do not meet the effectiveness requirements for treatment as cash flow hedges under the accounting guidelines.
The pre-tax gain recognized on these zinc contracts that were no longer considered cash flow hedges was
$1.6
at September 30, 2012 and was included in other financing in the Consolidated Statement of Earnings and Comprehensive Income.
Contract maturities for these hedges extend into
2014
. There were
17
open contracts at
September 30, 2012
with a total notional value of approximately
$31
.
Foreign Currency Risk
A significant portion of the Company’s product cost is more closely tied to the U.S. dollar than to the local currencies in which the product is sold. As such, a weakening of currencies relative to the U.S. dollar, results in margin declines unless mitigated through pricing actions, which are not always available due to the competitive environment. Conversely, a strengthening in currencies relative to the U.S. dollar, and to a lesser extent, the Euro can improve margins. As a result, the Company has entered into a series of forward currency contracts to hedge the cash flow uncertainty of forecasted inventory purchases due to short term currency fluctuations. The Company’s primary foreign affiliates, which are exposed to U.S. dollar purchases, have the Euro, the Japanese yen, the British pound, the Canadian dollar and the Australian dollar as their local currencies. At
September 30, 2012
and
2011
, the Company had an unrealized pre-tax loss on these forward currency contracts accounted for as cash flow hedges of
$5.9
and an unrealized pre-tax gain of
$3.3
, respectively, included in Accumulated other comprehensive loss on the Consolidated Balance Sheets. Assuming foreign exchange rates versus the U.S. dollar remain at
September 30, 2012
levels, over the next twelve months, approximately
$5.3
of the pre-tax loss included in Accumulated other comprehensive loss will be included in earnings. Contract maturities for these hedges extend into fiscal year
2014
. There were
61
open contracts at
September 30, 2012
with a total notional value of approximately
$359
.
Interest Rate Risk
The Company has interest rate risk with respect to interest expense on variable rate debt. At
September 30, 2012
, the Company has a remaining term loan outstanding of
$106.5
, which will mature in December 2012. As a result of the permanent repayment of
$335
of our existing term loan, the Company terminated a then-existing interest rate swap agreement, which previously hedged our interest rate exposure on
$200
of our then-existing term loan balance. A charge of
$1.7
is included in interest expense in the third fiscal quarter related to the early termination of this hedging instrument. The Company remains party to an interest rate swap agreement with one major financial institution that fixes the variable benchmark component (LIBOR) of the Company’s interest rate on
$100.0
of the Company’s remaining variable rate term loan debt through December 2012. At
September 30, 2012
and
2011
, respectively, the Company had an unrealized pre-tax loss on these interest rate swap agreements of
$0.3
and
$4.7
included in Accumulated other comprehensive loss on the Consolidated Balance Sheets. Over the next three months the interest rate swap agreement will be fully settled and the total
$0.3
pre-tax loss included in Accumulated other comprehensive loss is expected to be included in earnings.
Cash Flow Hedges
The Company maintains a number of cash flow hedging programs, as discussed above, to reduce risks related to foreign currency and interest rate risk. Each of these derivative instruments have a high correlation to the underlying exposure being hedged and have been deemed highly effective for accounting purposes in offsetting the associated risk.
Derivatives not Designated in Hedging Relationships
The Company holds a share option with a major financial institution to mitigate the impact of changes in certain of the Company’s deferred compensation liabilities, which are tied to the Company’s common stock price. Period activity related to the share option is classified in the same category in the cash flow statement as the period activity associated with the Company’s deferred compensation liability, which was cash flow from operations.
In addition, the Company enters into foreign currency derivative contracts which are not designated as cash flow hedges for accounting purposes to hedge existing balance sheet exposures. Any losses on these contracts would be offset by exchange gains on the underlying exposures; thus, they are not subject to significant market risk.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
The following table provides estimated fair values as of
September 30, 2012
and
2011
, and the amounts of gains and losses on derivative instruments classified as cash flow hedges as of and for the twelve months ended
September 30, 2012
and
2011
, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2012
|
|
For The Year Ended September 30, 2012
|
|
Derivatives designated as Cash Flow Hedging Relationships
|
|
Estimated Fair Value Asset(Liability) (1) (2)
|
|
Gain/(Loss) Recognized in OCI(3)
|
|
Gain/(Loss)
Reclassified From OCI into Income (Effective Portion) (4) (5)
|
|
Foreign currency contracts
|
|
$
|
(5.9
|
)
|
|
$
|
(10.0
|
)
|
|
$
|
(0.8
|
)
|
|
Commodity contracts
|
|
—
|
|
|
—
|
|
|
(6.0
|
)
|
|
Interest rate contracts
|
|
(0.3
|
)
|
|
2.7
|
|
|
(1.7
|
)
|
|
Total
|
|
$
|
(6.2
|
)
|
|
$
|
(7.3
|
)
|
|
$
|
(8.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2011
|
|
For The Year Ended September 30, 2011
|
|
Derivatives designated as Cash Flow Hedging Relationships
|
|
Estimated Fair Value Asset(Liability) (1) (2)
|
|
Gain/(Loss) Recognized in OCI(3)
|
|
Gain/(Loss)
Reclassified From OCI into Income (Effective Portion) (4) (5)
|
|
Foreign currency contracts
|
|
$
|
3.3
|
|
|
$
|
(4.5
|
)
|
|
$
|
(24.6
|
)
|
|
Commodity contracts
|
|
(6.2
|
)
|
|
(5.2
|
)
|
|
1.0
|
|
|
Interest rate contracts
|
|
(4.7
|
)
|
|
3.1
|
|
|
—
|
|
|
Total
|
|
$
|
(7.6
|
)
|
|
$
|
(6.6
|
)
|
|
$
|
(23.6
|
)
|
|
|
|
|
(1)
|
All derivative assets are presented in other current assets or other assets.
|
|
|
|
|
(2)
|
All derivative liabilities are presented in other current liabilities or other liabilities.
|
|
|
|
|
(3)
|
OCI is defined as other comprehensive income.
|
|
|
|
|
(4)
|
Gain/(Loss) reclassified to Income was recorded as follows: Foreign currency contracts and ineffective commodity contract in other financing, effective commodity contracts in Cost of products sold.
|
|
|
|
|
(5)
|
Each of these derivative instruments has a high correlation to the underlying exposure being hedged and has been deemed highly effective in offsetting associated risk. The ineffective portion for foreign currency and interest rate contracts recognized in income was insignificant to the twelve months ended
September 30, 2012
. In September 2012, the Company discontinued hedge accounting treatment for its zinc contracts as the contracts no longer correlated to the underlying zinc exposure being hedged. Included within the net loss above is a
$1.6
gain for the ineffective portion that was de-designated and reclassified from OCI into income at September 30, 2012. This gain has been included in the table below for derivatives not designated as cash flow hedges.
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
The following table provides estimated fair values as of
September 30, 2012
and
2011
, and the amounts of gains and losses on derivative instruments not classified as cash flow hedges as of and for the twelve months ended
September 30, 2012
and
2011
, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2012
|
|
For The Year Ended September 30, 2012
|
|
Derivatives not designated as Cash Flow Hedging Relationships
|
|
Estimated Fair Value Asset (Liability)
|
|
Gain/(Loss) Recognized in Income (1)
|
|
Share option
|
|
$
|
2.5
|
|
|
$
|
6.1
|
|
|
Commodity contracts (2)
|
|
1.6
|
|
|
1.6
|
|
|
Foreign currency contracts
|
|
(0.7
|
)
|
|
(1.9
|
)
|
|
Total
|
|
$
|
3.4
|
|
|
$
|
5.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2011
|
|
For The Year Ended September 30, 2011
|
|
Derivatives not designated as Cash Flow Hedging Relationships
|
|
Estimated Fair Value Asset (Liability)
|
|
Gain/(Loss) Recognized in Income (1)
|
|
Share option
|
|
$
|
(3.4
|
)
|
|
$
|
(0.6
|
)
|
|
Foreign currency contracts
|
|
0.4
|
|
|
4.5
|
|
|
Total
|
|
$
|
(3.0
|
)
|
|
$
|
3.9
|
|
(1) Gain/(Loss) recognized in Income was recorded as follows: Share option in Selling, general and administrative expense and foreign currency and commodity contracts in other financing.
(2) In September 2012, the Company discontinued hedge accounting treatment for its existing zinc contracts. These contracts no longer meet the accounting requirements for classification as cash flow hedges because of an ineffective correlation to the underlying zinc exposure being hedged. Included in the table above is a gain of
$1.6
for the ineffective portion that was de-designated and reclassified from OCI into income at September 30, 2012.
Fair Value Hierarchy
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.
Under the fair value accounting guidance hierarchy, an entity is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The following table sets forth the Company’s financial assets and liabilities, which are carried at fair value, as of
September 30, 2012
and
2011
that are measured on a recurring basis during the period, segregated by level within the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2
|
|
|
|
September 30,
|
|
|
|
2012
|
|
2011
|
|
Assets/(Liabilities) at estimated fair value:
|
|
|
|
|
|
Deferred Compensation
|
|
$
|
(161.6
|
)
|
|
$
|
(147.6
|
)
|
|
Derivatives - Foreign Exchange
|
|
(6.6
|
)
|
|
3.7
|
|
|
Derivatives - Commodity
|
|
1.6
|
|
|
(6.2
|
)
|
|
Derivatives - Interest Rate Swap
|
|
(0.3
|
)
|
|
(4.7
|
)
|
|
Share Option
|
|
2.5
|
|
|
(3.4
|
)
|
|
Total Liabilities at estimated fair value
|
|
$
|
(164.4
|
)
|
|
$
|
(158.2
|
)
|
At
September 30, 2012
and
2011
the Company had no level 1 or level 3 financial assets or liabilities.
See Note 7 of the Notes to Consolidated Financial Statements for further discussion of deferred compensation liabilities.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
Effective January 1, 2012, the Company adopted an ASU related to estimated fair value measurements. The new guidance results in a consistent definition of estimated fair value and common requirements for measurement of and disclosure about estimated fair value between U.S. GAAP and IFRS. These disclosures were applied on a prospective basis.
At
September 30, 2012
and
2011
, the fair market value of fixed rate long-term debt was
$2,438.0
and
$1,969.3
, respectively, compared to its carrying value of
$2,263.6
and
$1,865.0
, respectively. The book value of the Company’s variable rate debt approximates estimated fair value. The estimated fair value of the long-term debt is estimated using yields obtained from independent pricing sources for similar types of borrowing arrangements. The estimated fair value of fixed rate long-term debt has been determined based on level 2 inputs.
Due to the nature of cash and cash equivalents and short-term borrowings, including notes payable, carrying amounts on the balance sheets approximate estimated fair value. The estimated fair value of cash and cash equivalents and short-term borrowings have been determined based on level 2 inputs.
At
September 30, 2012
, the estimated fair value of foreign currency, interest rate swap and commodity contracts is the amount that the Company would receive or pay to terminate the contracts, considering first, quoted market prices of comparable agreements, or in the absence of quoted market prices, such factors as interest rates, currency exchange rates and remaining maturities. The estimated fair value of the deferred compensation liability is determined based upon the quoted market prices of the Energizer Common Stock Unit Fund as well as other investment options that are offered under the plan.
