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<SEC-DOCUMENT>0001096752-00-000048.txt : 20001218
<SEC-HEADER>0001096752-00-000048.hdr.sgml : 20001218
ACCESSION NUMBER: 0001096752-00-000048
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 11
CONFORMED PERIOD OF REPORT: 20000930
FILED AS OF DATE: 20001215
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ENERGIZER HOLDINGS INC
CENTRAL INDEX KEY: 0001096752
STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770]
IRS NUMBER: 431863181
STATE OF INCORPORATION: MO
FISCAL YEAR END: 0930
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-15401
FILM NUMBER: 789840
BUSINESS ADDRESS:
STREET 1: 800 CHOUTEAU AVE
CITY: ST LOUIS
STATE: MO
ZIP: 63102
BUSINESS PHONE: 3149822413
MAIL ADDRESS:
STREET 1: CHECKERBOARD SQUARE
CITY: ST LOUIS
STATE: MO
ZIP: 63164
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
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<TEXT>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2000 Commission File No. 001-15401
ENERGIZER HOLDINGS, INC.
Incorporated in Missouri IRS Employer Identification No. 43-1863181
800 Chouteau, St. Louis, Missouri 63102
Registrant's telephone number, including area code: 314-982-2000
-----------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ---------------------- -----------------------------------------
Energizer Holdings, Inc. New York Stock Exchange, Inc.
Common Stock, par value
$.01 per share
Energizer Holdings, Inc. New York Stock Exchange, Inc.
Common Stock Purchase Rights
Registrant 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 has been
subject to such filing requirements for the past 90 days.
Yes: X No:
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein and will not be contained, to the best of registrant's
knowledge, in the definitive proxy statement incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
Yes: X No:
<PAGE>
Aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of the close of business on November 1, 2000: $1,928,837,085
(Excluded from this figure is the voting stock held by Registrant's Directors,
who are the only persons known to Registrant who may be considered to be its
"affiliates" as defined under Rule 12b-2.)
Number of shares of Energizer Holdings, Inc. Common Stock ("ENR Stock"), $.01
par value, outstanding as of close of business on December 4, 2000: 94,402,011
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Energizer Holdings, Inc. Year 2000 Annual Report (Parts I and
II of Form 10-K).
2. Portions of Energizer Holdings, Inc. Notice of Annual Meeting and Proxy
Statement dated December 13, 2000 (Part III of Form 10-K).
PART I
ITEM 1. BUSINESS.
GENERAL
Energizer Holdings, Inc., incorporated in Missouri in 1999, is the world's
largest manufacturer of primary batteries and flashlights and a global leader in
the dynamic business of providing portable power. On April 1, 2000, all of the
outstanding shares of common stock of Energizer were distributed in a tax-free
spinoff to shareholders of Ralston Purina Company.
Energizer is the successor to over 100 years of expertise in the battery
and lighting products industry. Its brand names "Eveready" and "Energizer" have
worldwide recognition for quality and dependability, and are marketed and sold
in more than 140 countries. Energizer's subsidiaries operate 22 manufacturing
facilities in 15 countries on 4 continents, and employ 3,415 employees in the
United States and 7,065 in foreign jurisdictions.
PRINCIPAL PRODUCTS
Energizer's subsidiaries manufacture and market a complete line of primary
alkaline and carbon zinc batteries, miniature batteries and flashlights and
other lighting products. Although Energizer, in November of 1999, sold its
rechargeable battery manufacturing and assembly business, which produced
rechargeable batteries for sale to manufacturers of rechargeable equipment,
Energizer continues to market a line of rechargeable batteries for retail sale
to consumers. Energizer believes it has one of the industry's most extensive
product lines. "Energizer" brand alkaline batteries are the most popular and
widely used in the array of Energizer products. The batteries are offered in
1.5 volt, 4.5 volt, 6 volt and 9 volt configurations, and are available in the
standard selection of sizes, including AA, AAA, AAAA, C, D and 9 volt sizes. In
the summer of 2000, Energizer introduced a super-premium alkaline battery under
the brand name "Energizer e2", as well as a value-priced alkaline battery under
the name "Eveready Alkaline". Energizer also produces or distributes:
- - "Energizer Industrial" batteries in three models targeted for non-consumer
industrial applications;
- - lithium batteries, available in AA, miniature and cylindrical sizes, for
use in high-performance applications such as cameras, camcorders, memory backup,
CD players and portable computers;
- - a line of miniature batteries, available in several chemistries, including
silver oxide, zinc-air and manganese dioxide systems, for use in electronic
watches, calculators, hearing aids, cameras, miniature radios, remote controls
and electronic thermometers;
- - the "Eveready" brand "Super Heavy Duty" and "Classic" lines of carbon zinc
batteries for economy applications; and
- - a line of rechargeable batteries and battery packs under the "Energizer"
brand name.
Energizer is also the world's largest manufacturer of portable lighting devices,
offering more than 60 different lighting products for consumer and industrial
use.
SOURCES AND AVAILABILITY OF RAW MATERIALS
The principal raw materials used in the Energizer business - electrolytic
manganese dioxide, zinc, acetylene black, graphite, steel cans, nylon, brass
wire, separator paper, and potassium hydroxide -- are sourced on a regional or
global basis. Energizer believes that adequate supplies of the raw materials
required for its operations are available at the present time, but cannot
predict the future availability or prices of such materials. These raw
materials are generally available from a number of different sources, and the
prices of those raw materials are susceptible to currency fluctuations and price
fluctuations due to transportation, government regulations, price controls,
economic climate, or other unforeseen circumstances. In the past, Energizer has
not experienced any significant interruption in availability of raw materials.
Energizer's management has extensive experience in purchasing raw materials
in the commodity markets. From time to time, management has taken positions in
various ingredients to assure supply and to protect margins on anticipated sales
volume.
SALES AND DISTRIBUTION
Energizer's battery and lighting products are marketed primarily through a
direct sales force to mass merchandisers, wholesalers and other customers, but
also through exclusive and non-exclusive distributors and rack jobbers of
consumer packaged goods products. Third party food brokers may be used to make
headquarters contacts in the retail food industry and to merchandise Energizer's
products at retail locations. In the United States, the direct sales team has
been reorganized into a Customer Management Team focused on key business
accounts in several categories, including food, mass merchandise and specialty.
Energizer distributes its products to consumers through numerous retail
locations worldwide, including mass merchandisers and warehouse clubs, food,
drug and convenience stores, electronics specialty stores and department stores,
hardware and automotive centers and military stores.
Although a large percentage of Energizer's sales are attributable to a
relatively small number of retail customers, only Wal-Mart Stores, Inc. and its
subsidiaries, as a group, account for more than ten percent of Energizer's
sales. For fiscal year 2000, those customers accounted for, in the aggregate,
approximately 15.3% of Energizer's sales.
PATENTS, TECHNOLOGY AND TRADEMARKS
Energizer's operating subsidiaries own a number of trademarks which
Energizer considers of substantial importance and which are used individually or
in conjunction with other Energizer trademarks. These include "Eveready",
"Energizer", "Energizer Advanced Formula", "Energizer e2", the Energizer Bunny
and the Energizer Man character.
Energizer's ability to compete effectively in the battery industry depends
in part on its ability to maintain the proprietary nature of its technology and
manufacturing processes through a combination of patent and trade secret
protection, non-disclosure agreements, licensing, and cross-licensing
agreements. Energizer's subsidiaries own or license from third parties a
considerable number of patents, patent applications and other technology which
Energizer believes are extremely significant to its business. These primarily
relate to battery product and lighting device improvements, additional battery
product features, and manufacturing processes.
As of September 30, 2000, Eveready Battery Company, Inc., a subsidiary of
Energizer, owned approximately 165 unexpired United States patents which have a
range of expiration dates from September, 2000 to November, 2016, and had
approximately 177 United States patent applications pending. It routinely
prepares additional patent applications for filing in the United States.
Eveready also actively pursues foreign patent protection in a number of foreign
countries. As of September 30, 2000, Eveready owned approximately 700 foreign
patents and had approximately 650 patent applications pending in foreign
countries.
Since publications of discoveries in the scientific or patent literature
tends to lag behind actual discoveries by several months, Eveready cannot be
certain that it was the first creator of inventions covered by pending patent
applications or the first to file patent applications on such inventions.
SEASONALITY
The battery business, particularly in North America, tends to be seasonal,
with large purchases of batteries by consumers during the Christmas holiday
season, and increases in retailer inventories during late summer and autumn.
COMPETITION
The battery business is highly competitive, both in the United States and
on a global basis, as a number of large battery manufacturers compete for
consumer acceptance and, increasingly, limited retail shelf space. Competition
is based upon brand perceptions, product performance, customer service and
price.
Energizer competes in a high-growth domestic and global market. The
alkaline battery segment, both in the United States and worldwide, is the
fastest growing segment of the primary battery market. Energizer's principal
competitors in the United States are Duracell International, Inc., a subsidiary
of The Gillette Company, and Rayovac Corporation. Private-label sales by large
retailers have also been growing in significance. Duracell is also a
significant competitor in South and Central America and Asia and Europe, and
local and regional battery manufacturers in Asia and Europe also compete for
battery sales.
Energizer has a significant market position in most geographic markets in
which it competes. According to A.C. Nielsen, Energizer's primary battery
market share in the United States for the 52 weeks ended October 7, 2000 was
32.9%.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
The operations of Energizer, like those of other companies engaged in the
battery business, are subject to various federal, state, foreign and local laws
and regulations intended to protect the public health and the environment.
These regulations primarily relate to worker safety, air and water quality,
underground fuel storage tanks and waste handling and disposal.
Energizer has received notices from the U.S. Environmental Protection
Agency, state agencies, and/or private parties seeking contribution, that it has
been identified as a "potentially responsible party" (PRP) under the
Comprehensive Environmental Response, Compensation and Liability Act, and may be
required to share in the cost of cleanup with respect to 9 federal "Superfund"
sites. It may also be required to share in the cost of cleanup with respect to
a state-designated site. Liability under the applicable federal and state
statutes which mandate cleanup is strict, meaning that liability may attach
regardless of lack of fault, and joint and several, meaning that a liable party
may be responsible for all of the costs incurred in investigating and cleaning
up contamination at a site. However, liability in such matters is typically
shared by all of the financially viable responsible parties, through negotiated
agreements. Negotiations with the U.S. Environmental Protection Agency, the
state agency that is involved on the state-designated site, and other PRP's are
at various stages with respect to the sites. Negotiations involve
determinations of
- - the actual responsibility of Energizer and the other PRP's at the site,
- - appropriate investigatory and/or remedial actions, and
- - allocation of the costs of such activities among the PRP's and other site
users.
The amount of Energizer's ultimate liability in connection with those sites may
depend on many factors, including:
- - the volume and toxicity of material contributed to the site,
- - the number of other PRP's and their financial viability, and
- - the remediation methods and technology to be used.
In addition, Energizer undertook certain programs to reduce or eliminate
the environmental contamination at the rechargeable battery facility in
Gainesville, Florida, which was divested in 1999. In the event that the buyer
would become unable to continue such programs, Energizer could be required to
bear financial responsibility for such programs as well as for other known and
unknown environmental conditions at the site.
Many European countries, as well as the European Union, have been very
active in adopting and enforcing environmental regulations. In many developing
countries in which Energizer operates, there has not been significant
governmental regulation relating to the environment, occupational safety,
employment practices or other business matters routinely regulated in the United
States. As such economies develop, it is possible that new regulations may
increase the risk and expense of doing business in such countries.
It is difficult to quantify with certainty the potential financial impact of
actions regarding expenditures for environmental matters, particularly
remediation, and future capital expenditures for environmental control
equipment. Nevertheless, based upon the information currently available,
Energizer believes that its ultimate liability arising from such environmental
matters, taking into account established accruals of $3.6 million for estimated
liabilities, should not be material to its financial position. Such liability
could, however, be material to results of operations or cash flows for a
particular quarter or annual period.
OTHER MATTERS
The descriptions of the business of, and the summary of selected financial
data regarding Energizer appearing under "ENERGIZER HOLDINGS, INC. -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION - BUSINESS OVERVIEW" on pages 10 through 11, "ENERGIZER HOLDINGS, INC.
- - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION - HIGHLIGHTS" on page 11, "ENERGIZER HOLDINGS, INC. - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION -
LIQUIDITY AND CAPITAL RESOURCES" on pages 15 through 16, "ENERGIZER HOLDINGS,
INC. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION - OPERATING RESULTS - Segment Results" on pages 12 through
13, "ENERGIZER HOLDINGS, INC. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION - OPERATING RESULTS - Research and
Development Expense" on page 13, "ENERGIZER HOLDINGS, INC. - NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS - SEGMENT INFORMATION" on pages 44 through 45,
and "ENERGIZER HOLDINGS, INC. - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
SUMMARY OF ACCOUNTING POLICIES - Research and Development Costs" on page 27 of
the Energizer Holdings, Inc. Year 2000 Annual Report to Shareholders 2000, are
hereby incorporated by reference.
ITEM 2. PROPERTIES
A list of Energizer's principal plants and facilities as of the date of
filing follows. Energizer believes that such plants and facilities, in the
aggregate, are adequate, suitable and of sufficient capacity for purposes of
conducting its current business.
<TABLE>
<CAPTION>
<S> <C>
NORTH AMERICA EUROPE
Asheboro, NC (2) Caudebec Les Elbeuf, France (1)(5)
Bennington, VT La Chaux-de-Fonds, Switzerland
Garretsville, OH Slany, Czech Republic (1)
Marietta, OH Tanfield Lea, U.K. (1)
Maryville, MO
St. Albans, VT AFRICA
Tecamec, Mexico Alexandria, Egypt
Walkerton, Ontario, Canada (5) Nakuru, Kenya (4)
Westlake, OH (3)
ADMINISTRATIVE AND
ASIA EXECUTIVE OFFICES
Bogang, People's Republic of China (1) St. Louis, Missouri (1)
Mandaue Cebu, Philippines Chesterfield, Missouri (1)
Ekala, Sri Lanka
Cimanggis, Indonesia
Johor, Malaysia
Jurong, Singapore
Tianjin, People's Republic of China
</TABLE>
In addition to the properties identified above, Energizer and its subsidiaries
own and/or operate sales offices, regional offices, storage facilities,
distribution centers and terminals and related properties.
(1) Leased (2) Two plants (3)Research facility
(4) Less than 20% owned interest (5) Bulk packaging, labeling or
distribution
ITEM 3. LEGAL PROCEEDINGS
- - On April 8, 1998, Zinc Products Company, a division of Alltrista Corp., a
supplier of zinc cans used in the manufacture of batteries, filed suit in
federal district court for the Eastern District of Tennessee against Energizer,
claiming breach of contract when Energizer closed its Fremont, Ohio plant. The
plaintiff claims lost profits and other damages of approximately $2.8 million.
The case has been set for trial in January, 2001.
- - The U.S. Patent Office has awarded priority to Strategic Electronics
(Energizer's exclusive licensor) over Duracell in the patent interference
relating to the on-label battery tester. Duracell is expected to appeal. An
earlier decision, which denied Energizer's separate patent claims and those of
Eastman Kodak Company (which are licensed to Duracell) has been appealed to the
federal district court for Washington, D.C. on February 2, 1998. Kodak filed a
similar appeal, naming Energizer as a defendant on January 29, 1998. In a
related matter, Strategic Electronics filed a declaratory judgment suit on
September 9, 1999 in the federal district court for the Central District of
California seeking additional payments of approximately $1 million under the
license. Energizer filed a motion to dismiss which was granted in the spring of
2000.
Energizer is a party to a number of other legal proceedings in various
state, federal and foreign jurisdictions. Many of these legal matters are in
preliminary stages, involve complex issues of law and fact and may proceed for
protracted periods of time. The amount of alleged liability, if any, from these
proceedings cannot be determined with certainty. However, based upon present
information, Energizer believes that its ultimate liability, if any, arising
from
- - pending legal proceedings,
- - asserted legal claims and
- - known potential legal claims which are likely to be asserted,
should not be material to Energizer's financial position, taking into account
established accruals for estimated liabilities. These liabilities, however,
could be material to results of operations or cash flows for a particular
quarter or annual period.
See also the discussion captioned "Governmental Regulation and
Environmental Matters" under Item 1 above.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 4A EXECUTIVE OFFICERS OF THE REGISTRANT.
A list of the executive officers of Energizer and their business experience
follows. Ages shown are as of December 31, 2000.
J. Patrick Mulcahy - Chief Executive Officer of Energizer since March 2000. Mr.
Mulcahy joined Ralston in 1968 and has served as Chairman of the Board and Chief
Executive Officer of Eveready Battery Company, Inc. since 1987. Mr. Mulcahy
served as co-Chief Executive Officer and co-President of Ralston from October,
1997 to June, 1999. He served as Ralston's Vice President and Director,
Corporate Strategic Planning and Administration 1984-86; Division Vice
President, Strategic Planning 1981-84; and Division Vice President, Director of
Marketing, Grocery Products Group, 1980-81. Age: 56.
William P. Stiritz - Chairman of the Board of Directors of Energizer and
Chairman of the Management Strategy and Finance Committee since March 2000. Mr.
Stiritz joined Ralston in 1963 and served as Chief Executive Officer and
President of Ralston from 1982 until his retirement in 1997. He has served
since 1982 as Chairman of the Board of Directors of Ralston. Since 1998, he has
also served as Chief Executive Officer, President and Chairman of the Board of
Agribrands International, Inc. Age: 66.
Patrick C. Mannix - President of Energizer since March 2000. Mr. Mannix joined
the Eveready Battery Division of Union Carbide Corporation in 1963, and has
served as President of Eveready Battery Company, Inc. since 1998. Mr. Mannix
served as President of Eveready Battery Company, Inc., Specialty Business from
1995-98, as Executive Vice President, Eveready Battery Company, International
from 1991-95, and as Area Chairman, Asia Pacific operations, Eveready Battery
Company from 1985-91. Age: 55.
Randy J. Rose - President and Chief Operating Officer - North America and Europe
since September of 2000. Mr. Rose served as Executive Vice President, Worldwide
Sales and Marketing of Energizer from March to September, 2000. Mr. Rose joined
Ralston in 1986 and served as Executive Vice President, Golden Products Division
of Ralston from 1997 until April 1998, then served as Vice President, Worldwide
Sales and Asia Pacific Operating Officer of the Pet Products International
Division of Ralston until May, 1999, when he joined Eveready Battery Company,
Inc., serving as Executive Vice President, Sales and Marketing. Mr. Rose served
as Vice President and Director of the Customer Development Group of Ralston's
Pet Products Group from 1993-97. Age: 46.
Ward M. Klein - President and Chief Operating Officer - Asia Pacific and PanAm
since September, 2000. Mr. Klein served as Vice President - Asia Pacific for
Energizer from March to September, 2000. Mr. Klein joined Ralston Purina
Company in 1979 and served as Vice President and Area Chairman, Asia Pacific,
Africa and Middle East for battery operations from 1998 to 2000, as Area
Chairman, Latin America from 1996-98, as Vice President, General Manager Global
Lighting Products, 1994-96 and as Vice President of Marketing, 1992-94. Age:
45.
Daniel J. Sescleifer - Executive Vice President, Finance and Control of
Energizer since October, 2000. Mr. Sescleifer served as Vice President and
Treasurer of Solutia Inc. from July-October, 2000, as Vice President and
Treasurer of Ralcorp Holdings, Inc, from 1996 to 2000, and as Director,
Corporate Finance of Ralcorp Holdings, Inc. from 1994 to 1996. Age: 38.
Harry L. Strachan - Vice President and General Counsel of Energizer since March,
2000. Mr. Strachan joined Eveready Battery Company, Inc. in 1987, and has
served as Vice President, General Counsel and Secretary of that subsidiary since
1987. Age: 59.
Peter J. Conrad - Vice President, Human Resources of Energizer since March,
2000. Mr. Conrad joined Eveready Battery Company, Inc. in 1997 and served as
Vice President, Human Resources from 1997 to 2000. Mr. Conrad served as Vice
President, Human Resources for Protein Technologies International, Inc., a
former subsidiary of Ralston Purina Company, from 1995-97. Age: 40.
Joseph McClanathan - Vice President, North America of Energizer since March,
2000. Mr. McClanathan joined the Eveready Battery division of Union Carbide
Corporation in 1974 and served as Vice President and Chairman, North America of
Eveready Battery Company, Inc. from 1999 to 2000, as Vice President, Chief
Technology Officer from 1996 to 1999, and as Vice President, General Manager,
Energizer Power Systems division from 1993 to 1996. Age: 48.
Kapila Gunawardana - Vice President, Pan Am of Energizer since March, 2000. Mr.
Gunawardana joined the Eveready Battery division of Union Carbide Corporation in
1968 and served as Vice President and Area Chairman, Pan Am from 1998 to 2000,
as Managing Director, Eveready de Mexico from 1996-98, and as Area Finance
Director, Pan Am Division of Eveready Battery Company from 1993-96. Age: 59.
Luis Plana - Vice President, Europe of Energizer since March, 2000. Mr. Plana
joined Eveready Battery Company, Inc. in 1985 and served as Vice President and
Area Chairman, Europe from 1997 to 2000, as Vice Chairman, Europe for Eveready
Battery Company from 1996-97, and as Managing Director from 1993-96. Age: 56.
Steven Sanborn - Vice President, Technology, Research and Development since
March, 2000. Mr. Sanborn joined Eveready Battery Company, Inc. in 1993 and
served as Vice President and Chief Technology Officer for Eveready from 1999 to
2000, as Vice President of Technology and Engineering for Eveready's Energizer
Power Systems division from 1993 to 1997, and as Vice President, Technology for
Eveready itself from 1997 to 1999. Age: 55.
Joseph J. Tisone - Vice President, Global Manufacturing since March, 2000. Mr.
Tisone joined the Eveready Battery division of Union Carbide Corporation in
1976, and served as Vice President, Global Manufacturing of Eveready Battery
Company, Inc. from 1998 to 2000, as Vice President/General Manager of Eveready's
Energizer Power Systems division from 1997 to 1998, and as Vice President,
Production of that division from 1993 to 1997. Age: 47.
Robert K. Zimmermann - Vice President, Global Lighting Products of Energizer
since May, 2000. Mr. Zimmermann joined Ralston Purina Company in 1971 and
served as Vice President, Global Lighting Products of Eveready Battery Company,
Inc. from 1999 to 2000, as Vice President, Pet Products, with responsibility for
Europe, the Middle East and Africa from 1993 to 1999, and as Vice President, Pet
Products - Latin America and Vice President, International Pet Food Marketing
from 1992-1993. Age: 51
Mark Schafale - Vice President and Controller of Energizer since March, 2000.
Mr. Schafale joined Ralston Purina Company in 1992 and served as Vice President
and Director, Internal Audit for Ralston from 1996 to 2000, and as Director,
Financial Accounting from 1994-96. Age: 40.
William C. Fox - Vice President and Treasurer of Energizer since March, 2000.
Mr. Fox joined Ralston Purina Company in 1989 and served as Director, Global
Finance for Ralston from 1995 to 2000. Age: 38.
Timothy L. Grosch - Secretary of Energizer since March, 2000. Mr. Grosch joined
Ralston Purina Company in 1985 and served as Deputy General Counsel for Ralston
from 1996 to 2000, and as Senior Counsel - Securities from 1994 - 96. Age: 46.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
Energizer's common stock ("ENR Stock") is listed on the New York Stock
Exchange. As of November 24, 2000, there were 21,016 shareholders of record of
the ENR Stock.
The following table sets forth range of market prices for the ENR Stock for
the period from April 1, 2000 until September 30, 2000. No dividends were
declared or paid on the ENR Stock during that period, and the Company does not
currently intend to pay dividends during fiscal year 2001.
MARKET PRICE RANGE
Third Quarter $14.875 -- $23.1875
Fourth Quarter $18.6875 -- $24.50
There have been no unregistered offerings of registrant's equity securities
during the period covered by this Annual Report on Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA.
The "ENERGIZER HOLDINGS, INC. - SUMMARY SELECTED HISTORICAL FINANCIAL
INFORMATION" appearing on page 19 of the Energizer Holdings, Inc. Year 2000
Annual Report is hereby incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Information appearing under "ENERGIZER HOLDINGS, INC.-MANAGEMENT'S
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION" on
pages 10 through 18 and the information appearing under "ENERGIZER HOLDINGS, INC
- - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - SEGMENT INFORMATION" on pages 44
through 45 of the Energizer Holdings, Inc. Year 2000 Annual Report is hereby
incorporated by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Information appearing under " ENERGIZER HOLDINGS, INC.-MANAGEMENT'S
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION -
MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS" on pages 17 through 18 of the
Energizer Holdings, Inc. Year 2000 Annual Report is hereby incorporated by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of Energizer and its subsidiaries
appearing on pages 21 through 45, together with the report thereon of
PricewaterhouseCoopers LLP on page 20, and the supplementary data under
"ENERGIZER HOLDINGS, INC. - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
QUARTERLY FINANCIAL STATEMENTS" on page 46 of the Energizer Holdings, Inc. Year
2000 Annual are hereby incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS OF THE REGISTRANT.
The information regarding directors on pages 3 through 6, and information
appearing under "Compliance With Section 16(a) Reporting" on page 2, of the
Energizer Holdings, Inc. Notice of Annual Meeting and Proxy Statement dated
December 13, 2000 is hereby incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information appearing under "Executive Compensation" on pages 16 through
22, "Nominating and Executive Compensation Committee Report on Executive
Compensation" on pages 22 through 26, "Performance Graph" on page 28, "Common
Stock Ownership of Directors and Executive Officers" on pages 14 through 15, and
the remuneration information under "Board of Directors Standing Committees" on
page 4 and "Director Compensation" on pages 5 through 6 of the Energizer
Holdings, Inc. Company Notice of Annual Meeting and Proxy Statement dated
December 13, 2000 is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The discussion of the security ownership of certain beneficial owners and
management appearing under "Stock Ownership Information" on page 14 and "Common
Stock Ownership of Directors and Executive Officers" on pages 14 through 15 of
the Energizer Holdings, Inc. Notice of Annual Meeting and Proxy Statement dated
December 13, 2000 is hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information appearing under "Certain Relationships and Related
Transactions" on pages 6 through 8 of the Energizer Holdings, Inc. Notice of
Annual Meeting and Proxy Statement dated December 13, 2000, is hereby
incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
1. Documents filed with this report:
a. Financial statements previously incorporated by reference under Item 8
herein.
-Report of Independent Accountants.
- -Consolidated Statement of Earnings -- for years ended September 30, 2000, 1999
and 1998.
-Consolidated Balance Sheet -- for years ended September 30, 2000 and 1999.
- -Consolidated Statement of Cash Flows -- for years ended September 30, 2000,
1999, and 1998.
- -Consolidated Statement of Shareholders Equity -- for years ended September 30,
2000, 1999, 1998 and 1997.
.
-Notes to Financial Statements.
b. Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of fiscal year 2000.
c. Exhibits Required by Item 601 of Regulation S-K
(i) The following exhibits (listed by numbers corresponding to the Exhibit
Table of Item 601 in Regulation S-K) are hereby incorporated by reference to
Energizer's Post-Effective Amendment No. 1 to Form 10, filed April 19, 2000.
2 Agreement and Plan of Reorganization
3(i) Articles of Incorporation of Energizer Holdings, Inc.
3(ii) By-Laws of Energizer Holdings, Inc.
4 Rights Agreement between Energizer Holdings, Inc. and Continental Stock
Transfer & Trust Company, as Rights Agent
10(i) Debt Assignment, Assumption and Release Agreement by and among Ralston
Purina Co., Energizer Holdings, Inc. and Bank One, N.A.
10(ii) 364-Day Credit Agreement between Ralston Purina Company and Bank One,
N.A.
10(iii) 5-Year Revolving Credit Agreement between Ralston Purina Company and
Bank One, N.A.
10(iv) Energizer Holdings, Inc. Private Placement Note Purchase
Agreement
10(v) Asset Securitization Receivable Purchase Agreement between Energizer
Holdings, Inc., Falcon Asset Securitization Corporation and Bank One, N.A.
10(vi) Bridge Loan Agreement No. 1
10(vii) Bridge Loan Agreement No. 2
10(viii) Tax Sharing Agreement
10(ix) Bridging Agreement
10(x) Lease Agreement
10(xi) Intellectual Property Agreement
10(xii) Energizer Holdings, Inc. Incentive Stock Plan*
10(xii) Form of Change of Control Employment Agreements*
10(xiv) Form of Indemnification Agreements with Executive Officers and
Directors *
10(xv) Executive Savings Investment Plan*
10(xvi)Executive Health Insurance Plan*
10(xvii)Executive Long Term Disability Plan*
10(xviii)Financial Planning Plan*
10(xiv) Executive Group Personal Excess Liability Insurance Plan*
10(xx) Executive Retiree Life Plan*
10(xxi)Supplemental Executive Retirement Plan*
10(xxii)Form of Retention Letter*
(ii) The following exhibits (listed by numbers corresponding to the Exhibit
Table of Item 601 in Regulation S-K) are hereby incorporated by reference to
Energizer's Quarterly Report on Form 10Q for the Quarter Ended June 30, 2000.
10(i) Form of Non-Qualified Stock Option dated May 8, 2000*
10(ii) Form of Non-Qualified Stock Option dated May 8, 2000*
10(iii) Form of Non-Qualified Stock Option dated May 8, 2000*
10(iv) Form of 2000 Restricted Stock Equivalent Award Agreement dated May 8,
2000*
10(v) Form of 2000 Restricted Stock Equivalent Award Agreement dated May 8,
2000*
10(vi) Form of 2000 Restricted Stock Equivalent Award Agreement dated May 8,
2000*
(iii) 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 September 18, 2000*
10(ii) Form of 2000 Restricted Stock Equivalent Award Agreement dated
September 18, 2000*
10(iii) Energizer Holdings, Inc. Non-Qualified Deferred Compensation Plan,
as amended September 18, 2000*
10(iv) Form of Letter for Deferral of 2000 Bonus Award dated 3/30/00*
10(v) Form of Letter for Deferral of 2000 Bonus Award dated 12/6/00*
10(vi) Form of Indemnification Agreement*
13 Pages 10 to 48 of the Energizer Holdings, Inc. Year 2000 Annual Report
which are incorporated herein by reference, are filed herewith.
