FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 25, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number 33-23528
Duracell International Inc.
(Exact name of registrant as specified in its charter)
Delaware 06-1240267
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Berkshire Corporate Park, Bethel, CT 06801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 796-4000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements of the past 90 days. YES X NO ____
Number of Shares of Common Stock, Par Value $.01,
Outstanding as of January 21, 1994 116,560,131
<PAGE>
DURACELL INTERNATIONAL INC.
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION:
Condensed Consolidated Unaudited Financial Statements:
Statements of Consolidated Operations for the Three and Six
Fiscal Months Ended December 25, 1993 and December 26, 1992 1
Consolidated Balance Sheets - December 25, 1993 and June 30,
1993 2
Statements of Consolidated Cash Flows for the Three and Six
Fiscal Months Ended December 25, 1993 and December 26, 1992 3
Notes to Condensed Consolidated Financial Statements 4-7
Management's Discussion and Analysis of Results of Operations
and Financial Condition 8-12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE>
<TABLE>
Duracell International Inc.
Condensed Statements of Consolidated Operations
(Unaudited)
<CAPTION>
For the Three Fiscal For the Six Fiscal
Months Ended Months Ended
In millions, except per share amounts
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1993 1992 1993 1992
<S> <C> <C> <C> <C>
Net sales $ 660.6 $ 622.3 $1,098.1 $1,052.8
Operating expenses:
Cost of products sold 211.8 218.3 364.3 377.6
Selling, general and administrative
expenses 275.4 249.0 478.6 444.6
Total operating expenses 487.2 467.3 842.9 822.2
Operating income 173.4 155.0 255.2 230.6
Interest expense 8.3 12.5 16.3 26.5
Other expense 2.0 6.5 3.3 10.1
Income before accounting change and
income taxes 163.1 136.0 235.6 194.0
Provision for income taxes 64.0 40.6 92.1 58.8
Income before acctng change 99.1 95.4 143.5 135.2
Cumulative effect of accounting change, net
of income tax benefit of $4.7 - - - (75.4)
Net income $ 99.1 $ 95.4 $ 143.5 $ 59.8
Per share amounts:
Income before acctng change $ 0.83 $ 0.80 $ 1.21 $ 1.14
Cumulative effect of accounting
change - - - (0.64)
Net income $ 0.83 $ 0.80 $ 1.21 $ 0.50
Weighted average shares and share equivalents
outstanding 119.6 118.9 118.5 118.7
Cash dividends per share on
common stock $ 0.16 $ 0.08 $ 0.32 $ 0.16
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Duracell International Inc.
Condensed Consolidated Balance Sheets
<CAPTION>
In millions Dec. 25, 1993 June 30, 1993
<S> (unaudited)
ASSETS <C> <C>
Current assets:
Cash and cash equivalents $ 27.6 $ 25.9
Accounts receivable, less allowance of
$23.3 and $18.1 483.3 270.6
Inventories 168.4 194.9
Prepaid and other current assets 34.4 34.6
Total current assets 713.7 526.0
Property, plant and equipment, net of accumulated
depreciation of $187.5 and $170.1 292.2 294.2
Intangibles, net of accumulated amortization of
$252.0 and $233.0 1,137.3 1,165.2
Other assets 13.7 12.2
Total assets $ 2,156.9 $ 1,997.6
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 82.0 $ 90.1
Short-term borrowings and current portion of
long-term debt 58.2 30.7
Accrued liabilities 278.1 202.7
Total current liabilities 418.3 323.5
Long-term debt 394.0 473.8
Postretirement benefits other than pensions 94.7 91.2
Deferred income taxes 69.7 62.2
Other non-current liabilities 63.8 65.1
Total liabilities 1,040.5 1,015.8
Commitments and contingencies
Equity:
Common stock and capital surplus 1,052.9 1,016.2
Retained earnings (accumulated deficit) 93.5 (12.9)
Accumulated translation adjustment (30.0) (21.5)
Total equity 1,116.4 981.8
Total liabilities and equity $ 2,156.9 $ 1,997.6
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Duracell International Inc.
Condensed Statements of Consolidated Cash Flows
(Unaudited)
<CAPTION>
For the Six Fiscal Months Ended
In millions Dec. 25, 1993 Dec. 26, 1992
<S> <C> <C>
Operating activities:
Income before accounting change $143.5 $135.2
Adjustments to reconcile income before
accounting change to cash provided by
operating activities:
Depreciation 19.4 20.0
Amortization 21.4 24.2
Provision for deferred taxes 37.1 22.6
Other noncash items 4.7 11.7
(Increase) decrease in:
Accounts receivable (219.5) (200.4)
Inventories 22.3 61.5
Other working capital 81.7 65.3
Cash provided by operating activities 110.6 140.1
Investing activities:
Purchase of property, plant and equipment (22.8) (20.5)
Proceeds from sales of assets and other (2.2) 4.1
Cash used by investing activities (25.0) (16.4)
Financing activities:
Issuance of common stock 7.5 8.8
Repayment of revolving credit
borrowings, net (93.4) (70.7)
Dividends paid (37.1) (18.1)
Issuance (repayment) of commercial
paper, net 15.8 (42.4)
Net change in other borrowings & other 22.8 7.3
Cash used by financing activities (84.4) (115.1)
Effect of exchange rate changes on cash 0.5 3.8
Increase in cash and cash equivalents 1.7 12.4
Cash and cash equivalents,
beginning of period
Cash and cash equivalents, end of period $ 27.6 $ 20.3
Cash paid during the period for:
Interest $ 15.8 $ 25.1
Taxes $ 27.9 $ 16.6
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
DURACELL INTERNATIONAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in millions except per share amounts)
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The condensed financial statements of Duracell International
Inc. (the "Company") are unaudited, but in the opinion of
management contain all adjustments which are of a normal and
recurring nature necessary to represent fairly the financial
position and the results of operations and cash flows for the
periods presented.
