SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 2000
Commission File No. 001-15401
ENERGIZER HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
MISSOURI 43-1863181
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(State of Incorporation) (I.R.S. Employer Identification No.)
800 CHOUTEAU, ST. LOUIS MISSOURI 63102
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(Address of principal executive offices) (Zip Code)
(314) 982-2000
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(Registrant's telephone number, including area code)
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, and (2)
has been subject to such filing requirements for the past 90 days.
YES: X NO: _____
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Number of shares of Energizer Holdings, Inc. common stock, $.01 par value,
outstanding as of the close of business on February 2, 2001.
91,708,011
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PART I - FINANCIAL INFORMATION
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(CONDENSED)
(DOLLARS IN MILLIONS--UNAUDITED)
QUARTER ENDED DECEMBER 31,
2000 1999
---- ----
Net Sales $558.7 $673.6
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Costs and Expenses
Cost of products sold 292.0 322.2
Selling, general and administrative 92.3 97.2
Advertising and promotion 59.2 67.6
Research and development 11.5 11.9
Interest expense 9.9 2.6
Other financing items, net 1.1 (1.6)
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466.0 499.9
------- -------
Earnings from Continuing Operations before Income Taxes 92.7 173.7
Income Taxes (38.5) (69.0)
------- -------
Net Earnings $ 54.2 $104.7
======= =======
Basic and Diluted Earnings Per Share $ 0.57 $ 1.07
======= =======
<FN>
See accompanying Notes to Condensed Financial Statements.
ENERGIZER HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(CONDENSED)
(DOLLARS IN MILLIONS - UNAUDITED)
DECEMBER 31, SEPTEMBER 30,
2000 2000
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ASSETS
Current Assets
Cash and cash equivalents $ 28.3 $ 11.9
Trade receivables, less allowance for doubtful
accounts of $12.7 and $12.5, respectively 268.6 180.6
Inventories
Raw materials and supplies 56.3 64.0
Work in process 83.5 87.0
Finished products 245.7 308.1
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Total Inventory 385.5 459.1
Other current assets 211.6 278.7
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Total Current Assets 894.0 930.3
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Investments and Other Assets 377.6 377.8
Property at Cost 1,030.3 1,019.8
Accumulated depreciation 550.2 534.4
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480.1 485.4
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Total $1,751.7 $1,793.5
========= =========
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Notes payable $ 139.1 $ 135.0
Accounts payable 91.5 145.0
Other current liabilities 340.3 248.6
--------- ---------
Total Current Liabilities 570.9 528.6
Long-Term Debt 275.0 370.0
Other Liabilities 160.7 156.7
Shareholders Equity
Common Stock 1.0 1.0
Additional Paid in Capital 783.9 783.9
Retained Earnings 110.7 59.8
Treasury Stock (41.9) -
Accumulated Other Comprehensive Income (108.6) (106.5)
--------- ---------
Total Shareholders Equity 745.1 738.2
Total $1,751.7 $1,793.5
========= =========
<FN>
See accompanying Notes to Condensed Financial Statements.
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999
(CONDENSED)
(DOLLARS IN MILLIONS - UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
2000 1999
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CASH FLOW FROM OPERATIONS
Net earnings $ 54.2 $ 104.7
Non-cash items included in income 23.0 23.3
Sale of accounts receivable 50.0 -
Changes in assets and liabilities used in operations 22.9 (65.8)
Other, net 0.1 (1.6)
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Cash flow from continuing operations 150.2 60.6
Cash flow from discontinued operations - 53.5
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Net cash flow from operations 150.2 114.1
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CASH FLOW FROM INVESTING ACTIVITIES
Property additions (17.2) (11.0)
Proceeds from sale of OEM business - 20.0
Proceeds from sale of property 5.3 1.1
Other, net 2.1 0.5
-------- --------
Cash used by investing activities - continuing operations (9.8) 10.6
Cash used by investing activities - discontinued operations - (0.7)
-------- --------
Net cash used by investing activities (9.8) 9.9
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Net cash proceeds from issuance of long-term debt - -
Principal payments on long-term debt (including current
maturities) (95.0) (0.5)
Net (decrease)increase in notes payable 8.4 12.4
Treasury stock purchases (41.9) -
Net transactions with Ralston - (143.6)
-------- --------
Net cash used by financing activities (128.5) (131.7)
-------- --------
Effect of Exchange Rate Changes on Cash 0.4 (0.2)
-------- --------
Net Decrease in Cash and Cash Equivalents 12.3 (7.9)
Cash and Cash Equivalents, Beginning of Period (1) 16.0 27.8
Cash and Cash Equivalents, End of Period $ 28.3 $ 19.9
======== ========
<FN>
(1) The cash and cash equivalents balance at the beginning of the current quarter
has been adjusted by $4.1 to reflect the elimination of the one month
reporting lag used by the international operations as discussed in Note 3
to the Condensed Financial Statements.