21 Subsidiaries of Registrant
23 Consent of Independent Accountants.
27 Financial Data Schedule for 2000 Annual Period
*Denotes a management contract or compensatory plan or arrangement.
FINANCIAL STATEMENT AND SCHEDULES
The consolidated financial statements of the Registrant have been
incorporated by reference under Item 8. Financial statements of the
Registrant's 50% or less owned companies have been omitted because, in the
aggregate, they are not significant.
Schedules not included have been omitted because they are not applicable or
the required information is shown in the financial statements or notes thereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By:/s/ J. Patrick Mulcahy
--------------------------
J. Patrick Mulcahy
Chief Executive Officer
Date: December 15, 2000
<PAGE>
SIGNATURE TITLE
- --------- -----
/s/ Daniel J. Sescleifer
- ---------------------------
Daniel J. Sescleifer
Executive Vice President, Finance and Control
/s/ Mark A. Schafale
- -----------------------
Mark A. Schafale
Controller
/s/ William P. Stiritz
- -------------------------
William P. Stiritz
Chairman of the Board of Directors
/s/ William H. Danforth
- --------------------------
Dr. William H. Danforth
Director
/s/ F. Sheridan Garrison
- ---------------------------
F. Sheridan Garrison
Director
/s/ R. David Hoover
- ----------------------
R. David Hoover
Director
/s/ H. Fisk Johnson
- ----------------------
H. Fisk Johnson
Director
/s/ Richard A. Liddy
- -----------------------
Richard A. Liddy
Director
/s/ Joe R. Micheletto
- ------------------------
Joe R. Micheletto
Director
/s/ Robert A. Pruzan
- -----------------------
Robert A. Pruzan
Director
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<TEXT>
NON-QUALIFIED STOCK OPTION
--------------------------
ENERGIZER HOLDINGS, INC. (the "Company"), effective September 18, 2000,
grants this Non-Qualified Stock Option to H. Fisk Johnson ("Optionee") to
purchase a total of 10,000 shares of Common Stock of the Company ("Common
Stock") at a price of $____ per share pursuant to its Energizer Holdings, Inc.
2000 Incentive Stock Plan (the "Plan"). Subject to the provisions of the Plan
and the following terms, Optionee may exercise this Option from time to time by
tendering to the Company written notice of exercise together with the purchase
price in cash, or in shares of Common Stock at their Fair Market Value as
determined by the Board of Directors of the Company (the "Board"), provided that
such shares have been held for at least six months.
1. Normal Exercise. This Option becomes exercisable at the rate of 20% of
----------------
the total shares on September 18 in each of the years 2001, 2002, 2003, 2004 and
2005. This Option remains exercisable through September 17, 2010 unless
Optionee is no longer serving as a Director of the Company, in which case the
Option is exercisable only in accordance with the provisions of paragraph 3
below.
2. Acceleration. Notwithstanding the above, any shares not previously
------------
forfeited under this Option will become fully exercisable before the normal
exercise dates set forth in paragraph 1 hereof upon the occurrence of any of the
following events while Optionee is serving on the Board:
a. death of Optionee;
b. declaration of Optionee's total and permanent disability;
c. retirement, resignation or other termination from the Board; or
d. a Change of Control of the Company.
3. Exercise After Certain Events. Upon the occurrence of any of the events
------------------------------
described below, any shares that are exercisable upon such occurrence shall
remain exercisable during the period stated below, but, in any event, not later
than September 17, 2010:
a. Upon Optionee's retirement, resignation or other termination from
the Board (other than a termination related to a declaration of forfeiture as
described below), declaration of total and permanent disability or death, such
shares that are exercisable (including any shares that are accelerated because
of such events) shall remain exercisable for five years thereafter; or
b. If the Board determines that this Option is forfeit pursuant to
Section IV of the Plan because Optionee engages in competition with the Company
or an Affiliate, or Optionee engages in any activity or conduct contrary to the
best interests of the Company or any Affiliate, such shares that are then
exercisable shall remain exercisable for seven days after such determination.
<PAGE>
4. Forfeiture. This Option is subject to forfeiture for the reasons set
----------
forth in Section IV.A.1, 3 or 4 of the Plan. If there is a declaration of
forfeiture, those shares that are exercisable at the time of the declaration may
be exercised as set forth in paragraph 3 hereof; all other shares are forfeited.
5. Definitions. Unless otherwise defined in this Non-Qualified Stock
-----------
Option, defined terms used herein shall have the same meaning as set forth in
the Plan.
"Change of Control" shall occur when (i) a person, as defined under
securities laws of the United States, acquires beneficial ownership of more than
50% of the outstanding voting securities of the Company; or (ii) the directors
of the Company immediately before a business combination between the Company and
another entity, or a proxy contest for the election of directors, shall, as a
result thereof, cease to constitute a majority of the Board of Directors of the
Company of any successor to the Company.
6. Severability. The invalidity or unenforceability of any provision hereof
-------------
in any jurisdiction shall not affect the validity or enforceability of the
remainder hereof in that jurisdiction, or the validity or enforceability of this
Non-Qualified Stock Option, including that provision, in any other jurisdiction.
To the extent permitted by applicable law, the Company and Optionee each waive
any provision of law that renders any provision hereof invalid, prohibited or
unenforceable in any respect. If any provision of this Option is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
ACKNOWLEDGED AND ACCEPTED: ENERGIZER HOLDINGS, INC.
____________________________
Optionee
By:_________________________
____________________________ J. Patrick Mulcahy
Date Chief Executive Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>0003.txt
<TEXT>
2000 RESTRICTED STOCK EQUIVALENT AWARD AGREEMENT
Energizer Holdings, Inc. ("Company"), pursuant to its 2000 Incentive Stock
Plan (the "Plan"), grants to H. Fisk Johnson ("Recipient") a Restricted Stock
Equivalent Award of up to 10,000 Company restricted common stock equivalents.
This Award Agreement is subject to the provisions of the Plan and to the
following terms and conditions:
1. Restricted Stock Equivalents Award
-------------------------------------
If, at any time or from time to time, within two years of the effective date of
this Award Agreement, Recipient provides evidence to the Secretary of the
Company, reasonably satisfactory to the Company, of his acquisition of shares of
the Company's $.01 par value Common Stock ("Common Stock"), the Company will
credit the Recipient with a restricted common stock equivalent (an "Equivalent")
for each share of Common Stock so acquired, up to a maximum of 10,000
Equivalents, in the aggregate. (The shares of Common Stock which are acquired
by the Recipient and matched by Equivalents are referred to as "Matched Common
Stock" herein.) Deferrals into the Company's Deferred Compensation Plan will not
be matched with Equivalents.
2. Holding Period for Matched Common Stock
--------------------------------------------
The Recipient agrees that he shall not sell or transfer any portion of the
Matched Common Stock for a period of three (3) years following the date of
acquisition of such portion, provided, however, that if Recipient pledges any of
the Matched Common Stock as collateral for any loan during that period, it shall
not be deemed a sale or transfer of the shares for purposes of this Award
Agreement.
3. Vesting; Payment
-----------------
Each Equivalent will vest on the date that is three (3) years from the date of
its crediting and convert, at that time, or otherwise as provided herein, into
one share of Common Stock which will be issued to the Recipient. If Recipient,
no later than thirty (30) days from the effective date of this Award Agreement,
elects in writing to defer the conversion of Equivalents into shares of Common
Stock, the Equivalents will not convert into Common Stock, and shares of Common
Stock will not be issued to the Recipient, until the Recipient's termination of
service on the Board of Directors of the Company.
4. Additional Cash Payment
-------------------------
At the time of payment of shares of Common Stock to Recipient, as described in
paragraph 3 above, Recipient will also receive an additional cash payment equal
to the amount of dividends, if any, which would have been paid on the shares of
Common Stock issued to him if he had actually acquired those shares on the date
or dates of crediting of his Equivalents. No interest shall be included in the
calculation of such additional cash payment.
<PAGE>
5. Acceleration
------------
Notwithstanding the provisions of paragraph 3 above, all Equivalents credited to
the Recipient will immediately vest, convert into shares of Common Stock and be
paid to the Recipient, his designated beneficiary, or his legal representative,
in accordance with the terms of the Plan, in the event of:
(a) his death;
(b) a declaration of his total and permanent disability; or
(c) a Change of Control of the Company, which for purposes of this Award
Agreement shall be deemed to occur when (i) a person, as defined under the U.S.
securities laws, acquires beneficial ownership of more than fifty percent (50%)
of the outstanding voting securities of the Company; or (ii) the directors of
the Company immediately before a business combination between the Company and
another entity, or a proxy contest for the election of directors, shall, as a
result thereof, cease to constitute a majority of the Board of Directors of the
Company (or a successor corporation of the Company).
6. Forfeiture
----------
All rights in and to any and all Equivalents granted pursuant to this Award
Agreement, and to any shares of Common Stock into which they would convert,
which have not vested as described in paragraph 3 of this Award Agreement shall
be forfeited upon the Recipient's termination of service on the Board of
Directors of the Company. In addition, any Equivalents granted pursuant to this
Award Agreement which have not vested shall be forfeited if the shares of
Matched Common Stock to which they relate are sold or transferred by the
Recipient prior to three (3) years from the date of crediting of such
Equivalents.
7. Shareholder Rights; Adjustment of Equivalents
-------------------------------------------------
Recipient shall not be entitled, prior to the conversion of Equivalents into
shares of Common Stock, to any rights as a shareholder with respect to such
shares of Common Stock, including the right to vote, sell, pledge, transfer or
otherwise dispose of the shares. Recipient shall, however, have the right to
designate a beneficiary to receive such shares of Common Stock under this Award
Agreement, subject to the provisions of Section V of the Plan. The number of
Equivalents credited to Recipient may be adjusted, in the sole discretion of the
Nominating and Executive Compensation Committee of the Company's Board of
Directors, in accordance with the provisions of Section VI(F) of the Plan.
8. Other
-----
The Company reserves the right, as determined by the Board of Directors of the
Company, to convert this Award Agreement to a substantially equivalent award and
to make any other modification it may consider necessary or advisable to comply
with any applicable law or governmental regulation, or to preserve the tax
deductibility of any payments hereunder.
<PAGE>
9. Effective Date
---------------
This Award Agreement shall be deemed to be effective as of the 18th day of
September, 2000.
ACKNOWLEDGED AND ACCEPTED: ENERGIZER HOLDINGS, INC.
_________________________________ By:_______________________________
Recipient J. Patrick Mulcahy
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>0004.txt
<TEXT>
ENERGIZER HOLDINGS, INC.
------------------------
DEFERRED COMPENSATION PLAN
--------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE PAGE
- ------- ---------------------------------------------------------------
ARTICLE I 1
INTRODUCTION 1
1.1 NAME OF PLAN/PURPOSE. 1
1.2 "TOP HAT" RETIREMENT BENEFIT PLAN. 1
1.3 EFFECTIVE DATE. 1
1.4 ADMINISTRATION. 1
1.5 APPENDICES. 2
ARTICLE II 4
DEFINITIONS AND CONSTRUCTION 4
2.1 DEFINITIONS. 4
2.2 NUMBER AND GENDER. 10
2.3 HEADINGS. 10
ARTICLE III 11
PARTICIPATION AND ELIGIBILITY 11
3.1 ELIGIBILITY. 11
3.2 PARTICIPATION. 11
3.3 DURATION OF PARTICIPATION. 11
ARTICLE IV 13
DEFERRAL AND MATCHING CONTRIBUTIONS 13
4.1 DEFERRALS BY PARTICIPANTS. 13
4.2 EFFECTIVE DATE OF DEFERRED COMPENSATION AGREEMENT. 13
4.3 MODIFICATION OR REVOCATION OF ELECTION OF PARTICIPANT. 14
4.4 MATCHING CONTRIBUTIONS. 14
4.5 MANDATED DEFERRALS. 15
ARTICLE V 16
VESTING 16
5.1 VESTING IN BASE SALARY DEFERRALS, BONUS DEFERRALS, DIRECTOR FEE
DEFERRALS AND RALSTON PLAN ACCOUNT. 16
5.2 VESTING IN MATCHING CONTRIBUTIONS. 16
5.3 DEFERRAL PERIODS. 16
<PAGE>
ARTICLE VI 18
ACCOUNTS 18
6.1 ESTABLISHMENT OF BOOKKEEPING ACCOUNT. 18
6.2 SUBACCOUNTS. 18
6.3 INVESTMENT OF ACCOUNTS. 18
6.4 HYPOTHETICAL NATURE OF ACCOUNTS. 19
ARTICLE VII 20
PAYMENT OF ACCOUNT 20
7.1 TIMING OF DISTRIBUTION OF BENEFITS. 20
7.2 ADJUSTMENT OF ACCOUNT UPON A DISTRIBUTION. 20
7.3 FORM OF PAYMENT OR PAYMENTS. 20
7.4 DEATH BENEFITS 21
7.5 DESIGNATION OF BENEFICIARIES. 22
7.6 UNCLAIMED BENEFITS. 22
7.7 WITHDRAWAL. 22
7.8 DISABILITY BENEFITS. 23
7.9 OFFSET OF BENEFIT BY CERTAIN AMOUNTS 23
ARTICLE VIII 24
ADMINISTRATION 24
ARTICLE IX 25
AMENDMENT AND TERMINATION 25
ARTICLE X 26
GENERAL PROVISIONS 26
10.1 NON-ALIENATION OF BENEFITS. 26
10.2 CONTRACTUAL RIGHT TO BENEFITS FUNDING. 26
10.3 INDEMNIFICATION AND EXCULPATION. 26
10.4 NO EMPLOYMENT AGREEMENT. 27
10.5 CLAIMS FOR BENEFITS. 27
10.6 SUCCESSOR TO COMPANY. 27
10.7 SEVERABILITY. 28
10.8 TRANSFER AMONG AFFILIATES. 28
10.9 ENTIRE PLAN. 28
10.10 PAYEE NOT COMPETENT. 28
10.11 TAX WITHHOLDING. 28
10.12 GOVERNING LAW. 29
</TABLE>
<PAGE>
AMENDMENT NO. 1
ENERGIZER HOLDINGS, INC.
DEFERRED COMPENSATION PLAN
ARTICLE I
INTRODUCTION
1.1 NAME OF PLAN/PURPOSE.
ENERGIZER HOLDINGS, INC. ("Company") established the ENERGIZER
HOLDINGS, INC. DEFERRED COMPENSATION PLAN ("Plan") effective as of April 1,
2000. The Company now wishes to amend and completely restate the Plan effective
as of April 1, 2000. The Plan is an unfunded deferred compensation plan for the
benefit of certain designated management or highly compensated employees and
Directors of the Company and its Subsidiaries. This Plan is intended to
provide, in part, certain eligible employees and Directors of the Company and
its Subsidiaries the opportunity to defer elements of their compensation or fees
and to receive the benefit of additions to their deferrals.
1.2 "TOP HAT" RETIREMENT BENEFIT PLAN.
The Plan is intended to be a nonqualified unfunded deferred
compensation plan. The Plan is maintained for Directors and for a select group
of management or highly compensated employees and, therefore, it is intended
that the Plan will be exempt from Parts 2, 3 and 4 of Title I of ERISA. The
Plan is not intended to qualify under Code Section 401(a).
1.3 EFFECTIVE DATE.
This amendment and restatement of the Plan is effective as of April 1,
2000.
1.4 ADMINISTRATION.
The Plan shall be administered by the Committee described in Article
VIII.
1.5 APPENDICES.
The Plan may be amplified or modified from time to time by Appendices.
Each Appendix forms a part of the Plan and its provisions shall supersede Plan
provisions as necessary to eliminate any inconsistencies.
<PAGE>
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS.
For purposes of the Plan, the following words and phrases, whether or
not capitalized, shall have the respective meanings set forth below, unless the
context clearly requires a different meaning:
(a) "ACCOUNT" means the bookkeeping account maintained on behalf
of each Participant pursuant to Article VI that is credited with Base Salary
Deferrals, Bonus Deferrals, Matching Contributions, Director Fee Deferrals, and
Retention Payment Deferrals pursuant to Article IV, amounts allocated to the
Participant's Ralston Plan Account, and dividend equivalents as described in
Section 6.3, interest equivalents, if applicable, and equivalents of earnings,
if any, distributed with respect to other investment funds whose results are
reflected in measurement funds offered pursuant to the Plan. Statements of
Accounts issued to Participants also will reflect the market value of investment
funds selected by the Participants for their Accounts, as of the appropriate
Valuation Date. The market value of a particular investment fund in a
Participant's Account will be determined as of the appropriate Valuation Date at
the time of Distribution or transfer to another investment fund in the Plan,
notwithstanding that the market value attributed to such investment funds may
vary from day to day.
(b) "ACQUIRING PERSON" means any person or group of Affiliates or
Associates who is or becomes the beneficial owner, directly or indirectly, of
shares representing 20% or more of the total votes of the outstanding stock
entitled to vote at a meeting of shareholders.
(c) "AFFILIATE" or "ASSOCIATE" shall have the meanings set forth
in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended.
(d) "BASE SALARY" means, with respect to an Employee, the annual
cash compensation relating to services performed during any calendar year,
whether or not actually paid in such calendar year or included on the Federal
Income Tax Form W-2 for such calendar year, excluding bonuses, commissions,
overtime, fringe benefits, stock options, relocation expenses, incentive
payments, non-monetary awards, and other fees, automobile and other allowances
paid to a Participant for employment services rendered (whether or not such
allowances are included in the Employee's gross income). Base Salary shall be
calculated before reduction for compensation voluntarily or mandatorily deferred
or contributed by the Participant pursuant to all qualified or non-qualified
plans of the Company and any Subsidiary and shall be calculated to include
amounts not otherwise included in the Participant's gross income under Code
Sections 125, 402(e)(3), 402(h) or 403(b) pursuant to plans established by the
Company; provided however, that all such amounts will be included in
compensation only to the extent that, had there been no such plan, the amount
would have been payable in cash to the Employee.
(e) "BASE SALARY DEFERRAL" means the amount of a Participant's
Base Salary that the Participant elects to have withheld on a pre-tax basis from
his Base Salary and credited to his Account pursuant to Section 4.1.
(f) "BENEFICIAL OWNER" shall mean a person who shall be deemed to
have acquired "beneficial ownership" of, or to "beneficially own," any
securities:
(i) which such person or any of such persons Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such person or any of such person's Affiliates or
Associates has (a) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of currently exercisable
conversion or exchange rights, warrants or options, or otherwise; provided,
however, that a person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such person or any of such person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange;
or (b) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other person with which such person or any of such person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting or disposing of any securities of Company.
Notwithstanding anything in this definition of "Beneficial Owner" to
the contrary, the phrase "then outstanding," when used with reference to a
person's beneficial ownership of securities of Company, shall mean the number of
such securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such person would be
deemed to own beneficially hereunder.
(g) "BENEFICIARY" means the person or entity designated by the
Participant to receive benefits which may be payable on or after the
Participant's death in accordance with Section 7.4.
(h) "BOARD" means the Board of Directors of the Company.
(i) "BONUS COMPENSATION" means the amount awarded to a Participant
for a Plan Year under any bonus plan maintained by the Company and/or a
Subsidiary which the Committee permits to be deferred under the Plan.
(j) "BONUS DEFERRAL" means the amount of a Participant's Bonus
Compensation that the Participant elects to have withheld on a pre-tax basis
from his Bonus Compensation and credited to his Account pursuant to Section 4.1.
(k) "CHANGE OF CONTROL" shall mean the time when (a) any Acquiring
Person, either individually or together with such person's Affiliates or
Associates, shall have become the Beneficial Owner, director or indirectly, of
more than 20% of the total votes of the outstanding stock of Energizer Holdings,
Inc.; (b) individuals who shall qualify as Continuing Directors shall have
ceased for any reason to constitute at least a majority of the Board; or (c) a
majority of the individuals who shall qualify as Continuing Directors shall
approve a declaration that a Change of Control has occurred.
(l) "CODE" means the Internal Revenue Code of 1986, as amended,
and all valid regulations thereunder.
(m) "COMMITTEE" means the Nominating and Executive Compensation
Committee of the Board which administers the Plan in accordance with Article
VIII.
(n) "COMPANY" means Energizer Holdings, Inc. and any successor
thereto.
(o) "CONTINUING DIRECTOR" means any member of the Board, while
such person is a member of such Board, who is not an Affiliate or Associate of
an Acquiring Person or of any such Acquiring Person's Affiliate or Associate and
was a member of such Board prior to the time when such Acquiring Person became
an Acquiring Person, and any successor of a Continuing Director, while such
successor is a member of such Board, who is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or a representative or nominee of
an Acquiring Person or of any Affiliate or Associate of such Acquiring Person
and is recommended or elected to succeed the Continuing Director by a majority
of the Continuing Directors.
(p) "DEFERRAL PERIOD" means the period of time for which a
Participant elects to defer receipt of his Base Salary Deferrals, and Bonus
Deferrals, credited to such Participant's Account for a Plan Year. A
Participant's election of a Deferral Period made with respect to such Base
Salary Deferrals, and Bonus Deferrals for a Plan Year shall apply to Retention
Payment Deferrals and Matching Contributions made by the Company with respect to
such Bonus Deferrals and Retention Payment Deferrals for such Plan Year. A
---------
Participant who is a Director may not elect a Deferral Period with respect to
Director Fee Deferrals.
(q) "DEFERRALS" means (i) with respect to a Participant who is an
Employee, Base Salary Deferrals and/or Bonus Deferrals, (ii) with respect to a
Participant who is a Director, Director Fee Deferrals, and (iii) with respect to
certain Participants, Retention Payment Deferrals.
(r) "DEFERRED COMPENSATION AGREEMENT" means the written agreement
or electronic means by which a Participant elects the amount of Deferrals for a
Plan Year, the Deferral Period, the deemed investment and the form of payment
for the Deferrals and Matching Contributions, allocated to such Participant's
Account for a Plan Year. A Participant's election with respect to the deemed
investment and form of payment of Salary Deferrals and Bonus Deferrals shall
apply to the Retention Payment Deferrals and to the Matching Contributions made
by the Company with respect to such Bonus Deferrals and Retention Payment
Deferrals for such Plan Year. The Deferred Compensation Agreement may also
include benefits to the Participant or his Beneficiary or other changes in the
provisions of the Plan which are different from those set forth in the Plan.
(s) "DIRECTOR" means any member of the Board who is not an officer
or Employee of the Company and/or a Subsidiary.
(t) "DIRECTOR FEE DEFERRALS" means the amount of Director Fees
which a Participant elects to have withheld on a pre-tax basis from his Director
Fees and credited to his Account pursuant to Section 4.1.
(u) "DIRECTOR FEES" means the amount of cash paid to a Director,
including but not limited to board of director fees, committee fees, annual
retainer director fees and such other amounts paid to a Director, for services
as a Director of the Company or a Subsidiary.
(v) "DISABILITY" or "DISABLED" means such physical or mental
illness that prevents the Participant from reporting to work and performing
duties for the Company and/or Subsidiary, as determined by the Committee.
(w) "EFFECTIVE DATE" means April 1, 2000.
(x) "EMPLOYEE" means any individual who is classified by the
Company or a Subsidiary, and reported on the payroll records of the Company or a
Subsidiary, as a common-law employee of the Company or a Subsidiary, regardless
of such individual's status under common law, including whether such individual
is or has been determined by a third party (including, without limitation, a
government agency or board or court or arbitrator) to be an employee of the
Company, or any Affiliated Company for any purpose, including, for purposes of
any employee benefit plan of the Company or any Affiliated Company (including
this Plan) or for purposes of federal, state, or local tax withholding,
employment tax, or employment law.
(y) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(z) "MARKET VALUE" means the average of the closing stock price of
the Stock as reported by the New York Stock Exchange - Composite Transactions
during the ten (10) trading days immediately preceding the date in question, or,
if the Stock is not quoted on such composite tape or if such Stock is not listed
on such exchange, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934, as amended, on which the Stock is
listed, or if the Stock is not listed on any such exchange, the average of the
closing bid quotations with respect to a share of the Stock during the ten (10)
days immediately preceding the date in question on the NASDAQ Stock Market
National Market System or any system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of the Stock
as determined by a majority of the Continuing Directors in good faith. For
purposes of converting to Stock, the amounts allocated to a Participant under
the Ralston Plan as of March 31, 2000 that were invested in the Ralston Purina
Equity Option, (i) the amounts invested in the Ralston Purina Equity Option were
converted to cash using the average of the closing stock price of the Ralston
shares during the last ten (10) trading days in March, 2000, and such cash was
then converted to Stock using the average of the closing price of the Stock
during the last ten (10) trading days in April, 2000.
(aa) "MATCHING CONTRIBUTION" means the amount of the contribution
made by the Company and/or a Subsidiary on behalf of a Participant who elects to
make Bonus Deferrals and/or Retention Agreement Deferrals to the Plan for a Plan
Year, subject to the provisions of Section 4.4.
(bb) "PARTICIPANT" means each Employee who has been selected for
participation in the Plan and each Director who has become a Participant
pursuant to Article III.
(cc) "PLAN" means the ENERGIZER HOLDINGS, INC. DEFERRED
COMPENSATION PLAN, as amended from time to time.
(dd) "PLAN YEAR" means the twelve-consecutive month period
commencing January 1 of each year and ending on December 31, except that the
first Plan Year shall be the period beginning on April 1, 2000 and ending on
December 31, 2000.
(ee) "RALSTON PLAN" means the Ralston Purina Company Deferred
Compensation Plan for Key Employees.
(ff) "RALSTON PLAN ACCOUNT" means the amounts allocated to the
Account of a Participant under the Ralston Plan as of March 31, 2000 (including
amounts attributable to services performed on or before March 31, 3000 and not
paid until after such date but that are subject to a deferral election pursuant
to the Ralston Plan).
(gg) "RETENTION AGREEMENT PAYMENT" means a payment payable to a
Participant as of January 15, 2001, pursuant to a Retention Agreement between
the Participant and the Company.
(hh) "RETENTION PAYMENT DEFERRAL" means the amount of the
Retention Agreement payment that a Participant elects to have withheld on a
pre-tax basis from his Retention Agreement Repayment and credited to his Account
pursuant to Section 4.1.
(ii) "RETIREMENT" means (i) with respect to a Participant who is
an Employee, the date such Participant is entitled to a benefit (whether or not
such benefit has commenced) under the terms of the Energizer Holdings, Inc.
Retirement Plan, and (ii) with respect to a Participant who is a Director, the
date such Director resigns or is removed as a Director of the Company and
Subsidiaries following attainment of age 70.
(jj) "STOCK" means shares of the Company's common stock, par value
$.01 per share, which consists of shares of a class of common stock designated
as Energizer Common Stock ("ENR Stock") or any such other security outstanding
upon the reclassification or redesignation of the Company's ENR Stock or any
other outstanding class or series of common stock of the Company, including,
without limitation, any stock split-up, stock dividend, creation of tracking
stock, or other distributions of stock in respect of stock, or any reverse stock
split-up, or recapitalization of the Company or any merger or consolidation of
the Company with any Affiliate, or any other transaction, whether or not with or
into or otherwise involving an Acquiring Person.
(kk) "STOCK UNIT" means a stock unit that is equivalent to one
share of Stock.
(ll) "STOCK UNIT FUND" means the Energizer Common Stock Unit Fund.
(mm) "SUBSIDIARY" means any trade or business under common control
with the Company as defined in Code Section 1563(a)(1).
(nn) "TERMINATION FOR CAUSE" means a Participant's termination of
employment with the Company and its Subsidiaries because the Participant
willfully engaged in gross misconduct; provided, however, that a "Termination
for Cause" shall not include a termination attributable to: (i) poor work
performance, bad judgment or negligence on the part of the Participant; or (ii)
an act or omission reasonable believed by the Participant in good faith to have
been in or not opposed to the best interests of his employer and reasonably
believed by the Participant to be lawful.
(oo) "TRUST" means the fund, if any, established in consequence of
and for the purpose of the Plan, to be held in trust by the Trustee, from which
Trust benefits under the Plan may be paid.
(pp) "TRUST AGREEMENT" means the Trust under the Energizer
Holdings, Inc. Deferred Compensation Plan made and entered into by the Company
with the Trustee pursuant to the Plan, as said Trust Agreement may be amended
from time to time.
(qq) "TRUSTEE" means any person, persons or corporation designated
by the Company from time to time to hold, invest and disburse, in accordance
with the Plan and Trust Agreement, the assets of the Plan.
(rr) "VALUATION DATE" means each business day that the New York
Stock Exchange is open for business, unless changed by the Committee, and each
special valuation date designated by the Committee.
2.2 NUMBER AND GENDER.
Wherever appropriate herein, words used in the singular shall be
considered to include the plural and words used in the plural shall be
considered to include the singular. The masculine gender, where appearing in
the Plan, shall be deemed to include the feminine gender.
2.3 HEADINGS.
The headings of Articles and Sections herein are included solely for
convenience and do not bear on the interpretation of the text. If there is any
conflict between such headings and the text of the Plan, the text shall control.
As used in the Plan, the terms "Article", "Section" and "Appendix" mean the text
that accompanies the specified Article, Section or Appendix of the Plan.
<PAGE>
ARTICLE III
PARTICIPATION AND ELIGIBILITY
3.1 ELIGIBILITY.
(a) Employees - The Committee shall select who is eligible to
---------
participate in the Plan from among the management and highly compensated
Employees of the Company and its Subsidiaries who are subject to the income tax
laws of the United States. In making its selections hereunder, the Committee
shall take into consideration the nature of the services rendered or to be
rendered to the Company and its Subsidiaries by an Employee, his present and
potential contribution to the success of the Company and its Subsidiaries, and
such other factors as the Committee deems relevant in accomplishing the purposes
of the Plan. The Committee shall notify each Participant of his selection as a
Participant.