The results of operations for these periods are not necessarily
indicative of the results to be expected for the full year.
Worldwide battery sales are significantly greater in the second
half of the calendar year than the first half due to consumers'
traditionally strong purchases during the holiday season.
The Company's fiscal year ends June 30.
Inventories
Inventories are valued at the lower cost of market using the
first-in, first-out method.
Advertising
Accruals for advertising costs are recorded in interim periods
based upon forecasted expenditures for the current fiscal year
and charged to expense proportionally to the ratio of
year-to-date sales to the most recent forecast of annual sales.
Earnings Per Share
Earnings per share is calculated by dividing net income by the
weighted average number of common shares and common stock
equivalents outstanding during the period.
2. Inventories
The cost of inventories by stage of manufacture was:
<TABLE>
<CAPTION> December 25, June 30,
1993 1993
<S> <C> <C>
Finished goods $104.7 $132.4
Work in process 44.8 43.2
Raw materials and supplies 18.9 19.3
Total $168.4 $194.9
</TABLE>
<PAGE>
3. Income Taxes
The Company adopted Financial Accounting Standards ("FAS") No.
109, "Accounting for Income Taxes", effective July 1, 1993.
Adoption of FAS No. 109 did not have a material effect on the
results of operations.
Deferred income taxes reflect the impact of temporary
differences between the amount of assets and liabilities
recognized for financial reporting purposes and such amounts
recognized for tax purposes. These deferred taxes are measured
by applying current tax laws. The tax liability as of July 1,
1993 after giving effect to the adoption of FAS No. 109 follows:
Deferred tax liabilities:
Intangibles $285.2
Property, plant and equipment 41.1
Other 34.0
Subtotal 360.3
Deferred tax assets:
Operating loss carryforwards 292.4
Postretirement benefit obligation 34.1
Other 36.4
Subtotal 362.9
Valuation allowance (46.9)
Net deferred tax liability $44.3
Upon adoption of FAS No. 109, $22.4 of previously unrecorded tax
benefits arising from stock option exercises were recognized in
capital surplus.
The Company's effective income tax rate was 39.1% for the first
six months of fiscal 1994, compared with 30.3% in the comparable
1993 period. The adoption of FAS No. 109 had no material effect
on the effective tax rate for the first six months.
The provision for income taxes for the six months ended December
25, 1993 and December 26, 1992 was $92.1 and $58.8,
respectively. Information to identify the components of the
income tax expense is not available.
<PAGE>
At June 30, 1993, the Company had U.S. federal net operating
loss carryforwards of approximately $550 for tax purposes which
do not begin to expire until 2004 and foreign net operating loss
carryforwards of $50 for tax purposes which expire beginning in
1994.
See Note 6 for a discussion of the U.S. Internal Revenue
Service's audit of the Company's 1988, 1989 and 1990 U.S. tax
returns.
No provision was made in fiscal 1993 for U.S. income taxes on
the undistributed earnings of the foreign subsidiaries as it is
the Company's intention to utilize those earnings in the foreign
operations for an indefinite period of time or repatriate such
earnings only when tax effective to do so. At June 30, 1993,
undistributed earnings of the Company's foreign subsidiaries
amounted to $160. It is not practicable to determine the amount
of income or withholding tax that would be payable upon the
remittance of those earnings.
4. Debt
Effective December 22,1993 the Company amended two of its
principal credit facilities which provided for a pricing
reduction, elimination of $175.0 of credit availability and a
one year maturity extension to 1997.
5. Equity
The Company paid quarterly cash dividends of $0.16 and $0.08 per
share of common stock during the first six months of fiscal 1994
and 1993, respectively. Total dividends paid during these
periods were $37.1 and $18.1, respectively.
Common stock and capital surplus increased $36.7 reflecting
proceeds of $7.5 from stock option exercises and $29.2 of tax
benefits arising from stock option transactions, including $22.4
of previously unrecorded tax benefits recognized at the
beginning of the year as a result of the adoption of FAS No. 109
as discussed in Note 3.
6. Commitments and Contingencies
During the second quarter of fiscal 1994, the Company received
from the U.S. Internal Revenue Service proposed adjustments as a
result of their examination of the Company's U.S. tax returns
for 1988, 1989 and 1990. The proposed adjustments relate to
deductions taken by the Company with respect to the assets of
the battery business acquired from Kraft, Inc. on June 24, 1988.
