-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SoCjy8prJ3hsq6JKIZ/MX47guZEHOITxFEfjMfbyk9cchrEdtgicBRDzcsGtD811 +c3PqpBvrw3KLqm0yWOn4A== 0001096752-00-000048.txt : 20001218 0001096752-00-000048.hdr.sgml : 20001218 ACCESSION NUMBER: 0001096752-00-000048 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001215 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: SEC FILE NUMBER: 001-15401 FILM NUMBER: 789840 BUSINESS ADDRESS: STREET 1: 800 CHOUTEAU AVE CITY: ST LOUIS STATE: MO ZIP: 63102 BUSINESS PHONE: 3149822413 MAIL ADDRESS: STREET 1: CHECKERBOARD SQUARE CITY: ST LOUIS STATE: MO ZIP: 63164 10-K 1 0001.txt 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, 2000 Commission File No. 001-15401 ENERGIZER HOLDINGS, INC. Incorporated in Missouri IRS Employer Identification No. 43-1863181 800 Chouteau, St. Louis, Missouri 63102 Registrant's telephone number, including area code: 314-982-2000 ----------------------------------------------- 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, 2000: $1,928,837,085 (Excluded from this figure is the voting stock held by Registrant's Directors, 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 4, 2000: 94,402,011 DOCUMENTS INCORPORATED BY REFERENCE 1. Portions of Energizer Holdings, Inc. Year 2000 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 13, 2000 (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 facilities in 15 countries on 4 continents, and employ 3,415 employees in the United States and 7,065 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". 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 2000, those customers accounted for, in the aggregate, approximately 15.3% 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", 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, 2000, Eveready Battery Company, Inc., a subsidiary of Energizer, owned approximately 165 unexpired United States patents which have a range of expiration dates from September, 2000 to November, 2016, and had approximately 177 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, 2000, Eveready owned approximately 700 foreign patents and had approximately 650 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 Christmas 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 a high-growth domestic and global market. The alkaline battery segment, both in the United States and worldwide, is the fastest growing segment of the primary battery market. 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 October 7, 2000 was 32.9%. 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 9 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 1999. 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 $3.6 million 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 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 15 through 16, "ENERGIZER HOLDINGS, INC. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - OPERATING RESULTS - Segment Results" on pages 12 through 13, "ENERGIZER HOLDINGS, INC. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - OPERATING RESULTS - Research and Development Expense" on page 13, "ENERGIZER HOLDINGS, INC. - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - SEGMENT INFORMATION" on pages 44 through 45, and "ENERGIZER HOLDINGS, INC. - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - SUMMARY OF ACCOUNTING POLICIES - Research and Development Costs" on page 27 of the Energizer Holdings, Inc. Year 2000 Annual Report to Shareholders 2000, 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.
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 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 Chesterfield, Missouri (1) Ekala, Sri Lanka Cimanggis, Indonesia Johor, Malaysia Jurong, Singapore Tianjin, People's Republic of China
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, labeling or distribution ITEM 3. LEGAL PROCEEDINGS - - On April 8, 1998, Zinc Products Company, a division of Alltrista Corp., a supplier of zinc cans used in the manufacture of batteries, filed suit in federal district court for the Eastern District of Tennessee against Energizer, claiming breach of contract when Energizer closed its Fremont, Ohio plant. The plaintiff claims lost profits and other damages of approximately $2.8 million. The case has been set for trial in January, 2001. - - The U.S. Patent Office has awarded priority to Strategic Electronics (Energizer's exclusive licensor) over Duracell in the patent interference relating to the on-label battery tester. Duracell is expected to appeal. An earlier decision, which denied Energizer's separate patent claims and those of Eastman Kodak Company (which are licensed to Duracell) has been appealed to the federal district court for Washington, D.C. on February 2, 1998. Kodak filed a similar appeal, naming Energizer as a defendant on January 29, 1998. In a related matter, Strategic Electronics filed a declaratory judgment suit on September 9, 1999 in the federal district court for the Central District of California seeking additional payments of approximately $1 million under the license. Energizer filed a motion to dismiss which was granted in the spring of 2000. 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, 2000. 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: 56. 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. Since 1998, he has also served as Chief Executive Officer, President and Chairman of the Board of Agribrands International, Inc. Age: 66. 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: 55. 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: 46. 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: 45. 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: 38. 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: 59. 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: 40. 