(b) Directors - A Director is eligible to participate in the Plan.
---------
3.2 PARTICIPATION.
An Employee or Director shall become a Participant effective as of the
date the Committee determines, which date shall be on or after the date his
Deferred Compensation Agreement becomes effective. Subject to the provisions of
Section 3.3, a Participant shall remain eligible to continue participation in
the Plan for each Plan Year following his initial year of participation in the
Plan. The terms of the Plan shall govern the benefits, if any, payable to the
Participant or his Beneficiary, except as otherwise provided in the
Participant's Deferred Compensation Agreement.
3.3 DURATION OF PARTICIPATION.
(a) Employee - A Participant who is an Employee shall cease to be
--------
a Participant as of the date on which his or her employment with the Company and
all Subsidiaries terminates or is deemed terminated by the Company, the date the
Committee terminates such Participant's participation in the Plan or the date on
which the Plan terminates, whichever date is earliest.
If the Committee determines in good faith that a Participant no longer
qualifies as a member of a select group of management or highly compensated
employees, as membership in such group is determined in accordance with the
provisions of Section 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee
shall have the right, in its sole discretion, to (i) terminate any deferral
election the Participant has made for the remainder of the Plan Year in which
the Participant's membership changes, (ii) prevent the Participant from making
future deferral elections, and/or (iii) immediately distribute the Participant's
Account in which he is vested and terminate the Participant's participation in
the Plan.
(b) Director - A Participant who is a Director shall cease to be a
--------
Participant as of the date on which he ceases to be a Director, the date the
Committee terminates such Participant's participation in the Plan or the date on
which the Plan terminates, whichever date is earliest.
<PAGE>
ARTICLE IV
DEFERRAL AND MATCHING CONTRIBUTIONS
4.1 DEFERRALS BY PARTICIPANTS.
(a) Deferral Elections by Participants - Before the first day of
------------------------------------
each Plan Year (or the remaining portion thereof for an Employee or Director who
commences participation in the Plan other than on the first day of a Plan Year),
a Participant may file with the Committee a Deferred Compensation Agreement
pursuant to which such Participant elects to make Deferrals for such Plan Year.
Any such Participant election shall be subject to any maximum or minimum
percentage or dollar amount limitations and to any other rules prescribed by the
Committee in its sole discretion.
(b) Crediting of Deferral Amounts - Base Salary Deferrals will be
------------------------------
credited to the Account of each Participant as of the last day of each calendar
month, provided that such Participant is an Employee on the last day of such
calendar month. A Participant whose employment terminates with the Company and
all Subsidiaries during the calendar month shall be paid in cash the amount of
his Base Salary Deferrals for such month. Bonus Deferrals will be credited to
the Account of each Participant as soon as administratively feasible after such
Bonus Compensation otherwise would have been paid to the Participant in cash,
provided that the Participant is an Employee as of such date. A Participant
whose employment terminates with the Company and all Subsidiaries before his
Bonus Compensation would have been paid to him in cash will be paid his Bonus
Deferral in cash. Director Fee Deferrals will be credited to the Account of
each Participant as soon as administratively feasible after such Director Fees
otherwise would have been paid to the Participant in cash, provided that the
Participant is a Director as of such date. A Participant whose relationship as
a Director terminates before his Director Fees would have been paid to him in
cash will be paid his Director Fee Deferrals in cash. Retention Payment
Deferrals will be credited to the Account of each Participant as soon as
administratively feasible after such Retention Agreement Payment would have been
paid to the Participant in cash, provided that the Participant is an Employee as
of such date.
4.2 EFFECTIVE DATE OF DEFERRED COMPENSATION AGREEMENT.
A Participant's initial Deferred Compensation Agreement shall be
effective as of the date the Participant commences participation in the Plan.
Each subsequent Deferred Compensation Agreement shall become effective on the
first day of the Plan Year to which it relates. If a Participant fails to
complete a Deferred Compensation Agreement on or before the date the Participant
commences participation in the Plan or the first day of any Plan Year, the
Participant shall be deemed to have elected not to make Deferrals for such Plan
Year (or remaining portion thereof if the Participant enters the Plan other than
on the first day of a Plan Year).
4.3 MODIFICATION OR REVOCATION OF ELECTION OF PARTICIPANT.
A Participant may not discontinue or change the amount of his
Deferrals during a Plan Year. Under no circumstances may a Participant's
Deferred Compensation Agreement be made, modified or revoked retroactively.
4.4 MATCHING CONTRIBUTIONS.
For each Plan Year, the Company and/or its Subsidiaries shall make a
Matching Contribution with respect to a Participant's Bonus Deferrals for such
Plan Year; provided however, that (i) the amount, if any, of such Matching
Contributions for each Plan Year shall be determined by the Company in its sole
discretion, and (ii) that such Bonus Deferrals by Employees for such Plan Year
must be invested in the Stock Unit Fund as provided in Section 6.3 for a period
of not less than twelve (12) months beginning on the date such Bonus Deferrals
are credited to such Participant's Account in order to receive such Matching
Contribution. Matching Contributions with respect to Bonus Deferrals invested
in the Stock Unit Fund shall be credited to the Account of a Participant as of
the date such Bonus Deferrals are credited to the Participant's Account;
provided however, Matching Contributions proportionately attributable to Bonus
Deferrals that are withdrawn by a Participant from the Stock Unit Fund within
twelve (12) months beginning on the date such Bonus Deferrals are credited to
such Participant's Account, shall be forfeited by such Participant.
For each Plan Year, the Company shall make a Matching Contribution
with respect to a Participant's Director Fee Deferrals for such Plan Year. The
amount, if any, of such Matching Contribution shall be determined by the Company
in its sole discretion.
The Company and/or its Subsidiaries shall make a Matching Contribution with
respect to a Participant's Retention Payment Deferral; provided however, that
(i) such Matching Contribution shall be made only with respect to such
Participant's Retention Payment Deferrals for which a restricted stock
equivalent award pursuant to a 2000 Restricted Stock Equivalent Award Agreement
has not been, or may not be, issued, and (ii) the amount, if any, of such
Matching Contribution shall be determined by the Company in its sole discretion.
Matching Contributions with respect to Retention Payment Deferrals invested in
the Stock Unit Fund shall be credited to the Account of a Participant as of the
date such Retention Payment Deferrals are credited to the Participant's Account;
provided however, Matching Contributions proportionately attributable to
Retention Payment Deferrals that are withdrawn by a Participant from the Stock
Unit Fund within thirty-six (36) months beginning on the date such Retention
Payment Deferrals are credited to such Participant's Account, shall be forfeited
by such Participant.
4.5 MANDATED DEFERRALS.
If the Committee mandates the deferral of any compensation in order to
preserve the deductibility of such compensation when paid, under Code Section
162(m), such amounts shall remain deferred until such time as the Committee
directs. Such mandated deferrals shall not be entitled to a Matching
Contribution and shall be paid in a lump sum as soon as practicable after they
become deductible by the Company or its Subsidiaries as determined by the
Committee.
<PAGE>
ARTICLE V
VESTING
5.1 VESTING IN BASE SALARY DEFERRALS, BONUS DEFERRALS, DIRECTOR FEE
DEFERRALS AND RALSTON PLAN ACCOUNT.
A Participant shall always be 100% vested in the amounts allocated to
his Account attributable to his Base Salary Deferrals, Bonus Deferrals,
Retention Payment Deferrals and Director Fee Deferrals. A Participant shall
also be 100% vested in his Ralston Plan Account.
5.2 VESTING IN MATCHING CONTRIBUTIONS.
(a) Employees - A Participant who is an Employee shall become 100%
---------
vested in the amounts allocated to his Account attributable to his Matching
Contributions for a Plan Year, upon the expiration of thirty-six (36) months
beginning on the first day of the first full month following the date such
Matching Contributions are credited to his Account; provided, however, that in
the event such Participant's employment is terminated with the Company and all
Subsidiaries for any reason other than Retirement, death, Disability,
involuntary termination (other than Termination for Cause) or upon a Change of
Control, the amounts allocated to his Account attributable to his Matching
Contributions in which such Participant is vested shall be determined as of the
date of such termination of employment.
Notwithstanding the foregoing, a Participant who is an Employee shall,
become 100% vested in the amounts allocated to his Account attributable to his
Matching Contributions upon the Participant's Retirement, death, Disability,
involuntary termination (other than Termination for Cause) or upon a Change of
Control.
(b) Directors - A Participant who is a Director, shall always be
---------
100% vested in the amounts allocated to his Account attributable to his Matching
Contributions.
5.3 DEFERRAL PERIODS.
(a) Employees - A Participant who is an Employee must specify on
---------
the Deferred Compensation Agreement, the Deferral Period for the Deferrals for
the Plan Year to which the Deferred Compensation Agreement relates, subject to
certain rules as prescribed by the Committee from time to time. A Participant
shall elect one of the Deferral Period options as follows: (1) a Deferral Period
of at least three (3) years pursuant to which a distribution is made in January
of the fourth (or later) Plan Year following the Plan Year for which the
election of Base Salary Deferrals, and Bonus Deferrals and Matching
Contributions thereon, were made, and (2) termination of employment with the
Company and all Subsidiaries for any reason.
(b) Directors - A Participant who is a Director may not elect a
---------
Deferral Period with respect to Director Fee Deferrals. Payment of such
Director Fee Deferrals shall be made in accordance with the provisions of
Section 7.1.
<PAGE>
ARTICLE VI
ACCOUNTS
6.1 ESTABLISHMENT OF BOOKKEEPING ACCOUNT.
A separate bookkeeping account shall be maintained for each
Participant. Such account shall be credited with the Deferrals made by the
Participant pursuant to Section 4.1, the Matching Contributions made by the
Company or a Subsidiary pursuant to Section 4.4, and amounts allocated to his
Ralston Plan Account. Such account also shall reflect the investment results
described in Section 6.3.
6.2 SUBACCOUNTS.
Within each Participant's bookkeeping account, separate subaccounts
may be maintained to the extent necessary for the administration of the Plan.
For example, it may be necessary to maintain separate subaccounts where the
Participant has specified different Deferral Periods, methods of payment or
investment directions with respect to his Deferrals for different Plan Years.
6.3 INVESTMENT OF ACCOUNTS.
A Participant shall elect to invest the amounts credited to his
Account in such measurement funds as are selected by the Energizer Plans
Investment Committee in its sole discretion, including but not limited to the
Stock Unit Fund. The Energizer Plans Investment Committee may change or
eliminate such measurement funds from time to time. The investment of such
funds, or change in such investments, shall be made in accordance with such
rules and procedures established by the Committee.
A Participant's Account shall consist of a cash subaccount and a stock
subaccount. Amounts allocated to the cash subaccount shall be invested in
investments other than Stock Units. Amounts allocated to the stock subaccount
shall be maintained as Stock Units. A Participant shall elect on his Deferred
Compensation Agreement the portion of his Deferrals for a Plan Year that will be
allocated to a cash subaccount and to the stock subaccount. The balance of a
Participant's Account as of any date is the aggregate of the cash subaccount and
the stock subaccount as of such date. The balance of each cash subaccount shall
be expressed in United States dollars. The balance of each stock subaccount
shall be expressed in the numbers of shares of Stock deemed allocated to such
subaccount, with fractional shares of Stock calculated to three decimal places.
The number of Stock Units allocated to the stock subaccount as of any date shall
be equal to the quotient of the amount allocated to the stock subaccount divided
by the Market Value on such date. Upon the occurrence of any stock split-up,
stock dividend, issuance of any tracking stock, combination or reclassification
with respect to any outstanding series or class of Stock, or consolidation,
merger or sale of all or substantially all of the assets of the Company, the
number of Stock Units in each stock subaccount shall, to the extent appropriate
as determined by the Committee in its sole discretion, be adjusted accordingly.
To the extent dividends on any class or series of outstanding Stock are paid,
dividend equivalents and fractions thereof shall be calculated with respect to
balances of such Stock equivalents in the Participant's stock subaccount,
converted to additional equivalents of such Stock and credited to the
Participant's stock subaccount as of the dividend payment dates. The number of
Stock equivalents to be credited as of each such date shall be determined by
dividing the amount of the dividend equivalent by the Market Value of the
relevant Stock on the dividend payment date. The Participant's stock subaccount
shall continue to earn such dividend equivalents until fully distributed.
Matching Contributions and Retention Payment Deferrals must be
invested in the Stock Unit Fund for a period of not less than thirty-six (36)
months beginning on the date the applicable of such Matching Contributions and
Retention Payment Deferrals are credited to a Participant's Account.
Director Fee Deferrals must be invested in the Stock Unit Fund for a
period of not less than twelve (12) months beginning on the first day of the
calendar year in which they are earned.
As of each Valuation Date, a Participant's Account shall be valued in
accordance with this Section and any rules and procedures established by the
Committee.
6.4 HYPOTHETICAL NATURE OF ACCOUNTS.
The Account established under this Article VI shall be hypothetical in
nature and shall be maintained for bookkeeping purposes only. Neither the Plan
nor any of the Accounts (or subaccounts) established hereunder shall hold any
actual funds or assets. The right of any person to receive one or more payments
under the Plan shall be an unsecured claim against the general assets of the
Company. Any liability of the Company to any Participant, former Participant,
or Beneficiary with respect to a right to payment shall be based solely upon
contractual obligations created by the Plan. Neither the Company and/or any
Subsidiary, the Board, nor any other person shall be deemed to be a trustee of
any amounts to be paid under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship, between the Company and/or any
Subsidiary and a Participant or any other person.
<PAGE>
ARTICLE VII
PAYMENT OF ACCOUNT
7.1 TIMING OF DISTRIBUTION OF BENEFITS.
(a) Employees - With respect to a Participant who is an Employee,
---------
the Participant's Account in which such Participant is vested, shall be
distributed (or begin to be distributed, in the case of annual installment
payments) to such Participant as soon as practicable following the date the
Deferral Period for such Deferrals ends. In the event such Participant's
employment is terminated with the Company and all Subsidiaries for any reason
prior to the end of the Deferral Period for such Deferrals, the total amount of
the Participant's Account in which such Participant is vested shall be
distributed (or begin to be distributed, in the case of the annual installment
payments) to such Participant as soon as practicable following such termination
of employment notwithstanding the Deferral Period elected by such Participant
with respect to such Deferrals.
(b) Directors - With respect to a Participant who is a Director,
---------
distribution of the Participant's Account shall be made not later than sixty
(60) days following the date the Participant's relationship as a Director
terminates.
7.2 ADJUSTMENT OF ACCOUNT UPON A DISTRIBUTION.
Upon a distribution pursuant to this Article VII, the balance of a
Participant's Account shall be determined as of the Valuation Date immediately
preceding the date of the distribution to be made and shall be credited with
declared dividends, if any, and adjusted for investment results which have
accrued to the date of distribution but which have not been allocated to his
Account.
7.3 FORM OF PAYMENT OR PAYMENTS.
The amounts allocated to a Participant's Account attributable to
Deferrals and Matching Contributions, made to the Plan for a Plan Year, shall be
distributed to the Participant in accordance with the form of payment specified
as follows:
(a) Lump Sum Payment-A Participant who is an Employee shall be
------------------
paid his benefit in the form of a lump sum payment if the vested amount to be
distributed to such Participant, determined as of the date such amount is to be
distributed, is less than $50,000. A Participant who is a Director shall
receive payment of his Account in a lump sum payment.
(b) Annual Installment Payment-A Participant who is an Employee
----------------------------
may elect, in his Deferred Compensation Agreement, to be paid his benefit in a
series of annual installment payments provided that the vested amount of the
total installment payments to be distributed to such Participant, determined as
of the date such amount is to be distributed, is equal to or greater than
$50,000. If a Participant does not elect payment in the form of installment
payments or if the vested amount of the total installment payments to be
distributed to such Participant determined as of the date such amount is to
commence to be distributed is less than $50,000 at the time such payment is to
be made, his benefit shall be paid in the form of a lump sum payment. If a
benefit is to paid in a series of annual installment payments, the annual
installment payments may be made for a period equal to five (5) or ten (10)
years. Annual installments shall commence within 60 days of termination of
employment with the Company and all Subsidiaries provided that the vested amount
of the total installment payments to be distributed to such Participant
determined as of the date such amount is to commence to be distributed is equal
to or greater than $50,000. Subsequent annual installment payments shall be
paid as soon as administratively feasible after January l of each year. The
amount of each annual installment payment shall be calculated by multiplying the
total amount to be distributed to such Participant by a fraction, the numerator
of which is one, and the denominator of which is the remaining number of annual
installment payments to be made to the Participant.
7.4 DEATH BENEFITS
(a) Employees - In the event of the death of a Participant who is
---------
an Employee prior to attainment of age fifty (50) years, the total amount
allocated to the Participant's Account shall be paid in a lump sum to the
Beneficiary. If a Participant who is an Employee dies on or after attainment of
age fifty (50) years, the total amount allocated to the Participant's Account
shall be paid to the Participant's Beneficiary in accordance with the applicable
form of distribution elected by the Participant. If no Beneficiary is
designated, then benefits shall be paid in a lump sum to the Participant's
estate or as provided by law. Distribution shall be made (and, in the case of
installment payments, shall commence) no later than sixty (60) days following
the Participant's death.
(b) Directors - In the event of the death of a Participant who is
---------
a Director, the amount credited to the Participant's Account shall be paid in a
lump sum not later than sixty (60) days following the date of such Participant's
death.
<PAGE>
7.5 DESIGNATION OF BENEFICIARIES.
A Participant may designate the Beneficiary or Beneficiaries to whom
his benefit under the Plan shall be paid if he dies before he receives complete
payment of such benefit. A Beneficiary designation (i) must be made on a
beneficiary designation form provided by the Committee, (ii) shall be effective
on the date such designation form is actually received by the Committee, and
(iii) shall revoke all prior designations made by the Participant. A
Beneficiary designation form received by the Committee after the date of the
Participant's death shall be null and void. If a Participant has not designated
a Beneficiary, if no designated Beneficiary survives the Participant or if the
Beneficiary designation is legally invalid for any reason, then, the
Participant's Beneficiary shall be the Participant's executor or administrator,
or his heirs at law if there is no administration of such Participant's estate.
If the Committee is in doubt as to the right of any such Beneficiary to receive
any benefits under the Plan, it may pay such benefits, in its sole and absolute
discretion, to the legal representative of the Participant's estate, and upon
such payment neither the Committee, the Company, nor the Plan shall have further
liability for such payment.
7.6 UNCLAIMED BENEFITS.
In the case of a benefit payable on behalf of such Participant, if the
Committee is unable to locate the Participant or Beneficiary to whom such
benefit is payable, such benefit may be forfeited to the Company, upon the
Committee's determination. Notwithstanding the foregoing, if subsequent to any
such forfeiture the Participant or Beneficiary to whom such benefit is payable
makes a valid claim for such benefit, such forfeited benefit shall be paid by
the Company or restored to the Plan by the Company.
7.7 WITHDRAWAL.
A Participant (or, after a Participant's death, his or her
Beneficiary) may elect, at any time, to withdraw all of his Account in
accordance with such rules and procedures prescribed by the Committee. No
partial withdrawals of a Participant's Account may be made. The Participant (or
his or her Beneficiary) shall make this election by giving the Committee advance
written notice of the election in a form determined from time to time by the
Committee. The Participant (or his or her Beneficiary) shall be paid the
withdrawal amount within 60 days of his or her election. The Committee may
impose suspensions of future deferrals or other penalties as a condition to such
withdrawals. The payment of this Withdrawal Amount shall not be subject to the
deduction limitation under Code Section 162(m).
<PAGE>
7.8 DISABILITY BENEFITS.
(a) Disabled Employees - With respect to a Participant who is an
-------------------
Employee and who becomes Disabled but remains in the employ of the Company or a
Subsidiary, distribution of such Participant's vested Account shall be made as
soon as practicable following the date such Participant requests distribution of
his vested Account due to Disability.
(b) Disabled Directors - With respect to a Participant who is a
-------------------
Director and who becomes Disabled but remains a Director, distribution of such
Participant's Account shall be made as soon as practicable following the date
such Participant requests distribution of his Account due to Disability.
7.9 OFFSET OF BENEFIT BY CERTAIN AMOUNTS
The Committee in its sole and absolute discretion, may offset any
benefit payable to a Participant or Beneficiary pursuant to this Article VII, by
any amounts the Participant or Beneficiary may owe the Company or any
Subsidiaries.
<PAGE>
ARTICLE VIII
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have all powers necessary or appropriate to enable it to carry out its
administrative duties. Not in limitation, but in application of the foregoing,
the Committee shall have the duty and power to interpret the Plan and determine
all questions that may arise hereunder as to the status and rights of Employees,
Participants, and Beneficiaries. The Committee may exercise the powers hereby
granted in its sole and absolute discretion. The decisions of the Committee,
including but not limited to interpretations and determinations of amounts due
under the Plan, shall be final and binding on all parties. No member of the
Committee shall be personally liable for any actions taken by the Committee
unless the member's action involves willful misconduct. The Committee may
delegate its administrative responsibilities to any Employee of the Company
provided such designation is in writing.
<PAGE>
ARTICLE IX
AMENDMENT AND TERMINATION
The power to amend, modify or terminate the Plan in whole or in part
and at any time is reserved to the Committee. Notwithstanding the foregoing, no
amendment or modification which would reasonably be considered to be adverse to
a Participant or Beneficiary may apply to or affect the terms of any deferral of
compensation that was approved prior to the effective date of such amendment or
modification without the consent of the Participant or Beneficiary affected
thereby.
The Board reserves the right to terminate the Plan in whole or in
part, but such termination shall not affect the Deferred Compensation Agreements
then in effect, except that no additional amounts may be deferred by
Participants to the Plan after the date of termination of the Plan.
Upon termination of the Plan, all benefits shall be paid at such time
and in such manner as provided in Article VII.
<PAGE>
ARTICLE X
GENERAL PROVISIONS
10.1 NON-ALIENATION OF BENEFITS.
No right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber, or change any right or
benefit under this Plan shall be void. No right or benefit hereunder shall in
any manner be liable for or subject to the debts, contracts, liabilities or
torts of the person entitled to such benefits. If the Participant or
Beneficiary becomes bankrupt, or attempts to anticipate, alienate, sell, assign,
pledge, encumber, or change any right hereunder, then such right or benefit
shall, in the discretion of the Committee, cease and terminate, and in such
event, the Committee may hold or apply the same or any part thereof for the
benefit of the Participant or Beneficiary, spouse, children, or other
dependents, or any of them in such manner and in such amounts and proportions as
the Committee may deem proper.
10.2 CONTRACTUAL RIGHT TO BENEFITS FUNDING.
The Plan creates and vests in each Participant a contractual right to
the benefits to which he is entitled hereunder, enforceable by the Participant
against the Company. The benefits to which a Participant is entitled under the
Plan shall be paid from the general assets of the Company or from the Trust that
may be established or maintained to provide such benefits.
If a Trust is established and maintained, amounts deposited with the
Trustee shall be held and disposed of in accordance with the terms of the Trust
Agreement and payments made under the terms of the Trust Agreement shall be in
satisfaction of claims against the Company under the Plan. Nothing in the Plan
or Trust Agreement shall relieve the Company of its liabilities to pay amounts
under the Plan except to the extent that such liabilities are met from the use
of the assets held in Trust.
10.3 INDEMNIFICATION AND EXCULPATION.
The members of the Committee and their agents, and the officers,
directors and employees of the Company and any Subsidiary shall be indemnified
and held harmless by the Company against and from any and all loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by them in
connection with or resulting from any claim, action, suit, or proceeding to
which they may be a party or in which they may be involved by reason of any
action taken or failure to act under this Plan and against and from any and all
amounts paid by them in settlement (with the Company's written approval) or paid
by them in satisfaction of a judgment in any such action, suit, or proceeding.
The foregoing provision shall not be applicable to any person if the loss, cost,
liability, or expense is due to such person's gross negligence or willful
misconduct.
10.4 NO EMPLOYMENT AGREEMENT.
The Plan is not a contract of employment, and participation in the
Plan shall not confer on any Employee the right to be retained in the employ of
the Company and/or any Subsidiary.
10.5 CLAIMS FOR BENEFITS.
A Participant or Beneficiary may claim any benefit to which he or she
is entitled under this Plan by a written notice to the Committee. If a claim is
denied, it must be denied within a reasonable period of time, and be contained
in a written notice stating the following:
(a) The specific reason for the denial.
(b) Specific reference to the Plan provision on which the denial
is based.
(c) Description of additional information necessary for the
claimant to present his claim, if any, and an explanation of why such material
is necessary.
(d) An explanation of the Plan's claims review procedure.
The claimant will have sixty (60) days to request a review of the
denial by the Committee, which will provide a full and fair review. The request
for review must be in writing delivered to the Committee. The claimant may
review pertinent documents, and he may submit issues and comments in writing.
The decision by the Committee with respect to the review must be given within
sixty (60) days after receipt of the request, unless special circumstances
require an extension (such as for a hearing). In no event shall the decision be
delayed beyond one hundred and twenty (120) days after receipt of the request
for review. The decision shall be written in a manner calculated to be
understood by the claimant, and it shall include specific reasons and refer to
specific Plan provisions as to its effect.
10.6 SUCCESSOR TO COMPANY.
The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company, expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Plan, in the same manner and to the same extent that the Company would be
required to perform. Accordingly, this Plan and the related Deferred
Compensation Agreements shall be binding upon, and the term "Company" shall
include any successor or assignee to the business or assets of the Company.
10.7 SEVERABILITY.
In the event any provision of the Plan shall be held invalid or
illegal for any reason, any illegality or invalidity shall not affect the
remaining parts of the Plan, but the Plan shall be construed and enforced as if
the illegal or invalid provision had never been inserted, and the Company shall
have the privilege and opportunity to correct and remedy such questions of
illegality or invalidity by amendment as provided in the Plan.
10.8 TRANSFER AMONG AFFILIATES.
In the event the employment of a Participant is transferred from the
Company to any corporation or other entity that is an affiliate of the Company
and that adopts this Plan, or is transferred from one such affiliate to another,
the benefits attributable to compensation deferred with respect to each such
entity shall be credited to a separate bookkeeping account. Each such
corporation shall pay the benefit that is reflected in the Participant accounts
established with respect to such corporation. The Company hereby guarantees
payment of the total benefit, regardless of which entity is primarily liable for
payment of any portion of such benefit.
10.9 ENTIRE PLAN.
This document and any amendments contain all the terms and provisions
of the Plan and shall constitute the entire Plan, any other alleged terms or
provisions being of no effect.
10.10 PAYEE NOT COMPETENT.
In the event that the Committee shall find that the Participant is
unable to care for his affairs because of illness or accident, the Committee may
direct that any benefit payment due him, unless claim shall have been made
therefor by a duly appointed legal representative, be paid to his spouse, a
child, a parent or other blood relative, or to a person with whom he resides,
and any such payment so made shall be a complete discharge of the liabilities of
the Plan therefor.
10.11 TAX WITHHOLDING.
The Company shall withhold from amounts due under this Plan, the
amount necessary to enable the Company to remit to the appropriate government
entity or entities on behalf of the Participant as may be required by the
federal income tax withholding provisions of the Code, by an applicable state's
income tax, or by an applicable city, county or municipality's earnings or
income tax act. The Company shall withhold from the payroll of, or collect
from, a Participant the amount necessary to remit on behalf of the Participant
any FICA taxes which may be required with respect to amounts accrued by a
Participant hereunder, as determined by the Company.
10.12 GOVERNING LAW.
To the extent not superseded by the laws of the United States, this
Plan shall be construed and governed in accordance with the laws of the state of
Missouri.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>0005.txt
<TEXT>
ENERGIZER DEFERRED COMPENSATION PLAN
MARCH 30, 2000
March 30, 2000
PERSONAL AND CONFIDENTIAL
TO: PARTICIPANTS IN THE ENERGIZER HOLDINGS, INC. DEFERRED COMPENSATION PLAN
FOR KEY EMPLOYEES
The Energizer Holdings, Inc. Deferred Compensation Plan for Key Employees (the
"Energizer Plan") provides you the opportunity to defer all or a portion of your
Incentive Plan Bonus and/or annual base salary. In general, deferring
compensation has the advantage of postponing payment of income tax and allowing
any earnings on the deferred amount to accumulate free of tax until distributed.
The information contained in this packet has been assembled for two reasons.
First, we want to give you the opportunity to defer compensation for the rest of
calendar year 2000 into Energizer's Plan. If you do not complete and return the
enclosed forms you will not be able to continue Deferrals for calendar year
2000. Second, we want to let you know what will be happening to compensation
you previously deferred into the Ralston Purina Deferred Compensation Plan (the
"Ralston Plan")
as a result of the spin-off of Energizer from Ralston Purina.
ACTION NOW
This packet contains two forms for you to complete and return to Compensation
Resource Group, the company that administers the Energizer Plan, so that they
are RECEIVED ON OR BEFORE APRIL 21,2000.
- - "2000 Election Form"
- - "Beneficiary Designation Form"
Each of these forms will be described in more detail below. Please return both
forms -- whether or not you make a Deferral - to Compensation Resource Group
(CRG) either by fax or mail (in the enclosed pre-addressed envelope), so that
they are RECEIVED NO LATER THAN APRIL 21, 2000.
DEFERRAL OF COMPENSATION FOR THE REMAINDER OF CALENDAR YEAR 2000
2000 ELECTION FORM - Your December, 1999 Deferral election under the Ralston
- --------------------
Plan will be govern deferral of your First Half Fiscal Year 2000 Incentive Bonus
and your base annual salary through March 31, 2000. This "2000 Election Form"
controls any Deferral of your Second Half Fiscal Year 2000 Incentive Bonus and
any Deferral of your base annual salary from May 1, 2000 through the end of
calendar year 2000. If CRG does not receive your completed "2000 Election Form"
by the April 21, 2000 deadline, you cannot defer any compensation for the
remainder of calendar year 2000.