The proposed audit adjustments, if ultimately upheld, would
result in elimination of the Company's U.S. federal tax net
operating loss carryforward. The Company believes that these
deductions were properly claimed and is taking appropriate steps
to defend its position. As these proposed adjustments relate to
assets acquired in the June 1988 acquisition, the tax impact of
any adjustments ultimately upheld would decrease the Company's
cash, increase it's goodwill, and not have any significant
impact on the Company's future earnings.<PAGE>
Duracell's Lexington, North Carolina manufacturing site
continues to be under review by the U.S. Environmental
Protection Agency ("EPA") for mercury contamination, a process
which could culminate in it being designated a federal Superfund
site. Comprehensive remediation actions have taken place at the
Lexington site over the past ten years. Management believes
these actions, combined with its planned future remediation
efforts, should adequately address any concern on the part the
EPA. As of December 25, 1993, the Company estimates that future
costs will not exceed $10 million, which the Company has
reserved.
<PAGE>
Management's Discussion and Analysis of Results of Operations
and Financial Condition.
Results of Operations
Summarized below are the results of operations for the three and
six months ended December 25, 1993 and December 26, 1992,
respectively (in millions, except per share amounts):
<TABLE>
<CAPTION>
Three Fiscal Months Ended Six Fiscal Months Ended
% Change % Change
<S>
Dec. 25, Dec. 26, Reported Perf.* Dec. 25, Dec. 26, Reported Perf.*
1993 1992 1993 1992
<C> <C> <C> <C> <C> <C> <C> <C>
Alkaline unit volume:
N. America 434.0 386.9 12 12 719.6 646.0 11 11
Europe 251.9 240.4 5 5 393.1 378.1 4 4
Other Int'l
Markets 170.9 151.9 13 13 303.6 274.4 11 11
856.8 779.2 10 10 1,416.3 1,298.5 9 9
Sales:
N. America$361.1 $ 324.4 11 12 $610.0 $555.9 10 10
Europe 214.4 225.9 (5) 7 338.4 368.0 (8) 7
Other Int'l
Markets 85.1 72.0 18 18 149.7 128.9 16 16
660.6 622.3 6 11 1,098.1 1,052.8 4 10
Operating income:
N.America 125.9 102.9 22 23 194.2 166.6 17 17
Europe 53.6 59.2 (9) 2 78.1 83.2 (6) 8
Other Int'l
Markets 14.8 12.0 23 24 23.0 18.5 24 28
194.3 174.1 12 17 295.3 268.3 10 15
Corporate/
R & D (20.9) (19.1) (9) (9) (40.1) (37.7) (6) (6)
173.4 155.0 12 17 255.2 230.6 11 17
Int. exp. 8.3 12.5 34 31 16.3 26.5 38 35
Other exp. 2.0 6.5 69 64 3.3 10.1 67 55
Income before accounting change and income
taxes 163.1 136.0 20 25 235.6 194.0 21 27
Tax exp. 64.0 40.6 (58) (70) 92.1 58.8 (57) (68)
Effective tax
rate 39.2% 29.9% (9.3pp)(9.3pp) 39.1% 30.3% (8.8pp) (8.8pp)
Income before accounting
change 99.1 95.4 4 7 143.5 135.2 6 10
Income per share before accounting
change $0.83 $0.80 4 6 $1.21 $1.14 6 10
<FN>
* Performance - adjusted for foreign exchange (i.e., foreign
currency translation, defined as the impact of translating the
income statement from local currency to U.S. dollars).
</TABLE>
<PAGE>
Overview
Second quarter pre-tax income improved 20% to $163.1 million
driven by the double digit alkaline unit volume, sales and
operating income growth in North America and Other International
Markets. Consolidated sales increased 6% (up 11% before the
impact of unfavorable currency translation) due to alkaline
volume growth and higher prices across most markets. The
operating income increase of 12% (up 17% before the impact of
unfavorable currency translation) was largely due to the higher
sales and improved margins. The growth in operating income
combined with interest savings and lower foreign exchange losses
more than offset higher taxes and resulted in an increase in net
income of 4% to $99.1 million for the quarter.
For the six months ended December 25, 1993, income before accounting change
increased 6% to $143.5 million as an 11% increase in operating
income (up 17% before currency translation) and a 38% reduction
in interest costs were partially offset by higher taxes,
resulting from the full utilization of U.S. net operating loss
carryforwards in fiscal 1993.
Second Quarter Ended December 25, 1993
North America
Alkaline unit volume grew as a result of market growth, share
gains and expanded distribution in the wholesale club trade
class. The sales increase reflects the volume growth and the
benefits from a 3% U.S. price increase in March 1993. Operating
income rose 22% driven by the sales gain offset in part by
increased investment in advertising and promotion to support the
DURACELL brand.
Europe
Alkaline unit volume growth was driven by successful Christmas
promotions in France and Spain and expanded distribution in
Eastern Europe partially offset by sluggishness related to
recessionary economies throughout much of Europe and strong
price competition in several key markets. After excluding
unfavorable currency translation of $26 million, sales increased
7% due to higher prices and volume growth. Operating income
increased 2% (after excluding $7 million of unfavorable currency
translation) as sales growth, lower manufacturing costs and
restructuring related savings were offset by increased
advertising and promotion.