Venezuela Currency Risk
The Company has investments in Venezuelan affiliates. Venezuela has been considered highly inflationary under GAAP since January 1, 2010. In addition, the conversion of local monetary assets to U.S. dollars is restricted by the Venezuelan government. We continue to monitor this situation including the impact such restrictions may have on our future business operations. At this time, we are unable to predict with any degree of certainty how recent and future developments in Venezuela will affect our Venezuela operations, if at all. At
September 30, 2012
, the Company had approximately
$40
in net monetary assets in Venezuela. Due to the level of uncertainty in Venezuela, we cannot predict the exchange rate that will ultimately be used to convert our local currency net monetary assets to U.S. dollars in the future.
(14)
Environmental and Legal Matters
Government Regulation and Environmental Matters
– The operations of the Company, like those of other companies engaged in the Household Products and Personal Care businesses, are subject to various federal, state, foreign and local laws and regulations intended to protect the public health and the environment. These regulations relate primarily to worker safety, air and water quality, underground fuel storage tanks and waste handling and disposal. The Company has received notices from the U.S. Environmental Protection Agency, state agencies and/or private parties seeking contribution, that it has been identified as a “potentially responsible party” (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act, and may be required to share in the cost of cleanup with respect to eight federal “Superfund” sites. It may also be required to share in the cost of cleanup with respect to state-designated sites or other sites outside of the U.S.
Accrued environmental costs at
September 30, 2012
were
$19.9
, of which
$4.5
is expected to be spent in fiscal
2013
. It is difficult to quantify with certainty the cost of environmental matters, particularly remediation and future capital expenditures for environmental control equipment. Nevertheless, based on information currently available, the Company believes the possibility of material environmental costs in excess of the accrued amount is remote.
Certain of the Company’s products are subject to regulation by the United States Food and Drug Administration (FDA), including tampons and sun care products.
Legal Proceedings
– The Company and its subsidiaries are parties to a number of legal proceedings in various jurisdictions arising out of the operations of the Company's businesses. Many of these legal matters are in preliminary stages and involve complex issues of law and fact, and may proceed for protracted periods of time. The amount of liability, if any, from these proceedings cannot be determined with certainty. However, based upon present information, the Company believes that its liability, if any, arising from such pending legal proceedings, asserted legal claims and known potential legal claims which are likely to be asserted, are not reasonably likely to be material to the Company's financial position, results of operations, or cash flows, taking into account established accruals for estimated liabilities.
In January 2011, Munchkin, Inc. commenced an action against a subsidiary of the Company in the United States District Court for the Central District of California seeking a declaration that certain Munchkin, Inc. advertising claims were valid and alleging false advertising claims by the Company. A jury trial resulted in an adverse verdict in July 2012 in the amount of
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
approximately
$13.5
million. As a result of the jury verdict, the Company recorded an accrual of
$13.5
million as of June 30, 2012. In September 2012, the court ordered a new trial with respect to the claims on which the jury awarded damages, which set aside the previous jury verdict. Based on this development and our current assessment of the matter, the Company reversed the previously established litigation reserve.
In October 2012, after receiving five reports from consumers, the Company announced a voluntary market withdrawal of certain continuous spray Banana Boat sun care products due to a potential risk of product igniting on the skin if contact was made with a source of ignition before the product was completely dry. The Company is voluntarily removing these products from retail outlets because of this potential safety concern. The Company has provided for the costs associated with the voluntary withdrawal in its fiscal 2012 financial statements, and is unable to determine with any degree of certainty what, if any, other liabilities may arise.
(15) Other Commitments and Contingencies
Total rental expense less sublease rental income for all operating leases was
$30.8
,
$32.6
and
$30.5
in fiscal
2012
,
2011
and
2010
, respectively. Future minimum rental commitments under noncancellable operating leases in effect as of
September 30, 2012
, were
$26.8
in fiscal
2013
,
$20.0
in fiscal
2014
,
$16.4
in fiscal
2015
,
$14.0
in fiscal
2016
,
$11.9
in fiscal
2017
and
$38.1
thereafter. These leases are primarily for office facilities.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
(16)
Supplemental Financial Statement Information
The components of certain balance sheet accounts at September 30 for the years indicated are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
Inventories
|
|
|
|
|
|
Raw materials and supplies
|
|
$
|
100.7
|
|
|
$
|
95.5
|
|
|
Work in process
|
|
141.2
|
|
|
139.9
|
|
|
Finished products
|
|
430.5
|
|
|
418.0
|
|
|
Total inventories
|
|
$
|
672.4
|
|
|
$
|
653.4
|
|
|
Other Current Assets
|
|
|
|
|
|
Miscellaneous receivables
|
|
$
|
81.5
|
|
|
$
|
58.6
|
|
|
Deferred income tax benefits
|
|
207.0
|
|
|
189.2
|
|
|
Prepaid expenses
|
|
90.0
|
|
|
84.3
|
|
|
Value added tax collectible from customers
|
|
53.5
|
|
|
51.9
|
|
|
Other
|
|
23.0
|
|
|
42.3
|
|
|
Total other current assets
|
|
$
|
455.0
|
|
|
$
|
426.3
|
|
|
Property, plant and equipment
|
|
|
|
|
|
Land
|
|
$
|
39.0
|
|
|
$
|
39.4
|
|
|
Buildings
|
|
278.2
|
|
|
297.4
|
|
|
Machinery and equipment
|
|
1,775.7
|
|
|
1,719.8
|
|
|
Construction in progress
|
|
75.6
|
|
|
71.7
|
|
|
Total gross property
|
|
2,168.5
|
|
|
2,128.3
|
|
|
Accumulated depreciation
|
|
(1,320.0
|
)
|
|
(1,242.9
|
)
|
|
Total property, plant and equipment, net
|
|
$
|
848.5
|
|
|
$
|
885.4
|
|
|
Other Current Liabilities
|
|
|
|
|
|
|
Accrued advertising, sales promotion and allowances
|
|
$
|
70.1
|
|
|
$
|
96.2
|
|
|
Accrued trade allowances
|
|
101.4
|
|
|
87.9
|
|
|
Accrued salaries, vacations and incentive compensation
|
|
115.9
|
|
|
110.4
|
|
|
Income taxes payable
|
|
25.2
|
|
|
—
|
|
|
Returns reserve
|
|
52.8
|
|
|
48.5
|
|
|
Other
|
|
223.0
|
|
|
232.8
|
|
|
Total other current liabilities
|
|
$
|
588.4
|
|
|
$
|
575.8
|
|
|
Other Liabilities
|
|
|
|
|
|
|
Pensions and other retirement benefits
|
|
$
|
506.0
|
|
|
$
|
497.2
|
|
|
Deferred compensation
|
|
166.3
|
|
|
151.7
|
|
|
Deferred income tax liabilities
|
|
455.0
|
|
|
453.8
|
|
|
Other non-current liabilities
|
|
88.3
|
|
|
93.6
|
|
|
Total other liabilities
|
|
$
|
1,215.6
|
|
|
$
|
1,196.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Doubtful Accounts
|
|
2012
|
|
2011
|
|
2010
|
|
Balance at beginning of year
|
|
$
|
15.9
|
|
|
$
|
13.2
|
|
|
$
|
11.3
|
|
|
Impact of acquisition
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
Provision charged to expense, net of reversals
|
|
2.2
|
|
|
4.6
|
|
|
4.6
|
|
|
Write-offs, less recoveries, translation, other
|
|
(2.2
|
)
|
|
(2.7
|
)
|
|
(2.7
|
)
|
|
Balance at end of year
|
|
$
|
15.9
|
|
|
$
|
15.9
|
|
|
$
|
13.2
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Valuation Allowance
|
|
2012
|
|
2011
|
|
2010
|
|
Balance at beginning of year
|
|
$
|
12.6
|
|
|
$
|
11.0
|
|
|
$
|
10.3
|
|
|
Provision charged to expense
|
|
—
|
|
|
11.4
|
|
|
2.7
|
|
|
Reversal of provision charged to expense
|
|
(0.8
|
)
|
|
(4.6
|
)
|
|
(1.3
|
)
|
|
Write-offs, translation, other
|
|
0.1
|
|
|
(5.2
|
)
|
|
(0.7
|
)
|
|
Balance at end of year
|
|
$
|
11.9
|
|
|
$
|
12.6
|
|
|
$
|
11.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information
|
|
2012
|
|
2011
|
|
2010
|
|
Interest paid, including cost of early debt retirement
|
|
$
|
117.5
|
|
|
$
|
141.8
|
|
|
$
|
122.1
|
|
|
Income taxes paid
|
|
$
|
113.0
|
|
|
$
|
206.4
|
|
|
$
|
131.5
|
|
The Company has made two reclassifications for financial reporting purposes that impact the September 30, 2011, balance sheet only. They are as follows:
|
|
|
|
•
|
In many of the Company's foreign affiliates, a value-added tax (VAT) is included on the invoice to the customer. The VAT is not included as part of the Company's revenue because the Company is simply collecting required taxes related to the sale of its goods to a third party and passing that tax collection to the proper tax authorities. Historically, the Company has reported this VAT component as part of trade receivables. We have reclassified this outstanding VAT amount from trade receivables to other current assets. The amount of the reclassification at September 30, 2011 is
$51.9
.
|
|
|
|
|
•
|
The Company engages in a variety of trade promotional activities with its customers to promote its brands. The cost of these programs have historically been accounted for as a reduction of net sales in accordance with GAAP, with an offsetting establishment of an accrued liability. A large portion of these liabilities are paid via a customer deduction from amounts owed to the Company for invoiced sales as the customer exercises a right of offset against trade receivables to recoup payment for trade promotion allowances. While practice may vary depending on the type and nature of the trade promotional activities, we believe reduction of trade receivables to reflect this estimated right of offset is common in the industry and appropriate to reflect on the reported balance sheet. The amount reclassified to reflect this presentation change was
$131.9
at
September 30, 2011
.
|
(17)
Segment Information
Operations for the Company are managed via two segments - Personal Care (Wet Shave, Skin Care, Feminine Care and Infant Care Products) and Household Products (Battery and Portable Lighting Products). On November 23, 2010, we completed the acquisition of ASR. ASR is a leading global manufacturer of private label/value wet shaving razors and blades, and industrial and specialty blades and is part of the Company' s Personal Care segment. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based compensation costs, costs associated with most restructuring, acquisition integration or business realignment activities, and amortization of intangible assets. Financial items, such as interest income and expense, are managed on a global basis at the corporate level. The exclusion from segment results of charges such as inventory write-up related to purchase accounting, other acquisition transaction and integration costs, and substantially all restructuring and realignment costs, reflects management's view on how it evaluates segment performance.
The Company's operating model includes a combination of stand-alone and combined business functions between the Personal Care and Household Products businesses, varying by country and region of the world. Shared functions include product warehousing and distribution, various transaction processing functions, and in some countries, a combined sales force and management. The Company applies a fully allocated cost basis, in which shared business functions are allocated between the segments. Such allocations do not represent the costs of such services, if performed on a stand-alone basis.
For the fiscal year ended
September 30, 2012
, the 2011 Household Products restructuring activities generated pre-tax income of
$6.8
, which was driven by the gain on the sale of our former battery manufacturing facility in Switzerland, which was closed in fiscal 2011. This gain was partially offset by
$6.0
of additional costs related to the 2011 Household Products restructuring, which were incurred in fiscal 2012. For the fiscal year ended
September 30, 2011
, the 2011 Household Products Restructuring initiatives generated pre-tax expense of
$79.0
.