See accompanying Notes to Condensed Financial Statements.
ENERGIZER HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(DOLLARS IN MILLIONS - UNAUDITED)
NOTE 1 - The accompanying unaudited financial statements have been prepared in
accordance with Article 10 of Regulation S-X and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included.
Operating results for any quarter are not necessarily indicative of the results
for any other quarter or for the full year. These statements should be read in
conjunction with the financial statements and notes thereto for Energizer for
the year ended September 30, 2000.
NOTE 2 - On April 1, 2000, Ralston Purina Company (Ralston) distributed the
common stock of its wholly owned subsidiary, Energizer Holdings, Inc.
(Energizer), to the shareholders of Ralston's common stock through a tax-free
spin-off. Following the spin-off, Energizer has conducted its business as a
separate public company.
NOTE 3 - Prior to fiscal 2001, Energizer's international operations reported
their results of operations on a one month lag, which allowed more time to
compile results. Energizer has taken steps to improve its internal reporting
procedures that has allowed for more timely reporting of these operations.
Beginning in the first quarter of fiscal year 2001, the one month lag was
eliminated. As a result, the September 2000 loss from international operations
of $3.3 was recorded directly to retained earnings.
The effects of the change on the first quarter of fiscal 2000 are presented in
Note 14. The effect of the change is not significant to the balance sheet or
cash flow, and as a result, the September 30, 2000 balance sheet and the
historical basis cash flow for the quarter ended December 31, 1999 have not been
adjusted.
NOTE 4 - Energizer's operations are managed via four major geographic areas -
North America (which includes the U.S. and Canada), Asia Pacific, Europe, and
South and Central America (including Mexico). This structure is the basis for
the Company's reportable operating segment information disclosed below. Segment
performance is evaluated based on operating profit, exclusive of general
corporate expenses, research and development expenses, restructuring charges and
amortization of goodwill and intangibles. Financial items, such as interest
income and expense, are managed on a global basis at the corporate level.
Intersegment sales are generally valued at market-based prices and represent the
difference between total sales and external sales as presented in the table
below. Segment profitability includes profit on these intersegment sales.
FOR THE QUARTER ENDED DECEMBER 31,
2000 1999
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TOTAL EXTERNAL TOTAL EXTERNAL
Net Sales SALES SALES SALES SALES
-------- ----- -------- ------
North America $357.7 $328.4 $448.9 $420.4
Asia Pacific 112.0 100.9 138.4 119.1
Europe 87.3 86.2 92.5 92.0
South and Central America 45.1 43.2 46.7 42.1
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Total Net Sales $558.7 $673.6
====== ======
FOR THE QUARTER ENDED DECEMBER 31,
2000 1999
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OPERATING PROFIT BEFORE AMORTIZATION
North America $ 90.9 $145.5
Asia Pacific 27.1 38.0
Europe 1.1 7.9
South and Central America 5.7 6.7
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TOTAL SEGMENT PROFITABILITY 124.8 198.1
General Corporate Expenses (4.0) (5.4)
Research and Development Expense (11.5) (11.9)
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Operating Profit before Amortization 109.3 180.8
Amortization of Intangibles (5.6) (6.1)
Interest and Other Financial Items (11.0) (1.0)
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Total Earnings Before Income Taxes $ 92.7 $173.7
======= =======
Supplemental product information is presented below for revenues from external
customers.