Other International Markets
Alkaline unit volume growth was driven by continued alkaline
penetration and distribution gains throughout much of Latin
America, the Middle East and Africa, partially offset by volume
declines in Mexico and Brazil due to soft economies and
competitive pressures. Signs of improvement are beginning to
appear in Mexico as well as in Australia, markets which have
been in recession for more than a year. Sales increased
reflecting the volume growth and higher prices. Operating
income, which continues to increase at a greater pace than
sales, was driven by improved gross margins partially offset by
increased marketing, distribution, advertising and promotion
spending to support alkaline volume growth.
<PAGE>
Six Months Ended December 25, 1993
North America
Alkaline unit volume grew as a result of market growth, share
gains and expanded distribution in the wholesale club trade
class offset in part by the absence of shipments related to
Hurricane Andrew in August 1992. Higher sales reflects the
volume growth and the benefits from the March 1993 U.S. price
increase partially offset by $3 million of unfavorable foreign
currency translation in Canada. Operating income rose 17%
driven by the sales gain offset in part by increased investment
in advertising and promotion.
Europe
As a result of recessionary economies throughout much of Europe
and strong price competition in several key markets, alkaline
unit volume growth was limited to 4%. Sales increased 7% after
excluding unfavorable currency translation of $52 million, due
to higher prices and volume growth. After excluding unfavorable
currency translation of $11 million, operating income increased
8% on sales growth, lower manufacturing costs and restructuring
related savings partially offset by increased advertising and
promotion.
Other International Markets
Alkaline unit volume increased reflecting alkaline penetration
and distribution gains in Latin American, Middle Eastern and
African markets offset in part by declines in Mexico,
Brazil and Australia reflecting soft economies and competitive
pressures. The sales increase was driven by volume growth and higher
prices. Operating income, which increased at a pace greater
than sales, continued to grow through improved gross margins
partially offset by higher advertising, promotion and other
volume-related costs to support alkaline volume growth.
Corporate/Research & Development
Operating expenses increased 9% and 6% during the three and six
months ended December 25, 1993, respectively, reflecting higher
spending on research and development related to the Company's
new line of high power batteries.
Interest Expense
The decrease in interest expense reflects debt reduction,
achieved through the use of cash generated from operations, and
lower worldwide interest rates.
Other Expense
Other expense decreased as a result of lower foreign exchange
losses reflecting the success of foreign exchange hedging
activities and the absence of turmoil between the European
currencies which existed during fiscal 1993.
<PAGE>
Income Tax Expense
The provision for income taxes increased as a result of higher
pre-tax income and higher effective tax rates. The increase in
the Company's effective tax rate for the period reflects the
impact of the full utilization of domestic net operating loss
carryforwards during fiscal 1993.
The Omnibus Budget Reconciliation Act of 1993 (the "Act") became
effective August 10, 1993. The Company has analyzed the effects
of the tax changes included in the Act on its operations and has
concluded that the impact is insignificant.
The Company adopted FAS No. 109 "Accounting for Income Taxes"
during the first quarter of fiscal 1994. Implementation of this
standard did not have a material impact on results of operations
or financial condition.
Financial Condition
<TABLE>
<CAPTION>
December 25, 1993 December 26, 1992
<S> <C> <C>
Cash flow from operations (1) $154.3 $ 181.8
Capital Expenditures 22.8 20.5
Interest paid 15.8 25.1
Taxes paid 27.9 16.6
Other sources (uses) of cash (2.2) 4.1
Free cash flow (2) 85.6 123.7
Dividends paid 37.1 18.1
Total debt-to-capital ratio 29% 37%
_______________
<FN>
(1) Excludes changes in accrued interest and taxes.
(2) Defined as cash flow after operating and investing
activities.
</TABLE>
Free cash flow decreased $38.1 million to $85.6 million for the
six months ended December 25, 1993 as a result of increased
receivables from sales growth, the absence of an inventory
reduction which occurred in fiscal 1993 and higher tax payments
partially offset by lower interest costs.
The Company will rely on cash generated from operations to fund
its future working capital and capital expenditure requirements
needed to support continued sales growth, geographic expansion
and investment in new high power rechargeable batteries. Funds
available from unused bank credit facilities will be used
primarily to fund seasonal working capital during the year when
receivables and inventories rise to meet operating requirements.
<PAGE>
Capital expenditures are expected to increase significantly in
fiscal 1994 and over the next several years, when compared to
prior years, for capacity expansion, efficiencies in the
manufacturing process, and investments to develop new high power
rechargeable batteries.
Interest payments decreased $9.3 million or 37% for the six
months ended December 25, 1993 when measured against the
comparable prior year period. This decline was achieved through
a reduction in the Company's debt levels and lower worldwide
interest rates.
Cash taxes have remained low as taxable income was shielded by
deductions for amortization and depreciation taken earlier for
tax purposed than recognized for book purposes, principally in
the United States. As of the end of fiscal 1993, the U.S. tax
net operating loss carryforward was $550 million. See Footnote
6 in the Notes to Condensed Consolidated Unaudited Financial
Statements for discussion regarding the U.S. Internal Revenue
Service's audit of the Company's 1988, 1989 and 1990 U.S. tax
returns.