For the year ended
September 30, 2011
, the Company recorded expense of
$1.8
related to the devaluation of its net monetary
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
assets in Venezuela as a result of accounting for the translation of this affiliate under the accounting rules governing a highly inflationary economy. These results reflect an exchange rate of
5.6
Venezuelan Bolivar Fuerte to one U.S. dollar. In 2010, the Company recorded a pre-tax loss of
$18.3
due primarily to the devaluation of our Venezuela affiliates' U.S. dollar based intercompany payable as a result of the official devaluation of the exchange rate between the U.S. dollar and the Venezuelan Bolivar Fuerte. These impacts, which are included in Other financing on the Consolidated Statements of Earnings and Comprehensive Income, are not considered in the evaluation of segment profit. However, normal operating results in Venezuela, such as sales, gross profit and spending remain part of reported segment totals.
On May 19, 2011, the Company completed the issuance of
$600.0
principal amount of
4.70%
Senior Notes due May 2021, with interest paid semi-annually beginning November, 2011. The vast majority of the proceeds of the offering were used to repay existing indebtedness including the early redemption of certain private placement notes. The early retirement of the certain private placement notes resulted in the payment of “make whole” premiums totaling $
19.9
, pre-tax, which are reflected as a separate line item on the Consolidated Statements of Earnings and Comprehensive Income as well as the reconciliation of segment results to total earnings before income taxes included in this footnote. In addition, the notice period required to repay certain private placement notes resulted in duplicate interest expense of approximately
$3.0
, which is included in Interest expense on the Consolidated Statements of Earnings and Comprehensive Income. See Note 10 of the Notes to Consolidated Financial Statements for further details.
The presentation for inventory write-up, which was
$7.0
in fiscal 2011 related to the write-up and subsequent sale of inventory acquired in the ASR transaction, acquisition transaction and integration costs, and substantially all restructuring and realignment costs, reflects management’s view on how it evaluates segment performance.
Corporate assets shown in the following table include all cash and cash equivalents, financial instruments and deferred tax assets that are managed outside of operating segments.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
The following table provides segment information for the years ended or at September 30 for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
2012
|
|
2011
|
|
2010
|
|
Personal Care
|
|
$
|
2,479.5
|
|
|
$
|
2,449.7
|
|
|
$
|
2,048.6
|
|
|
Household Products
|
|
2,087.7
|
|
|
2,196.0
|
|
|
2,199.7
|
|
|
Total net sales
|
|
$
|
4,567.2
|
|
|
$
|
4,645.7
|
|
|
$
|
4,248.3
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
Operating Profit
|
|
|
|
|
|
|
|
Personal Care
|
|
$
|
470.7
|
|
|
$
|
408.4
|
|
|
$
|
366.6
|
|
|
Household Products
|
|
400.2
|
|
|
410.6
|
|
|
451.1
|
|
|
Total operating profit
|
|
870.9
|
|
|
819.0
|
|
|
817.7
|
|
|
General corporate and other expenses
|
|
(159.0
|
)
|
|
(119.9
|
)
|
|
(108.4
|
)
|
|
Household Products restructuring
|
|
6.8
|
|
|
(79.0
|
)
|
|
—
|
|
|
Acquisition inventory valuation
|
|
—
|
|
|
(7.0
|
)
|
|
—
|
|
|
ASR transaction costs/integration
|
|
(8.4
|
)
|
|
(13.5
|
)
|
|
(0.5
|
)
|
|
Amortization of intangibles
|
|
(22.7
|
)
|
|
(21.3
|
)
|
|
(13.6
|
)
|
|
Venezuela devaluation/other impacts
|
|
—
|
|
|
(1.8
|
)
|
|
(18.3
|
)
|
|
Cost of early debt retirements
|
|
—
|
|
|
(19.9
|
)
|
|
—
|
|
|
Interest and other financing items
|
|
(122.2
|
)
|
|
(150.6
|
)
|
|
(133.5
|
)
|
|
Total earnings before income taxes
|
|
$
|
565.4
|
|
|
$
|
406.0
|
|
|
$
|
543.4
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
|
|
|
|
|
Personal Care
|
|
$
|
82.0
|
|
|
$
|
78.9
|
|
|
$
|
57.9
|
|
|
Household Products
|
|
54.7
|
|
|
63.5
|
|
|
65.8
|
|
|
Total segment depreciation and amortization
|
|
136.7
|
|
|
142.4
|
|
|
123.7
|
|
|
Corporate
|
|
25.5
|
|
|
38.9
|
|
|
15.5
|
|
|
Total depreciation and amortization
|
|
$
|
162.2
|
|
|
$
|
181.3
|
|
|
$
|
139.2
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
|
|
|
Personal Care
|
|
$
|
1,278.4
|
|
|
$
|
1,266.9
|
|
|
|
|
Household Products
|
|
1,134.4
|
|
|
1,176.7
|
|
|
|
|
Total segment assets
|
|
2,412.8
|
|
|
2,443.6
|
|
|
|
|
Corporate
|
|
995.2
|
|
|
734.4
|
|
|
|
|
Goodwill and other intangible assets, net
|
|
3,323.2
|
|
|
3,353.5
|
|
|
|
|
Total assets
|
|
$
|
6,731.2
|
|
|
$
|
6,531.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
Personal Care
|
|
$
|
58.3
|
|
|
$
|
61.0
|
|
|
$
|
69.2
|
|
|
Household Products
|
|
38.1
|
|
|
36.6
|
|
|
38.2
|
|
|
Total segment capital expenditures
|
|
96.4
|
|
|
97.6
|
|
|
107.4
|
|
|
Corporate
|
|
14.6
|
|
|
0.4
|
|
|
1.3
|
|
|
Total capital expenditures
|
|
$
|
111.0
|
|
|
$
|
98.0
|
|
|
$
|
108.7
|
|
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
Geographic segment information on a legal entity basis for the years ended September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
Net Sales to Customers
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
2,355.0
|
|
|
$
|
2,341.9
|
|
|
$
|
2,196.8
|
|
|
International
|
|
2,212.2
|
|
|
2,303.8
|
|
|
2,051.5
|
|
|
Total net sales
|
|
$
|
4,567.2
|
|
|
$
|
4,645.7
|
|
|
$
|
4,248.3
|
|
|
|
|
|
|
|
|
|
|
Long-Lived Assets
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
581.1
|
|
|
$
|
615.6
|
|
|
|
|
|
Germany
|
|
81.5
|
|
|
93.3
|
|
|
|
|
|
Singapore
|
|
89.8
|
|
|
81.7
|
|
|
|
|
|
Other International
|
|
133.0
|
|
|
126.7
|
|
|
|
|
|
Total long-lived assets excluding goodwill and intangibles
|
|
$
|
885.4
|
|
|
$
|
917.3
|
|
|
|
|
The Company’s international net sales are derived from customers in numerous countries, with sales to customers in Canada representing
5.3%
of the Company's total net sales in fiscal
2012
and
2011
and
5.7%
in fiscal
2010
, respectively. Net sales to customers in all other individual foreign countries represented less than
5%
of the Company’s total net sales for each of the three years presented.
Supplemental product information is presented below for net sales for the years ended September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
Net Sales
|
|
|
|
|
|
|
|
Wet Shave
|
|
$
|
1,687.6
|
|
|
$
|
1,637.4
|
|
|
$
|
1,265.1
|
|
|
Alkaline batteries
|
|
1,263.4
|
|
|
1,311.7
|
|
|
1,327.9
|
|
|
Other batteries and lighting products
|
|
824.3
|
|
|
884.3
|
|
|
871.8
|
|
|
Skin Care
|
|
423.0
|
|
|
417.6
|
|
|
383.0
|
|
|
Feminine Care
|
|
185.5
|
|
|
195.1
|
|
|
198.8
|
|
|
Infant Care
|
|
180.3
|
|
|
198.0
|
|
|
201.7
|
|
|
Other personal care products
|
|
3.1
|
|
|
1.6
|
|
|
—
|
|
|
Total net sales
|
|
$
|
4,567.2
|
|
|
$
|
4,645.7
|
|
|
$
|
4,248.3
|
|
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share and percentage data)
(18)
Quarterly Financial Information – (Unaudited)
The results of any single quarter are not necessarily indicative of the Company’s results for the full year. Net earnings of the Company are impacted in the first quarter by the additional battery product sales volume associated with the December holiday season. Data are computed independently for each of the periods presented. As a result, the sum of the amounts for the quarter may not equal the total for the year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2012
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Net sales
|
|
$
|
1,198.1
|
|
|
$
|
1,101.8
|
|
|
$
|
1,124.1
|
|
|
$
|
1,143.2
|
|
|
Gross profit
|
|
564.5
|
|
|
517.2
|
|
|
528.8
|
|
|
527.4
|
|
|
Net earnings
|
|
143.8
|
|
|
77.9
|
|
|
70.2
|
|
|
117.0
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.17
|
|
|
$
|
1.19
|
|
|
$
|
1.08
|
|
|
$
|
1.86
|
|
|
Diluted
|
|
$
|
2.15
|
|
|
$
|
1.17
|
|
|
$
|
1.06
|
|
|
$
|
1.84
|
|
|
|
|
|
|
|
|
|
|
|
|
Items increasing/(decreasing) net earnings:
|
|
|
|
|
|
|
|
|
|
ASR integration/transaction costs
|
|
(0.9
|
)
|
|
(1.5
|
)
|
|
(1.5
|
)
|
|
(1.4
|
)
|
|
Other realignment/integration costs
|
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|
(4.5
|
)
|
|
Early termination of interest rate swap
|
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
|
Household Products restructuring
|
|
7.6
|
|
|
(1.2
|
)
|
|
(0.4
|
)
|
|
(0.3
|
)
|
|
Litigation provision
|
|
—
|
|
|
—
|
|
|
(8.5
|
)
|
|
8.5
|
|
|
Adjustments to valuation allowances and prior years tax accruals
|
|
—
|
|
|
—
|
|
|
4.2
|
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2011
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Net sales
|
|
$
|
1,177.1
|
|
|
$
|
1,035.3
|
|
|
$
|
1,234.5
|
|
|
$
|
1,198.8
|
|
|
Gross profit
|
|
555.6
|
|
|
471.1
|
|
|
573.0
|
|
|
546.0
|
|
|
Net earnings
|
|
110.4
|
|
|
39.1
|
|
|
65.9
|
|
|
45.8
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.56
|
|
|
$
|
0.56
|
|
|
$
|
0.95
|
|
|
$
|
0.67
|
|
|
Diluted
|
|
$
|
1.55
|
|
|
$
|
0.55
|
|
|
$
|
0.94
|
|
|
$
|
0.67
|
|
|
|
|
|
|
|
|
|
|
|
|
Items increasing/(decreasing) net earnings:
|
|
|
|
|
|
|
|
|
|
Household Products restructuring
|
|
$
|
(1.3
|
)
|
|
$
|
(30.0
|
)
|
|
$
|
(16.9
|
)
|
|
$
|
(15.3
|
)
|
|
Early debt retirement/duplicate interest
|
|
—
|
|
|
—
|
|
|
(12.5
|
)
|
|
(1.9
|
)
|
|
ASR transaction costs/integration
|
|
(3.8
|
)
|
|
(0.9
|
)
|
|
(2.5
|
)
|
|
(1.2
|
)
|
|
Acquisition inventory valuation
|
|
(1.7
|
)
|
|
(2.7
|
)
|
|
—
|
|
|
—
|
|
|
Other realignment/integration costs
|
|
(0.2
|
)
|
|
(1.9
|
)
|
|
0.2
|
|
|
(0.1
|
)
|
|
Venezuela devaluation/other impacts
|
|
(2.3
|
)
|
|
1.0
|
|
|
—
|
|
|
(0.5
|
)
|
|
Adjustments to valuation allowances and prior years tax accruals
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|
(10.8
|
)
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
(19)
Guarantor and Non-Guarantor Financial Information
On May 19, 2011, the Company issued a total of
$600.0
of
4.70%
senior notes due in May 2021 with interest payable semi-annually beginning November 2011. On May 24, 2012, the Company issued an additional
$500.0
of senior notes with interest payable semi-annually in May and November at an annual fixed interest rate of
4.70%
, maturing in May 2022.
