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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 June 30, 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 July 23, 2004:   

               77,976,429                   
 
 
 
     
 
 

Table of Contents


Part 1 – Financial Information
 
Part II – Other Information

 

 
     
 
 

CONSOLIDATED STATEMENT OF EARNINGS
(Condensed)
(Dollars in millions, except per share data - Unaudited)
 
  
 
    
 
    
 
    
 
  
 
  
Quarter Ended June 30,
    
Nine Months Ended June 30,
 
  
2004
    
2003
    
2004
    
2003
  
 
 
 
 
 
 
  
 
    
 
    
 
    
 
  
Net sales
$
651.9
 
$
594.0
 
$
2,056.5
 
$
1,529.0
 
 
  
 
    
 
    
 
    
 
  
Cost of products sold
  
325.0
   
359.0
   
1,017.0
   
874.0
 
Selling, general and administrative expense
  
126.5
   
107.9
   
383.2
   
252.9
 
Advertising and promotion expense
  
114.4
   
90.2
   
295.9
   
164.2
 
Research and development expense
  
16.7
   
16.0
   
53.5
   
34.1
 
Intellectual property rights income
  
-
   
(2.5
)
  
(1.5
)
  
(8.5
)
Interest expense
  
7.6
   
10.2
   
21.5
   
19.3
 
Other financing items, net
  
5.6
   
-
   
2.0
   
(1.1
)
 
 
 
 
 
 
  
 
    
 
    
 
    
 
  
Earnings before income taxes
  
56.1
   
13.2
   
284.9
   
194.1
 
                         
Income tax (provision)/benefit
  
(17.4
)
  
4.3
   
(77.8
)
  
(57.2
)
 
 
 
 
 
 
  
 
    
 
    
 
    
 
  
Net earnings
$
38.7
 
$
17.5
 
$
207.1
 
$
136.9
 
 
 
 
 
 
 
  
 
    
 
    
 
    
 
  
Basic earnings per share
$
0.48
 
$
0.21
 
$
2.52
 
$
1.59
 
Diluted earnings per share
$
0.46
 
$
0.20
 
$
2.43
 
$
1.55
 
 
  
 
    
 
    
 
    
 
  
 
  
 
    
 
    
 
    
 
  
STATEMENT OF COMPREHENSIVE INCOME:
  
 
    
 
    
 
    
 
  
 
  
 
    
 
    
 
    
 
  
Net earnings
$
38.7
 
$
17.5
 
$
207.1
 
$
136.9
 
Other comprehensive income, net of tax
  
 
    
 
    
 
    
 
  
Foreign currency translation adjustments
  
(10.7
)
  
26.9
   
19.0
   
33.7
 
Minimum pension liability change, net of tax of
 
 
    
 
    
 
    
 
  
$0.2 for nine months ended June 30, 2004
  
 
    
 
    
 
    
 
  
and $1.8 for nine months ended June 30, 2003
  
-
   
(0.1
)
  
(0.4
)
  
(6.1
)
Unrealized holding gain on available-for-sale securities,
  
 
    
 
    
 
    
 
  
net of tax of $(0.4)
  
(0.7
)
  
-
   
-
   
-
 
 
 
 
 
 
Total comprehensive income
$
27.3
 
$
44.3
 
$
225.7
 
$
164.5
 
 
 
 
 
 
                         
See accompanying Notes to Condensed Financial Statements
 
 
 
     
 
 

CONSOLIDATED BALANCE SHEET
(Condensed)
(Dollars in millions--Unaudited)
 
    
 
    
 
    
 
  
 
    
June 30,
    
September 30,
    
June 30,
 
 
    
2004
    
2003
    
2003
  
   
 
 
 
Assets
    
 
    
 
    
 
  
 
    
 
    
 
    
 
  
Current assets
    
 
    
 
    
 
  
Cash and cash equivalents
  
$
84.2
 
$
71.7
 
$
63.4
 
Restricted cash
    
3.6
   
-
   
-
 
Trade receivables, less allowance for doubtful
   
 
    
 
    
 
  
accounts of $16.4, $9.8 and $9.9, respectively
    
567.7
   
432.3
   
384.8
 
Inventories
    
460.5
   
430.6
   
493.0
 
Other current assets
    
207.0
   
308.5
   
254.0
 
   
 
 
 
Total current assets
    
1,323.0
   
1,243.1
   
1,195.2
 
   
 
 
 
 
    
 
    
 
    
 
  
Property at cost
    
1,383.2
   
1,339.1
   
1,327.7
 
Accumulated depreciation
    
(693.5
)
  
(637.9
)
  
(633.5
)
   
 
 
 
 
    
689.7
   
701.2
   
694.2
 
 
    
 
    
 
    
 
  
Goodwill
    
369.1
   
330.2
   
457.4
 
Intangible assets
    
306.6
   
308.8
   
193.9
 
Other assets
    
152.6
   
148.8
   
148.3
 
 
  
 
 
 
Total
  
$
2,841.0
 
$
2,732.1
 
$
2,689.0
 
 
  
 
 
 
 
    
 
    
 
    
 
  
Liabilities and Shareholders Equity
    
 
    
 
    
 
  
 
    
 
    
 
    
 
  
Current liabilities
    
 
    
 
    
 
  
Current maturities of long-term debt
  
$
20.0
 
$
20.0
 
$
-
 
Notes payable
    
132.3
   
66.1
   
52.1
 
Accounts payable
    
195.5
   
213.2
   
205.3
 
Other current liabilities
    
468.7
   
428.2
   
373.1
 
   
 
 
 
Total current liabilities
    
816.5
   
727.5
   
630.5
 
 
    
 
    
 
    
 
  
Long-term debt
    
921.5
   
913.6
   
1,008.0
 
 
    
 
    
 
    
 
  
Other liabilities
    
327.6
   
283.0
   
294.9
 
 
    
 
    
 
    
 
  
Shareholders equity
    
 
    
 
    
 
  
 
    
 
    
 
    
 
  
Common stock
    
1.0
   
1.0
   
1.0
 
Additional paid in capital
    
828.5
   
811.9
   
798.6
 
Retained earnings
    
568.4
   
367.1
   
336.2
 
Treasury stock
    
(557.2
)
  
(288.1
)
  
(295.4
)
Accumulated other comprehensive loss
    
(65.3
)
  
(83.9
)
  
(84.8
)
   
 
 
 
Total shareholders equity
    
775.4
   
808.0
   
755.6
 
 
  
 
 
 
Total
  
$
2,841.0
 
$
2,732.1
 
$
2,689.0
 
 
  
 
 
 
See accompanying Notes to Condensed Financial Statements

 

 
     
 
 

CONSOLIDATED STATEMENT OF CASH FLOWS
(Condensed)
(Dollars in millions - Unaudited)
 
    
 
    
 
  
 
  

 Nine Months Ended June 30,

 
    
2004
    
2003
  
   
 
 
Cash flow from operations
    
 
    
 
  
Net earnings
  
$
207.1
 
$
136.9
 
Non-cash items included in income
    
93.8
   
59.5
 
Changes in assets and liabilities used in operations
    
14.0
   
113.5
 
Other, net
    
11.4
   
6.0
 
   
 
 
Net cash flow from operations
    
326.3
   
315.9
 
 
    
 
    
 
  
Cash flow from investing activities
    
 
    
 
  
Property additions
    
(76.6
)
  
(34.2
)
Proceeds from sale of property
    
1.5
   
7.1
 
Purchase of Schick-Wilkinson Sword, net of cash acquired
    
-
   
(922.9
)
Other, net
    
4.6
   
-
 
   
 
 
Net cash used by investing activities
    
(70.5
)
  
(950.0
)
 
    
 
    
 
  
Cash flow from financing activities
    
 
    
 
  
Net cash proceeds from issuance of long-term debt
    
65.0
   
1,058.1
 
Principal payments on long-term debt (including
    
 
    
 
  
current maturities)
    
(58.5
)
  
(230.0
)
Proceeds from acquisition bridge loan
    
-
   
550.0
 
Payment of acquisition bridge loan
    
-
   
(550.0
)
Net increase/(decrease) in notes payable
    
15.4
   
(47.0
)
Common stock purchased
    
(280.1
)
  
(131.4
)
Proceeds from issuance of common stock
    
18.3
   
13.4
 
   
 
 
Net cash (used)/provided by financing activities
    
(239.9
)
  
663.1
 
   
 
 
 
    
 
    
 
  
Effect of exchange rate changes on cash
    
0.2
   
0.5
 
   
 
 
 
    
 
    
 
  
Net increase in cash and cash equivalents
    
16.1
   
29.5
 
 
    
 
    
 
  
Cash and cash equivalents, beginning of period
    
71.7
   
33.9
 
 
  
 
 
Cash and cash equivalents, end of period
  
$
87.8
 
$
63.4
 
 
  
 
 
 
    
 
    
 
  
See accompanying Notes to Condensed Financial Statements
 
 
 
     
 
 

ENERGIZER HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 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. (the Company) for the year ended September 30, 2003.

Note 2 – The Company 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 $0.5 and $0.3 for each of the quarters ending June 30, 2004 and 2003, respectively, and $1.3 and $1.5 for each of the nine months ended June 30, 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 $1.9 and $1.5 for the quarters ended June 30, 2004 and 2003, respectively, and $4.5 and $4.7 for the nine months ended June 30, 2004 and 2003, respectively. Pro forma disclosures required under SFAS 123, as if the Company had adopted the f air 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
Nine Months Ended
 
  
June 30,
June 30,
 
  
2004
 
2003
2004
 
2003
   
   
 
   
 
Net earnings/(loss):
    
 
      
 
    
 
      
 
  
As reported
  
$
38.7
   
$
17.5
 
$
207.1
   
$
136.9
 
Pro forma adjustments