At December 25, 1993, the Company's total debt-to-capital ratio
was 29%, a decline from 34% at June 30, 1993 and 37% at December
26, 1992. This achievement is consistent with the Company's
objective of maintaining an investment grade credit rating. As
a result of significant free cash flow, the Company has been
able to maintain a level of debt which provides for low cost
financing.
As of December 25, 1993, the Company has $795 million in
contractually committed lines of credit from its principal
long-term bank credit facilities under which $322 million was
outstanding. Commitments under the facilities can be used to
support commercial paper, of which $81 million was outstanding
at December 25, 1993. The Company's commercial paper program is
rated investment grade by both Standard & Poor's Corporation and
Moody's Investors Services Inc. Unused borrowing capacity under
its principal bank credit facilities at December 25, 1993 was
$473 million.
<PAGE>
PART II
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(i) Statement re: computation of earnings per share
(ii) Fifth Amendment, dated as of December 22, 1993, to the
Second Amended and Restated Credit Agreement, dated as of March
29, 1991, among Duracell International Inc. and certain of its
affiliates and the Banks listed therein, including The First
National Bank of Chicago, as agent.
(iii) Eighth Amendment, dated as of December 22, 1993, to the
Amended and Restated Multi-Option Financing Facility Agreement,
dated as of November 16, 1990 among Duracell International Inc.
and certain of its affiliates, the Financial Institutions listed
therein, including Bank of America International Limited as
facility agent and The First National Bank of Chicago as
documentation agent.
(b) Reports on Form 8-K
On October 20, 1993, the Company filed a Report on Form 8-K.
This filing included the Company's press release and unaudited operating
results for the three fiscal months ended September 25, 1993.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
DURACELL INTERNATIONAL INC.
February 4, 1993 By:Robert A. Burgholzer, Jr.
Robert A. Burgholzer, Jr.
Vice President and Controller
(Principal Accounting Officer)
<PAGE>
<TABLE>
DURACELL INTERNATIONAL INC.
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
For the Three and Six Fiscal Months Ended
December 25, 1993 and December 26, 1992
<CAPTION> Three Fiscal Months Ended Six Fiscal Months Ended
In millions, except per share amounts
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1993 1992 1993 1992
<S> <C> <C> <C> <C>
Primary Computations:
Weighted average number of shares
outstanding 116.2 113.4 115.7 113.0
Effect of outstanding
stock options 3.4 5.5 2.8 5.7
Weighted average number of shares and share
equivalents outstanding 119.6 118.9 118.5 118.7
Per share amounts:
Income before accounting
change $0.83 $0.80 $1.21 $1.14
Accounting change - - - (0.64)
Net income (a) (b) $0.83 $0.80 $1.21 $0.50
Fully Diluted Computations:
Weighted average number of
shares outstanding 116.2 113.4 115.7 113.0
Effect of outstanding stock
options 3.4 5.5 3.1 5.8
Weighted average number of shares and share
equivalents outstanding 119.6 118.9 118.8 118.8
Per share amounts:
Income before accounting
change $0.83 $0.80 $1.21 $1.14
Accounting change - - - (0.64)
Net income (a) (b) $0.83 $0.80 $1.21 $0.50
_________________________________
<FN>
(a) These calculations are submitted in accordance with Regulation
S-K item (b) (11)
(b) Calculated by dividing the following by the weighted
average number of shares and share equivalents:
Income before accounting
change $99.1 $95.4 $143.5 $135.2
Accounting change - - - (75.4)
Net income $99.1 $95.4 $143.5 $ 59.8
</TABLE>
<PAGE>
Exhibit ii
FIFTH AMENDMENT, dated as of December 22, 1993 (this "Fifth
Amendment"), to the SECOND AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of March 29, 1991 (as the same may be further amended, supplemented
or otherwise modified from time to time, the "Agreement") among DURACELL
INTERNATIONAL INC., and DURACELL INC., as borrowers (the "Borrowers"), THE
FIRST NATIONAL BANK OF CHICAGO, as agent (in such capacity, the "Agent"),
and the other financial institutions parties thereto (the "Banks").
W I T N E S S E T H :
WHEREAS, the parties hereto wish to amend certain provisions of the
Agreement on the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, terms defined
in the Agreement shall be used herein as so defined.
2. Amendment to Section 2.07(a). Section 2.07(a) of the
Agreement is hereby amended to read as follows:
(a) Rate of Interest. Domestic Revolving Credit Loans shall bear
interest on the unpaid principal amount thereof from the date made
until paid in full at a rate determined by reference to the Base
Rate, the Fixed CD Rate or the Eurodollar Rate. Competitive Bid
Loans shall bear interest on the unpaid principal amount thereof
from the date made until paid in full at the rate specified in
the applicable Competitive Bid Borrowing Notice. The applicable
basis for determining the rate of interest on any such Advance
shall be selected by the Borrower thereof at the time a Notice
of Borrowing or Competitive Bid Borrowing Notice is given by such
Borrower pursuant to Section 2.03(d) or Section 2.03A(f), or,
for any Loan, at the time a Notice of Conversion/ Continuation
is given by the Borrower of such Loan pursuant to Section 2.07(c).
