1 | ||
Part 1 – Financial Information |
Part II – Other Information |
2 | ||
ENERGIZER HOLDINGS, INC. | |||||||||||||
(Condensed) | |||||||||||||
(Dollars in millions, except per share data - Unaudited) | |||||||||||||
Quarter Ended March 31, | Six Months Ended March 31, | ||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Net sales | $ | 592.9 | $ | 362.6 | $ | 1,404.6 | $ | 935.0 | |||||
Cost of products sold | 289.5 | 207.3 | 692.0 | 515.0 | |||||||||
Selling, general and administrative expense | 127.3 | 69.4 | 256.7 | 145.0 | |||||||||
Advertising and promotion expense | 88.8 | 26.8 | 181.5 | 74.0 | |||||||||
Research and development expense | 20.7 | 9.3 | 36.8 | 18.1 | |||||||||
Intellectual property rights income | (1.5 | ) | - | (1.5 | ) | (6.0 | ) | ||||||
Interest expense | 6.7 | 4.7 | 13.9 | 9.1 | |||||||||
Other financing items, net | (1.7 | ) | (0.8 | ) | (3.6 | ) | (1.1 | ) | |||||
Earnings before income taxes | 63.1 | 45.9 | 228.8 | 180.9 | |||||||||
Income tax provision | (9.7 | ) | (12.9 | ) | (60.4 | ) | (61.5 | ) | |||||
Net earnings | $ | 53.4 | $ | 33.0 | $ | 168.4 | $ | 119.4 | |||||
Basic earnings per share | $ | 0.65 | $ | 0.38 | $ | 2.03 | $ | 1.36 | |||||
Diluted earnings per share | $ | 0.63 | $ | 0.37 | $ | 1.97 | $ | 1.33 | |||||
STATEMENT OF COMPREHENSIVE INCOME: | |||||||||||||
Net earnings | $ | 53.4 | $ | 33.0 | $ | 168.4 | $ | 119.4 | |||||
Other comprehensive income, net of tax | |||||||||||||
Foreign currency translation adjustments | (13.3 | ) | (0.7 | ) | 29.7 | 6.8 | |||||||
Minimum pension liability change, net of tax of | |||||||||||||
$0.2 for six months ended March 31, 2004 | |||||||||||||
and $1.8 for six months ended March 31, 2003 | 0.2 | (0.1 | ) | (0.4 | ) | (6.0 | ) | ||||||
Unrealized holding gain on available-for-sale securities, | |||||||||||||
net of tax of $0.4 | 0.7 | - | 0.7 | - | |||||||||
Total comprehensive income | $ | 41.0 | $ | 32.2 | $ | 198.4 | $ | 120.2 | |||||
See accompanying Notes to Condensed Financial Statements |
3 | ||
ENERGIZER HOLDINGS, INC. | |||||||||
(Condensed) | |||||||||
(Dollars in millions--Unaudited) | |||||||||
March 31, | September 30, | March 31, | |||||||
2004 | 2003 | 2003 | |||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 89.4 | $ | 71.7 | $ | 34.1 | |||
Trade receivables, less allowance for doubtful | |||||||||
accounts of $11.4, $9.8 and $12.8, respectively | 436.9 | 432.3 | 325.6 | ||||||
Inventories | 449.3 | 430.6 | 520.6 | ||||||
Other current assets | 281.6 | 308.5 | 248.9 | ||||||
Total current assets | 1,257.2 | 1,243.1 | 1,129.2 | ||||||
Property at cost | 1,389.2 | 1,339.1 | 1,313.4 | ||||||
Accumulated depreciation | (691.2 | ) | (637.9 | ) | (613.3 | ) | |||
698.0 | 701.2 | 700.1 | |||||||
Goodwill | 342.6 | 330.2 | 443.1 | ||||||
Intangible assets | 310.6 | 308.8 | 192.4 | ||||||
Other assets | 160.0 | 148.8 | 142.5 | ||||||
