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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended March 31, 2004

Commission File No. 001-15401
 
 
 
ENERGIZER HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

MISSOURI               43-1863181
(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.
 
YES: x      NO: o
 
Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
 
YES: x      NO: o

Number of shares of Energizer Holdings, Inc. common stock, $.01 par value, outstanding as of the close of business on April 30, 2004:   

                82,010,416             
 
 
  1  
 
 
Table of Contents
 
Part 1 – Financial Information                                
Part II – Other Information                                    
 
  2  
 
 
PART I -    FINANCIAL INFORMATION

Item 1. Financial Statements.

 ENERGIZER HOLDINGS, INC.

 CONSOLIDATED STATEMENT OF EARNINGS

 (Condensed)

 (Dollars in millions, except per share data - Unaudited)

 
       
 
  
Quarter Ended March 31, 

Six Months Ended March 31, 

 
2004
2003
2004
2003
     
   
   
   
 
Net sales    $  592.9    $  362.6    $
1,404.6
    $  935.0  
Cost of products sold
    
289.5
   
207.3
   
692.0
   
515.0
 
Selling, general and administrative expense
    
127.3
   
69.4
   
256.7
   
145.0
 
Advertising and promotion expense
    
88.8
   
26.8
   
181.5
   
74.0
 
Research and development expense
    
20.7
   
9.3
   
36.8
   
18.1
 
Intellectual property rights income
    
(1.5
)
  
-
   
(1.5
)
  
(6.0
)
Interest expense
    
6.7
   
4.7
   
13.9
   
9.1
 
Other financing items, net
    
(1.7
)
  
(0.8
)
  
(3.6
)
  
(1.1
)
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Earnings before income taxes
    
63.1
   
45.9
   
228.8
   
180.9
 
 
    
 
    
 
    
 
    
 
  
Income tax provision
    
(9.7
)
  
(12.9
)
  
(60.4
)
  
(61.5
)
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Net earnings
  
$
53.4
 
$
33.0
 
$
168.4
 
$
119.4
 
 
  
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Basic earnings per share
  
$
0.65
 
$
0.38
 
$
2.03
 
$
1.36
 
Diluted earnings per share
  
$
0.63
 
$
0.37
 
$
1.97
 
$
1.33
 
 
    
 
    
 
    
 
    
 
  
 
    
 
    
 
    
 
    
 
  
STATEMENT OF COMPREHENSIVE INCOME:
    
 
    
 
    
 
    
 
  
 
    
 
    
 
    
 
    
 
  
Net earnings
  
$
53.4
 
$
33.0
 
$
168.4
 
$
119.4
 
Other comprehensive income, net of tax
    
 
    
 
    
 
    
 
  
Foreign currency translation adjustments
    
(13.3
)
  
(0.7
)
  
29.7
   
6.8
 
Minimum pension liability change, net of tax of
   
 
    
 
    
 
    
 
  
$0.2 for six months ended March 31, 2004
    
 
    
 
    
 
    
 
  
and $1.8 for six months ended March 31, 2003
    
0.2
   
(0.1
)
  
(0.4
)
  
(6.0
)
Unrealized holding gain on available-for-sale securities,
    
 
    
 
    
 
    
 
  
net of tax of $0.4
    
0.7
   
-
   
0.7
   
-
 
   
 
 
 
 
Total comprehensive income
  
$
41.0
 
$
32.2
 
$
198.4
 
$
120.2
 
 
  
 
 
 
 
 
See accompanying Notes to Condensed Financial Statements
 
 
  3  
 
 

 ENERGIZER HOLDINGS, INC.

 CONSOLIDATED BALANCE SHEET

 (Condensed)

 (Dollars in millions--Unaudited)

       
 
March 31,
September 30,
March 31,
 

2004 

2003 

2003 

Assets
 
 
 
 
Current assets
 
Cash and cash equivalents 
  $
 89.4
   $
 71.7
   $  34.1  
Trade receivables, less allowance for doubtful
 
 
    
 
    
 
  
accounts of $11.4, $9.8 and $12.8, respectively
  
436.9
   
432.3
   
325.6
 
Inventories
  
449.3
   
430.6
   
520.6
 
Other current assets
  
281.6
   
308.5
   
248.9
 
 
 
 
 
Total current assets
  
1,257.2
   
1,243.1
   
1,129.2
 
 
 
 
 
 
  
 
    
 
    
 
  
Property at cost
  
1,389.2
   
1,339.1
   
1,313.4
 
Accumulated depreciation
  
(691.2
)
  
(637.9
)
  
(613.3
)
 
 
 
 
 
  
698.0
   
701.2
   
700.1
 
 
  
 
    
 
    
 
  
Goodwill
  
342.6
   
330.2
   
443.1
 
Intangible assets
  
310.6
   
308.8
   
192.4
 
Other assets
  
160.0
   
148.8
   
142.5
 
 
 
 
 
Total
$
2,768.4
 
$
2,732.1
 
$
2,607.3
 
 
 
 
 
 
  
 
    
 
    
 
  
Liabilities and Shareholders Equity
  
 
    
 
    
 
  
 
  
 
    
 
    
 
  
Current liabilities
  
 
    
 
    
 
  
Current maturities of long-term debt
$
20.0
 
$
20.0
 
$
15.0
 
Notes payable
  
68.7
   
66.1
   
706.3
 
Accounts payable
  
188.6
   
213.2
   
160.9
 
Other current liabilities
  
437.7
   
428.2
   
382.8
 
 
 
 
 
Total current liabilities
  
715.0
   
727.5
   
1,265.0
 
 
  
 
    
 
    
 
  
Long-term debt
  
865.9
   
913.6
   
375.0
 
 
  
 
    
 
    
 
  
Other liabilities
  
304.7
   
283.0
   
268.4
 
 
  
 
    
 
    
 
  
Shareholders equity
  
 
    
 
    
 
  
 
  
 
    
 
    
 
  
Common stock
  
1.0
   
1.0
   
1.0
 
Additional paid in capital
  
825.6
   
811.9
   
791.9
 
Retained earnings
  
531.6
   
367.1
   
320.7
 
Treasury stock
  
(421.5
)
  
(288.1
)
  
(303.1
)
Accumulated other comprehensive loss
  
(53.9
)
  
(83.9
)
  
(111.6
)
 
 
 
 
Total shareholders equity
  
882.8
   
808.0
   
698.9
 
 
 
 
 
Total
$
2,768.4
 
$
2,732.1
 
$
2,607.3
 
 
 
 
 
 
See accompanying Notes to Condensed Financial Statements
 
 
 
  4  
 
 

 ENERGIZER HOLDINGS, INC.

 CONSOLIDATED STATEMENT OF CASH FLOWS

 (Condensed)

 (Dollars in millions - Unaudited)

       
 

 Six Months Ended March 31,

   

2004 

2003 

   
Cash flow from operations
  
 
 
Net earnings
  
$
168.4
 
$
119.4
 
Non-cash items included in income
    
74.1
   
34.5
 
Changes in assets and liabilities used in operations
    
5.4
   
91.0
 
Other, net
    
1.8
   
0.7
 
   
 
 
Net cash flow from operations
    
249.7
   
245.6
 
 
    
 
    
 
  
Cash flow from investing activities
    
 
    
 
  
Property additions
    
(53.6
)
  
(14.1
)
Proceeds from sale of property
    
0.6
   
1.0
 
Purchase of Schick-Wilkinson Sword
    
-
   
(932.2
)
Other, net
    
0.1
   
-
 
   
 
 
Net cash used by investing activities
    
(52.9
)
  
(945.3
)
 
    
 
    
 
  
Cash flow from financing activities
    
 
    
 
  
Net cash proceeds from issuance of long-term debt
    
-
   
215.0
 
Principal payments on long-term debt (including
    
 
    
 
  
current maturities)
    
(50.2
)
  
-
 
Net increase in notes payable
    
1.2
   
608.9
 
Treasury stock purchases
    
(145.8
)
  
(128.9
)
Other, net
    
14.8
   
4.2
 
     
   
 
Net cash (used)/provided by financing activities
    
(180.0
)
  
699.2
 
   
 
 
 
    
 
    
 
  
Effect of exchange rate changes on cash
    
0.9
   
0.7
 
   
 
 
 
    
 
    
 
  
Net increase in cash and cash equivalents
    
17.7
   
0.2
 
 
    
 
    
 
  
Cash and cash equivalents, beginning of period
    
71.7
   
33.9
 
 
  
 
 
Cash and cash equivalents, end of period
  
$
89.4
 
$
34.1
 
 
  
 
 
               
 
    
 
    
 
  
See accompanying Notes to Condensed Financial Statements
 
 
  5  
 
 

ENERGIZER HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 2004
(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 March 31, 2004 and 2003, respectively, and $0.8 and $1.2 for each of the six months ended March 31, 2004 and 2003, 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 $1.3 and $1.6 for the quarters ended March 31, 2004 and 2003, respectively, and $2.5 and $3.1 for the six months ended March 31, 2004 and 2003, respectively. Pro forma disclosures required under SFAS 123, as if Energizer had adopted the fai r value-based method of accounting for stock options, are presented below and are for disclosure purposes only and may not be representative of future calculations.
 

 
  
Quarter Ended
Six Months Ended
 
  
March 31,
March 31,
 
    
2004
      
2003
    
2004
      
2003
  
   
   
 
   
 
Net earnings/(loss):
    
 
      
 
    
 
      
 
  
As reported
  
$
53.4
   
$
33.0
 
$
168.4
   
$
119.4
 
Pro forma adjustments
    
(1.3
)
    
(1.6
)
  
(2.5
)
    
(3.1
)
  
   
 
   
 
Pro forma
  
$
52.1
   
$
31.4
 
$
165.9
   
$
116.3