BENEFICIARY DESIGNATION FORM - Your beneficiary designation under the Ralston
- ------------------------------
Plan will not be carried over to the Energizer Plan. This form will make that
selection now. If you do not complete and return this form, you can select a
Beneficiary at any time. However, in the event of your death prior to
completing your "Beneficiary Designation Form", payments under the Energizer
Plan will be made to your estate.
GENERAL INFORMATION ABOUT THE ENERGIZER PLAN
- -------------------------------------------------
The Energizer Plan carries over several features from the Ralston Plan:
The ability to DEFER UP TO 75% OF YOUR ANNUAL BASE SALARY.
INTERMEDIATE-TERM DEFERRAL OPTIONS that allow you to defer compensation for
periods as short as three years to help meet shorter-term financial needs such
as funding a child's college education or financing a future home purchase.
Payment distribution options that provide 5 or 10 year ANNUAL INSTALLMENT
PAYMENTS if you have a balance in your account of at least $50,000 when you
leave Energizer's employment.
The opportunity to transfer existing account balances, except for Company
matching contributions, to eleven possible options: NINE INVESTMENTS FUNDS which
mirror the returns of the Vanguard mutual funds that are available under the
Energizer Savings Investment Plan, a Prime Rate Fund, and the Energizer Common
Stock Fund.
Incentive Plan Bonus Deferrals into the Energizer Common Stock Fund will
continue to receive A 25% COMPANY MATCH.
Transaction flexibility including DAILY INVESTMENT REALLOCATIONS,
interactive voice response system, Internet access to account balance
information, and quarterly account statements.
Plan Administration by Compensation Resource Group (CRG)
However, unlike the Ralston Plan, Company matching contributions under the
Energizer Plan now will VEST after thirty-six (36) months, rather than upon
attainment of age fifty (50). Retirement, death or Disability also will
continue to accelerate vesting.
YOUR MARCH 31, 2000 ACCOUNT BALANCE UNDER THE RALSTON PLAN
Your prior account balance in the Ralston Plan, including any Incentive Plan
Bonus or Annual Salary Deferrals through March 31, 2000, will be fully vested
and transferred to your account in the Energizer Plan. All Company matching
contributions associated with these Deferrals also will be fully vested and
transferred to your Energizer Plan account. Your Ralston Plan account balance
when transferred to the Energizer Plan will mirror the funds in which your
Ralston Plan account balance is currently invested, except that your account
balance credited to the Ralston Common Stock fund will be converted to the
Energizer Common Stock fund.
There will be a 6-week freeze on participant activity in order to allow CRG to
establish each participant's account in the Energizer Plan. Since your account
under the Ralston Plan will be fully vested in the Energizer Plan, once the
administrative freeze lifts, you can choose to move any of these vested monies
into other Measurement Funds by contacting CRG.
Any First Half Fiscal Year 2000 Incentive Bonus Plan payment which you deferred
will be governed by the Deferral election you submitted in December, 1999.
However, the portion of your First Half Fiscal Year 2000 Incentive Bonus which
you allocated to the Ralston Common Stock Fund in December of 1999 will
automatically be allocated to Energizer Common Stock Fund. Since these
Deferrals, including any associated matching contribution by the Energizer, also
will be vested as part of the spin-off, you may move these funds to other
Measurement Funds, if you choose once the administrative freeze is lifted.
IMPORTANT DATES
APRIL 1, 2000 begins the freeze on participant activity so that CRG can set up
the Energizer Plan. During this time participants cannot move money in their
Account between Measurement Funds.
APRIL 21, 2000 is the deadline for CRG to receive your "2000 Election Form" and
your "Beneficiary Designation Form" either by fax or mail.
MAY 15, 2000 is when we currently estimate that the freeze will be lifted by CRG
and participants may begin accessing their Accounts again and reallocating
Account investments.
The attached Questions and Answers will give you more information about the
Plan, and a plan document will be forwarded to you in the near future. Please
review the enclosed information carefully; then, using the enclosed
pre-addressed envelope, return both forms -- whether or not you make a Deferral
- - TO COMPENSATION RESOURCE GROUP (CRG) EITHER BY FAX OR MAIL SO THAT THEY ARE
RECEIVED NO LATER THAN APRIL 21, 2000.
If you have any questions concerning this information, please contact
Compensation Resource Group at 1-800-405-0911 or Stacy Wegmann at 314-982-1979.
Geraldine S. Auger
Director, Organizational Development and Compensation
Energizer Holdings, Inc.
Telephone 314-982-1215
Enclosures
<PAGE>
ENERGIZER HOLDINGS, INC.
Deferred Compensation Plan
2000 Election Form
- --------------------------------------------------------------------------------
- -------------------------------------------------- ------------------------
Participant Name (Last, First, Middle Initial) Social Security Number
I have been offered an opportunity to participate in the Energizer Holdings,
Inc., Deferred Compensation Plan (the "Plan"). I hereby elect to participate in
the Plan and irrevocably authorize the Company to deduct from my compensation
the amounts specified below:
DEFERRAL ELECTION PLEASE COMPLETE THE DEFERRALELECTION BELOW. YOU MUST
DEFER A TOTAL OF AT LEAST $1,000 TO PARTICIPATE IN
THE PLAN.
================================================================================
BASE SALARY I elect to defer _______% of my calendar 2000 Base
Salary starting with the May payroll following my
enrollment (maximum deferral is 75%).
================================================================================
INCENTIVE PLAN BONUS I elect to defer _______%, OR all up to $_______, OR
defer all in excess of $_______ of my Second Half
Fiscal Year 2000 Incentive Plan Bonus.
================================================================================
NON-PARTICIPATION I elect not to defer calendar 2000 Base Salary or
Second Half Fiscal Year Incentive Plan Bonus.
================================================================================
CALENDAR 2000 BASE SALARY INVESTMENT ELECTION (PLEASE SELECT IN WHOLE
PERCENTAGE INCREMENTS; TOTAL MUST EQUAL 100%)
================================================================================
I elect to invest my calendar 2000 Base Salary deferrals in the following
Measurement Funds:
================================================================================
<TABLE>
<CAPTION>
CALENDAR 2000 BASE SALARY INVESTMENT ELECTION (PLEASE SELECT IN WHOLE PERCENTAGE INCREMENTS; TOTAL MUST
EQUAL 100%)
===========================================================================================================
I elect to invest my calendar 2000 Base Salary deferrals in the following Measurement Funds:
<S> <C> <C> <C>
Energizer Holdings, Inc. Common Stock Vanguard International Growth Fund ____%
Prime Rate Fund ____% Vanguard Life Strategy Income Fund ____%
Vanguard Wellington Fund ____% Vanguard Life Strategy Conservative Growth Fund ____%
Vanguard 500 Index ____% Vanguard Life Strategy Moderate Growth Fund ____%
Vanguard Windsor II Fund ____% Vanguard Life Strategy Growth Fund ____%
Vanguard Small-Cap Index ____%
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SECOND HALF FISCAL YEAR 2000 INCENTIVE PLAN BONUS INVESTMENT ELECTION (PLEASE SELECT IN WHOLE
PERCENTAGE INCREMENTS; TOTAL MUST EQUAL 100%)
==========================================================================================================
I elect to invest my Second Half Fiscal Year 2000 Incentive Plan Bonus deferrals in the following
Measurement Funds:
<S> <C> <C> <C>
Energizer Holdings, Inc. Common Stock ____%
Prime Rate Fund ____% Vanguard International Growth Fund ____%
Vanguard Wellington Fund ____% Vanguard Life Strategy Income Fund
Vanguard 500 Index ____% Vanguard Life Strategy Conservative Growth Fund ____%
Vanguard Windsor II Fund ____% Vanguard Life Strategy Moderate Growth Fund ____%
Vanguard Small-Cap Index ____% Vanguard Life Strategy Growth Fund
==========================================================================================================
(OVER)
</TABLE>
ELECTION OF DATE AND FORM OF PAYMENT FOR 2000 DEFERRALS (PLEASE SELECT A DATE
AND FORM OF PAYMENT)
================================================================================
I elect to receive _______% of my calendar 2000 Base Salary Deferrals and/or
my Second Half Fiscal Year 2000 Incentive Plan Bonus Deferrals and the
associated earnings, on ___________________(cannot be sooner than January 1,
2004). I understand that if my employment terminates for any reason prior to
the date I elected above, my benefit will be paid to me upon my termination
of employment.
I elect to receive my calendar 2000 Base Salary Deferrals and/or my Second
Half Fiscal Year 2000 Incentive Plan Bonus Deferrals upon the termination
of my employment for any reason.
================================================================================
Upon termination of my employment for any reason, I elect to receive payment of
my entire Account Balance in the following form (check one below):
________ Lump Sum ________ 5 Annual Payments ________ 10 Annual Payments
I understand that if my vested account balance is less than $50,000 my account
will be paid to me in a lump sum.
================================================================================
ACCEPTED AND ACKNOWLEDGED:
Signature of Participant Date For Energizer Plans Administrative
Committee Date
MAIL OR FAX ON OR BEFORE APRIL 21, 2000 TO:
COMPENSATION RESOURCE GROUP
ATTN: LAURA POPE
633 WEST FIFTH STREET, 52ND FLOOR
LOS ANGELES, CA 90071
FAX (213) 438-6600
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>0006.txt
<TEXT>
ENERGIZER DEFERRED COMPENSATION PLAN
DECEMBER 6, 2000
December 6, 2000
PERSONAL AND CONFIDENTIAL
TO: PARTICIPANTS IN THE ENERGIZER HOLDINGS, INC. DEFERRED COMPENSATION PLAN
FOR KEY EMPLOYEES
The Energizer Holdings, Inc. Deferred Compensation Plan for Key Employees (the
"Energizer Plan") provides you the opportunity to defer all or a portion of your
Incentive Plan Bonus and/or annual base salary. In general, deferring
compensation has the advantage of postponing payment of income tax and allowing
any earnings on the deferred amount to accumulate free of tax until distributed.
ACTION NOW
This packet contains two forms for you to complete and return to Compensation
Resource Group, the company that administers the Energizer Plan, so that they
are RECEIVED ON OR BEFORE DECEMBER 29, 2000.
- - 2001 Election Form
- - Beneficiary Designation Form
Each of these forms will be described in more detail below. Please return both
forms -- whether or not you make a Deferral - to Compensation Resource Group
(CRG) either by fax or mail (in the enclosed pre-addressed envelope), so that
they are RECEIVED NO LATER THAN DECEMBER 29, 2000. If you do not complete and
return the enclosed forms you will not be able to make Deferrals for calendar
year 2001.
DEFERRAL OF COMPENSATION FOR CALENDAR YEAR 2001
2001 ELECTION FORM - This "2001 Election Form" controls any Deferral of your
- --------------------
Fiscal Year 2001 Incentive Bonus and any Deferral of your base annual salary
from January 1, 2001 through the end of calendar year 2001. If CRG does not
receive your completed "2001 Election Form" by the DECEMBER 29, 2000 deadline,
you cannot defer any compensation for the calendar year 2001.
BENEFICIARY DESIGNATION FORM - Your beneficiary designation selection should be
- -----------------------------
made with this form. If you do not complete and return this form, the
Beneficiary Designation form you submitted earlier this year will apply. Or,
alternatively, you can select a Beneficiary at any time. In the event of your
death prior to completing your "Beneficiary Designation Form", payments under
the Energizer Plan will be made to your estate.
GENERAL INFORMATION ABOUT THE ENERGIZER PLAN
- -------------------------------------------------
The Energizer Plan offers several features:
The ability to DEFER UP TO 75% OF YOUR ANNUAL BASE SALARY.
INTERMEDIATE-TERM DEFERRAL OPTIONS that allow you to defer compensation for
periods as short as three years to help meet shorter-term financial needs such
as funding a child's college education or financing a future home purchase.
Payment distribution options that provide for lump sum payment or for 5 or
10 year ANNUAL INSTALLMENT PAYMENTS if you have a balance in your account of at
least $50,000 when you leave Energizer's employment.
The opportunity to transfer existing account balances, except for Company
matching contributions, to ELEVEN POSSIBLE INVESTMENT FUNDS: nine funds which
mirror the returns of the Vanguard mutual funds that are available under the
Energizer Savings Investment Plan, a Prime Rate Fund, and the Energizer Common
Stock Fund.
Incentive Plan Bonus Deferrals into the Energizer Common Stock Fund will
receive A 25% COMPANY MATCH.
Transaction flexibility including DAILY INVESTMENT REALLOCATIONS,
interactive voice response system, Internet access to account balance
information, and quarterly account statements.
Plan Administration by Compensation Resource Group (CRG)
Company matching contributions under the Energizer Plan will VEST after
thirty-six (36) months. Retirement, death or Disability also will continue to
accelerate vesting.
NEXT STEPS
- -----------
The attached Questions and Answers will give you more information about the
Plan. Please review the enclosed information carefully; then, using the
enclosed pre-addressed envelope, return both forms -- whether or not you make a
Deferral - TO COMPENSATION RESOURCE GROUP (CRG) EITHER BY FAX OR MAIL SO THAT
THEY ARE RECEIVED NO LATER THAN DECEMBER 29, 2000.
If you have any questions concerning this information, please contact
Compensation Resource Group at 1-800-405-0911 or Stacy Wegmann at 314-982-1979.
Geraldine S. Auger
Vice President, Global HR Programs
Energizer Holdings, Inc.
Telephone 314-982-1215
Enclosures
<PAGE>
ENERGIZER HOLDINGS, INC.
Deferred Compensation Plan
2001 Election Form
- --------------------
- --------------------------------------------- ----------------------------
Participant Name (Last, First, Middle Initial) Social Security Number
I have been offered an opportunity to participate in the Energizer Holdings,
Inc., Deferred Compensation Plan (the "Plan"). I hereby elect to participate in
the Plan and irrevocably authorize the Company to deduct from my compensation
the amounts specified below:
================================================================================
DEFERRAL ELECTION PLEASE COMPLETE THE DEFERRAL ELECTION BELOW. YOU MUST
DEFER A TOTAL OF AT LEAST $1,000 TO PARTICIPATE IN THE
PLAN.
================================================================================
BASE SALARY I elect to defer _______% of my calendar 2001 Base
Salary (maximum deferral is 75%).
================================================================================
INCENTIVE PLAN BONUS I elect to defer _______%, OR all up to $_______, OR
defer all in excess of $_______ of my Year 2001
Incentive Plan Bonus.
================================================================================
NON-PARTICIPATION I elect not to defer calendar 2001 Base Salary or
Fiscal Year Incentive Plan Bonus.
================================================================================
================================================================================
CALENDAR 2001 BASE SALARY INVESTMENT ELECTION (PLEASE SELECT IN WHOLE
PERCENTAGE INCREMENTS; TOTAL MUST EQUAL 100%)
================================================================================
I elect to invest my calendar 2001 Base Salary deferrals in the following
Measurement Funds:
================================================================================
CALENDAR 2001 BASE SALARY INVESTMENT ELECTION (PLEASE SELECT IN WHOLE
PERCENTAGE INCREMENTS; TOTAL MUST EQUAL 100%)
<TABLE>
<CAPTION>
I elect to invest my calendar 2001 Base Salary deferrals in the following Measurement Funds:
<S> <C> <C> <C>
Energizer Holdings, Inc. Common Stock ____% Vanguard International Growth Fund ____%
Prime Rate Fund ____% Vanguard Life Strategy Income Fund ____%
Vanguard Wellington Fund ____% Vanguard Life Strategy Conservative
Vanguard 500 Index ____% Growth Fund ____%
Vanguard Windsor II Fund ____% Vanguard Life Strategy Moderate Growth ____%
Vanguard Small-Cap Index ____% Vanguard Life Strategy Growth Fund ____%
</TABLE>
================================================================================
FISCAL YEAR 2001 INCENTIVE PLAN BONUS INVESTMENT ELECTION (PLEASE SELECT IN
WHOLE PERCENTAGE INCREMENTS; TOTAL MUST EQUAL 100%)
================================================================================
<TABLE>
<CAPTION>
I elect to invest my calendar 2001 Base Salary deferrals in the following Measurement Funds:
<S> <C> <C> <C>
Energizer Holdings, Inc. Common Stock ____% Vanguard International Growth Fund ____%
Prime Rate Fund ____% Vanguard Life Strategy Income Fund ____%
Vanguard Wellington Fund ____% Vanguard Life Strategy Conservative
Vanguard 500 Index ____% Growth Fund ____%
Vanguard Windsor II Fund ____% Vanguard Life Strategy Moderate Growth ____%
Vanguard Small-Cap Index ____% Vanguard Life Strategy Growth Fund ____%
</TABLE>
(OVER)
ELECTION OF DATE AND FORM OF PAYMENT FOR 2001 DEFERRALS (PLEASE SELECT A DATE
AND FORM OF PAYMENT)
================================================================================
I elect to receive _______% of my calendar 2001 Base Salary Deferrals and/or
my Fiscal Year 2001 Incentive Plan Bonus Deferrals and the associated
earnings, on ___________________(cannot be sooner than January 1, 2005).
I understand that if my employment terminates for any reason prior to the
date I elected above, my benefit will be paid to me upon my termination
of employment.
I elect to receive my calendar 2001 Base Salary Deferrals and/or my Fiscal
Year 2001 Incentive Plan Bonus Deferrals upon the termination of my
Employment for any reason.
================================================================================
Upon termination of my employment for any reason, I elect to receive payment of
my entire Account Balance in the following form (check one below):
________ Lump Sum ________ 5 Annual Payments ________ 10 Annual Payments
I understand that if my vested account balance is less than $50,000 my account
will be paid to me in a lump sum.
================================================================================
ACCEPTED AND ACKNOWLEDGED:
- ----------------------------- -------------------------------------------------
SIGNATURE OF PARTICIPANT DATE FOR ENERGIZER PLANS ADMINISTRATIVE COMMITTEE DATE
MAIL OR FAX TO:
CLARK/BARDES CONSULTING - COMPENSATION RESOURCE GROUP
ATTN: LAURA POPE
633 WEST FIFTH STREET, 52ND FLOOR
LOS ANGELES, CA 90071
FAX (213) 438-6600
<PAGE>
ENERGIZER HOLDINGS, INC.
Deferred Compensation Plan
2001 Election Form for Directors
- ------------------------------------
- ------------------------------------------------ ---------------------------
Participant's Name (Last, First, Middle Initial) Social Security Number
I have been offered an opportunity to participate in the Energizer Holdings,
Inc., Deferred Compensation Plan (the "Plan"). I hereby elect to participate in
the Plan and irrevocably authorize the Company to deduct from my calendar 2001
Director's Fees the amount specified below:
================================================================================
DIRECTOR'S FEE DEFERRAL ELECTION PLEASE COMPLETE THE DEFERRAL ELECTION
BELOW. YOU MUST DEFER A TOTAL OF AT LEAST $ 1,000 TO PARTICIPATE IN THE PLAN.
================================================================================
FEES I elect to defer _______%, or all up to $____________,
or all in excess of $____________, or _____% in excess
of $____________ of my remaining calendar 2001
Director's Fees
================================================================================
NON-PARTICIPATION I elect not to defer my remaining calendar 2001
Director's Fees
================================================================================
DIRECTOR'S FEE INVESTMENT ELECTION (PLEASE SELECT IN WHOLE PERCENTAGE
INCREMENTS; TOTAL MUST EQUAL 100%)
================================================================================
<TABLE>
<CAPTION>
I elect to invest my calendar 2001 Base Salary deferrals in the following Measurement Funds:
<S> <C> <C> <C>
Energizer Holdings, Inc. Common Stock ____% Vanguard International Growth Fund ____%
Prime Rate Fund ____% Vanguard Life Strategy Income Fund ____%
Vanguard Wellington Fund ____% Vanguard Life Strategy Conservative
Vanguard 500 Index ____% Growth Fund ____%
Vanguard Windsor II Fund ____% Vanguard Life Strategy Moderate Growth ____%
Vanguard Small-Cap Index ____% Vanguard Life Strategy Growth Fund ____%
</TABLE>
ACCEPTED AND ACKNOWLEDGED:
- ------------------------------ --------------------------------------------
Signature of Participant Date for the Nominating and Executive Date
Compensation Committee
PLEASE COMPLETE AND RETURN FORMS TO:
CLARK/BARDES CONSULTING - COMPENSATION RESOURCE GROUP
ATTN: LAURA POPE
633 WEST FIFTH STREET, 52ND FLOOR
LOS ANGELES, CA 90071-2086
FAX: (213) 438-6600
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>7
<FILENAME>0007.txt
<TEXT>
INDEMNIFICATION AGREEMENT
This Indemnification Agreement dated as of the ___ day of ______, 2000 by and
between Energizer Holdings, Inc. (the "Company") and _____________________
("Executive"),
WITNESSETH:
WHEREAS, the Company and Executive have entered into a 2000 Restricted Stock
Equivalents Award Agreement dated as of May 8, 2000 (the "Award Agreement"),
pursuant to which the Company has agreed to award the Executive, up to the limit
set forth in the Award Agreement, a restricted stock equivalent for every share
of the Company's $.01 par value common stock ("Common Stock") that the Executive
acquires prior to May 8, 2002; and
WHEREAS, the Company recognizes that the Executive's acquisition of shares of
Common Stock may create financial difficulties for the Executive and that
Executive may be required to borrow funds necessary to acquire such shares of
Common Stock; and
WHEREAS, the Company has arranged for Bank of America to extend a loan
commitment to Executive in order to enable Executive to acquire shares of Common
Stock, and has agreed to guarantee the total amount of any loan extended by Bank
of America to Executive;
NOW THEREFORE, in consideration of the Company's guarantee of his loan from Bank
of America, Executive hereby agrees to indemnify and hold harmless the Company,
to the full extent lawful, from and against all losses, claims, damages,
liabilities and expenses incurred by the Company in connection with, or arising
out of, its guarantee of said loan.
Executive further agrees that he will promptly reimburse the Company for all
expenses (including reasonable fees and disbursements of counsel) as they may be
incurred by the Company in connection with investigating, preparing for or
defending any pending or threatened claim or action by Bank of America in
respect of which indemnification may be sought hereunder, and in enforcing this
Indemnification Agreement.
In addition, Executive hereby grants the Company the right, exercisable at its
discretion and to the extent permitted by law, to withhold from any and all
amounts payable to Executive by the Company such amounts as the Company
reasonably deems necessary in full or partial satisfaction of Executive's
obligation to the Company pursuant to this Indemnification Agreement.
Executive's indemnity and reimbursement obligations under this Indemnification
Agreement shall be in addition to any liability that he may have, at common law
or otherwise, and shall be binding on his successors and assigns.
Upon demand for payment by Bank of America under the terms of said guarantee,
the Company agrees to notify Executive in writing of such demand, but failure to
so notify Executive will not relieve him of any liability which he may have
hereunder unless, and only to the extent that, such failure results in the
forfeiture by Executive of substantial rights and defenses with respect to the
loan or the guarantee.
Solely for purposes of enforcing this Indemnification Agreement, Executive
hereby consents to personal jurisdiction, service and venue in any court in
which any claim or proceeding which is subject to, or which may give rise to a
claim for indemnification under, this Indemnification Agreement is brought
against the Company.
This Indemnification Agreement shall be deemed made in the State of Missouri.
This Indemnification Agreement and all controversies arising from or relating to
performance under this Indemnification Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri, without giving
effect to such states rules concerning conflicts of laws. ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO ANY CLAIM OR ACTION ARISING OUT OF THIS INDEMNIFICATION
AGREEMENT IS HEREBY WAIVED.
If any provision of this Indemnification Agreement shall be held invalid or
unenforceable to any extent, ther remainder thereof and the application of such
provision to other circumstances shall not be affected thereby and such
provision shall be enforced to the greatest extent permitted by applicable law
and such invalidity or unenforceability shall not affect the validity or
enforceability of any other provision hereof.
No failure or delay in exercising any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right.
This Indemnification Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
a single agreement.
No modifications of or amendments to this Indemnification Agreement shall be
valid or binding unless set forth in writing and duly executed by all parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement on the day and year first above written.
_____________________________ ENERGIZER HOLDINGS, INC.
EXECUTIVE
By: __________________________
Title: _________________________
Executive Officers That Have Entered Into Indemnification Agreement
Mr. Zimmermann
Mr. Strachan
Mr. Rose
Mr. McClanathan
Mr. Conrad
Mr. Sanborn
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>8
<FILENAME>0008.txt
<TEXT>
2000.$
financial
review
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION 19 SUMMARY SELECTED HISTORICAL FINANCIAL INFORMATION
20 RESPONSIBILITY FOR FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT
ACCOUNTANTS 21 CONSOLIDATED FINANCIAL STATEMENTS 25 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS INSIDE BACK COVER CORPORATE INFORMATION
<PAGE>
MANAGEMENT'S DISCUSSION AND
- ---------------------------
ANALYSIS OF RESULTS OF OPERATIONS
- ---------------------------------
AND FINANCIAL CONDITION
- -----------------------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AND PERCENTAGE DATA)
The following discussion is a summary of the key factors management considers
necessary in reviewing Energizer Holdings Inc.'s (Energizer) historical basis
results of operations, operating segment results, liquidity and capital
resources. This discussion should be read in conjunction with the
Consolidated Financial Statements and related notes.
BASIS OF PRESENTATION
Prior to April 1, 2000, Energizer was a wholly owned subsidiary of Ralston
Purina Company (Ralston). On that date, Ralston distributed the common stock
of Energizer to its shareholders in a tax-free spin-off.
The Balance Sheet as of September 30, 2000 is presented on a consolidated
basis. The Statement of Earnings and Statement of Cash Flows for the year
ended September 30, 2000 include the combined results of operations of the
Energizer businesses under Ralston for the six months prior to the spin-off
and the consolidated results of operations of Energizer on a stand-alone
basis for the six months ended September 30, 2000. The financial statements
for all periods prior to the spin-off are presented on a combined basis and
reflect periods during which the Energizer businesses operated as wholly
owned subsidiaries of Ralston. The financial information in these financial
statements does not include certain expenses and adjustments that would have
been incurred had Energizer been a separate, independent company, and may not
necessarily be indicative of results that would have occurred had Energizer
been a separate, independent company during the periods presented or of
future results of Energizer. See Pro Forma Statement of Earnings for the
years ended September 30, 2000 and 1999 in Note 23 to the Consolidated
Financial Statements.
BUSINESS OVERVIEW
Energizer is the world's largest publicly traded manufacturer of primary
batteries and flashlights and a global leader in the dynamic business of
providing portable power. Energizer manufactures and markets a complete line
of primary alkaline and carbon zinc batteries primarily under the brands
Energizer e2, Energizer and Eveready, as well as miniature and rechargeable
batteries, and flashlights and other lighting products. Energizer and its
subsidiaries operate 22 manufacturing facilities in 15 countries on four
continents. Its products are marketed and sold in more than 140 countries
primarily through a direct sales force, and also through distributors, to
mass merchandisers, wholesalers and other customers.
There has been a continuing shift within primary battery products from carbon
zinc batteries to alkaline batteries. As such, Energizer has recorded
provisions related to restructuring its worldwide battery production capacity
and certain administrative functions in 1998 and 1999. Alkaline batteries are
now the dominant primary battery in all world areas with the exception of
Asia and Africa. Energizer continues to review its battery production
capacity and its business structure in light of pervasive global trends,
including the evolution of technology.
Energizer's operations are managed via four major geographic areas - North
America (including the United States and Canada), Asia Pacific, Europe and
South and Central America (including Mexico). Segment profit and sales are
concentrated in the North America and Asia Pacific areas which together
account for 97% and 79%, respectively, of 2000 segment profit and sales.
The battery business is highly competitive, both in the United States and on
a global basis, as a number of large battery manufacturers compete for
consumer acceptance and limited retail shelf space. According to A.C.
Nielsen, Energizer's dollar share of the U.S. alkaline battery market was
34.0% in 1998, 31.2% in 1999 and 32.9% in 2000.
The primary battery category experienced unprecedented growth levels in the
first quarter of fiscal 2000, particularly in the North America and Asia
Pacific regions, related to increased demand from retail customers and
consumers in anticipation of potential disruptions related to the date change
on January 1, 2000. According to A. C. Nielsen, the alkaline dollar sales for
October through December in the United States increased 28% over the same
quarter last year, compared to historical growth trends in the high single
digits. As the category returns to normal growth trends, consumer take away
will likely decline in the first quarter of fiscal
- ---
1 0 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
2001 relative to the same quarter last year. In addition, retail inventory
levels at December 31, 1999, were above historical norms due to Y2K-driven
ordering which further increased Energizer's sales in the first quarter of
fiscal 2000. As such, Energizer anticipates reporting significantly lower
year over year sales for its first fiscal quarter of 2001.
The Asia Pacific area experienced significant currency devaluations and
economic contraction in 1998 and early 1999, with more stable trends emerging
more recently in most markets. Changes in the value of local currencies or
economic contractions in this area may continue to impact segment
profitability. In particular, recent currency declines in Australia, New
Zealand and the Philippines have been unfavorable to Energizer during 2000
and into 2001. The euro and certain other European currencies are at or near
historical low points relative to the U.S. dollar. Currency devaluation was a
significant unfavorable factor in 2000 and continues into 2001.
HIGHLIGHTS
Net earnings were $181.4 for the year ended September 30, 2000, compared to
$80.0 in 1999. Earnings per share were $1.89 and $1.88 on a basic and diluted
basis, respectively, compared to earnings per basic and diluted share of
$.78 in the prior year. Included in net earnings are earnings from continuing
operations of $180.2 and $159.8 in 2000 and 1999, respectively. Current year
net earnings include a net gain on disposition of discontinued operations of
$1.2 related to the final settlement of the sale of discontinued operations.
Fiscal 1999 results include a net loss from discontinued operations of $5.6
and a net loss on the disposition of discontinued operations of $74.2.