Total | $ | 2,768.4 | $ | 2,732.1 | $ | 2,607.3 | |||
Liabilities and Shareholders Equity | |||||||||
Current liabilities | |||||||||
Current maturities of long-term debt | $ | 20.0 | $ | 20.0 | $ | 15.0 | |||
Notes payable | 68.7 | 66.1 | 706.3 | ||||||
Accounts payable | 188.6 | 213.2 | 160.9 | ||||||
Other current liabilities | 437.7 | 428.2 | 382.8 | ||||||
Total current liabilities | 715.0 | 727.5 | 1,265.0 | ||||||
Long-term debt | 865.9 | 913.6 | 375.0 | ||||||
Other liabilities | 304.7 | 283.0 | 268.4 | ||||||
Shareholders equity | |||||||||
Common stock | 1.0 | 1.0 | 1.0 | ||||||
Additional paid in capital | 825.6 | 811.9 | 791.9 | ||||||
Retained earnings | 531.6 | 367.1 | 320.7 | ||||||
Treasury stock | (421.5 | ) | (288.1 | ) | (303.1 | ) | |||
Accumulated other comprehensive loss | (53.9 | ) | (83.9 | ) | (111.6 | ) | |||
Total shareholders equity | 882.8 | 808.0 | 698.9 | ||||||
Total | $ | 2,768.4 | $ | 2,732.1 | $ | 2,607.3 | |||
See accompanying Notes to Condensed Financial Statements |
4 | ||
ENERGIZER HOLDINGS, INC. | |||||||
(Condensed) | |||||||
(Dollars in millions - Unaudited) | |||||||
Six Months Ended March 31, | |||||||
2004 | 2003 | ||||||
Cash flow from operations | |||||||
Net earnings | $ | 168.4 | $ | 119.4 | |||
Non-cash items included in income | 74.1 | 34.5 | |||||
Changes in assets and liabilities used in operations | 5.4 | 91.0 | |||||
Other, net | 1.8 | 0.7 | |||||
Net cash flow from operations | 249.7 | 245.6 | |||||
Cash flow from investing activities | |||||||
Property additions | (53.6 | ) | (14.1 | ) | |||
Proceeds from sale of property | 0.6 | 1.0 | |||||
Purchase of Schick-Wilkinson Sword | - | (932.2 | ) | ||||
Other, net | 0.1 | - | |||||
Net cash used by investing activities | (52.9 | ) | (945.3 | ) | |||
Cash flow from financing activities | |||||||
Net cash proceeds from issuance of long-term debt | - | 215.0 | |||||
Principal payments on long-term debt (including | |||||||
current maturities) | (50.2 | ) | - | ||||
Net increase in notes payable | 1.2 | 608.9 | |||||
Treasury stock purchases | (145.8 | ) | (128.9 | ) | |||
Other, net | 14.8 | 4.2 | |||||
Net cash (used)/provided by financing activities | (180.0 | ) | 699.2 | ||||
Effect of exchange rate changes on cash | 0.9 | 0.7 | |||||
Net increase in cash and cash equivalents | 17.7 | 0.2 | |||||
Cash and cash equivalents, beginning of period | 71.7 | 33.9 | |||||
Cash and cash equivalents, end of period | $ | 89.4 | $ | 34.1 | |||
See accompanying Notes to Condensed Financial Statements |
5 | ||
Quarter Ended | Six Months Ended | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||||
Net earnings/(loss): | |||||||||||||||
As reported | $ | 53.4 | $ | 33.0 | $ | 168.4 | $ | 119.4 | |||||||
Pro forma adjustments | (1.3 | ) | (1.6 | ) | (2.5 | ) | (3.1 | ) | |||||||
Pro forma | $ | 52.1 | $ | 31.4 | $ | 165.9 | $ | 116.3 | |||||||