The notes issued in May 2011 and May 2012 (collectively the "Notes") are fully and unconditionally guaranteed on a joint and several basis by the Company's existing and future direct and indirect domestic subsidiaries that are guarantors of any of the Company's credit agreements or other indebtedness for borrowed money (the “Guarantors”). The Guarantors are 100% owned either directly or indirectly by the Company and jointly and severally guarantee the Company's obligations under the Notes and substantially all of the Company's other outstanding indebtedness. The Company's subsidiaries organized outside of the U.S. and certain domestic subsidiaries, which are not guarantors of any of the Company's other indebtedness, (collectively, the “Non-Guarantors”) do not guarantee the Notes. The subsidiary guarantee with respect to the Notes is subject to release upon sale of all of the capital stock of the Subsidiary Guarantor; if the guarantee under our credit agreements and other indebtedness for borrowed money is released or discharged (other than due to payment under such guarantee); or when the requirements for legal defeasance are satisfied or the obligations are discharged in accordance with the indenture.
Set forth below are the condensed consolidating financial statements presenting the results of operations, financial position and cash flows of the Parent Company (Energizer Holdings, Inc.), the Guarantors on a combined basis, the Non-Guarantors on a combined basis and eliminations necessary to arrive at the information for the Company as reported, on a consolidated basis. Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among the Parent Company, the Guarantor and the Non-Guarantor subsidiaries. In addition, the Company has revised certain elements of its previously filed consolidating statements as shown in the tables and revisions presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statements of Earnings (Condensed)
|
|
|
Year Ended September 30, 2012
|
|
|
Parent Company
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
|
Net Sales
|
$
|
—
|
|
$
|
2,773.5
|
|
$
|
2,433.3
|
|
$
|
(639.6
|
)
|
$
|
4,567.2
|
|
|
Cost of products sold
|
—
|
|
1,691.9
|
|
1,373.8
|
|
(636.4
|
)
|
2,429.3
|
|
|
Gross Profit
|
—
|
|
1,081.6
|
|
1,059.5
|
|
(3.2
|
)
|
2,137.9
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense
|
0.2
|
|
452.2
|
|
442.7
|
|
—
|
|
895.1
|
|
|
Advertising and sales promotion expense
|
—
|
|
249.9
|
|
200.7
|
|
(1.1
|
)
|
449.5
|
|
|
Research and development expense
|
—
|
|
112.3
|
|
0.2
|
|
—
|
|
112.5
|
|
|
Household Products restructuring
|
—
|
|
0.4
|
|
(7.2
|
)
|
—
|
|
(6.8
|
)
|
|
Interest expense/(income)
|
122.6
|
|
(0.5
|
)
|
5.2
|
|
—
|
|
127.3
|
|
|
Intercompany interest (income)/expense
|
(119.5
|
)
|
118.7
|
|
0.8
|
|
—
|
|
—
|
|
|
Other financing expense, net
|
—
|
|
(0.5
|
)
|
(4.5
|
)
|
(0.1
|
)
|
(5.1
|
)
|
|
Intercompany service fees
|
—
|
|
12.8
|
|
(12.8
|
)
|
—
|
|
—
|
|
|
Equity in earnings of subsidiaries
|
(414.3
|
)
|
(315.1
|
)
|
—
|
|
729.4
|
|
—
|
|
|
Earnings before income taxes
|
411.0
|
|
451.4
|
|
434.4
|
|
(731.4
|
)
|
565.4
|
|
|
Income taxes
|
2.1
|
|
60.2
|
|
96.2
|
|
(2.0
|
)
|
156.5
|
|
|
Net earnings
|
$
|
408.9
|
|
$
|
391.2
|
|
$
|
338.2
|
|
$
|
(729.4
|
)
|
$
|
408.9
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statements of Earnings (Condensed)
|
|
|
Year Ended September 30, 2011
|
|
|
Parent Company
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
|
Net Sales
|
$
|
—
|
|
$
|
2,775.2
|
|
$
|
2,444.5
|
|
$
|
(574.0
|
)
|
$
|
4,645.7
|
|
|
Cost of products sold
|
—
|
|
1,658.4
|
|
1,418.4
|
|
(576.8
|
)
|
2,500.0
|
|
|
Gross Profit
|
—
|
|
1,116.8
|
|
1,026.1
|
|
2.8
|
|
2,145.7
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense
|
—
|
|
420.4
|
|
435.7
|
|
—
|
|
856.1
|
|
|
Advertising and sales promotion expense
|
—
|
|
285.9
|
|
240.8
|
|
(2.7
|
)
|
524.0
|
|
|
Research and development expense
|
—
|
|
108.2
|
|
0.1
|
|
—
|
|
108.3
|
|
|
Household Products restructuring
|
—
|
|
3.0
|
|
76.0
|
|
—
|
|
79.0
|
|
|
Interest expense/(income)
|
137.1
|
|
(2.4
|
)
|
6.6
|
|
—
|
|
141.3
|
|
|
Intercompany interest (income)/expense
|
(134.5
|
)
|
133.7
|
|
0.8
|
|
—
|
|
—
|
|
|
Other financing expense, net
|
—
|
|
2.0
|
|
29.0
|
|
—
|
|
31.0
|
|
|
Intercompany service fees
|
—
|
|
10.6
|
|
(10.6
|
)
|
—
|
|
—
|
|
|
Equity in earnings of subsidiaries
|
(271.2
|
)
|
(153.6
|
)
|
—
|
|
424.8
|
|
—
|
|
|
Earnings before income taxes
|
268.6
|
|
309.0
|
|
247.7
|
|
(419.3
|
)
|
406.0
|
|
|
Income taxes
|
7.4
|
|
64.6
|
|
71.1
|
|
1.7
|
|
144.8
|
|
|
Net earnings
|
$
|
261.2
|
|
$
|
244.4
|
|
$
|
176.6
|
|
$
|
(421.0
|
)
|
$
|
261.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statements of Earnings (Condensed)
|
|
|
Year Ended September 30, 2010
|
|
|
Parent Company
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
|
Net Sales
|
$
|
—
|
|
$
|
2,551.9
|
|
$
|
2,229.3
|
|
$
|
(532.9
|
)
|
$
|
4,248.3
|
|
|
Cost of products sold
|
—
|
|
1,483.1
|
|
1,270.1
|
|
(524.2
|
)
|
2,229.0
|
|
|
Gross Profit
|
—
|
|
1,068.8
|
|
959.2
|
|
(8.7
|
)
|
2,019.3
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense
|
—
|
|
379.5
|
|
386.2
|
|
—
|
|
765.7
|
|
|
Advertising and sales promotion expense
|
—
|
|
274.3
|
|
188.8
|
|
(1.8
|
)
|
461.3
|
|
|
Research and development expense
|
—
|
|
97.0
|
|
0.1
|
|
—
|
|
97.1
|
|
|
Interest expense/(income)
|
121.5
|
|
(1.4
|
)
|
5.3
|
|
—
|
|
125.4
|
|
|
Intercompany interest (income)/expense
|
(119.5
|
)
|
118.2
|
|
1.3
|
|
—
|
|
—
|
|
|
Other financing (income)/expense
|
(0.1
|
)
|
1.3
|
|
25.2
|
|
—
|
|
26.4
|
|
|
Intercompany service fees
|
—
|
|
16.9
|
|
(16.9
|
)
|
—
|
|
—
|
|
|
Equity in earnings of subsidiaries
|
(412.5
|
)
|
(266.5
|
)
|
—
|
|
679.0
|
|
—
|
|
|
Earnings before income taxes
|
410.6
|
|
449.5
|
|
369.2
|
|
(685.9
|
)
|
543.4
|
|
|
Income taxes
|
7.6
|
|
52.3
|
|
83.6
|
|
(3.1
|
)
|
140.4
|
|
|
Net earnings
|
$
|
403.0
|
|
$
|
397.2
|
|
$
|
285.6
|
|
$
|
(682.8
|
)
|
$
|
403.0
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Balance Sheets (Condensed)
|
|
|
September 30, 2012
|
|
|
Parent Company
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
|
Assets
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
4.0
|
|
$
|
9.2
|
|
$
|
705.3
|
|
$
|
—
|
|
$
|
718.5
|
|
|
Trade receivables, net (a)
|
—
|
|
4.1
|
|
672.6
|
|
—
|
|
676.7
|
|
|
Inventories
|
—
|
|
341.4
|
|
362.1
|
|
(31.1
|
)
|
672.4
|
|
|
Other current assets
|
0.4
|
|
210.8
|
|
232.9
|
|
10.9
|
|
455.0
|
|
|
Total current assets
|
4.4
|
|
565.5
|
|
1,972.9
|
|
(20.2
|
)
|
2,522.6
|
|
|
Investment in subsidiaries
|
6,552.5
|
|
1,760.8
|
|
—
|
|
(8,313.3
|
)
|
—
|
|
|
Intercompany receivables, net (b)
|
—
|
|
4,249.9
|
|
168.6
|
|
(4,418.5
|
)
|
—
|
|
|
Intercompany notes receivable (b)
|
2,413.3
|
|
22.4
|
|
11.0
|
|
(2,446.7
|
)
|
—
|
|
|
Property, plant and equipment, net
|
—
|
|
553.1
|
|
295.4
|
|
—
|
|
848.5
|
|
|
Goodwill
|
—
|
|
1,104.9
|
|
364.6
|
|
—
|
|
1,469.5
|
|
|
Other intangible assets, net
|
—
|
|
1,646.8
|
|
206.9
|
|
—
|
|
1,853.7
|
|
|
Other noncurrent assets
|
12.4
|
|
9.7
|
|
14.8
|
|
—
|
|
36.9
|
|
|
Total assets
|
8,982.6
|
|
9,913.1
|
|
3,034.2
|
|
(15,198.7
|
)
|
6,731.2
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
300.0
|
|
372.2
|
|
635.2
|
|
0.1
|
|
1,307.5
|
|
|
Intercompany payables, net (b)
|
4,418.5
|
|
—
|
|
—
|
|
(4,418.5
|
)
|
—
|
|
|
Intercompany notes payable (b)
|
—
|
|
2,424.3
|
|
22.4
|
|
(2,446.7
|
)
|
—
|
|
|
Long-term debt
|
2,138.6
|
|
—
|
|
—
|
|
—
|
|
2,138.6
|
|
|
Other noncurrent liabilities
|
56.0
|
|
954.7
|
|
204.9
|
|
—
|
|
1,215.6
|
|
|
Total liabilities
|
6,913.1
|
|
3,751.2
|
|
862.5
|
|
(6,865.1
|
)
|
4,661.7
|
|
|
Total shareholders' equity
|
2,069.5
|
|
6,161.9
|
|
2,171.7
|
|
(8,333.6
|
)
|
2,069.5
|
|
|
Total liabilities and shareholders' equity
|
$
|
8,982.6
|
|
$
|
9,913.1
|
|
$
|
3,034.2
|
|
$
|
(15,198.7
|
)
|
$
|
6,731.2
|
|
(a) Trade receivables, net for the Non-Guarantors includes approximately
$369.1
at
September 30, 2012
of U.S. trade receivables sold from the Guarantors to Energizer Receivables Funding Corp ("ERF"), a 100% owned, special purpose subsidiary, which is a non-guarantor of the Notes. These receivables are used by ERF to securitize the borrowings under the Company's receivable securitization facility. The trade receivables are short-term in nature (on average less than 90 days). As payment of the receivable obligation is received from the customer, ERF remits the cash to the Guarantors in payment for the purchase of the receivables. Cost and expenses paid by ERF related to the receivable securitization facility are re-billed to the Guarantors by way of intercompany services fees.