If on any day a Loan is outstanding with respect to which notice
has not been delivered to the Agent in accordance with the terms
of this Agreement specifying the basis for determining the rate
of interest, then for that day that Loan shall be a Base Rate Loan
and shall bear interest at a rate determined by reference to the
Base Rate.
Domestic Revolving Credit Loans shall bear interest, subject
to Section 2.07(d), as follows:
(A) If a Base Rate Loan, then at a rate equal to the
Base Rate in effect from time to time;
(B) If a Fixed CD Rate Loan, then at a rate equal to
the sum of the Fixed CD Rate for the applicable Interest Period
plus five-eighths of one percent (0.625%) per annum; or
(C) If a Eurodollar Rate Loan, then at a rate equal to
the sum of the Eurodollar Rate for the applicable Interest Period
plus three-eighths of one percent (0.375%) per annum.
3. Amendment to Section 2.08(e). Section 2.08(e) of the
Agreement is hereby amended to read as follows:
(e) Commitment Fees. Holdings and the Company shall pay to
the Agent for the account of the Banks:
(i) a commitment fee (the "Domestic Revolving Credit
Commitment Fee") accruing at the rate of one-eighth of one
percent (0.125%) per annum upon the average daily amount by
which, from time to time, (A) the Domestic Revolving Credit
Commitments exceed (B) the sum of (1) the aggregate principal
amount of all outstanding Domestic Revolving Credit Loans
(it being understood that such principal amount excludes
the principal amount of all outstanding Domestic Competitive
Bid Loans) and (2) the aggregate Facility Letter of Credit
Obligations of all Borrowers;
(ii) [Intentionally Omitted].
The Commitment Fees shall be calculated on the basis of a
year of 365 (or 366, as applicable) days and actual days
elapsed and shall be payable quarterly, in arrears, on the
last day of each September, December, March and June. In
addition, the Domestic Revolving Credit Fee shall be payable on
the Domestic Revolving Credit Termination Date.
4. Amendment to Section 2.09(g). Section 2.09(g)(i) of the
Agreement is hereby amended to read as follows:
(g) Mandatory Reductions. (i) The Domestic Revolving Credit
Commitments shall be reduced to zero on December 30, 1997.
5. Reduction of Commitments. As of the date of the
effectiveness of this Fifth Amendment, the Domestic Revolving Credit
Commitments shall be reduced to $500,000,000.
6. Effective Date. This Fifth Amendment will become
effective as of the date hereof upon its execution by the Borrowers
and all the Banks.
7. Representation. Each Borrower represents and warrants
to each Bank that as of the effective date of this Fifth Amendment
(a) this Fifth Amendment constitutes the be legal, valid and binding
obligation of such Borrower, enforceable against it in accordance with
its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
limiting creditors' rights generally or by equitable principles generally
and (b) since the date of the most recent Form 10-K or 10-Q filed by
Holdings, there has occurred no event which has a Material Adverse Effect.
8. Reaffirmation. Holdings, the Company and the Subsidiary
Guarantor reaffirm their obligations under the Holdings Guaranty, the
Company Guaranty and the Subsidiary Guaranty, respectively, which Holdings
Guaranty, Company Guaranty and Subsidiary Guaranty remain in full force
and effect.
9. Continuing Effect. Except as expressly amended hereby,
the Agreement shall continue to be and shall remain in full force and
effect in accordance with its terms.
10. Governing Law. This Fifth Amendment shall be governed by,
and construed and interpreted in accordance with, the laws of the State of
New York.
11. Counterparts. This Fifth Amendment may be executed by the
parties hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the
same instrument.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Fifth
Amendment to be duly executed and delivered by their properly and duly
authorized officers as of the day and year first above written.
DURACELL INTERNATIONAL INC.
By:
Title:
DURACELL INC.
By:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Agent and as
a Bank
By:
Title:
BANKERS TRUST COMPANY
By:
Title:
CHEMICAL BANK
By:
Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
Title:
THE BANK OF NOVA SCOTIA
By:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE
By:
Title:
THE CHASE MANHATTAN BANK,
NATIONAL ASSOCIATION
By:
Title:
CONTINENTAL BANK N.A.
By:
Title:
THE TOKAI BANK LIMITED
By:
Title:
THE TORONTO-DOMINION BANK
By:
Title:
UNION TRUST COMPANY
By:
Title:
THE BANK OF NEW YORK
By:
Title:
INDUSTRIAL BANK OF JAPAN
By:
Title:
UNITED STATES NATIONAL BANK
OF OREGON
By:
Title:
THE MITSUI TRUST AND BANKING
COMPANY, LIMITED
By:
Title:
BANCA DI ROMA
By:
Title:
BBL, BANK BRUSSELS LAMBERT,
NEW YORK BRANCH
By:
Title:
CITIBANK, N.A.
By:
Title:
THE FIRST NATIONAL BANK OF
BOSTON
By:
Title:
KLEINWORT BENSON LIMITED
By:
Title:
NATIONAL WESTMINSTER BANK PLC
By:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By:
Title:
BANCA COMMERCIALE ITALIANA,
NEW YORK BRANCH
By:
Title:
KREDIETBANK NV,
GRAND CAYMAN BRANCH
By:
Title:
THE FUJI BANK, LIMITED
By:
Title:
BANQUE NATIONALE DE PARIS
By:
Title:
YASUDA TRUST AND BANKING CO., LTD.
