UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 25, 2002
ENERGIZER HOLDINGS, INC.
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(Exact name of Registrant as specified in its charter)
MISSOURI 1-15401 No. 43-1863181
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(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification Number)
Incorporation)
533 MARYVILLE UNIVERSITY DRIVE, ST. LOUIS, MO 63141
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(Address of Principal Executive Offices) (Zip Code)
(314) 985-2000
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(Registrant's telephone number, including area code)
Item 5. Other Events
The Company today issued the following press release:
ENERGIZER HOLDINGS, INC. ANNOUNCES SECOND QUARTER RESULTS
St. Louis, Missouri, April 25, 2002 - Energizer Holdings, Inc, [NYSE: ENR],
today announced results of its second quarter ended March 31, 2002. Net
earnings for the quarter were $20.0 million, or $0.21 per diluted share, versus
net earnings of $5.6 million, or $0.06 per share in the second fiscal quarter of
2001. Excluding unusual items of $2.9 million, net of taxes, relating to a
restructuring of international operations, and $6.1 million, net of taxes,
relating to bad debt expense for accounts receivable from Kmart, net earnings
for the second quarter of 2002 were $29.0 million, or $0.31 per diluted share.
Last year's second quarter results included amortization expense, net of taxes,
of $3.8 million that would not have been amortized under the accounting rules
adopted at the beginning of fiscal 2002. Excluding amortization, results for
the second quarter of 2001 were $9.4 million, or $0.10 per diluted share.
Excluding the unusual items in both periods, net earnings and diluted earnings
per share increased 208% and 210%, respectively. Sales for the quarter were
$339.7 million compared to sales of $355.0 million in last year's second
quarter, a decrease of 4%. With the exception of a sales increase in Europe,
all other regions experienced sales declines. Geographic segment income
increased $9.5 million on higher North America and Europe results. General
corporate and other expenses declined $0.8 million, research and development
expenses declined $2.0 million and interest and other financing items decreased
$3.8 million.
For the six months ended March 31, 2002, net earnings were $90.4 million, or
$0.98 per diluted share, compared to net earnings of $59.8 million, or $0.63 per
diluted share, in the same period last year. Excluding unusual items of $5.8
million, net of taxes, relating to restructuring and $6.1 million, net of taxes,
relating to the Kmart accounts receivable, net earnings for the six months were
$102.3 million, or $1.11 per diluted share. In addition, the six months ended
March 31, 2001, included amortization expense of $7.6 million, net of taxes that
was not included in the current year due to new accounting rules. Excluding
this amortization, results for the first six months of 2001 were $67.4 million,
or $0.71 per diluted share. Sales for the six months declined 1% to $907.4
million versus the same period in the prior year, primarily due to declines in
Asia Pacific and South and Central America, nearly offset by increases in North
America and Europe. Geographic segment income increased $35.4 million,
primarily due to improved product costs and lower overhead expenses. For the
six months, general corporate and other expenses increased $8.0 million, while
research and development expenses, and interest and other financing items,
decreased by $4.3 million and $7.3 million, respectively.
For the quarter and six months, all geographic segments benefited from lower
product costs, reflecting lower material and variable costs, the impact of
restructuring activities undertaken in the fourth quarter of 2001, and improved
plant operating levels compared to last year.
"We are very pleased with these results. In a very tough environment we have
posted earnings per share, before unusual items, which are up over 200% for the
quarter and 56% for the year to date," said J. Patrick Mulcahy, chief executive
officer. "Competitive pressures in the U.S. and economic conditions in Asia and
Argentina have hurt the top line, but we've focused on the things that we can
control: more effective promotional spending and cost management. We gave up
some share in instances where we saw no return for added promotional spending,
and we've aggressively challenged our production and overhead costs. We believe
that a large portion of these costs savings are sustainable throughout the
remainder of the year."
North America
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Net sales to customers for the second quarter decreased $4.8 million, or 3%, due
to lower volumes, partially offset by favorable pricing and product mix. Gross
profit increased $5.5 million for the quarter, due to the favorable pricing and
product mix discussed above and lower product cost rates reflecting lower
material costs and improved plant costs and operating levels. Segment profit
increased $6.0 million reflecting higher margins and lower overhead and
advertising expenses and included the $10 million, pre-tax, charge related to
the Kmart bad debt expense.
Net sales to customers for the six months increased $22.4 million, or 4%, due to
higher alkaline volumes, partially offset by unfavorable pricing and product
mix, reflecting intense competition and higher promotional activity. Gross
profit increased $24.2 million for the six months on lower product cost rates
and higher sales. Segment profit increased $34.7 million, reflecting higher
margins and lower overhead and advertising expenses, partially offset by the
Kmart bad debt expense.
A.C. Nielsen reported the overall U.S. battery category sales value declined 4%
in the quarter, while Energizer battery sales value declined 7%. However,
Nielsen captures data from less than 50% of the total retail market. Energizer
estimates total retail consumption of its battery products was down 1% for the
quarter, as increases in non-Nielsen measured retailers nearly offset declines
in Nielsen measured channels.
Energizer estimates sales to its retail customers in the U.S. lagged retail
consumption by 8 to 10% during the third quarter of fiscal 2001 due to excess
inventory in the retail pipeline and does not believe such excess existed as of
March 31, 2002.
