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<SEC-DOCUMENT>0001096752-01-500015.txt : 20020413
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ACCESSION NUMBER: 0001096752-01-500015
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 8
CONFORMED PERIOD OF REPORT: 20010930
FILED AS OF DATE: 20011214
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: 1934 Act
SEC FILE NUMBER: 001-15401
FILM NUMBER: 1813470
BUSINESS ADDRESS:
STREET 1: 533 MARYVILLE UNIVERSITY DRIVE
CITY: ST LOUIS
STATE: MO
ZIP: 63141
BUSINESS PHONE: 3149852161
MAIL ADDRESS:
STREET 1: 533 MARYVILLE UNIVERSITY DRIVE
CITY: ST LOUIS
STATE: MO
ZIP: 63141
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>doc1.txt
<TEXT>
UNITED STATES
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, 2001 Commission File No. 001-15401
ENERGIZER HOLDINGS, INC.
Incorporated in Missouri IRS Employer Identification No. 43-1863181
533 Maryville University Drive, St. Louis, Missouri 63141
Registrant's telephone number, including area code: 314-985-2000
-----------------------------------------------
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:
Aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of the close of business on November 1, 2001: $1,441,634,536
(Excluded from this figure is the voting stock held by Registrant's Directors
and Executive Officers, 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 1, 2001: 91,718,811
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Energizer Holdings, Inc. Year 2001 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 10, 2001 (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
and packaging facilities in 15 countries on four continents, and employ 3,525
employees in the United States and 6,306 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". In 2001, it relaunched its base alkaline brand as
"Energizer Max". 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 2001, those customers accounted for, in the aggregate,
approximately 16.6% 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", "Energizer Max", 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, 2001, Eveready Battery Company, Inc., a subsidiary of
Energizer, owned approximately 255 unexpired United States patents which have a
range of expiration dates from January, 2002 to April, 2020, and had
approximately 111 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, 2001, Eveready owned approximately 787 foreign
patents and had approximately 602 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 December 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 the domestic and global battery markets which have
been, in the past, high growth markets. The alkaline battery segment, both in
the United States and worldwide, has been the fastest growing segment of the
primary battery market. More recently, growth of the battery market, as well as
the alkaline segment, has moderated and in some instances declined, primarily
because of local economic conditions. 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 September 30, 2001 was
32.4%.
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 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, 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 November, 1999. In 2001, the buyer,
as well as its operating subsidiary which owns and operates the Gainesville
facility, filed petitions in bankruptcy. In the event that they would become
unable to continue the programs to reduce or eliminate contamination, 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 $5.9 million for estimated
liabilities at September 30, 2001, 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 16 through 17, "ENERGIZER HOLDINGS,
INC. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION - OPERATING RESULTS - Segment Results" on pages 12 through
14, "ENERGIZER HOLDINGS, INC. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION - OPERATING RESULTS - Research and
Development Expense" on page 14, "ENERGIZER HOLDINGS, INC. - NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS - Segment Information" on pages 49 through 51,
of the Energizer Holdings, Inc. Year 2001 Annual Report to Shareholders, 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. During the fiscal year ended September 30,
2001, Energizer's alkaline manufacturing facilities were utilized, on average,
at approximately 70% of capacity, and its carbon zinc facilities were utilized,
on average, at approximately 47% of capacity.
<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 (6) 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
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 or labeling
(6) To be closed
ITEM 3. LEGAL PROCEEDINGS
LEGAL PROCEEDINGS -
- - Energizer previously disclosed that Zinc Products Company, a division of
Alltrista Corp., a supplier of zinc cans used in the manufacture of batteries,
filed suit against Energizer, claiming breach of contract when Energizer closed
its Fremont, Ohio plant. In January of 2001, the suit was dismissed upon a
settlement payment, in an immaterial amount, by Energizer.
- - In October of 2001, Energizer entered into separate settlement agreements
with Strategic Electronics and Duracell related to outstanding contract claims
associated with Duracell's and Energizer's on-label battery testers. Under the
terms of the agreements, mutual releases of all outstanding claims were given,
and Energizer was licensed to utilize any applicable patents related to its
on-label battery tester.
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, 2001.
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: 57.
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. From 1998 to 2001,
he also served as Chief Executive Officer, President and Chairman of the Board
of Agribrands International, Inc. Age: 67.
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: 56.
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: 47.
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:
46.
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: 39.
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: 60.
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: 41.
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: 49.
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 30, 2001, there were 19,418 shareholders of record of
the ENR Stock.
The following table sets forth range of market prices for the ENR Stock for
the period from September 30, 2000 to September 30, 2001. 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 2002.
<TABLE>
<CAPTION>
MARKET PRICE RANGE
<S> <C> <C> <C>
First Quarter. $ 17.0625 - $24.375
Second Quarter $ 20.125 - $27.55
Third Quarter. $ 20.80 - $25.39
Fourth Quarter $ 15.00 - $23.35
</TABLE>
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 pages 21 through 22 of the Energizer Holdings, Inc.
Year 2001 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 20 and the information appearing under "ENERGIZER HOLDINGS, INC
- - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Segment Information" on pages 49
through 51 of the Energizer Holdings, Inc. Year 2001 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 18 through 19 of the
Energizer Holdings, Inc. Year 2001 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 25 through 28, together with the report thereon of
PricewaterhouseCoopers LLP on page 24, and the supplementary data under
"ENERGIZER HOLDINGS, INC. - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
Quarterly Financial Information (Unaudited)" on pages 52 through 53 of the
Energizer Holdings, Inc. Year 2001 Annual Report 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 10, 2001 is hereby incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information appearing under "Executive Compensation" on pages 13 through
21, "Nominating and Executive Compensation Committee Report on Executive
Compensation" on pages 21 through 24, "Performance Graph" on page 26, "Common
Stock Ownership of Directors and Executive Officers" on pages 11 through 12, and
the remuneration information under "Board of Directors Standing Committees" on
pages 4 through 5 and "Director Compensation" on pages 5 through 6 of the
Energizer Holdings, Inc. Company Notice of Annual Meeting and Proxy Statement
dated December 10, 2001 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 10 and "Common
Stock Ownership of Directors and Executive Officers" on pages 11 through 12 of
the Energizer Holdings, Inc. Notice of Annual Meeting and Proxy Statement dated
December 10, 2001 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 10, 2001, 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, 2001,
2000 and 1999.
- Consolidated Balance Sheet -- for years ended September 30, 2001
and 2000.
- Consolidated Statement of Cash Flows -- for years ended September 30,
2001, 2000, and 1999.
- Consolidated Statement of Shareholders Equity -- for years ended
September 30, 2001, 2000, 1999 and 1998.
- Notes to Financial Statements.
b. Reports on Form 8-K.
On July 26, 2001, a Current Report on Form 8-K was filed disclosing the
Company's press release concerning its third quarter earnings.
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) Intellectual Property Agreement
10(xi) Energizer Holdings, Inc. Incentive Stock Plan*
10(xii) Form of Indemnification Agreements with Executive
Officers and Directors *
10(xiii) Executive Savings Investment Plan*
10(xiv) Executive Health Insurance Plan*
10(xv) Executive Long Term Disability Plan*
10(xvi) Financial Planning Plan*
10(xvii) Executive Group Personal Excess Liability Insurance Plan*
10(xviii) Executive Retiree Life Plan*
10(xix) Supplemental Executive Retirement Plan*
(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 hereby
Incorporated by reference to Energizer's Annual Report on
Form 10K for the Year Ended September 30, 2000.
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*
(iv) 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 December 31, 2000.
10(i) Form of Non-Qualified Stock Option dated November 20,
2000*
10(ii) Form of 2000 Restricted Stock Equivalent Agreement
dated November 20, 2000*
(v) 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) Amended Change of Control Employment Agreement dated
November 19, 2001*
10(ii) Revised Negotiated Employment Agreement and
General Release*
10(iii) Form of Energizer Holdings, Inc. Deferred Compensation
Plan 2001 Election Form*
10(iv) Form of Acknowledgement for Deferral of Fiscal Year
2001 Incentive Plan Bonus*
13 Pages 10 to 56 of the Energizer Holdings, Inc.
Year 2001 Annual Report, which are incorporated
herein by reference, are filed herewith.
21 Subsidiaries of Registrant
23 Consent of Independent Accountants
*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 14, 2001
<PAGE>
SIGNATURE TITLE
- --------- -----
/s/ Daniel J. Sescleifer
- ---------------------------
Daniel J. Sescleifer
Executive Vice President and Chief Financial Officer
/s/ Mark A. Schafale
- -----------------------
Mark A. Schafale
Vice President and 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
<SEQUENCE>3
<FILENAME>doc2.txt
<DESCRIPTION>AMENDED CHANGE OF CONTROL AGMT 11/19/01
<TEXT>
AMENDED CHANGE OF CONTROL
-------------------------
EMPLOYMENT AGREEMENT
--------------------
This Amended Change of Control Employment Agreement (the "Amended Agreement") by
and between Energizer Holdings, Inc. (the "Company"), a Missouri corporation,
and ___________________ ("Executive"),
WITNESSETH:
WHEREAS, the Company, on behalf of itself, its subsidiaries and its
stockholders, and any successor or surviving entity, wishes to encourage
Executive's continued service and dedication in the performance of his duties,
notwithstanding the possibility, threat or occurrence of a Change of Control of
the Company; and
WHEREAS, the Board of Directors of the Company (the "Board") believes that the
prospect of a pending or threatened Change of Control inevitably creates
distractions and personal risks and uncertainties for its executives, and that
it is in the best interests of Company and its stockholders to minimize such
distractions to certain executives, and the Board further believes that it is in
the best interests of the Company to encourage its executives' full attention
and dedication to their duties, both currently and in the event of any
threatened or pending Change of Control; and
WHEREAS, the Board has determined that appropriate steps should be taken to
reinforce and encourage the continued retention of certain members of the
Company's management, including Executive, and the attention and dedication of
management to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change of
Control.
NOW, THEREFORE, in order to induce Executive to remain in the employ of the
Company and in consideration of his continued service to the Company, the
Company agrees that Executive shall receive the benefits set forth in this
Amended Agreement in the event that Executive's employment with the Company is
terminated subsequent to a Change of Control in the circumstances described
herein, and the parties further agree as follows:
I. Definitions.
-----------
The meaning of each defined term that is used in this Amended Agreement is
set forth below.
(a) AAA. The American Arbitration Association.
---
(b) Accounting Firm. The meaning of this term is set forth in
----------------
Subsection IV(e)(ii).
(c) Additional Pay. The meaning of this term is set forth in
---------------
Subsection IV(b).
(d) Agreement Payments. The meaning of this term is set forth in
-------------------
Subsection IV(e).
(e) Beneficiaries. The meaning of this term is set forth in Subsection
-------------
VI(b).
(f) Board. The meaning of this term is set forth in the second WHEREAS
-----
clause of this Amended Agreement.
(g) Business Combination. The meaning of this term is set forth in
---------------------
Subsection I(i)(iii).
(h) Cause. For purposes of this Amended Agreement, "Cause" shall mean
-----
Executive's willful breach or failure to perform his/her employment duties. For
purposes of this Subsection I(h), no act, or failure to act, on the part of
Executive shall be deemed "willful" unless done, or omitted to be done, by
Executive not in good faith and without reasonable belief that such action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, Executive's employment shall not be deemed to have been terminated
for Cause unless and until the Company delivers to Executive a certificate of a
resolution duly adopted by the affirmative vote of not less than seventy-five
percent (75%) of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to Executive and an
opportunity for Executive, together with Executive's counsel, to be heard before
the Board), finding that in the good faith opinion of the Board, Executive has
engaged in such willful conduct and specifying the details of such willful
conduct.
(i) Change of Control. For purposes of this Amended Agreement, a
-------------------
"Change of Control" shall be deemed to have occurred if there is a change of
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then
subject to such reporting requirement; provided that, without limitation, such a
Change of Control shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) as currently in effect, of the Exchange Act) is or becomes a
"beneficial owner" (as determined for purposes of Regulation 13D-G, as currently
in effect, of the Exchange Act), directly or indirectly, of securities
representing twenty percent (20%) or more of the total voting power of all of
the Company's then outstanding voting securities. For purposes of this Amended
Agreement, the term "person" shall not include: (A) the Company or any of its
Subsidiaries, (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Subsidiaries, or (C) an
underwriter temporarily holding securities pursuant to an offering of said
securities;
(ii) during any period of two (2) consecutive calendar years,
individuals who at the beginning of such period constitute the Board and any new
director(s) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board;
(iii) the stockholders of the Company approve a merger,
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless following
such Business Combination: (i) all or substantially all of the individuals and
entities who were the "beneficial owners" (as determined for purposes of
Regulation 13D-G, as currently in effect, of the Exchange Act) of the
outstanding voting securities of the Company immediately prior to such Business
Combination beneficially own, directly or indirectly, securities representing
more than fifty percent (50%) of the total voting power of the then outstanding
voting securities of the corporation resulting from such Business Combination or
the parent of such corporation (the "Resulting Corporation"); (ii) no "person"
(as such term is used in Section 13(d) and 14(d)(2), as currently in effect, of
the Exchange Act), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or the Resulting Corporation, is
the "beneficial owner" (as determined for purposes of Regulation 13D-G, as
currently in effect, of the Exchange Act), directly or indirectly, of voting
securities representing twenty percent (20%) or more of the total voting power
of then outstanding voting securities of the Resulting Corporation; and (iii) at
least a majority of the members of the board of directors of the Resulting
Corporation were members of the Board at the time of the execution of the
initial agreement, or at the time of the action of the Board, providing for such
Business Combination;
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company; or
(v) any other event that a simple majority of the Board, in its
sole discretion, shall determine constitutes a Change of Control.
(j) Code. For purposes of this Amended Agreement, "Code" shall mean
----
the Internal Revenue Code of 1986, as amended.
(k) Company. The meaning of this term is set forth in the first
-------
paragraph of this Amended Agreement and in Subsection VI(a).
(l) Controlled Group. For purposes of this Amended Agreement,
-----------------
"Controlled Group" shall mean the Company and all of the Company's Subsidiaries.
(m) Disability. For purposes of this Amended Agreement, "Disability"
----------
shall mean an illness, injury or similar incapacity which 52 weeks after its
commencement, continues to render Executive unable to perform the material and
substantial duties of Executive's position or any substantially similar
occupation or substantially similar employment for which Executive is qualified
or may reasonably become qualified by training, education or experience. Any
question as to the existence of a Disability upon which Executive and the
Company cannot agree shall be determined by a qualified independent physician
selected by Executive (or, if Executive is unable to make such selection, by any
adult member of Executive's immediate family or Executive's legal
representative), and approved by the Company, such approval not to be
unreasonably withheld. The determination of such physician made in writing to
both the Company and Executive shall be final and conclusive for all purposes of
this Amended Agreement.
(n) Employer. For purposes of this Amended Agreement, "Employer" shall
--------
mean the Company or the Subsidiary, as the case may be, with which Executive has
an employment relationship.
(o) Exchange Act. This term shall have the meaning set forth in
-------------
Subsection I(i).
(p) Executive. This term shall have the meaning set forth in the first
---------
paragraph of this Amended Agreement.
(q) Excise Tax. This term shall have the meaning set forth in
-----------
Subsection IV(e)(i).
(r) Good Reason. For purposes of this Amended Agreement, "Good Reason"
-----------
shall mean the occurrence, without Executive's prior express written consent, of
any of the following circumstances:
(i) The assignment to Executive of any duties inconsistent with
Executive's status or responsibilities as in effect immediately prior to a
Change of Control, including imposition of travel obligations which differ
materially from required business travel immediately prior to the Change of
Control;
(ii) Any diminution in the status or responsibilities of
Executive's position from that which existed immediately prior to the Change of
Control, whether by reason of the Company ceasing to be a public company under
the Exchange Act, becoming a subsidiary of a successor public company, or
otherwise;
(iii) (A) A reduction in Executive's annual base salary as in
effect immediately before the Change of Control; or (B) the failure to pay a
bonus award to which Executive is entitled under any short-term incentive
plan(s) or program(s), any long-term incentive plan(s) or program(s), or any
other incentive compensation plan(s) or program(s) of Company in which Executive
participated immediately prior to the time of the Change of Control;
(iv) A change in the principal place of Executive's employment, as
in effect immediately prior to the Change of Control to a location more than
fifty (50) miles distant from the location of such principal place at such time;
(v) The failure by the Company to offer Executive participation in
incentive compensation or stock or stock option plans on at least a
substantially equivalent basis, both in terms of the nature and amount of
benefits provided and the level of Executive's participation, as is then being
provided by the Company to similarly situated peer executives of the Company;
(vi) (A) Except as required by law, the failure by the Company to
offer Executive benefits on at least a substantially equivalent basis, in the
aggregate, to those then being provided by the Company to similarly situated
peer executives of the Company under the qualified and non-qualified employee
benefit and welfare plans of the Company, including, without limitation, any
pension, deferred compensation, life insurance, medical, dental, health and
accident, disability, retirement or savings plan(s) or program(s) offered by the
Company; (B) the taking of any action by the Company that would, directly or
indirectly, materially reduce or deprive Executive of any other perquisite or
benefit then being offered by the Company to similarly situated peer executives
of the Company (including, without limitation, Company-paid and/or reimbursed
club memberships, financial counseling fees and the like); or (C) the failure by
the Company to treat Executive under the Company's vacation policy, past
practice or special agreement in the same manner and to the same extent as then
being provided by the Company to similarly situated peer executives of the
Company;
(vii) The failure of the Company to obtain a satisfactory written
agreement from any successor prior to consummation of the Change of Control to
assume and agree to perform this Amended Agreement, as contemplated in
Subsection VI(a); or
(viii) Any purported termination by the Company of Executive's
employment that is not effected pursuant to a Notice of Termination satisfying
the requirements of Subsection III(d) or, if applicable, Subsection I(h). For
purposes of this Amended Agreement, no such purported termination shall be
effective except as constituting Good Reason.
Executive's continued employment with the Company or any Subsidiary shall not
constitute a consent to, or a waiver of rights with respect to, any
circumstances constituting Good Reason hereunder. Any good faith determination
of "Good Reason" made by the Executive shall be conclusive for purposes of this
Amended Agreement.
(s) Gross-Up Payment. The meaning of this term is set forth in
-----------------
Subsection IV(e)(i).
(t) Notice of Termination. The meaning of this term is set forth in
-----------------------
Subsection III(d).
(u) Other Payments. The meaning of this term is set forth in
---------------
Subsection IV(e)(i).
(v) Payments. The meaning of this term is set forth in Subsection IV(e)(i).
--------
(w) Resulting Corporation. The meaning of this term is set forth in
----------------------
Subsection I(i)(iii).
(x) Retirement. For purposes of this Amended Agreement, "Retirement"
----------
shall mean Executive's voluntary termination of employment with the Company,
other than for Good Reason, and in accordance with the Company's retirement
policy generally applicable to its employees or in accordance with any prior or
contemporaneous retirement agreement or arrangement between Executive and the
Company.
(y) Severance Bonus Amount. For purposes of this Amended Agreement,
------------------------
"Severance Bonus Amount" means the greatest of (i) an amount determined by
averaging the percentages of Executive's base salary which were actually awarded
to Executive as incentive bonuses under short-term incentive plans of the
Company or any of its Subsidiaries for the five most recently completed fiscal
years prior to the fiscal year in which the Change of Control occurs, and
multiplying such average percentage by the greater of (A) Executive's annual
base salary in effect immediately prior to the Termination Date, or (B)
Executive's annual base salary in effect as of the date of the Change of
Control; (ii) Executive's Target Bonus for the fiscal year in which the Change
of Control occurs, or (iii) the Executive's Target Bonus for the fiscal year in
which the Termination Date occurs. For purposes of the calculation in (i)
above, if the five most recently completed fiscal years include any periods
during which Executive was awarded an incentive bonus under any short-term
incentive plans of Ralston Purina Company, such bonuses shall be included in
determining the average percentage of base salary. If Executive was not
employed by the Company or any of its Subsidiaries, or by Ralston Purina
Company, for the entire five-year period, the average shall be determined only
for those years during which Executive was so employed.