Basic earnings/(loss) per share: | |||||||||||||||
As reported | $ | 0.65 | $ | 0.38 | $ | 2.03 | $ | 1.36 | |||||||
Pro forma adjustments | (0.01 | ) | (0.02 | ) | (0.03 | ) | (0.03 | ) | |||||||
Pro forma | $ | 0.64 | $ | 0.36 | $ | 2.00 | $ | 1.33 | |||||||
Diluted earnings/(loss) per share: | |||||||||||||||
As reported | $ | 0.63 | $ | 0.37 | $ | 1.97 | $ | 1.33 | |||||||
Pro forma adjustments | (0.02 | ) | (0.02 | ) | (0.03 | ) | (0.03 | ) | |||||||
Pro forma | $ | 0.61 | $ | 0.35 | $ | 1.94 | $ | 1.30 |
6 | ||
Historical | Historical | ||||||
For the quarter ended March 31, | For the six months ended March 31, | ||||||
2004 | 2003 | 2004 | 2003 | ||||
Net Sales | |||||||
North America Battery | $187.5 | $194.2 | $557.4 | $541.7 | |||
International Battery | 190.5 | 168.4 | 429.3 | 393.3 | |||
Total Battery | 378.0 | 362.6 | 986.7 | 935.0 | |||
Razors and Blades | 214.9 | - | 417.9 | - | |||
Total Net Sales | $592.9 | $362.6 | $1,404.6 | $935.0 | |||
Profitability | |||||||
North America Battery | $39.0 | $45.6 | $154.0 | $155.8 | |||
International Battery | 34.3 | 23.4 | 83.2 | 62.9 | |||
R&D Battery | (13.0) | (9.3) | (21.5) | (18.1) | |||
Total Battery | 60.3 | 59.7 | 215.7 | 200.6 | |||
Razors and Blades | 30.0 | - | 64.4 | - | |||
Total segment profitability | $90.3 | $59.7 | $280.1 | $200.6 | |||
General corporate and other expenses | (22.3) | (9.9) | (39.7) | (17.7) | |||
Intellectual property rights income | 1.5 | - | 1.5 | 6.0 | |||
Amortization | (1.4) | - | (2.8) | - | |||
Interest and other financial items | (5.0) | (3.9) | (10.3) | (8.0) | |||
Total earnings before income taxes | $63.1 | $45.9 | $228.8 | $180.9 | |||
For the quarter ended March 31, | For the six months ended March 31, | ||||||
2004 | 2003 | 2004 | 2003 | ||||
Net Sales by Product Line | |||||||
Alkaline Batteries | $231.0 | $232.6 | $656.7 | $643.0 | |||
Carbon Zinc Batteries | 57.0 | 54.6 | 126.4 | 120.9 | |||
Other Batteries and Lighting Products | 90.0 | 75.4 | 203.6 | 171.1 | |||
Razors and Blades | 214.9 | - | 417.9 | - | |||
Total Net Sales | $592.9 | $362.6 | $1,404.6 | $935.0 | |||
7 | ||
Historical | Pro Forma | Historical | Pro Forma | ||||||||||
| Quarter Ended | Quarter Ended | Six Months Ended | Six Months Ended | |||||||||
| March 31, | March 31, | March 31, | March 31, | |||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||
Net sales | $ | 592.9 | $ | 490.6 | $ | 1,404.6 | $ | 1,247.0 | |||||
Cost of products sold | 289.5 | 273.2 | 692.0 | 668.7 | |||||||||
Selling, general and administrative expense | 127.3 | 105.8 | 256.7 | 218.0 | |||||||||
Advertising and promotion expense | 88.8 | 59.1 | 181.5 | 130.6 | |||||||||
Research and development expense | 20.7 | 16.4 | 36.8 | 32.8 | |||||||||
Intellectual property rights income | (1.5 | ) | - | (1.5 | ) | (6.0 | ) | ||||||
Interest expense | 6.7 | 12.0 | 13.9 | 23.6 | |||||||||