Net earnings were $164.7, or $1.62 per basic and diluted share, for the year
ended September 30, 1998. Included in 1998 net earnings are earnings from
continuing operations of $208.2 and a net loss from discontinued operations
of $43.5.
Earnings from continuing operations increased $20.4, or $.32 and $.31 per
basic and diluted share, respectively, in 2000. Included in 2000 results are
costs related to the spin-off of $5.5 pretax, $3.3 after-tax, loss on
disposition of Spanish affiliate of $15.7, and capital loss tax benefits of
$24.4. Fiscal 1999 results include provisions for restructuring of $9.9
pretax, $8.3 after-tax, and capital loss tax benefits of $16.6. Excluding
these items, earnings from continuing operations increased $23.3, or $.35 and
$.34 per basic and diluted share, respectively, in 2000. This increase is
primarily attributable to improved operating results in North America and
Asia Pacific and lower corporate overhead, partially offset by higher
interest expense on the debt assumed as part of the spin-off from Ralston.
Earnings from continuing operations decreased $48.4, or $.49 per basic and
diluted share, in 1999. Included in both periods are provisions for
restructuring and capital loss tax benefits. Excluding these items, earnings
from continuing operations decreased $21.1, or $.22 per basic and diluted
share, in 1999. This decrease is primarily attributable to declines in the
Europe and Asia Pacific areas partially offset by increases in North America.
Discontinued operations consist of Energizer's worldwide rechargeable
Original Equipment Manufacturers' (OEM) battery business. In March 1999, the
Board of Directors of Ralston announced its intention to exit this business
to allow Energizer to focus on its primary battery business. On November 1,
1999, this business was sold to Moltech Corporation for approximately $20.0.
OPERATING RESULTS
NET SALES
Net sales increased $42.0 or 2% in 2000 compared to 1999 primarily on growth
in North America, partially offset by declines in Europe. In 1999, sales
decreased $49.5 or 3% as declines in Europe and, to a lesser extent, the Asia
Pacific and South and Central America regions were partially offset by
increases in North America. See comments on sales changes by region in the
Segment Results section below.
GROSS MARGIN
Gross margin dollars increased $65.2 or 7% in 2000 on increases in North
America and Asia Pacific, partially offset by declines in Europe. Gross
margin percentage improved 2.4 percentage points in 2000 to 49.1% on higher
volume and lower production costs in North America and Asia as well as lower
costs in South and Central America. Gross margin dollars declined $43.0 or 5%
in 1999 on lower sales and lower margin percentage. The margin percentage in
1999 was off 1.0 percentage point to 46.7% compared to 1998 with decreases in
all regions except North America.
- ---
1 1
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses decreased $19.3 or 5% in 2000 on
lower general corporate expenses, as discussed below, and decreases in Europe
were partially offset by increases in North American marketing and
distribution costs. In 1999, selling, general and administrative expenses
were flat with 1998 as decreases in Europe and South and Central America were
offset by higher general corporate expenses. Selling, general and
administrative expenses were 19.7%, 21.2% and 20.7% of sales in 2000, 1999
and 1998, respectively.
ADVERTISING AND PROMOTION
Advertising and promotion increased $23.1 or 14% in 2000 reflecting higher
spending in North America, partially offset by a decrease in Europe. In 1999,
advertising and promotion decreased $19.3 or 11% with declines in all
regions. Advertising and promotion as a percent of sales was 9.8%, 8.8% and
9.6% in 2000, 1999 and 1998, respectively.
SEGMENT RESULTS
Energizer's operations are managed via four major geographic areas - North
America (including the United States and Canada), Asia Pacific, Europe and
South and Central America (including Mexico). This structure is the basis for
Energizer's reportable operating segment information presented in Note 21 to
the Consolidated Financial Statements. Energizer evaluates segment
profitability based on operating profit before general corporate expenses,
research and development expenses, restructuring charges and amortization of
goodwill and intangibles. Intersegment sales are generally valued at
market-based prices and represent the difference between total sales and
external sales as presented in Note 21 to the Consolidated Financial
Statements. Segment profitability includes profit on these intersegment
sales.
NORTH AMERICA Net sales increased $86.1 or 8% in 2000 on higher volume,
- -------------
partially offset by unfavorable pricing and product mix. Alkaline unit volume
increased 11% over 1999. Strong Y2K-driven demand early in the fiscal year
and incremental Energizer e2 sales in the last four months of the year
account for the increased volume. Gross margin increased $53.7 with volume
contributing $45.8. In addition, favorable production costs were partially
offset by unfavorable pricing and product mix. Segment profit increased $20.5
or 7% as higher gross margin was partially offset by increased advertising
and promotion of $27.6, primarily related to the Energizer e2 launch, as well
as higher marketing and distribution expenses.
Net sales increased $30.5 or 3% in 1999. Volume contributed $55.2 of the
sales increase, partially offset by unfavorable pricing and product mix.
Alkaline volume increased 8% in 1999. Segment profit for North America
increased $11.6 or 4% in 1999 as a result of the higher gross margin
associated with the increase in sales. Increased marketing and distribution
costs of $5.0 and increased general and administrative expenses of $4.4 were
largely offset by an $8.4 decrease in advertising and promotion expenditures.
ASIA PACIFIC Net sales to customers increased $8.4 or 2% in 2000. Excluding
- ------------
currency devaluations of $4.3, net sales increased $12.7 or 3%. Alkaline
volume increases of 8% were partially offset by a 2% decline in carbon zinc
volume. Segment profit for Asia Pacific increased $22.7 or 25%, in 2000.
Gross margin increased $23.3 due to lower production costs, higher customer
sales and higher intersegment sales. Lower production costs reflect a variety
of factors including higher production facility utilization and lower costs
resulting from a plant closing in 1999. Selling, general and administrative
expenses were up 1% compared to 1999.
Net sales decreased $12.1 or 3% in 1999. Currency devaluations accounted for
$12.0 of the sales decline. Carbon zinc volume decreases of 5% were offset by
a 4% increase in alkaline volume. Segment profit for Asia Pacific decreased
$11.1 or 11% in 1999. Gross margin declined $21.3 due to higher production
costs and lower sales. Partially offsetting these declines were a $6.2
decrease in exchange losses and a $4.0 decrease in advertising and promotion.
EUROPE Net sales to customers for Europe decreased $44.3 or 14% in 2000
- ------
reflecting currency devaluation of $28.2, lower carbon zinc volume of $11.8
and unfavorable pricing and product mix of $6.9, partially offset by a 1%
alkaline volume gain. For the year, carbon zinc unit volume declined 14%.
Gross margin decreased $21.0, primarily on unfavorable currency impacts of
$18.3. The remaining decline reflects lower sales, partially offset by lower
production costs associated with increased efficiencies following a plant
closing in
- ---
1 2 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
1999. Segment results for Europe improved $1.0 to a loss of $.2. Net currency
impacts in 2000 were unfavorable $6.8 compared to 1999. Absent currency
impacts, segment results improved $7.8 despite a $2.6 decrease in gross
margin. The improvement reflects lower costs following sales and
administrative realignment last year.
Net sales to customers decreased $48.7 or 13% in 1999 compared to 1998
primarily on lower volume. Alkaline and carbon zinc volumes declined 5% and
19%, respectively, accounting for $33.3 of the sales decline. Pricing and
product mix negatively impacted sales by $17.0 in 1999. The majority of the
pricing and product mix decline, $9.8, was driven by Energizer's move from a
sales force to a distributor model in several countries during 1999. The
remainder of the decline reflects competitive and retail pressures. Segment
results for Europe declined by $12.5 to a loss of $1.2 in 1999. Production
inefficiencies related to a plant closing and other costs associated with
restructuring activities accounted for $6.5 of the decline. Excluding these
costs, segment profit declined $6.0 as sales declines of $48.7 were partially
offset by a $28.3 decrease in cost of products sold associated with the lower
sales and a $15.1 decrease in overhead reflecting results of the
restructuring of the European business operations, including the move to the
distributor sales model in several countries.
SOUTH AND CENTRAL AMERICA Net sales decreased $8.2 or 6% in 2000, primarily
- -------------------------
on lower volume and on currency devaluation which could not be mitigated
through pricing actions. Carbon zinc volume declined 6% while alkaline
increased 1%. Despite the sales decrease, gross margin increased $1.2 or 2%,
as unfavorable currency impacts of $7.2 were more than offset by lower
production costs, favorable pricing and product mix. Segment profit for South
and Central America decreased $2.4 or 17% in 2000 as higher marketing,
distribution and management costs were partially offset by the gross margin
increase.
Net sales decreased $19.2 or 13% in 1999 compared to 1998. Of this decline,
$19.0 was due to currency devaluation. Favorable pricing and product mix of
$16.0 was offset by volume declines of 10% for alkaline and 17% for carbon
zinc batteries.
Segment profit for South and Central America decreased $2.4 or 14% in 1999.
Gross margin declined $13.0, much of which was attributable to lower usage of
production capacity in the Mexican plant. Lower other operating costs and a
decrease of $2.1 in exchange losses partially offset the earnings decline.
Operating cost reductions included decreased advertising and promotion
expenses of $4.7 and lower general and administrative expenses of $2.4
resulting from actions taken to offset lower plant utilization and from
planned reorganization and restructuring in Brazil.
GENERAL CORPORATE EXPENSES
General corporate expenses decreased $16.6 in 2000 to $37.4, compared to
$54.0 in 1999, due to higher pension income and lower consulting,
reorganization and information systems costs as well as a lighting product
recall charge in 1999. These costs were partially offset by additional costs
associated with operating as a stand-alone company for the last six months of
fiscal 2000. Fiscal 2001 will include a full year of stand-alone costs, an
estimated increase of $4.0. Corporate expenses in 1999 increased $7.8
compared to 1998 due to higher consulting costs, the product recall charge
discussed above and increases in various other corporate costs. As a percent
of sales, general corporate expenses were 2.0% in 2000 compared to 2.9% in
1999 and 2.4% in 1998.
RESEARCH AND DEVELOPMENT EXPENSE
Research and development expense of $49.9 in 2000 increased 3% in 2000, 4% in
1999 and 11% in 1998. These increases are attributable to Energizer's ongoing
effort to maintain technological leadership in the primary battery business.
As a percent of sales, research and development expense was 2.6% in 2000 and
1999 compared to 2.4% in 1998.
COSTS RELATED TO SPIN-OFF
Energizer recorded one-time spin-related costs of $5.5 pre-tax, or $3.3
after-tax. These costs include legal fees, charges related to the vesting of
certain compensation benefits and other costs triggered by or associated with
the spin-off.
LOSS ON DISPOSITION OF SPANISH AFFILIATE
Energizer recorded a $15.7 pre-tax loss on the sale of its Spanish affiliate
prior to the spin-off. The loss was a non-cash write-off of goodwill and
cumulative translation accounts of the Spanish affiliate. Ralston recognized
capital loss tax benefits related to the Spanish
- ---
1 3
<PAGE>
sale of $24.4, which are reflected in Energizer's historical financial
statements and resulted in a net after-tax gain of $8.7 on the Spanish
transaction. Such capital loss benefits would not have been realized by
Energizer on a stand-alone basis, thus are not included in the Pro Forma
Statement of Earnings for the year ended September 30, 2000 as presented in
Note 23 to the Consolidated Financial Statements.
RESTRUCTURING CHARGES
Competition in the primary battery business has intensified in recent years,
and there continues to be a migration of demand from carbon zinc to alkaline
batteries. In response to these changes, Energizer has recorded restructuring
charges each year from 1994 through 1999. These charges include a reduction
in carbon zinc plant capacity as demand for this type of battery continues to
decline, plant closures for the movement and consolidation of alkaline
production to new or more efficient locations in an effort to achieve lower
product costs, and staffing reorganizations and reductions in various world
areas to enhance management effectiveness and reduce overhead costs. A
detailed discussion of such charges and expenditures during 1998 through 2000
follows.
During 1999, Energizer recorded net provisions for restructuring of $8.3
after-tax, or $9.9 pre-tax, $2.1 of which represented inventory write-downs
and is classified as cost of products sold in the Consolidated Statement of
Earnings. Of the net pre-tax charge, $7.4 relates to 1999 restructuring plans
for the elimination of certain production capacity in North America and in
Asia.
The pre-tax charge of $7.4 for 1999 plans consisted of termination benefits
of $3.2, other cash costs of $.2 and fixed asset impairments of $4.0. The
fixed asset impairments primarily relate to assets used for the production of
lithium coin cells in North America. These assets were idled and scrapped in
1999.
The 1999 restructuring plan provided for the termination of approximately 170
production and administrative employees and the closure of one plant in Asia.
This plant closure was precipitated by the financial problems in the Asian
market, which resulted in contractions in battery markets in this area.
Substantially all actions associated with these charges were completed as of
September 30, 2000.
The remaining $2.5 represents additional net provisions related to prior
years' restructuring plans. Additional termination benefits of $5.5 related
to the 1997 restructuring plan primarily represent enhanced severance related
to a European plant closing. Additional provisions for other cash costs of
$1.8 were recorded for fixed asset disposition costs for previously held for
use assets related to the 1997 restructuring plan that were idled and held
for disposal. Other non-cash charges of $2.1 relate to inventory write-offs,
which were more than offset by a reclassification of $4.5 from other
comprehensive income to net income of cumulative translation adjustment for a
subsidiary sold in connection with the 1997 plan. Also recorded in 1999 were
asset proceeds greater than anticipated of $5.4 related to 1994, 1995 and
1997 restructuring plans.
During 1998, Energizer recorded net after-tax provisions for restructuring of
$12.8, or $21.3 on a pre-tax basis, of which $.3 represents inventory
write-downs and is classified as cost of products sold in the Consolidated
Statement of Earnings. Of the net pre-tax charge, $36.5 related to 1998
restructuring plans, including a voluntary early retirement option offered to
most U.S. Energizer employees meeting certain age and service requirements
and European business operations restructuring, primarily a reorganization of
European sales forces and related employee reductions.
The total 1998 pre-tax charge of $36.5 consisted of termination benefits of
$29.3, which provided for the termination or early retirement of
approximately 420 sales and administrative employees, other cash costs of
$4.6, fixed asset impairments of $1.1 and a non-cash investment write-off of
$1.5. The other cash costs of $4.6 consisted of demolition costs of $1.5 and
environmental exit costs of $.8, both relating to assets held for disposal,
lease termination costs of $1.6 and other exit costs of $.7. Except for
disposition of certain assets held for disposal, substantially all actions
associated with the 1998 charges were complete as of September 30, 2000.
In addition, net reversals of $15.2, related to prior years' restructuring
plans, were recorded in 1998, comprised of $3.7 of additional charges offset
by $18.9 of reversals of prior years' charges. The additional charges
primarily related to asset disposition costs of $2.6 for previously held for
use assets that were idled and held for disposal. The reversals included $9.4
of greater than anticipated proceeds from asset sales related to the 1994,
1995 and 1996
- ---
1 4 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
restructuring plans. In addition, $8.5 of termination benefits recorded in
1997 were reversed in 1998, due primarily to the modification of a European
plant closing plan, driven by the changing business environment in Europe.
The modifications resulted in the termination of approximately 200 fewer
employees than originally anticipated.
Annual pre-tax cost savings from the 1999 restructuring plans have been or
are expected to be as follows: 2000 - $.3 and $1.4 thereafter. Annual pre-tax
cost savings from the 1998 restructuring plans have been or are expected to
be as follows: 1999 - $12.0; 2000 and thereafter - $13.0. Annual pre-tax cost
savings from the 1997 restructuring plans have been or are expected to be as
follows: 1998 - $9.0; 1999 - $19.0; 2000 and thereafter - $23.0.
As of September 30, 2000, except for the disposition of certain assets held
for disposal, substantially all activities associated with 1994 through 1997
restructuring plans are complete. The remaining accrual related to these
plans was $2.1 at September 30, 2000 and primarily represents asset
disposition costs. The carrying value of assets held for disposal under all
restructuring plans was $6.7 at September 30, 2000.
Energizer expects to fund the remaining costs of these restructuring actions
with funds generated from operations.
See Note 5 to the Consolidated Financial Statements for a table which
presents, by major cost component and by year of provision, activity related
to the restructuring charges discussed above during fiscal years 2000, 1999
and 1998, including any adjustments to the original charges.
INTEREST AND OTHER FINANCIAL ITEMS
Interest expense increased $19.9 in 2000 primarily in the last six months of
the year reflecting incremental debt assumed by Energizer immediately prior
to the spin-off. Interest expense decreased $3.5 in 1999 compared to 1998
primarily due to lower rates on foreign debt. Other financing-related costs
were favorable $4.3 in 2000 compared to 1999 primarily due to lower foreign
exchange losses partially offset by the discount on the sale of accounts
receivable financing arrangement. Other financing costs were unfavorable $6.0
in 1999 compared to 1998 primarily due to higher foreign exchange losses in
1999.
INCOME TAXES
Income taxes, which include federal, state and foreign taxes, were 35.5%,
35.6% and 20.7% of earnings from continuing operations before income taxes in
2000, 1999 and 1998, respectively. Income taxes include certain unusual items
in all years, the most significant of which are described below:
* In 2000, the income tax percentage was favorably impacted by the
recognition of $24.4 of U.S. capital loss tax benefits related to the
disposition of Energizer's Spanish affiliate.
* Capital loss tax benefits of $16.6 and $48.4 were recognized in 1999 and
1998, respectively, and were primarily related to prior years' restructuring
actions.
* In 1999, the income tax percentage was unfavorably impacted by pre-tax
restructuring provisions that did not result in tax benefits due to tax loss
situations or particular statutes of a country.
Excluding unusual items, the income tax percentage was 41.8% in 2000, 41.3%
in 1999 and 39.2% in 1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from continuing operations totaled $289.6 in 2000, $337.2 in 1999
and $232.6 in 1998. The 14% decrease in cash flows from continuing operations
in 2000 is due primarily to increased inventory levels and the realization of
capital loss tax benefits in fiscal 1999, partially offset by higher cash
earnings and proceeds from the sale of accounts receivable. The 45% increase
in cash flows from continuing operations in 1999 resulted primarily from
higher cash earnings and also from favorable changes in working capital
items.
Working capital was $401.7 and $478.1 at September 30, 2000 and 1999,
respectively. Capital expenditures totaled $72.8, $69.2 and $102.8 in 2000,
1999 and 1998, respectively. These expenditures were primarily funded by cash
flow from operations. Capital expenditures of approximately $90.0 are
anticipated in 2001 and are expected to be financed with funds generated from
operations. Net transactions with Ralston, prior to the spin-off, resulted in
cash usage of $210.7, $293.7 and $154.7 in 2000, 1999 and 1998, respectively.
- ---
1 5
<PAGE>
Immediately prior to the spin-off, Ralston borrowed $478.0 through several
interim funding facilities and assigned all repayment obligations of those
facilities to Energizer. In April and May, 2000, Energizer entered into
separate financing agreements and repaid the interim funding facilities. As
of September 30, 2000, Energizer's financing agreements include the
following: private placement notes of $175.0 with maturities of 3 to 10
years; borrowings of $195.0 under revolving credit facilities, generally with
5 year maturities; an agreement to sell domestic trade receivables as
discussed below; and other short-term borrowings. The average interest rate
on the domestic short-term and long-term debt is approximately 7.1% and 7.8%,
respectively. Approximately $195.0 of the long-term debt has a variable
interest rate. The interest rates on the long-term debt range from 7.3% to
8.0%. Energizer maintains total committed debt facilities of $625.0, of which
$255.0 remained available as of September 30, 2000. Under the terms of the
facilities, the ratio of Energizer's total indebtedness to its EBITDA cannot
be greater than 3 to 1 and the ratio of its EBIT to total interest expense
must exceed 3 to 1.
On a historical basis, Energizer's ratio of total indebtedness to EBITDA was
1.5 to 1 and the ratio of EBIT to total interest expense was 11.2 to 1 as of
September 30, 2000. On a pro forma basis, which assumes the post-spin debt
was outstanding for the full year, these ratios would have been 1.5 to 1 and
6.8 to 1, respectively, at September 30, 2000.
Energizer entered into an agreement to sell, on an ongoing basis, a pool of
domestic trade accounts receivable to a wholly owned bankruptcy-remote
subsidiary of Energizer. Energizer received $100.0 of proceeds from this
arrangement, which was used to repay interim funding facilities as discussed
above. See Note 12 to the Consolidated Financial Statements for further
discussion regarding the sale of accounts receivable.
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. Subsequent to year-end through November 10, 2000, approximately
1,150,000 shares of Energizer common stock had been purchased under the
authorization.
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.
INFLATION
Management recognizes that inflationary pressures may have an adverse effect
on Energizer through higher asset replacement costs and related depreciation
and higher material, labor and other costs. Energizer tries to minimize these
effects through cost reductions and productivity improvements as well as
price increases to maintain reasonable profit margins. It is management's
view, however, that inflation has not had a significant impact on operations
in the three years ended September 30, 2000.
SEASONAL FACTORS
Energizer's results are significantly impacted in the first quarter of the
fiscal year by the additional sales volume associated with the Christmas
holiday season, particularly in North America. First quarter sales accounted
for 35%, 31% and 33% of total net sales in 2000, 1999 and 1998, respectively.
The first quarter percentage in 2000 was also higher due to Y2K-driven
demand.
ENVIRONMENTAL MATTERS
The operations of Energizer, like those of other companies engaged in the
battery business, are subject to various federal, state, foreign and local
laws and regulations intended to protect the public health and the
environment. These regulations primarily relate to worker safety, air and
water quality, underground fuel storage tanks and waste handling and
disposal.
Energizer has received notices from the U.S. Environmental Protection Agency,
state agencies, and/or private parties seeking contribution, that it has been
identified as a "potentially responsible party" (PRP) under the Comprehensive
Environmental Response, Compensation and Liability Act, and may be required
to share in the cost of cleanup with respect to nine federal "Superfund"
sites. It may also be required to share in the cost of cleanup with respect
to a
- ---
1 6 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
state-designated site. Liability under the applicable federal and state
statutes which mandate cleanup is strict, meaning that liability may attach
regardless of lack of fault, and joint and several, meaning that a liable
party may be responsible for all of the costs incurred in investigating and
cleaning up contamination at a site. However, liability in such matters is
typically shared by all of the financially viable responsible parties.
The amount of Energizer's ultimate liability in connection with those sites
may depend on many factors, including the volume and toxicity of material
contributed to the site, the number of other PRPs and their financial
viability, and the remediation methods and technology to be used.
In addition, Energizer undertook certain programs to reduce or eliminate the
environmental contamination at the rechargeable battery facility in
Gainesville, Florida, which was divested in 1999. In the event that the buyer
would become unable to continue such programs, Energizer could be required to
bear financial responsibility for such programs as well as for other known
and unknown environmental conditions at the site.
Many European countries, as well as the European Union, have been very active
in adopting and enforcing environmental regulations. In many developing
countries in which Energizer operates, there has not been significant
governmental regulation relating to the environment, occupational safety,
employment practices or other business matters routinely regulated in the
United States. As such economies develop, it is possible that new regulations
may increase the risk and expense of doing business in such countries.
It is difficult to quantify with certainty the potential financial impact of
actions regarding expenditures for environmental matters, particularly
remediation and future capital expenditures for environmental control
equipment. Nevertheless, based upon the information currently available,
Energizer believes that its ultimate liability arising from such
environmental matters, taking into account established accruals of $3.6 for
estimated liabilities, should not be material to its financial position. Such
liability could, however, be material to results of operations or cash flows
for a particular quarter or annual period.
MARKET RISK SENSITIVE INSTRUMENTS
AND POSITIONS
The market risk inherent in Energizer's financial instruments and positions
represents the potential loss arising from adverse changes in interest rates
and foreign currency exchange rates. The following risk management discussion
and the estimated amounts generated from the sensitivity analyses are
forward-looking statements of market risk assuming certain adverse market
conditions occur.
INTEREST RATES
Energizer has interest-rate risk with respect to interest expense on variable
rate debt. At September 30, 2000 and 1999, Energizer had $330.0 and $120.7
variable rate debt outstanding. A hypothetical 10% adverse change in all
interest rates would have had an annual unfavorable impact of $2.6 and $.9 in
2000 and 1999, respectively, on Energizer's earnings and cash flows based
upon these year-end debt levels. The primary interest rate exposures on
variable rate debt are with respect to U.S. rates and short-term local
currency rates in certain Asian and Latin American countries.
FOREIGN CURRENCY EXCHANGE RATES
Energizer employs a foreign currency hedging strategy which focuses on
mitigating potential losses in earnings or cash flows on foreign currency
transactions, primarily anticipated intercompany purchase transactions and
intercompany borrowings. External purchase transactions and intercompany
dividends and service fees with foreign currency risk are also hedged from
time to time. The primary currencies to which Energizer's foreign affiliates
are exposed include the U.S. dollar, euro, Singapore dollar, Indonesian
rupiah and British pound, while domestic affiliates are primarily exposed to
the Swiss franc.
Energizer's hedging strategy involves the use of natural hedging techniques,
where possible, such as the offsetting or netting of like foreign currency
cash flows. Where natural hedging techniques are not possible, foreign
currency derivatives with durations of generally one year or less may be
used, including forward exchange contracts, purchased put and call options,
and zero-cost option collars. Energizer policy allows foreign currency
derivatives to be used only for identifiable foreign currency exposures and,
therefore,
- ---
1 7
<PAGE>
Energizer does not enter into foreign currency contracts for trading purposes
where the sole objective is to generate profits.
Market risk of foreign currency derivatives is the potential loss in fair
value of net currency positions for outstanding foreign currency contracts at
fiscal year end, resulting from a hypothetical 10% adverse change in all
foreign currency exchange rates. Market risk does not include foreign
currency derivatives that hedge existing balance sheet exposures, as any
losses on these contracts would be fully offset by exchange gains on the
underlying exposures for which the contracts are designated as hedges.
Accordingly, the market risk of Energizer's foreign currency derivatives at
September 30, 2000 and 1999 amounts to $2.6 and $1.5, respectively.
Energizer generally views as long-term its investments in foreign
subsidiaries with a functional currency other than the U.S. dollar. As a
result, Energizer does not generally hedge these net investments. Capital
structuring techniques are used to manage the net investment in foreign
currencies as considered necessary. Additionally, Energizer attempts to limit
its U.S. dollar net monetary liabilities in currencies of hyperinflationary
countries, primarily in Latin America. In terms of foreign currency
translation risk, Energizer is exposed to the Swiss franc and other European
currencies; the Mexican peso and other Latin American currencies; and the
Singapore dollar, Chinese renminbi, Australian dollar, Indonesian rupiah and
other Asian currencies. Energizer's net foreign currency investment in
foreign subsidiaries and affiliates translated into U.S. dollars using
year-end exchange rates was $515.1 and $545.1 at September 30, 2000 and 1999,
respectively. The potential loss in value of Energizer's net foreign currency
investment in foreign subsidiaries resulting from a hypothetical 10% adverse
change in quoted foreign currency exchange rates at September 30, 2000 and
1999 amounts to $51.5 and $54.5, respectively.
RECENTLY ISSUED ACCOUNTING STANDARDS
See discussion in Note 2 to the Consolidated Financial Statements.
FORWARD-LOOKING INFORMATION
Statements in the Management's Discussion and Analysis of Results of
Operations and Financial Condition and other sections of this Annual Report
to Shareholders that are not historical, particularly statements regarding
anticipated category trends, Energizer market share and sales in future
periods, the future adequacy of cash flows, and the risk associated with
financial instruments and the concentration of credit, 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.
Technological or design changes in portable electronic and other devices that
utilize batteries as a power source may significantly affect the demand for
batteries. Continuing improvements in the service life of primary batteries,
improvements in rechargeable battery performance and increasing consumer
acceptance of rechargeable batteries, and the development of new non-alkaline
battery technologies could all significantly affect continued category growth
for primary alkaline batteries. General economic conditions and continuing
growth in consumer demand for portable electronic devices could also affect
category growth. Within the category, Energizer's sales and market share may
be negatively affected by competitive activity, including new product
introductions or advertising campaigns, retail discounts and other
promotional activities. Competition for key retail customers and growth of
the lower-price private-label battery segment may also negatively affect
sales or market share for Energizer. Unforeseen fluctuations in levels of
Energizer's operating cash flows, or inability to maintain compliance with
its debt covenants, could limit Energizer's ability to meet future operating
expenses and liquidity requirements, fund capital expenditures or service its
debt as it becomes due. Economic turmoil, currency fluctuations and
unforeseen customer financial difficulties could increase Energizer's risk
from currency hedges and other financial instruments or from the extension of
credit to customers. Additional risks and uncertainties include those
detailed from time to time in Energizer's publicly filed documents, including
its Registration Statement on Form 10, as amended, and its Current Report on
Form 8-K dated April 25, 2000.
- ---
1 8 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
SUMMARY SELECTED HISTORICAL FINANCIAL INFORMATION
(Dollars in millions except per share data)
<CAPTION>
STATEMENT OF EARNINGS DATA FOR THE YEAR ENDED SEPTEMBER 30,
----------
2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $1,914.3 $1,872.3 $1,921.8 $2,005.8 $2,023.5
Depreciation and Amortization 82.0 94.9 101.2 112.3 122.6
Earnings from Continuing
Operations before Income
Taxes <Fa> 279.2 248.2 262.5 203.9 271.4
Income Taxes 99.0 88.4 54.3 44.6 106.3
Earnings from Continuing Operations <Fb> 180.2 159.8 208.2 159.3 165.1
Net Earnings 181.4 80.0 164.7 159.8 169.1
Earnings Per Share from Continuing Operations:
Basic $ 1.88 $ 1.56 $ 2.05 $ 1.56 $ 1.62
Diluted $ 1.87 $ 1.56 $ 2.05 $ 1.56 $ 1.62
Average Shares Outstanding <Fc> 96.1 102.6 101.6 102.1 101.8
----------
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA SEPTEMBER 30,
----------
2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Working Capital $ 401.7 $ 478.1 $ 478.5 $ 489.6 $ 532.3
Property at Cost, Net 485.4 472.8 476.9 494.2 543.2
Additions (during the period) 72.8 69.2 102.8 98.8 95.7
Depreciation (during the period) 57.9 68.4 74.1 79.5 81.4
Total Assets 1,793.5 1,833.7 2,077.6 2,113.6 2,146.9
Long-term Debt 370.0 1.9 1.3 21.3 43.1
----------
<FN>
<Fa> Results for the year ended September 30, 2000 include a loss on
disposition of Spanish affiliate of $15.7 and costs related to the
spin-off of $5.5. Prior results include restructuring charges of $9.9,
$21.3, $83.7 and $3.4 for the years ended September 30, 1999, 1998,
1997 and 1996, respectively.