(z) Subsidiary. For purposes of this Amended Agreement, "Subsidiary"
----------
shall mean any corporation of which fifty percent (50%) or more of the voting
stock is owned, directly or indirectly, by the Company.
(aa) Target Bonus. For purposes of this Amended Agreement, "Target
-------------
Bonus" means the assigned bonus target for the Executive under any short-term
incentive plan(s) of the Company, multiplied by his or her base salary, for the
relevant fiscal year. If the Executive's base salary is changed during the
relevant fiscal year, the Target Bonus shall be calculated by multiplying the
Executive's assigned bonus target by the highest base salary in effect during
that fiscal year.
(bb) Terminate(d) or Termination. The meaning of this term is set
-----------------------------
forth in Subsection III(c).
(cc) Termination Date. For purposes of this Amended Agreement,
-----------------
"Termination Date" shall mean:
(i) If Executive's employment is terminated for Disability, thirty
(30) calendar days after Notice of Termination is given (provided that Executive
shall not have returned to the full-time performance of his/her duties during
such thirty-day period); and
(ii) If Executive's employment is terminated for Cause or Good
Reason or for any reason other than death or Disability, the date specified in
the Notice of Termination (which in the case of a termination for Cause shall
not be less than thirty (30) calendar days and in the case of a termination for
Good Reason shall not be less than thirty (30) calendar days nor more than sixty
(60) calendar days, respectively, from the date such Notice of Termination is
given).
II. Term of Agreement.
-------------------
(a) General. Upon execution by Executive, this Amended Agreement shall
-------
commence effective as of November 19, 2001. This Amended Agreement shall
continue in effect through April 1, 2002; provided, however, that commencing on
April 1, 2002, and every second April 1 thereafter, the term of this Amended
Agreement shall automatically be extended for two (2) additional years unless,
not later than ninety (90) calendar days prior to the date on which this Amended
Agreement otherwise automatically would be extended, the Company shall have
given notice to Executive that it does not wish to extend this Amended
Agreement; provided further, however, that if a Change of Control shall have
occurred during the original or any extended term of this Amended Agreement,
this Amended Agreement shall continue in effect for a period of twenty-four (24)
months beyond the month in which the Change of Control occurred. The term of
this Amended Agreement automatically shall be extended for two (2) additional
years from the date of any public announcement of an event that would constitute
a Change of Control as defined in this Amended Agreement; provided, however,
that if any such announced event is not consummated within that two (2) year
period, the original extended term thereafter shall apply.
(b) Disposition of Employer. In the event Executive is employed by a
-------------------------
Subsidiary, the terms of this Amended Agreement shall expire if such Subsidiary
is sold or otherwise disposed of prior to the date on which a Change of Control
occurs, unless Executive continues in employment with the Controlled Group after
such sale or other disposition. If Executive's Employer is sold or disposed of
on or after the date on which a Change of Control occurs, this Amended Agreement
shall continue through its original term or any extended term then in effect.
(c) Deemed Change of Control. If Executive's employment with Employer
-------------------------
is terminated prior to the date on which a Change of Control occurs, and such
termination was at the request of a third party who has taken steps to effect a
Change of Control, or otherwise was in connection with the Change of Control,
then for all purposes of this Amended Agreement, a Change of Control shall be
deemed to have occurred prior to such termination.
(d) Expiration of Agreement. No termination or expiration of this
-------------------------
Amended Agreement shall affect any rights, obligations or liabilities of either
party that shall have accrued on or prior to the date of such termination or
expiration.
III. Benefits Following Change of Control.
----------------------------------------
(a) Accelerated Vesting in All Equity. If a Change of Control shall
-------------------------------------
have occurred, Executive shall be entitled to, immediately upon the date of the
Change of Control, accelerated vesting of all unvested stock options and
restricted stock that have been granted or sold to the Executive by the Company
under any restricted terms, such that following said acceleration, all
restrictions as to the sale and ownership of this equity, as imposed by the
Company, shall have lapsed.
(b) Prorated Payout of Short Term Bonus. If a Change of Control shall
------------------------------------
have occurred, Executive shall be entitled to, immediately upon the date of the
Change of Control, payment in full of Executive's prorated bonus for the fiscal
year in which the Change of Control occurs. The prorated bonus amount shall be
calculated as Executive's Target Bonus for the fiscal year in which the Change
of Control occurs, or, if greater, the actual bonus awarded to Executive under
any short-term incentive plan(s) of the Company for the fiscal year immediately
preceding the fiscal year in which the Change of Control occurs, divided by 365
and multiplied by the number of calendar days in said year immediately up to the
day on which the Change of Control occurs.
(c) Entitlement to Benefits Upon Termination. If a Change of Control
------------------------------------------
shall have occurred, Executive shall be entitled to, in addition to the benefits
described in Subsections III(a) and (b), the benefits provided in Section IV
hereof upon the subsequent termination of his/her employment with the Company
within two (2) years after the date of the Change of Control unless such
termination is (i) a result of Executive's death or Retirement, (ii) for Cause,
(iii) a result of Executive's Disability, or (iv) by Executive other than for
Good Reason. For purposes of this Amended Agreement, "Termination" shall mean a
termination of Executive's employment that is not as a result of Executive's
death, Retirement or Disability and (x) if by the Company, is not for Cause, or
(y) if by Executive, is for Good Reason.
(d) Notice of Termination. Any purported termination of Executive's
-----------------------
employment by either the Company or Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section VIII.
For purposes of this Amended Agreement, a "Notice of Termination" shall mean a
written notice that indicates the specific provision(s) of this Amended
Agreement relied upon and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision(s) so indicated. If Executive's employment shall
be terminated by the Company for Cause or by Executive for other than Good
Reason, the Company shall pay Executive his/her full base salary through the
Termination Date at the salary level in effect at the time Notice of Termination
is given and shall pay any amounts to be paid to Executive pursuant to any other
compensation or stock or stock option plan(s), program(s) or employment
agreement(s) then in effect, and the Company shall have no further obligations
to Executive under this Amended Agreement.
If within thirty (30) calendar days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the grounds for termination, then, notwithstanding the
meaning of "Termination Date" set forth in Subsection I(aa), the Termination
Date shall be the date on which the dispute is finally resolved, whether by
mutual written agreement of the parties or by a decision rendered pursuant to
Section XI; provided that the Termination Date shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay Executive his/her full compensation including, without limitation, base
salary, bonus, incentive pay and equity grants, in effect when the notice of the
dispute was given, and continue Executive's participation in all benefits plans
or other perquisites in which Executive was participating, or which Executive
was enjoying, when the Notice of Termination giving rise to the dispute was
given, until the dispute is finally resolved. Amounts paid under this
Subsection III(d) are in addition to and not in lieu of all other amounts due to
Executive under this Amended Agreement and shall not be offset against or reduce
any other amounts due to Executive under this Amended Agreement.
IV. Compensation Upon a Termination.
----------------------------------
Following a Change of Control, upon Executive's Termination, Executive shall be
entitled to the following benefits, provided that such Termination occurs during
the two (2) year period immediately following the date of the Change of Control:
(a) Standard Benefits. The Company shall pay Executive his/her full
------------------
base salary through the Termination Date at the rate in effect at the time the
Notice of Termination is given, no later than the second business day following
the Termination Date, plus all other amounts to which Executive is entitled
under any compensation plan(s) or program(s) of the Company applicable to
Executive at the time such payments are due. Without limitation, amounts
payable pursuant to this Subsection IV(a) shall include, pursuant to the express
terms of any short-term incentive plan(s) in which Executive participates or
otherwise, Executive's Target Bonus for the then-current fiscal year, pro-rated
to the Termination Date. If the Termination Date shall fall within the same
short-term incentive period, as set forth by the express terms of any of the
short-term incentive plan(s) in which Executive participates or otherwise, as of
the Change of Control Date, and Executive has previously received the prorated
bonus amount as described in Subsection III(b), then Executive shall be paid the
difference between the prorated bonus amount as described here in Subsection
IV(a) and the prorated bonus amount described in Subsection III(b).
(b) Additional Benefits. The Company shall pay to Executive as
--------------------
additional pay ("Additional Pay"), the product of two (2) multiplied by the sum
of (x) the greater of (i) Executive's annual base salary in effect immediately
prior to the Termination Date, or (ii) Executive's annual base salary in effect
as of the date of the Change of Control, and (y) Executive's Severance Bonus
Amount. The Company shall pay the Additional Pay to Executive in a lump sum, in
cash, not later than the fifteenth calendar day following the Termination Date.
The Company shall maintain for Executive all such perquisites and fringe
benefits enjoyed by Executive immediately prior to the Termination Date as are
approved in writing by the Company's Chief Executive Officer for such period as
is specified in such writing.
(c) Retirement Plan Benefits. If not already vested, Executive shall
--------------------------
be deemed fully vested as of the Termination Date in any Company retirement
plan(s) or other written agreement(s) between Executive and the Company relating
to pay or other benefits upon retirement in which Executive was a participant,
party or beneficiary immediately prior to the Change of Control, and any
additional plan(s) or agreement(s) in which such Executive became a participant,
party or beneficiary thereafter. In addition to the foregoing, for purposes of
determining the amounts to be paid to Executive under such plan(s) or
agreement(s), the years of service with the Company and the age of Executive
under all such plans and agreements shall be deemed increased by twenty-four
months (24). For purposes of this Subsection IV(c), the term "plan(s)"
includes, without limitation, the Company's qualified pension plan,
non-qualified pension plans, and any companion, successor or amended plan(s),
and the term "agreement(s)" encompasses, without limitation, the terms of any
offer letter(s) leading to Executive's employment with the Company where
Executive was a signatory thereto, any written amendment(s) to the foregoing and
any subsequent agreements on such matters. In the event the terms of the plans
referenced in this Subsection IV(c) do not for any reason coincide with the
provisions of this Subsection IV(c) (e.g., if plan amendments would cause
disqualification of qualified plans), Executive shall be entitled to receive
from the Company, under the terms of this Amended Agreement, an amount equal to
all amounts Executive would have received, at the time Executive would have
received such amounts, had all such plans continued in existence as in effect on
the date of this Amended Agreement after being amended to coincide with the
terms of this Subsection IV(c).
(d) Health and Other Benefits. Following the Termination Date, the
----------------------------
Company shall continue to provide, for a period of twenty-four (24) months,
substantially the same level of health, vision and dental benefits to Executive
and Executive's eligible dependents that the Company would provide to Executive
and Executive's eligible dependents if Executive were first eligible for retiree
health, vision and dental benefits immediately prior to the Change of Control.
The eligibility of Executive's dependents shall be determined by the terms of
any retiree health, vision and dental benefit plan(s) or program(s) in effect
immediately prior to the Change of Control.
(e) Gross-Up Payments.
-------------------
(i) In the event any payment(s) or the value of any benefit(s) received or
to be received by Executive in connection with Executive's Termination or
contingent upon a Change of Control (whether received or to be received pursuant
to the terms of this Amended Agreement (the "Agreement Payments") or of any
other plan, arrangement or agreement of the Company, its successors, any person
whose actions result in a Change of Control, or any person affiliated with any
of them (or which, as a result of the completion of the transaction(s) causing a
Change of Control, will become affiliated with any of them) ("Other Payments"
and, together with the Amended Agreement Payments, the "Payments")), are
determined, under the provisions of Subsection IV(e)(ii), to be subject to an
excise tax imposed by Section 4999 of the Code (any such excise tax, together
with any interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), as determined in this Subsection IV(e), the Company shall pay to
Executive an additional amount such that the net amount retained by Executive,
after any federal, state, and local income and employment tax and Excise Tax
payable by Executive upon the Payment(s) provided for by this Subsection
IV(e)(i), and any interest, penalties or additions to tax payable by Executive
with respect thereto shall be equal to the Excise Tax imposed on the Payments
(the "Gross-Up Payment(s)"). The intent of the parties is that the Company
shall be responsible in full for, and shall pay, any and all Excise Tax on any
Payments and Gross-Up Payment(s) and any income and all excise and employment
taxes (including, without limitation, penalties and interest) imposed on any
Gross-Up Payment(s) as well as any loss of deduction caused by or related to the
Gross-Up Payment(s).
(ii) All determinations required to be made under this Subsection IV(e),
including, without limitation, whether and when a Gross-Up Payment is required,
and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determinations, unless otherwise set forth in this Amended
Agreement, shall be made by a nationally recognized certified public accounting
firm selected by the Company and reasonably acceptable to Executive (the
"Accounting Firm"). For purposes of determining the amount of any Gross-Up
Payment, Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made, and state and local income taxes at the highest
marginal rate of taxation in the state and locality of Executive's residence on
the Termination Date, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes. The Company
shall cause the Accounting Firm to provide detailed supporting calculations to
the Company and Executive within fifteen (15) business days after notice is
given by Executive to the Company that any or all of the Payments have occurred,
or such earlier time as is requested by the Company. Within two (2) business
days after such notice is given to the Company, the Company shall instruct the
Accounting Firm to timely provide the data required by this Subsection IV(e)(ii)
to Executive. All fees and expenses of the Accounting Firm shall be paid in
full by the Company. Any Gross-Up Payment as determined pursuant to this
Subsection IV(e)(ii) shall be paid by the Company to the Executive within five
(5) business days after receipt of the Accounting Firm's determination, net of
applicable withholding taxes. If the Accounting Firm determines that there is
substantial authority (within the meaning of Section 6662 of the Code) that no
Excise Tax is payable by Executive, the Accounting Firm shall furnish Executive
with a written opinion that failure to disclose or report the Excise Tax on
Executive's federal income tax return will not constitute a substantial
understatement of tax or be reasonably likely to result in the imposition of a
negligence or any other penalty. Any determination by the Accounting Firm shall
be binding upon the Company and Executive in the absence of material
mathematical or legal error. As a result of the uncertainty in the application
of Section 4999 of the Code at the time the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments will not have
been made by the Company that should have been made or that Gross-Up Payments
will have been made that should not have been made, in each case, consistent
with the calculations required to be made hereunder. In the event the Company
exhausts its remedies pursuant to Subsection IV(e)(iii) below and Executive is
thereafter required to make a payment of any Excise Tax or any interest,
penalties or addition to tax related thereto, the Accounting Firm shall
determine the amount of underpayment of Excise Taxes that has occurred and any
such underpayment and interest, penalties or addition to tax shall be promptly
paid by the Company to Executive along with such additional amounts described in
Section (IV)(e)(i). In the event the Accounting Firm determines that an
overpayment of Gross-Up Payment(s) has occurred, any such overpayment shall be
treated for all purposes as a loan to Executive with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code, due and payable
within ninety (90) days after written demand to Executive by the Company;
provided, however, that Executive shall have no duty or obligation whatsoever to
repay such loan if Executive's receipt of the overpayment, or any portion
thereof, is included in Executive's income and Executive's repayment of the same
is not deductible by Executive for federal and state income tax purposes.
(iii) Executive shall notify the Company in writing of any claim of
which Executive is aware by the Internal Revenue Service or state or local
taxing authority, that, if successful, would result in any Excise Tax or an
underpayment of any Gross-Up Payment(s). Such notice shall be given as soon as
practicable but no later than fifteen (15) business days after Executive is
informed in writing of the claim by the taxing authority and Executive shall
provide written notice of the Company of the nature of the claim, the
administrative or judicial appeal period, and the date on which any payment of
the claim must be paid. Executive shall not pay any portion of the claim prior
to the expiration of the thirty (30) day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on the
date that any amount under the claim is due). If the Company notifies Executive
in writing prior to the expiration of such thirty (30) day period that it
desires to contest the claim, Executive shall:
(A) give the Company any information reasonably requested by the Company
relating to the claim;
(B) take such action in connection with contesting the claim as the Company
shall reasonably request in writing from time to time, including without
limitation, accepting legal representation concerning the claim by an attorney
selected by the Company who is reasonably acceptable to Executive; and
(C) cooperate with the Company in good faith in order to effectively contest
the claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, without limitation, additional interest and penalties and
attorneys' fees) incurred in such contests and shall indemnify and hold
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including, without limitation, interest and penalties thereon) imposed as a
result of such representation. Without limitation upon the foregoing provisions
of this Subsection IV(e)(iii), except as provided below, the Company shall
control all proceedings concerning such contest and, in its sole opinion, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority pertaining to the claim. At the written
request of the Company and upon payment to Executive of an amount at least equal
to any amount necessary to obtain the jurisdiction of the appropriate taxing
authority and sue for a refund, Executive agrees to prosecute in cooperation
with the Company any contest of a claim to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company requests Executive to pay the claim and sue for a refund, the Company
shall advance the amount of such payment to Executive, on an interest-free
basis, and shall indemnify and hold Executive harmless on an after-tax basis,
from any Excise Tax or income tax (including, without limitation, interest and
penalties thereon) imposed on such advance or for any imputed income on such
advance. Any extension of the statute of limitations relating to assessment of
any Excise Tax for the taxable year of Executive which is the subject of the
claim is to be limited solely to the claim. Furthermore, the Company's control
of the contest shall be limited to issues for which a Gross-Up Payment would be
payable hereunder. Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(iv) If after the receipt by Executive of an amount advanced by the
Company pursuant to Subsection IV(e)(iii) above, Executive receives any refund
of a claim or any additional amount that was necessary to obtain jurisdiction,
Executive shall promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by the Company pursuant to
Subsection IV(e)(iii) above, a determination is made that Executive shall not be
entitled to any refund of the claim, and the Company does not notify Executive
in writing of its intent to contest such denial of refund of a claim prior to
the expiration of thirty (30) calendar days after such determination, then the
portion of such advance attributable to a claim shall be forgiven by the Company
and shall not be required to be repaid by Executive. The amount of such advance
attributable to a claim shall offset, to the extent thereof, the amount of the
underpayment required to be paid by the Company to Executive.
(f) Legal Fees and Expenses. The Company shall pay to Executive all
--------------------------
legal fees and expenses as and when incurred by Executive in connection with
this Amended Agreement, including all such fees and expenses, if any, incurred
in contesting or disputing any Termination or in seeking to obtain or enforce
any right or benefit provided by this Amended Agreement, regardless of the
outcome, unless, in the case of a legal action brought by or in the name of
Executive, a decision is rendered pursuant to Section XI, or in any other proper
legal proceeding, that such action was not brought by Executive in good faith.
(g) No Mitigation. Executive shall not be required to mitigate the
--------------
amount of any payment provided for in this Section IV by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for in this Section IV be reduced by any compensation earned by Executive as the
result of employment by another employer or by retirement or other benefits
received from whatever source after the Termination Date or otherwise, except as
specifically provided in this Section IV. The Company's obligation to make
payments to Executive provided for in this Amended Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action that the
Company or Employer may have against Executive or other parties.
V. Death and Disability Benefits.
--------------------------------
In the event of the death or Disability of Executive after a Change of Control,
Executive, or in the case of death, Executive's Beneficiaries (as defined below
in Subsection VI(b)), shall receive the benefits to which Executive or his/her
Beneficiaries are entitled under this Amended Agreement and any and all
retirement plans, pension plans, disability policies and other applicable plans,
programs, policies, agreements or arrangements of the Company.