FOR THE QUARTER ENDED DECEMBER 31,
NET SALES 2000 1999
- --------------------- ------ ------
Alkaline Batteries $398.2 $486.0
Carbon Zinc Batteries 81.4 98.7
Lighting Products 31.5 41.2
Miniature Batteries 16.5 17.8
Other 31.1 29.9
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Total Net Sales $558.7 $673.6
====== ======
NOTE 5 - Basic earnings per share is based on the average number of common
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. For the quarter ended December 31, 1999, shares used in the
earnings per share calculation are based on the weighted average number of
shares of Ralston common stock outstanding adjusted for the distribution of one
share of Energizer stock for each three shares of Ralston stock.
The following table sets forth the computation of basic and diluted earnings per
share for the quarter ended December 31, 2000 and 1999, respectively.
Quarter Ended December 31,
2000 1999
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Numerator
Numerator for basic earnings per share -
Net earnings $54.2 $104.7
Effect of dilutive securities - -
----- ------
Numerator for dilutive earnings per share -
Net earnings $54.2 $104.7
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Denominator
Denominator for basic earnings per share -
Weighted average shares 94.7 97.4
===== ======
Effect of dilutive securities
Stock Options 0.7 -
Restricted Stock Equivalents 0.5 -
----- ------
1.2 -
Denominator for dilutive earnings per share -
Weighted-average shares and assumed conversions 95.9 97.4
===== ======
Basic and Diluted earnings per share $0.57 $ 1.07
===== ======
NOTE 6 - As of December 31, 2000, except for the disposition of certain assets
held for disposal, substantially all actions associated with restructuring plans
have been completed. Activities impacting the restructuring reserve during the
quarter ended December 31, 2000, are presented in the following table:
Balance at September 30, 2000 $ 3.9
Provisions/Reversals -
Activity (.8)
------
Balance at December 31, 2000 $ 3.1
======
NOTE 7 - The components of total comprehensive income for the quarter December
31, 2000 and 1999 are shown in the following table:
Quarter Ended December 31,
2000 1999
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Net earnings $54.2 $104.7
Other comprehensive income items:
Foreign currency translation adjustments related to -
elimination of one month reporting lag (see note 3) (4.4)
Foreign currency translation adjustments 2.3 (3.0)
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Total comprehensive income $52.1 $101.7
====== =======
NOTE 8 - Energizer has an agreement to sell, on an ongoing basis, a pool of
domestic trade accounts receivable to a wholly owned bankruptcy-remote
subsidiary of Energizer. The subsidiary qualifies as a Special Purpose Entity
(SPE), under SFAS No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." The SPE's sole purpose is the
acquisition of receivables from Energizer and the sale of its interests in the
receivables to a multi-seller receivables securitization company. The SPE is
not consolidated for financial reporting purposes. Energizer's investment in
the SPE is classified as Other Current Assets on the Consolidated Balance Sheet
as disclosed in Note 9 below.
As of December 31, 2000, Energizer has sold $251.1 of outstanding accounts
receivable to the SPE. The SPE has sold the receivables to an unrelated third
party for $150.0 in cash, an increase of $50.0 from the accounts receivable sold
as of September 30, 2000. Energizer's SPE retains a subordinated retained
interest in the remaining $101.1 of receivables. The net proceeds of the
transaction were used to reduce various debt instruments. The net increase in
proceeds received in the quarter is reflected as operating cash flows in the
Consolidated Statement of Cash Flows.
NOTE 9 - Other Current Assets consist of the following:
December 31, September 30,
2000 2000
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Investment in SPE $101.1 $157.1
Miscellaneous receivables 38.7 36.6
Deferred income tax benefits 39.0 38.9
Prepaid expenses 32.6 44.1
Other current assets .2 2.0
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$211.6 $278.7
====== ======
NOTE 10 - Investments and Other Assets consist of the following:
December 31, September 30,
2000 2000
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Goodwill $168.5 $168.0
Other intangible assets 79.4 82.4
Pension asset 105.3 102.0
Deferred charges and other assets 24.4 25.4
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$377.6 $377.8
====== ======
NOTE 11 - Other Liabilities consist of the following:
December 31, September 30,
2000 2000
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Postretirement benefits liability $ 88.7 $ 87.7
Other non-current liabilities 72.0 69.0
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$160.7 $156.7
====== ======
NOTE 12 - In September 2000, Energizer's Board of Directors approved a share
repurchase plan authorizing the repurchase of up to 5 million shares of
Energizer's common stock. As of December 31, 2000, Energizer had purchased
approximately 2.3 million shares under the authorization.