<Fb> Earnings from continuing operations include the following unusual
items:
</FN>
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
----------
2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
After-tax restructuring charges $ - $(8.3) $(12.8) $(72.0) $(2.2)
Capital loss tax benefits 24.4 16.6 48.4 35.9 -
Foreign tax credit refunds - - - 20.5 -
Loss on disposition of Spanish affiliate (15.7) - - - -
After-tax costs related to spin-off (3.3) - - - -
- -----------------------------------------------------------------------------------------------------------------
Total $ 5.4 $ 8.3 $ 35.6 $(15.6) $(2.2)
=================================================================================================================
<FN>
<Fc> Average shares outstanding is based on the weighted-average number of
shares of Ralston common stock outstanding prior to the spin-off (adjusted
for the distribution of one share of Energizer stock for each three shares
of Ralston stock) and the weighted-average number of shares of Energizer stock
outstanding from April 1, 2000 through September 30, 2000.
</FN>
</TABLE>
- ---
1 9
<PAGE>
RESPONSIBILITY FOR FINANCIAL STATEMENTS
- ---------------------------------------
The preparation and integrity of the financial statements of Energizer
Holdings, Inc. are the responsibility of its management. These statements
have been prepared in conformance with generally accepted accounting
principles in the United States, and in the opinion of management, fairly
present Energizer's financial position, results of operations and cash flows.
Energizer maintains accounting and internal control systems, which
it believes are adequate to provide reasonable assurance that assets are
safeguarded against loss from unauthorized use or disposition and that the
financial records are reliable for preparing financial statements. The
selection and training of qualified personnel, the establishment and
communication of accounting and administrative policies and procedures, and
an extensive program of internal audits are important elements of these
control systems.
The report of PricewaterhouseCoopers LLP, independent accountants, on their
audits of the accompanying financial statements is shown below. This report
states that the audits were made in accordance with generally accepted
auditing standards in the United States. These standards include a study and
evaluation of internal control for the purpose of establishing a basis for
reliance thereon relative to the scope of their audits of the financial
statements.
The Board of Directors, through its Audit Committee consisting solely of
nonmanagement directors, meets periodically with management, internal audit
and the independent accountants to discuss audit and financial reporting
matters. To assure independence, PricewaterhouseCoopers LLP has direct access
to the Audit Committee.
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------
To the Shareholders and Board of Directors of
Energizer Holdings, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of earnings and comprehensive income, of cash flows
and of shareholders equity present fairly, in all material respects, the
financial position of Energizer Holdings, Inc. and its subsidiaries at
September 30, 2000 and 1999, and the results of their operations and their
cash flows for each of the three years in the period ended September 30,
2000, in conformity with accounting principles generally accepted in the
United States. These financial statements are the responsibility of
Energizer's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
St. Louis, Missouri
October 31, 2000
- ---
2 0 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF EARNINGS AND COMPREHENSIVE INCOME
(Dollars in millions except per share data)
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------
2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STATEMENT OF EARNINGS:
Net Sales $1,914.3 $1,872.3 $1,921.8
- ------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of products sold 974.7 997.9 1,004.4
Selling, general and administrative 378.0 397.3 397.9
Advertising and promotion 187.4 164.3 183.6
Research and development 49.9 48.5 46.6
Costs related to spin-off 5.5 - -
Loss on disposition of Spanish affiliate 15.7 - -
Provisions for restructuring - 7.8 21.0
Interest expense 27.5 7.6 11.1
Other financing items, net (3.6) 0.7 (5.3)
- ------------------------------------------------------------------------------------------------------------------
1,635.1 1,624.1 1,659.3
- ------------------------------------------------------------------------------------------------------------------
Earnings from Continuing Operations before Income Taxes 279.2 248.2 262.5
Income Taxes (99.0) (88.4) (54.3)
- ------------------------------------------------------------------------------------------------------------------
Earnings from Continuing Operations 180.2 159.8 208.2
Net Earnings/(Loss) from Discontinued Operations - (5.6) (43.5)
Net Gain/(Loss) on Disposition of Discontinued Operations 1.2 (74.2) -
- ------------------------------------------------------------------------------------------------------------------
Net Earnings $ 181.4 $ 80.0 $ 164.7
==================================================================================================================
EARNINGS PER SHARE
Basic
Earnings from Continuing Operations $ 1.88 $ 1.56 $ 2.05
Net Earnings/(Loss) from Discontinued Operations - (0.06) (0.43)
Net Gain/(Loss) on Disposition of Discontinued Operations 0.01 (0.72) -
- ------------------------------------------------------------------------------------------------------------------
Net Earnings $ 1.89 $ 0.78 $ 1.62
==================================================================================================================
Diluted
Earnings from Continuing Operations $ 1.87 $ 1.56 $ 2.05
Net Earnings/(Loss) from Discontinued Operations - (0.06) (0.43)
Net Gain/(Loss) on Disposition of Discontinued Operations 0.01 (0.72) -
- ------------------------------------------------------------------------------------------------------------------
Net Earnings $ 1.88 $ 0.78 $ 1.62
==================================================================================================================
STATEMENT OF COMPREHENSIVE INCOME:
Net Earnings $ 181.4 $ 80.0 $ 164.7
- ------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income, Net of Tax
Foreign currency translation adjustments (31.9) 7.8 (30.4)
Foreign currency reclassification adjustments 9.7 (4.5) -
Minimum pension liability adjustment (1.1) - -
- ------------------------------------------------------------------------------------------------------------------
Comprehensive Income $ 158.1 $ 83.3 $ 134.3
==================================================================================================================
</TABLE>
The above financial statement should be read in conjunction
with the Notes to Consolidated Financial Statements.
- ---
2 1
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
(Dollars in millions except per share data)
<CAPTION>
SEPTEMBER 30,
-----------
2000 1999
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 11.9 $ 27.8
Trade receivables, net 180.6 441.9
Inventories 459.1 383.0
Other current assets 278.7 121.3
- ------------------------------------------------------------------------------------------------------------------
Total Current Assets 930.3 974.0
==================================================================================================================
Investments and Other Assets 377.8 319.7
Net Investment in Discontinued Operations - 67.2
Property at Cost
Land 14.6 16.9
Buildings 140.6 143.0
Machinery and equipment 816.9 816.7
Construction in progress 47.7 33.5
- ------------------------------------------------------------------------------------------------------------------
1,019.8 1,010.1
Accumulated depreciation 534.4 537.3
- ------------------------------------------------------------------------------------------------------------------
485.4 472.8
- ------------------------------------------------------------------------------------------------------------------
Total $1,793.5 $1,833.7
==================================================================================================================
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Current maturities of long-term debt $ - $ 0.3
Notes payable 135.0 118.5
Accounts payable 145.0 128.6
Other current liabilities 248.6 248.5
- ------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 528.6 495.9
Long-term Debt 370.0 1.9
Other Liabilities 156.7 23.0
Shareholders Equity
Preferred stock - $.01 par value, none outstanding - -
Common stock - $.01 par value, issued 95,552,711 at
September 30, 2000 1.0 -
Additional paid-in capital 783.9 -
Retained earnings 59.8 -
Accumulated other comprehensive income (106.5) -
Ralston's net investment in Energizer - 1,312.9
- ------------------------------------------------------------------------------------------------------------------
Total Shareholders Equity 738.2 1,312.9
- ------------------------------------------------------------------------------------------------------------------
Total $1,793.5 $1,833.7
==================================================================================================================
</TABLE>
The above financial statement should be read in conjunction with
the Notes to Consolidated Financial Statements.
- ---
2 2 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------
2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATIONS
Net earnings $ 181.4 $ 80.0 $ 164.7
Adjustments to reconcile net earnings
to net cash flow from operations:
Depreciation and amortization 82.0 94.9 101.2
Translation and exchange loss 1.9 9.0 10.4
Deferred income taxes 5.9 70.4 (36.6)
Loss on sale of Spanish affiliate 15.7 - -
Non-cash restructuring charges/(reversals) - (2.2) (6.5)
Net (earnings)/loss from discontinued operations (1.2) 79.8 43.5
Sale of accounts receivable 100.0 - -
Changes in assets and liabilities used in operations:
(Increase)/decrease in accounts receivable, net (25.3) (6.4) (34.2)
(Increase)/decrease in inventories (90.8) 22.1 (2.8)
(Increase)/decrease in other current assets 18.7 (13.9) 3.6
Increase/(decrease) in accounts payable 24.2 (21.3) 0.2
Increase/(decrease) in other current liabilities (16.8) 16.2 1.5
Other, net (6.1) 8.6 (12.4)
- ------------------------------------------------------------------------------------------------------------------
Cash flow from continuing operations 289.6 337.2 232.6
Cash flow from discontinued operations 54.7 15.1 8.7
- ------------------------------------------------------------------------------------------------------------------
Net cash flow from operations 344.3 352.3 241.3
- ------------------------------------------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Property additions (72.8) (69.2) (102.8)
Proceeds from sale of OEM business 20.0 - -
Proceeds from sale of assets 3.2 1.4 14.1
Other, net (8.7) (0.5) 4.6
- ------------------------------------------------------------------------------------------------------------------
Cash used by investing activities - continuing operations (58.3) (68.3) (84.1)
Cash used by investing activities - discontinued operations (0.7) (3.7) (13.2)
- ------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (59.0) (72.0) (97.3)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Net cash proceeds from issuance of long-term debt 407.0 1.0 13.8
Principal payments on long-term debt
(including current maturities) (449.5) (13.3) (35.1)
Cash proceeds from issuance of notes payables
with maturities greater than 90 days 6.1 14.7 10.2
Cash payments on notes payables with maturities
greater than 90 days (3.7) (0.1) -
Net increase/(decrease) in notes payable with
maturities of 90 days or less (50.2) (12.0) 32.8
Net transactions with Ralston prior to spin-off (210.7) (293.7) (154.7)
- ------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities (301.0) (303.4) (133.0)
- ------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash (0.2) 1.8 (4.6)
- ------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Cash and Cash Equivalents (15.9) (21.3) 6.4
Cash and Cash Equivalents, Beginning of Period 27.8 49.1 42.7
- ------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $ 11.9 $ 27.8 $ 49.1
==================================================================================================================
Non-cash transactions:
Debt assigned by Ralston $ 478.0 $ - $ -
==================================================================================================================
</TABLE>
The above financial statement should be read in conjunction with
the Notes to Consolidated Financial Statements.
- ---
2 3
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
(Dollars in millions)
<CAPTION>
Accumulated
Ralston's Additional Other
Net Common Paid in Retained Comprehensive
Investment Stock Capital Earnings Income
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1997 $1,548.2
Net earnings 164.7
Net transactions with Ralston (151.2)
Foreign currency translation adjustment (30.4)
- -----------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1998 $1,531.3
Net earnings 80.0
Net transactions with Ralston (301.7)
Foreign currency translation adjustment 3.3
- -----------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1999 $1,312.9
Net earnings 121.6
Net transactions with Ralston (732.8)
Foreign currency translation adjustment (1.4)
- -----------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2000 $ 700.3
Distribution to Ralston's shareholders $ (700.3) $1.0 $783.9 $ (84.6)
Net earnings $59.8
Foreign currency translation adjustment (20.8)
Minimum pension liability adjustment (1.1)
=======================================================================================================================
Balance at September 30, 2000 $ - $1.0 $783.9 $59.8 $(106.5)
=======================================================================================================================
</TABLE>
The above financial statement should be read in conjunction with the Notes to
Consolidated Financial Statements.
- ---
2 4 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(1) BASIS OF PRESENTATION
On June 10, 1999, the Board of Directors of Ralston approved in principle a
plan to spin off its battery business to the Ralston stockholders. In
September 1999, Energizer Holdings, Inc. (Energizer) was incorporated in
Missouri as an indirect subsidiary of Ralston.
Effective April 1, 2000, Energizer became an independent, publicly owned
company as a result of the distribution by Ralston of Energizer's $.01 par
value common stock to the Ralston stockholders at a distribution ratio of one
for three (the spin-off). Prior to the spin-off, Energizer operated as a
wholly owned subsidiary of Ralston. Ralston received a ruling from the
Internal Revenue Service stating the distribution qualified as a tax-free
spin-off.
Energizer is the world's largest publicly traded manufacturer of primary
batteries and flashlights and a global leader in the dynamic business of
providing portable power. Energizer manufactures and markets a complete line
of primary alkaline and carbon zinc batteries under the brands Energizer e2,
Energizer and Eveready, as well as miniature and rechargeable batteries, and
flashlights and other lighting products. Energizer and its subsidiaries
operate 22 manufacturing facilities in 15 countries on four continents. Its
products are marketed and sold in more than 140 countries primarily through a
direct sales force, and also through distributors, to mass merchandisers,
wholesalers and other customers.
The Balance Sheet as of September 30, 2000 is presented on a consolidated
basis. The Statement of Earnings and Statement of Cash Flows for the year
ended September 30, 2000 include the combined results of operations of the
Energizer businesses under Ralston for the six months prior to the spin-off
and the consolidated results of operations of Energizer on a stand-alone
basis for the six months ended September 30, 2000. The financial statements
for all periods prior to the spin-off are presented on a combined basis and
reflect periods during which the Energizer businesses operated as wholly
owned subsidiaries of Ralston. The financial information in these financial
statements does not include certain expenses and adjustments that would have
been incurred had Energizer been a separate, independent company, and may not
necessarily be indicative of results that would have occurred had Energizer
been a separate, independent company during the periods presented or of
future results of Energizer.
(2) SUMMARY OF ACCOUNTING POLICIES
Energizer's significant accounting policies, which conform to generally
accepted accounting principles in the United States and are applied on a
consistent basis among all years presented, except as indicated, are
described below.
PRINCIPLES OF CONSOLIDATION - These financial statements include the accounts
- ---------------------------
of Energizer and its majority-owned subsidiaries. All significant
intercompany transactions are eliminated. Investments in affiliated
companies, 20% through 50% owned, are carried at equity. A one-month lag is
utilized in reporting all international subsidiaries in Energizer's
consolidated financial statements.
USE OF ESTIMATES - The preparation of financial statements in conformity with
- ----------------
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
FOREIGN CURRENCY TRANSLATION - Financial statements of foreign operations
- ----------------------------
where the local currency is the functional currency are translated using
end-of-period exchange rates for assets and liabilities and average exchange
rates during the period for results of operations. Related translation
adjustments are reported as a component within accumulated other
comprehensive income in the shareholders equity section of the Consolidated
Balance Sheet.
- ---
2 5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)(DOLLARS IN MILLIONS
- ------------------------------------------
EXCEPT PER SHARE DATA)
For foreign operations where the U.S. dollar is the functional currency and
for countries which are considered highly inflationary, translation practices
differ in that inventories, properties, accumulated depreciation and
depreciation expense are translated at historical rates of exchange, and
related translation adjustments are included in earnings. Gains and losses
from foreign currency transactions are generally included in earnings.
FINANCIAL INSTRUMENTS - Energizer uses financial derivatives in the
- ---------------------
management of foreign currency and interest-rate risks that are inherent to
its business operations. Such instruments are not held or issued for trading
purposes.
Foreign exchange (F/X) instruments, including currency forwards, purchased
options and zero-cost option collars, are used primarily to reduce
transaction exposures associated with anticipated intercompany purchases and
intercompany borrowings and, to a lesser extent, to manage other transaction
and translation exposures. F/X instruments used are selected based on their
risk reduction attributes and the related market conditions. The terms of
such instruments are generally 12 months or less.
Realized and unrealized gains and losses from F/X instruments that hedge firm
commitments are deferred as part of the cost basis of the asset or liability
being hedged and are recognized in the Consolidated Statement of Earnings in
the same period as the underlying transaction. Realized and unrealized gains
or losses from F/X instruments used as hedges of existing balance sheet
exposures or anticipated transactions that are not firmly committed are
recognized currently in selling, general and administrative expenses in the
Consolidated Statement of Earnings. However, gains or losses from F/X
instruments that hedge existing balance sheet exposures are offset in the
Consolidated Statement of Earnings by gains or losses recorded on these
hedged exposures. Premiums or discounts on foreign exchange forward contracts
are recognized, and premiums paid for purchased options are amortized, over
the life of the related F/X instrument in selling, general and administrative
expenses in the Consolidated Statement of Earnings. Unrealized gains and
losses, if any, on zero-cost option collars are deferred as part of the cost
basis of the asset or liability being hedged. F/X instruments are generally
not disposed of prior to settlement date; however, if an F/X instrument and
the underlying hedged transaction were disposed of prior to the settlement
date, any deferred gain or loss would be recognized immediately in the
Consolidated Statement of Earnings.
CASH EQUIVALENTS - For purposes of the Consolidated Statement of Cash Flows,
- ----------------
cash equivalents are considered to be all highly liquid investments with a
maturity of three months or less when purchased.
INVENTORIES - Inventories are valued at the lower of cost or market, with
- -----------
cost generally being determined using average cost or the first-in, first-out
(FIFO) method.
CAPITALIZED SOFTWARE COSTS - Capitalized software costs are included in
- --------------------------
Investments and Other Assets. These costs are amortized using the
straight-line method over periods of related benefit ranging from three to
seven years.
PROPERTY AT COST - Expenditures for new facilities and expenditures that
- ----------------
substantially increase the useful life of property, including interest during
construction, are capitalized. Maintenance, repairs and minor renewals are
expensed as incurred. When property is retired or otherwise disposed of, the
related cost and accumulated depreciation are removed from the accounts and
gains or losses on the disposition are reflected in earnings.
DEPRECIATION - Depreciation is generally provided on the straight-line basis
- ------------
by charges to costs or expenses at rates based on the estimated useful lives.
Estimated useful lives range from three to 25 years for machinery and
equipment and 10 to 50 years for buildings. Depreciation expense was $57.9,
$68.4 and $74.1 in 2000, 1999 and 1998, respectively.
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization of goodwill, representing
- ------------------------------------
the excess of cost over the net tangible assets of acquired businesses, is
recorded on a straight-line basis primarily over a period of 25 years, with
some amounts being amortized over 40 years. The cost to purchase or develop
other intangible assets, which consist primarily of patents, tradenames and
trademarks, is amortized on a straight-line basis over estimated periods of
related benefit ranging from seven to 40 years.
- ---
2 6 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
IMPAIRMENT OF LONG-LIVED ASSETS - Energizer reviews long-lived assets,
- -------------------------------
including goodwill and other intangible assets, for impairment whenever
events or changes in business circumstances indicate that the remaining
useful life may warrant revision or that the carrying amount of the
long-lived asset may not be fully recoverable. Energizer performs
undiscounted cash flow analyses to determine if an impairment exists. If an
impairment is determined to exist, any related impairment loss is calculated
based on fair value. Impairment losses on assets to be disposed of, if any,
are based on the estimated proceeds to be received, less costs of disposal.
REVENUE RECOGNITION - Revenue is recognized upon shipment of product to
- -------------------
customers. Sales discounts, returns and allowances are included in net sales,
and the provision for doubtful accounts is included in selling, general and
administrative expenses in the Consolidated Statement of Earnings.
ADVERTISING AND PROMOTION COSTS - Energizer advertises and promotes its
- -------------------------------
products through national and regional media. Products are also advertised
and promoted through cooperative programs with retailers. Energizer expenses
advertising and promotion costs as incurred. Due to the seasonality of the
business, with typically higher sales and volume during the holidays in the
first quarter, advertising and promotion costs incurred during interim
periods are generally expensed ratably in relation to revenues.
RESEARCH AND DEVELOPMENT COSTS - Research and development costs are expensed
- ------------------------------
as incurred.
INCOME TAXES - Energizer follows the liability method of accounting for
- ------------
income taxes. Deferred income taxes are recognized for the effect of
temporary differences between financial and tax reporting. No additional U.S.
taxes have been provided on earnings of foreign subsidiaries expected to be
reinvested indefinitely. Additional income taxes are provided, however, on
planned repatriation of foreign earnings after taking into account tax-exempt
earnings and applicable foreign tax credits. Management assesses the
realizability of deferred tax assets and provides valuation allowances as
deemed necessary.
EARNINGS PER SHARE - Basic earnings per share is based on the average number
- ------------------
of shares outstanding during the period subsequent to the spin-off. 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 all periods prior to the
spin-off, 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.
ACCOUNTING FOR STOCK-BASED COMPENSATION - Energizer accounts for stock
- ---------------------------------------
options using the intrinsic value method as prescribed by Accounting
Principles Board Opinion No. 25 (APB 25). Pro forma disclosures required
under Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
for Stock-Based Compensation," as if Energizer had adopted the fair value
based method of accounting for stock options, are presented in Note 8 to the
Consolidated Financial Statements.
ENVIRONMENTAL REMEDIATION LIABILITIES - Accruals for environmental
- -------------------------------------
remediation are recorded when it is probable that a liability has been
incurred and the amount of the liability can be reasonably estimated, based
on current law and existing technologies. These accruals are adjusted
periodically as assessments take place and remediation efforts progress, or
as additional technical or legal information becomes available.
Accruals for environmental remediation are included in other current
liabilities or other liabilities, depending on their nature, in the
Consolidated Balance Sheet and are recorded at undiscounted amounts.
RECLASSIFICATIONS - Certain reclassifications have been made to the prior
- -----------------
year financial statements to conform to the current presentation.
- ---
2 7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)(DOLLARS IN MILLIONS
- ------------------------------------------
EXCEPT PER SHARE DATA)
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - 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. Accordingly, Energizer has adopted the
provisions of SFAS 133 as of the first quarter of fiscal year 2001. Energizer
has determined that the implementation of this standard will 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.
In September 2000, FASB issued Statement of Financial Accounting Standards
No. 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." The statement is effective for fiscal years
ending after December 15, 2000. The statement replaces FASB Statement No. 125
and revises the standards for accounting and disclosure for securitizations
and other transfers of financial assets and collateral. The statement carries
over most of SFAS 125's provisions without reconsideration and, as such,
Energizer believes that the implementation of this standard will not have a
material effect on its consolidated financial position or results of
operations.
(3) RELATED PARTY ACTIVITY
CASH MANAGEMENT - Prior to the spin-off, Energizer participated in a
- ---------------
centralized cash management system administered by Ralston. Cash deposits
from Energizer were transferred to Ralston on a daily basis and Ralston
funded Energizer's disbursement bank accounts as required. Unpaid balances of
checks were included in accounts payable. No interest was charged or credited
on transactions with Ralston.
SHARED SERVICES - Energizer and Ralston have entered into a Bridging
- ---------------
Agreement under which Ralston has continued to provide certain general and
administrative services to Energizer, including systems, benefits,
advertising and facilities for Energizer's headquarters. Prior to the
spin-off, the expenses related to shared services listed above, as well as
legal and financial support services, were allocated to Energizer generally
based on utilization, which management believes to be reasonable. Costs of
these shared services charged to Energizer were $9.6, $20.0 and $20.9 for the
six months ended March 31, 2000 and years ended September 30, 1999 and 1998,
respectively. Actual expenses paid by Energizer to Ralston for such services
were $4.0 for the six-month period subsequent to the spin-off.
RALSTON'S NET INVESTMENT - Included in Ralston's Net Investment are
- ------------------------
cumulative translation adjustments for non-hyperinflationary countries of
$84.6 as of March 31, 2000 representing net devaluation of currencies
relative to the U.S. dollar over the period of investment. Also included in
Ralston's Net Investment are accounts payable and receivable between
Energizer and Ralston.
- ---
2 8 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
(4) DISCONTINUED OPERATIONS
In March 1999, the Board of Directors of Ralston announced its intention to
exit Energizer's worldwide rechargeable Original Equipment Manufacturers'
(OEM) battery business to allow Energizer to focus on its primary battery
business. On November 1, 1999, the OEM business was sold to Moltech
Corporation for approximately $20.0. This segment is accounted for as a
discontinued operation in Energizer's consolidated financial statements.
In fiscal 2000, Energizer recognized an after-tax gain of $1.2 on the
disposition of discontinued operations related to the final settlement of the
sale transaction.
Included in the fiscal year 1999 Net Loss on Disposition of Discontinued
Operations are estimated operating losses during the divestment period of
$15.0 pre-tax, or $9.6 after-tax, and a loss on disposition of $95.6 pre-tax,
or $64.6 after-tax. Actual pre-tax operating losses during the divestment
period through September 30, 1999, totaled $12.5.
The net loss for 1998 includes an after-tax provision of $42.7, primarily
representing an impairment write-down of lithium ion rechargeable battery
assets of the OEM business. Fair value of those assets was primarily
determined based upon estimates of recovery value for unique manufacturing
equipment. Due to rapid changes in the business environment since the
beginning of the lithium ion project in 1996, it became more economical to
source lithium ion cells from other manufacturers.
The Investment in Discontinued Operations at September 30, 1999 was primarily
comprised of fixed assets, inventory and accounts receivable and payable.
Results for discontinued operations are
presented in the following table.
1999 1998
- -------------------------------------------------------------------------
Net sales $64.2 $ 149.4
=========================================================================
Earnings/(loss) before
income taxes $(9.0) $ (70.6)
Income taxes benefit/(provision) 3.4 27.1
- -------------------------------------------------------------------------
Net earnings/(loss) from
discontinued operations $(5.6) $ (43.5)
=========================================================================
(5) RESTRUCTURING ACTIVITIES
Competition in the primary battery business has intensified in recent years,
and there continues to be a migration of demand from carbon zinc to alkaline
batteries. In response to these changes, Energizer has recorded restructuring
charges each year from 1994 through 1999. These charges include a reduction
in carbon zinc plant capacity as demand for this type of battery continues to
decline, plant closures for the movement and consolidation of alkaline
production to new or more efficient locations in an effort to achieve lower
product costs, and staffing reorganizations and reductions in various world
areas to enhance management effectiveness and reduce overhead costs. A
detailed discussion of such charges and expenditures during 1998 through 2000
follows.
During 1999, Energizer recorded net provisions for restructuring of $8.3
after-tax, or $9.9 pre-tax, $2.1 of which represented inventory write-downs
and is classified as cost of products sold in the Consolidated Statement of
Earnings. Of the net pre-tax charge, $7.4 relates to the 1999 restructuring
plans for the elimination of certain production capacity in North America and
in Asia.
The pre-tax charge of $7.4 for 1999 plans consisted of termination benefits
of $3.2, other cash costs of $.2 and fixed asset impairments of $4.0. The
fixed asset impairments primarily relate to assets used for the production of
lithium coin cells in North America. These assets were idled and scrapped in
1999.
- ---
2 9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)(DOLLARS IN MILLIONS
- ------------------------------------------
EXCEPT PER SHARE DATA)
The 1999 restructuring plan provided for the termination of approximately 170
production and administrative employees and the closure of one plant in Asia.
This plant closure was precipitated by the financial problems in the Asian
market, which resulted in contractions in battery markets in this area.
Substantially all actions associated with these charges were completed as of
September 30, 2000.
The remaining $2.5 represents additional net provisions related to prior
years' restructuring plans. Additional termination benefits of $5.5 related
to the 1997 restructuring plan primarily represent enhanced severance related
to a European plant closing. Additional provisions for other cash costs of
$1.8 were recorded for fixed asset disposition costs for previously held for
use assets related to the 1997 restructuring plan that were idled and held
for disposal. Other non-cash charges of $2.1 relate to inventory write-offs,
which were more than offset by a reclassification of $4.5 from other
comprehensive income to net income of cumulative translation adjustment for a
subsidiary sold in connection with the 1997 plan. Also recorded in 1999 were
asset proceeds greater than anticipated of $5.4 related to 1994, 1995 and
1997 restructuring plans.
During 1998, Energizer recorded net after-tax provisions for restructuring of
$12.8, or $21.3 on a pre-tax basis, of which $.3 represents inventory
write-downs and is classified as cost of products sold in the Consolidated
Statement of Earnings. Of the net pre-tax charge, $36.5 related to 1998
restructuring plans, including a voluntary early retirement option offered to
most U.S. Energizer employees meeting certain age and service requirements
and European business operations restructuring, primarily a reorganization of
European sales forces and related employee reductions.
The total 1998 pre-tax charge of $36.5 consisted of termination benefits of
$29.3, which provided for the termination or early retirement of
approximately 420 sales and administrative employees, other cash costs of
$4.6, fixed asset impairments of $1.1 and a non-cash investment write-off of
$1.5. The other cash costs of $4.6 consisted of demolition costs of $1.5 and
environmental exit costs of $.8, both relating to assets held for disposal,
lease termination costs of $1.6 and other exit costs of $.7. Except for
disposition of certain assets held for disposal, substantially all actions
associated with the 1998 charges were complete as of September 30, 2000.
In addition, net reversals of $15.2, that related to prior years'
restructuring plans, were recorded in 1998, comprised of $3.7 of additional
charges offset by $18.9 of reversals of prior years' charges. The additional
charges primarily related to asset disposition costs of $2.6 for previously
held for use assets that were idled and held for disposal. The reversals
included $9.4 of greater than anticipated proceeds from asset sales related
to the 1994, 1995 and 1996 restructuring plans. In addition, $8.5 of
termination benefits recorded in 1997 were reversed in 1998 due primarily to
the modification of a European plant closing plan, driven by the changing
business environment in Europe. The modifications resulted in the termination
of approximately 200 fewer employees than originally anticipated.