VI. Successors; Binding Agreement.
-------------------------------
(a) Obligations of Successors. The Company will require any successor
--------------------------
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Amended Agreement in the same manner
and to the same extent that the Company is required to perform it. Failure of
the Company to obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Amended Agreement and shall
entitle Executive to compensation from the Company in the same amount and on the
same terms as Executive would be entitled hereunder if Executive had terminated
employment for Good Reason following a Change of Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date. As used in this Amended
Agreement, the term "Company" shall mean Company, including any surviving entity
or successor to all or substantially all of its business and/or assets and the
parent of any such surviving entity or successor.
(b) Enforceable by Beneficiaries. This Amended Agreement shall inure
------------------------------
to the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees (the "Beneficiaries"). In the event of the death of
Executive while any amount would still be payable hereunder if such death had
not occurred, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Amended Agreement to Executive's
Beneficiaries.
(c) Employment. Except in the event of a Change of Control and,
----------
thereafter, only as specifically set forth in this Amended Agreement, nothing in
this Amended Agreement shall be construed to (i) limit in any way the right of
the Company or a Subsidiary to terminate Executive's employment at any time for
any reason or for no reason; or (ii) be evidence of any agreement or
understanding, expressed or implied, that the Company or a Subsidiary will
employ Executive in any particular position, on any particular terms or at any
particular rate of remuneration.
VII. Confidential Information.
-------------------------
Executive shall hold in fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company,
the Subsidiaries and their respective businesses, which shall have been obtained
during Executive's employment with the Employer and which shall not be public
knowledge (other than by acts by Executive or his/her representatives in
violation of this Amended Agreement). After termination of Executive's
employment with the Company or any Employer within the Controlled Group,
Executive shall not, without prior written consent of the Company or the
Employer, communicate or divulge any such information, knowledge or data to
anyone other than the Company, the Employer or those designated by them. In no
event shall an asserted violation of this Section VII constitute a basis for
deferring or withholding any amounts otherwise payable to Executive under this
Amended Agreement.
VIII. Notice.
------
All notices and communications including, without limitation, any Notice of
Termination hereunder, shall be in writing and shall be given by hand delivery
to the other party, by registered or certified mail, return receipt requested,
postage prepaid, or by overnight delivery service, addressed as follows:
If to Executive:
Name
Title
Company
Address
Address
If to the Company:
Energizer Holdings, Inc.
533 Maryville University Drive
St. Louis, MO 63141
Attn: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be deemed given
and effective when actually received by the addressee.
IX. Miscellaneous.
-------------
No provision of this Amended Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by Executive and the Company's Chief Executive Officer or other authorized
officer designated by the Board or an appropriate committee of the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any conditions or provision of this Amended
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Amended Agreement. The
validity, interpretation, construction and performance of this Amended Agreement
shall be governed by the laws of the State of Missouri. All references to
sections of the Code or the Exchange Act shall be deemed also to refer to any
successor provisions of such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law. The obligations of the Company under Sections IV and V shall survive
the expiration of the term of this Amended Agreement.
X. Validity.
--------
The invalidity or unenforceability of any provision of this Amended Agreement
shall not affect the validity or enforceability of any other provision of this
Amended Agreement, which shall remain in full force and effect.
XI. Arbitration.
-----------
Executive may agree in writing with the Company (in which case this Article XI
shall have effect but not otherwise) that any dispute that may arise directly or
indirectly in connection with this Amended Agreement, Executive's employment or
the termination of Executive's employment, whether arising in contract, statute,
tort, fraud, misrepresentation, discrimination or other legal theory, shall be
resolved by arbitration in City, State under the applicable rules and procedures
of the AAA. The only legal claims between Executive and the Company or any
Subsidiary that would not be included in this agreement to arbitration are
claims by Executive for workers' compensation or unemployment compensation
benefits, claims for benefits under a Company or Subsidiary benefit plan if the
plan does not provide for arbitration of such disputes, and claims by Executive
that seek judicial relief in the form of specific performance of the right to be
paid until the Termination Date during the pendency of any applicable dispute or
controversy. If this Article XI is in effect, any claim with respect to this
Amended Agreement, Executive's employment or the termination of Executive's
employment must be established by a preponderance of the evidence submitted to
an impartial arbitrator. A single arbitrator engaged in the practice of law
shall conduct any arbitration under the applicable rules and procedures of the
AAA. The arbitrator shall have the authority to order a pre-hearing exchange of
information by the parties including, without limitation, production of
requested documents, and examination by deposition of parties and their
authorized agents. If this Article XI is in effect, the decision of the
arbitrator: (i) shall be final and binding, (ii) shall be rendered within
ninety (90) days after the impanelment of the arbitrator, and (iii) shall be
kept confidential by the parties to such arbitration. The arbitration award may
be enforced in any court of competent jurisdiction. The Federal Arbitration
Act, 9 U.S.C. 1 et seq., not state law, shall govern the arbitrability of all
claims.
XII. Entire Agreement.
This Amended Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof, and supercedes and replaces,
in its entirety, the [Amended Change of Control Employment Agreement dated as of
February 1, 2001] [Change of Control Employment Agreement dated as of September
17, 2001]. Upon the execution of this Amended Agreement by the Executive and
the Company, said prior agreement shall be considered null and void and of no
further effect.
IN WITNESS WHEREOF, the Company and Executive have executed this Amended
Agreement effective as of the 19th day of November, 2001.
Energizer Holdings, Inc. Attest:
By:___________________________________ By:_____________________
J. Patrick Mulcahy Timothy L. Grosch
Chief Executive Officer Secretary
______________________________________ ______________________
Executive Witness
RECIPIENTS
J. P. Mulcahy
P. C. Mannix
W. M. Klein
R. J. Rose
D. J. Sescleifer
H. L. Strachan
P. J. Conrad
J. W. McClanathan
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>doc3.txt
<DESCRIPTION>REV. NEG. EMPLOY AGMT & RELEASE
<TEXT>
REVISED NEGOTIATED EMPLOYMENT AGREEMENTAND GENERAL RELEASE
----------------------------------------------------------
This Revised Negotiated Employment Agreement and General Release (referred
to as "Revised Negotiated Employment Agreement") is entered into this ____ day
of ________________, 2000, by and between Daniel E. Corbin, (referred to as "MR.
CORBIN") and Eveready Battery Company, Inc. (as defined in Paragraph 22 and
referred to as "COMPANY").
WHEREAS, MR. CORBIN is a long-term employee of the COMPANY in a key
position; and
WHEREAS, COMPANY has decided to make management changes in response to
business developments, but would benefit from MR. CORBIN's assistance in
transitioning to these changes; and
WHEREAS, MR. CORBIN and COMPANY are amicably limiting and concluding their
employment relationship and wish to enter into this Agreement;
NOW THEREFORE, in consideration of the mutual promises contained in this
Revised Negotiated Employment Agreement, the parties agree as follows:
1. Employment Terms, subject to Paragraphs 4, 5 and 6 below:
-----------------------------------------------------------------
a. MR. CORBIN shall execute a written resignation from his position as
an officer of Energizer Holdings, Inc. and also as an officer and/or director of
Eveready Battery Company, Inc. and any affiliates or subsidiaries of Energizer
Holdings, Inc. effective upon execution of this Revised Negotiated Agreement.
This resignation letter shall be in line with COMPANY's specifications and
submitted to the Chief Executive Officer of COMPANY upon execution of this
Revised Negotiated Employment Agreement.
b. Upon the effective date of the resignation set out in Paragraph 1(a)
above, through January 1, 2003, MR. CORBIN will be employed by COMPANY in the
position of Vice President, Special Projects, for Eveready Battery Company, Inc.
MR. CORBIN will be paid the base monthly salary he earned as of October 1, 2000.
MR. CORBIN will perform those duties or special projects that are specifically
requested by the Chief Executive Officer of the Company or his designee. MR.
CORBIN shall make arrangements to be available for questions and/or special
projects, as assigned at COMPANY's discretion, on business days, except
scheduled COMPANY holidays and the periods of November 22, 2000 through December
31, 2000; January 2, 2001 through February 6, 2001; and January 2, 2002 through
February 6, 2002, which time periods shall constitute and be deemed MR. CORBIN's
remaining 2000 paid time off allotment and the full annual allotment of paid
time off (PTO) for 2001 and 2002. MR. CORBIN may perform such duties and
projects from his residence or any other location, except when MR. CORBIN and
COMPANY mutually agree that to do so would negatively impact COMPANY's
operations.
c. MR. CORBIN agrees satisfactorily to perform his duties as assigned
without disruption to COMPANY operations or injury to COMPANY's business
operations or reputation.
d. MR. CORBIN will receive a bonus payment of one hundred
twenty-five thousand ($125,000), less legally required deductions, for Fiscal
Year 2001 and a bonus payment of one hundred twenty-five thousand ($125,000),
less legally required deductions, for Fiscal Year 2002. MR. CORBIN will not be
eligible for or receive a bonus payment for Fiscal Year 2003. MR. CORBIN will
receive the payments set out in this subparagraph on November 30, 2001 and
November 30, 2002. This Revised Negotiated Agreement will not be deemed to
prohibit or affect Mr. CORBIN's eligibility for or receipt of a bonus payment,
pursuant to the COMPANY's Incentive Pay Program, for Fiscal Year 2000.
e. The terms of the Retention Agreement entered into by COMPANY with MR.
CORBIN on September 17, 1999, will remain in full effect and nothing in this
Revised Negotiated Employment Agreement will be deemed to affect MR. CORBIN's
eligibility for any payment pursuant to that Retention Agreement.
f. Effective January 4, 2002, MR. CORBIN no longer will be required to be
available for work or to perform any further duties for COMPANY, except as may
be specifically requested by the Chief Executive Officer of COMPANY, so that MR.
CORBIN may begin to seek opportunities for employment elsewhere.
g. Effective January 1, 2003, MR. CORBIN's employment will be terminated, he
will be removed from the active payroll and may, if he so chooses, transfer to
retiree status at that time.
h. MR. CORBIN may retain possession of the COMPANY-provided cellular phone
in his possession as of October 1, 2000. MR. CORBIN will switch the mailing
address for the bill to his home and, as needed, will submit an expense report
to COMPANY for all charges related to COMPANY's business. The COMPANY agrees
that the cellular telephone number shall be transferred to MR. CORBIN and the
parties agree to execute any documents required to complete such transfer.
i. No later than January 3, 2001, MR. CORBIN may elect to keep the
office furniture assigned to him as of October 1, 2000. It is understood and
agreed that the fair market value of said furnishings shall be reflected in MR.
CORBIN's W-2 as income to MR. CORBIN and that MR. CORBIN shall be solely
responsible for arranging to have such furniture moved to whatever location is
selected by MR. CORBIN.
j. Benefit Plan Participation.
i. While he is on the payroll, MR. CORBIN shall continue to be able to
participate in the benefit plans offered to other salaried employees of COMPANY
and to other executives at MR. CORBIN's job grade and title. It is understood
and agreed that nothing in this paragraph shall be construed to prevent COMPANY,
its affiliates or its subsidiaries from terminating, modifying or reducing any
of the benefit plans or incentive programs
offered to employees of COMPANY during the course of this Revised Negotiated
Employment Agreement, as long as such action is not directed solely at MR.
CORBIN.
ii. MR. CORBIN is not entitled to and will not receive any other payments,
including, but not limited to, severance, incentive or termination payments,
from COMPANY or its affiliates or subsidiaries and will be deemed ineligible to
participate in any such programs except as specifically identified in this
Agreement.
k. Within two weeks after his removal from the payroll, MR. CORBIN will be
paid for any unused, banked, or carryover paid time off (PTO) days, in
accordance with Eveready policy in effect at the time. MR. CORBIN will not earn
or be entitled to any paid time off otherwise allocated on January 1, 2003, for
time on the payroll in 2002.
2. Deferred Compensation, Stock Awards, Restricted Stock Equivalent
--------------------------------------------------------------------
Award:
--
a. The terms of COMPANY's Deferred Compensation Plan will apply to MR.
CORBIN's termination of employment and retirement in 2003, or earlier date
pursuant to Paragraphs 4, 5 or 6 below, in accordance with that status as of his
payroll removal date. It is understood that nothing in this paragraph shall be
construed to prevent COMPANY from terminating, modifying or reducing the terms
of its Deferred Compensation Plan during the course of this Revised Negotiated
Employment Agreement, as long as such action is not directed solely at MR.
CORBIN.
b. MR. CORBIN previously was granted certain non-qualified stock
options. The terms of those stock option agreements will continue to apply, in
accordance with MR. CORBIN's status as of his payroll removal date.
c. COMPANY and MR. CORBIN hereby mutually agree that the
Restricted Stock Equivalent Award Agreement previously entered into on May 8,
2000, between COMPANY and MR. CORBIN is, upon mutual execution of this
Negotiated Employment Agreement, void and of no further effect, that MR. CORBIN
shall have no further rights under that Restricted Stock Equivalent Award
Agreement, and that MR. CORBIN's deferral into COMPANY's Deferred Compensation
Plan of his payment pursuant to the Retention Agreement entered into by COMPANY
with MR. CORBIN on September 17, 1999, shall be subject solely to the terms of
COMPANY's Deferred Compensation Plan, specifically including, but not limited
to, those provision establishing and governing matching contributions by
COMPANY. The parties acknowledge that the matching contribution rate under the
terms of the Deferred Compensation Plan as of the execution of this Revised
Negotiated Employment Agreement is 25% of eligible deferred compensation,
subject to all other plan provisions, and also acknowledge that the COMPANY may
amend this or any other provision of the Deferred Compensation Plan from time to
time, in its business discretion and in accordance with plan procedures.
3. Pension Benefit:
----------------
MR. CORBIN's retirement benefits under the Energizer Holdings, Inc.
Retirement Plan and the Supplemental Retirement Plan, or any successor plans,
will be calculated in accordance with the terms of each plan taking into account
all relevant terms of such plans including, but not limited to, reduction
factors for early retirement and social security offsets. It is understood that
nothing in this paragraph shall be construed to prevent COMPANY or its
affiliates and subsidiaries from reducing the rate of future accruals or
terminating or modifying the terms of such retirement plans or successor plans,
as long as such action is not directed solely at MR. CORBIN.
4. MR. CORBIN and COMPANY understand and agree that, if MR. CORBIN
resigns or obtains and begins employment with another company on or prior to
--------------------
January 1, 2003, COMPANY will terminate MR. CORBIN immediately by removing MR.
CORBIN from COMPANY's payroll. Upon termination, MR. CORBIN's benefits as an
active employee will cease. Any remaining salary continuation through January
1, 2003, and bonus payment provided for in Paragraph 1(d), will be paid to MR.
CORBIN in a lump sum, less legally required deductions, within two weeks of MR.
CORBIN's last day on the payroll. Part-time employment or self-employment or
occasional consultation shall not constitute beginning employment under this
Paragraph, subject to the confidentiality and non-competition obligations set
out in Paragraphs 8, 9, 10 and 11 below.
5. MR. CORBIN and COMPANY understand and agree that, if MR. CORBIN
obtains and begins employment within COMPANY or any of its affiliates or
---------------
subsidiaries prior to January 1, 2003 in another position, this Revised
Negotiated Employment Agreement will become null and void and, unless a new
employment contract is executed in writing, COMPANY no longer will be obligated
in any way to provide employment MR. CORBIN on its payroll for any specific
amount of time in the future or to pay the bonus payments set out in Paragraph
1(d) or any bonus payment.
6. In the event of MR. CORBIN's death prior to January 1, 2003, the COMPANY
agrees to the following:
a. to pay a lump sum payment equivalent to the amount of any remaining
salary continuation through January 1, 2003, pursuant to Paragraph 1(b, f, and
g) above, payable to MR. CORBIN's designated beneficiary, or in lieu of
designated beneficiary, to MR. Corbin's estate within thirty days of
notification of MR. Corbin's death.
b. to pay the bonus payments provided for in paragraph 1(d) above,
payable to MR. CORBIN's designated beneficiary, or in lieu of designated
beneficiary, to MR. CORBIN's estate within thirty days of notification of MR.
CORBIN's death.
<PAGE>
7. Obligation of MR. CORBIN:
---------------------------
a. MR. CORBIN shall notify COMPANY within two days of being offered and
accepting another position, if MR. CORBIN accepts a position to commence before
January 1, 2003;
b. MR. CORBIN waives all claims to future employment with COMPANY
except as provided in this Revised Negotiated Employment Agreement. MR. CORBIN
will not seek re-employment with COMPANY and, if a third party identifies MR.
CORBIN as a candidate, COMPANY may reject such application.
c. MR. CORBIN shall cooperate with and assist COMPANY whenever
reasonably possible, so that all of his duties, responsibilities and pending
matters can be transferred in an orderly way;
d. MR. CORBIN shall provide COMPANY with full cooperation and
assistance, upon COMPANY's request, including testifying at all trials, when MR.
CORBIN might have relevant information. COMPANY shall pay MR. CORBIN, at an
hourly rate derived from MR. CORBIN's base monthly salary during the term of
this Revised Negotiated Employment Agreement, for time expended in preparation
of trial, including but not limited to review of records and files, attendance
at and review of depositions, attendance at conferences with counsel, attendance
at trial and assistance with post trial and appeal issues and matters and for
any reasonable and necessary expenses because of his requested cooperation with
and assistance to COMPANY.
8. Confidentiality of Information:
--------------------------------
MR. CORBIN acknowledges that the information, observations and data
relating to the formulation, processing, manufacturing, sale and marketing of
COMPANY's battery and battery related products obtained by MR. CORBIN during the
course of MR. CORBIN's employment with COMPANY, its subsidiaries and affiliated
companies and its predecessors (the "Confidential Information") are confidential
and the exclusive property of COMPANY/or such companies. MR. CORBIN agrees that
he will not disclose to any unauthorized persons or use for MR. CORBIN's own
account or for the benefit of any third party (other than COMPANY) any of such
"Information" without COMPANY's prior written consent, unless and to the extent
that such "Confidential Information" became generally known to and available for
use by the public other than as a result of MR. CORBIN's acts or omissions to
act. Such "Confidential Information", observations and data shall include, but
not be limited to, COMPANY's and its affiliates current and planned information
systems, the names, addresses or particular desires or needs of its customers,
the bounds of its markets, the prices charged for its services or products, its
market share, marketing strategies and promotional efforts in any market,
information concerning product development, manufacturing processes, research
and development projects, formulas, inventions and compilations of information,
records or specifications, information concerning future product or market
developments, financial information, information regarding suppliers and costs
of raw materials and other supplies, financing programs, overhead distribution
and other expenses, or conversion costs. MR. CORBIN understands and agrees that
such "Confidential Information" is important, material and confidential, and
that disclosure would gravely affect the successful conduct of COMPANY's and its
affiliates' businesses. The obligation to protect confidential Information is
------------------------------------------------------
on-going and does not expire upon the termination of the Parties' contractual
-------------------------------------------------------------------------------
relationship.
------------
9. Subject to Paragraph 1(h and i) above, by January 2, 2002, or
mutually agreed earlier date, MR. CORBIN warrants and represents that he will
return and deliver to COMPANY's designated representative all memoranda, notes,
plans, programs, records, reports, and other documentation (and copies thereof)
relating to the business of COMPANY, its affiliates, and its predecessors which
MR. CORBIN possesses or has under his possession now or in the future,
including, but not limited to, computer hardware, software, data and disks,
draft books, memoranda, notes, plans, programs, records, reports, and other
documentation (and copies thereof) relating to COMPANY, a Company provided car,
office equipment and supplies, credit cards, cash advances and, if applicable,
any outstanding final expense report.
10. Non-Interference and Related Agreements:
------------------------------------------
For the duration of this Revised Negotiated Employment Agreement and a
period of twelve (12) months after MR. CORBIN is removed from COMPANY's payroll,
MR. CORBIN shall not (i) induce or attempt to induce any employee of COMPANY to
leave the employ of COMPANY or in any way interfere with the relationship
between COMPANY and its employees or (ii) induce or attempt to induce any
customer, supplier, distributor, broker or other business relation of COMPANY to
cease doing business with the COMPANY, or in any way interfere with the
relationship between any customer, supplier, distributor, broker or other
business relation and COMPANY.
11. Non Competition
----------------
a. For the duration of this Revised Negotiated Employment Agreement and a
period of twelve (12) months after MR. CORBIN is removed from COMPANY's payroll,
MR. CORBIN will not compete against COMPANY in COMPANY business.
b. Definition of "COMPANY Business"
-----------------------------------
For purposes of this Revised Negotiated Employment Agreement, the
term "COMPANY Business" shall mean any company that owns or operates a business
or facility that engages in any of the following business activities: (i)
manufacturing, marketing, distributing and/or consulting on and or operating a
facility for, the manufacturing, processing, marketing or distributing of
batteries, lighting products, rechargeable batteries and related battery and
lighting products; (ii) purchasing or producing materials for use as, and
marketing and distributing and/or consulting on the purchasing, producing or
marketing or distributing of such products or materials; and (iii) marketing and
distributing, and/or consulting regarding the marketing or distributing, of such
related products or materials. This obligation extends to the products and/or
methods that presently are used, or were used, or are or were under development
or consideration, whether or not completed, for use in COMPANY Business as of
the date MR. CORBIN's employment ends for any reason. MR.
CORBIN understands that this definition applies only to this Revised Negotiated
Employment Agreement. Any other restrictions on competition in other plan,
policies or arrangements, including, but not limited to, those restrictions in
the Fixed Benefit Option of the Deferred Compensation Plan for Key Employees,
shall continue to apply as they exist now or may be modified by COMPANY in the
future, as long as such modifications are not directed solely at MR. CORBIN.
c. For the purpose of this Revised Negotiated Employment Agreement, to
"compete" means to accept or begin employment with, advise, finance, own
(partially or in whole), consult with, or accept an assignment through an
employer with any third party worldwide in a position involving or relating to
COMPANY Business.
d. This Revised Negotiated Employment Agreement does not prevent MR. CORBIN
from buying or selling stock in any company that is publicly listed and traded
in any stock exchange or the over-the-counter market. However, MR. CORBIN may
not use Confidential Information to engage in, or induce others to engage in,
insider trading as prohibited by federal and state securities laws.
12. Release and Waiver:
--------------------
The promises and payments contained in this Agreement, including
Paragraphs 1 (except 1(k)), 4, and 6 above, are in addition to any wages to
which MR. CORBIN already is entitled because of his work for COMPANY. MR.
CORBIN agrees to accept the promises and terms in these Paragraphs in
consideration for the settlement, waiver and release and discharge of any and
all claims or actions against COMPANY arising under any federal, state, or local
statute, law, or regulation pertaining to employment discrimination on the basis
of age, religion, disability, marital status, or any other reason established by
law, including any claim of actual or constructive wrongful discharge.
13. Promise Not to Sue:
---------------------
a. MR. CORBIN makes the following promises not to sue:
i. MR. CORBIN releases, settles and forever discharges
COMPANY, including its agents and Employees, from any and all claims, causes of
action, rights, demands, debts, or damages of whatever nature, whether or not
MR. CORBIN currently knows of them, which might have arisen from MR. CORBIN's
employment with and retirement from COMPANY and which may be brought by MR.
CORBIN or another person or agency on MR. CORBIN's behalf. This includes, but
is not limited to, any claim MR. CORBIN might raise under contract or tort law
for actual or constructive wrongful discharge, except those claims which the
------
parties specifically have excluded from this release and identified in Paragraph
15 below and except for a breach by COMPANY of a material provision of this
Agreement.
ii MR. CORBIN expressly releases COMPANY from any and all
legal liability and waives all claims, demands, or causes of action which MR.
CORBIN, or any person or agency acting on MR. CORBIN's behalf, may have against
COMPANY, its agents, representatives, and employees under all federal, state,
and/or local laws regulating employment, including but not limited to, all
discrimination claims under the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act, the Americans with Disabilities Act, Civil
Rights Act known as 42 USC 1981, the Handicap Discrimination Act, the Missouri
Human Rights Act, as amended, Section 213.010 et seq., the Missouri Service
Letter Statute, as amended, Section 290.140 R.S.Mo., the Family and Medical
Leave Act of 1994, and the Older Worker Benefit Protection Act.
b. The COMPANY releases, settles, and forever discharges MR. CORBIN from any
and all claims, causes of actions, rights demands, debts, or damages of whatever
nature, whether or not COMPANY currently knows them, which might have arisen
from MR. CORBIN's actions or omissions within the scope of his duties during his
employment with the COMPANY and retirement from COMPANY and which may be brought
by the COMPANY or another person or agency on the COMPANY's behalf. This
includes, but is not limited to, any claim COMPANY might raise under contract or
tort law and also includes any claims arising under federal, state, and/or local
laws regulating employment.
14. Penalty for Violation:
-----------------------
In the event that MR. CORBIN brings a cause of action against COMPANY
in violation of Paragraph 17, 10, 12, or 13 above, MR. CORBIN understands and
agrees to repay to COMPANY with interest the value of the salary continuation
and benefits paid to him under Paragraph 1 (except 1(k)) of this Revised
Negotiated Employment Agreement which are paid to MR. CORBIN as consideration
for the promises made by MR. CORBIN in this Agreement as well as the costs of
any attorney fees to recover such.
15. Excluded Claims:
----------------
This Agreement shall not affect MR. CORBIN's right to raise any claims
based on any Social Security, or Workers' Compensation laws, or based on the
terms in effect at the time the claim is raised of the Energizer Holdings, Inc.
Retirement Plan, Supplemental Retirement Plan, Deferred Compensation Plan,
Savings Investment Plan, Executive Savings Investment Plan, Executive Life and
Health Plans, retiree benefits under the Energizer Medical Plan, and any and all
other executive or employee benefit plans or programs through which he may be
legally entitled to benefits as a result of his employment with COMPANY or
subsequent retirement.
16. Benefit Earnings:
-----------------
It is understood and agreed that only the salary continuation and payments
identified in Paragraphs 1(b), (d), (e), (f) and (k) will be considered benefit
earnings for applicable benefit plans maintained by COMPANY. Any other monies
paid to MR. CORBIN pursuant to this Revised Negotiated Employment Agreement
shall not constitute earnings for benefit plan purposes.
<PAGE>
17. Confidentiality:
---------------
MR. CORBIN agrees not to talk about, write about, or otherwise
disclose the existence of this Revised Negotiated Employment Agreement, the
terms of this Revised Negotiated Employment Agreement, or any fact concerning
its negotiation, execution, or implementation to any person, firm, or
corporation, other than to MR. CORBIN's spouse, financial advisor or attorney,
unless MR. CORBIN is required to do so by federal, state, or local law, or by a
court of competent jurisdiction. If MR. CORBIN discloses the terms of this
Revised Negotiated Employment Agreement to MR. CORBIN's spouse, financial
advisor or attorney, MR. CORBIN shall advise that confidentiality is an
essential part of this Revised Negotiated Employment Agreement and advise each
that they are bound by the confidentiality clause. MR. CORBIN understands that
COMPANY will only disclose the terms of this Revised Negotiated Employment
Agreement if it reasonably concludes that it is legally bound to do so.
18. Full Revised Negotiated Employment Agreement:
------------------------------------------------
This Revised Negotiated Employment Agreement is intended to finally
and fully define and conclude the employment relationship between MR. CORBIN and
COMPANY and may be amended only by an agreement in writing signed by the parties
hereto. This Revised Negotiated Employment Agreement shall not be interpreted
as an admission by COMPANY, its affiliates or its subsidiaries or MR. CORBIN of
any wrongdoing or any violation of federal, state or local law, regulation, or
ordinance. The COMPANY specifically denies that it, or its agents, supervisors,
representatives, or employees of COMPANY, its affiliates or subsidiaries, have
ever committed any wrongdoing whatsoever against MR. CORBIN.
19. Effect in the Event of Unenforceability:
--------------------------------------------
If, at the time of enforcement of any of the provisions of this
Revised Negotiated Employment Agreement, but particularly Paragraphs 8, 9, 10,
and 11 above, a court holds that the restrictions stated herein are unreasonable
under the circumstances then existing, the parties agree that the maximum
period, scope or geographical area reasonable under the circumstances will be
substituted for the stated period, scope or area.
20. Severability:
------------
In the event that any provision shall be held to be invalid or
unenforceable for any reason whatsoever by a court of competent jurisdiction it
is agreed such invalidity or unenforceability shall not affect any other
provision of this Revised Negotiated Employment Agreement and the remaining
covenants, restrictions and provisions hereof shall remain in full force and
effect, and any court of competent jurisdiction may so modify the objectionable
provision as to make it valid, reasonable and enforceable.
21. Governing Law:
--------------
This Revised Negotiated Employment Agreement will be governed by the
internal law of the State of Missouri and not the law of conflicts.
22. Definition of Company:
-----------------------
For purposes of this Revised Negotiated Employment Agreement,
references to COMPANY shall include all affiliates, subsidiaries, and parent
holding companies of Eveready Battery Company and also shall be deemed to
include all of the officers, directors, agents, and employees of those business
entities.
23. Voluntary Nature of Revised Negotiated Employment Agreement:
-----------------------------------------------------------------
MR. CORBIN expressly acknowledges that he understands all the terms
and effects of this Revised Negotiated Employment Agreement and is entering
voluntarily into this Revised Negotiated Employment Agreement. MR. CORBIN
expressly acknowledges that the COMPANY has given him at least twenty-one (21)
days to consider this Employment Agreement as originally presented and that the
COMPANY also has given him the opportunity to discuss all aspects of this
Revised Negotiated Employment Agreement with an attorney before signing this
Revised Negotiated Employment Agreement. MR. CORBIN states that he has
discussed this Revised Negotiated Employment Agreement or, in the alternative,
has freely elected to waive any remaining part of the twenty-one (21) calendar
days and any further opportunity to discuss this Revised Negotiated Employment
Agreement with an attorney before signing it.
24. Right of Revocation:
---------------------
MR. CORBIN may revoke his acceptance within seven (7) calendar days
after signing this Revised Negotiated Employment Agreement. MR. CORBIN's notice
of revocation must be given to the Vice President, Human Resources, of the
COMPANY in writing within seven (7) calendar days after signing this Revised
Negotiated Employment Agreement in order to be valid and effective. If MR.
CORBIN does revoke this Revised Negotiated Employment Agreement, neither MR.
CORBIN nor COMPANY will be required to satisfy any of the terms of this Revised
Negotiated Employment Agreement. If MR. CORBIN has not revoked his acceptance
---
within seven (7) calendar days, this Revised Negotiated Employment Agreement's
effectiveness will become final.
EVEREADY BATTERY COMPANY, INC.
By:
-----------------------------
Peter J. Conrad
Vice President, Human Resources
Eveready Battery Company, Inc.
- --------------------------------- Signed this _________ day of
Daniel E. Corbin ___________________, 2000.
Signed this _____ day of _____, 2000.
Witness:
Dated:
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>doc4.txt
<DESCRIPTION>DEF. COMP. PLAN ELECTION FORM
<TEXT>
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 Fiscal Year 2001 Incentive Plan Bonus 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 Director's Fee Deferrals in the following
Measurement Funds:
<S> <C> <C> <C>
Energizer Holdings, Inc. Common Stock ____% Vanguard International Growth Fund ____%
Prime Rate Fund ____% Vanguard LifeStrategy Income Fund ____%
Vanguard Wellington Fund ____% Vanguard LifeStrategy Conservative
Vanguard 500 Index ____% Growth Fund ____%
Vanguard Windsor II Fund ____% Vanguard LifeStrategy Moderate Growth ____%
Vanguard Small-Cap Index ____% Vanguard LifeStrategy 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
FAX: (213) 438-6600
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>doc5.txt
<DESCRIPTION>ACKNOW. FOR DEFERRAL OF BONUS FORM
<TEXT>
ACKNOWLEDGMENT FOR DEFERRAL
OF
FISCAL YEAR 2001 INCENTIVE PLAN BONUS
Energizer Holdings, Inc. and acknowledge that, of the
------------ -------
FY2001 Bonus awarded to Participant under the Fiscal Year 2001 Incentive Bonus
Program, shall be deferred, effective November 15, 2001, as previously requested
by Participant, into the Measurement Fund(s) available under the Energizer
Holdings, Inc. Deferred Compenstaion Plan (the "Plan").
Pursuant to Participant's request, the following amounts have been deferred
for Participant in the manner set forth below:
(1) ENERGIZER HOLDINGS, INC. COMMON STOCK MEASUREMENT FUND -
(a) in Energizer common stock equivalents and
------------
(b) in Energizer common stock equivalents,
------------
representing the Company Matching Contribution (25% of amount listed
in 1(a) above).
(2) OTHER MEASUREMENT FUNDS - $0 in other Measurement Funds as previously
selected by Participant.
Participant's deferral as described hereunder is pursuant to the Plan and
is Subject in all respects to the terms and conditions of the Plan. THIS
AGREEMENT SUPERCEDES ANY PREVIOUS AGREEMENT FOR DEFERRAL OF 2001 ANNUAL CASH
BONUS.
ACKNOWLEDGED: ENERGIZER HOLDINGS, INC.
By:
- ---------------------------- --------------------
Peter Conrad
Vice President
Human Resources
- ----------------------------
Date
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>7
<FILENAME>doc6.txt
<DESCRIPTION>FINANCIAL PAGES FROM 2001 ANNUAL REPORT
<TEXT>
<PAGE>
2001 FINANCIAL REVIEW
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Management's Discussion and Analysis of Results of
Operations and Financial Condition........................ 10
Summary Selected Historical Financial Information........... 21
Responsibility for Financial Statements..................... 23
Report of Independent Accountants........................... 24
Consolidated Financial Statements........................... 25
Notes to Consolidated Financial Statements.................. 29
</TABLE>
<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.
Financial statements as of and for periods after the spin-off are 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
1999 are presented on a combined basis and reflect periods during which the
Energizer businesses operated as wholly owned subsidiaries of Ralston. Financial
statements for periods prior to the spin-off do 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 the Pro Forma
Statement of Earnings for the years ended September 30, 2000 and 1999 in Note 22
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
e(2), Energizer and Eveready, as well as miniature and rechargeable batteries,
and flashlights and other lighting products. Energizer and its subsidiaries
operate 22 manufacturing and packaging 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 in consumer preference from carbon zinc
batteries to alkaline batteries. As a result, Energizer has continually
reassessed its production capacity with respect to both types of batteries and
has recorded provisions related to restructuring its worldwide battery
production capacity and certain administrative functions in 2001 and 1999.
Alkaline batteries are now the dominant primary battery in all world areas with
the exception of Asia and Africa. Energizer will continue 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 (the United States, Canada and Caribbean), 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 98% and 77%, respectively, of 2001 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. As measured by A.C. Nielsen,
Energizer's dollar share of the U.S. primary battery market was 32.4% in 2001,
33.5% in 2000 and 32.0% in 1999. However share for the fourth quarter of 2001
declined to 30.0% as competition in the United States has intensified.
The primary battery category declined in calendar 2000 and 2001 after
unprecedented growth levels immediately prior to the January 1, 2000 date change
due to increased demand from retail customers and consumers in anticipation of
potential disruptions related to the date change. Retail inventory levels at
10
<PAGE>
December 31, 1999 were above historical norms due to Y2K-driven ordering.
Following January 1, 2000, consumer demand for batteries has generally lagged
behind historical growth rates, reflecting economic slowdown in much of the
world, and Energizer's sales to the trade have been further reduced as retail
inventory levels have declined.
Currency devaluation, relative to the U.S. dollar, in Australia, New
Zealand, the Philippines and other countries in the Asia Pacific region has been
unfavorable to Energizer during 2000 and 2001. The Euro and certain other
European currencies have also been unfavorable to Energizer in 2000 and most of
2001. A significant portion of Energizer's product cost is more closely tied to
the U.S. dollar than to the local currencies in which the product is sold. As
such, currency devaluation relative to the U.S. dollar reduces margins to the
extent increased costs in local currency terms are not offset by local currency
price increases. Changes in the value of local currencies may continue to impact
segment profitability.
REPORTING PERIOD SYNCHRONIZATION
Energizer historically reported results of international operations on a
one-month lag. As a result, prior year amounts represent results of
international operations for September through August combined with the U.S.
results for October through September. Beginning in fiscal 2001, Energizer has
synchronized international operations' reporting to be consistent with U.S.
reporting.
The impact of the synchronization on the prior year results was to decrease
sales by $28.4 to $1,899.3 and net earnings by $9.0 to $171.2. The impact of the
synchronization on the prior year reported earnings per share was a decrease of
$.09 per share. All statement of earnings-related discussions comparing 2001 to
2000 below refer to comparisons of current period results to synchronized 2000
results. Synchronization adjustments to reported results for fiscal 2000 are
presented in the Note 22 to the Consolidated Financial Statements.
HIGHLIGHTS
Energizer recorded a net loss of $39.0 for the year ended September 30,
2001, compared to net earnings of $181.4 in 2000. The loss per share was $.42,
compared to earnings per basic share of $1.89 and per diluted share of $1.88 in
the prior year. Included in fiscal 2000 results are earnings from continuing
operations of $180.2. Prior year net earnings include a net gain on disposition
of discontinued operations of $1.2, or $.01 per share, related to the final
settlement of the sale of discontinued operations.
Net earnings were $80.0, or $.78 per share, for the year ended September
30, 1999. Included in 1999 net earnings are earnings from continuing operations
of $159.8, a net loss from discontinued operations of $5.6 and a net loss on
disposition of discontinued operations of $74.2.
Earnings from continuing operations decreased $210.2, or $2.21 and $2.20
per basic and diluted share, respectively, in 2001. Current year earnings
include a provision for goodwill impairment of $119.0, provisions for
restructuring of $29.8, or $19.4 after-tax, and income associated with the
licensing of intellectual property rights of $20.0, or $12.3 after-tax. Included
in 2000 results were costs related to the spin-off of $5.5 pre-tax, or $3.3
after-tax, loss on disposition of Spanish affiliate of $15.7, and capital loss
tax benefits of $24.4. Excluding these items, earnings from continuing
operations decreased $78.7, or $.80 per share, in 2001. This decrease was
primarily attributable to lower operating results in the North America and Asia
regions and higher tax rate, partially offset by lower general corporate
expenses and interest.
Earnings from continuing operations increased $20.4, or $.32 and $.31 per
basic and diluted share, respectively, in 2000. Included in 2000 results are the
items listed in the previous paragraph. Fiscal 1999 results included provisions
for restructuring of $9.9 pre-tax, or $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 was 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.
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Discontinued operations consist of Energizer's worldwide rechargeable
Original Equipment Manufacturers' (OEM) battery business. On November 1, 1999,
that business was sold to Moltech Corporation for approximately $20.0.
OPERATING RESULTS
NET SALES
Net sales to customers decreased $205.1, or 11%, in 2001 compared to 2000
with unfavorable pricing and product mix, lower volumes and currency devaluation
each accounting for about one-third of the decline. In 2000, net sales to
customers increased $49.2, or 3%, primarily on growth in North America,
partially offset by declines in Europe. See comments on sales changes by region
in the Segment Results section below.
GROSS MARGIN
Gross margin dollars decreased $172.0, or 20%, in 2001 primarily on lower
sales in North America and Asia Pacific. Gross margin percentage declined 4.7
percentage points in 2001 to 41.0% on lower sales. Gross margin dollars
increased $64.7, or 8%, in 2000 on increases in North America and Asia Pacific,
partially offset by declines in Europe. The margin percentage in 2000 improved
2.2 percentage points to 45.8% compared to 1999 on higher volume and lower
production costs in North America and Asia Pacific as well as lower costs in
South and Central America.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expense decreased $24.5, or 7%, in 2001
on lower corporate, Asia Pacific and Europe expenses. In 2000, selling, general
and administrative expense decreased $23.6, or 6%, on lower corporate and Europe
expenses, partially offset by increases in North America. Selling, general and
administrative expenses were 18.9%, 17.9% and 19.6% of sales in 2001, 2000 and
1999, respectively.
ADVERTISING AND PROMOTION
Advertising and promotion decreased $31.1, or 19%, in 2001 on lower
spending in all world areas. In 2000, advertising and promotion increased $26.9,
or 20%, on higher spending in North America, partially offset by decreases in
Europe. Advertising and promotion as a percent of sales was 7.9%, 8.5% and 7.3%
in 2001, 2000 and 1999, respectively.
SEGMENT RESULTS
Energizer's operations are managed via four major geographic areas -- North
America (the United States, Canada and Caribbean), 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 20 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 20 to the Consolidated Financial Statements. Segment profitability includes
profit on these intersegment sales.
NORTH AMERICA
Net sales to customers decreased $152.9, or 14%, in 2001 with lower volume
accounting for slightly more than half of the decline. Alkaline, carbon zinc and
lighting products unit volume decreased 5%, 4% and 17%, respectively, from 2000,
compared to heavy Y2K demand last year, reflecting retail inventory reductions
this year. Unfavorable pricing and product mix accounted for the remainder of
the sales decline, reflecting increased promotional spending. Gross margin
decreased $120.8 in 2001 on unfavorable pricing and product mix, lower volume
and higher product cost rates associated with lower production levels. Segment
profit decreased $106.2, or 34%, as lower gross margin was partially offset by
lower advertising and promotion expense.
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Net sales to customers increased $92.8, or 9%, 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 e(2) sales in the last four months of the year, accounted
for the increased volume. Gross margin increased $54.1, 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
expense, primarily related to the Energizer e(2) launch, as well as higher
marketing and distribution expenses.
ASIA PACIFIC
Net sales to customers decreased $47.9, or 13%, in 2001. Excluding currency
devaluation of $30.3, net sales decreased $17.6, or 6%, on lower volume
reflecting unfavorable economic conditions in the region. Alkaline, carbon zinc
and lighting products unit volume decreased 6%, 9% and 7%, respectively, from
2000. Segment profit for Asia Pacific decreased $28.2, or 27%, in 2001 with
unfavorable currency effects accounting for $19.0 of the decline. Absent
currencies, segment profit decreased $9.2, or 9%, on lower volume and higher
product cost, partially offset by lower advertising and promotion and overhead
expenses.
Net sales to customers increased $8.7, or 2%, in 2000. Excluding currency
devaluation of $4.3, net sales increased $13.0, 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 on 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.
EUROPE
Net sales to customers for Europe decreased $10.8, or 4%, in 2001, which
included currency devaluation of $24.2. Absent currency effect, sales increased
$13.4, or 5%, on higher volume, partially offset by unfavorable pricing and
product mix in the first three quarters of the year. Alkaline unit volume
increased 19% during 2001 while carbon zinc volume declined 9%. Much of the
volume increase and unfavorable pricing was due to heavy promotional activity
early in the year. Segment results for Europe improved $1.6 for the year to a
loss of $2.6 and included unfavorable currency effects of $13.4. Absent
currencies, segment profit increased $15.0, with higher sales, lower advertising
and promotion expense, and lower product cost accounting for $8.7 of the
increase. In addition, prior year results included an unfavorable adjustment
related to estimates for promotional and rebate programs, as well as costs
related to reorganization activities, improving the year over year comparison by
approximately $6.3.
Net sales to customers for Europe decreased $44.2, 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%. 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, as lower sales were partially offset by lower product and
overhead costs. Lower costs reflected increased efficiencies following a plant
closing and sales and administrative realignment completed in 1999 and early
2000.
SOUTH AND CENTRAL AMERICA
Net sales to customers increased $6.5, or 5%, in 2001 primarily on higher
volume, partially offset by currency devaluation. Alkaline volume increased 5%
in 2001 while carbon zinc volume declined 2%. Segment profit decreased $2.5, or
26%, virtually all on currency impacts. Higher sales volumes were offset by
higher product costs.
Net sales to customers decreased $8.1, 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 $.6, or 2%, as unfavorable currency
impacts of $7.2 were more than offset by lower production costs and 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.
GENERAL CORPORATE EXPENSES
General corporate expenses decreased $16.2 in 2001 compared to 2000 due to
lower incentive and stock compensation costs, higher pension income, and
favorable profit-in-inventory adjustments associated with decreased intercompany
inventory levels, partially offset by higher management costs, including the
incremental costs of operating as a stand-alone company for a full year,
compared to six months in fiscal 2000. General corporate expenses decreased
$16.6 in 2000 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 of operating as a
stand-alone company for the last six months of fiscal 2000. As a percent of
sales, general corporate expenses were 1.2% in 2001, 1.9% in 2000 and 2.9% in
1999.
RESEARCH AND DEVELOPMENT EXPENSE
Research and development expense was $46.4 in 2001, $49.9 in 2000 and $48.5
in 1999. Energizer strives to maintain technological leadership in the primary
battery business. Research and development costs were slightly higher in 2000
and 1999 due to increased activity related to Energizer e(2). As a percent of
sales, research and development expense was 2.7% in 2001 and 2.6% in 2000 and
1999.
GOODWILL IMPAIRMENT CHARGE
Energizer monitors changing business conditions, which may indicate that
the remaining useful life of goodwill and other intangible assets may warrant
revision, or carrying amounts may require adjustment. Continuing unfavorable
business trends in Europe, and the unfavorable costs of U.S. dollar-based
products resulting from currency declines, represent such conditions. As part of
its annual business planning cycle, Energizer performed a thorough evaluation of
its European business in the fourth quarter of fiscal 2001, which resulted in an
impairment charge for $119.0 of related goodwill. At September 30, 2001, the
carrying amount of goodwill related to Energizer's European business was $8.5.
RESTRUCTURING CHARGES
Energizer recorded restructuring charges each year from 1994 through 1999,
and in 2001. These charges included 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 1999 through 2001 follows.
Because there continues to be a migration of consumer demand from carbon
zinc to alkaline batteries, a comprehensive study of Energizer's carbon zinc
facilities to determine the optimum number of carbon zinc manufacturing plants
was completed in the fourth quarter of fiscal 2001. Energizer also reviewed its
worldwide operations in light of competitive market conditions and available
technologies and techniques, and is adjusting its organization accordingly. As a
result, Energizer adopted restructuring plans to eliminate carbon zinc capacity,
and to reduce and realign certain selling, production, research and
administrative functions. The total cost associated with this plan is expected
to be $35.6 before taxes, of which $29.8 ($19.4 after-taxes, or $.21 per share)
was recorded in the fourth quarter, with the remainder expected to be recorded
in the first quarter of fiscal 2002.
These restructuring activities are expected to improve the Company's
operating efficiency, downsize and centralize corporate functions, and decrease
costs. The plans will result in the closure of one carbon zinc production
facility in South and Central America, and the severance of 570 employees,
consisting of 375 production and 195 sales, research and administrative
employees, primarily in the United States and South and Central America.
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The program commenced in the fourth quarter of 2001 and is expected to be
completed during the second quarter of fiscal year 2002. When the program is
fully implemented, the annual pre-tax savings is estimated to be $16.5, in
fiscal year 2002, the pre-tax savings is estimated to be $14.3.
The restructuring charges consist of non-cash fixed asset impairment
charges of $11.1 for the closed carbon zinc plant and production equipment,
enhanced pension benefits for certain terminated U.S. employees of $8.3, cash
severance payments of $6.3, and other cash charges of $4.1.
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 related 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. All
actions associated with these charges were completed as of September 30, 2000.
The remaining $2.5 represented additional net provisions related to prior
years' restructuring plans. Additional termination benefits of $5.5 primarily
represent enhanced severance related to a European plant closing in the 1997
restructuring plan. 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.
Annual pre-tax cost savings from the 1999 restructuring plans are as
follows: $.3 in 2000 and $1.4 thereafter. Annual pre-tax cost savings from prior
restructuring plans have been or are expected to be as follows: $31.0 in 1999
and $36.0 thereafter.
As of September 30, 2001, except for the disposition of certain assets held
for disposal, all activities associated with the 1994 through 1999 restructuring
plans are complete. The carrying value of assets held for disposal under all
restructuring plans was $2.6 at September 30, 2001.
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 that
presents, by major cost component and by year of provision, activity related to
the restructuring charges discussed above during fiscal years 2001, 2000 and
1999 including any adjustments to the original charges.
INTELLECTUAL PROPERTY RIGHTS INCOME
In fiscal 2001, Energizer recorded income of $20.0 pre-tax, or $12.3
after-tax, related to the licensing of intellectual property rights.
COSTS RELATED TO SPIN-OFF
In fiscal 2000, 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.
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LOSS ON DISPOSITION OF SPANISH AFFILIATE
In fiscal 2000, 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 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 22 to the Consolidated Financial
Statements.
INTEREST AND OTHER FINANCIAL ITEMS
Interest expense increased $5.9 in 2001 and $19.9 in 2000, reflecting the
cost of incremental debt assumed by Energizer immediately prior to the spin-off
for a full year and for six months, respectively. Interest expense for the last
six months of 2001 declined $7.6 compared to the same six-month period in 2000,
due to lower average borrowings and lower interest rates.
Other financing-related costs increased $5.9 in 2001, reflecting the
discount on the sale of accounts receivable under a financing arrangement and
lower net exchange gains. Other financing-related costs decreased $4.3 in 2000
compared to 1999, primarily due to lower foreign exchange losses, partially
offset by accounts receivable sales discounts.
INCOME TAXES
Income taxes, which include federal, state and foreign taxes, were 223.8%,
35.5% and 35.6% of earnings from continuing operations before income taxes in
2001, 2000 and 1999, respectively. Earnings before income taxes and income taxes
include certain unusual items in all years, the most significant of which are
described below:
- In 2001, the provision for goodwill impairment of $119.0 has no
associated tax benefit as the charge is not deductible for tax purposes.
The provisions for restructuring of $29.8 have an associated tax rate of
34.9%.
- In 2000, the income tax percentage was favorably impacted by the
recognition of $24.4 U.S. capital loss tax benefits related to the
disposition of Energizer's Spanish affiliate.
- Capital loss tax benefits of $16.6 were recognized in 1999 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 45.7% in 2001, 41.8%
in 2000 and 41.3% in 1999. The higher effective tax rate in 2001 reflects
pre-tax losses in foreign tax jurisdictions for which no tax benefits were
realized and goodwill charges for which there is no tax deduction. The
year-over-year increase was the result of the fixed dollar impact of these items
being spread over a smaller earnings base.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from continuing operations totaled $318.1 in 2001, $289.6 in
2000 and $337.2 in 1999. The increase in cash flows from continuing operations
in 2001 was due primarily to significant inventory reduction in 2001 compared to
a significant inventory increase in 2000, and other working capital improvements
in 2001, partially offset by substantially lower cash earnings in 2001 and
proceeds from sale of accounts receivable in 2000. The decrease in cash flows
from continuing operations in 2000 compared to 1999 was 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.
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Working capital was $288.1 and $401.7 at September 30, 2001 and 2000,
respectively. Capital expenditures totaled $77.9, $72.8 and $69.2 in 2001, 2000
and 1999, respectively. These expenditures were funded by cash flow from
operations. Capital expenditures of approximately $50.0 are anticipated in 2002
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 and $293.7 in 2000 and 1999, respectively.
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 of 2000, Energizer entered into
separate financing agreements and repaid the interim funding facilities. Total
long-term debt outstanding of $225.0 at September 30, 2001 includes $50.0 of
borrowings with a variable interest rate. Energizer maintains total committed
debt facilities of $625.0, of which $400.0 remained available as of September
30, 2001.
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. Energizer's ratio of total
indebtedness to EBITDA was 1.5-to-1 and the ratio of EBIT to total interest
expense was 5-to-1 as of September 30, 2001.
In fiscal 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 net
proceeds from this arrangement in fiscal 2000, which was used to repay interim
funding facilities as discussed above. Net proceeds received from this
arrangement declined $13.8 in 2001 as a result of lower qualifying accounts
receivable. See Note 13 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. As of September 30, 2001, approximately 3.8 million
shares, or $79.6, of Energizer common stock had been purchased under the
authorization. No shares were purchased after fiscal 2001 year-end.
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, 2001.
SEASONAL FACTORS
Energizer's results are significantly impacted in the first quarter of the
fiscal year by the additional sales volume associated with the December holiday
season, particularly in North America. First quarter sales accounted for 33%,
35% and 31% of total net sales in 2001, 2000 and 1999, 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.
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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 2001, the buyer,
as well as its operating subsidiary which owns and operates the Gainesville
facility, filed petitions in bankruptcy court. 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 $5.9 at September 30, 2001
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 year.
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, 2001 and 2000, Energizer had $160.3 and
$330.0 variable rate debt outstanding. A hypothetical 10% adverse change in all
interest rates would have had an annual unfavorable impact of $.9 and $2.6 in
2001 and 2000, 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 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, which primarily consist of 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, the Euro and the 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 a duration 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,
Energizer does not enter into foreign currency contracts for trading purposes
where the sole objective is to generate profits. Energizer has not designated
any financial instruments as hedges for accounting purposes in the three years
ended September 30, 2001.
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, 2001 and 2000
amounts to $1.9 and $2.6, 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 and
Argentine peso and other Latin American currencies; and the Singapore dollar,
Chinese renminbi, Australian and Hong Kong dollars, 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 $329.2
and $515.1 at September 30, 2001 and 2000, 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, 2001 and 2000 amounts to $32.9 and $51.5,
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
Energizer's commitment to maintaining technological leadership, the impact of
Energizer's restructuring activity, the future adequacy of cash flows and
Energizer's ability to meet liquidity requirements, the impact of inflationary
pressures, the impact of future expenditures for environmental matters and
equipment, the impact of adverse changes in interest rates, the market risk of
foreign currency derivatives, and the potential loss in value of Energizer's net
foreign currency investment in foreign subsidiaries, may be considered
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company cautions readers not to place undue
reliance on any forward-looking statements, which speak only as of the date
made.
The Company advises readers that various risks and uncertainties could
affect its financial performance and could cause the Company's actual results
for future periods to differ materially from those anticipated or projected. The
high cost of research and development activities, shifts in consumer demand from
higher quality to lower-priced batteries, and patented innovations by
competitors, could affect the Company's commitment or ability to maintain its
technological leadership. Severance costs and other expenses associated with
current and proposed restructuring activity may be higher than anticipated, and
there may be unknown expenses associated with these activities. In addition,
expected improvements in operating efficiency may not materialize, and the cost
reductions actually realized as a result of restructuring activity may be less
significant than anticipated. Unforeseen fluctuations in levels of the Company's
operating cash flows, or inability to maintain compliance with its debt
covenants, could limit the Company's ability to meet future operating expenses
and liquidity requirements, fund capital expenditures or service its debt as it
becomes due. The current political and economic crisis could result in higher
levels of inflation than anticipated, and the Company may not be able to realize
cost reductions, productivity improvements or price increases which are
substantial enough to counter the inflationary impact. Unknown environmental
liabilities and greater than anticipated remediation expenses or environmental
control expenditures could have a material impact on the Company's financial
position. Economic turmoil and currency fluctuations could increase the
Company's risk from unfavorable impacts on variable-rate debt, currency
derivatives and other financial instruments, as well as increase the potential
loss in value of its net foreign currency investment in foreign subsidiaries.
Additional risks and uncertainties include those detailed from time to time in
the Company'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.
20
<PAGE>
SUMMARY SELECTED HISTORICAL FINANCIAL INFORMATION
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA
Net sales (a).............................. $1,694.2 $1,927.7 $1,878.5 $1,930.7 $2,015.2
Depreciation and amortization.............. 79.8 82.0 94.9 101.2 112.3
Earnings from continuing operations before
income taxes (b)......................... 31.5 279.2 248.2 262.5 203.9
Income taxes............................... 70.5 99.0 88.4 54.3 44.6
Earnings/(loss) from continuing operations
(c)...................................... (39.0) 180.2 159.8 208.2 159.3
Net earnings/(loss)........................ (39.0) 181.4 80.0 164.7 159.8
Earnings/(loss) per share from continuing
operations:
Basic.................................... $ (0.42) $ 1.88 $ 1.56 $ 2.05 $ 1.56
Diluted.................................. $ (0.42) $ 1.87 $ 1.56 $ 2.05 $ 1.56
Average shares outstanding (d)
Basic.................................... 92.6 96.1 102.6 101.6 102.1
Diluted.................................. 94.1 96.3 102.6 101.6 102.1
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital............................ $ 288.1 $ 401.7 $ 478.1 $ 478.5 $ 489.6
Property at cost, net...................... 476.1 485.4 472.8 476.9 494.2
Additions (during the period)............ 77.9 72.8 69.2 102.8 98.8
Depreciation (during the period)......... 58.6 57.9 68.4 74.1 79.5
Total assets............................... 1,497.6 1,793.5 1,833.7 2,077.6 2,113.6
Long-term debt............................. 225.0 370.0 1.9 1.3 21.3
</TABLE>
(a) Certain reclassifications have been made to comply with EITF 00-10, 00-14
and 00-25. See Note 2 for further information.
(b) Earnings/(loss) from continuing operations before income taxes were
(reduced)/increased due to the following unusual items:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Intellectual property rights income.... $ 20.0 $ -- $ -- $ -- $ --
Provision for goodwill impairment...... (119.0) -- -- -- --
Provisions for restructuring........... (29.8) -- (9.9) (21.3) (83.7)
Loss on disposition of Spanish
affiliate............................ -- (15.7) -- -- --
Costs related to spin-off.............. -- (5.5) -- -- --
-------- -------- -------- -------- --------
Total................................ $ (128.8) $ (21.2) $ (9.9) $ (21.3) $ (83.7)
======== ======== ======== ======== ========
</TABLE>
21
<PAGE>
(c) Earnings/(loss) from continuing operations were (reduced)/increased due to
the following unusual items:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Intellectual property rights income,
net of tax........................... $ 12.3 $ -- $ -- $ -- $ --
Provision for goodwill impairment, net
of tax............................... (119.0) -- -- -- --
Provisions for restructuring, net of
tax.................................. (19.4) -- (8.3) (12.8) (72.0)
Capital loss tax benefits.............. -- 24.4 16.6 48.4 35.9
Foreign tax credit refunds............. -- -- -- -- 20.5
Loss on disposition of Spanish
affiliate, net of tax................ -- (15.7) -- -- --
Costs related to spin-off, net of
tax.................................. -- (3.3) -- -- --
-------- -------- -------- -------- --------
Total................................ $ (126.1) $ 5.4 $ 8.3 $ 35.6 $ (15.6)
======== ======== ======== ======== ========
</TABLE>
(d) Basic earnings per share for the current year is based on the
weighted-average number of shares outstanding during the period. Diluted
earnings per share for the current year is based on the weighted-average
number of shares used in the basic earnings per share calculation, adjusted
for the dilutive effect of stock options and restricted stock equivalents.
Prior fiscal years are based on the weighted-average number of shares
outstanding of Ralston common stock prior to the spin-off, adjusted in
fiscal 2000 for the distribution of one share of Energizer stock for each
three shares of Ralston stock. In fiscal 2001, the potentially dilutive
securities were not included in the dilutive earnings per share calculation
due to their anti-dilutive effect.
22
<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.
23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Energizer Holdings, Inc.
In our opinion, the accompanying consolidated balance sheets 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, 2001 and 2000, and the results of their operations and their cash flows for
each of the three years in the period ended September 30, 2001, in conformity
with accounting principles generally accepted in the United States of America.
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 of America, 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 our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
St. Louis, Missouri
October 30, 2001
24
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS AND COMPREHENSIVE INCOME
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
STATEMENT OF EARNINGS:
Net sales................................................... $1,694.2 $1,927.7 $1,878.5
Cost of products sold....................................... 999.1 1,044.0 1,059.5
Selling, general and administrative expense................. 320.3 344.8 368.4
Advertising and promotion expense........................... 133.6 164.7 137.8
Research and development expense............................ 46.4 49.9 48.5
Provision for goodwill impairment........................... 119.0 -- --
Provisions for restructuring................................ 29.8 -- 7.8
Intellectual property rights income......................... (20.0) -- --
Costs related to spin-off................................... -- 5.5 --
Loss on disposition of Spanish affiliate.................... -- 15.7 --
Interest expense............................................ 33.2 27.5 7.6
Other financing items, net (income)/expense................. 1.3 (3.6) 0.7
-------- -------- --------
Earnings from continuing operations before income taxes..... 31.5 279.2 248.2
Income taxes................................................ (70.5) (99.0) (88.4)
-------- -------- --------
Earnings/(loss) from continuing operations.................. (39.0) 180.2 159.8
Net loss from discontinued operations....................... -- -- (5.6)
Net gain/(loss) on disposition of discontinued operations... -- 1.2 (74.2)
-------- -------- --------
NET EARNINGS/(LOSS)......................................... $ (39.0) $ 181.4 $ 80.0
======== ======== ========
EARNINGS PER SHARE:
Basic
Earnings/(loss) from continuing operations............. $ (0.42) $ 1.88 $ 1.56
Net loss from discontinued operations.................. -- -- (0.06)
Net gain/(loss) on disposition of discontinued
operations........................................... -- 0.01 (0.72)
-------- -------- --------
Net earnings/(loss).................................... $ (0.42) $ 1.89 $ 0.78
======== ======== ========
Diluted
Earnings/(loss) from continuing operations............. $ (0.42) $ 1.87 $ 1.56
Net loss from discontinued operations.................. -- -- (0.06)
Net gain/(loss) on disposition of discontinued
operations........................................... -- 0.01 (0.72)
-------- -------- --------
Net earnings/(loss).................................... $ (0.42) $ 1.88 $ 0.78
======== ======== ========
STATEMENT OF COMPREHENSIVE INCOME:
Net earnings/(loss)......................................... $ (39.0) $ 181.4 $ 80.0
Other comprehensive income, net of tax
Foreign currency translation adjustments.................. (8.6) (31.9) 7.8
Foreign currency reclassification adjustments............. -- 9.7 (4.5)
Minimum pension liability adjustment, net of tax of $.7... -- (1.1) --
-------- -------- --------
Comprehensive income/(loss)................................. $ (47.6) $ 158.1 $ 83.3
======== ======== ========
</TABLE>
The above financial statement should be read in conjunction with the
Notes to Consolidated Financial Statements.
25
<PAGE>
CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
2001 2000
-------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 23.0 $ 11.9
Trade receivables, net.................................... 189.1 180.6
Inventories............................................... 361.3 459.1
Other current assets...................................... 209.9 278.7
-------- --------
Total current assets................................... 783.3 930.3
Property, plant and equipment, net.......................... 476.1 485.4
Other assets................................................ 238.2 377.8
-------- --------
Total................................................ $1,497.6 $1,793.5
======== ========
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities
Notes payable............................................. $ 110.3 $ 135.0
Accounts payable.......................................... 109.2 145.0
Other current liabilities................................. 275.7 248.6
-------- --------
Total current liabilities.............................. 495.2 528.6
Long-term debt.............................................. 225.0 370.0
Other liabilities........................................... 169.5 156.7
Shareholders equity
Preferred stock - $.01 par value, none outstanding........ -- --
Common stock $.01 par value, issued 95,563,511 and
95,552,711 at 2001 and 2000, respectively.............. 1.0 1.0
Additional paid-in capital................................ 784.1 783.9
Retained earnings......................................... 17.5 59.8
Common stock in treasury, at cost, 3,844,700 shares at
2001................................................... (79.6) --
Accumulated other comprehensive income.................... (115.1) (106.5)
-------- --------
Total shareholders equity.............................. 607.9 738.2
-------- --------
Total................................................ $1,497.6 $1,793.5
======== ========
</TABLE>
The above financial statement should be read in conjunction with the
Notes to Consolidated Financial Statements.
26
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------
2001 2000 1999
------- ------- -------
<S> <C> <C> <C>
CASH FLOW FROM OPERATIONS
Net earnings/(loss)....................................... $ (39.0) $ 181.4 $ 80.0
Adjustments to reconcile net earnings to net cash flow
from operations:
Other non-cash charges.................................... 139.3 15.7 (2.2)
Depreciation and amortization............................. 79.8 82.0 94.9
Translation and exchange loss............................. 6.1 1.9 9.0
Deferred income taxes..................................... 0.3 5.9 70.4
Net (earnings)/loss from discontinued operations.......... -- (1.2) 79.8
Sale of accounts receivable............................... (13.8) 100.0 --
Changes in assets and liabilities used in operations:
(Increase)/decrease in accounts receivable, net......... (2.7) (25.3) (6.4)
(Increase)/decrease in inventories...................... 90.2 (90.8) 22.1
(Increase)/decrease in other current assets............. 70.3 18.7 (13.9)
Increase/(decrease) in accounts payable................. (27.3) 24.2 (21.3)
Increase/(decrease) in other current liabilities........ 11.2 (16.8) 16.2
Other, net.................................................. 3.7 (6.1) 8.6
------- ------- -------
Cash flow from continuing operations...................... 318.1 289.6 337.2
Cash flow from discontinued operations.................... -- 54.7 15.1
------- ------- -------
Net cash flow from operations........................... 318.1 344.3 352.3
------- ------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Property additions........................................ (77.9) (72.8) (69.2)
Proceeds from sale of OEM business........................ -- 20.0 --
Proceeds from sale of assets.............................. 10.8 3.2 1.4
Other, net................................................ 1.8 (8.7) (0.5)
------- ------- -------
Cash used by investing activities from continuing
operations............................................. (65.3) (58.3) (68.3)
Cash used by investing activities from discontinued
operations............................................. -- (0.7) (3.7)
------- ------- -------
Net cash used by investing activities................. (65.3) (59.0) (72.0)
------- ------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Net cash proceeds from issuance of long-term debt......... -- 407.0 1.0
Principal payments on long-term debt (including current
maturities)............................................. (145.0) (449.5) (13.3)
Cash proceeds from issuance of notes payables with
maturities greater than 90 days......................... 19.4 6.1 14.7
Cash payments on notes payables with maturities greater
than 90 days............................................ (19.4) (3.7) (0.1)
Net increase/(decrease) in notes payable with maturities
of 90 days or less...................................... (20.1) (50.2) (12.0)
Purchase of treasury stock................................ (79.6) -- --
Other, net................................................ 0.2 -- --
Net transactions with Ralston prior to spin-off........... -- (210.7) (293.7)
------- ------- -------
Net cash used by financing activities................... (244.5) (301.0) (303.4)
------- ------- -------
Effect of exchange rate changes on cash..................... (1.2) (0.2) 1.8
------- ------- -------
Net increase/(decrease) in cash and cash equivalents........ 7.1 (15.9) (21.3)
Cash and cash equivalents, beginning of period.............. 11.9 27.8 49.1
Cash and cash equivalents, international month-lag
elimination (Note 2)...................................... 4.0 -- --
------- ------- -------
Cash and cash equivalents, end of period.................... $ 23.0 $ 11.9 $ 27.8
======= ======= =======
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.
27
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
(DOLLARS IN MILLIONS, SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
DOLLARS SHARES
----------------------------- ------------------------
2001 2000 1999 2001 2000 1999
------- -------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Ralston's net investment:............. $ -- $1,312.9 $1,531.3
Net earnings........................ -- 121.6 80.0
Net transactions with Ralston....... -- (732.8) (301.7)
Foreign currency translation
adjustment....................... -- (1.4) 3.3
Distribution to Ralston's
shareholders at spin-off......... -- (700.3) --
------- -------- --------
Ending balance...................... $ -- $ -- $1,312.9
Common Stock:......................... $ 1.0 $ -- $ -- 95,553 -- --
Distribution to Ralston's
shareholders at spin-off......... -- 1.0 -- -- 95,553 --
Shares issued under stock plan
activity......................... -- -- -- 11 -- --
------- -------- -------- ------ ------ ------
Ending balance...................... $ 1.0 $ 1.0 $ -- 95,564 95,553 --
Additional paid in capital:........... $ 783.9 $ -- $ --
Distribution to Ralston's
shareholders at spin-off......... -- 783.9 --
Shares issued under stock plan
activity......................... 0.2 -- --
------- -------- --------
Ending balance...................... $ 784.1 $ 783.9 $ --
Retained earnings:.................... $ 59.8 $ -- $ --
Net earnings........................ (39.0) 59.8 --
Elimination of international
one-month lag (Note 2)........... (3.3) -- --
------- -------- --------
Ending balance...................... $ 17.5 $ 59.8 $ --
Common stock in treasury:............. $ -- $ -- $ -- -- -- --
Treasury stock purchased............ (79.6) -- -- (3,845) -- --
------- -------- -------- ------ ------ ------
Ending balance...................... $ (79.6) $ -- $ -- (3,845) -- --
Accumulated other comprehensive
income:
Cumulative translation
adjustment:...................... $(105.4) $ -- $ --
Distribution to Ralston's
shareholders at spin-off....... -- (84.6) --
Foreign currency translation
adjustment..................... (8.6) (20.8) --
------- -------- --------
Ending balance................... $(114.0) $ (105.4) $ --
Minimum pension liability
adjustment:...................... $ (1.1) $ -- $ --
Adjustment....................... -- (1.1) --
------- -------- --------
Ending balance................... $ (1.1) $ (1.1) $ --
------- -------- --------
Total accumulated other
comprehensive income............. $(115.1) $ (106.5) $ --
------- -------- --------
Total shareholders equity... $ 607.9 $ 738.2 $1,312.9
======= ======== ========
</TABLE>
The above financial statement should be read in conjunction with the
Notes to Consolidated Financial Statements.
28
<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 e(2),
Energizer and Eveready, as well as miniature and rechargeable batteries, and
flashlights and other lighting products. Energizer and its subsidiaries operate
22 manufacturing and packaging 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.
Financial statements as of and for periods after the spin-off are 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 the pro forma statement of earnings for the years ended September
30, 2000 and 1999 in Note 22.
(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. Energizer historically reported
results of international operations on a one-month lag. As such, prior year
amounts represent results of international operations for September through
August combined with the U.S. results for October through September. Beginning
in fiscal 2001, Energizer synchronized international operations' reporting to be
consistent with U.S. reporting. As a result, the fiscal 2000 loss from
international operations of $3.3 was recorded directly to retained earnings.
The effects of the change on the year ended September 30, 2000 are
presented in Note 22. The effect of the change is not significant to the balance
sheet or cash flow, and as a result, the September 30, 2000 balance sheet and
the cash flow have not been adjusted.
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.
For foreign operations where the U.S. dollar is the functional currency and
for countries that 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 and Derivative Securities - Energizer uses financial
instruments 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.
For derivatives not designated as hedging instruments for accounting
purposes, realized and unrealized gains or losses from F/X instruments are
recognized currently in selling, general and administrative expenses or other
financing items, net in the Consolidated Statement of Earnings. Energizer has
not designated any financial instruments as hedges for accounting purposes in
the three years ended September 30, 2001.
Energizer adopted Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), and
Statement of Financial Accounting Standards No. 138, an amendment of SFAS 133,
in the first quarter of fiscal 2001. The implementation of this standard did not
have a material effect on its consolidated financial position or results of
operations.
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
Other Assets. These costs are amortized using the straight-line method over
periods of related benefit ranging from two 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 30 years for machinery and
equipment and three to 50 years for buildings. Depreciation expense was $58.6,
$57.9 and $68.4 in 2001, 2000 and 1999, respectively.
30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
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.
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 impairment exists. If 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 in accordance with terms of
sale, which is generally upon shipment of product to or upon receipt of product
by customers. Energizer provides its customers a variety of programs designed to
promote sales of its products. Promotional payments and allowances that
represent primarily a reduction in price paid by either a retail customer,
distributor, wholesaler or ultimate consumer are recorded in net sales. 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. Energizer expenses advertising and
promotion in the year such costs are 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.
Reclassifications - Certain reclassifications have been made to the prior
year financial statements to conform to the current presentation.
Recently Issued Accounting Pronouncements - In 2001, the FASB issued
Statement of Financial Accounting Standards No. 141 (SFAS 141), "Business
Combinations." SFAS 141 requires that the purchase method of accounting be used
for all business combinations initiated after June 30, 2001 and establishes
specific criteria for recognition of intangible assets separately from goodwill.
For business combinations initiated after June 30, 2001, SFAS 141 also requires
that unallocated negative goodwill be written off immediately as an
extraordinary gain. Energizer is currently evaluating the impact of SFAS 141 on
its financial statements.
Also in 2001, the FASB issued Statement of Financial Accounting Standards
No. 142 (SFAS 142), "Goodwill and Other Intangible Assets." SFAS 142 eliminates
the amortization of goodwill and instead requires goodwill be tested for
impairment annually at the reporting unit level. Also, intangible assets are
required to be amortized over their useful lives and reviewed for impairment in
accordance with Statement of Financial Accounting Standards 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." Under SFAS 142, if the intangible asset has an indefinite useful life, it
is not amortized until its life is determined to be finite. Energizer is
required to adopt SFAS 142 no later than the first quarter of fiscal 2003, but
is permitted to adopt as of the first quarter of fiscal 2002. Energizer is
currently evaluating the impact of SFAS 142 on its financial statements.
The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations"
(SFAS 143) in 2001. SFAS 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. Energizer is required to adopt SFAS 143 no
later than the first quarter of fiscal 2003, but is permitted to adopt earlier.
Energizer is currently evaluating the impact of SFAS 143 on its financial
statements.
31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," which provides guidance on the accounting for the impairment
or disposal of long-lived assets. The provisions of this statement are effective
for financial statements issued for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years, although early adoption is
allowed. Energizer is currently evaluating the impact of SFAS 144 on its
financial statements.
The Emerging Issues Task Force (EITF) issued EITF 00-10, "Accounting for
Shipping and Handling Fees and Costs," which provides guidance on earnings
statement classification of amounts billed to customers for shipping and
handling. Energizer adopted EITF 00-10 in its fourth quarter of fiscal 2001.
Reclassifications were necessary from net sales to cost of products sold and
were $34.4, $36.1 and $32.7 for 2001, 2000 and 1999, respectively. In addition,
warehousing costs in selling, general and administrative expense of $31.1, $33.2
and $28.9 in 2001, 2000 and 1999, respectively, were reclassified to cost of
products sold. There was no impact to net earnings.
The EITF also issued EITF 00-14 and 00-25. EITF 00-14, "Accounting for
Certain Sales Incentives," provides guidance on accounting for discounts,
coupons, rebates and free product. EITF 00-25, "Vendor Income Statement
Characterization of Consideration from a Vendor to a Retailer," provides
guidance on accounting for considerations other than those directly addressed in
EITF 00-14. Energizer adopted EITF 00-14 and 00-25 in its fourth quarter of
fiscal 2001. Reclassifications were necessary from advertising and promotion
expense to net sales and were $28.3, $22.7 and $26.5 for 2001, 2000 and 1999,
respectively. There was no impact to net earnings.
(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 and
advertising. Ralston also provided facilities for Energizer's headquarters
through July 31, 2001, when Energizer relocated its 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 and $20.0 for the six months ended March
31, 2000, and year ended September 30, 1999, respectively.
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.
(4) DISCONTINUED OPERATIONS
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.
32
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
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 for 1999 were as follows: net
sales, $64.2; loss before income taxes, $9.0; income tax benefit, $3.4; and net
loss from discontinued operations, $5.6.
(5) RESTRUCTURING ACTIVITIES
Because there continues to be a migration of consumer demand from carbon
zinc to alkaline batteries, a comprehensive study of Energizer's carbon zinc
facilities to determine the optimum number of carbon zinc manufacturing plants
was completed in the fourth quarter of fiscal 2001. Energizer also reviewed its
worldwide operations in light of competitive market conditions and available
technologies and techniques, and is adjusting its organization accordingly. As a
result, Energizer adopted restructuring plans to eliminate carbon zinc capacity,
and to reduce and realign certain selling, production, research and
administrative functions. The total cost associated with this plan is expected
to be $35.6 before taxes, of which $29.8, or $19.4 after-tax, was recorded in
the fourth quarter, with the remainder expected to be recorded in the first
quarter of fiscal 2002.
These restructuring activities are expected to improve the Company's
operating efficiency, downsize and centralize corporate functions, and decrease
costs. The plans will result in the closure of one carbon zinc production
facility in South and Central America, and the severance of 570 employees,
consisting of 375 production and 195 sales, research and administrative
employees, primarily in the United States and South and Central America.
The restructuring charges consist of non-cash fixed asset impairment
charges of $11.1 for the closed carbon zinc plant and production equipment,
enhanced pension benefits for certain terminated U.S. employees of $8.3, cash
severance payments of $6.3, and other cash charges of $4.1.
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.
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. All
actions associated with these charges were completed as of September 30, 2000.
The remaining $2.5 represented additional net provisions related to prior
years' restructuring plans. Additional termination benefits of $5.5 primarily
represent enhanced severance related to a European plant closing in the 1997
restructuring plan. 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.
As of September 30, 2001, except for the disposition of certain assets held
for disposal, all activities associated with the 1994 through 1999 restructuring
plans are complete. The carrying value of assets held for disposal under all
restructuring plans was $2.6 at September 30, 2001.
33
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
The following table presents, by major cost component and by year of
provision, activity related to the restructuring charges discussed above during
fiscal years 2001, 2000 and 1999, including any adjustments to the original
charges.
<TABLE>
<CAPTION>
1999 ROLLFORWARD 2000 ROLLFORWARD
-------------------------------------------- --------------------------------------------
BEGINNING PROVISION/ ENDING BEGINNING PROVISION/ ENDING
BALANCE (REVERSALS) ACTIVITY BALANCE BALANCE (REVERSALS) ACTIVITY BALANCE
--------- ----------- -------- ------- --------- ----------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR PLANS
Termination
benefits........... $33.9 $ 6.4 $(34.6) $ 5.7 $ 5.7 $ -- $(5.7) $ --
Other cash costs..... 7.1 2.3 (4.5) 4.9 4.9 -- (1.0) 3.9
Fixed asset
impairments........ -- (5.4) 5.4 -- -- -- -- --
Other non-cash
charges............ -- (0.8) 0.8 -- -- -- -- --
----- ----- ------ ----- ----- ---- ----- ----
Total.............. 41.0 2.5 (32.9) 10.6 10.6 -- (6.7) 3.9
----- ----- ------ ----- ----- ---- ----- ----
1999 PLAN
Termination
benefits........... -- 3.2 (2.5) 0.7 0.7 -- (0.7) --
Other cash costs..... -- 0.2 (0.2) -- -- -- -- --
Fixed asset
impairments........ -- 4.0 (4.0) -- -- -- -- --
----- ----- ------ ----- ----- ---- ----- ----
Total.............. -- 7.4 (6.7) 0.7 0.7 -- (0.7) --
----- ----- ------ ----- ----- ---- ----- ----
2001 PLAN
Termination
benefits........... -- -- -- -- -- -- -- --
Other cash costs..... -- -- -- -- -- -- -- --
Fixed asset
impairments........ -- -- -- -- -- -- -- --
----- ----- ------ ----- ----- ---- ----- ----
Total.............. -- -- -- -- -- -- -- --
----- ----- ------ ----- ----- ---- ----- ----
GRAND TOTAL...... $41.0 $ 9.9 $(39.6) $11.3 $11.3 $ -- $(7.4) $3.9
===== ===== ====== ===== ===== ==== ===== ====
</TABLE>
<TABLE>
<CAPTION>
2001 ROLLFORWARD
--------------------------------------------
BEGINNING PROVISION/ ENDING
BALANCE (REVERSALS) ACTIVITY BALANCE
--------- ----------- -------- -------
<S> <C> <C> <C> <C>
PRIOR PLANS
Termination
benefits........... $ -- $ -- $ -- $ --
Other cash costs..... 3.9 -- (3.9) --
Fixed asset
impairments........ -- -- -- --
Other non-cash
charges............ -- -- -- --
---- ----- ------ ----
Total.............. 3.9 -- (3.9) --
---- ----- ------ ----
1999 PLAN
Termination
benefits........... -- -- -- --
Other cash costs..... -- -- -- --
Fixed asset
impairments........ -- -- -- --
---- ----- ------ ----
Total.............. -- -- -- --
---- ----- ------ ----
2001 PLAN
Termination
benefits........... -- 14.6 (9.3) 5.3
Other cash costs..... -- 4.1 (0.2) 3.9
Fixed asset
impairments........ -- 11.1 (11.1) --
---- ----- ------ ----
Total.............. -- 29.8 (20.6) 9.2
---- ----- ------ ----
GRAND TOTAL...... $3.9 $29.8 $(24.5) $9.2
==== ===== ====== ====
</TABLE>
(6) EUROPE GOODWILL
Energizer monitors changing business conditions, which may indicate that
the remaining useful life of goodwill and other intangible assets may warrant
revision or carrying amounts may require adjustment. Continuing unfavorable
business trends in Europe, and the unfavorable costs of U.S. dollar-based
products resulting from currency declines, represent such conditions. As part of
its annual business planning cycle, Energizer performed a thorough evaluation of
its European business in the fourth quarter of fiscal 2001, which resulted in a
provision for goodwill impairment of $119.0. As of September 30, 2001, the
remaining carrying amount of goodwill related to Energizer's European business
after the provision for impairment was $8.5.
34
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(7) INCOME TAXES
Prior to 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.
The provisions for income taxes consisted of the following for the years
ended September 30:
<TABLE>
<CAPTION>
2001 2000 1999
------------ ------------------ -------------------
CONTINUING CONTINUING
CONSOLIDATED OPERATIONS TOTAL OPERATIONS TOTAL
------------ ---------- ----- ---------- ------
<S> <C> <C> <C> <C> <C>
Currently payable:
United States..................... $42.8 $47.5 $45.2 $(17.5) $(27.0)
State............................. 5.4 9.0 8.7 7.9 8.6
Foreign........................... 22.0 36.6 36.6 27.6 27.8
----- ----- ----- ------ ------
Total current.................. 70.2 93.1 90.5 18.0 9.4
----- ----- ----- ------ ------
Deferred:
United States..................... 1.2 1.2 1.2 68.6 39.1
State............................. 0.1 0.2 0.2 (0.5) (2.2)
Foreign........................... (1.0) 4.5 4.5 2.3 2.3
----- ----- ----- ------ ------
Total deferred................. 0.3 5.9 5.9 70.4 39.2
----- ----- ----- ------ ------
Provision for income taxes.......... $70.5 $99.0 $96.4 $ 88.4 $ 48.6
===== ===== ===== ====== ======
</TABLE>
The source of pre-tax earnings was:
<TABLE>
<CAPTION>
2001 2000 1999
------------ ------------------- -------------------
CONTINUING CONTINUING
CONSOLIDATED OPERATIONS TOTAL OPERATIONS TOTAL
------------ ---------- ------ ---------- ------
<S> <C> <C> <C> <C> <C>
United States...................... $118.2 $201.9 $200.5 $197.2 $ 75.4
Foreign............................ (86.7) 77.3 77.3 51.0 53.3
------ ------ ------ ------ ------
Pre-tax earnings................... $ 31.5 $279.2 $277.8 $248.2 $128.7
====== ====== ====== ====== ======
</TABLE>
35
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
A reconciliation of income taxes with the amounts computed at the statutory
federal rate follows:
<TABLE>
<CAPTION>
2001 2000 1999
-------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Computed tax at federal statutory
rate................................. $ 11.0 35.0% $ 97.7 35.0% $ 86.9 35.0%
State income taxes, net of federal tax
benefit.............................. 3.9 12.4 6.0 2.1 4.8 1.9
Foreign tax in excess of domestic
rate................................. 5.9 18.6 3.8 1.4 3.3 1.3
Taxes on repatriation of foreign
earnings............................. 5.2 16.5 6.4 2.3 7.8 3.1
Foreign sales corporation benefit...... (1.2) (3.8) (2.0) (0.7) (1.7) (0.7)
Nondeductible goodwill................. 4.1 13.0 5.2 1.9 5.5 2.2
Provision for goodwill impairment...... 41.7 132.4 -- -- -- --
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)
Other, net............................. (0.1) (0.3) 0.8 0.2 (1.6) (0.6)
------ ----- ------ ---- ------ ----
$ 70.5 223.8% $ 99.0 35.5% $ 88.4 35.6%
====== ===== ====== ==== ====== ====
</TABLE>
In 2001, Energizer recorded a provision for goodwill impairment of $119.0,
for which there is no associated tax provision or benefit. See further
discussion in Note 6.
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 in 1999, primarily related to past restructuring actions.
The capital loss benefits are not recognized in Energizer's pro forma financial
results (see Note 22), 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 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:
<TABLE>
<CAPTION>
2001 2000
------- ------
<S> <C> <C>
Deferred tax liabilities:
Depreciation and property differences..................... $ (61.1) $(61.1)
Pension plans............................................. (38.4) (31.9)
Other tax liabilities, non-current........................ (10.3) (6.1)
------- ------
Gross deferred tax liabilities......................... (109.8) (99.1)
------- ------
Deferred tax assets:
Accrued liabilities....................................... 58.8 51.8
Tax loss carryforwards and tax credits.................... 28.6 25.6
Intangible assets......................................... 42.7 42.6
Postretirement benefits other than pensions............... 35.3 28.8
Inventory differences..................................... 4.0 5.2
Other tax assets, non-current............................. 7.5 8.8
------- ------
Gross deferred tax assets.............................. 176.9 162.8
------- ------
Valuation allowance....................................... (35.1) (31.1)
------- ------
Net deferred tax assets..................................... $ 32.0 $ 32.6
======= ======
</TABLE>
36
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
Total deferred tax assets and liabilities shown above include current and
non-current amounts.
Tax loss carryforwards of $1.4 expired in 2001. Future expiration of tax
loss carryforwards and tax credits, if not utilized, are as follows: 2002, $1.6;
2003, $4.2; 2004, $4.6; 2005, $3.5; 2006, $2.2; thereafter or no expiration,
$12.5. The valuation allowance is primarily attributed to certain accrued
liabilities, tax loss carryforwards and tax credits outside the United States.
The valuation allowance increased $4.0 in 2001 primarily due to losses in
certain foreign subsidiaries for which no tax benefit is expected to be
realized.
At September 30, 2001, approximately $52.8 of foreign subsidiary net
earnings was 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.
(8) EARNINGS PER SHARE
For fiscal 2001, basic earnings per share is based on the average number of
shares outstanding during the period. Diluted earnings per share is based on the
average number of shares used for the basic earnings per share calculation,
adjusted for the dilutive effect of stock options and restricted stock
equivalents. In fiscal 2001, the potentially dilutive securities were not
included in the dilutive earnings per share calculation due to their
anti-dilutive effect.
Earnings per share has been calculated using Energizer's historical basis
earnings for the fiscal 2000 and 1999. 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. For the year ended September 30, 1999, 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.
37
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
The following table sets forth the computation of basic and diluted
earnings per share.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
SEPTEMBER 30,
------------------------
2001 2000 1999
------ ------ ------
<S> <C> <C> <C>
Numerator
Numerator for basic and dilutive earnings per share -
Earnings/(loss) from continuing operations............. $(39.0) $180.2 $159.8
Net loss from discontinued operations.................. -- -- (5.6)
Net gain/(loss) on disposition of discontinued
operations............................................ -- 1.2 (74.2)
------ ------ ------
Net earnings/(loss).................................... $(39.0) $181.4 $ 80.0
====== ====== ======
Denominator
Denominator for basic earnings per share -
Weighted-average shares................................ 92.6 96.1 102.6
------ ------ ------
Effect of dilutive securities
Stock options.......................................... 1.0 0.1 --
Restricted stock equivalents........................... 0.5 0.1 --
------ ------ ------
1.5 0.2 --
Denominator for dilutive earnings per share -
Weighted-average shares and assumed conversions........ 94.1 96.3 102.6
====== ====== ======
Basic earnings per share
Earnings/(loss) from continuing operations................ $(0.42) $ 1.88 $ 1.56
Net loss from discontinued operations..................... -- -- (0.06)
Net gain/(loss) on disposition of discontinued
operations............................................. -- 0.01 (0.72)
------ ------ ------
Net earnings/(loss)....................................... $(0.42) $ 1.89 $ 0.78
====== ====== ======
Diluted earnings per share
Earnings/(loss) from continuing operations................ $(0.42) $ 1.87 $ 1.56
Net loss from discontinued operations..................... -- -- (0.06)
Net gain/(loss) on disposition of discontinued
operations............................................. -- 0.01 (0.72)
------ ------ ------
Net earnings/(loss)....................................... $(0.42) $ 1.88 $ 0.78
====== ====== ======
</TABLE>
(9) STOCK-BASED COMPENSATION
Energizer's 2000 Incentive Stock Plan (the Plan) was adopted by the Board
of Directors in March 2000 and approved by shareholders, 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 (ENR stock) may be granted to directors, officers and key employees. A
maximum of 15.0 million shares of ENR stock was approved to be issued under the
Plan. At September 30, 2001 and 2000, respectively, there were 6.6 million and
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 Energizer (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. During fiscal
2001 and 2000, respectively, 120,885 and 488,415 restricted stock equivalents
had been granted. The weighted-average fair value for restricted stock
equivalents granted in 2001 and 2000 was $19.94 and $18.30, respectively.
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 $4.1 and $4.8 in 2001 and 2000, respectively. 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>
2001 2000
------ ------
<S> <C> <C>
Net earnings/(loss):
As reported............................................... $(39.0) $181.4
Pro forma................................................. $(45.7) $176.1
Basic earnings/(loss) per share:
As reported............................................... $(0.42) $ 1.89
Pro forma................................................. $(0.49) $ 1.83
Diluted earnings/(loss) per share:
As reported............................................... $(0.42) $ 1.88
Pro forma................................................. $(0.49) $ 1.83
</TABLE>
The weighted-average fair value from options granted in fiscal 2001 and
2000 was $7.51 and $7.13 per option, respectively. This was estimated at the
grant date using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
<TABLE>
<CAPTION>
2001 2000
--------- ---------
<S> <C> <C>
Risk-free interest rate..................................... 4.90% 5.85%
Expected life of option..................................... 7.5 years 7.5 years
Expected volatility of ENR stock............................ 19.28% 20.30%
Expected dividend yield on ENR stock........................ --% --%
</TABLE>
39
<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>
2001 2000
------------------------- -------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------ ---------------- ------ ----------------
<S> <C> <C> <C> <C>
Outstanding on October 1, ..................... 7.37 $17.41 -- $ --
Granted........................................ 0.38 20.30 7.37 17.41
Exercised...................................... (0.01) 17.00 -- --
Cancelled...................................... (0.03) 20.00 -- --
----- ----
Outstanding on September 30, .................. 7.71 17.54 7.37 17.41
----- ----
Exercisable on September 30,................... 1.62 $17.43 -- $ --
</TABLE>
The weighted-average remaining contractual life for both the shares
outstanding and exercisable at September 30, 2001 was 8.7 years.
(10) 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.
Energizer also sponsors or participates in a number of other non-U.S.
pension arrangements, including various retirement and termination benefit
plans, some of which are required by local law or coordinated with
government-sponsored plans, which are not significant in the aggregate and
therefore are not included in the information presented below.
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, as
total costs of the program change. In prior years, Energizer has increased its
contributions for health care benefits to partially mitigate the impact of
increased medical costs to eligible retirees, although there is no requirement
in Energizer's retiree health plan to do so. The benefit obligation as of the
beginning of 2001 and prior is computed assuming such increases continue in the
future. In 2001, the plan was amended such that there will not be an increase in
the Energizer's contribution rate beyond the level of subsidy to be provided for
calendar 2002. The impact of this amendment was a reduction of the projected
benefit obligation of $39.4.
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.
40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
The following tables present the benefit obligation and funded status of
the plans for the periods subsequent to the spin-off.
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------------
PENSION POSTRETIREMENT
--------------- --------------
2001 2000 2001 2000
------ ------ ------ -----
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year (1)............... $351.6 $345.6 $ 83.7 $77.6
Service cost.............................................. 16.6 7.8 0.2 0.1
Interest cost............................................. 24.5 11.8 6.1 2.8
Plan participants' contributions.......................... 0.5 0.2 -- --
Actuarial (gain)/loss..................................... 20.3 (1.3) 5.8 4.2
Benefits paid............................................. (18.4) (10.0) (1.8) (1.0)
Foreign currency exchange rate changes.................... 2.0 (7.0) (0.2) --
Special termination benefits.............................. 8.3 -- -- --
Amendments................................................ -- 4.5 (39.4) --
------ ------ ------ -----
Benefit obligation at end of year......................... $405.4 $351.6 $ 54.4 $83.7
====== ====== ====== =====
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year (1)........ $557.7 $558.9 $ 1.9 $ 1.7
Actual return on plan assets.............................. (49.0) 16.6 0.4 0.2
Company contributions..................................... 2.6 1.2 1.8 1.0
Plan participants' contributions.......................... 0.5 0.2 2.0 1.0
Benefits paid............................................. (18.4) (10.0) (3.8) (2.0)
Foreign currency exchange rate changes.................... 2.0 (9.2) -- --
------ ------ ------ -----
Fair value of plan assets at end of year.................. $495.4 $557.7 $ 2.3 $ 1.9
====== ====== ====== =====
</TABLE>
- ---------------
(1) For fiscal 2000, the benefit obligation and fair value of plan assets are as
of April 1, 2000, the date of the spin-off from Ralston.
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------------------
PENSION POSTRETIREMENT
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
<S> <C> <C> <C> <C>
FUNDED STATUS:
Funded status of the plan................................ $ 90.0 $206.1 $(52.1) $(81.8)
Unrecognized net loss/(gain)............................. 6.7 (113.0) 3.1 (2.3)
Unrecognized prior service cost.......................... 0.2 0.4 (42.7) (3.6)
Unrecognized net transition asset........................ 1.3 1.1 -- --
------ ------ ------ ------
Prepaid/(accrued) benefit cost........................... $ 98.2 $ 94.6 $(91.7) $(87.7)
------ ------ ------ ------
AMOUNTS RECOGNIZED IN THE CONSOLIDATED BALANCE SHEET:
Prepaid benefit cost..................................... $106.2 $102.0 $ -- $ --
Accrued benefit liability................................ (10.0) (9.4) (91.7) (87.7)
Intangible asset......................................... 0.2 0.2 -- --
Accumulated other comprehensive income................... 1.8 1.8 -- --
------ ------ ------ ------
Net amount recognized.................................... $ 98.2 $ 94.6 $(91.7) $(87.7)
====== ====== ====== ======
</TABLE>
41
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
For pension plans with accumulated benefit obligations in excess of plan
assets, the projected benefit obligation was $10.0 and $9.4 at September 30,
2001 and 2000, respectively. There are no plan assets for these nonqualified
plans as of September 30, 2001.
Pension assets consist primarily of listed common stocks and bonds. The
U.S. plan held 1.7 million shares of ENR stock in both 2001 and 2000. The market
values of such stock was $28.8 and $42.4, at September 30, 2001 and 2000,
respectively.
The following table presents pension and postretirement expense for fiscal
2001 and the period subsequent to the spin-off (six months ended September 30,
2000).
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------
PENSION POSTRETIREMENT
---------------- --------------
2001 2000 2001 2000
------ ------ ----- -----
<S> <C> <C> <C> <C>
Service cost.............................................. $ 16.6 $ 7.8 $ 0.2 $ 0.1
Interest cost............................................. 24.5 11.8 6.1 2.8
Expected return on plan assets............................ (46.9) (22.4) -- --
Amortization of unrecognized prior service cost........... -- -- (0.3) (0.1)
Amortization of unrecognized transition asset............. 0.3 0.1 -- --
Recognized net actuarial/(gain) loss...................... (3.3) (1.5) -- --
------ ------ ----- -----
Net periodic benefit cost/(income)........................ $ (8.8) $ (4.2) $ 6.0 $ 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
------------ --------------
2001 2000 2001 2000
---- ---- ----- -----
<S> <C> <C> <C> <C>
Discount rate............................................... 6.6% 6.7% 7.0% 7.0%
Expected return on plan assets.............................. 8.7% 8.7% -- --
Compensation increase rate.................................. 5.2% 5.2% -- --
</TABLE>
Assumed health care cost trend rates have been used in the valuation of
postretirement health insurance benefits as of 2000 and for the beginning of the
2001 valuation. The trend rate used for those periods was 6.5%. As of September
30, 2001, cost trend rates will no longer materially impact the plan.
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.
Prior to the spin-off, Ralston provided health care and life insurance
benefits for certain groups of retired Energizer employees. 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.
42
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
The following table presents the net expense/(income) allocated to
Energizer for the respective plans prior to the spin-off.
<TABLE>
<CAPTION>
2000 1999
----- ----
<S> <C> <C>
Defined benefit plans....................................... $(2.1) $5.2
Postretirement benefits..................................... 3.3 5.8
</TABLE>
(11) 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%. Amounts
charged to expense during fiscal 2001 were $3.8. 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. Participant contributions were matched in accordance with
Ralston's plan terms. 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 and $3.0 in 1999.
(12) 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 13 below, and repaid the interim-funding facilities.
Notes payable at September 30, 2001 and 2000 consisted of notes payable to
financial institutions with original maturities of less than one year of $110.3
and $135.0, respectively, and had a weighted-average interest rate of 6.9% and
7.9%, respectively.
The detail of long-term debt at September 30 is as follows.
<TABLE>
<CAPTION>
2001 2000
------ ------
<S> <C> <C>
Private Placement, interest rates ranging from 7.8% to 8.0%,
due 2003 to 2010.......................................... $175.0 $175.0
Revolving Credit Facility, interest rate 3.7%, due 2006..... 50.0 195.0
------ ------
225.0 370.0
Less current portion........................................ -- --
------ ------
Total long-term debt...................................... $225.0 $370.0
====== ======
</TABLE>
Energizer maintains total committed long-term debt facilities of $625.0, of
which $400.0 remained available as of September 30, 2001.
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: $15.0 in 2003,
$160.0 in 2005 and $50.0 thereafter.
(13) 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) for accounting purposes and is therefore not consolidated for financial
reporting purposes. The SPE's sole purpose is the acquisition of receivables
from Energizer and the sale of its interests in the receivables to a
multi-seller receivables securitization company. Energizer's investment in the
SPE is classified as Other Current Assets on the Consolidated Balance Sheet as
disclosed below.
The activity related to the SPE at September 30, is presented in the table
below. 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.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
-------------------
2001 2000
-------- --------
<S> <C> <C>
Total outstanding accounts receivable sold to SPE........... $184.1 $257.1
Cash received by SPE from sale of receivables to a third
party..................................................... 86.2 100.0
Subordinated retained interest.............................. 97.9 157.1
Energizer's investment in SPE............................... 97.9 157.1
</TABLE>
(14) 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, 2001,
there were no shares of preferred stock outstanding.
(15) 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.
44
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
At September 30, 2001, there were 300 million shares of ENR stock
authorized, of which approximately 8.4 million 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, of which approximately 3.8 million shares have been
repurchased.
(16) 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. Energizer has not designated any financial instruments as
hedges for accounting purposes. 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>
2001 2000
------ ------
<S> <C> <C>
INSTRUMENT
Forwards.................................................. $121.3 $122.5
Options................................................... 16.0 25.0
CURRENCY
Swiss franc............................................... 105.7 117.2
Canadian dollar........................................... -- 25.0
Euro...................................................... 27.5 --
Other currencies.......................................... 4.1 5.3
</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 that 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.
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, 2001 and 2000, the fair market value of long-term debt was
$242.2 and $371.9, respectively, compared to its carrying value of $225.0 and
$370.0, respectively. The fair value of the long-term debt is estimated using
yields obtained from independent pricing sources for similar types of borrowing
arrangements.
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 receive a total net
payment of $6.7 and would be required to make a payment of $2.4 to
counterparties for outstanding foreign currency contracts at September 30, 2001
and 2000, 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.
(17) ENVIRONMENTAL AND LEGAL MATTERS
Government 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 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 2001, the buyer,
as well as its operating subsidiary which owns and operates the Gainesville
facility, filed petitions in bankruptcy court. 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.
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.
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 $5.9 at September 30, 2001
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 year.
Legal Proceedings - Energizer previously disclosed that Zinc Products
Company, a division of Alltrista Corp., a supplier of zinc cans used in the
manufacture of batteries, filed suit against Energizer, claiming breach of
contract when Energizer closed its Fremont, Ohio plant. In January of 2001, the
suit was dismissed upon a settlement payment, in an immaterial amount, by
Energizer.
In October of 2001, Energizer entered into separate settlement agreements
with Strategic Electronics and Duracell related to outstanding contract claims
associated with Duracell's and Energizer's on-label battery testers. Under the
terms of the agreements, mutual releases of all outstanding claims were given,
and Energizer was licensed to utilize any applicable patents related to its
on-label battery tester.
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 these 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 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 year.
(18) OTHER COMMITMENTS AND CONTINGENCIES
Future minimum rental commitments under noncancellable operating leases in
effect as of September 30, 2001 were: 2002 - $15.7, 2003 - $9.9, 2004 - $8.5,
2005 - $7.8, 2006 - $7.7 and thereafter - $31.7. These leases are primarily for
office facilities.
Total rental expense for all operating leases was $17.9, $17.5 and $21.5 in
2001, 2000 and 1999, respectively.
47
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(19) SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION
SUPPLEMENTAL BALANCE SHEET INFORMATION:
<TABLE>
<CAPTION>
2001 2000
-------- --------
<S> <C> <C>
INVENTORIES
Raw materials and supplies................................ $ 47.0 $ 64.0
Work in process........................................... 91.4 87.0
Finished products......................................... 222.9 308.1
-------- --------
Total Inventories...................................... $ 361.3 $ 459.1
======== ========
OTHER CURRENT ASSETS
Investment in SPE (see Note 13)........................... $ 97.9 $ 157.1
Miscellaneous receivables................................. 25.3 36.6
Deferred income tax benefits.............................. 46.3 38.9
Prepaid expenses.......................................... 39.8 44.1
Other..................................................... 0.6 2.0
-------- --------
Total Other Current Assets............................. $ 209.9 $ 278.7
======== ========
PROPERTY AT COST
Land...................................................... $ 10.1 $ 14.6
Buildings................................................. 147.6 140.6
Machinery and equipment................................... 834.5 816.9
Construction in progress.................................. 37.8 47.7
-------- --------
Total gross property................................... 1,030.0 1,019.8
Accumulated depreciation.................................. 553.9 534.4
-------- --------
Total Net Property..................................... $ 476.1 $ 485.4
======== ========
OTHER ASSETS
Goodwill (net of accumulated amortization: 2001 - $32.7,
2000 - $117.0)......................................... $ 38.1 $ 168.0
Other intangible assets (net of accumulated amortization:
2001 - $364.7, 2000 - $356.1).......................... 72.7 82.4
Pension asset............................................. 106.2 102.0
Deferred charges and other assets......................... 21.2 25.4
-------- --------
Total Other Assets..................................... $ 238.2 $ 377.8
======== ========
OTHER CURRENT LIABILITIES
Accrued advertising, promotion and allowances............. $ 143.2 $ 123.2
Accrued salaries, vacations and incentive compensation.... 47.2 47.4
Restructuring reserves.................................... 0.6 3.9
Other..................................................... 84.7 74.1
-------- --------
Total Other Current Liabilities........................ $ 275.7 $ 248.6
======== ========
OTHER NON-CURRENT LIABILITIES
Postretirement benefit liability.......................... $ 91.7 $ 87.7
Other non-current liability............................... 77.8 69.0
-------- --------
Total Other Non-current Liabilities.................... $ 169.5 $ 156.7
======== ========
</TABLE>
48
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
<TABLE>
<CAPTION>
2001 2000 1999
----- ----- -----
<S> <C> <C> <C>
Balance at beginning of year................................ $12.5 $19.3 $19.6
Provision charged to expense................................ 2.8 5.1 6.7
Write-offs, less recoveries................................. (3.9) (5.9) (7.0)
Transfer to SPE (see Note 13)............................... 0.4 (6.0) --
----- ----- -----
Balance at end of year...................................... $11.8 $12.5 $19.3
===== ===== =====
</TABLE>
SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION:
<TABLE>
<CAPTION>
2001 2000 1999
----- ----- -----
<S> <C> <C> <C>
Interest paid............................................... $36.1 $19.5 $11.7
Income taxes paid........................................... 83.1 86.5 44.0
</TABLE>
(20) 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 (the United States, Canada and Caribbean),
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 16.6%, 15.3% and 13.5% of
total net sales in 2001, 2000 and 1999, respectively, primarily in North
America.
<TABLE>
<CAPTION>
2001 2000 1999
------------------- ------------------- -------------------
TOTAL EXTERNAL TOTAL EXTERNAL TOTAL EXTERNAL
NET SALES SALES SALES SALES SALES SALES SALES
- --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
North America.................... $1,068.8 $ 970.6 $1,228.2 $1,123.9 $1,131.1 $1,031.1
Asia Pacific..................... 373.8 329.0 465.2 395.5 432.0 386.8
Europe........................... 264.1 261.4 287.1 278.6 326.1 322.8
South and Central America........ 143.2 133.2 147.5 129.7 154.4 137.8
-------- -------- -------- -------- -------- --------
Total Net Sales............. $1,694.2 $1,927.7 $1,878.5
======== ======== ========
</TABLE>
49
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
2001 2000 1999
------- ------ ------
<S> <C> <C> <C>
OPERATING PROFIT BEFORE RESTRUCTURING CHARGES,
AMORTIZATION AND UNUSUAL ITEMS
North America........................................... $ 203.0 $311.9 $291.4
Asia Pacific............................................ 75.8 111.9 89.2
Europe.................................................. (2.6) (0.2) (1.2)
South and Central America............................... 7.1 12.1 14.5
------- ------ ------
Total segment profitability.......................... 283.3 435.7 393.9
General corporate expenses.............................. (20.9) (37.4) (54.0)
Research and development expense........................ (46.4) (49.9) (48.5)
------- ------ ------
Operating Profit before Restructuring Charges,
Amortization and Unusual Items..................... 216.0 348.4 291.4
Provision for goodwill impairment....................... (119.0) -- --
Provisions for restructuring............................ (29.8) -- (9.9)
Intellectual property rights income..................... 20.0 -- --
Costs related to spin-off............................... -- (5.5) --
Loss on disposition of Spanish affiliate................ -- (15.7) --
Amortization............................................ (21.2) (24.1) (25.0)
Interest and other financial items...................... (34.5) (23.9) (8.3)
------- ------ ------
Total Earnings from Continuing Operations Before
Income Taxes....................................... $ 31.5 $279.2 $248.2
======= ====== ======
DEPRECIATION
North America........................................... $ 38.1 $ 34.8 $ 45.0
Asia Pacific............................................ 11.5 12.4 11.1
Europe.................................................. 6.4 7.7 10.3
South and Central America............................... 2.6 3.0 2.0
------- ------ ------
Total Depreciation Expense........................... $ 58.6 $ 57.9 $ 68.4
======= ====== ======
</TABLE>
50
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
ASSETS AT YEAR-END
North America........................................ $ 851.7 $ 956.5 $ 815.5
Asia Pacific......................................... 195.7 245.7 271.4
Europe............................................... 259.2 244.7 282.2
South and Central America............................ 80.2 96.2 98.0
-------- -------- --------
Total segment assets.............................. 1,386.8 1,543.1 1,467.1
Goodwill and other intangible assets................. 110.8 250.4 299.4
Investment in discontinued operations................ -- -- 67.2
-------- -------- --------
Total Assets...................................... $1,497.6 $1,793.5 $1,833.7
======== ======== ========
CAPITAL EXPENDITURES
North America........................................ $ 69.0 $ 56.0 $ 39.6
Asia Pacific......................................... 4.6 8.4 18.4
Europe............................................... 2.6 6.0 8.9
South and Central America............................ 1.7 2.4 2.3
-------- -------- --------
Total Capital Expenditures........................ $ 77.9 $ 72.8 $ 69.2
======== ======== ========
</TABLE>
GEOGRAPHIC SEGMENT INFORMATION:
<TABLE>
<CAPTION>
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
NET SALES
United States........................................ $ 903.4 $1,053.5 $ 972.4
International........................................ 790.8 874.2 906.1
-------- -------- --------
Total Net Sales................................... $1,694.2 $1,927.7 $1,878.5
======== ======== ========
LONG-LIVED ASSETS
United States........................................ $ 527.1 $ 517.9 $ 404.6
International........................................ 187.2 345.3 387.9
-------- -------- --------
Total Long Lived-Assets........................... $ 714.3 $ 863.2 $ 792.5
======== ======== ========
</TABLE>
Supplemental product information is presented below for revenues from
external customers.
<TABLE>
<CAPTION>
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
NET SALES
Alkaline Batteries................................... $1,124.5 $1,282.3 $1,205.5
Carbon Zinc Batteries................................ 263.4 324.3 366.7
Lighting Products.................................... 114.0 130.4 131.1
Miniature Batteries.................................. 67.2 64.9 65.7
Other................................................ 125.1 125.8 109.5
-------- -------- --------
Total Net Sales................................... $1,694.2 $1,927.7 $1,878.5
======== ======== ========
</TABLE>
51
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(21) 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 December holiday season.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
------ ------ ------ -------
<S> <C> <C> <C> <C>
FISCAL 2001
Net sales (a)..................................... $559.3 $355.0 $347.2 $ 432.7
Gross profit (a).................................. 247.7 150.4 131.4 165.6
Net earnings/(loss)............................... 54.2 5.6 15.7 (114.5)
Basic and diluted earnings/(loss) per share....... $ 0.57 $ 0.06 $ 0.17 $ (1.25)
</TABLE>
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
------ ------ ------ ------
<S> <C> <C> <C> <C>
FISCAL 2000
Net sales (a)...................................... $678.2 $364.0 $404.3 $481.2
Gross profit (a)................................... 334.6 155.4 184.2 209.5
Earnings from continuing operations (b)............ 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 (c)
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
</TABLE>
(a) Certain reclassifications have been made to comply with EITF 00-10, 00-14
and 00-25. See Note 2 for further discussion.
<TABLE>
<CAPTION>
FIRST SECOND THIRD
------ ------ ------
<S> <C> <C> <C>
FISCAL 2001
Net sales as disclosed in 10Q.............................. $558.7 $351.9 $346.6
Reclassifications, net..................................... 0.6 3.1 0.6
------ ------ ------
Reclassified net sales..................................... $559.3 $355.0 $347.2
Gross profit as disclosed in 10Q........................... $266.7 $162.3 $145.0
Reclassifications, net..................................... (19.0) (11.9) (13.6)
------ ------ ------
Reclassified gross profit.................................. $247.7 $150.4 $131.4
</TABLE>
52
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
------ ------ ------ ------
<S> <C> <C> <C> <C>
FISCAL 2000
Net sales as disclosed in 10K...................... $673.6 $359.9 $402.8 $478.0
Reclassifications, net............................. 4.6 4.1 1.5 3.2
------ ------ ------ ------
Reclassified net sales............................. $678.2 $364.0 $404.3 $481.2
Gross profit as disclosed in 10K................... $351.4 $167.3 $196.9 $224.0
Reclassifications, net............................. (16.8) (11.9) (12.7) (14.5)
------ ------ ------ ------
Reclassified gross profit.......................... $334.6 $155.4 $184.2 $209.5
</TABLE>
(b) Earnings from continuing operations include the following items:
<TABLE>
<CAPTION>
2001 2000
------ -----
<S> <C> <C>
Second quarter
Costs related to spin-off................................. (3.3)
Loss on disposition of Spanish affiliate.................. -- (15.7)
Capital loss tax benefits................................. -- 24.4
Third quarter
Intellectual property rights income....................... 12.3 --
Fourth quarter
Provision for goodwill impairment......................... (119.0) --
Provisions for restructuring.............................. (19.4) --
</TABLE>
(c) For the 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.
(22) PRO FORMA FINANCIAL RESULTS
The pro forma consolidated statements of earnings for the year ended
September 30, 2000 and 1999 present the consolidated results of Energizer's
operations assuming the spin-off had occurred as of October 1, 1999. Such
statements of earnings has been prepared by adjusting the historical statement
of earnings to indicate the effect of estimated costs and expenses, the
recapitalization associated with the spin-off and the synchronization of
international operations' reporting.
The pro forma results from September 30, 2000 also reflect the
synchronization of international operations' reporting (see Note 2).
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.
53
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 2000
------------------------------------------------------
PRO FORMA REPORTING
HISTORICAL ADJUSTMENTS SYNCHRONIZATION PRO FORMA
9/30/00 SPIN-OFF ADJUSTMENTS (H) 9/30/00
---------- ----------- --------------- ---------
<S> <C> <C> <C> <C>
Net sales..................................... $1,927.7 $ -- $(28.4) $1,899.3
Cost of products sold......................... 1,044.0 -- (11.8) 1,032.2
Selling, general and administrative expense... 344.8 4.0(a) -- 348.8
-- 0.8(b) -- --
-- (0.8)(c) -- --
Advertising and promotion expense............. 164.7 -- -- 164.7
Research and development expense.............. 49.9 -- -- 49.9
Costs related to spin-off..................... 5.5 -- -- 5.5
Loss on disposition of Spanish affiliate...... 15.7 -- -- 15.7
Interest expense.............................. 27.5 17.1(d) (0.2) 44.4
Other financing items, net.................... (3.6) -- (1.0) (4.6)
-------- ------ ------ --------
Earnings/(loss) from continuing operations
before taxes................................ 279.2 (21.1) (15.4) 242.7
Income taxes.................................. (99.0) (23.4)(e) 6.4 (107.6)
-- 8.4(f) -- --
-------- ------ ------ --------
Earnings/(loss) from continuing operations.... $ 180.2 $(36.1) $ (9.0) $ 135.1
======== ====== ====== ========
Earnings per share from continuing operations
(g)
Basic....................................... $ 1.88 $ 1.41
Diluted..................................... $ 1.87 $ 1.40
Weighted-average shares of common stock (g)
Basic.................................... 96.1 96.1
Diluted.................................. 96.3 96.3
</TABLE>
(a) To reflect the incremental costs associated with becoming a stand-alone
company including Board of Director costs, stock exchange registration fees,
shareholder record keeping services, external financial reporting, treasury
services, tax planning and compliance, certain legal expenses, and
compensation planning and administration.
(b) To adjust pension income on plan assets transferred to Energizer plans upon
the spin-off.
(c) To eliminate expense of certain postretirement benefits retained by Ralston.
(d) To reflect the increase in interest expense associated with debt levels to
be assumed at 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.
(e) To reflect taxes as if Energizer was a single, stand-alone U.S. taxpayer.
(f) To reflect tax effect of the above pro forma adjustments.
(g) The number of shares used to compute earnings per share is based on the
weighted-average number of basic shares of Ralston stock outstanding during
the period adjusted for the distribution of one share of Energizer stock for
each three shares of Ralston stock and the weighted-average number of shares
of Energizer shares outstanding from April 1, 2000 to September 30, 2000.
54
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(h) To reflect adjustments related to the synchronization of international
reporting as discussed in Note 2 to the Consolidated Financial Statements.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1999
--------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
9/30/99 SPIN-OFF 9/30/99
---------- ----------- ---------
<S> <C> <C> <C>
Net sales.................................................. $1,878.5 $ -- $1,878.5
Cost of products sold...................................... 1,059.5 -- 1,059.5
Selling, general and administrative expense................ 368.4 8.0(a) 371.3
-- (3.3)(b) --
-- (1.8)(c)(d) --
Advertising and promotion expense.......................... 137.8 -- 137.8
Research and development expense........................... 48.5 -- 48.5
Provisions for restructuring............................... 7.8 -- 7.8
Interest expense........................................... 7.6 36.9(e) 44.5
Other financing items, net................................. 0.7 -- 0.7
-------- ------ --------
Earnings/(loss) from continuing operations before taxes.... 248.2 (39.8) 208.4
Income taxes............................................... (88.4) (11.2)(f) (91.5)
-- 8.1(g)
-------- ------ --------
Earnings/(loss) from continuing operations................. $ 159.8 $(42.9) $ 116.9
======== ====== ========
Earnings per share from continuing operations (h)
Basic and diluted........................................ $ 1.56 $ 1.14
Weighted-average shares of common stock (h)
Basic and diluted........................................ 102.6 102.6
</TABLE>
(a) To reflect the incremental costs associated with becoming a stand-alone
company including Board of Director costs, stock exchange registration fees,
shareholder record keeping services, external financial reporting, treasury
services, tax planning and compliance, certain legal expenses, and
compensation planning and administration.
(b) To adjust pension income on plan assets transferred to Energizer plans upon
the spin-off.
(c) To eliminate expense of certain postretirement benefits retained by Ralston.
(d) 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.
(e) To reflect the increase in interest expense associated with debt levels to
be assumed at spin-off. The adjustment reflects an average 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.
(f) To reflect taxes as if Energizer was a single, stand-alone U.S. taxpayer.
55
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
(g) To reflect tax effect of the above pro forma adjustments.
(h) The number of shares used to compute earnings per share is based on the
weighted-average number of basic shares of Ralston stock outstanding during
the period adjusted for the distribution of one share of Energizer stock for
each three shares of Ralston stock.
56
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>8
<FILENAME>doc7.txt
<DESCRIPTION>SUBSIDIARIES OF REGISTRANT
<TEXT>
<TABLE>
<CAPTION>
ENERGIZER SUBSIDIARIES 11/1/01
--------------------------------------
<S> <C> <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 100%
----------------------------------------- --------------- ----------------------
* Eveready Energizer Miniatures Limited . . India 49% Joint Venture
----------------------------------------- --------------- ----------------------
PT Energizer Indonesia. . . . . . . . . . Indonesia 100%
----------------------------------------- --------------- ----------------------
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 60.67%
----------------------------------------- --------------- ----------------------
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%
----------------------------------------- --------------- ----------------------
<FN>
* In liquidation
** "Delaware Holding Company"
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>9
<FILENAME>doc8.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<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 30, 2001 relating to the financial
statements, which appears in the Annual Report to Shareholders 2001, which is
incorporated in this Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
St. Louis, Missouri
December 14, 2001
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----