By:
Title:
MORGAN GUARANTY TRUST COMPANY
OF
NEW YORK
By:
Title:
CREDIT SUISSE
By:
Title:
Acknowledged and Agreed to:
DURANAME CORP.
By:
Exhibit iii
EIGHTH AMENDMENT, dated as of December 22, 1993 (this "Eighth
Amendment"), to the AMENDED AND RESTATED MULTI-OPTION FINANCING
FACILITY AGREEMENT, dated as of November 16, 1990, as heretofore amended (as
the same may be further amended, supplemented or otherwise modified from
time to time, the "Agreement"), among DURACELL INTERNATIONAL INC.,
DURACELL BATTERIES LIMITED, N.V. DURACELL BATTERIES S.A., S.A.
DURACELL BENELUX N.V. and DURACELL S.P.A, formerly known as Diesse S.P.A.,
as borrowers (the "Borrowers"), BANK OF AMERICA INTERNATIONAL LIMITED,
as Facility Agent (in such capacity, the "Facility Agent"), THE FIRST
NATIONAL BANK OF CHICAGO, as Documentation Agent (in such capacity,the
"Documentation Agent"), and the other financial institutions parties
thereto (the "Banks").
W I T N E S S E T H :
WHEREAS, the parties hereto wish to amend certain provisions of the
Agreement on the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, terms defined
in the Agreement shall be used herein as so defined.
2. Amendment to Section 1.05. Section 1.05 of the Agreement
is hereby amended by deleting the defined term "Scheduled Termination
Date" and substituting therefor the following:
"Scheduled Termination Date" shall mean December 30, 1997.
3. Amendment to Section 2.05(a). Section 2.05(a) of the
Agreement is hereby amended to read as follows:
(a) Rate of Interest. (i) Except as otherwise provided in
Section 2.05(a)(iii), the Committed Loans shall bear interest
as provided in this Section 2.05(a)(i). Revolving Loans other
than Domestic Sterling Revolving Loans shall bear interest on
the unpaid principal amount at a rate equal to the sum of the
LIBOR Rate for the applicable Interest Period plus one-quarter
of one percent (0.250%) per annum. Domestic Sterling Revolving
Loans shall bear interest on the unpaid principal amount
thereof at a rate equal to the sum of the Domestic Sterling
Rate for the applicable Interest Period plus one-quarter of
one percent (0.250%) per annum. Competitive Bid Advances
shall bear interest on the unpaid principal amount thereof
from the date made until paid in full at the rate specified
in the applicable Competitive Bid<PAGE>
Borrowing Notice. Same Day
Swingline Loans shall bear interest on the unpaid principal
amount thereof at a rate equal to the greater of (x) the
Federal Funds Rate and (y) one-eighth of one percent (0.125%)
below the Reference Rate. LIBOR Swingline Loans shall bear
interest on the unpaid principal amount thereof at a rate
equal to the sum of the LIBOR Rate for the applicable seven-day
Interest Period plus one-quarter of one percent (0.250%) per annum.
(ii) [Intentionally Omitted.]
(iii) [Intentionally Omitted.]
4. Amendment of Section 2.06(b). Section 2.06(b) of the
Agreement is hereby amended to read as follows:
(b) Facility Fee. The Borrowers (other than Diesse) shall pay
to the Facility Agent, for the account of the Banks, a facility
fee (the "Facility Fee") accruing at the rate of one-eighth of
one percent (0.125%) per annum of the average daily total of
the Commitments. The Facility Fee shall be calculated on the
basis of a year of 365 (or 366, as applicable) days and actual
days elapsed and shall be payable in Dollars quarterly in
arrears, on the last day of each September, December, March
and June and on the Termination Date. The Facility Agent
shall promptly remit the Facility Fee, when paid, to the
Banks in accordance with their Pro Rata Shares thereof.
5. Amendment of Section 2.06(c). Section 2.06(c) of the
Agreement is hereby amended to read as follows:
(c) Fees for Syndicated Letters of Credit. The Borrowers
each agree to pay to the Facility Agent for the account of the
Banks a fee (the "Letter of Credit Fee") with respect to each
Syndicated Letter of Credit issued for its account, for the period
from the date of issuance of such Syndicated Letter of Credit to
the earlier to occur of the expiry date or termination date of
such Syndicated Letter of Credit, computed at a rate for each day
equal to one-eighth of one percent (0.125%) per annum of the
amount available to be drawn thereunder on such day. Accrued
Letter of Credit fees shall be computed on the basis of a year
of 365 (or 366, as applicable) days and actual days elapsed
and shall be due and payable (in the currency in which the related
Letter of Credit is denominated) in arrears on the last Business
Day of each September, December, March, and June and on the date
the respective Syndicated Letter of Credit terminates. The
Facility Agent shall promptly remit the Letter of Credit Fee,
when paid, to the Banks in accordance with their Pro Rata Shares
thereof.
6. Amendment to Section 2.07. Section 2.07(f) of the Agreement
is hereby amended to read as follows:
(f) Mandatory Reductions of Commitments. (i) The Commitments
shall be reduced to zero on December 30, 1997.