NOTE 13 - In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133) and in June 2000, issued
Statement of Financial Accounting Standards No. 138 (SFAS 138), an amendment of
SFAS 133. These statements are effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. The statements require the recognition of
derivative financial instruments on the balance sheet as assets or liabilities,
at fair value. Gains or losses resulting from changes in the value of
derivatives are accounted for depending on the intended use of the derivative
and whether it qualifies for hedge accounting. Energizer adopted the provisions
of SFAS 133 in the first quarter of fiscal 2001. The implementation of this
standard did not have a material effect on its consolidated financial position
or results of operations.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements."
SAB 101 provides guidance on recognition, presentation and disclosure of revenue
in financial statements. In addition, the Emerging Issues Task Force (EITF)
issued EITF 00-10 and 00-14. EITF 00-10, "Accounting for Shipping and Handling
Fees and Costs," provides guidance on earnings statement classification of
amounts billed to customers for shipping and handling. EITF 00-14, "Accounting
for Certain Sales Incentives," provides guidance on accounting for discounts,
coupon, rebates and free product. Energizer will be required to adopt SAB 101,
EITF 00-10 and EITF 00-14 no later than the fourth quarter of fiscal year 2001.
Energizer does not expect the adoption of these statements to have a material
effect on its results of operations, however, certain reclassifications may be
necessary.
NOTE 14 - The pro forma consolidated statement of earnings for the quarter ended
December 31, 1999, presents the consolidated results of Energizer's operations
assuming the spin-off and the synchronization of the international reporting
periods (as discussed in Note 3 above) had occurred as of October 1, 1999. Such
statement of earnings has been prepared by adjusting the historical statement of
earnings to indicate the effect of estimated costs and expenses and the
recapitalization associated with the spin-off.
The pro forma statement of earnings may not necessarily reflect the combined
results of operations that would have existed had the spin-off been effected on
the date specified nor are they necessarily indicative of future results.
ENERGIZER HOLDINGS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
THREE MONTHS ENDED DECEMBER 31, 1999
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA - UNAUDITED)
PRO FORMA REPORTING
HISTORICAL ADJUSTMENTS SYNCHRONIZATION PRO FORMA
12/31/99 SPIN-OFF ADJUSTMENTS (h) 12/31/99
-------- -------- --------------- --------
Net Sales $673.6 $ - $ 5.7 $679.3
------- ---------- ---------- -------
Costs and Expenses
Cost of products sold 322.2 - 4.6 326.8
Selling, general and administrative 97.2 2.0 (a) 0.5 99.7
- 0.4 (b)
- (0.4)(c)
Advertising and promotion 67.6 - 0.4 68.0
Research and development 11.9 - 0.2 12.1
Interest expense 2.6 8.9 (d) 11.5
Other financing items, net (1.6) - (0.9) (2.5)
------- ------- ------- -------
499.9 10.9 4.8 515.6
------- ------- ------- -------
Earnings from Cont'g Ops Before Taxes 173.7 (10.9) 0.9 163.7
Income Taxes (69.0) 3.3 (e) (0.6) (64.2)
- 2.1 (f) -
------- ------- ------- -------
Earnings from Continuing Operations $104.7 $ (5.5) $ 0.3 $ 99.5
======= ======= ========== =======
Basic and Diluted Earnings Per Share
From Continuing Operations (g) $ 1.07 $ 1.02
======= =======
Weighted average shares of common
stock (g) 97.4 97.4
======= =======
<FN>
(a) To reflect the incremental costs associated with becoming a stand-alone company
including board of director costs, stock exchange registration fees, shareholder record
keeping services, external financial reporting, treasury services, tax planning and
compliance, certain legal expenses and compensation planning and administration.