As of September 30, 2000, except for the disposition of certain assets held
for disposal, substantially all activities associated with 1994 through 1997
restructuring plans are complete. The remaining accrual related to these
plans was $2.1 at September 30, 2000 and primarily represents asset
disposition costs. The carrying value of assets held for disposal under all
restructuring plans was $6.7 at September 30, 2000.
- ---
3 0 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
The following table presents, by major cost component and by year of
provision, activity related to the restructuring charges discussed above
during fiscal years 2000, 1999 and 1998, including any adjustments to the
original charges.
<TABLE>
<CAPTION>
1998 Rollforward 1999 Rollforward
- ------------------------------------------------------------------------------------------------------------------------
Beginning Provision/ Ending Beginning Provision/ Ending
Balance Reversals Activity Balance Balance Reversals Activity Balance
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994 PLAN
Termination benefits 0.2 - (0.2) - - - - -
Other cash costs 1.2 - (1.2) - - - - -
Fixed asset impairments - (5.8) 5.8 - - (2.0) 2.0 -
- ------------------------------------------------------------------------------------------------------------------------
Total 1.4 (5.8) 4.4 - - (2.0) 2.0 -
- ------------------------------------------------------------------------------------------------------------------------
1995 PLAN
Termination benefits 2.1 0.3 (1.5) 0.9 0.9 0.1 (1.0) -
Other cash costs 1.9 0.5 (1.2) 1.2 1.2 - (0.4) 0.8
Fixed asset impairments - (2.2) 2.2 - - (1.5) 1.5 -
Other non-cash charges - (0.4) 0.4 - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Total 4.0 (1.8) (0.1) 2.1 2.1 (1.4) 0.1 0.8
- ------------------------------------------------------------------------------------------------------------------------
1996 PLAN
Termination benefits 1.1 (0.6) (0.5) - - - - -
Other cash costs 1.7 - (0.7) 1.0 1.0 - (0.2) 0.8
Fixed asset impairments - (1.4) 1.4 - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Total 2.8 (2.0) 0.2 1.0 1.0 - (0.2) 0.8
- ------------------------------------------------------------------------------------------------------------------------
1997 PLAN
Termination benefits 42.6 (8.5) (15.4) 18.7 18.7 5.5 (20.1) 4.1
Other cash costs 2.2 2.3 (2.3) 2.2 2.2 1.8 (2.7) 1.3
Fixed asset impairments - - - - - (1.9) 1.9 -
Other non-cash charges - 0.6 (0.6) - - (2.4) 2.4 -
- ------------------------------------------------------------------------------------------------------------------------
Total 44.8 (5.6) (18.3) 20.9 20.9 3.0 (18.5) 5.4
- ------------------------------------------------------------------------------------------------------------------------
1998 PLAN
Termination benefits - 29.3 (15.0) 14.3 14.3 0.8 (13.5) 1.6
Other cash costs - 4.6 (1.9) 2.7 2.7 0.5 (1.2) 2.0
Fixed asset impairments - 1.1 (1.1) - - - - -
Other non-cash charges - 1.5 (1.5) - - 1.6 (1.6) -
- ------------------------------------------------------------------------------------------------------------------------
Total - 36.5 (19.5) 17.0 17.0 2.9 (16.3) 3.6
- ------------------------------------------------------------------------------------------------------------------------
1999 PLAN
Termination benefits - - - - - 3.2 (2.5) 0.7
Other cash costs - - - - - 0.2 (0.2) -
Fixed asset impairments - - - - - 4.0 (4.0) -
Total - - - - - 7.4 (6.7) 0.7
- ------------------------------------------------------------------------------------------------------------------------
Grand Total $53.0 $21.3 $(33.3) $41.0 $41.0 $9.9 $(39.6) $11.3
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
2000 Rollforward
- -----------------------------------------------------------------------
Beginning Provision/ Ending
Balance Reversals Activity Balance
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 PLAN
Termination benefits - - - -
Other cash costs - - - -
Fixed asset impairments - - - -
- -----------------------------------------------------------------------
Total - - - -
- -----------------------------------------------------------------------
1995 PLAN
Termination benefits 0.8 - (0.8) -
Fixed asset impairments - - - -
Other non-cash charges - - - -
- -----------------------------------------------------------------------
Total 0.8 - (0.8) -
- -----------------------------------------------------------------------
1996 PLAN
Termination benefits - - - -
Other cash costs 0.8 - - 0.8
Fixed asset impairments - - - -
- -----------------------------------------------------------------------
Total 0.8 - - 0.8
- -----------------------------------------------------------------------
1997 PLAN
Termination benefits 4.1 - (4.1) -
Other cash costs 1.3 - - 1.3
Fixed asset impairments - - - -
Other non-cash charges - - - -
- -----------------------------------------------------------------------
Total 5.4 - (4.1) 1.3
- -----------------------------------------------------------------------
1998 PLAN
Termination benefits 1.6 - (1.6) -
Other cash costs 2.0 - (0.2) 1.8
Fixed asset impairments - - - -
Other non-cash charges - - - -
- -----------------------------------------------------------------------
Total 3.6 - (1.8) 1.8
- -----------------------------------------------------------------------
1999 PLAN
Termination benefits 0.7 - (0.7) -
Other cash costs - - - -
Fixed asset impairments - - - -
- -----------------------------------------------------------------------
Total 0.7 - (0.7) -
- -----------------------------------------------------------------------
Grand Total $11.3 $ - $(7.4) $3.9
=======================================================================
</TABLE>
(6) INCOME TAX
Prior to the spin-off, U.S. income tax payments, refunds, credits, provision
and deferred tax components have been allocated to Energizer in accordance
with Ralston's tax allocation policy. Such policy allocates tax components
included in the consolidated income tax return of Ralston to Energizer to the
extent such components were generated by or related to Energizer. Subsequent
to the spin-off, taxes are provided on a stand-alone basis.
Had the Energizer tax provision been calculated as if Energizer was a
separate, independent U.S. taxpayer, the income tax provision would have been
higher by approximately $23.4 in 2000. The higher provision is due primarily
to the $24.4 of capital loss benefits that would not be realized on a
stand-alone basis.
- ---
3 1
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)(DOLLARS IN MILLIONS
- ------------------------------------------
EXCEPT PER SHARE DATA)
The provisions for income taxes consisted of the following for the years
ended September 30:
<TABLE>
<CAPTION>
--------------------------
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
CONTINUING Continuing Continuing
OPERATIONS CONSOLIDATED Operations Consolidated Operations Consolidated
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Currently payable:
United States $47.5 $45.2 $(17.5) $(27.0) $ 47.5 $ 41.2
State 9.0 8.7 7.9 8.6 6.5 6.2
Foreign 36.6 36.6 27.6 27.8 36.9 37.0
- -----------------------------------------------------------------------------------------------------------------------
Total Current 93.1 90.5 18.0 9.4 90.9 84.4
- -----------------------------------------------------------------------------------------------------------------------
Deferred:
United States 1.2 1.2 68.6 39.1 (39.0) (57.1)
State 0.2 0.2 (0.5) (2.2) (0.3) (2.8)
Foreign 4.5 4.5 2.3 2.3 2.7 2.7
- -----------------------------------------------------------------------------------------------------------------------
Total Deferred 5.9 5.9 70.4 39.2 (36.6) (57.2)
- -----------------------------------------------------------------------------------------------------------------------
Provision for Income Taxes $99.0 $96.4 $ 88.4 $ 48.6 $ 54.3 $ 27.2
=======================================================================================================================
</TABLE>
The source of pre-tax earnings was:
<TABLE>
<CAPTION>
--------------------------
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
CONTINUING Continuing Continuing
OPERATIONS CONSOLIDATED Operations Consolidated Operations Consolidated
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States $201.9 $200.5 $197.2 $ 75.4 $172.1 $102.4
Foreign 77.3 77.3 51.0 53.3 90.4 89.5
- -----------------------------------------------------------------------------------------------------------------------
Pre-tax earnings $279.2 $277.8 $248.2 $128.7 $262.5 $191.9
=======================================================================================================================
</TABLE>
A reconciliation of income taxes with the amounts computed at the statutory
federal rate follows:
<TABLE>
<CAPTION>
---------------------
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Computed tax at federal statutory rate $ 97.7 35% $ 86.9 35% $ 91.9 35%
State income taxes, net of federal tax benefit 6.0 2.1 4.8 1.9 4.0 1.5
Foreign tax in excess of federal rate 8.5 3.0 8.4 3.4 4.8 1.8
Taxes on repatriation of foreign earnings 6.4 2.3 7.8 3.1 7.5 2.9
Net tax benefit on sale of Spanish affiliate
in excess of federal rate (18.9) (6.7) - - - -
Recognition of U.S. capital losses - - (16.6) (6.6) (48.4) (18.4)
Other, net (0.7) (0.2) (2.9) (1.2) (5.5) (2.1)
- -----------------------------------------------------------------------------------------------------------------------
$ 99.0 35.5% $ 88.4 35.6% $ 54.3 20.7%
=======================================================================================================================
</TABLE>
- ---
3 2 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
In 2000, Energizer recorded U.S. capital loss tax benefits of $24.4 related
to the sale of Energizer's Spanish affiliate. Energizer recognized capital
loss tax benefits of $16.6 and $48.4 in 1999 and 1998, respectively,
primarily related to past restructuring actions. The capital loss benefits
are not recognized in Energizer's pro forma financial results (see Note 23)
as Energizer would not have been able to realize these benefits on a
stand-alone basis.
The effective tax rate for discontinued operations is higher than the federal
statutory rate in 1999 and 1998 due to state income taxes.
The deferred tax assets and deferred tax liabilities recorded on the balance
sheet as of September 30 are as follows:
------------
2000 1999
- --------------------------------------------------------------------------
Deferred Tax Liabilities:
Depreciation and property
differences $(61.1) $(64.7)
Pension plans (31.9) -
- --------------------------------------------------------------------------
Gross deferred tax liabilities (93.0) (64.7)
==========================================================================
Deferred Tax Assets:
Accrued liabilities 45.7 64.3
Tax loss carryforwards and
tax credits 25.6 46.4
Intangible assets 42.6 37.6
Postretirement benefits
other than pensions 28.8 -
Inventory differences 5.2 3.5
Other 8.8 12.1
- --------------------------------------------------------------------------
Gross deferred tax assets 156.7 163.9
- --------------------------------------------------------------------------
Valuation allowance (31.1) (66.8)
- --------------------------------------------------------------------------
Net deferred tax assets $ 32.6 $ 32.4
==========================================================================
Total deferred tax assets/liabilities shown above include current and
non-current amounts.
Tax loss carryforwards of $11.0 expired in 2000, primarily due to the sale of
Energizer's Spanish affiliate. Future expiration of tax loss carryforwards
and tax credits, if not utilized, are as follows: 2001, $.8; 2002, $.8; 2003,
$2.2; 2004, $6.7; 2005, $3.6; thereafter or no expiration, $11.5. The
valuation allowance is primarily attributed to deferred tax assets related to
certain accrued liabilities, tax loss carryforwards and tax credits outside
the United States. The valuation allowance decreased $35.7 in 2000 primarily
due to the decrease in tax loss carryforwards discussed above and other
deferred tax assets disposed of as part of the sale of Energizer's Spanish
affiliate.
At September 30, 2000, approximately $65.9 of foreign subsidiary net earnings
were considered permanently invested in those businesses. Accordingly, U.S.
income taxes have not been provided for such earnings. It is not practicable
to determine the amount of unrecognized deferred tax liabilities associated
with such earnings.
- ---
3 3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)(DOLLARS IN MILLIONS
- ------------------------------------------
EXCEPT PER SHARE DATA)
(7) EARNINGS PER SHARE
Earnings per share has been calculated using Energizer's historical basis
earnings for the three years presented below. For the year ended September
30, 2000, the number of shares used to compute basic earnings per share is
based on the weighted-average number of shares of Ralston stock outstanding
during the six months ended March 31, 2000 (adjusted for the distribution of
one share of Energizer stock for each three shares of Ralston stock) and the
weighted-average number of shares of Energizer stock outstanding from April
1, 2000 to September 30, 2000. 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 years ended September 30, 1999 and 1998, the number of
shares used to compute earnings per share is based on the weighted-average
number of 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.
The following table sets forth the computation of basic and diluted earnings
per share.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
---------------
2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Numerator
Numerator for basic and dilutive earnings per share -
Earnings from continuing operations $180.2 $159.8 $208.2
- ----------------------------------------------------------------------------------------------------------------------
Net loss from discontinued operations $ - $ (5.6) $(43.5)
Gain/(loss) on disposition of discontinued operations $ 1.2 $(74.2) $ -
- ----------------------------------------------------------------------------------------------------------------------
Net Earnings $181.4 $ 80.0 $164.7
======================================================================================================================
Denominator
Denominator for basic earnings per share
Weighted-average shares 96.1 102.6 101.6
- ----------------------------------------------------------------------------------------------------------------------
Effect of dilutive securities
Stock options 0.1 - -
Restricted stock equivalents 0.1 - -
- ----------------------------------------------------------------------------------------------------------------------
0.2 - -
Denominator for dilutive earnings per share -
Weighted-average shares and assumed conversions 96.3 102.6 101.6
======================================================================================================================
Basic earnings per share
Earnings from continuing operations $ 1.88 $ 1.56 $ 2.05
Net earnings/(loss) from discontinued operations - (0.06) (0.43)
Net gain/(loss) on disposition of discontinued operations 0.01 (0.72) -
- ----------------------------------------------------------------------------------------------------------------------
Net Earnings $ 1.89 $ 0.78 $ 1.62
======================================================================================================================
Diluted earnings per share
Earnings from continuing operations $ 1.87 $ 1.56 $ 2.05
Net earnings/(loss) from discontinued operations - (0.06) (0.43)
Net gain/(loss) on disposition of discontinued operations 0.01 (0.72) -
- ----------------------------------------------------------------------------------------------------------------------
Net Earnings $ 1.88 $ 0.78 $ 1.62
======================================================================================================================
</TABLE>
- ---
3 4 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
(8) STOCK-BASED COMPENSATION
Energizer's 2000 Incentive Stock Plan was adopted by the Board of Directors
in March 2000 and is being submitted to shareholders for their approval, with
respect to future awards which may be granted under the Plan, at the 2001
Annual Meeting of Shareholders. Under the Plan, awards to purchase shares of
Energizer's common stock may be granted to directors, officers and key
employees. A maximum of 15.0 million shares of Energizer (ENR) stock was
approved to be issued under the Plan. At September 30, 2000, there were 7.0
million shares available for future awards.
Options which have been granted under the Plan have been granted at the
market price on the grant date and generally vest ratably over four or five
years. Awards have a maximum term of 10 years.
Restricted stock and restricted stock equivalent awards may also be granted
under the Plan. During 2000, the Board of Directors approved the grants of up
to 635,000 restricted stock equivalents to a group of key employees and
directors upon their purchase of an equal number of shares of ENR stock
within a specified period. The restricted stock equivalents will vest three
years from their respective dates of grant and will convert into unrestricted
shares of ENR stock at that time, or, at the recipient's election, will
convert at the time of the recipient's retirement or other termination of
employment. As of September 30, 2000, 488,415 restricted stock equivalents
had been granted. The weighted-average fair value for restricted stock
equivalents granted in 2000 was $18.30.
Under the terms of the Plan, option shares and prices, and restricted stock
and stock equivalent awards, are adjusted in conjunction with stock splits
and other recapitalizations so that the holder is in the same economic
position before and after these equity transactions.
Energizer also permits deferrals of bonus and salary, and, for directors,
retainers and fees, under the terms of its Deferred Compensation Plan. Under
this Plan, employees or directors deferring amounts into the Energizer Common
Stock Unit Fund are credited with a number of stock equivalents based on the
fair value of ENR stock at the time of deferral. In addition, during 2000,
they were credited with an additional number of stock equivalents equal to
25% for employees, and 33 1/3% for directors, of the amount deferred. This
additional company match vests immediately for directors and three years from
the date of initial crediting for employees. Amounts deferred into the
Energizer Common Stock Unit Fund, and vested company matching deferrals, may
be transferred to other investment options offered under the Plan. At the
time of termination of employment, or for directors, at the time of
termination of service on the Board, or at such other time for distribution
which may be elected in advance by the participant, the number of equivalents
then credited to the participant's account is determined and then an amount
in cash equal to the fair value of an equivalent number of shares of ENR
stock is paid to the participant.
Energizer applies APB 25 and related interpretations in accounting for its
stock-based compensation. Accordingly, charges to earnings for stock-based
compensation were $4.8 in 2000. Had cost for stock-based compensation been
determined based on the fair value method set forth under SFAS 123,
Energizer's net earnings and earnings per share would have been reduced to
the pro forma amounts indicated in the table below. Pro forma amounts are for
disclosure purposes only and may not be representative of future
calculations.
<TABLE>
<CAPTION>
Fiscal 2000
- ------------------------------------------------------------------------------
Basic Diluted
Net Earnings Earnings
Earnings per Share per Share
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
As reported $181.4 $1.89 $1.88
Pro forma $176.1 $1.83 $1.83
</TABLE>
The weighted-average fair value for options granted in fiscal 2000 was $7.13
per option. This was estimated at the grant date using the Black-Scholes
option pricing model with the following weighted-average assumptions:
<TABLE>
<CAPTION>
-----------------
2000
- ------------------------------------------------------------------------------
<S> <C>
Risk-free interest rate 5.85%
Expected life of option 7.5 YEARS
Expected volatility of
ENR stock 20.30%
Expected dividend
yield on ENR stock -%
-----------------
</TABLE>
- ---
3 5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
(CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
A summary of nonqualified ENR stock options outstanding is as follows (shares
in millions).
<TABLE>
<CAPTION>
2000
- ----------------------------------------------------------------------
Weighted-Average
Shares Exercise Price
- ----------------------------------------------------------------------
<S> <C> <C>
Outstanding on October 1 - $ -
Granted 7.37 17.41
Exercised - -
Cancelled - -
Outstanding on September 30 7.37 17.41
Exercisable on September 30 - $ -
</TABLE>
(9) PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
Energizer has several defined benefit pension plans covering substantially
all of its employees in the United States and certain employees in other
countries. The plans provide retirement benefits based on years of service
and earnings.
Certain other foreign pension arrangements, that include various retirement
and termination benefit plans, some of which are required by local law or
coordinated with government-sponsored plans, are not significant in the
aggregate.
Energizer currently provides other postretirement benefits, consisting of
health care and life insurance benefits for certain groups of retired
employees. Retiree contributions for health care benefits are adjusted
periodically, and it is expected that such adjustments will continue into the
future.
Prior to the spin-off, Energizer employees participated in Ralston's defined
benefit plans. In addition, certain groups of retirees and management
employees were eligible for certain postretirement benefits provided by
Ralston. See further discussion of pre-spin pension and postretirement
benefits below.
The following pension and other postretirement benefit information is
presented in accordance with SFAS 132, "Employers' Disclosures about Pensions
and Other Postretirement Benefits."
The following tables present the benefit obligation and funded status of the
plans for the period subsequent to the spin-off.
<TABLE>
<CAPTION>
September 30, 2000
- ------------------------------------------------------------------------------
Pension Postretirement
- ------------------------------------------------------------------------------
<S> <C> <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at April 1, 2000 $ 345.6 $ 77.6
Service cost 7.8 0.1
Interest cost 11.8 2.8
Plan participants' contributions 0.2 -
Actuarial (gain)/loss (1.3) 4.2
Benefits paid (10.0) (1.0)
Foreign currency exchange
rate changes (7.0) -
Amendments 4.5 -
- ------------------------------------------------------------------------------
Benefit obligation at end of year $ 351.6 $ 83.7
==============================================================================
CHANGE IN PLAN ASSETS:
Fair value of plan assets at
April 1, 2000 $ 558.9 $ 1.7
Actual return on plan assets 16.6 0.2
Company contributions 1.2 1.0
Plan participants' contributions 0.2 1.0
Benefits paid (10.0) (2.0)
Foreign currency exchange
rate changes (9.2) -
- ------------------------------------------------------------------------------
Fair value of plan assets at
end of year $ 557.7 $ 1.9
==============================================================================
FUNDED STATUS:
Funded status of the plan $ 206.1 $ (81.8)
Unrecognized net loss/(gain) (113.0) (2.3)
Unrecognized prior service cost 0.4 (3.6)
Unrecognized net transition asset 1.1
- ------------------------------------------------------------------------------
Prepaid/(accrued) benefit cost $ 94.6 $ (87.7)
==============================================================================
AMOUNTS RECOGNIZED IN THE CONSOLIDATED BALANCE SHEET:
Prepaid benefit cost $ 102.0 $ -
Accrued benefit liability (9.4) (87.7)
Intangible asset 0.2 -
Accumulated other
comprehensive income 1.8 -
- ------------------------------------------------------------------------------
Net amount recognized $ 94.6 $ (87.7)
==============================================================================
</TABLE>
For pension plans with accumulated benefit obligations in excess of plan
assets, the projected benefit obligation was $9.4 at September 30, 2000.
There are no plan assets for these nonqualified plans as of September 30,
2000.
- ---
3 6 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
Pension assets consist primarily of listed common stocks and bonds. The
U.S. plan held approximately 1.7 million shares of Energizer common stock
at September 30, 2000, with a market value of $42.4.
The following table presents pension and postretirement expense for the
period subsequent to the spin-off (six months ended September 30, 2000).
<TABLE>
<CAPTION>
Pension Postretirement
- ------------------------------------------------------------------------------
<S> <C> <C>
Service cost $ 7.8 $ 0.1
Interest cost 11.8 2.8
Expected return on plan assets (22.4) -
Amortization of unrecognized
prior service cost - (0.1)
Amortization of unrecognized
transition asset 0.1 -
Recognized net actuarial
(gain)/loss (1.5) -
- ------------------------------------------------------------------------------
Net periodic benefit
cost/(income) $ (4.2) $ 2.8
==============================================================================
</TABLE>
The following table presents assumptions, which reflect weighted-averages for
the component plans, used in determining the above information.
<TABLE>
<CAPTION>
Pension Postretirement
- ------------------------------------------------------------------------------
<S> <C> <C>
Discount rate 6.7% 7.0%
Expected return on plan assets 8.7% -
Compensation increase rate 5.2% -
</TABLE>
Assumed health care cost trend rates have been used in the valuation of
postretirement health insurance benefits. The trend rate is 6.5% in 2000 and
thereafter for all retirees. A one percentage point increase in health care
cost trend rates in each year would increase the accumulated postretirement
benefit obligation as of September 30, 2000 by $4.9 and the net periodic
postretirement benefit cost by $.4. A one percentage point decrease in the
health care cost trend rates in each year would decrease the accumulated
postretirement benefit obligation as of September 30, 2000 by $4.4 and the
net periodic postretirement benefit cost for 2000 by $.3.
PRE-SPIN PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS Prior to the
- --------------------------------------------------------
spin-off, Energizer participated in Ralston's noncontributory defined benefit
pension plans (Plans), which covered substantially all regular employees in
the United States and certain employees in other countries. In fiscal 1999,
Ralston amended the qualified U.S. Pension Plan to allow employees to make an
irrevocable election effective January 1, 1999 between two pension benefit
formulas. Prior to this time, one benefit formula was used. Also effective
January 1, 1999, assets of the Plan provide employee benefits in addition to
normal retirement benefits. The additional benefit was equal to a 300% match
on participants' after-tax contributions of 1% or 1.75% to the Savings
Investment Plan. The cost of the Plans allocated to Energizer was based on
Energizer's percentage of the total liability of the Plans, as shown in the
table below.
Certain other foreign pension arrangements, that included various retirement
and termination benefit plans, some of which are required by local law or
coordinated with government-sponsored plans, were not material in the
aggregate.
Prior to the spin-off, Ralston provided health care and life insurance
benefits for certain groups of retired Energizer employees who met specified
age and years of service requirements. The cost of these benefits was
allocated to Energizer based on Energizer's percentage of the total liability
related to these benefits. Ralston also sponsored plans whereby certain
management employees could defer compensation for cash benefits after
retirement. The cost of these postretirement benefits is shown in the
table below.
The following table presents the net expense/(income) allocated
to Energizer for the respective plans prior to the spin-off.
<TABLE>
<CAPTION>
--------
2000 1999 1998
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Defined benefit plans $(2.1) $5.2 $0.3
Postretirement benefits 3.3 5.8 4.3
--------
</TABLE>
- ---
3 7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
- ------------------------------------------
(CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(10) DEFINED CONTRIBUTION PLAN
Energizer sponsors employee savings plans, which cover substantially
all U.S. employees. Energizer matches 50% of participants' before-tax
contributions up to 6% of compensation. In addition, participants can make
after-tax contributions of 1% of compensation into the savings plan. This
participant after-tax contribution is matched within the pension plan at
325%. Subsequent to the spin-off from Ralston, Energizer charged $1.8 to
expense in fiscal 2000.
Prior to the spin-off, substantially all regular Energizer employees in
the United States were eligible to participate in the Ralston-sponsored
defined contribution plans. In fiscal 1999, Ralston amended the contribution
structure of the plans. Prior to January 1, 1999, Ralston generally matched
100% of participants' before-tax contributions up to 6% of compensation for
employees hired prior to July 1, 1993. For employees hired on or after July
1, 1993, Ralston matched before-tax participant contributions in increasing
20% increments for each year of service. On January 1, 1999 and thereafter,
Ralston matched 25% of participants' before-tax contributions up to 4% of
compensation. In addition, participants could make after-tax contributions of
1% or 1.75% of compensation into the savings plan. This participant after-tax
contribution was matched within the pension plan at 300%. Amounts charged to
expense are shown in the table below. Prior to the spin-off, Energizer
recorded costs as allocated by Ralston. The amount of such costs was $1.2 for
the six months ended March 31, 2000, $3.0 in 1999 and $8.2 in 1998.
(11) DEBT
Immediately prior to the spin-off, Ralston borrowed $478.0 through several
interim-funding facilities and assigned all repayment obligations of those
facilities to Energizer. In April and May 2000, Energizer entered into
separate financing agreements, including an agreement to sell domestic trade
receivables as discussed in Note 12 below, and repaid the interim-funding
facilities.
Notes payable at September 30, 2000 and 1999, consisted of notes payable
to financial institutions with original maturities of less than one year
of $135.0 and $118.5, respectively, and had a weighted-average interest
rate of 7.9% and 7.3%, respectively.
The detail of long-term debt at September 30 is as follows.
<TABLE>
<CAPTION>
--------
2000 1999
- -------------------------------------------------------------------------
<S> <C> <C>
Private Placement, interest rates
ranging from 7.8% to 8.0%,
due 2003 to 2010 $ 175.0 $ -
Revolving Credit Facility, interest
rates ranging from 7.4% to
7.8%, due 2005 195.0 -
Other, interest rates ranging
from 7.6% to 18.9% at 9-30-99
due 1999 to 2002 - 2.2
- -------------------------------------------------------------------------
370.0 2.2
Less current portion - (0.3)
- -------------------------------------------------------------------------
Total long-term debt $ 370.0 $ 1.9
=========================================================================
</TABLE>
Energizer maintains total committed long-term debt facilities of $625.0,
of which $255.0 remained available as of September 30, 2000.
Under the terms of the facilities, the ratio of Energizer's total
indebtedness to its EBITDA cannot be greater than 3 to 1 and the ratio
of its EBIT to total interest expense must exceed 3 to 1.
Aggregate maturities on all long-term debt are as follows: Year ending
September 30, 2003 - $15.0; 2005 - $ 305.0; and thereafter - $50.0.
(12) SALE OF ACCOUNTS RECEIVABLE
Energizer entered into 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 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." The SPE's sole purpose is the
acquisition of receivables
- ---
3 8 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
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 below.
As of September 30, 2000, Energizer had sold $257.1 of outstanding accounts
receivable to the SPE. The SPE sold the receivables to an unrelated third
party for $100.0 in cash and maintains a subordinated retained interest in
the remaining $157.1 of receivables, which is equivalent to Energizer's
investment in the SPE. The net proceeds of the transaction were used to
reduce various debt instruments. The proceeds are reflected as operating cash
flows in Energizer's Consolidated Statement of Cash Flows.
(13) PREFERRED STOCK
Energizer's Articles of Incorporation authorize Energizer to issue up to
10 million shares of $.01 par value of preferred stock. As of September 30,
2000, there were no shares of preferred stock outstanding.
(14) SHAREHOLDERS EQUITY
On March 16, 2000, the Board of Directors declared a dividend of one share
purchase right (Right) for each outstanding share of ENR common stock. Each
Right entitles a shareholder of ENR stock to purchase an additional share of
ENR stock at an exercise price of $150, which price is subject to
antidilution adjustments. Rights, however, may only be exercised if a person
or group has acquired, or commenced a public tender for 20% or more of the
outstanding ENR stock, unless the acquisition is pursuant to a tender or
exchange offer for all outstanding shares of ENR stock and a majority of the
Board of Directors determines that the price and terms of the offer are
adequate and in the best interests of shareholders (a Permitted Offer). At
the time that 20% or more of the outstanding ENR stock is actually acquired
(other than in connection with a Permitted Offer), the exercise price of each
Right will be adjusted so that the holder (other than the person or member of
the group that made the acquisition) may then purchase a share of ENR stock
at one-third of its then-current market price. If Energizer merges with any
other person or group after the Rights become exercisable, a holder of a
Right may purchase, at the exercise price, common stock of the surviving
entity having a value equal to twice the exercise price. If Energizer
transfers 50% or more of its assets or earnings power to any other person or
group after the Rights become exercisable, a holder of a Right may purchase,
at the exercise price, common stock of the acquiring entity having a value
equal to twice the exercise price.
Energizer can redeem the Rights at a price of $.01 per Right at any time
prior to the time a person or group actually acquires 20% or more of the
outstanding ENR stock (other than in connection with a Permitted Offer). In
addition, following the acquisition by a person or group of at least 20%, but
not more than 50% of the outstanding ENR stock (other than in connection with
a Permitted Offer), Energizer may exchange each Right for one share of ENR
stock. Energizer's Board of Directors may amend the terms of the Rights at
any time prior to the time a person or group acquires 20% or more of the
outstanding ENR stock (other than in connection with a Permitted Offer) and
may amend the terms to lower the threshold for exercise of the Rights. If the
threshold is reduced it cannot be lowered to a percentage which is less than
10%, or, if any shareholder holds 10% or more of the outstanding ENR stock at
that time, the reduced threshold must be greater than the percentage held by
that shareholder. The Rights will expire on April 1, 2010.