Other financing items, net | (1.7 | ) | 0.2 | (3.6 | ) | 0.9 | |||||||
Earnings before income taxes | 63.1 | 23.9 | 228.8 | 178.4 | |||||||||
Income tax provision | (9.7 | ) | (5.0 | ) | (60.4 | ) | (61.1 | ) | |||||
Net earnings | $ | 53.4 | $ | 18.9 | $ | 168.4 | $ | 117.3 | |||||
Earnings per share | |||||||||||||
Basic | $ | 0.65 | $ | 0.22 | $ | 2.03 | $ | 1.34 | |||||
Diluted | $ | 0.63 | $ | 0.21 | $ | 1.97 | $ | 1.31 | |||||
Weighted average shares of common stock - Basic | 81.8 | 86.5 | 82.8 | 87.5 | |||||||||
Weighted average shares of common stock - Diluted | 84.8 | 88.6 | 85.7 | 89.8 | |||||||||
Historical | Pro Forma | Historical | Pro Forma | ||||||||||
|
| Quarter Ended | Quarter Ended | Six Months Ended | Six Months Ended | ||||||||
|
| March 31, | March 31, | March 31, | March 31, | ||||||||
|
| 2004 | 2003 | 2004 | 2003 | ||||||||
Net Sales | |||||||||||||
North America Battery | $ | 187.5 | $ | 194.2 | $ | 557.4 | $ | 541.7 | |||||
International Battery | 190.5 | 168.4 | 429.3 | 393.3 | |||||||||
Total Battery | 378.0 | 362.6 | 986.7 | 935.0 | |||||||||
Razors and Blades | 214.9 | 128.0 | 417.9 | 312.0 | |||||||||
Total Net Sales | $ | 592.9 | $ | 490.6 | $ | 1,404.6 | $ | 1,247.0 | |||||
Profitability | |||||||||||||
North America Battery | $ | 39.0 | $ | 45.6 | $ | 154.0 | $ | 155.8 | |||||
International Battery | 34.3 | 23.4 | 83.2 | 62.9 | |||||||||
R&D Battery | (13.0 | ) | (9.3 | ) | (21.5 | ) | (18.1 | ) | |||||
Total Battery | 60.3 | 59.7 | 215.7 | 200.6 | |||||||||
Razors and Blades | 30.0 | (12.3 | ) | 64.4 | 16.8 | ||||||||
Total segment profitability | $ | 90.3 | $ | 47.4 | $ | 280.1 | $ | 217.4 | |||||
General corporate and other expenses | (22.3 | ) | (9.9 | ) | (39.7 | ) | (17.7 | ) | |||||
Intellectual property rights income | 1.5 | - | 1.5 | 6.0 | |||||||||
Amortization | (1.4 | ) | (1.4 | ) | (2.8 | ) | (2.8 | ) | |||||
Interest and other financial items | (5.0 | ) | (12.2 | ) | (10.3 | ) | (24.5 | ) | |||||
Total earnings before income taxes | $ | 63.1 | $ | 23.9 | $ | 228.8 | $ | 178.4 | |||||
8 | ||
(shares in millions) | Quarter Ended |
|
| Quarter Ended | |||||||||
March 31, | March 31, | ||||||||||||
2004 |
|
| 2003 |
|
| 2004 |
|
| 2003 | ||||
Numerator: | |||||||||||||
Net earnings for basic and dilutive earnings per share | $ | 53.4 | $ | 33.0 | $ | 168.4 | $ | 119.4 | |||||
Denominator: | |||||||||||||
Weighted-average shares for basic earnings per share | 81.8 | 86.5 | 82.8 | 87.5 | |||||||||
Effect of dilutive securities: | |||||||||||||
Stock options | 2.2 | 1.4 | 2.1 | 1.7 | |||||||||
Restricted stock equivalents | 0.8 | 0.6 | 0.8 | 0.6 | |||||||||
Total dilutive securities | 3.0 | 2.0 | 2.9 | 2.3 | |||||||||
Weighted-average shares for diluted earnings per share | 84.8 | 88.5 | 85.7 | 89.8 | |||||||||
Basic earnings per share | $ | 0.65 | $ | 0.38 | $ | 2.03 | $ | 1.36 | |||||