(b) To adjust pension income on plan assets transferred to Energizer plans upon
Distribution.
(c) To eliminate expense of certain post retirement benefits to be retained by Ralston.
(d) To reflect the increase in interest expense associated with debt levels to be assumed
at Distribution Date. The adjustment reflects an interest rate of 7.0% for $150.0 of
incremental notes payable and 7.7% for $324.1 of incremental long-term debt. The incremental
notes payable will have a variable interest rate. A 1/8% variation in the interest rate would
change interest expense by $.1
(e) To reflect taxes as if Energizer was a single, stand-alone U.S. taxpayer.
(f) To reflect tax effect of the above pro forma adjustments.
(g) The number of shares used to compute earnings per share is based on the weighted
average number of basic shares of Ralston stock outstanding during the period adjusted for the
distribution of one share of Energizer stock for each three shares of Ralston stock.
(h) To reflect adjustments related to the synchronization of international reporting as
discussed in Note 3 to the Condensed Financial Statements.
ENERGIZER HOLDINGS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL INFORMATION
(DOLLARS IN MILLIONS)
BUSINESS OVERVIEW
Primary battery category sales declined for the quarter ended December 31,
2000, compared to the same quarter last year which experienced increased demand
from retail customers and consumers in anticipation of potential disruptions
related to the year 2000 date change. This was particularly significant in the
U.S. According to A.C. Nielsen, the U.S. alkaline category declined 6% in
October through December period compared to the same quarter last year, which
had increased 28% over the prior year.
HIGHLIGHTS / OPERATING RESULTS
Net earnings for the quarter ended December 31, 2000 were $54.2 or $.57 per
basic and diluted share compared to $104.7 or $1.07 per share for the quarter
ended December 31, 1999. Net earnings decreased 48% primarily on significantly
lower segment profit compared to heavy Y2K-driven sales demand in the first
quarter last year. In addition, net financing costs increased reflecting debt
assigned to Energizer in connection with the spin-off.
Net sales for the quarter ended December 31, 2000 decreased $114.9 or 17%
with declines in all geographic segments except South and Central America.
Gross margin for the quarter decreased $84.7 or 24% on the lower sales.
Gross margin percentage decreased from 52.2% in the quarter last year to 47.7%
this year with declines in all segments reflecting lower sales.
Selling, general and administrative expenses decreased $4.9, or 5%, on
lower general corporate expenses and lower marketing and distribution costs in
North America and Asia. Selling, general and administrative expenses as a
percent of sales increased 2.1% to 16.5% in the current quarter due to lower
sales.
Advertising and promotion decreased $8.4 or 12% with declines in North
America, Asia and Europe. Advertising and promotion as a percent of sales was
10.6% and 10.0% for the quarter ended December 31, 2000 and 1999, respectively.
Energizer has historically reported results of international operations on
a one-month lag. As such, prior year amounts represent results of international
operations for September through November combined with the U.S. results for
October through December. Beginning in fiscal 2001, Energizer has synchronized
international operations' reporting to be consistent with U.S. reporting. The
impact of the synchronization on the prior year first quarter results was to
increase sales by $5.7 to $679.3 and net earnings by $.3 to $99.5. There was no
impact on the reported pro forma earnings per share for the quarter. Pro forma
results restated for the synchronization of the first quarter of fiscal 2000 are
presented in Note 14 to the Condensed Financial Statements.
SEGMENT RESULTS
Operations are managed via four major geographic areas - North America
(which includes the U.S. and Canada), Asia Pacific, Europe, and South and
Central America (including Mexico). This structure is the basis for the
Company's reportable operating segment information, as included in the tables in
Note 4 to the Condensed Financial Statements for the quarters ended December 31,
2000 and December 31, 1999, respectively.
North America
Net sales to customers for North America decreased $92.0, or 22%, for the
current quarter. Volume decreases accounted for $68.5 of the decline as
compared to the heavy Y2K demand last year and reflecting retail inventory
reductions in the current quarter. Unfavorable pricing and product mix also
effected the quarter, driven primarily by increased promotional spending.
At the consumer level, Energizer's alkaline share, as measured by A. C.