At September 30, 2000, there were 300 million shares of ENR stock authorized,
of which 8,013,000 shares were reserved for issuance under the 2000 Incentive
Stock Plan.
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.
- ---
3 9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
- ------------------------------------------
(CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(15) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
FOREIGN CURRENCY CONTRACTS - Energizer enters into foreign exchange forward
- --------------------------
contracts and, to a lesser extent, purchases options and enters into
zero-cost option collars to mitigate potential losses in earnings or cash
flows on foreign currency transactions. Foreign currency exposures are
primarily related to anticipated intercompany purchase transactions and
intercompany borrowings. Other foreign currency transactions to which
Energizer is exposed include external purchase transactions and intercompany
receivables, dividends and service fees.
The table below summarizes, by instrument and by major currency, the
contractual amounts of Energizer's forward exchange contracts and purchased
currency options in U.S. dollar equivalents at year-end. These contractual
amounts represent transaction volume outstanding and do not represent the
amount of Energizer's exposure to credit or market loss. Foreign currency
contracts are generally for one year or less.
<TABLE>
<CAPTION>
--------
2000 1999
- -------------------------------------------------------------------------
<S> <C> <C>
INSTRUMENT
Forwards $ 122.5 $ 133.4
Options 25.0 17.7
CURRENCY
Swiss franc 117.2 124.2
Canadian dollar 25.0 17.7
Other currencies 5.3 9.2
- -------------------------------------------------------------------------
</TABLE>
CONCENTRATION OF CREDIT RISK - The counterparties to foreign currency
- ----------------------------
contracts consist of a number of major international financial institutions
and are generally institutions with which Energizer maintains lines of
credit. Energizer does not enter into foreign exchange contracts through
brokers nor does it trade foreign exchange contracts on any other exchange or
over-the-counter markets. Risk of currency positions and market-to-market
valuation of positions are strictly monitored at all times.
Energizer continually monitors positions with, and credit ratings of,
counterparties both internally and by using outside rating agencies.
Energizer has implemented policies which limit the amount of agreements it
enters into with any one party. While nonperformance by these counterparties
exposes Energizer to potential credit losses, such losses are not anticipated
due to the control features mentioned.
Energizer sells to a large number of customers primarily in the retail trade,
including those in mass merchandising, drugstore, supermarket and other
channels of distribution throughout the world. Energizer performs ongoing
evaluations of its customers' financial condition and creditworthiness, but
does not generally require collateral. While the competitiveness of the
retail industry presents an inherent uncertainty, Energizer does not believe
a significant risk of loss from a concentration of credit risk exists with
respect to accounts receivable.
FAIR VALUE OF FINANCIAL INSTRUMENTS - Energizer's financial instruments
- -----------------------------------
include cash and cash equivalents, short-term and long-term debt, foreign
currency contracts and interest rate swap agreements. Due to the nature of
cash and cash equivalents and short-term borrowings, including notes payable,
carrying amounts on the balance sheet approximate fair value.
At September 30, 2000, the fair market value of long-term debt was $371.9
compared to its carrying value of $370.0. The fair value of the long-term
debt is estimated using yields obtained from independent pricing sources for
similar types of borrowing arrangements. As of September 30, 1999,
Energizer's long-term debt represented borrowings in foreign countries under
various credit facilities that provided for periodic interest rate resets, at
least annually. Therefore, the fair market value of Energizer's long-term
debt was deemed to approximate its book value at September 30, 1999.
The fair value of foreign currency contracts is the amount that Energizer
would receive or pay to terminate the contracts, considering first, quoted
market prices of comparable agreements, or in the absence of quoted market
prices, such factors as interest rates, currency exchange rates and remaining
maturities. Based on these considerations, Energizer would be required to
make a total net
- ---
4 0 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
payment of $2.4 and $2.7 to counterparties for outstanding foreign currency
contracts at September 30, 2000 and 1999, respectively. However, these
payments are unlikely due to the fact that Energizer enters into foreign
currency contracts to hedge identifiable foreign currency exposures, and as
such would generally not terminate such contracts.
(16) ENVIRONMENTAL AND LEGAL MATTERS
GOVERNMENT REGULATIONS AND ENVIRONMENTAL MATTERS - The operations of
- ------------------------------------------------
Energizer, like those of other companies engaged in the battery business, are
subject to various federal, state, foreign and local laws and regulations
intended to protect the public health and the environment. These regulations
primarily relate to worker safety, air and water quality, underground fuel
storage tanks, and waste handling and disposal.
Energizer has received notices from the U.S. Environmental Protection Agency,
state agencies and/or private parties seeking contribution, that it has been
identified as a "potentially responsible party" (PRP) under the Comprehensive
Environmental Response, Compensation and Liability Act and may be required to
share in the cost of cleanup with respect to nine federal "Superfund" sites.
It may also be required to share in the cost of cleanup with respect to a
state-designated site. Liability under the applicable federal and state
statutes which mandate cleanup is strict, meaning that liability may attach
regardless of lack of fault, and joint and several, meaning that a liable
party may be responsible for all of the costs incurred in investigating and
cleaning up contamination at a site. However, liability in such matters is
typically shared by all of the financially viable responsible parties.
The amount of Energizer's ultimate liability in connection with those sites
may depend on many factors, including the volume and toxicity of material
contributed to the site, the number of other PRPs and their financial
viability, and the remediation methods and technology to be used.
In addition, Energizer undertook certain programs to reduce or eliminate
the environmental contamination at the rechargeable battery facility in
Gainesville, Florida, which was divested in November 1999. In the event that
the buyer would become unable to continue such programs, Energizer could be
required to bear financial responsibility for such programs as well as for
other known and unknown environmental conditions at the site.
Many European countries, as well as the European Union, have been very active
in adopting and enforcing environmental regulations. In many developing
countries in which Energizer operates, there has not been significant
governmental regulation relating to the environment, occupational safety,
employment practices or other business matters routinely regulated in the
United States. As such economies develop, it is possible that new regulations
may increase the risk and expense of doing business in such countries.
It is difficult to quantify with certainty the potential financial impact
of actions regarding expenditures for environmental matters, particularly
remediation, and future capital expenditures for environmental control
equipment. Nevertheless, based upon the information currently available,
Energizer believes that its ultimate liability arising from such
environmental matters, taking into account established accruals of $3.6 for
estimated liabilities, should not be material to its financial position. Such
liability could, however, be material to results of operations or cash flows
for a particular quarter or annual period.
LEGAL PROCEEDINGS - On April 8, 1998, Zinc Products Company, a division
- -----------------
of Alltrista Corp., a supplier of zinc cans used in the manufacture of
batteries, filed suit in federal district court for the Eastern District
of Tennessee against Energizer, claiming breach of contract when Energizer
closed its Fremont, Ohio plant. The plaintiff claims lost profits and other
damages of approximately $2.8. The case has been set for trial in January
2001.
- ---
4 1
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
- ------------------------------------------
(CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
The U.S. Patent Office continues to review the interference claims between
Strategic Electronics (Energizer's licensor) and Duracell relating to use of
the on-battery tester. A decision is not expected for several years. An
earlier decision, which denied Energizer's separate patent claims and those
of Eastman Kodak Company (which are licensed to Duracell) was appealed to the
federal district court for Washington, D.C. on February 2, 1998. Kodak filed
a similar appeal, naming Energizer as a defendant on January 29, 1998. In a
related matter, Strategic Electronics filed a declaratory judgment suit on
September 9, 1999 in the federal district court for the Central District of
California seeking additional payments of approximately $1.0 under the
license. Energizer filed a motion to dismiss, which was granted in the spring
of 2000.
Energizer and its subsidiaries are parties to a number of other legal
proceedings in various jurisdictions arising out of the operations of the
Energizer business.
Many of the foregoing legal matters are in preliminary stages and involve
complex issues of law and fact, and may proceed for protracted periods of
time. The amount of alleged liability, if any, from these proceedings cannot
be determined with certainty. However, based upon present information,
Energizer believes that its ultimate liability, if any, arising from pending
legal proceedings, asserted legal claims and known potential legal claims
which are likely to be asserted, should not be material to Energizer's
financial position, taking into account established accruals for estimated
liabilities. These liabilities, however, could be material to results of
operations or cash flows for a particular quarter or annual period.
(17) OTHER COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS - Future minimum rental commitments under noncancellable
- -----------------
operating leases in effect as of September 30, 2000 were: 2001 - $16.7; 2002
- - $9.5; 2003 - $8.4; 2004 - $7.4; 2005 - $7.1; and thereafter - $34.3.
Total rental expense for all operating leases was $17.5, $21.5 and $19.7 in
2000, 1999 and 1998, respectively.
- ---
4 2 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
(18) SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
--------
2000 1999
- --------------------------------------------------------------------------------------------
<S> <C> <C>
INVENTORIES
Raw materials and supplies $ 64.0 $ 74.0
Work in process 87.0 80.5
Finished products 308.1 228.5
- --------------------------------------------------------------------------------------------
Total Inventories $ 459.1 $ 383.0
============================================================================================
OTHER CURRENT ASSETS
Investment in SPE (see Note 12) $ 157.1 $ -
Miscellaneous receivables 36.6 52.7
Deferred income tax benefits 38.9 34.6
Prepaid expenses 44.1 32.4
Other 2.0 1.6
- --------------------------------------------------------------------------------------------
Total Other Current Assets $ 278.7 $ 121.3
============================================================================================
INVESTMENTS AND OTHER ASSETS
Goodwill (net of accumulated amortization:
2000 - $117.0; 1999 - $120.2) $ 168.0 $ 205.0
Other intangible assets (net of accumulated
amortization: 2000 - $356.1; 1999 - $343.3) 82.4 94.4
Pension asset 102.0 -
Deferred charges and other assets 25.4 20.3
- --------------------------------------------------------------------------------------------
Total Investments and Other Assets $ 377.8 $ 319.7
============================================================================================
OTHER CURRENT LIABILITIES
Accrued advertising, promotion and allowances $ 123.2 $ 110.0
Restructuring reserves 3.9 11.3
Salaries, vacations and incentive compensation 47.4 48.9
Other 74.1 78.3
- --------------------------------------------------------------------------------------------
Total Other Current Liabilities $ 248.6 $ 248.5
============================================================================================
OTHER NON-CURRENT LIABILITIES
Postretirement benefit liability $ 87.7 $ -
Other non-current liability 69.0 23.0
- --------------------------------------------------------------------------------------------
Total Other Non-current Liabilities $ 156.7 $ 23.0
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
(19) SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest paid $ 19.5 $ 11.7 $ 14.9
Income taxes paid 86.5 44.0 81.2
- -----------------------------------------------------------------------------------------------------------
(20) ALLOWANCE FOR DOUBTFUL ACCOUNTS
--------
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------
Balance at beginning of year $ 19.3 $ 19.6 $ 19.6
Provision charged to expense 5.1 6.7 3.4
Write-offs, less recoveries (5.9) (7.0) (3.4)
Transfer to SPE (see Note 12) (6.0) - -
- -----------------------------------------------------------------------------------------------------------
Balance at end of year $ 12.5 $ 19.3 $ 19.6
===========================================================================================================
</TABLE>
- ---
4 3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
- ------------------------------------------
(CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(21) SEGMENT INFORMATION
Energizer manufactures and markets dry cell batteries including alkaline,
carbon zinc, miniature and specialty batteries, and flashlights and other
lighting products throughout the world. Operations are managed via four major
geographic areas - North America (including the United States and Canada),
Asia Pacific, Europe, and South and Central America (including Mexico).
This structure is the basis for Energizer's reportable operating segment
information disclosed below. Segment performance is evaluated based on
operating profit, exclusive of general corporate 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. One single mass merchandiser accounted for 15.3%, 13.5% and 11.5%
of total net sales in 2000, 1999 and 1998, respectively, primarily in
North America.
<TABLE>
<CAPTION>
----------------------
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------
NET SALES TOTAL EXTERNAL Total External Total External
SALES SALES Sales Sales Sales Sales
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
North America $ 1,226.3 $ 1,122.0 $ 1,135.9 $ 1,035.9 $ 1,104.3 $ 1,005.4
Asia Pacific 462.9 393.2 430.0 384.8 448.6 396.9
Europe 281.2 272.7 320.3 317.0 369.5 365.7
South and Central America 144.2 126.4 151.2 134.6 179.9 153.8
- -----------------------------------------------------------------------------------------------------------------
Total Net Sales $ 1,914.3 $ 1,872.3 $ 1,921.8
=================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING PROFIT BEFORE RESTRUCTURING CHARGES
AND AMORTIZATION
North America $ 311.9 $ 291.4 $ 279.8
Asia Pacific 111.9 89.2 100.3
Europe (0.2) (1.2) 11.3
South and Central America 12.1 14.5 16.9
- -----------------------------------------------------------------------------------------------------------------
Total segment profitability 435.7 393.9 408.3
General corporate expenses (37.4) (54.0) (46.2)
Research and development expense (49.9) (48.5) (46.6)
- -----------------------------------------------------------------------------------------------------------------
Operating profit before restructuring
charges and amortization 348.4 291.4 315.5
Restructuring charges - (9.9) (21.3)
Costs related to spin-off (5.5) - -
Loss on disposition of Spanish affiliate (15.7) - -
Amortization (24.1) (25.0) (25.9)
Interest and other financial items (23.9) (8.3) (5.8)
- -----------------------------------------------------------------------------------------------------------------
Total Earnings from Continuing Operations
before Income Taxes $ 279.2 $ 248.2 $ 262.5
=================================================================================================================
DEPRECIATION
North America $ 34.8 $ 45.0 $ 50.1
Asia Pacific 12.4 11.1 10.0
Europe 7.7 10.3 12.4
South and Central America 3.0 2.0 1.6
- -----------------------------------------------------------------------------------------------------------------
Total Depreciation Expense $ 57.9 $ 68.4 $ 74.1
=================================================================================================================
</TABLE>
- ---
4 4 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
<TABLE>
<CAPTION>
----------
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS AT YEAR END
North America $ 956.5 $ 815.5 $ 888.0
Asia Pacific 245.7 271.4 265.0
Europe 244.7 282.2 334.6
South and Central America 96.2 98.0 92.7
- -----------------------------------------------------------------------------------------------------------------
Subtotal 1,543.1 1,467.1 1,580.3
Goodwill and other intangible assets 250.4 299.4 340.7
Investment in discontinued operations - 67.2 156.6
- -----------------------------------------------------------------------------------------------------------------
Total Assets $1,793.5 $1,833.7 $2,077.6
=================================================================================================================
CAPITAL EXPENDITURES
North America $ 56.0 $ 39.6 $ 53.7
Asia Pacific 8.4 18.4 32.6
Europe 6.0 8.9 8.1
South and Central America 2.4 2.3 8.4
- -----------------------------------------------------------------------------------------------------------------
Total Capital Expenditures $ 72.8 $ 69.2 $ 102.8
=================================================================================================================
Geographic Segment Information
NET SALES
United States $1,052.3 $ 977.6 $ 950.0
International 862.0 894.7 971.8
- -----------------------------------------------------------------------------------------------------------------
Total Net Sales $1,914.3 $1,872.3 $1,921.8
=================================================================================================================
LONG LIVED ASSETS
United States $ 517.9 $ 404.6 $ 426.3
International 345.3 387.9 410.7
- -----------------------------------------------------------------------------------------------------------------
Total Long Lived Assets $ 863.2 $ 792.5 $ 837.0
=================================================================================================================
Supplemental product information is presented below
for revenues from external customers.
NET SALES
Alkaline Batteries $1,281.2 $1,211.0 $1,189.4
Carbon Zinc Batteries 316.4 358.8 419.7
Lighting Products 127.6 128.6 131.0
Miniature Batteries 64.5 65.2 65.7
Other 124.6 108.7 116.0
- -----------------------------------------------------------------------------------------------------------------
Total Net Sales $1,914.3 $1,872.3 $1,921.8
=================================================================================================================
</TABLE>
- ---
4 5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
- ------------------------------------------
(CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(22) QUARTERLY FINANCIAL INFORMATION - (UNAUDITED)
The results of any single quarter are not necessarily indicative of
Energizer's results for the full year. Net earnings of Energizer are
significantly impacted in the first quarter by the additional sales
volume associated with the Christmas holiday season.
<TABLE>
<CAPTION>
First Second Third Fourth
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FISCAL 2000
Net sales $ 673.6 $ 359.9 $ 402.8 $ 478.0
Gross profit 351.4 167.3 196.9 224.0
Earnings from continuing operations <Fa> 104.7 15.7 23.2 36.6
Gain on disposition of discontinued operations - 1.2 - -
Net earnings 104.7 16.9 23.2 36.6
Basic and Diluted Earnings Per Share <Fb>
Earnings from continuing operations $ 1.07 $ 0.17 $ 0.24 $ 0.38
Net gain on discontinued operations $ - $ 0.01 $ - $ -
Net earnings $ 1.07 $ 0.18 $ 0.24 $ 0.38
First Second Third Fourth
- ----------------------------------------------------------------------------------------------------------------------
FISCAL 1999
Net sales $ 582.4 $ 405.7 $ 399.2 $ 485.0
Gross profit 277.3 184.0 183.1 230.0
Earnings from continuing operations <Fa> 54.8 22.0 21.7 61.3
Loss from discontinued operations (2.8) (2.8) - -
Loss on disposition of discontinued operations - (74.2) - -
Net earnings/(loss) 52.0 (55.0) 21.7 61.3
Basic and Diluted Earnings Per Share <Fb>
Earnings from continuing operations $ 0.55 $ 0.21 $ 0.21 $ 0.60
Net loss on discontinued operations $ (0.03) $ (0.73) $ - $ -
Net earnings/(loss) $ 0.52 $ (0.52) $ 0.21 $ 0.60
<FN>
<Fa> Earnings from continuing operations include the following items:
</FN>
</TABLE>
<TABLE>
<CAPTION>
----------
2000 1999
- -------------------------------------------------------------------------
<S> <C> <C>
First quarter
Restructuring $ - $ (6.2)
Second quarter
Costs related to spin-off (3.3) -
Loss on disposition of Spanish affiliate (15.7) -
Restructuring - 0.1
Capital loss tax benefits 24.4 -
Third quarter
Restructuring - (8.5)
Capital loss tax benefits - 3.3
Fourth quarter
Restructuring - 6.3
Capital loss tax benefits - 13.3
- -------------------------------------------------------------------------
<FN>
<Fb> For all periods prior to the spin-off, 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.
</FN>
</TABLE>
- ---
4 6 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
<PAGE>
(23) PRO FORMA FINANCIAL RESULTS
The pro forma consolidated statements of earnings for the years ended
September 30, 1999 and 2000 present the consolidated results of Energizer's
operations assuming the spin-off had occurred as of October 1, 1998. 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
consolidated results of operations that would have existed had the spin-off
been effected on the dates specified nor are they necessarily indicative of
future results.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in millions except per share data - unaudited)
<CAPTION>
YEAR ENDED SEPTEMBER 30, 2000
Adjustments
Related to
Historic Distribution Pro Forma
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 1,914.3 $ 1,914.3
Costs and Expenses
Cost of products sold 974.7 974.7
Selling, general and administrative 374.4 4.0 <Fa> 378.4
0.8 <Fb>
(0.8) <Fc>
Advertising and promotion 187.4 187.4
Research and development 49.9 49.9
Costs related to spin-off 5.5 5.5
Loss on disposition of Spanish affiliate 15.7 15.7
Interest 27.5 17.1 <Fd> 44.6
- ----------------------------------------------------------------------------------------------------------------------
1,635.1 21.1 1,656.2
- ----------------------------------------------------------------------------------------------------------------------
Earnings from Continuing Operations before Income Taxes 279.2 (21.1) 258.1
Income Taxes (99.0) (23.4) <Fe> (114.0)
8.4 <Ff>
- ----------------------------------------------------------------------------------------------------------------------
Earnings from Continuing Operations $ 180.2 $ (36.1) $ 144.1
======================================================================================================================
Earnings Per Share from Continuing Operations <Fg>
Basic $1.88 $1.50
Diluted $1.87 $1.49
Weighted-average Shares of Common Stock <Fg>
Basic 96.1 96.1
Diluted 96.3 96.3
- ----------------------------------------------------------------------------------------------------------------------
<FN>
<Fa> 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.
<Fb> To adjust pension income on plan assets transferred to Energizer plans
upon the spin-off.
<Fc> To eliminate expense of certain postretirement benefits to be retained
by Ralston.
<Fd> To reflect the increase in interest expense associated with debt levels
assigned to Energizer upon the spin-off. The adjustment reflects an
average interest rate of 6.7% for $67.0 of incremental notes payable
and 7.2% for $411.0 of incremental long-term debt. Approximately $303.0
of the incremental debt has a variable interest rate. A 1/8% variation
in the interest rate would change interest expense by $.4.
<Fe> To reflect taxes as if Energizer was a single, stand-alone U.S.
taxpayer.
<Ff> To reflect tax effect of the above pro forma adjustments.
<Fg> The number of shares used to compute earnings per share is based on
the weighted-average number of shares of Ralston stock outstanding
during the six months ended March 31, 2000 (adjusted for the
distribution of one share of Energizer stock for each three shares
of Ralston stock) and the weighted-average number of shares of
Energizer stock outstanding from April 1, 2000 to September 30, 2000.
</FN>
</TABLE>
- ---
4 7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
- ------------------------------------------
(CONTINUED)(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in millions except per share data - unaudited)
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1999
Adjustments
Related to
Historic Distribution Pro Forma
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 1,872.3 $ 1,872.3
Costs and Expenses
Cost of products sold 997.9 997.9
Selling, general and administrative 398.0 8.0 <Fa> 400.9
(3.3) <Fb>
(1.8) <Fc>
<Fd>
Advertising and promotion 164.3 164.3
Research and development 48.5 48.5
Provisions for restructuring 7.8 7.8
Interest 7.6 36.9 <Fe> 44.5
- ----------------------------------------------------------------------------------------------------------------------
1,624.1 39.8 1,663.9
- ----------------------------------------------------------------------------------------------------------------------
Earnings from Continuing Operations before Income Taxes 248.2 (39.8) 208.4
Income Taxes (88.4) (11.2) <Ff> (91.5)
8.1 <Fg>
- ----------------------------------------------------------------------------------------------------------------------
Earnings from Continuing Operations $ 159.8 $ (42.9) $ 116.9
======================================================================================================================
Earnings Per Share from Continuing Operations <Fh> $ 1.56 $ 1.14
Weighted-average Shares of Common Stock <Fh> 102.6 102.6
<FN>
<Fa> 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.
<Fb> To reflect pension income on plan assets to be transferred to Energizer
plans upon the distribution.
<Fc> To eliminate expense of certain postretirement benefits to be retained
by Ralston.
<Fd> In addition to costs described above, compensation for certain
executive officers will be higher than the costs included in the
historical financial statements. The amount of the increase cannot
be determined at this time.
<Fe> 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
$343.9 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 $.4.
<Ff> To reflect taxes as if Energizer was a single, stand-alone U.S.
taxpayer.
<Fg> To reflect tax effect of the above pro forma adjustments.
<Fh> The number of shares used to compute earnings per share is based on
the weighted-average number of shares of Ralston stock outstanding
during the year ended September 30, 1999, adjusted for the anticipated
distribution of one share of Energizer stock for each three shares of
Ralston stock.
</FN>
</TABLE>
- ---
4 8 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>9
<FILENAME>0009.txt
<TEXT>
<TABLE>
<CAPTION>
ENERGIZER SUBSIDIARIES 11/1/00
-------------------------------------
<S> <C> <C>
Jurisdictions of Percentage
Subsidiary Name Incorporation of Control
- ----------------------------------------- ---------------- -----------
Energizer Argentina S.A. Argentina 100%
Energizer Australia Pty. Ltd. Australia 100%
Energizer Austria Ges.m.b.H. Austria 100%
Energizer Sales Ltd. Barbados 100%
Energizer Belgium Belgium 100%
Energizer Insurance Company Ltd. Bermuda 100%
Energizer do Brasil Ltda. Brazil 100%
Energizer Canada Inc. Canada 100%
Eveready de Chile S.A. Chile 100%
Energizer (China) Co., Ltd. China 100%
Eveready de Colombia, S.A. Colombia 100%
Energizer Czech spol.sr.o. Czech Republic 100%
EBC Batteries, Inc. Delaware 100%
Energizer Asia Pacific, Inc. Delaware 100%
Energizer International, Inc. Delaware 100%
Energizer Japan, Inc. Delaware 100%
Energizer Middle East and Africa Limited Delaware 100%
Energizer (South Africa) Ltd. Delaware 100%
Eveready Battery Company, Inc. Delaware 100%
MKTE, Inc. Delaware 100%
Energizer Receivables Funding Corporation Delaware 100%
Eveready Ecuador C.A. Ecuador 100%
Energizer Egypt S.A.E. Egypt 51%
Energizer France France 100%
Fibat S.A. France 20%
Energizer Deutschland G.m.b.H. Germany 100%
Eveready Ghana Limited Ghana 66.6%
Energizer Hellas A.E. Greece 100%
Energizer Hong Kong Limited Hong Kong 100%
Eveready Hong Kong Company Hong Kong 100% Partnership
Sonca Products Limited Hong Kong 100%
Energizer Hungary Trading Ltd. Hungary 100%
EBC (India) Company Ltd. India 100%
Energizer India Limited India 51% Joint Venture
Eveready Energizer Miniatures Limited India 49% Joint Venture
PT Energizer Indonesia Indonesia 80%
PT Energizer Trading Indonesia Indonesia 100%
Energizer Ireland Limited Ireland 100%
Energizer Italia S.p.A. Italy 100%
Eveready Batteries Kenya Ltd. Kenya 14%
Energizer Korea Ltd. Korea 100%
Energizer Malaysia SDN.BHD. Malaysia 80%
Eveready de Mexico S.A. de C.V. Mexico 100%
Energizer Holdings, Inc. Missouri 100%
Energizer NZ Limited New Zealand 100%
Eveready NZ Limited New Zealand 100%
Energizer Philippines, Inc. Philippines 100%
Energizer Polska Sp. zo.o Poland 100%
Energizer Puerto Rico, Inc. Puerto Rico 100%
Energizer LLC Russia 100%
Energizer Singapore Pte. Ltd. Singapore 100%
Energizer Slovakia, Spol.Sr.O. Slovak Republic 100%
Energizer Lanka Limited Sri Lanka 60%
Energizer SA Switzerland 100%
Energizer (Thailand) Limited Thailand 100%
BCL (MVL) Limited UK 100%
Berec Overseas Investments Limited UK 100%
Energizer Financial Service Centre Ltd. UK 100%
Energizer Holdings UK Company UK 100%
Ever Ready Limited UK 100%
Energizer Limited UK 100%
Energizer Trust Limited UK 100%
WER (MVL) 1998 Limited UK 100%
EBC Uruguay, S. A. Uruguay 100%
Eveready de Venezuela, C.A. Venezuela 100%
- ----------------------------------------- ---------------- ----------------------
* In liquidation.
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>10
<FILENAME>0010.txt
<TEXT>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 333-33690, 333-33676 and 333-35116) of
Energizer Holdings, Inc. of our report dated October 31, 2000 relating to
the financial statements, which appears in the Annual Report to Shareholders
2000, which is incorporated in this Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
St. Louis, Missouri
December 15, 2000
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>11
<FILENAME>0011.txt
<TEXT>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
9/30/2000 ENERGIZER HOLDINGS, INC. CONSOLIDATED BALANCE SHEET AND 9/30/2000
AND 9/30/1999 CONSOLIDATED STATEMENTS OF EARNINGS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> SEP-30-2000 SEP-30-1999
<PERIOD-END> SEP-30-2000 SEP-30-1999
<CASH> 11,900 0<F2>
<SECURITIES> 0 0<F2>
<RECEIVABLES> 193,100 0<F2>
<ALLOWANCES> (12,500) 0<F2>
<INVENTORY> 459,100 0<F2>
<CURRENT-ASSETS> 278,700 0<F2>
<PP&E> 1,019,800 0<F2>
<DEPRECIATION> (534,400) 0<F2>
<TOTAL-ASSETS> 1,793,500 0<F2>
<CURRENT-LIABILITIES> 528,600 0<F2>
<BONDS> 370,000 0<F2>
<PREFERRED-MANDATORY> 0 0<F2>
<PREFERRED> 0 0<F2>
<COMMON> 1,000 0<F2>
<OTHER-SE> 737,200 0<F2>
<TOTAL-LIABILITY-AND-EQUITY> 1,793,500 0<F2>
<SALES> 1,914,300 0<F2>
<TOTAL-REVENUES> 1,914,300 0<F2>
<CGS> 974,700 0<F2>
<TOTAL-COSTS> 974,700 0<F2>
<OTHER-EXPENSES> 627,800 0<F2>
<LOSS-PROVISION> 5,100 0<F2>
<INTEREST-EXPENSE> 27,500 0<F2>
<INCOME-PRETAX> 279,200 0<F2>
<INCOME-TAX> 99,000 0<F2>
<INCOME-CONTINUING> 180,200 0<F2>
<DISCONTINUED> 1,200 0<F2>
<EXTRAORDINARY> 0 0<F2>
<CHANGES> 0 0<F2>
<NET-INCOME> 181,400 0<F2>
<EPS-BASIC> 1.89 0.78<F1>
<EPS-DILUTED> 1.88 0.78<F1>
<FN>
<F1>ACTUAL AMOUNTS ARE LISTED, NOT MULTIPLIERS OF 1,000.
<F2>INFORMATION PREVIOUSLY FILED AS PART OF FORM 10.
</FN>
</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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