Diluted earnings per share | $ | 0.63 | $ | 0.37 | $ | 1.97 | $ | 1.33 |
Beginning | Ending | |||||||
Balance | Provision | Activity | Balance | |||||
Termination benefits | $ 2.3 | $ - | $ (2.3) | $ - | ||||
Other cash costs | 0.1 | - | (0.1) | - | ||||
Total | $ 2.4 | $ - | $ (2.4) | $ - | ||||
9 | ||
March 31, 2004 | September 30, 2003 | March 31, 2003 | ||||
Total outstanding accounts receivable sold to SPE | $ 119.5 | $ 175.7 | $ 138.8 | |||
Cash received by SPE from sale of receivables to a third party | 50.0 | 75.0 | 50.0 | |||
Subordinated retained interest | 69.5 | 100.7 | 88.8 | |||
Energizer's investment in SPE | 69.5 | 100.7 | 88.8 | |||
March 31, 2004 | September 30, 2003 | March 31, 2003 | ||||
Additional accounts receivable | $ 119.5 | $ 175.7 | $ 138.8 | |||
Additional notes payable | 50.0 | 75.0 | 50.0 | |||
Lower other current assets | 69.5 | 100.7 | 88.8 |
10 | ||
North American | International | Razors & | |||||
Battery | Battery | Blades | Total | ||||
Balance at October 1, 2003 | $ 24.7 | $ 13.3 | $ 292.2 | $ 330.2 | |||
Cumulative translation adjustment | - | 0.1 | 12.3 | 12.4 | |||
Balance at March 31, 2004 | $ 24.7 | $ 13.4 | $ 304.5 | $ 342.6 | |||
Gross | Accumulated | ||||
Carrying Amount | Amortization | Net | |||
To be amortized: | |||||
Tradenames | $ 11.0 | $ (1.7) | $ 9.3 | ||
Technology and patents | 35.2 | (3.0) | 32.2 | ||
Customer-related | 7.1 | (1.0) | 6.1 | ||
53.3 | (5.7) | 47.6 | |||
Indefinite-lived: | |||||
Tradenames | 626.0 | (363.0) | 263.0 | ||
Total intangible assets | $ 679.3 | $ (368.7) | $ 310.6 | ||
11 | ||
Pension | |||||||||||||
Quarter ended March 31, | Six months ended March 31, | ||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Service cost | $ | 6.2 | $ | 4.5 | $ | 11.7 | $ | 8.9 | |||||
Interest cost | 8.1 | 6.8 | 16.1 | 13.5 | |||||||||
Expected return on plan assets | (12.0 | ) | (11.3 | ) | (24.0 | ) | (22.4 | ) | |||||
Amortization of prior service cost | 0.2 | (0.1 | ) | 0.3 | (0.1 | ) | |||||||
Amortization of unrecognized net loss | 0.4 | 0.4 | 0.8 | 0.8 | |||||||||
Amortization of transition obligation | (0.1 | ) | - | - | 0.1 | ||||||||
Net periodic benefit cost | $ | 2.8 | $ | 0.3 | $ | 4.9 | $ | 0.8 | |||||
Postretirement | |||||||||||||
Quarter ended March 31, | Six months ended March 31, | ||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Service cost | $ | - | $ | 0.1 | $ | 0.1 | $ | 0.1 | |||||
Interest cost | 0.7 | 0.7 | 1.5 | 1.5 | |||||||||
Expected return on plan assets | - | - | (0.1 | ) | - | ||||||||
Amortization of prior service cost | (0.6 | ) | (0.6 | ) | (1.2 | ) | (1.2 | ) | |||||
Net periodic benefit cost | $ | 0.1 | $ | 0.2 | $ | 0.3 | $ | 0.4 | |||||
12 | ||
March 31, | September 30, | March 31, | ||||||||
2004 | 2003 | 2003 | ||||||||
Inventories | ||||||||||
Raw materials and supplies | $ 60.7 | $ 56.5 | $ 59.5 | |||||||