(b) Intercompany activity includes notes that bear interest due from the Guarantors to the Parent Company. Interest rates on these notes approximate the interest rates paid by the Parent on third party debt. Additionally, other intercompany activities include product purchases between Guarantors and Non-Guarantors, charges for services provided by the parent and various subsidiaries to other affiliates within the consolidated entity and other intercompany activities in the normal course of business.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Balance Sheets (Condensed)
|
|
|
September 30, 2011
|
|
|
Parent Company
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
|
Assets
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
$
|
4.3
|
|
$
|
466.9
|
|
$
|
—
|
|
$
|
471.2
|
|
|
Trade receivables, net (a) (c)
|
—
|
|
15.3
|
|
694.5
|
|
—
|
|
709.8
|
|
|
Inventories
|
—
|
|
318.7
|
|
363.8
|
|
(29.1
|
)
|
653.4
|
|
|
Other current assets (c)
|
21.1
|
|
243.7
|
|
183.0
|
|
(21.5
|
)
|
426.3
|
|
|
Total current assets
|
21.1
|
|
582.0
|
|
1,708.2
|
|
(50.6
|
)
|
2,260.7
|
|
|
Investment in subsidiaries
|
6,177.9
|
|
1,430.6
|
|
—
|
|
(7,608.5
|
)
|
—
|
|
|
Intercompany receivables, net (b)
|
—
|
|
4,046.7
|
|
13.4
|
|
(4,060.1
|
)
|
—
|
|
|
Intercompany notes receivable (b)
|
2,347.6
|
|
24.4
|
|
5.9
|
|
(2,377.9
|
)
|
—
|
|
|
Property, plant and equipment, net
|
—
|
|
574.8
|
|
310.6
|
|
—
|
|
885.4
|
|
|
Goodwill
|
—
|
|
1,105.0
|
|
370.3
|
|
—
|
|
1,475.3
|
|
|
Other intangible assets, net
|
—
|
|
1,664.3
|
|
213.9
|
|
—
|
|
1,878.2
|
|
|
Other noncurrent assets
|
10.4
|
|
11.1
|
|
10.4
|
|
—
|
|
31.9
|
|
|
Total assets
|
8,557.0
|
|
9,438.9
|
|
2,632.7
|
|
(14,097.1
|
)
|
6,531.5
|
|
|
|
|
|
|
|
|
|
Current liabilities (c)
|
141.1
|
|
399.1
|
|
518.1
|
|
(30.9
|
)
|
1,027.4
|
|
|
Intercompany payables, net (b)
|
4,060.1
|
|
—
|
|
—
|
|
(4,060.1
|
)
|
—
|
|
|
Intercompany notes payable (b)
|
—
|
|
2,353.5
|
|
24.4
|
|
(2,377.9
|
)
|
—
|
|
|
Long-term debt
|
2,206.5
|
|
—
|
|
—
|
|
—
|
|
2,206.5
|
|
|
Other noncurrent liabilities
|
48.0
|
|
975.9
|
|
172.4
|
|
—
|
|
1,196.3
|
|
|
Total liabilities
|
6,455.7
|
|
3,728.5
|
|
714.9
|
|
(6,468.9
|
)
|
4,430.2
|
|
|
Total shareholders' equity
|
2,101.3
|
|
5,710.4
|
|
1,917.8
|
|
(7,628.2
|
)
|
2,101.3
|
|
|
Total liabilities and shareholders' equity
|
$
|
8,557.0
|
|
$
|
9,438.9
|
|
$
|
2,632.7
|
|
$
|
(14,097.1
|
)
|
$
|
6,531.5
|
|
(a) Trade receivables, net for the Non-Guarantors includes approximately
$373.0
at
September 30, 2011
of U.S. trade receivables sold from the Guarantors to Energizer Receivables Funding Corp ("ERF"), a 100% owned, special purpose subsidiary, which is a non-guarantor of the Notes. These receivables are used by ERF to securitize the borrowings under the Company's receivable securitization facility. The trade receivables are short-term in nature (on average less than 90 days). As payment of the receivable obligation is received from the customer, ERF remits the cash to the Guarantors in payment for the purchase of the receivables. Cost and expenses paid by ERF related to the receivable securitization facility are re-billed to the Guarantors by way of intercompany services fees.
(b) Intercompany activity includes notes that bear interest due from the Guarantors to the Parent Company. Interest rates on these notes approximate the interest rates paid by the Parent on third party debt. Additionally, other intercompany activities include product purchases between Guarantors and Non-Guarantors, charges for services provided by the parent and various subsidiaries to other affiliates within the consolidated entity and other intercompany activities in the normal course of business.
(c) The Company has made two reclassifications for financial reporting purposes that impact the balance sheets only. See Note 10 for further information.
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statements of Cash Flows (Condensed)
|
|
|
Year Ended September 30, 2012
|
|
|
Parent Company
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
|
Net cash flow from operating activities
|
$
|
87.4
|
|
$
|
275.9
|
|
$
|
327.4
|
|
$
|
(59.1
|
)
|
$
|
631.6
|
|
|
Cash Flow from Investing Activities
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
(73.4
|
)
|
(37.6
|
)
|
—
|
|
(111.0
|
)
|
|
Proceeds from sale of assets
|
—
|
|
2.0
|
|
17.3
|
|
—
|
|
19.3
|
|
|
Proceeds from intercompany notes
|
441.0
|
|
2.8
|
|
—
|
|
(443.8
|
)
|
—
|
|
|
Payments for intercompany notes
|
(498.6
|
)
|
—
|
|
(5.0
|
)
|
503.6
|
|
—
|
|
|
Intercompany receivable/payable, net
|
—
|
|
(358.4
|
)
|
(105.0
|
)
|
463.4
|
|
—
|
|
|
Proceeds from return of capital
|
—
|
|
0.7
|
|
—
|
|
(0.7
|
)
|
—
|
|
|
Payment for equity contributions
|
—
|
|
(3.1
|
)
|
—
|
|
3.1
|
|
—
|
|
|
Other, net
|
—
|
|
(1.1
|
)
|
(2.1
|
)
|
—
|
|
(3.2
|
)
|
|
Net cash (used by)/from investing activities
|
(57.6
|
)
|
(430.5
|
)
|
(132.4
|
)
|
525.6
|
|
(94.9
|
)
|
|
Cash Flow from Financing Activities
|
|
|
|
|
|
|
Cash proceeds from issuance of debt with
original maturities greater than 90 days
|
498.6
|
|
—
|
|
—
|
|
—
|
|
498.6
|
|
|
Cash payments on debt with original maturities
greater than 90 days
|
(441.0
|
)
|
—
|
|
—
|
|
—
|
|
(441.0
|
)
|
|
Payment of debt issue cost
|
(4.3
|
)
|
—
|
|
—
|
|
—
|
|
(4.3
|
)
|
|
Net (decrease)/increase in debt with original
maturity days of 90 or less
|
—
|
|
(8.1
|
)
|
109.0
|
|
—
|
|
100.9
|
|
|
Proceeds from intercompany notes
|
—
|
|
503.6
|
|
—
|
|
(503.6
|
)
|
—
|
|
|
Payments for intercompany notes
|
—
|
|
(441.0
|
)
|
(2.8
|
)
|
443.8
|
|
—
|
|
|
Common stock purchased
|
(417.8
|
)
|
—
|
|
—
|
|
—
|
|
(417.8
|
)
|
|
Proceeds from issuance of common stock
|
3.0
|
|
—
|
|
—
|
|
—
|
|
3.0
|
|
|
Excess tax benefits from share-based payments
|
2.2
|
|
—
|
|
—
|
|
—
|
|
2.2
|
|
|
Cash dividends paid
|
(24.9
|
)
|
—
|
|
—
|
|
—
|
|
(24.9
|
)
|
|
Intercompany receivable/payable, net
|
358.4
|
|
105.0
|
|
—
|
|
(463.4
|
)
|
—
|
|
|
Proceeds for equity contribution
|
—
|
|
—
|
|
3.1
|
|
(3.1
|
)
|
—
|
|
|
Capital contribution
|
—
|
|
—
|
|
(0.7
|
)
|
0.7
|
|
—
|
|
|
Payments for intercompany equity distributions
|
—
|
|
—
|
|
(59.1
|
)
|
59.1
|
|
—
|
|
|
Net cash (used by)/from financing activities
|
(25.8
|
)
|
159.5
|
|
49.5
|
|
(466.5
|
)
|
(283.3
|
)
|
|
Effect of exchange rate changes on cash
|
—
|
|
—
|
|
(6.1
|
)
|
—
|
|
(6.1
|
)
|
|
Net increase in cash and cash equivalents
|
4.0
|
|
4.9
|
|
238.4
|
|
—
|
|
247.3
|
|
|
Cash and cash equivalents, beginning of period
|
—
|
|
4.3
|
|
466.9
|
|
—
|
|
471.2
|
|
|
Cash and cash equivalents, end of period
|
$
|
4.0
|
|
$
|
9.2
|
|
$
|
705.3
|
|
$
|
—
|
|
$
|
718.5
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statements of Cash Flows (Condensed)
|
|
|
Year Ended September 30, 2011
|
|
|
Parent Company
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
|
Net cash flow from operating activities
|
$
|
5.5
|
|
$
|
298.3
|
|
$
|
232.8
|
|
$
|
(124.1
|
)
|
$
|
412.5
|
|
|
Cash Flow from/(used by) Investing Activities
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
(55.4
|
)
|
(42.6
|
)
|
—
|
|
(98.0
|
)
|
|
Proceeds from sale of assets
|
—
|
|
5.0
|
|
2.6
|
|
—
|
|
7.6
|
|
|
Acquisitions, net of cash acquired
|
(301.0
|
)
|
11.1
|
|
22.8
|
|
—
|
|
(267.1
|
)
|
|
Proceeds from intercompany notes
|
576.0
|
|
38.0
|
|
—
|
|
(614.0
|
)
|
—
|
|
|
Payments for intercompany notes
|
(600.0
|
)
|
—
|
|
—
|
|
600.0
|
|
—
|
|
|
Intercompany receivable/payable, net
|
—
|
|
(355.7
|
)
|
(35.0
|
)
|
390.7
|
|
—
|
|
|
Proceeds from return of capital
|
—
|
|
4.0
|
|
—
|
|
(4.0
|
)
|
—
|
|
|
Payment for equity contributions
|
—
|
|
(12.8
|
)
|
—
|
|
12.8
|
|
—
|
|
|
Other, net
|
—
|
|
(4.8
|
)
|
(1.2
|
)
|
—
|
|
(6.0
|
)
|
|
Net cash (used by)/from investing activities
|
(325.0
|
)
|
(370.6
|
)
|
(53.4
|
)
|
385.5
|
|
(363.5
|
)
|
|
Cash Flow from Financing Activities
|
|
|
|
|
|
|
Cash proceeds from issuance of debt with
original maturities greater than 90 days
|
600.0
|
|
—
|
|
—
|
|
—
|
|
600.0
|
|
|
Cash payments on debt with original maturities
greater than 90 days
|
(576.0
|
)
|
—
|
|
—
|
|
—
|
|
(576.0
|
)
|
|
Payment of debt issue cost
|
(7.6
|
)
|
—
|
|
—
|
|
—
|
|
(7.6
|
)
|
|
Net decrease in debt with original maturity
days of 90 or less
|
—
|
|
15.1
|
|
30.6
|
|
—
|
|
45.7
|
|
|
Proceeds from intercompany notes
|
—
|
|
600.0
|
|
—
|
|
(600.0
|
)
|
—
|
|
|
Payments for intercompany notes
|
—
|
|
(576.0
|
)
|
(38.0
|
)
|
614.0
|
|
—
|
|
|
Common stock purchased
|
(276.0
|
)
|
—
|
|
—
|
|
—
|
|
(276.0
|
)
|
|
Proceeds from issuance of common stock
|
8.2
|
|
—
|
|
—
|
|
—
|
|
8.2
|
|
|
Excess tax benefits from share-based payments
|
3.7
|
|
—
|
|
—
|
|
—
|
|
3.7
|
|
|
Intercompany receivable/payable, net
|
355.7
|
|
35.0
|
|
—
|
|
(390.7
|
)
|
—
|
|
|
Proceeds for equity contribution
|
—
|
|
—
|
|
12.8
|
|
(12.8
|
)
|
—
|
|
|
Capital contribution
|
—
|
|
—
|
|
(4.0
|
)
|
4.0
|
|
—
|
|
|
Payments for intercompany equity distributions
|
—
|
|
—
|
|
(124.1
|
)
|
124.1
|
|
—
|
|
|
Net cash from/(used by) financing activities
|
108.0
|
|
74.1
|
|
(122.7
|
)
|
(261.4
|
)
|
(202.0
|
)
|
|
Effect of exchange rate changes on cash
|
—
|
|
—
|
|
(5.5
|
)
|
—
|
|
(5.5
|
)
|
|
Net (decrease)/increase in cash and cash
equivalents
|
(211.5
|
)
|
1.8
|
|
51.2
|
|
—
|
|
(158.5
|
)
|
|
Cash and cash equivalents, beginning of period
|
211.5
|
|
2.5
|
|
415.7
|
|
—
|
|
629.7
|
|
|
Cash and cash equivalents, end of period
|
$
|
—
|
|
$
|
4.3
|
|
$
|
466.9
|
|
$
|
—
|
|
$
|
471.2
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statements of Cash Flows (Condensed)
|
|
|
Year Ended September 30, 2010
|
|
|
Parent Company
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
|
Net cash flow from operating activities
|
$
|
12.5
|
|
$
|
389.2
|
|
$
|
337.5
|
|
$
|
(86.8
|
)
|
$
|
652.4
|
|
|
Cash Flow from/(used by) Investing Activities
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
(57.0
|
)
|
(51.7
|
)
|
—
|
|
(108.7
|
)
|
|
Proceeds from sale of assets
|
—
|
|
0.1
|
|
0.7
|
|
—
|
|
0.8
|
|
|
Proceeds from intercompany notes
|
101.0
|
|
26.1
|
|
—
|
|
(127.1
|
)
|
—
|
|
|
Intercompany receivable/payable, net
|
—
|
|
(97.6
|
)
|
147.5
|
|
(49.9
|
)
|
—
|
|
|
Proceeds from return of capital
|
—
|
|
2.0
|
|
—
|
|
(2.0
|
)
|
—
|
|
|
Payment for equity contributions
|
—
|
|
(5.5
|
)
|
—
|
|
5.5
|
|
—
|
|
|
Other, net
|
—
|
|
(4.9
|
)
|
(0.5
|
)
|
—
|
|
(5.4
|
)
|
|
Net cash from/(used by) investing activities
|
101.0
|
|
(136.8
|
)
|
96.0
|
|
(173.5
|
)
|
(113.3
|
)
|
|
Cash Flow from Financing Activities
|
|
|
|
|
|
|
Net decrease in debt with original maturity
days of 90 or less
|
(101.0
|
)
|
—
|
|
—
|
|
—
|
|
(101.0
|
)
|
|
Net decrease in debt with original maturity
days of 90 or less
|
—
|
|
(5.1
|
)
|
(146.8
|
)
|
—
|
|
(151.9
|
)
|
|
Payments for intercompany notes
|
—
|
|
(101.0
|
)
|
(26.1
|
)
|
127.1
|
|
—
|
|
|
Proceeds from issuance of common stock
|
12.6
|
|
—
|
|
—
|
|
—
|
|
12.6
|
|
|
Excess tax benefits from share-based payments
|
5.8
|
|
—
|
|
—
|
|
—
|
|
5.8
|
|
|
Intercompany receivable/payable, net
|
97.6
|
|
(147.5
|
)
|
—
|
|
49.9
|
|
—
|
|
|
Proceeds for equity contribution
|
—
|
|
—
|
|
5.5
|
|
(5.5
|
)
|
—
|
|
|
Capital contribution
|
—
|
|
—
|
|
(2.0
|
)
|
2.0
|
|
—
|
|
|
Payments for intercompany equity distributions
|
—
|
|
—
|
|
(86.8
|
)
|
86.8
|
|
—
|
|
|
Net cash from/(used by) financing activities
|
15.0
|
|
(253.6
|
)
|
(256.2
|
)
|
260.3
|
|
(234.5
|
)
|
|
Effect of exchange rate changes on cash
|
—
|
|
—
|
|
(34.2
|
)
|
—
|
|
(34.2
|
)
|
|
Net increase/(decrease) in cash and cash
equivalents
|
128.5
|
|
(1.2
|
)
|
143.1
|
|
—
|
|
270.4
|
|
|
Cash and cash equivalents, beginning of period
|
83.0
|
|
3.7
|
|
272.6
|
|
—
|
|
359.3
|
|
|
Cash and cash equivalents, end of period
|
$
|
211.5
|
|
$
|
2.5
|
|
$
|
415.7
|
|
$
|
—
|
|
$
|
629.7
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
The Company revised its Condensed Consolidating Statements of Earnings to eliminate the incorrect inclusion of intercompany dividends. These revisions resulted in a reduction of the Guarantors net earnings with a corresponding reduction to Eliminations. The reported net earnings of the Parent and Non-Guarantors was not impacted by this error. The Company also revised its Condensed Consolidating Balance Sheets to present intercompany notes between the Parent, Guarantor and the Non-Guarantor subsidiaries on a gross basis, rather than showing intercompany obligations on a net basis. Additionally, the Company revised its Condensed Consolidating Statements of Cash Flows to correct the presentation of certain intercompany activities between the Parent, Guarantor and Non-Guarantor subsidiaries for loans, capital contributions/returns, return on equity and repayments. These revisions resulted in offsetting amounts to certain line items and did not impact total cash flow for any of the subsidiaries presented. The Company assessed the materiality of these items on previously issued annual and interim financial statements in accordance with SEC Staff Accounting Bulletin No. 99 and No. 108, and concluded that the revisions were not material to the Condensed Consolidating Financial Statements for any period presented. The prior period quarterly Condensed Consolidating Financial Statements will also be presented in our Form 10-Q filings in fiscal year 2013 as revised consistent with the presentation below. There were no changes to the Company's Consolidated Financial Statements as a result of these revisions. The impact of these revisions is shown in the following tables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statement of
Earnings (Condensed)
|
As Previously Reported
|
|
|
Year Ended
|
|
Three Months Ended
|
|
(millions)
|
Sep 2010
|
Sep 2011
|
|
Dec 2010
|
Mar 2011
|
Jun 2011
|
Dec 2011
|
Mar 2012
|
Jun 2012
|
|
Parent Company
|
$
|
410.6
|
|
$
|
268.6
|
|
|
$
|
111.4
|
|
$
|
39.7
|
|
$
|
66.4
|
|
$
|
144.8
|
|
$
|
78.3
|
|
$
|
70.4
|
|
|
Guarantors
|
536.3
|
|
433.1
|
|
|
189.3
|
|
65.6
|
|
93.7
|
|
182.6
|
|
112.5
|
|
72.1
|
|
|
Non-Guarantors
|
369.2
|
|
247.7
|
|
|
86.8
|
|
41.6
|
|
49.3
|
|
125.5
|
|
83.6
|
|
88.6
|
|
|
Eliminations
|
(772.7
|
)
|
(543.4
|
)
|
|
(225.0
|
)
|
(85.9
|
)
|
(108.5
|
)
|
(244.5
|
)
|
(161.4
|
)
|
(142.3
|
)
|
|
Earnings before income taxes
|
543.4
|
|
406.0
|
|
|
162.5
|
|
61.0
|
|
100.9
|
|
208.4
|
|
113.0
|
|
88.8
|
|
|
Parent Company
|
403.0
|
|
261.2
|
|
|
110.4
|
|
39.1
|
|
65.9
|
|
143.8
|
|
77.9
|
|
70.2
|
|
|
Guarantors
|
484.0
|
|
368.5
|
|
|
158.1
|
|
52.6
|
|
71.5
|
|
146.9
|
|
99.5
|
|
70.8
|
|
|
Non-Guarantors
|
285.6
|
|
176.6
|
|
|
67.6
|
|
33.6
|
|
37.4
|
|
97.5
|
|
65.1
|
|
71.7
|
|
|
Eliminations
|
(769.6
|
)
|
(545.1
|
)
|
|
(225.7
|
)
|
(86.2
|
)
|
(108.9
|
)
|
(244.4
|
)
|
(164.6
|
)
|
(142.5
|
)
|
|
Net earnings
|
$
|
403.0
|
|
$
|
261.2
|
|
|
$
|
110.4
|
|
$
|
39.1
|
|
$
|
65.9
|
|
$
|
143.8
|
|
$
|
77.9
|
|
$
|
70.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statement of
Earnings (Condensed)
|
Adjustments
|
|
|
Year Ended
|
|
Three Months Ended
|
|
(millions)
|
Sep 2010
|
Sep 2011
|
|
Dec 2010
|
Mar 2011
|
Jun 2011
|
Dec 2011
|
Mar 2012
|
Jun 2012
|
|
Parent Company
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Guarantors
|
(86.8
|
)
|
(124.1
|
)
|
|
(50.7
|
)
|
(14.9
|
)
|
(8.4
|
)
|
(7.6
|
)
|
(21.4
|
)
|
(4.9
|
)
|
|
Non-Guarantors
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Eliminations
|
86.8
|
|
124.1
|
|
|
50.7
|
|
14.9
|
|
8.4
|
|
7.6
|
|
21.4
|
|
4.9
|
|
|
Earnings before income taxes
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Parent Company
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Guarantors
|
(86.8
|
)
|
(124.1
|
)
|
|
(50.7
|
)
|
(14.9
|
)
|
(8.4
|
)
|
(7.6
|
)
|
(21.4
|
)
|
(4.9
|
)
|
|
Non-Guarantors
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Eliminations
|
86.8
|
|
124.1
|
|
|
50.7
|
|
14.9
|
|
8.4
|
|
7.6
|
|
21.4
|
|
4.9
|
|
|
Net earnings
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statement of
Earnings (Condensed)
|
As Revised
|
|
|
Year Ended
|
|
Three Months Ended
|
|
(millions)
|
Sep 2010
|
Sep 2011
|
|
Dec 2010
|
Mar 2011
|
Jun 2011
|
Dec 2011
|
Mar 2012
|
Jun 2012
|
|
Parent Company
|
$
|
410.6
|
|
$
|
268.6
|
|
|
$
|
111.4
|
|
$
|
39.7
|
|
$
|
66.4
|
|
$
|
144.8
|
|
$
|
78.3
|
|
$
|
70.4
|
|
|
Guarantors
|
449.5
|
|
309.0
|
|
|
138.6
|
|
50.7
|
|
85.3
|
|
175.0
|
|
91.1
|
|
67.2
|
|
|
Non-Guarantors
|
369.2
|
|
247.7
|
|
|
86.8
|
|
41.6
|
|
49.3
|
|
125.5
|
|
83.6
|
|
88.6
|
|
|
Eliminations
|
(685.9
|
)
|
(419.3
|
)
|
|
(174.3
|
)
|
(71.0
|
)
|
(100.1
|
)
|
(236.9
|
)
|
(140.0
|
)
|
(137.4
|
)
|
|
Earnings before income taxes
|
543.4
|
|
406.0
|
|
|
162.5
|
|
61.0
|
|
100.9
|
|
208.4
|
|
113.0
|
|
88.8
|
|
|
Parent Company
|
403.0
|
|
261.2
|
|
|
110.4
|
|
39.1
|
|
65.9
|
|
143.8
|
|
77.9
|
|
70.2
|
|
|
Guarantors
|
397.2
|
|
244.4
|
|
|
107.4
|
|
37.7
|
|
63.1
|
|
139.3
|
|
78.1
|
|
65.9
|
|
|
Non-Guarantors
|
285.6
|
|
176.6
|
|
|
67.6
|
|
33.6
|
|
37.4
|
|
97.5
|
|
65.1
|
|
71.7
|
|
|
Eliminations
|
(682.8
|
)
|
(421.0
|
)
|
|
(175.0
|
)
|
(71.3
|
)
|
(100.5
|
)
|
(236.8
|
)
|
(143.2
|
)
|
(137.6
|
)
|
|
Net earnings
|
$
|
403.0
|
|
$
|
261.2
|
|
|
$
|
110.4
|
|
$
|
39.1
|
|
$
|
65.9
|
|
$
|
143.8
|
|
$
|
77.9
|
|
$
|
70.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Balance Sheet (Condensed)
|
As Previously Reported
|
|
(millions)
|
Sep 2011
|
Dec 2011
|
Mar 2012
|
Jun 2012
|
|
Parent Company
|
$
|
21.1
|
|
$
|
34.8
|
|
$
|
44.5
|
|
$
|
70.9
|
|
|
Guarantors
|
582.0
|
|
594.3
|
|
627.7
|
|
586.9
|
|
|
Non-Guarantors
|
1,708.2
|
|
1,716.3
|
|
1,786.3
|
|
1,893.0
|
|
|
Eliminations
|
(50.6
|
)
|
(51.5
|
)
|
(64.9
|
)
|
(86.2
|
)
|
|
Total current assets
|
2,260.7
|
|
2,293.9
|
|
2,393.6
|
|
2,464.6
|
|
|
|
|
|
|
|
|
Parent Company
|
6,209.4
|
|
6,343.4
|
|
6,467.9
|
|
6,524.6
|
|
|
Guarantors
|
7,085.4
|
|
7,158.4
|
|
7,289.2
|
|
7,429.5
|
|
|
Non-Guarantors
|
2,613.4
|
|
2,756.4
|
|
2,767.1
|
|
2,804.0
|
|
|
Eliminations
|
(9,376.7
|
)
|
(9,734.6
|
)
|
(9,892.5
|
)
|
(10,091.0
|
)
|
|
Total assets
|
6,531.5
|
|
6,523.6
|
|
6,631.7
|
|
6,667.1
|
|
|
|
|
|
|
|
|
Parent Company
|
141.1
|
|
562.8
|
|
582.4
|
|
265.3
|
|
|
Guarantors
|
399.1
|
|
318.0
|
|
367.3
|
|
418.9
|
|
|
Non-Guarantors
|
518.1
|
|
600.4
|
|
527.6
|
|
552.1
|
|
|
Eliminations
|
(30.9
|
)
|
(28.4
|
)
|
(33.1
|
)
|
(59.4
|
)
|
|
Total current liabilities
|
1,027.4
|
|
1,452.8
|
|
1,444.2
|
|
1,176.9
|
|
|
|
|
|
|
|
|
Parent Company
|
4,108.1
|
|
4,253.0
|
|
4,249.9
|
|
4,352.3
|
|
|
Guarantors
|
1,375.0
|
|
1,311.8
|
|
1,343.5
|
|
1,377.0
|
|
|
Non-Guarantors
|
695.6
|
|
769.4
|
|
701.8
|
|
717.6
|
|
|
Eliminations
|
(1,748.5
|
)
|
(1,901.0
|
)
|
(1,881.5
|
)
|
(1,952.1
|
)
|
|
Total liabilities
|
4,430.2
|
|
4,433.2
|
|
4,413.7
|
|
4,494.8
|
|
|
|
|
|
|
|
|
Parent Company
|
2,101.3
|
|
2,090.4
|
|
2,218.0
|
|
2,172.3
|
|
|
Guarantors
|
5,710.4
|
|
5,846.6
|
|
5,945.7
|
|
6,052.5
|
|
|
Non-Guarantors
|
1,917.8
|
|
1,987.0
|
|
2,065.3
|
|
2,086.4
|
|
|
Eliminations
|
(7,628.2
|
)
|
(7,833.6
|
)
|
(8,011.0
|
)
|
(8,138.9
|
)
|
|
Total Stockholders' equity
|
$
|
2,101.3
|
|
$
|
2,090.4
|
|
$
|
2,218.0
|
|
$
|
2,172.3
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Balance Sheet (Condensed)
|
Adjustments
|
|
(millions)
|
Sep 2011
|
Dec 2011
|
Mar 2012
|
Jun 2012
|
|
Parent Company
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Guarantors
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Non-Guarantors
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Eliminations
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Total current assets
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
Parent Company
|
2,347.6
|
|
2,324.4
|
|
2,344.3
|
|
2,395.9
|
|
|
Guarantors
|
2,353.5
|
|
2,335.3
|
|
2,355.2
|
|
2,406.8
|
|
|
Non-Guarantors
|
19.3
|
|
24.1
|
|
23.4
|
|
21.6
|
|
|
Eliminations
|
(4,720.4
|
)
|
(4,683.8
|
)
|
(4,722.9
|
)
|
(4,824.3
|
)
|
|
Total assets
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
Parent Company
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Guarantors
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Non-Guarantors
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Eliminations
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Total current liabilities
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
Parent Company
|
2,347.6
|
|
2,324.4
|
|
2,344.3
|
|
2,395.9
|
|
|
Guarantors
|
2,353.5
|
|
2,335.3
|
|
2,355.2
|
|
2,406.8
|
|
|
Non-Guarantors
|
19.3
|
|
24.1
|
|
23.4
|
|
21.6
|
|
|
Eliminations
|
(4,720.4
|
)
|
(4,683.8
|
)
|
(4,722.9
|
)
|
(4,824.3
|
)
|
|
Total liabilities
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
Parent Company
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Guarantors
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Non-Guarantors
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Eliminations
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Total Stockholders' equity
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Balance Sheet (Condensed)
|
As Revised
|
|
(millions)
|
Sep 2011
|
Dec 2011
|
Mar 2012
|
Jun 2012
|
|
Parent Company
|
$
|
21.1
|
|
$
|
34.8
|
|
$
|
44.5
|
|
$
|
70.9
|
|
|
Guarantors
|
582.0
|
|
594.3
|
|
627.7
|
|
586.9
|
|
|
Non-Guarantors
|
1,708.2
|
|
1,716.3
|
|
1,786.3
|
|
1,893.0
|
|
|
Eliminations
|
(50.6
|
)
|
(51.5
|
)
|
(64.9
|
)
|
(86.2
|
)
|
|
Total current assets
|
2,260.7
|
|
2,293.9
|
|
2,393.6
|
|
2,464.6
|
|
|
|
|
|
|
|
|
Parent Company
|
8,557.0
|
|
8,667.8
|
|
8,812.2
|
|
8,920.5
|
|
|
Guarantors
|
9,438.9
|
|
9,493.7
|
|
9,644.4
|
|
9,836.3
|
|
|
Non-Guarantors
|
2,632.7
|
|
2,780.5
|
|
2,790.5
|
|
2,825.6
|
|
|
Eliminations
|
(14,097.1
|
)
|
(14,418.4
|
)
|
(14,615.4
|
)
|
(14,915.3
|
)
|
|
Total assets
|
6,531.5
|
|
6,523.6
|
|
6,631.7
|
|
6,667.1
|
|
|
|
|
|
|
|
|
Parent Company
|
141.1
|
|
562.8
|
|
582.4
|
|
265.3
|
|
|
Guarantors
|
399.1
|
|
318.0
|
|
367.3
|
|
418.9
|
|
|
Non-Guarantors
|
518.1
|
|
600.4
|
|
527.6
|
|
552.1
|
|
|
Eliminations
|
(30.9
|
)
|
(28.4
|
)
|
(33.1
|
)
|
(59.4
|
)
|
|
Total current liabilities
|
1,027.4
|
|
1,452.8
|
|
1,444.2
|
|
1,176.9
|
|
|
|
|
|
|
|
|
Parent Company
|
6,455.7
|
|
6,577.4
|
|
6,594.2
|
|
6,748.2
|
|
|
Guarantors
|
3,728.5
|
|
3,647.1
|
|
3,698.7
|
|
3,783.8
|
|
|
Non-Guarantors
|
714.9
|
|
793.5
|
|
725.2
|
|
739.2
|
|
|
Eliminations
|
(6,468.9
|
)
|
(6,584.8
|
)
|
(6,604.4
|
)
|
(6,776.4
|
)
|
|
Total liabilities
|
4,430.2
|
|
4,433.2
|
|
4,413.7
|
|
4,494.8
|
|
|
|
|
|
|
|
|
Parent Company
|
2,101.3
|
|
2,090.4
|
|
2,218.0
|
|
2,172.3
|
|
|
Guarantors
|
5,710.4
|
|
5,846.6
|
|
5,945.7
|
|
6,052.5
|
|
|
Non-Guarantors
|
1,917.8
|
|
1,987.0
|
|
2,065.3
|
|
2,086.4
|
|
|
Eliminations
|
(7,628.2
|
)
|
(7,833.6
|
)
|
(8,011.0
|
)
|
(8,138.9
|
)
|
|
Total Stockholders' equity
|
$
|
2,101.3
|
|
$
|
2,090.4
|
|
$
|
2,218.0
|
|
$
|
2,172.3