Asia Pacific
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For the second quarter, net sales decreased $2.8 million, or 4%, due to currency
devaluation, partially offset by favorable pricing and product mix. Segment
profit of $15.0 million was essentially flat versus prior year as lower product
costs were offset by sales declines.
For the six months, net sales declined $20.0 million, or 11%, due to lower
carbon zinc volumes and currency devaluation, partially offset by improved
pricing and product mix. Segment profit declined $2.9 million, or 7%, as lower
sales were offset by lower product costs.
Europe
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Second quarter net sales increased $1.7 million, or 3%, due to improved pricing
and product mix, partially offset by currency devaluation. Segment profit
improved $3.5 million, to a loss of $0.8 million, reflecting higher sales and
lower overhead and product costs.
For the six months, sales increased $7.5 million, or 5%, due to improved pricing
and product mix and higher alkaline volumes. Segment profit increased $7.0
million, primarily due to higher sales and improved product costs.
South and Central America
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Net sales for the quarter decreased $9.4 million, or 30%, primarily due to
currency devaluation and lower sales volumes in Argentina. Segment profit was
essentially flat, as lower sales were offset by lower overhead costs and higher
prices.
For the six months, net sales decreased $16.8 million, or 22%, due to lower
volumes and currency devaluation. Argentina accounted for $12.7 million of the
decline due to the recent economic crisis and deliberate actions to reduce sales
and accounts receivable in the first quarter in anticipation of a currency
devaluation. Segment profit declined $3.4 million, as lower sales were
partially offset by lower overhead and product costs.
Other Items
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For the quarter, corporate and other expenses were essentially flat versus the
prior year quarter. For the six months, corporate and other expenses increased
$8.0 million, reflecting higher compensation costs relating to company
performance and stock price and lower royalty income, partially offset by lower
management costs. Interest and other financing items decreased $3.8 million for
the quarter and $7.3 million for the six months, reflecting lower average
borrowings and lower interest rates, partially offset by currency exchange
losses. Research and development expense decreased $2.0 million for the quarter
and $4.3 million for the six months, reflecting cost savings efforts implemented
in the fourth quarter of 2001. Income taxes were 25.4% for the quarter and
37.2% for the six months, compared to 41.5% for the same periods last year. The
improvement in the tax rate for the current quarter includes a reduction
necessary to bring the tax rate for the six months in line with expectations for
the full year. The full tax rate for fiscal 2001 was 45.7%. The projected year
over year improvement is due to reduced foreign losses, the elimination of
goodwill amortization and lower taxes on repatriation of foreign earnings.
During the quarter, Energizer repurchased 44,700 shares of its common stock, for
a total of 399,200 shares purchased in the first half of fiscal year 2002.
Capital expenditures and depreciation expense for the quarter were $10.8 million
and $14.2 million, respectively. For the six months, capital expenditures were
$20.0 million, and depreciation expense was $29.2 million.
Restructuring Activities
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In March 2002, Energizer adopted a restructuring plan to reorganize certain
international selling affiliates. As a result of the restructuring plan,
Energizer recorded a $4.5 million charge, pre-tax, in the second quarter. The
total estimated provision will be $6.0 to $8.0 million, pre-tax. The remaining
provision will be recorded in the second half of 2002. Cost savings of this
plan are expected to be $2.0 to $2.5 million in fiscal 2003, and $4.0 to $5.0
million annually thereafter.
The results for the six months ended March 31, 2002, include the above
restructuring charge of $4.5 million and an additional charge of $4.0 million
relating to the restructuring plans announced in the fourth quarter of 2001. Of
the total $8.5 million restructuring charges recorded, $5.9 million was recorded
separately as a provision for restructuring and $2.6 million was recorded in
cost of goods sold relating to inventory write-downs and accelerated
depreciation.
See attached schedule and notes for additional information on the first fiscal
quarter of 2002.
# # #
Statements in this press release that are not historical, particularly
statements regarding the expenses associated with restructuring activity, the
cost savings resulting from that activity and other cost saving initiatives, as
well as the sustainability of those savings, Energizer's projected full-year tax
rate, levels of foreign losses, and Energizer's market share and retail
inventory levels of its products, 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. Severance
costs and other expenses associated with current and proposed restructuring
activity may be higher than anticipated, and there may be unknown expenses
associated with these activities. In addition, the cost reductions actually
realized as a result of restructuring activity and other cost savings
initiatives may be less significant than anticipated. Such reductions may also
not be sustainable over extended periods of time or may be offset by other
overhead and production expenses. Energizer's actual tax rate for fiscal 2002
may be higher than projected because of unforeseen changes in the tax laws or
applicable rates, higher taxes on repatriated earnings, or greater than
anticipated foreign losses. Such losses may be impacted by local economic
conditions or adverse governmental regulation, or by unforeseen increases in the
cost structures of Energizer's foreign affiliates. Energizer's estimates of the
total retail unit consumption of its battery products may be inaccurate, or may
not reflect segments of the retail market. Moreover, Energizer sales volumes in
future quarters may lag unit consumption if retailers are currently carrying
inventories in excess of Energizer estimates, or if those retailers elect to
further contract their inventory levels. 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, 2001, its
quarterly report on Form 10-Q for the period ended December 31, 2001, and its
Current Reports on Form 8-K dated April 25, 2000.
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 hereunto duly authorized.
ENERGIZER HOLDINGS, INC.
By: /s/ Daniel J. Sescleifer
Daniel J. Sescleifer
Executive Vice President and Chief Financial Officer
Dated: April 25, 2002