Work in process | 113.8 | 116.3 | 138.4 | |||||||
Finished products | 274.8 | 257.8 | 322.7 | |||||||
Total inventories | $ | 449.3 | $ | 430.6 | $ | 520.6 | ||||
Other current assets | ||||||||||
Investment in SPE | $ | 69.5 | $ | 100.7 | $ | 88.8 | ||||
Miscellaneous receivables | 26.3 | 56.9 | 27.9 | |||||||
Deferred income tax benefits | 60.3 | 60.4 | 59.8 | |||||||
Other | 125.5 | 90.5 | 72.4 | |||||||
Total other current assets | $ | 281.6 | $ | 308.5 | $ | 248.9 | ||||
Other assets | ||||||||||
Pension asset | $ | 122.5 | $ | 117.3 | $ | 114.0 | ||||
Deferred charges and other assets | 37.5 | 31.5 | 28.5 | |||||||
Total other assets | $ | 160.0 | $ | 148.8 | $ | 142.5 | ||||
Other current liabilities | ||||||||||
Accrued advertising, promotion and allowances | $ | 251.3 | $ | 230.8 | $ | 190.4 | ||||
Accrued salaries, vacations and incentive compensation | 56.4 | 73.7 | 76.8 | |||||||
Other | 130.0 | 123.7 | 115.6 | |||||||
Total other current liabilities | $ | 437.7 | $ | 428.2 | $ | 382.8 | ||||
Other non-current liabilities | ||||||||||
Pension, other retirement benefits and deferred compensation | $ | 265.1 | $ | 224.7 | $ | 191.1 | ||||
Other non-current liabilities | 39.6 | 58.3 | 77.3 | |||||||
Total other non-current liabilities | $ | 304.7 | $ | 283.0 | $ | 268.4 | ||||
13 | ||
14 | ||
Quarter ended March 31, | Six months ended March 31, | |||
2004 | 2003 | 2004 | 2003 | |
Net sales | $ 187.5 | $ 194.2 | $ 557.4 | $ 541.7 |
Segment profit | $ 39.0 | $ 45.6 | $ 154.0 | $ 155.8 |
15 | ||
Quarter ended March 31, | Six months ended March 31, | |||
2004 | 2003 | 2004 | 2003 | |
Net sales | $ 190.5 | $ 168.4 | $ 429.3 | $ 393.3 |
Segment profit | $ 34.3 | $ 23.4 | $ 83.2 | $ 62.9 |
Quarter ended March 31, | Six months ended March 31, | |||
2004 | 2003 pro forma | 2004 | 2003 pro forma | |
Net sales | $ 214.9 | $ 128.0 | $ 417.9 | $ 312.0 |
Segment profit | $ 30.0 | ($ 12.3) | $ 64.4 | $ 16.8 |
16 | ||
17 | ||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||
Long-term debt, including current maturities | $ 885.9 | $ 20.0 | $ 120.9 | $ 155.0 | $ 590.0 | |||||
Notes payable | 68.7 | 68.7 | - | - | - | |||||
Operating leases | 90.7 | 13.2 | 20.7 | 14.3 | 42.5 | |||||
Total | $ 1,045.3 | $ 101.9 | $ 141.6 | $ 169.3 | $ 632.5 | |||||
18 | ||
19 | ||
20 | ||
Issuer Purchases of Energizer Common Stock during the quarter ended March 31, 2004
(a) Total Number of Shares Purchased | (b) Average Price Paid per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Programs (1) | (d) Maximum Number of Shares that may yet be purchased under the current Program (2) | |
1/1/04 – 1/31/04 | 477,800 | $ 37.42 | 477,800 | 10,000,000 |
2/1/04 – 2/29/04 | - | - | - | - |
3/1/04 – 3/31/04 | - | - | - | - |
Quarter 2 of FY 2004 | 477,800 | $ 37.42 | 477,800 | 10,000,000 |
10 | |
31(i) | |
31(ii) | |
32(i) | |
32(ii) | |
21 | ||
By: