UNITED STATES
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 March 31, 2002
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.)
533 MARYVILLE UNIVERSITY DRIVE, ST. LOUIS MISSOURI 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)
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: _____
---
Number of shares of Energizer Holdings, Inc. common stock, $.01 par value,
outstanding as of the close of business on May 3, 2002.
91,388,561
---------------------
PART I - FINANCIAL INFORMATION
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(CONDENSED)
(DOLLARS IN MILLIONS--UNAUDITED)
QUARTER ENDED SIX MONTHS
MARCH 31, ENDED MARCH 31,
2002 2001 2002 2001
---- ---- ---- ----
Net sales . . . . . . . . . . . . . . . . . $339.7 $355.0 $907.4 $914.3
Cost of products sold . . . . . . . . . . . 189.8 204.6 494.8 516.2
Selling, general and administrative expense 79.6 93.1 161.0 176.3
Advertising and promotion expense . . . . . 24.4 27.4 70.4 76.7
Research and development expense. . . . . . 9.1 11.1 18.3 22.6
Provisions for restructuring. . . . . . . . 4.5 - 5.9 -
Interest expense. . . . . . . . . . . . . . 5.3 8.8 11.5 18.7
Other financing items, net. . . . . . . . . 0.2 0.5 1.5 1.6
------- ------- ------- -------
Earnings before income taxes. . . . . . . . 26.8 9.5 144.0 102.2
Income taxes. . . . . . . . . . . . . . . . (6.8) (3.9) (53.6) (42.4)
------- ------- ------- -------
Net earnings. . . . . . . . . . . . . . . . $ 20.0 $ 5.6 $ 90.4 $ 59.8
======= ======= ======= =======
Basic earnings per share. . . . . . . . . . $ 0.22 $ 0.06 $ 0.99 $ 0.64
Diluted earnings per share. . . . . . . . . $ 0.21 $ 0.06 $ 0.98 $ 0.63
<FN>
See accompanying Notes to Condensed Financial Statements
ENERGIZER HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(CONDENSED)
(DOLLARS IN MILLIONS--UNAUDITED)
MARCH 31, SEPTEMBER 30, MARCH 31,
2002 2001 2001
---- ---- ----
ASSETS
Current assets
Cash and cash equivalents . . . . . . . . . . . $ 34.6 $ 23.0 $ 16.3
Trade receivables, less allowance for doubtful
accounts of $8.0, $11.8 and $12.6, respectively 179.2 189.1 179.1
Inventories
Raw materials and supplies . . . . . . . . . 42.2 47.0 50.8
Work in process. . . . . . . . . . . . . . . 104.7 91.4 98.5
Finished products. . . . . . . . . . . . . . 173.0 222.9 243.1
--------- --------- ---------
Total Inventory. . . . . . . . . . . . . . . 319.9 361.3 392.4
Other current assets. . . . . . . . . . . . . . 237.9 209.9 185.3
--------- --------- ---------
Total current assets . . . . . . . . . . . . 771.6 783.3 773.1
--------- --------- ---------
Property at cost. . . . . . . . . . . . . . . . . . 1,032.3 1,030.0 1,036.5
Accumulated depreciation. . . . . . . . . . . . . . 570.6 553.9 557.5
--------- --------- ---------
461.7 476.1 479.0
Other assets. . . . . . . . . . . . . . . . . . . . 241.3 238.2 366.3
--------- --------- ---------
Total . . . . . . . . . . . . . . . . . $1,474.6 $1,497.6 $1,618.4
========= ========= =========
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities
Notes payable. . . . . . . . . . . . . . . . . . $ 85.4 $ 110.3 $ 144.8
Accounts payable . . . . . . . . . . . . . . . . 88.9 109.2 84.9
Other current liabilities. . . . . . . . . . . . 275.8 275.7 201.1
--------- --------- ---------
Total current liabilities . . . . . . . . . . 450.1 495.2 430.8
Long-term debt. . . . . . . . . . . . . . . . . . . 175.0 225.0 320.0
Other liabilities . . . . . . . . . . . . . . . . . 171.9 169.5 166.7
Shareholders equity
Common stock . . . . . . . . . . . . . . . . . . 1.0 1.0 1.0
Additional paid in capital . . . . . . . . . . . 784.4 784.1 783.9
Retained earnings. . . . . . . . . . . . . . . . 107.8 17.5 116.3
Treasury stock . . . . . . . . . . . . . . . . . (86.8) (79.6) (79.6)
Accumulated other comprehensive income . . . . . (128.8) (115.1) (120.7)
--------- --------- ---------
Total shareholders equity. . . . . . . . . . . 677.6 607.9 700.9
--------- --------- ---------
Total. . . . . . . . . . . . . . . . . . $1,474.6 $1,497.6 $1,618.4
========= ========= =========
<FN>
See accompanying Notes to Condensed Financial Statements
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(CONDENSED)
(DOLLARS IN MILLIONS - UNAUDITED)
SIX MONTHS ENDED MARCH 31,
2002 2001
---- ----
CASH FLOW FROM OPERATIONS
Net earnings. . . . . . . . . . . . . . . . . . . . . $ 90.4 $ 59.8
Non-cash items included in income . . . . . . . . . . 33.6 50.9
Sale of accounts receivable, net. . . . . . . . . . . (86.2) (26.0)
Changes in assets and liabilities used in operations. 72.8 56.9
Other, net. . . . . . . . . . . . . . . . . . . . . . 2.0 3.9
------- --------
Net cash flow from operations . . . . . . . . . . 112.6 145.5
CASH FLOW FROM INVESTING ACTIVITIES
Property additions. . . . . . . . . . . . . . . . . . (20.0) (36.0)
Proceeds from sale of property. . . . . . . . . . . . 0.2 5.3
Other, net. . . . . . . . . . . . . . . . . . . . . . 0.3 1.1
------- --------
Net cash used by investing activities . . . . . . (19.5) (29.6)
CASH FLOW FROM FINANCING ACTIVITIES
Principal payments on long-term debt
(including current maturities). . . . . . . . . . (50.0) (50.0)
Net increase/(decrease) in notes payable. . . . . . . (22.9) 14.5
Treasury stock purchases. . . . . . . . . . . . . . . (7.2) (79.6)
Proceeds from issuance of common stock. . . . . . . . 0.3 -
------- --------
Net cash used by financing activities . . . . . . (79.8) (115.1)
------- --------
Effect of exchange rate changes on cash. . . . . . . . . (1.7) (0.5)
------- --------
Net increase in cash and cash equivalents. . . . . . . . 11.6 0.3
Cash and cash equivalents, beginning of period . . . . . 23.0 16.0
------- --------
Cash and cash equivalents, end of period . . . . . . . . $ 34.6 $ 16.3
======= ========
<FN>
See accompanying Notes to Condensed Financial Statements
ENERGIZER HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2002
(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
Holdings, Inc. (Energizer) for the year ended September 30, 2001.
NOTE 2 - On October 1, 2001, Energizer adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Intangible Assets" (SFAS 142). SFAS 142
eliminates the amortization of goodwill and instead requires goodwill be tested
for impairment at least annually. Intangible assets deemed to have an
indefinite life under SFAS 142 are no longer amortized, but instead reviewed at
least annually for impairment. Intangible assets with finite lives are
amortized over its useful life.
As businesses have been acquired in the past, Energizer has allocated goodwill
and other intangible assets to reporting units within each operating segment.
Energizer's intangible assets are comprised of trademarks related to the
Energizer name, which are deemed indefinite-lived intangibles. Thus beginning
in fiscal 2002, these trademarks are no longer amortized.
As part of the implementation of SFAS 142, Energizer completed transitional
tests in the first quarter of fiscal 2002, which resulted in no impairment. The
fair value of the reporting unit was estimated using the discounted cash flow
method. Prospectively, Energizer will test its goodwill and intangible assets
for impairment as a part of its annual business planning cycle in the fourth
quarter of each fiscal year.
The following table represents the carrying amount of goodwill and trademarks by
segment at March 31, 2002:
South &
North Central
America Asia Europe America Total
-------- ----- ------ ------- -------
Goodwill . . . . . . . . . . . . 24.7 0.9 8.2 3.1 36.9
======== ===== ====== ======= =======
Trademarks - Gross . . . . . . . 413.8 23.6 - - 437.4
Trademarks - Accum. amortization (354.4) (9.6) - - (364.0)
-------- ----- ------ ------- -------
Trademarks - Net carrying amount 59.4 14.0 - - 73.4
======== ===== ====== ======= =======
As required by SFAS 142, the results for periods prior to fiscal 2002 were not
restated in the accompanying consolidated statement of earnings. A
reconciliation between net earnings and earnings per share reported by Energizer
and net earnings and earnings per share as adjusted to reflect the impact of
SFAS 142 is provided below.
Quarter ended Six Months Ended
March 31, 2001 March 31, 2001
-------------- --------------
Net earnings:
As reported $5.6 $59.8
Goodwill amortization, net of tax 3.1 6.1
Intangible asset amortization, net of tax 0.7 1.5
---- -----
Adjusted net earnings $9.4 $67.4
==== =====
Quarter ended Six Months Ended
March 31, 2001 March 31, 2001
-------------- --------------
Basic earnings per share:
As reported $0.06 $0.64
Goodwill amortization, net of tax 0.03 0.07
Intangible asset amortization, net of tax 0.01 0.02
----- -----
Adjusted net earnings $0.10 $0.73
===== =====
Diluted earnings per share:
As reported $0.06 $0.63
Goodwill amortization, net of tax 0.03 0.06
Intangible asset amortization, net of tax 0.01 0.02
----- -----
Adjusted net earnings $0.10 $0.71
===== =====
Basic shares 92.2 93.5
Diluted shares 94.1 95.0
NOTE 3 - The Emerging Issues Task Force (EITF) issued EITF 00-10, "Accounting
for Shipping and Handling Fees and Costs," which provides guidance on earnings
statement classification of amounts billed to customers for shipping and
handling. Energizer adopted EITF 00-10 in its fourth quarter of fiscal 2001.
Reclassification was necessary from net sales to cost of products sold of $8.1
and $18.6 for the quarter and six months ended March 31, 2001, respectively. In
addition, warehousing costs in selling, general and administrative expense of
$6.9 and $16.0 for the quarter and six months ended March 31, 2001,
respectively, were reclassified to cost of products sold. There was no impact
to net earnings.
The EITF also issued EITF 00-14 and 00-25. EITF 00-14, "Accounting for Certain
Sales Incentives," provides guidance on accounting for discounts, coupons,
rebates and free product. EITF 00-25, "Vendor Income Statement Characterization
of Consideration from a Vendor to a Retailer," provides guidance on accounting
for considerations other than those directly addressed in EITF 00-14. Energizer
adopted EITF 00-14 and 00-25 in its fourth quarter of fiscal 2001.
Reclassification of $5.0 and $14.9 was necessary from advertising and promotion
expense to net sales for the quarter and six months ended March 31, 2001,
respectively. There was no impact to net earnings.
NOTE 4 - Energizer operations are managed via four geographic segments. In the
past, each segment has reported profit from its intersegment sales in its own
segment's results. Changes in intersegment profit captured in inventory not yet
sold to outside customers were recorded in general corporate expenses. Due to
increased levels of intersegment sales related to production consolidation and
in light of Energizer's current management objectives and structure, Energizer
believes the exclusion of intersegment profit in segment results is a more
appropriate view of its operating segments.
Beginning in fiscal 2002, Energizer reports segment results reflecting all
profit derived from each outside customer sale in the region in which the
customer is located. Profit on sales to other segments is no longer reported in
the selling region. As a result, segments with manufacturing capacity that are
net exporters to other segments show lower segment profit than in the past.
Segments that are net importers of Energizer manufactured product show higher
segment profit than in the past.
This new 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.
FOR THE QUARTER ENDED MARCH 31,
-------------------------------
2002 2001
---------- ----------
NET SALES
North America . . . . . . $ 184.2 $ 189.0
Asia Pacific. . . . . . . 75.3 78.1
Europe. . . . . . . . . . 58.5 56.8
South & Central America . 21.7 31.1
---------- ----------
Total Net Sales $ 339.7 $355.0
========== ==========
FOR THE SIX MONTHS ENDED MARCH 31,
----------------------------------
2002 2001
---------- ----------
NET SALES
North America . . . . . . $ 536.1 $ 513.7
Asia Pacific. . . . . . . 158.3 178.3
Europe. . . . . . . . . . 153.6 146.1
South & Central America . 59.4 76.2
---------- ---------
Total Net Sales $ 907.4 $ 914.3
========== ==========
FOR THE QUARTER ENDED MARCH 31,
---------------------------------
2002 2001
--------- -------
PROFITABILITY
North America. . . . . . . . . . . . . . . . . . . . $ 43.2 $ 37.2
Asia Pacific . . . . . . . . . . . . . . . . . . . . 15.0 14.7
Europe . . . . . . . . . . . . . . . . . . . . . . . (0.8) (4.3)
South and Central America. . . . . . . . . . . . . . 1.8 2.1
--------- -------
TOTAL SEGMENT PROFITABILITY . . . . . . . . . . . $ 59.2 $ 49.7
General corporate and other expenses . . . . . . . . (13.3) (14.1)
Research and development expense . . . . . . . . . . (9.1) (11.1)
---------- -------
Operating profit before unusual items
and amortization . . . . . . . . . . . . . . . . 36.8 24.5
Provisions for restructuring and other related costs (4.5) -
Amortization of intangibles. . . . . . . . . . . . . - (5.7)
Interest and other financial items . . . . . . . . . (5.5) (9.3)
--------- --------
Total earnings before income taxes. . . . . . . . $ 26.8 $ 9.5
========= ========
FOR THE SIX MONTHS ENDED MARCH 31,
----------------------------------
2002 2001
------ -------
PROFITABILITY
North America. . . . . . . . . . . . . . . . . . . . $ 160.9 $ 126.2
Asia Pacific . . . . . . . . . . . . . . . . . . . . 36.6 39.5
Europe . . . . . . . . . . . . . . . . . . . . . . . 7.4 0.4
South and Central America. . . . . . . . . . . . . . 7.4 10.8
--------- ---------
TOTAL SEGMENT PROFITABILITY . . . . . . . . . . . $ 212.3 $ 176.9
General corporate and other expenses . . . . . . . . (28.5) (20.5)
Research and development expense . . . . . . . . . . (18.3) (22.6)
---------- ----------
Operating profit before unusual items
and amortization . . . . . . . . . . . . . . . . 165.5 133.8
Provisions for restructuring and other related costs (8.5) -
Amortization of intangibles. . . . . . . . . . . . . - (11.3)
Interest and other financial items . . . . . . . . . (13.0) (20.3)
---------- ----------
Total earnings before income taxes. . . . . . . . $ 144.0 $ 102.2
========== ==========
FOR THE QUARTER ENDED MARCH 31,
-------------------------------
NET SALES BY PRODUCT LINE 2002 2001
- ------------------------- ---- ----
Alkaline Batteries . . $ 211.6 $ 217.9
Carbon Zinc Batteries. 58.4 63.0
Lighting Products. . . 22.8 26.4
Miniature Batteries. . 18.3 17.4
Other. . . . . . . . . 28.6 30.3
------- ------
Total Net Sales $ 339.7 $ 355.0
======= =======
FOR THE SIX MONTHS ENDED MARCH 31,
----------------------------------
NET SALES BY PRODUCT LINE 2002 2001
- ------------------------- ---- ----
Alkaline Batteries . . $ 632.2 $ 613.2
Carbon Zinc Batteries. 125.0 146.6
Lighting Products. . . 55.0 58.6
Miniature Batteries. . 34.9 34.0
Other. . . . . . . . . 60.3 61.9
------- ------
Total Net Sales $ 907.4 $ 914.3
======= ======
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.
The following table sets forth the computation of basic and diluted earnings per
share for the quarter and six months ended March 31, 2002 and 2001,
respectively.
Quarter Ended Six Months Ended
March 31, March 31,
2002 2001 2002 2001
----- ----- ----- -----
Numerator:
Numerator for basic and dilutive earnings per share -
Net earnings. . . . . . . . . . . . . . . . . . . . . $20.0 $ 5.6 $90.4 $59.8
Denominator:
Denominator for basic earnings per share -
Weighted average shares. . . . . . . . . . . . . 91.4 92.2 91.5 93.5
Effect of dilutive securities
Stock Options. . . . . . . . . . . . . . . . . . 0.8 1.4 0.5 1.0
Restricted Stock Equivalents . . . . . . . . . . 0.6 0.5 0.6 0.5
----- ----- ----- -----
1.4 1.9 1.1 1.5
Denominator for dilutive earnings per share -
Weighted-average shares and assumed conversions. 92.8 94.1 92.6 95.0
===== ===== ===== =====
Basic earnings per share . . . . . . . . . . . . . . . . . $0.22 $0.06 $0.99 $0.64
Diluted earnings per share . . . . . . . . . . . . . . . . $0.21 $0.06 $0.98 $0.63
NOTE 6 - The following table reconciles as reported net earnings and earnings
per share to earnings and earnings per share excluding unusual items.
Quarter Ended Six Months Ended
March 31, March 31,
2002 2001 2002 2001
----- ----- ------ -----
Net Earnings:
As reported . . . . . . . . . . . . . . . . . . . . . $20.0 $ 5.6 $ 90.4 $59.8
Provisions for restructuring & related costs (Note 7) 2.9 - 5.8 -
Accounts receivable write-down (Note 8) . . . . . . . 6.1 - 6.1 -
Amortization (Note 2) . . . . . . . . . . . . . . . . - 3.8 - 7.6
----- ----- ------ -----
Net earnings excluding unusual items. . . . . . . . . $29.0 $ 9.4 $102.3 $67.4
===== ===== ====== =====
Basic Earnings Per Share:
As reported . . . . . . . . . . . . . . . . . . . . . $0.22 $0.06 $ 0.99 $0.64
Provisions for restructuring & related costs. . . . . 0.03 - 0.06 -
Accounts receivable write-down. . . . . . . . . . . . 0.07 - 0.07 -
Amortization. . . . . . . . . . . . . . . . . . . . . - 0.04 - 0.09
----- ----- ------ -----
Basic earnings per share excluding unusual items. . . $0.32 $0.10 $ 1.12 $0.73
===== ===== ====== =====
Diluted Earnings Per Share:
As reported . . . . . . . . . . . . . . . . . . . . . $0.21 $0.06 $ 0.98 $0.63
Provisions for restructuring & related costs. . . . . 0.03 - 0.06 -
Accounts receivable write-down. . . . . . . . . . . . 0.07 - 0.07 -
Amortization. . . . . . . . . . . . . . . . . . . . . - 0.04 - 0.08
----- ----- ------ -----
Diluted earnings per share excluding unusual items. . $0.31 $0.10 $ 1.11 $0.71
===== ===== ====== =====
NOTE 7 - In March 2002, Energizer adopted a restructuring plan to reorganize
certain European selling affiliates. The plan will involve terminating up to 75
sales and administrative employees resulting in a provision for restructuring of
$6.0 to $8.0, pre-tax. During the quarter ended March 31, 2002, Energizer
recorded a provision for restructuring related to the plan described above of
$4.5 pre-tax or $2.9 after-tax. The remaining cost of the plan will be recorded
in the second half of fiscal 2002.
As part of restructuring plans announced in the fourth quarter of fiscal 2001,
Energizer ceased production and terminated substantially all of its employees at
its Mexican carbon zinc production facility in the first quarter of fiscal 2002,
as well as continuing execution of other restructuring actions. Energizer
recorded provisions for restructuring of $1.4 pre-tax, as well as related costs
for accelerated deprecation and inventory obsolescence of $2.6 pre-tax, which
was recorded in cost of products sold in the first quarter of fiscal 2002.
Total provisions for restructuring and related costs were $4.0 pre-tax, or $2.9
after-tax, in the first quarter of fiscal 2002.
As of March 31, 2002, 509 of a total of 570 employees have been terminated in
connection with the 2001 plans, with four terminated in the current quarter.
Activities impacting the restructuring reserve, which are recorded in other
current liabilities on the Consolidated Balance Sheet, during the six months
ended March 31, 2002, are presented in the following table:
Beginning Ending
Balance Provision Activity Balance
------- --------- --------- -------
2002 PLAN
- --------------------
Termination benefits - 3.6 - 3.6
Other cash costs . . - 0.9 - 0.9
------- --------- --------- -------
Total. . . . . . . . - 4.5 - 4.5
======= ========= ========= =======
2001 PLAN
- --------------------
Termination benefits 5.3 0.9 (5.0) 1.2
Other cash costs . . 3.9 0.5 (1.9) 2.5
------- --------- --------- -------
Total. . . . . . . . 9.2 1.4 (6.9) 3.7
======= ========= ========= =======
TOTAL
- --------------------
Termination benefits 5.3 4.5 (5.0) 4.8
Other cash costs . . 3.9 1.4 (1.9) 3.4
------- --------- --------- -------
Total. . . . . . . . 9.2 5.9 (6.9) 8.2
======= ========= ========= =======
NOTE 8- On January 23, 2002, Kmart filed for Chapter 11 bankruptcy protection.
At March 31, 2002, Energizer's Special Purpose Entity (SPE) had pre-petition
accounts receivable from Kmart Corporation of $20.0. In the current quarter,
Energizer recorded a charge related its such receivables of $10.0 pre-tax or
$6.1 after-tax. It is not yet known what portion, if any, of the balance will
be collected. Recovery of less than $10.0 of pre-petition receivables may
result in additional charges in the future.
NOTE 9 - The components of total comprehensive income for the quarter and six
months ended March 31, 2002 and 2001, respectively, are shown in the following
table:
Quarter Ended March 31,
2002 2001
-------- -------
Net earnings . . . . . . . . . . . . . . . $ 20.0 $ 5.6
Other comprehensive income items:
- - Foreign currency translation adjustments (5.4) (12.1)
-------- -------
Total comprehensive income . . . . . . . . $ 14.6 ($6.5)
========= =======
Six Months Ended March 31,
2002 2001
------- ------
Net earnings . . . . . . . . . . . . . . . $ 90.4 $59.8
Other comprehensive income items:
- - Foreign currency translation adjustments (13.1) (9.8)
- - Foreign currency translation adjustments
related to elimination of one month
reporting lag . . . . . . . . . . . . . - (4.4)
- - Minimum pension liability adjustment,
net of taxes of $.3 . . . . . . . . . . (0.3) -
------- ------
Total comprehensive income . . . . . . . . $ 77.0 $45.6
======= ======
NOTE 10 - 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 an SPE, under SFAS No. 140,
"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 11 below.
March 31, 2002 September 30, 2001 March 31, 2001
-------------- ------------------ --------------
Total outstanding accounts
receivable sold to SPE. 134.5 184.1 153.1
Cash received by SPE from
sale of receivables to third party - 86.2 74.0
Subordinated retained interest . . 134.5 97.9 79.1
Energizer's investment in SPE. . . 134.5 97.9 79.1
Absent the sale treatment required for the SPE, Energizer's balance sheet would
reflect additional accounts receivable, notes payable and lower other current
assets as follows:
March 31, 2002 September 30, 2001 March 31, 2001
-------------- ------------------ --------------
Additional accounts receivable 134.5 184.1 153.1
Additional notes payable . . . - 86.2 74.0
Lower other current assets . . 134.5 97.9 79.1
NOTE 11- Other Current Assets consist of the following:
March 31, 2002 September 30, 2001 March 31, 2001
--------------- ------------------- ---------------
Investment in SPE. . . . . . $ 134.5 $ 97.9 $ 79.1
Miscellaneous receivables. . 22.1 25.3 28.3
Deferred income tax benefits 44.9 46.3 39.0
Prepaid expenses . . . . . . 36.3 39.8 38.3
Other current assets . . . . 0.1 0.6 0.6
--------------- ------------------- ---------------
$ 237.9 $ 209.9 $ 185.3
=============== =================== ===============
NOTE 12- Other Assets consist of the following:
March 31, 2002 September 30, 2001 March 31, 2001
--------------- ------------------- ---------------
Goodwill. . . . . . . . . . . . . $ 36.9 $ 38.1 $ 159.1
Other intangible assets . . . . . 73.4 72.7 76.7
Pension asset . . . . . . . . . . 111.6 106.2 107.4
Other assets and deferred charges 19.4 21.2 23.1
--------------- ------------------- ---------------
$ 241.3 $ 238.2 $ 366.3
=============== =================== ===============
NOTE 13- Other Liabilities consist of the following:
March 31, 2002 September 30, 2001 March 31, 2001
--------------- ------------------- ---------------
Postretirement benefits liability $ 92.2 $ 91.7 $ 89.7
Other non-current liabilities . . 79.7 77.8 77.0
--------------- ------------------- ---------------
$ 171.9 $ 169.5 $ 166.7
=============== =================== ===============
NOTE 14- 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 March 31, 2002, Energizer has purchased
approximately 4.2 million shares under the authorization.
NOTE 15- The FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. Energizer is required to adopt SFAS 143 no
later than the first quarter of fiscal 2003, although early adoption is allowed.
Energizer determined that SFAS 143 would not have a material effect on its
financial statements.
The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," which provides guidance on the accounting for the impairment
or disposal of long-lived assets. Energizer is required to adopt SFAS 144 no
later than the first quarter of fiscal 2003, although early adoption is allowed.
Energizer determined that SFAS 144 would not have a material effect on its
financial statements.
The FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections." SFAS 145
updates, clarifies and simplifies existing accounting pronouncements. Energizer
is required to adopt SFAS 145 no later than the first quarter of fiscal 2003,
although early adoption is allowed. Energizer determined that SFAS 145 would
not have a material effect on its financial statements.
ENERGIZER HOLDINGS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL INFORMATION
(DOLLARS IN MILLIONS)
HIGHLIGHTS / OPERATING RESULTS
Net earnings for the six months ended March 31, 2002 were $90.4 or $.99 per
basic share and $.98 per diluted share compared to $59.8, or $.64 per basic
share and $.63 per diluted share for the same six month period last year.
Included in the current six month net earnings are restructuring provisions and
related costs of $5.8 after taxes, or $.06 per share and a charge related to
Kmart accounts receivable of $6.1 after taxes, or $.07 per share. The prior
year six month period includes amortization expense that would not have been
amortized under SFAS 142, of $7.6 after taxes, or $.09 per basic share and $.08
per diluted share. Due to the adoption of SFAS 142 at the beginning of fiscal
2002 as described in Note 2 to the Condensed Financial Statements, amortization
expense was discontinued beginning in fiscal 2002. Adjusting for these items in
both six month periods, net earnings would have been $102.3, or $1.12 per basic
share and $1.11 per diluted share in the current period compared to $67.4, or
$.73 per basic share and $.71 per diluted share last year.
For the quarter ended March 31, 2002, net earnings were $20.0 or $.22 per
basic share and $.21 per diluted share compared to $5.6, or $.06 per share for
the quarter ended March 31, 2001. Included in the current quarter net earnings
are restructuring provisions of $2.9 after taxes, or $.03 per share and a charge
related to Kmart accounts receivable of $6.1 after taxes, or $.07 per share. The
prior year quarter includes amortization expense as described in the previous
paragraph of $3.8, or $.04 per share. Adjusting for these items in both
quarters, net earnings would have been $29.0, or $.32 per basic share and $.31
per diluted share in the current quarter compared to $9.4, or $.10 per share for
the prior year quarter. Note 6 summarizes the earnings and earnings per share
excluding unusual items for the current and prior six months and quarter.
Net sales for the six months ended March 31, 2002 decreased $6.9 or 1%,
with decreases in the Asia Pacific and South and Central America regions,
partially offset by increases in North America and Europe. For the quarter, net
sales decreased $15.3, or 4% with lower sales in all regions except Europe. See
the following section for comments on sales changes by segment.
Gross margin for the six months increased $14.5 or 4% reflecting lower
product cost rates, partially offset by the impact of lower sales. For the
quarter, gross margin decreased $.5, with lower product costs more than offset
by the impact of lower sales. Gross margin percentage improved 2.0 percentage
points to 45.5% for the current six months and 1.7 percentage points to 44.1%
for the quarter, primarily due to lower product costs. For the six months and
quarter, 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.
Selling, general and administrative expenses decreased $15.3 or 9% in the
six months and $13.5 or 15% in the quarter due to the absence of amortization
expense and lower overheads in all regions, partially offset by the $10.0 charge
related to Kmart accounts receivable and, in the six months, higher general
corporate expense. Selling, general and administrative expenses as a percent of
sales was 17.7% and 23.4% in the current six months and quarter, respectively,
compared to 19.3% and 26.2% in the same periods a year ago, respectively.
Advertising and promotion expense declined $6.3 or 8% in the six months and
$3.0, or 11% in the quarter primarily on decreases in North America. Advertising
and promotion as a percent of sales was 7.8% and 7.2% in the current six months
and quarter, respectively, compared to 8.4% and 7.7% in the same periods a year
ago, respectively.
SEGMENT RESULTS
Energizer Holdings, Inc. (Energizer) operations are managed via four
geographic segments. In the past, each segment has reported profit from its
intersegment sales in its own segment results. Changes in intersegment profit
captured in inventory and not yet sold to outside customers were recorded in
general corporate expenses. Due to increased levels of intersegment sales
related to production consolidation and in light of Energizer's current
management objectives and structure, Energizer believes the exclusion of
intersegment profit in segment results is a more appropriate view of its
operating segments.
Beginning in fiscal 2002, Energizer reports segment results reflecting all
profit derived from each outside customer sale in the region in which the
customer is located. Profit on sales to other segments is no longer reported in
the selling region. As a result, segments with manufacturing capacity that are
net exporters to other segments show lower segment profit than in the past.
Segments that are net importers of Energizer manufactured product show higher
segment profit than in the past.
This structure is the basis for Energizer's reportable operating segment
information, as included in the tables in Note 4 to the Condensed Financial
Statements for the quarter and six months ended March 31, 2002 and 2001.
North America
Net sales for North America were $536.1 for the six months ended March 31,
2002, an increase of $22.4 or 4%, on higher alkaline volume, partially offset by
unfavorable pricing and product mix reflecting intense competition and high
promotional activity, primarily in the first quarter. For the six months,
alkaline volume increased 8% versus the same period last year.
For the current quarter, sales decreased $4.8, or 3% as lower volume was
partially offset by favorable pricing and product mix. Alkaline unit volume
declined 5% for the current quarter primarily due to a large customer delaying
orders pending a packaging change, partially offset by higher unit volume in the
remainder of the business. The current quarter reflects modest reductions in
promotional levels compared to the same quarter last year and the first quarter
of this year.
A. C. Nielsen reported the overall battery category sales value declined 4%
in the quarter while Energizer's battery sales value declined 7%. However, A.
C. 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. We do not believe such excess exists at March
31, 2002.
Gross margin increased $24.2 for the six months, primarily on improved
product cost reflecting lower material and other variable costs and improved
plant operating levels, as well as higher sales. Segment profit increased $34.7
or 27% in the six months on higher gross margin and lower overhead and
advertising expense, partially offset by a $10.0 provision for doubtful accounts
receivable from Kmart. Favorable costs for the six months reflect the impact of
restructuring actions that began in the fourth quarter of fiscal 2001.
For the quarter, gross margin increased $5.5 on favorable pricing and
product mix and lower product cost. Segment profit increased $6.0 or 16% in the
quarter on lower overhead and advertising expense and higher gross margin,
partially offset by the $10.0 provision for doubtful accounts receivable
described above.
Asia Pacific
Net sales for Asia Pacific were $158.3 for the six months ended March 31,
2002, a decrease of $20.0, or 11%. Lower volume, primarily carbon zinc, and
unfavorable currency impacts of $7.4 were partially offset by improved pricing
and product mix. Carbon zinc volume declined 14%, as a number of key markets
continue to experience unfavorable economic conditions. For the quarter, sales
were $75.3, a decrease of $2.8 or 4%, due to unfavorable currency impacts,
partially offset by favorable pricing and product mix. The impact of unit
volume on sales was nearly flat for the quarter as continuing carbon zinc
declines were offset by improved alkaline volume.
Segment profit decreased $2.9, or 7% for the six months, and increased $.3
or 2% for the quarter as lower sales were more than offset by lower product
costs and higher prices.
Europe
Net sales for Europe were $153.6 for the six months ended March 31, 2002,
an increase of $7.5, or 5% on improved pricing and product mix and higher
alkaline volume, partially offset by lower carbon zinc volume. For the quarter,
sales were $58.5, an increase of $1.7, or 3% as improved pricing and product mix
was partially offset by unfavorable currency impacts.
Segment results improved $7.0 for the six months and improved $3.5 for the
quarter on higher sales and lower product and overhead costs, partially offset
by unfavorable currency effects.
South and Central America
Net sales for South and Central America for the six months ended March 31,
2002 were $59.4, a decrease of $16.8, or 22% on lower volume and unfavorable
currency effects of $6.1, partially offset by higher prices. For the quarter,
net sales declined $9.4, or 30% on lower volume and currency effects of $5.4,
partially offset by higher prices. Alkaline and carbon zinc volumes declined by
17% and 13%, for the six months and 22% and 8% for the quarter, respectively.
Lower sales in Argentina accounted for about 75% of the sales decline in the six
months and quarter. In the first quarter, Energizer took deliberate actions to
reduce sales and accounts receivable in Argentina in anticipation of the
currency devaluation. In the second quarter, following devaluation, demand has
declined sharply, however Energizer has maintained its market share.
Segment profit decreased $3.4 million for the six months and $.3 for the
quarter as lower sales were nearly offset by lower overheads, higher prices and
lower product costs. Cost and currency management initiatives in Argentina
mitigated a portion of the impact of the negative economic situation.
Future sales and segment profit for the South and Central America region
will be significantly impacted by economic and market conditions in Argentina,
which accounted for approximately 30% of South and Central America's net sales
for the fiscal year ended September 30, 2001.
OTHER COSTS AND EXPENSES
General Corporate and Other Expenses
Corporate and other expenses increased $8.0 to $28.5 for the six months
ended March 31, 2002, reflecting higher compensation costs related to company
performance and stock price, and lower royalty income, partially offset by lower
management costs. For the quarter, corporate and other expenses decreased $.8
to $13.3 on lower management costs.
Research and Development Expenses
Research and development expense decreased $4.3 and $2.0 in the current six
months and quarter ended March 31, 2002, respectively, as Energizer focused on
new and improved products for retail applications and reduced spending on
products designed for industrial applications.
Restructuring Activity
In March 2002, Energizer adopted a restructuring plan to reorganize certain
European selling affiliates. The plan will involve terminating up to 75 sales
and administrative employees resulting in a provision for restructuring of $6.0
to $8.0, pre-tax. During the quarter ended March 31, 2002, Energizer recorded a
pre-tax provision for restructuring related to the plan described above of $4.5.
The remaining cost of the plan will be recorded in the second half of fiscal
2002. Cost savings from the plan are expected to be $2.0 to $2.5 in fiscal 2003
and $4.5 to $5.0, annually, in fiscal 2004 and thereafter.
As part of the restructuring plans announced in the fourth quarter of
fiscal 2001, Energizer recorded provisions for restructuring of $1.4, pre-tax,
as well as related costs for accelerated depreciation and inventory obsolescence
of $2.6, pre-tax in the current six months, which are reflected in cost of
products sold.
Total provisions for restructuring and related costs were $8.5 pre-tax,
$5.8 after-tax and $.06 per share in the current six months. Total provisions
for restructuring for the current quarter were $4.5 pre-tax, $2.9 after-tax and
$.03 per share.
Activities impacting the restructuring reserve during the six months ended
March 31, 2002 are presented in Note 7 to the Condensed Financial Statements.
Goodwill and Intangible Amortization
Energizer adopted SFAS No. 142, "Goodwill and Other Intangible Assets" as
of October 1, 2001. As a result, Energizer no longer amortizes its goodwill and
intangible assets, which consist of tradenames. See Note 2 to the Condensed
Financial Statements for further discussion.
Interest Expense and Other Financing Costs
Interest expense decreased $7.2 and $3.5 for the current six months and
quarter ended March 31, 2002, respectively, reflecting lower average borrowings
at lower average interest rates. Other financing costs decreased $.1 and $.3
for the current six months and quarter, respectively, as unfavorable net
currency exchange, primarily in Argentina, was nearly offset by lower discounts
on the sale of accounts receivable under a financing arrangement.
Income Taxes
Income taxes, which include federal, state and foreign taxes, were 37.2%
for the current six months, compared to a tax rate of 41.5% for the same period
last year. The improvement in the tax rate for the six-month period is
primarily due to the absence of the unfavorable impact of goodwill amortization,
lower operating losses in certain foreign jurisdictions with no corresponding
tax benefit and lower taxes on the repatriation of foreign earnings.
For the current quarter, income taxes were 25.4% compared to 41.5% for the
same period last year. The improvement in the tax rate for the current quarter
includes the reduction necessary to bring the tax rate for the six months in
line with expectations of the tax rate for the full year.
FINANCIAL CONDITION
Cash flow from operations was $112.6 for the six months ended March 31,
2002 compared to $145.5 of cash flow from operations for the same period in
fiscal 2001. The decrease in cash flow from operations was primarily due to
reductions in accounts receivable sold to an outside party under a financing
arrangement. Capital expenditures totaled $20.0 and $36.0 for the six months
ended March 31, 2002 and 2001, respectively. Energizer purchased 399,200 shares
of treasury stock in the six months ended March 31, 2002 for $7.2.
Working capital was $321.5 at March 31, 2002 compared to $288.1 at
September 30, 2001, primarily reflecting seasonal increases. Working capital at
March 31, 2002 compared to $342.3 at March 31, 2001 reflects lower inventory and
higher accrued liabilities that were offset by lower notes payable and higher
investment in Energizer's Special Purpose Entity (SPE). See below for further
discussion on the SPE. Energizer's total debt decreased from $464.8 at March 31,
2001 to $335.3 at September 30, 2001 to $260.4 at March 31, 2002 as the excess
cash generated from operations was used to pay down 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.
Special Purpose Entity
Energizer generates accounts receivable from its customers through the
ordinary course of business. Substantially all accounts receivable in the U.S.
are routinely sold to Energizer Receivables Funding Corporation (the SPE), which
is a wholly owned, bankruptcy remote subsidiary of Energizer. The SPE's only
business activities relate to acquiring and selling interests in Energizer's
receivables, and it is used as an additional source of liquidity. The SPE sells
an undivided percentage ownership interest in each individual receivable to an
unrelated party (the Conduit) and uses the cash collected on these receivables
to purchase additional receivables from Energizer.
The trade receivables sale facility represents "off-balance sheet
financing," since the Conduit's ownership interest in the SPE's accounts
receivable results in assets being removed from our balance sheet, rather than
resulting in a liability to the Conduit. Upon the facility's termination, the
Conduit would be entitled to all cash collections on the SPE's accounts
receivable until its purchased interest has been repaid.
The terms of the agreements governing this facility qualify trade
receivables sale transactions for "sale treatment" under generally accepted
accounting principles in the United States of America. As such, Energizer is
required to account for the SPE's transactions with the Conduit as a sale of
accounts receivable instead of reflecting the Conduit's net investment as
long-term debt with a pledge of accounts receivable as collateral. Absent this
"sale treatment," Energizer's balance sheet would reflect additional accounts
receivable and short-term debt and lower other current assets. See further
discussion in Note 10.
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 had an annual unfavorable impact of $.3 on Energizer's net earnings
and cash flows based upon current debt levels.
During the current quarter, Energizer contributed $8.4 of capital to its
Argentine subsidiary, sufficient to repay all its U.S. dollar liabilities in
order to mitigate exposure to further currency exchange losses.
On January 23, 2002, Kmart Corporation filed for Chapter 11 bankruptcy
protection. At March 31, 2002, Energizer's SPE had pre-petition accounts
receivable from Kmart of $20.0. In the current quarter, Energizer recorded a
charge related to its receivables of $10.0 pre-tax or $6.1 after-tax. It is not
yet known what portion, if any, of the balance will be collected. Recovery of
less than $10.0 of pre-petition receivables may result in additional charges in
the future.
CRITICAL ACCOUNTING POLICIES
Energizer identified the policies below as critical to its business
operations and the understanding of its results of operations. The following
discussion is presented as recommended by Financial Reporting Release No. 60,
"Cautionary Advice Regarding Disclosure About Critical Accounting Policies."
The impact and any associated risks related to these policies on its business
operations is discussed throughout Management's Discussion and Analysis of
Financial Condition and Results of Operations where such policies affect the
reported and expected financial results.
Preparation of the financial statements in conformity with generally
accepted accounting principles in the United States of America requires
Energizer to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities and the
reported amounts of revenues and expenses. On an on-going basis, Energizer
evaluates its estimates, including those related to customer programs and
incentives, product returns, bad debts, inventories, intangible assets and other
long-lived assets, income taxes, financing operations, restructuring, pensions
and other postretirement benefits, and contingencies. Actual results could
differ from those estimates. This listing is not intended to be a comprehensive
list of all of Energizer's accounting policies.
- - Revenue recognition - Energizer provides its customers a variety of
programs designed to promote sales of its products, many of which require
periodic payments and allowances based on estimated results of specific
programs. Such payments and allowances are recorded as a reduction to net
sales. Energizer accrues at the time of sale the estimated total payments and
allowances associated with each sale and continually assesses the adequacy of
accruals for program costs not yet paid. To the extent total program payments
differ from estimates, adjustments may be necessary.
- - Allowance for Doubtful Accounts - Energizer maintains an allowance for
doubtful accounts receivable for estimated losses resulting from customers that
are unable to meet their financial obligations. The financial condition of
specific customers is considered when establishing the allowance. Provisions to
increase the allowance for doubtful accounts are included in selling, general
and administrative expenses. If actual bad debt losses exceed estimates,
additional provisions may be required in the future. If a large customer cannot
meet its payment terms, Energizer may incur a significant loss, as was the case
with Kmart in the current quarter.
- - Pension Plans and Other Postretirement Benefits - The determination of
Energizer's obligation and expense for pension and other postretirement benefits
is dependent on certain assumptions developed by Energizer and used by actuaries
in calculating such amounts. Assumptions include, among others, the discount
rate, future salary increases and the expected long-term rate of return on plan
assets. Actual results that differ from assumptions made are accumulated and
amortized over future periods and therefore, generally affect Energizer's
recognized expense and recorded obligation in such future periods. Significant
differences in actual experience or significant changes in assumptions may
materially affect pension and other postretirement obligations.
- - Valuation of long-lived assets - Energizer periodically evaluates its
long-lived assets, including goodwill and intangible assets, for potential
impairment indicators. Judgments regarding the existence of impairment
indicators are based on legal factors, market conditions and operational
performance. Future events could cause Energizer to conclude that impairment
indicators exist. Energizer uses the discounted cash flows method to determine
if impairment exists. This requires management to make assumptions regarding
future income, working capital and discount rates, which affect the impairment
calculation.
- - Income taxes - Energizer estimates income taxes and the income tax rate in
each jurisdiction that it operates. This involves estimating taxable earnings,
specific taxable and deductible items, the likelihood of generating sufficient
future taxable income to utilize deferred tax assets, and possible exposures
related to future tax audits. To the extent these estimates change, adjustments
to income taxes are made in the period in which the estimate is changed.
For interim quarterly reporting, Energizer estimates an annualized blended
world-wide effective tax rate based on estimated taxable earnings and specific
tax attributes of each jurisdiction in which it operates. This estimated
annualized tax rate is applied to the first quarter consolidated pre-tax
earnings. As estimates of the variables discussed above change during the year,
the annualized tax rate may change. Significant changes in a particular
jurisdiction, such as an economic crisis, currency devaluation or change in tax
law can significantly impact Energizer's earnings estimates and thus the
estimated tax rate for the year.
RECENTLY ISSUED ACCOUNTING STANDARDS
See discussion in Note 15 to the Condensed Financial Statements.
FORWARD-LOOKING STATEMENTS
Statements in this document that are not historical, particularly
statements regarding estimates of retail consumption of Energizer's battery
products and retailer inventory levels, cost savings from restructuring
activity, Energizer's projected full-year tax rate, its continuing 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
estimates of retail consumption of its battery products may be inaccurate, or
may not reflect segments of the retail market. Moreover, Energizer sales volume
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. Energizer's actual tax rate for fiscal
2002 may be higher than projected because of unforeseen changes in 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 structure of Energizer's foreign affiliates. 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 those
activities. In addition, the cost reductions actually realized as a result of
restructuring may be less significant than anticipated. 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 its liquidity requirements. The
impact of adverse interest rate changes could be more significant than
anticipated. 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 Reports 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 and April 25, 2002.
PART II - OTHER INFORMATION
------------------
There is no information required to be reported under any items except those
indicated below.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits Required by Item 601 of Regulation S-K
(i) The following exhibit (listed by numbers corresponding to the Exhibit Table
of Item 601 in Regulation S-K) is filed with this report.
10 Negotiated Employment Agreement And General Release with former
executive officer.
(b) Reports on Form 8-K
A Current Report on Form 8-K dated January 17, 2002, was filed to set forth
tables reconciling historical segment results for fiscal 2001, by quarter,
reflecting the exclusion of intersegment profit in segment results, as well as
adjustments made to reflect EITF pronouncements on advertising and promotion,
and shipping, handling and freight. A Current Report on Form 8-K dated March 1,
2000 was filed to set forth the Company's press release regarding the
resignation of an executive officer.
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 and
Chief Financial Officer
Date: May 10, 2002
EXHIBIT INDEX
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10 Negotiated Employment Agreement And General Release