(ii) The Commitments shall be reduced by the amount of each
prepayment applied to the Loans under Section 2.07(b). If any
prepayment under Section 2.07(b) would have been required had Loans
or Letter of Credit Obligations in the amount of such prepayment been
outstanding, the Commitments shall be reduced by the amount of the
prepayment which would thus have been required.
7. Amendment to Section 2.10. The second sentence of Section
2.10 is hereby amended to read as follows:
If with respect to any Interest Period, all of the Reference Banks shall
have failed to provide quotations for the LIBOR Rate, or if the
Facility Agent is advised by the Reference Banks that deposits in
the applicable currency (in the applicable amounts) are not being
offered by such Reference Bank in the relevant market for such Interest
Period or that adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the
definition of LIBOR Rate, then the Facility Agent shall forthwith
give notice thereof to the Borrowers, whereupon until the Facility
Agent notifies the Borrowers that the circumstances giving rise to such
suspension no longer exist, (a) the right of the Borrowers to have
Committed Loans or Competitive Bid Advances bear interest based
upon the LIBOR Rate shall be suspended, and (b) each outstanding
LIBOR Loan shall, on the expiration of the Interest Period applicable
thereto, be converted to Loans having Interest Periods of one month
which shall bear interest, with respect to each Bank's Loan, at a rate
equal to (i) the rate per annum notified to the Facility Agent by
such Bank before the last day of such Interest Period as that
which expresses as a percentage rate per annum the cost to such
Bank of funding such Loan during such Interest Period, provided,
however, that in the case of Diesse Revolving Loans, the cost to
the Diesse Lender of funding such Loans shall be deemed to equal
the sum of the Diesse Participants' respective costs of funding
their advances under the Italian Participation Agreement, plus
(ii) one-quarter of one percent (0.250%).
8. Reduction of Commitments. As of the date of the effectiveness
of this Eighth Amendment, the Commitments shall be reduced to $250,000,000.
9. Effective Date. This Eighth Amendment will become effective
as of the date hereof upon receipt by the Facility Agent of counterparts
hereof executed by the Borrowers, the Guarantors and all the Banks.
10. Representation. Each Borrower represents and warrants to
each Bank that, as of the effective date of this Eighth Amendment, (a)
this Eighth Amendment constitutes the legal, valid and binding obligation
of such Borrower, enforceable against it in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or limiting
creditors' rights generally or by equitable principles generally and
(b) since the date of the most recent Form 10-K or 10-Q filed by
Holdings, there has occurred no event which has a Material Adverse
Effect.
11. Continuing Effect. Except as expressly amended hereby,
the Agreement and each of the Guaranties shall continue to be and shall
remain in full force and effect in accordance with its terms.
12. Reaffirmation. Holdings, Duracell US and Duraname
reaffirm their obligations under the Holdings Guaranty, the Duracell
US Guaranty and the Duraname Guaranty, respectively, which remain in
full force and effect.
13. Counterparts. This Eighth Amendment may be executed by
the parties hereto in any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and
the same instrument.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Eighth
Amendment to be duly executed and delivered by their properly and duly
authorized officers as of the day and year first above written.
DURACELL INTERNATIONAL INC.
By:
Title:
DURACELL BATTERIES LIMITED
By:
Title:
N.V. DURACELL BATTERIES S.A.
By:
Title:
S.A. DURACELL BENELUX N.V.
By:
Title:
DURACELL S.P.A, formerly known as
Diesse S.P.A.
By:
Title:
BANK OF AMERICA INTERNATIONAL
LIMITED, as Facility Agent
By:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Documentation Agent and as a
Bank
By:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
Title:
BANKERS TRUST COMPANY
By:
Title:
CHEMICAL BANK
By:
Title:
THE CHASE MANHATTAN BANK,
NATIONAL ASSOCIATION
By:
Title:
CONTINENTAL BANK N.A.
By:
Title:
BANCA COMMERCIALE ITALIANA
By:
Title:
By:
Title:
BBL, BANK BRUSSELS LAMBERT
By:
Title:
By:
Title:
ABN AMRO BANK N.V. NEW YORK
BRANCH/CAYMAN ISLANDS BRANCH
By:
Title:
By:
Title:
THE MITSUI TRUST AND BANKING
COMPANY, LIMITED
By:
Title:
BANQUE PARIBAS
By:
Title:
By:
Title:
KREDIETBANK NV, GRAND CAYMAN
BRANCH
By:
Title:
By:
Title:
THE FUJI BANK, LIMITED
By:
Title:
CREDIT LYONNAIS NEW YORK
BRANCH/CAYMAN ISLAND BRANCH
By:
Title:
By:
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:
Title:
YASUDA TRUST AND BANKING CO., LTD.
By:
Title:
FRENCH AMERICAN BANKING
CORPORATION
By:
Title:
By:
Title:
BANCA DI ROMA - CHICAGO BRANCH
By:
Title:
By:
Title:
THE TORONTO-DOMINION BANK
By:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By:
Title:
CREDIT SUISSE
By:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
Title:
BAYERISCHE VEREINSBANK AG
By:
Title:
Acknowledged and Agreed to:
DURACELL INTERNATIONAL INC.
By:
Title:
DURACELL INC.
By:
Title:
DURANAME CORP.
By:
Title:
