exv99w1
Exhibit 99.1
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Energizer Holdings, Inc.
533 Maryville University Dr.
St. Louis, MO 63141 |
FOR IMMEDIATE RELEASE
July 27, 2011
Energizer Holdings, Inc. Announces Third Quarter Results
Third Quarter Highlights
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Net Earnings per diluted share of $0.94 |
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Adjusted net earnings per diluted share of $1.37 |
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Net Sales of $1,234.5 million, up 15%, Organic sales growth up 3% (a) |
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(a) |
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See Net Sales Total Company table below |
St. Louis July 27, 2011Energizer Holdings, Inc. (NYSE: ENR) announced results for the
third fiscal quarter and the nine months ended June 30, 2011. Net earnings for the quarter were
$65.9 million, or $0.94 per diluted share, versus net earnings of $104.0 million, or $1.47 per
diluted share in the third fiscal quarter of 2010. Net earnings for the nine months ended June 30,
2011, were $215.4 million, or $3.04 per diluted share versus net earnings of $318.2 million, or
$4.51 per diluted share, in the same period last year.
The following table provides a reconciliation of net earnings per diluted share to adjusted net
earnings per diluted share.
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Quarter Ended June 30, |
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Nine Months Ended June 30, |
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2011 |
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2010 |
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2011 |
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2010 |
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Diluted
EPS GAAP |
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$ |
0.94 |
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$ |
1.47 |
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$ |
3.04 |
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$ |
4.51 |
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Impacts, net of tax: Expense (Income) |
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Household Products restructuring |
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0.24 |
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0.68 |
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Early debt retirement |
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0.18 |
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0.18 |
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Other realignment/integration |
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0.03 |
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0.01 |
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0.13 |
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0.09 |
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Acquisition inventory valuation |
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0.06 |
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Venezuela devaluation/other impacts |
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(0.08 |
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0.02 |
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0.24 |
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Adjustment to prior years tax accruals |
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(0.02 |
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(0.05 |
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(0.02 |
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(0.05 |
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Diluted EPS
adjusted (Non-GAAP) |
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$ |
1.37 |
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$ |
1.35 |
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$ |
4.09 |
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$ |
4.79 |
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Our year of investment remains on track, said Ward Klein, Chief Executive Officer. We are
pleased with the substantial growth within our Personal Care segment, including our wet shave and
Skin Care businesses. We continue to be excited about the Schick Hydro global new product
launch and are seeing significant trial and consumer satisfaction with the Hydro world class shave
2
experience. This major new product introduction, combined with our recent acquisition of American
Safety Razor, contributed to the substantial growth of our wet shave business.
Mr. Klein continued, Meanwhile, the restructuring of our Household Products battery production
footprint is well underway and remains on schedule to be substantially complete by the end of this
fiscal year. We believe this redefined global battery production platform appropriately aligns our
business with continued negative battery category trends. We are confident this effort and our
other investments will drive top and bottom line growth.
Net
Sales Total Company ($ in millions)
Quarter and Nine Months Ended June 30, 2011
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Q3 |
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%Chg |
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YTD |
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%Chg |
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Net Sales
FY 10 |
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$ |
1,076.8 |
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$ |
3,188.6 |
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Organic growth |
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27.6 |
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2.6 |
% |
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35.7 |
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1.1 |
% |
Impact of currency |
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42.5 |
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3.9 |
% |
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59.9 |
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1.9 |
% |
Chg. in Venezuela |
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4.4 |
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0.4 |
% |
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(19.4 |
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-0.6 |
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Impact of ASR |
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83.2 |
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7.7 |
% |
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182.1 |
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5.7 |
% |
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Net Sales
FY 11 |
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$ |
1,234.5 |
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14.6 |
% |
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$ |
3,446.9 |
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8.1 |
% |
For the quarter, net sales increased approximately 15% on a reported basis due to the
inclusion of American Safety Razor (ASR) and favorable currencies. On an organic basis, net sales
increased approximately 3% driven by sales growth in Personal Care, most notably in Skin Care.
Household Products organic sales were essentially flat for the quarter as improved revenue per unit
due to recent pricing actions and the positive effect of certain distribution gains were offset by
continued category declines in both units and dollars in North America and Western Europe.
Gross margin for the quarter was 46.4%, down 170 basis points versus fiscal 2010s third quarter.
This decrease was due primarily to the inclusion of value priced ASR products, which reduced the
overall gross margin by approximately 140 basis points in the quarter. In addition, there was a
negative impact on gross margin from commodity costs, primarily in batteries.
Advertising and promotion (A&P) was $156.2 million, or 12.7% of net sales for the quarter as
compared to $145.2 million, or 13.5% of net sales in the prior years third quarter. Excluding net
sales and A&P related to ASR in the current year quarter, A&P as a percent of sales was essentially
flat due to continued support behind the launch of Schick Hydro and the impact of timing of
spending in Household Products.
Total Selling, General and Administrative expense (SG&A) was $215.2 million, or 17.4% of net sales
as compared to $185.1 million, or 17.2% of net sales in the prior year quarter. This increase was
due primarily to the inclusion of approximately $14 million of expenses related to ASR, which
were not incurred in the prior year and the unfavorable impact of currency of approximately $9
million.
3
Net sales for the nine months ended June 30, 2011 increased approximately 8% on a reported basis
due primarily to the inclusion of ASR. On an organic basis, net sales for the nine month period
increased approximately 1% as higher sales in Personal Care due, in part, to the Schick Hydro
launch were offset by declines in Household Products.
Gross Margin for the nine months ended June 30, 2011 was 46.4%, down 140 basis points. This
decrease was due primarily to the inclusion of value priced ASR products, which reduced gross
margin by approximately 110 basis points during the period, higher commodity costs primarily in
batteries, and higher coupon and trade promotion related to the Schick Hydro launch. This was
partially offset by favorable product mix.
A&P for the nine months was $385.2 million, or 11.2% of net sales as compared to $310.7 million, or
9.7% of net sales in the prior year. Excluding the net sales and A&P related to ASR for the nine
months, A&P as a percent of sales was up approximately 200 basis points as compared to the same
period in the prior year primarily due to support behind the launch of Hydro.
SG&A for the nine months ended June 30, 2011 was $638.7 million, or 18.5% of net sales as
compared to $556.9 million, or 17.5% of net sales for the same period in the prior year. This
increase was due to the inclusion of approximately $36 million of expenses related to ASR, which
were not incurred in the prior year, the unfavorable impact of currency of approximately $11
million, and higher corporate expenses related to the increase in the underlying market value of
deferred compensation liabilities and higher pension expense due to the actuarial impact of lower
market discount rates on the value of pension liabilities.
Personal Care
Net Sales Personal Care ($ in millions)
Quarter and Nine Months Ended June 30, 2011
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Q3 |
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%Chg |
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YTD |
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%Chg |
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Net Sales
FY 10 |
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$ |
589.2 |
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$ |
1,555.2 |
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Organic growth |
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28.6 |
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4.9 |
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85.8 |
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5.5 |
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Impact of currency |
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22.3 |
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3.8 |
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30.8 |
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2.0 |
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Chg. In Venezuela |
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2.0 |
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0.3 |
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(9.6 |
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-0.6 |
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Impact of ASR |
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83.2 |
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14.1 |
% |
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182.1 |
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11.7 |
% |
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Net Sales
FY 11 |
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$ |
725.3 |
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23.1 |
% |
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$ |
1,844.3 |
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18.6 |
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For the quarter, net sales increased approximately 23% due, in part, to the inclusion of ASR
and favorable currencies. Organic sales growth was approximately 5% for the quarter, and this
growth was in comparison to the prior year quarter, which included the initial pipeline build for
the North America Schick Hydro launch. The net sales growth in the third quarter was driven
primarily by the following:
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Skin Care net sales increased 20%, of which 18% is organic sales growth due in part to
the timing of sun care shipments and lower sun care returns and the remainder is due to
favorable currency; and |
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Net sales in Wet Shave increased 31% including the impact of ASR and favorable
currency. Organic sales grew 1% due to higher sales of disposables and Schick Hydro mens
systems, which were mostly offset by anticipated lower sales of legacy mens sales, and
lower shipments of womens systems, and shave preparations. |
Net sales for the nine months showed a similar pattern as the third quarter and was up
approximately 19%, of which 6% was organic sales growth and the remainder was driven by ASR and
favorable currencies. The year-to-date net sales growth was driven primarily by:
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Net sales in Wet Shave increased 29%, including the impact of ASR and favorable
currency, offset by Venezuela. Organic sales increased 8% due primarily to the launch of
Schick Hydro mens systems and shave preparations, and higher shipments of disposables,
which were partially offset by lower sales of legacy mens systems; and |
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In Skin Care, net sales increased approximately 10% (9% organic and 1% currency) for
the current year nine months due to the favorable impact of lower prior year sun care
returns and higher shipments for the current sun care season. |
Segment Profit - Personal Care
($ in millions)
Quarter and Nine Months Ended June 30, 2011
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Q3% |
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Chg |
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YTD |
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%Chg |
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Segment Profit FY 10 |
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$ |
95.4 |
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$ |
331.1 |
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Operations |
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13.8 |
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14.5 |
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(38.2 |
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-11.5 |
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Impact of currency |
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8.1 |
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8.5 |
% |
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17.5 |
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5.3 |
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Chg. In Venezuela |
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1.3 |
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1.3 |
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(3.2 |
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-1.0 |
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Impact of ASR |
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11.9 |
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12.5 |
% |
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23.2 |
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7.0 |
% |
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Segment Profit FY 11 |
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$ |
130.5 |
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36.8 |
% |
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$ |
330.4 |
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-0.2 |
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Segment profit for the quarter was $130.5 million, up approximately 37% including the
favorable impact of ASR and currencies. Operationally, segment profit increased approximately $14
million, or 14%, on higher gross margin from the increased sales discussed above and lower A&P.
These favorable impacts were partially offset by higher product costs and overheads.
Segment profit for the nine months ended June 30, 2011 was essentially flat. The favorable
impacts of ASR and currencies were offset by operational results, which were down approximately
$38 million, or 12%, due
to increased A&P and overhead spending in support of the Schick Hydro launch and higher product
costs, partially offset by the margin impact of the higher organic sales growth noted above.
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Household Products
Net Sales Household Products ($ in millions)
Quarter and Nine Months Ended June 30, 2011
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Q3 |
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%Chg |
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YTD |
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%Chg |
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Net Sales FY 10 |
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$ |
487.6 |
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$ |
1,633.4 |
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Organic Change |
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(1.0 |
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-0.2 |
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(50.1 |
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-3.1 |
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Impact of currency |
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20.2 |
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4.1 |
% |
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29.1 |
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1.8 |
% |
Chg. In Venezuela |
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2.4 |
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0.5 |
% |
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(9.8 |
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-0.6 |
% |
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Net Sales FY 11 |
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$ |
509.2 |
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4.4 |
% |
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$ |
1,602.6 |
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-1.9 |
% |
Net sales increased approximately 4% for the quarter versus year ago driven by the impact of
favorable currencies. On an organic basis, net sales were essentially flat as pipeline fill for
new distribution and space gains in France and the U.S. and returns from strategic international
market investments offset continued category declines in the U.S. and Western Europe. In addition,
gains realized from the C, D and 9V price increase in the U.S. and other selected international
markets partially offset retail trade spending increases. We estimate that the dollar value of the
battery category in global measured markets has continued a negative trend, down approximately 4.5%
in our latest reported twelve weeks data.
Net sales for the nine months decreased approximately 2%, as the favorable impact of currencies
were offset by continued negative category value trends and increased retail trade spending earlier
this year, primarily in the U.S. and Western Europe.
Segment Profit Household Products ($ in millions)
Quarter and Nine Months Ended June 30, 2011
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Q3 |
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%Chg |
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YTD |
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%Chg |
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Segment Profit -
FY10 |
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$ |
89.9 |
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$ |
340.6 |
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Operations |
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(21.9 |
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-24.4 |
% |
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(62.2 |
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-18.2 |
% |
Impact of currency |
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9.7 |
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10.8 |
% |
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14.0 |
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4.1 |
% |
Chg. In Venezuela |
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2.3 |
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2.6 |
% |
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3.1 |
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0.9 |
% |
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Segment Profit -
FY11 |
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$ |
80.0 |
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-11.0 |
% |
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$ |
295.5 |
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-13.2 |
% |
Segment profit for the quarter was $80 million, down approximately $10 million, or 11%, versus
the same quarter last year including the favorable impacts of currencies and Venezuela.
Operationally, segment profit declined approximately $22 million, or 24%, due primarily to
increased commodity costs (unfavorable by approximately $9 million driven by higher prices for
zinc, silver and steel) and the timing of A&P investments (up approximately $11 million over the
prior year quarter).
Segment profit for the nine months decreased approximately $45 million, or 13%. The favorable
impact of currencies and Venezuela were offset by operational results, which declined
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approximately
$62 million, or 18%, due primarily to the category value declines (noted above), increased trade
spending, the unfavorable impact of higher raw material prices, and investments in growth
initiatives.
Our restructuring project, announced in the fourth quarter of fiscal 2010, remains on track and we
continue to estimate that total restructuring costs will be in the range of $75 to $85 million,
with the vast majority in fiscal 2011. We expect to generate annual savings of approximately $25
to $35 million by the end of fiscal 2012 and have recognized approximately $4 million thus far in
fiscal 2011. The third quarter and nine months ended June 30, 2011 included pre-tax restructuring
charges of approximately $21 million and $60 million, respectively.
Other Items
On May 19, 2011, the Company completed the issuance of $600 million principal amount of 4.7% Senior
Notes due May, 2021, with interest paid semi-annually beginning November, 2011. The majority of
the proceeds were used to repay existing indebtedness including refinancing $475 million of private
placement notes with maturities ranging from 2011 to 2013. The early retirement of certain of the
private placement notes resulted in make-whole payments totaling $19.9 million, pre-tax, which is
reflected as a separate line item on the attached Statement of Earnings.
For the quarter and nine months ended June 30, 2011, interest expense was $29.8 million and $88.1
million, respectively, both down as compared to the same period in the prior year due to lower
average borrowings. As noted above, a portion of the proceeds from the issuance of the senior
notes were used for the early redemption of certain private placement notes. This early redemption
required a notice period, which delayed our repayment of the private placement notes until late
June. We estimate that we incurred approximately $3 million of duplicate interest expense in the
third fiscal quarter as a result of this notice period.
Other financing expense was $2.2 million and $6.3 million for the quarter and nine months ended
June 30, 2011, respectively, due primarily to losses on foreign exchange hedge contracts, which
were more than offset by currency gains within segment profits. The prior year quarter included a
gain of approximately $5 million and the prior year nine months included a charge of approximately
$19 million, both related to the currency devaluation in Venezuela.
For the current year quarter, the effective tax rate was 34.7%. The effective tax rate in the
third fiscal quarter was negatively impacted by the Household Products restructuring as the
majority of the costs incurred were in low tax jurisdictions. For the nine months ended June 30,
2011, the effective tax rate was 33.6%. However, exclusive of the Household Products
restructuring, the effective tax rate for the current nine month period was approximately 31.4%.
Subsequent to the end of the third fiscal quarter and through July 25, the Company repurchased an
additional 1.2 shares of its common stock under the current Board authorization. This brings total
shares repurchased during fiscal 2011 to 2.2 million.
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For the quarter, capital expenditures were approximately $23 million and depreciation was
approximately $47 million. For the nine months, capital expenditures were approximately $65
million and depreciation was approximately $121 million.
Outlook / Guidance
In summary, we expect total earnings per share for the full fiscal year to be in the range of $3.90
- $4.10, which reflects the significant unfavorable impact of the items noted in footnote 2 of the
press release attachment. This is lower than previous guidance due to the make-whole payments
associated with the debt refinancing, which was not included in our prior guidance. Excluding
these items, which are primarily related to the Household Products restructuring, the acquisition
and integration of ASR and the impact of costs associated with the refinancing of our outstanding
indebtedness, we re-confirm that adjusted earnings per diluted share (Non-GAAP) for fiscal 2011 are
expected to be in the range of $5.10 to $5.30. Due to the timing of the recent share repurchase, we
do not expect it to have a significant impact on fiscal 2011 full year earnings per share.
Webcast Information
In conjunction with this announcement, the Company will hold an investor conference
call beginning at 10:00 a.m. eastern time today. The call will focus on third-quarter earnings,
year-to-date fiscal 2011 financial results and earnings guidance for Fiscal 2011. All interested
parties may access a live webcast of this conference call at www.energizer.com, under About the
Company, Investor Relations, and Webcasts and Presentations tabs or by using the following
link:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=124138&eventID=4155786
For those unable to participate during the live webcast, a replay will be available on
www.energizer.com, under About the Company, Investor Relations, and Webcasts and
Presentations tabs, for three months.
# # #
Non-GAAP Financial Measures. While Energizer Holdings, Inc. reports financial results in
accordance with accounting principles generally accepted in the U.S. (GAAP), this press release
includes non-GAAP financial measures. These non-GAAP measures, such as historic and estimated
future operating results, including EPS, net sales and segment profit, are adjusted to exclude the
impact of certain charges and recoveries, such as foreign currencies, the results of operations in
Venezuela, the acquisition of ASR and related transaction costs, the costs associated with the
restructuring and refinancing costs. The Company believes these non-GAAP measures (which are
accompanied by reconciliations to the comparable GAAP measures) provide
8
a more meaningful
comparison to the corresponding reported period and assist investors in performing analysis
consistent with financial models developed by research analysts. Investors should consider
non-GAAP measures in addition to, not as a substitute for, or superior to, the comparable GAAP
measures. Further, these non-GAAP measures may differ from similarly titled measures presented by
other companies.
Forward-Looking Statements. This document contains both historical and forward-looking statements.
Forward-looking statements are not based on historical facts but instead reflect our expectations,
estimates or projections concerning future results or events, including, without limitation,
statements regarding future earnings, investment or spending initiatives, restructuring charges and
cost savings related to our restructuring project, the impact of the elimination of pack upsizing
and certain price increases, anticipated advertising and promotional spending, the estimated impact
of foreign currency movements, the ASR acquisition, raw material and commodity costs, category
value and future volume, sales and growth in some of our businesses. These statements generally
can be identified by the use of forward-looking words or phrases such as believe, expect,
anticipate, may, could, intend, belief, estimate, plan, likely, will, should or
other similar words or phrases. These statements are not guarantees of performance and are
inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to
predict and could cause our actual results, performance or achievements to differ materially from
those expressed in or indicated by those statements. We cannot assure you that any of our
expectations, estimates or projections will be achieved.
The forward-looking statements included in this document are only made as of the date of this
document and we disclaim any obligation to publicly update any forward-looking statement to reflect
subsequent events or circumstances.
Numerous factors could cause our actual results and events to differ materially from those
expressed or implied by forward-looking statements, including, without limitation:
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The success of new products and the ability to continually develop new products; |
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Energizers ability to predict consumer consumption trends with respect to the overall
battery category and Energizers other businesses; |
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Energizers ability to improve operations and realize cost savings; |
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Energizers ability to continue planned advertising and other promotional spending may be
impacted by lower than anticipated cash flows, or by alternative investment opportunities; |
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Anticipating the impact of raw material and other commodity costs; |
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The possibility that estimates related to the restructuring initiatives may change as
management develops and finalizes its plans and that restructuring initiatives will have
favorable future impacts; |
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Energizers ability to timely implement the strategic initiatives in a manner that will
positively impact our financial condition and results of operation; |
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The impact of the strategic initiatives on Energizers relationships with its employees,
its major customers and vendors; |
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Risks related to the integration of the acquisition of ASR; |
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Energizers effective tax rate for the year could be impacted by legislative or regulatory
changes by federal, state and local, and foreign taxing authorities, as well as by the
profitability or losses of Energizers various subsidiary operations in both high-tax and
low-tax countries; |
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Estimating the impact of foreign currency exchange rates and offsetting hedges on
Energizers profitability for the year with any degree of certainty; and |
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Prolonged recessionary conditions in key global markets where Energizer competes could
result in significantly greater local currency movements and correspondingly greater negative
impact on Energizer than what can be anticipated from the current spot rates. |
In addition, other risks and uncertainties not presently known to us or that we consider immaterial
could affect the accuracy of any such forward-looking statements.
The list of factors above is illustrative, but by no means exhaustive. All forward-looking
statements should be evaluated with the understanding of their inherent uncertainty. Additional
risks and uncertainties include those detailed from time to time in Energizers publicly filed
documents; including its annual report on Form 10-K for the year ended September 30, 2010.
Investor Relations Contact:
Jackie Burwitz
314-985-2169
Jacquelinee.burwitz@energizer.com
ENERGIZER HOLDINGS, INC.
STATEMENT OF EARNINGS
(Condensed)
(In millions, except per share data Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, |
|
|
Nine Months Ended June 30, |
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
Net sales |
|
$ |
1,234.5 |
|
|
$ |
1,076.8 |
|
|
$ |
3,446.9 |
|
|
$ |
3,188.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold |
|
|
661.5 |
|
|
|
559.2 |
|
|
|
1,847.2 |
|
|
|
1,663.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
573.0 |
|
|
|
517.6 |
|
|
|
1,599.7 |
|
|
|
1,525.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
|
|
215.2 |
|
|
|
185.1 |
|
|
|
638.7 |
|
|
|
556.9 |
|
Advertising and promotion expense |
|
|
156.2 |
|
|
|
145.2 |
|
|
|
385.2 |
|
|
|
310.7 |
|
Research and development expense |
|
|
27.8 |
|
|
|
23.6 |
|
|
|
77.5 |
|
|
|
68.5 |
|
Household Products restructuring |
|
|
21.0 |
|
|
|
|
|
|
|
59.6 |
|
|
|
|
|
Interest expense |
|
|
29.8 |
|
|
|
30.8 |
|
|
|
88.1 |
|
|
|
95.1 |
|
Cost of early debt retirements |
|
|
19.9 |
|
|
|
|
|
|
|
19.9 |
|
|
|
|
|
Other financing expense, net |
|
|
2.2 |
|
|
|
(9.9 |
) |
|
|
6.3 |
|
|
|
24.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
100.9 |
|
|
|
142.8 |
|
|
|
324.4 |
|
|
|
469.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision |
|
|
35.0 |
|
|
|
38.8 |
|
|
|
109.0 |
|
|
|
151.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
65.9 |
|
|
$ |
104.0 |
|
|
$ |
215.4 |
|
|
$ |
318.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.95 |
|
|
$ |
1.48 |
|
|
$ |
3.07 |
|
|
$ |
4.55 |
|
Diluted |
|
$ |
0.94 |
|
|
$ |
1.47 |
|
|
$ |
3.04 |
|
|
$ |
4.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares of common stock - Basic |
|
|
69.7 |
|
|
|
70.1 |
|
|
|
70.1 |
|
|
|
69.9 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock -
Diluted |
|
|
70.6 |
|
|
|
70.7 |
|
|
|
70.9 |
|
|
|
70.5 |
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes to Condensed Financial Statements
2
Energizer Holdings, Inc.
Notes to Condensed Financial Statements
June 30, 2011
(in millions, except per share data)
1. |
|
Operating results for any quarter are not necessarily indicative of the results for any
other quarter or the full year. |
|
2. |
|
The following table provides a reconciliation of net earnings to adjusted net
earnings. |
|
|
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|
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|
|
|
|
|
Quarter Ended June 30, |
|
|
Nine Months Ended June 30, |
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
Net
Earnings GAAP |
|
$ |
65.9 |
|
|
$ |
104.0 |
|
|
$ |
215.4 |
|
|
$ |
318.2 |
|
Impacts, net of tax: Expense (Income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Household Products restructuring |
|
|
16.9 |
|
|
|
|
|
|
|
48.2 |
|
|
|
|
|
Early debt retirement |
|
|
12.5 |
|
|
|
|
|
|
|
12.5 |
|
|
|
|
|
Other realignment/integration |
|
|
2.3 |
|
|
|
0.9 |
|
|
|
9.2 |
|
|
|
6.5 |
|
Acquisition inventory valuation |
|
|
|
|
|
|
|
|
|
|
4.4 |
|
|
|
|
|
Venezuela devaluation/other impacts |
|
|
|
|
|
|
(5.7 |
) |
|
|
1.3 |
|
|
|
17.0 |
|
Adjustment to prior years tax accruals |
|
|
(1.1 |
) |
|
|
(3.7 |
) |
|
|
(1.1 |
) |
|
|
(3.7 |
) |
|
|
|
|
|
|
|
|
|
Net earnings adjusted (Non-GAAP) |
|
$ |
96.5 |
|
|
$ |
95.5 |
|
|
$ |
289.9 |
|
|
$ |
338.0 |
|
3. |
|
Operations for the Company are managed via two major segments Household Products
(Battery and Lighting Products) and Personal Care (Wet Shave/Blades, Skin Care, Feminine
Care and Infant Care). On November 23, 2010, we completed the acquisition of American
Safety Razor (ASR). ASR is a leading global manufacturer of private label/value wet
shaving razors and blades, and industrial and specialty blades and will be a part of the
Company s Personal Care segment. Segment performance is evaluated based on segment
operating profit, exclusive of general corporate expenses, share-based compensation costs,
costs associated with most restructuring, integration or business realignment activities
and amortization of intangible assets. Financial items, such as interest income and
expense and other financing items, are managed on a global basis at the corporate level. |
|
|
|
The Companys operating model includes a combination of stand-alone and combined business
functions between the Household Products and Personal Care businesses, varying by country
and region of the world. Shared functions include product warehousing and distribution,
various transaction processing functions, and in some countries, combined sales forces and
management. The Company applies a fully allocated cost basis, in which shared business
functions are allocated between the businesses. Such allocations do not represent the
costs of such services if performed on a stand-alone basis. |
|
|
|
The reduction in gross margin associated with the write-up and subsequent sale of inventory
acquired in the acquisition of ASR, which was $7.0, pre-tax, for the nine months ended June
30, 2011 is not reflected in the Personal Care segment, but rather presented as a separate
line item below segment profit, as it is a non-recurring item directly associated with the
ASR acquisition. Such presentation reflects managements view on how segment results are
evaluated. |
|
|
|
For the nine months ended June 30, 2011, the Company recorded a charge of $1.3 related to
the change in the value of its net monetary assets in Venezuela as a result of accounting
for the translation of this affiliate under the accounting rules governing a highly
inflationary economy. |
3
|
|
This result was recorded using an exchange rate of 5.6 Venezuelan Bolivar Fuerte to one
U.S. dollar at June 30, 2011. In the prior year quarter and nine months, the Company
recorded a gain of $5.1 and a charge of $19.1, respectively, related to the devaluation of
the exchange rate between the U.S. dollar and the Venezuelan Bolivar Fuerte. These
impacts, which are included in other financing on the Consolidated Statements of Earnings