Nielsen, increased 1.0 share point to 34.4 compared to the same quarter last
year. Energizer's alkaline sales decreased 3%, as measured by A. C. Nielsen,
compared to overall alkaline battery category decline of 6%.
Segment profit decreased $54.6 for the quarter, a decrease of 38%. Gross
margin decreased $59.3 for the quarter, with lower volume accounting for $38.5
of the decline and pricing and product mix the primary factor for the balance of
the decline. Advertising and promotion and marketing and distribution expense
decreased in the quarter.
Asia Pacific
Net sales to customers for Asia Pacific were $100.9 for the current
quarter, a decrease of $18.2 from reported sales in last year's first quarter.
Adjusting for the impact of synchronizing reporting periods, sales declined
$15.7 or 14% compared to the same quarter last year. Unfavorable currency
effects accounted for $8.9 of the decline. Lower volume versus the Y2K driven
demand last year and unfavorable pricing and product mix accounted for the
remaining decline.
Segment profit for the quarter decreased $10.9 compared to reported results
last year. Adjusting for the impact of synchronizing reporting periods, segment
profit declined $9.1 or 25% with unfavorable currency effects accounting for
$5.2 of the decrease. Absent currency effects, segment profit fell $3.9 on
lower customer sales and lower intercompany sales, partially offset by lower
advertising and promotion expenses.
South and Central America
Net sales to customers for South and Central America for the current
quarter were $43.2, an increase of $1.1 from reported sales in last year's first
quarter. Adjusting for the impact of synchronizing reporting periods, sales
declined $.3 or 1% as unfavorable currency effects of $1.7 were partially offset
by higher volume.
Segment profit for the quarter decreased $1.3 or 19% compared to the
synchronized quarter last year, primarily on unfavorable currency effect.
Europe
Net sales to customers for Europe decreased $5.8, or 6%, compared to
results reported for the prior year quarter. Adjusting for the impact of
synchronizing reporting periods, sales declined $11.6, or 12%, for the quarter.
Absent the impact of currency devaluation of $15.1, sales increased 4% on higher
alkaline volume from distribution gains in key customers and increased
promotional activity.
Segment profit for the quarter decreased $7.5 compared to the synchronized
quarter last year, primarily on unfavorable currency effect. Absent currency
effects, higher sales volumes were offset by increased promotional costs.
CORPORATE EXPENSES
Corporate expenses decreased $1.4 in the quarter on higher pension and
royalty income partially offset by higher management expenses reflecting higher
costs of operating as a stand-alone company.
RESTRUCTURING ACTIVITY
As of December 31, 2000, except for disposition of certain assets held for
disposal, substantially all actions associated with the restructuring plans have
been completed. Activities impacting the restructuring reserve during the
quarter ended December 31, 2000 are presented in Note 6 to the Condensed
Financial Statements.
INTEREST EXPENSE AND OTHER FINANCING COSTS
Interest expense increased $7.3 for the quarter reflecting incremental debt
assumed by Energizer immediately prior to the spin-off. Other financing costs
increased $2.7 reflecting the discount on the sale of accounts receivable under
the financing arrangement, lower foreign exchange gains and lower investment
income.
INCOME TAXES
Income taxes, which include federal, state and foreign taxes, were 41.5% of
pre tax earnings in the current quarter, compared to 39.7% in the prior year
quarter. The increase in the tax rate is due primarily to an unfavorable mix of
U.S. and foreign earnings.
FINANCIAL CONDITION
Cash flow from continuing operations was $150.2 for the quarter ended
December 31, 2000 compared to $60.6 for the same period in fiscal 2000. The
increase in cash flow from continuing operations is due primarily to an
additional $50.0 in cash received from the sale of accounts receivable, as
discussed in Note 8 to the Condensed Financial Statements, and decreases in
working capital during the quarter. Capital expenditures totaled $17.2 and
$11.0 for the quarter ended December 31, 2000 and 1999, respectively. Energizer
purchased approximately 2.3 million shares of treasury stock in the quarter
ended December 31, 2000 for approximately $41.9. Working capital was $323.1 at
December 31, 2000 compared to $401.7 at September 30, 2000, reflecting seasonal
reductions in operating working capital.