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statement of
Cash Flows (Condensed)
|
As Previously Reported (YTD)
|
|
(millions)
|
Sep 2010
|
Dec 2010
|
Mar 2011
|
Jun 2011
|
Sep 2011
|
Dec 2011
|
Mar 2012
|
Jun 2012
|
|
Parent Company
|
$
|
211.2
|
|
$
|
(59.0
|
)
|
$
|
(11.1
|
)
|
$
|
(57.1
|
)
|
$
|
303.4
|
|
$
|
(17.8
|
)
|
$
|
5.7
|
|
$
|
(36.1
|
)
|
|
Guarantors
|
(17.5
|
)
|
33.8
|
|
(12.5
|
)
|
76.5
|
|
(73.4
|
)
|
64.2
|
|
117.8
|
|
178.1
|
|
|
Non-Guarantors
|
458.7
|
|
24.2
|
|
129.5
|
|
157.0
|
|
182.5
|
|
(18.6
|
)
|
103.2
|
|
204.8
|
|
|
Eliminations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Net cash from/(used by
operating activities
|
652.4
|
|
(1.0
|
)
|
105.9
|
|
176.4
|
|
412.5
|
|
27.8
|
|
226.7
|
|
346.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
—
|
|
(267.1
|
)
|
(267.1
|
)
|
(267.1
|
)
|
(267.1
|
)
|
—
|
|
—
|
|
—
|
|
|
Guarantors
|
(61.8
|
)
|
(14.0
|
)
|
(23.3
|
)
|
(39.5
|
)
|
(55.2
|
)
|
(13.7
|
)
|
(37.3
|
)
|
(55.0
|
)
|
|
Non-Guarantors
|
(51.5
|
)
|
(7.3
|
)
|
(16.1
|
)
|
(25.6
|
)
|
(41.2
|
)
|
11.1
|
|
1.4
|
|
(5.4
|
)
|
|
Eliminations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Net cash (used by) investing
activities
|
(113.3
|
)
|
(288.4
|
)
|
(306.5
|
)
|
(332.2
|
)
|
(363.5
|
)
|
(2.6
|
)
|
(35.9
|
)
|
(60.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
(82.6
|
)
|
166.6
|
|
66.7
|
|
126.7
|
|
(247.7
|
)
|
24.3
|
|
(0.7
|
)
|
36.1
|
|
|
Guarantors
|
78.2
|
|
(13.8
|
)
|
38.6
|
|
(34.4
|
)
|
130.4
|
|
(40.3
|
)
|
(78.1
|
)
|
(122.9
|
)
|
|
Non-Guarantors
|
(230.1
|
)
|
(44.1
|
)
|
(63.6
|
)
|
(71.4
|
)
|
(84.7
|
)
|
1.1
|
|
(20.9
|
)
|
(23.1
|
)
|
|
Eliminations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Net cash (used by)/from
financing activities
|
$
|
(234.5
|
)
|
$
|
108.7
|
|
$
|
41.7
|
|
$
|
20.9
|
|
$
|
(202.0
|
)
|
$
|
(14.9
|
)
|
$
|
(99.7
|
)
|
$
|
(109.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statement of
Cash Flows (Condensed)
|
Adjustments (YTD)
|
|
(millions)
|
Sep 2010
|
Dec 2010
|
Mar 2011
|
Jun 2011
|
Sep 2011
|
Dec 2011
|
Mar 2012
|
Jun 2012
|
|
Parent Company
|
$
|
(198.7
|
)
|
$
|
55.6
|
|
$
|
2.4
|
|
$
|
25.3
|
|
$
|
(297.9
|
)
|
$
|
21.6
|
|
$
|
0.2
|
|
$
|
18.8
|
|
|
Guarantors
|
406.7
|
|
17.9
|
|
86.0
|
|
71.5
|
|
371.7
|
|
(19.0
|
)
|
27.7
|
|
12.3
|
|
|
Non-Guarantors
|
(121.2
|
)
|
(22.8
|
)
|
(22.8
|
)
|
(22.8
|
)
|
50.3
|
|
5.0
|
|
1.1
|
|
2.8
|
|
|
Eliminations
|
(86.8
|
)
|
(50.7
|
)
|
(65.6
|
)
|
(74.0
|
)
|
(124.1
|
)
|
(7.6
|
)
|
(29.0
|
)
|
(33.9
|
)
|
|
Net cash from/(used by)
operating activities
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
101.0
|
|
62.6
|
|
(0.9
|
)
|
(59.4
|
)
|
(57.9
|
)
|
1.5
|
|
3.0
|
|
(67.1
|
)
|
|
Guarantors
|
(75.0
|
)
|
(129.4
|
)
|
(149.2
|
)
|
(195.1
|
)
|
(315.4
|
)
|
(140.0
|
)
|
(133.9
|
)
|
(228.1
|
)
|
|
Non-Guarantors
|
147.5
|
|
(149.2
|
)
|
(112.2
|
)
|
(42.2
|
)
|
(12.2
|
)
|
(110.0
|
)
|
(30.0
|
)
|
(30.0
|
)
|
|
Eliminations
|
(173.5
|
)
|
216.0
|
|
262.3
|
|
296.7
|
|
385.5
|
|
248.5
|
|
160.9
|
|
325.2
|
|
|
Net cash from/(used by)
investing activities
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
97.6
|
|
(118.2
|
)
|
(1.5
|
)
|
34.1
|
|
355.7
|
|
(23.1
|
)
|
(3.2
|
)
|
48.3
|
|
|
Guarantors
|
(331.8
|
)
|
111.5
|
|
63.2
|
|
123.6
|
|
(56.3
|
)
|
159.0
|
|
106.2
|
|
215.8
|
|
|
Non-Guarantors
|
(26.1
|
)
|
172.0
|
|
135.0
|
|
65.0
|
|
(38.0
|
)
|
105.0
|
|
28.9
|
|
27.2
|
|
|
Eliminations
|
260.3
|
|
(165.3
|
)
|
(196.7
|
)
|
(222.7
|
)
|
(261.4
|
)
|
(240.9
|
)
|
(131.9
|
)
|
(291.3
|
)
|
|
Net cash from/(used by)
financing activities
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
ENERGIZER HOLDINGS, INC.
(Dollars in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statement of
Cash Flows (Condensed)
|
As Revised (YTD)
|
|
(millions)
|
Sep 2010
|
Dec 2010
|
Mar 2011
|
Jun 2011
|
Sep 2011
|
Dec 2011
|
Mar 2012
|
Jun 2012
|
|
Parent Company
|
$
|
12.5
|
|
$
|
(3.4
|
)
|
$
|
(8.7
|
)
|
$
|
(31.8
|
)
|
$
|
5.5
|
|
$
|
3.8
|
|
$
|
5.9
|
|
$
|
(17.3
|
)
|
|
Guarantors
|
389.2
|
|
51.7
|
|
73.5
|
|
148.0
|
|
298.3
|
|
45.2
|
|
145.5
|
|
190.4
|
|
|
Non-Guarantors
|
337.5
|
|
1.4
|
|
106.7
|
|
134.2
|
|
232.8
|
|
(13.6
|
)
|
104.3
|
|
207.6
|
|
|
Eliminations
|
(86.8
|
)
|
(50.7
|
)
|
(65.6
|
)
|
(74.0
|
)
|
(124.1
|
)
|
(7.6
|
)
|
(29.0
|
)
|
(33.9
|
)
|
|
Net cash from/(used by)
operating activities
|
652.4
|
|
(1.0
|
)
|
105.9
|
|
176.4
|
|
412.5
|
|
27.8
|
|
226.7
|
|
346.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
101.0
|
|
(204.5
|
)
|
(268.0
|
)
|
(326.5
|
)
|
(325.0
|
)
|
1.5
|
|
3.0
|
|
(67.1
|
)
|
|
Guarantors
|
(136.8
|
)
|
(143.4
|
)
|
(172.5
|
)
|
(234.6
|
)
|
(370.6
|
)
|
(153.7
|
)
|
(171.2
|
)
|
(283.1
|
)
|
|
Non-Guarantors
|
96.0
|
|
(156.5
|
)
|
(128.3
|
)
|
(67.8
|
)
|
(53.4
|
)
|
(98.9
|
)
|
(28.6
|
)
|
(35.4
|
)
|
|
Eliminations
|
(173.5
|
)
|
216.0
|
|
262.3
|
|
296.7
|
|
385.5
|
|
248.5
|
|
160.9
|
|
325.2
|
|
|
Net cash from/(used by)
investing activities
|
(113.3
|
)
|
(288.4
|
)
|
(306.5
|
)
|
(332.2
|
)
|
(363.5
|
)
|
(2.6
|
)
|
(35.9
|
)
|
(60.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
15.0
|
|
48.4
|
|
65.2
|
|
160.8
|
|
108.0
|
|
1.2
|
|
(3.9
|
)
|
84.4
|
|
|
Guarantors
|
(253.6
|
)
|
97.7
|
|
101.8
|
|
89.2
|
|
74.1
|
|
118.7
|
|
28.1
|
|
92.9
|
|
|
Non-Guarantors
|
(256.2
|
)
|
127.9
|
|
71.4
|
|
(6.4
|
)
|
(122.7
|
)
|
106.1
|
|
8.0
|
|
4.1
|
|
|
Eliminations
|
260.3
|
|
(165.3
|
)
|
(196.7
|
)
|
(222.7
|
)
|
(261.4
|
)
|
(240.9
|
)
|
(131.9
|
)
|
(291.3
|
)
|
|
Net cash from/(used by)
financing activities
|
$
|
(234.5
|
)
|
$
|
108.7
|
|
$
|
41.7
|
|
$
|
20.9
|
|
$
|
(202.0
|
)
|
$
|
(14.9
|
)
|
$
|
(99.7
|
)
|
$
|
(109.9
|
)
|
(20)
Subsequent Events
2013 Restructuring Initiatives
On November 8, 2012, we announced that our Board of Directors approved a multi-year restructuring plan, which was developed in connection with an assessment of our cost structure and operating model undertaken to improve cost competitiveness and deliver enhanced financial returns.
The Company estimates one-time charges associated with the restructuring will include accelerated depreciation and asset impairment charges on certain property, plant and equipment at facilities targeted for closing or some form of streamlining. Based on our initial assessment, we estimate that we will incur an impairment charge in fiscal 2013 in the range of
$10
to
$15
,
pre-tax, which we expect to record in the first quarter of fiscal 2013. Additionally, we estimate accelerated depreciation will be in the range of
$50
to
$60
, and will be incurred over the next 12 to 18 months as production ceases and the facilities are closed or streamlined.
Changes to the U.S. Pension Plan
In November 2012, which is the first fiscal quarter of 2013, the Company approved and communicated changes to its U.S. pension plan, which is the most significant of the Company's pension obligations. Effective January 1, 2014, the pension benefit earned to date by active participants under the legacy Energizer U.S. pension plan will be frozen and future service benefits will no longer be accrued under this retirement program. It is expected that the Company will provide an enhanced defined contribution benefit in conjunction with this action, but this change is expected to result in an overall reduction in the costs of retirement service benefits for U.S. colleagues. We expect to recognize a curtailment gain in pre-tax earnings of between
$30
to
$40
in the first fiscal quarter of 2013 as a result of this plan change. This estimate may vary from the actual curtailment gain recorded due primarily to changes in market interest rates and other factors.
