UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 2003
Commission File No. 001-15401
ENERGIZER HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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MISSOURI |
43-1863181 |
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(State of Incorporation) |
(I.R.S. Employer Identification No.) |
533 MARYVILLE UNIVERSITY DRIVE, ST. LOUIS MISSOURI 63141
(Address of principal executive offices) (Zip Code)
(314) 985-2000
(Registrant's telephone number, including area code)
Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.
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YES: |
x |
NO: |
o |
Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
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YES: |
x |
NO: |
o |
Number of shares of Energizer Holdings, Inc. common stock, $.01 par value, outstanding as of the close of business on January 31, 2004:
81,454,264
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PART I - FINANCIAL INFORMATION
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ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Condensed)
(Dollars in millions, except per share data - Unaudited)
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Quarter Ended December 31, | |||||
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2003 |
2002 |
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Net sales |
$ |
811.7 |
$ |
572.4 |
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Cost of products sold |
402.5 |
307.7 |
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Selling, general and administrative expense |
129.4 |
75.6 |
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Advertising and promotion expense |
92.7 |
47.2 |
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Research and development expense |
16.1 |
8.8 |
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Intellectual property rights income |
- |
(6.0 |
) | |||
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Interest expense |
7.2 |
4.4 |
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Other financing items, net |
(1.9 |
) |
(0.3 |
) | ||
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Earnings before income taxes |
165.7 |
135.0 |
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Income tax provision |
(50.7 |
) |
(48.6 |
) | ||
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Net earnings |
$ |
115.0 |
$ |
86.4 |
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Basic earnings per share |
$ |
1.37 |
$ |
0.98 |
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Diluted earnings per share |
$ |
1.32 |
$ |
0.95 |
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STATEMENT OF COMPREHENSIVE INCOME: |
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Net earnings |
$ |
115.0 |
$ |
86.4 |
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Other comprehensive income, net of tax |
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Foreign currency translation adjustments |
43.0 |
7.5 |
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Minimum pension liability change, net of tax of |
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$0.2 in fiscal 2004 and $1.8 in fiscal 2003 |
(0.6 |
) |
(5.9 |
) | ||
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Total comprehensive income |
$ |
157.4 |
$ |
88.0 |
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See accompanying Notes to Condensed Financial Statements | ||||||
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ENERGIZER HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(Condensed)
(Dollars in millions--Unaudited) | |||||||||
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December 31, |
September 30, |
December 31, |
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2003 |
2003 |
2002 |
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Assets |
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Current assets |
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Cash and cash equivalents |
$ |
88.5 |
$ |
71.7 |
$ |
134.0 |
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Trade receivables, less allowance for doubtful |
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accounts of $11.0, $9.8 and $7.3, respectively |
496.5 |
432.3 |
271.3 |
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Inventories |
401.0 |
430.6 |
296.4 |
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Other current assets |
327.8 |
308.5 |
335.7 |
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Total current assets |
1,313.8 |
1,243.1 |
1,037.4 |
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Property at cost |
1,370.5 |
1,339.1 |
1,051.5 |
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Accumulated depreciation |
(664.9 |
) |
(637.9 |
) |
(601.8 |
) | |||
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705.6 |
701.2 |
449.7 |
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Goodwill |
345.2 |
330.2 |
37.6 |
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Intangible assets |
312.9 |
308.8 |
74.6 |
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Other assets |
149.9 |
148.8 |
139.0 |
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Total |
$ |
2,827.4 |
$ |
2,732.1 |
$ |
1,738.3 |
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Liabilities and Shareholders Equity |
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Current liabilities |
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Current maturities of long-term debt |
$ |
20.0 |
$ |
20.0 |
$ |
15.0 |
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Notes payable |
74.1 |
66.1 |
75.7 |
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Accounts payable |
178.7 |
213.2 |
90.2 |
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Other current liabilities |
512.3 |
428.2 |
418.7 |
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Total current liabilities |
785.1 |
727.5 |
599.6 |
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Long-term debt |
910.2 |
913.6 |
160.0 |
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Other liabilities |
290.4 |
283.0 |
201.7 |
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Shareholders equity |
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Common stock |
1.0 |
1.0 |
1.0 |
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Additional paid in capital |
814.0 |
811.9 |
790.6 |
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Retained earnings |
480.9 |
367.1 |
288.3 |
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Treasury stock |
(412.7 |
) |
(288.1 |
) |
(192.1 |
) | |||
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Accumulated other comprehensive loss |
(41.5 |
) |
(83.9 |
) |
(110.8 |
) | |||
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Total shareholders equity |
841.7 |
808.0 |
777.0 |
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Total |
$ |
2,827.4 |
$ |
2,732.1 |
$ |
1,738.3 |
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See accompanying Notes to Condensed Financial Statements | |||||||||
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ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Condensed)
(Dollars in millions - Unaudited) | ||||||
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Quarter Ended December 31, | |||||
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2003 |
2002 |
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Cash flow from operations |
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Net earnings |
$ |
115.0 |
$ |
86.4 |
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Non-cash items included in income |
34.3 |
17.7 |
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Changes in assets and liabilities used in operations |
8.0 |
40.7 |
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Other, net |
1.0 |
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(1.6 |
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Net cash flow from operations |
158.3 |
143.2 |
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Cash flow from investing activities |
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Property additions |
(18.7 |
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(5.9 |
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Proceeds from sale of property |
0.2 |
0.5 |
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Other, net |
(1.6 |
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- |
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Net cash used by investing activities |
(20.1 |
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(5.4 |
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Cash flow from financing activities |
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Principal payments on long-term debt (including |
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current maturities) |
(6.4 |
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- |
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Net increase/(decrease) in notes payable |
7.4 |
(22.5 |
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Treasury stock purchases |
(127.9 |
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(18.0 |
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Other, net |
2.9 |
1.9 |
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Net cash used by financing activities |
(124.0 |
) |
(38.6 |
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Effect of exchange rate changes on cash |
2.6 |
0.9 |
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Net increase in cash and cash equivalents |
16.8 |
100.1 |
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Cash and cash equivalents, beginning of period |
71.7 |
33.9 |
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Cash and cash equivalents, end of period |
$ |
88.5 |
$ |
134.0 |
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See accompanying Notes to Condensed Financial Statements |
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ENERGIZER HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
December 31, 2003
(Dollars in millions, except per share data – Unaudited)
Note 1 – The accompanying unaudited financial statements have been prepared in accordance with Article 10 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year. These statements should be read in conjunction with the financial statements and notes thereto for Energizer Holdings, Inc. (Energizer) for the year ended September 30, 2003.
Note 2 – Energizer applies Accounting Principles Board (APB) No. 25 and related interpretations in accounting for its stock-based compensation. Charges to net earnings for stock-based compensation under APB 25 were $0.4 and $0.6 for each of the quarters ending December 31, 2003 and 2002, respectively. Had cost for stock-based compensation been determined based on the fair value method set forth under Statement of Financial Accounting Standards (SFAS) 123, charges to net earnings would have been an additional $1.2 and $1.5 for the quarters ended December 31, 2003 and 2002, respectively. Pro forma amounts shown below are for disclosure purposes only and may not be representative of future calculations.
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Quarter Ended | ||||||
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December 31, | ||||||
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2003 |
2002 | ||||
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Net earnings/(loss): |
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As reported |
$ |
115.0 |
$ |
86.4 |
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Pro forma adjustments |
(1.2 |
) |
(1.5 |
) | ||
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Pro forma |
$ |
113.8 |
$ |
84.9 |
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Basic earnings/(loss) per share: |
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As reported |
$ |
1.37 |
$ |
0.98 |
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Pro forma adjustments |
(0.01 |
) |
(0.02 |
) | ||
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Pro forma |
$ |
1.36 |
$ |
0.96 |
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Diluted earnings/(loss) per share: |
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As reported |
$ |
1.32 |
$ |
0.95 |
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Pro forma adjustments |
(0.01 |
) |
(0.02 |
) | ||
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Pro forma |
$ |
1.31 |
$ |
0.93 |
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Note 3 – Energizer’s operations are managed via three major segments - North America Battery (United States and Canada battery and lighting products), International Battery (rest of world battery and lighting products) and Razors and Blades (global razors, blades, and related products). Energizer reports segment results reflecting all profit derived from each outside customer sale in the region in which the customer is located. Research and development costs for the battery segments are combined and included in the Total Battery segment results. Research and development costs for Razors and Blades are included in that segment’s results. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, major restructuring charges and amortization of intangible assets. Financial items, such as interest income and expense, are managed on a global basis at the corporate level.
Historical segment sales and profitability for the quarter ended December 31, 2003 and 2002, respectively, are p