Energizer's total debt decreased from $505.0 at September 30, 2000 to
$414.1 at December 31, 2000 as the excess cash generated from operations was
used to pay down long-term debt.
Energizer believes that cash flows from operating activities and periodic
borrowings under existing credit facilities will be adequate to meet short-term
and long-term liquidity requirements prior to the maturity of Energizer's credit
facilities, although no guarantee can be given in this regard.
MARKET RISK
Energizer has interest rate risk with respect to interest expense on
variable rate debt. A hypothetical 10% adverse change in all interest rates
would have an annual unfavorable impact of $1.3 on Energizer's net earnings and
cash flows based on current debt levels.
RECENTLY ISSUED ACCOUNTING STANDARDS
See discussion in Note 13 to the Condensed Financial Statements.
FORWARD-LOOKING STATEMENTS
Statements in this document that are not historical, particularly
statements regarding the continued availability of credit facilities, the
ability to meet liquidity requirements, and the impact of changes in interest
rates, may be considered forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Energizer cautions readers
not to place undue reliance on any forward-looking statements, which speak only
as of the date made.
Energizer advises readers that various risks and uncertainties could affect
its financial performance and could cause Energizer's actual results for future
periods to differ materially from those anticipated or projected. Energizer's
ability to maintain compliance with its debt covenants, as well as changes in
its operating cash flows, could limit its ability to meet future operating
expenses and such liquidity requirements, fund capital expenditures, and service
its debt as it becomes due. The impact of adverse interest rate changes could
be more significant than anticipated, particularly if general economic
conditions in the countries in which Energizer operates deteriorate as well.
Additional risks and uncertainties include those detailed from time to time in
Energizer's publicly filed documents, including Energizer's Registration
Statement on Form 10, as amended, its Annual Report on Form 10-K for the Year
ended September 30, 2000, and its Current Report on From 8-K dated April 25,
2000.
PART II - OTHER INFORMATION
------------------
There is no information required to be reported under any items except those
indicated below.
Item 4 -- Submission of Matter to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on January 29, 2001, for the
purpose of electing three directors to serve three-year terms ending at the
Annual Meeting held in 2004 and one director to serve a two-year term ending at
the Annual Meeting held in 2003, and to approve the adoption of the Energizer
Holdings, Inc. 2000 Incentive Stock Plan.
The number of votes cast, and the number of shares voting for or against each
candidate and the number of votes cast for the other matters submitted for
approval, as well as the number of abstentions with respect thereto, is as
follows:
VOTES VOTES
FOR WITHHELD
Robert A. Pruzan 79,812,745 1,708,298
F. Sheridan Garrison 79,177,685 2,343,358
R. David Hoover 77,778,243 3,742,800
H. Fisk Johnson 79,314,581 2,206,462
VOTES VOTES VOTES
FOR AGAINST ABSTAINED
Adoption of the Energizer
Holdings, Inc. 2000 Incentive
Stock Plan 70,096,069 10,981,435 443,539
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits Required by Item 601 of Regulation S-K
The following exhibits (listed by numbers corresponding to the Exhibit
Table of Item 601 in Regulation S-K) are filed with this report:
10(i) Form of Non-Qualified Stock Option dated November 20, 2000*
10(ii) Form of 2000 Restricted Stock Equivalent Agreement dated
November 20, 2000*
10(iii) Form of Change of Control Employment Agreement dated
November 20, 2000*
*Denotes a management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
A Current Report on Form 8-K dated October 31, 2000 was filed to set forth
Energizer's press release of its fourth quarter and fiscal 2000 results.
SIGNATURES
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.
ENERGIZER HOLDINGS, INC.
-----------------------------------------
Registrant
By: /s/ Daniel J. Sescleifer
Daniel J. Sescleifer
Executive Vice President,
Finance and Control
Date: February 9, 2001
EXHIBIT INDEX
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10(i) Form of Non-Qualified Stock Option dated November 20, 2000
10(ii) Form of 2000 Restricted Stock Equivalent Agreement dated
November 20, 2000
10(iii) Form of Change of Control Employment Agreement dated
November 20, 2000