(Condensed), are not considered in the evaluation of segment profit. However, normal
operating results in Venezuela, such as sales, gross margin and spending, have been
negatively impacted by translating at less favorable exchange rates for portions of fiscal
2011and by the impact of unfavorable economic conditions in the country. These operating
results remain part of the reported segment totals. The negative segment impacts of the
Venezuela devaluation and the unfavorable economic impact on operating results are shown
separately in the net sales and segment profit tables presented in the press release. |
|
|
|
On May 19, 2011, the Company completed the issuance of $600.0 principal amount of 4.7%
Senior Notes due May 2021, with interest paid semi-annually beginning November, 2011. The
vast majority of the proceeds of the offering were used to repay existing indebtedness
including the early redemption of certain private placement notes. The early retirement of
the certain private placement notes resulted in the payment of make whole premiums
totaling $19.9, pre-tax, which are reflected as a separate line item on the Consolidated
Statements of Earnings as well as the reconciliation of segment results to total earnings
before income taxes included in this footnote. |
|
|
|
Segment sales and profitability for the quarter and nine months ended June 30, 2011 and
2010, respectively, are presented below. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, |
|
|
Nine Months Ended June 30, |
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Care |
|
$ |
725.3 |
|
|
$ |
589.2 |
|
|
$ |
1,844.3 |
|
|
$ |
1,555.2 |
|
Household Products |
|
|
509.2 |
|
|
|
487.6 |
|
|
|
1,602.6 |
|
|
|
1,633.4 |
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
1,234.5 |
|
|
$ |
1,076.8 |
|
|
$ |
3,446.9 |
|
|
$ |
3,188.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Care |
|
$ |
130.5 |
|
|
$ |
95.4 |
|
|
$ |
330.4 |
|
|
$ |
331.1 |
|
Household Products |
|
|
80.0 |
|
|
|
89.9 |
|
|
|
295.5 |
|
|
|
340.6 |
|
|
|
|
|
|
|
|
|
|
Total operating profit |
|
|
210.5 |
|
|
|
185.3 |
|
|
|
625.9 |
|
|
|
671.7 |
|
General corporate and other expenses |
|
|
(27.1 |
) |
|
|
(18.2 |
) |
|
|
(93.5 |
) |
|
|
(72.6 |
) |
Household Products restructuring |
|
|
(21.0 |
) |
|
|
|
|
|
|
(59.6 |
) |
|
|
|
|
Acquisition inventory valuation |
|
|
|
|
|
|
|
|
|
|
(7.0 |
) |
|
|
|
|
ASR transaction costs/integration |
|
|
(4.0 |
) |
|
|
|
|
|
|
(11.6 |
) |
|
|
|
|
Amortization |
|
|
(5.6 |
) |
|
|
(3.4 |
) |
|
|
(15.5 |
) |
|
|
(10.2 |
) |
Venezuela devaluation/other impacts |
|
|
|
|
|
|
5.1 |
|
|
|
(1.3 |
) |
|
|
(19.1 |
) |
Cost of early debt retirements |
|
|
(19.9 |
) |
|
|
|
|
|
|
(19.9 |
) |
|
|
|
|
Interest and other financing items |
|
|
(32.0 |
) |
|
|
(26.0 |
) |
|
|
(93.1 |
) |
|
|
(100.2 |
) |
|
|
|
|
|
|
|
|
|
Total earnings before income taxes |
|
$ |
100.9 |
|
|
$ |
142.8 |
|
|
$ |
324.4 |
|
|
$ |
469.6 |
|
|
|
|
|
|
|
|
|
|
Supplemental product information is presented below for revenues from external customers: |
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, |
|
|
Nine Months Ended June 30, |
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet Shave/Blades |
|
$ |
446.4 |
|
|
$ |
340.1 |
|
|
$ |
1,194.9 |
|
|
$ |
928.7 |
|
Alkaline batteries |
|
|
300.3 |
|
|
|
286.2 |
|
|
|
939.8 |
|
|
|
976.5 |
|
Other batteries and lighting products |
|
|
208.9 |
|
|
|
201.4 |
|
|
|
662.8 |
|
|
|
656.9 |
|
Skin Care |
|
|
176.8 |
|
|
|
147.6 |
|
|
|
358.2 |
|
|
|
324.7 |
|
Feminine Care |
|
|
52.5 |
|
|
|
51.0 |
|
|
|
142.8 |
|
|
|
149.4 |
|
Infant Care |
|
|
48.7 |
|
|
|
50.5 |
|
|
|
147.5 |
|
|
|
152.4 |
|
Other personal care products |
|
|
0.9 |
|
|
|
|
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
1,234.5 |
|
|
$ |
1,076.8 |
|
|
$ |
3,446.9 |
|
|
$ |
3,188.6 |
|
|
|
|
|
|
|
|
|
|
4. |
|
Basic earnings per share is based on the average number of common 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. |