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: 48. Kapila Gunawardana - Vice President, Pan Am of Energizer since March, 2000. Mr. Gunawardana joined the Eveready Battery division of Union Carbide Corporation in 1968 and served as Vice President and Area Chairman, Pan Am from 1998 to 2000, as Managing Director, Eveready de Mexico from 1996-98, and as Area Finance Director, Pan Am Division of Eveready Battery Company from 1993-96. Age: 59. Luis Plana - Vice President, Europe of Energizer since March, 2000. Mr. Plana joined Eveready Battery Company, Inc. in 1985 and served as Vice President and Area Chairman, Europe from 1997 to 2000, as Vice Chairman, Europe for Eveready Battery Company from 1996-97, and as Managing Director from 1993-96. Age: 56. Steven Sanborn - Vice President, Technology, Research and Development since March, 2000. Mr. Sanborn joined Eveready Battery Company, Inc. in 1993 and served as Vice President and Chief Technology Officer for Eveready from 1999 to 2000, as Vice President of Technology and Engineering for Eveready's Energizer Power Systems division from 1993 to 1997, and as Vice President, Technology for Eveready itself from 1997 to 1999. Age: 55. Joseph J. Tisone - Vice President, Global Manufacturing since March, 2000. Mr. Tisone joined the Eveready Battery division of Union Carbide Corporation in 1976, and served as Vice President, Global Manufacturing of Eveready Battery Company, Inc. from 1998 to 2000, as Vice President/General Manager of Eveready's Energizer Power Systems division from 1997 to 1998, and as Vice President, Production of that division from 1993 to 1997. Age: 47. Robert K. Zimmermann - Vice President, Global Lighting Products of Energizer since May, 2000. Mr. Zimmermann joined Ralston Purina Company in 1971 and served as Vice President, Global Lighting Products of Eveready Battery Company, Inc. from 1999 to 2000, as Vice President, Pet Products, with responsibility for Europe, the Middle East and Africa from 1993 to 1999, and as Vice President, Pet Products - Latin America and Vice President, International Pet Food Marketing from 1992-1993. Age: 51 Mark Schafale - Vice President and Controller of Energizer since March, 2000. Mr. Schafale joined Ralston Purina Company in 1992 and served as Vice President and Director, Internal Audit for Ralston from 1996 to 2000, and as Director, Financial Accounting from 1994-96. Age: 40. William C. Fox - Vice President and Treasurer of Energizer since March, 2000. Mr. Fox joined Ralston Purina Company in 1989 and served as Director, Global Finance for Ralston from 1995 to 2000. Age: 38. Timothy L. Grosch - Secretary of Energizer since March, 2000. Mr. Grosch joined Ralston Purina Company in 1985 and served as Deputy General Counsel for Ralston from 1996 to 2000, and as Senior Counsel - Securities from 1994 - 96. Age: 46. 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 24, 2000, there were 21,016 shareholders of record of the ENR Stock. The following table sets forth range of market prices for the ENR Stock for the period from April 1, 2000 until September 30, 2000. 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 2001. MARKET PRICE RANGE Third Quarter $14.875 -- $23.1875 Fourth Quarter $18.6875 -- $24.50 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 page 19 of the Energizer Holdings, Inc. Year 2000 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 18 and the information appearing under "ENERGIZER HOLDINGS, INC - - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - SEGMENT INFORMATION" on pages 44 through 45 of the Energizer Holdings, Inc. Year 2000 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 17 through 18 of the Energizer Holdings, Inc. Year 2000 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 21 through 45, together with the report thereon of PricewaterhouseCoopers LLP on page 20, and the supplementary data under "ENERGIZER HOLDINGS, INC. - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - QUARTERLY FINANCIAL STATEMENTS" on page 46 of the Energizer Holdings, Inc. Year 2000 Annual 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 13, 2000 is hereby incorporated by reference. ITEM 11. EXECUTIVE COMPENSATION. Information appearing under "Executive Compensation" on pages 16 through 22, "Nominating and Executive Compensation Committee Report on Executive Compensation" on pages 22 through 26, "Performance Graph" on page 28, "Common Stock Ownership of Directors and Executive Officers" on pages 14 through 15, and the remuneration information under "Board of Directors Standing Committees" on page 4 and "Director Compensation" on pages 5 through 6 of the Energizer Holdings, Inc. Company Notice of Annual Meeting and Proxy Statement dated December 13, 2000 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 14 and "Common Stock Ownership of Directors and Executive Officers" on pages 14 through 15 of the Energizer Holdings, Inc. Notice of Annual Meeting and Proxy Statement dated December 13, 2000 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 13, 2000, 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, 2000, 1999 and 1998. -Consolidated Balance Sheet -- for years ended September 30, 2000 and 1999. - -Consolidated Statement of Cash Flows -- for years ended September 30, 2000, 1999, and 1998. - -Consolidated Statement of Shareholders Equity -- for years ended September 30, 2000, 1999, 1998 and 1997. . -Notes to Financial Statements. b. Reports on Form 8-K. No reports on Form 8-K were filed during the last quarter of fiscal year 2000. 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) Lease Agreement 10(xi) Intellectual Property Agreement 10(xii) Energizer Holdings, Inc. Incentive Stock Plan* 10(xii) Form of Change of Control Employment Agreements* 10(xiv) Form of Indemnification Agreements with Executive Officers and Directors * 10(xv) Executive Savings Investment Plan* 10(xvi)Executive Health Insurance Plan* 10(xvii)Executive Long Term Disability Plan* 10(xviii)Financial Planning Plan* 10(xiv) Executive Group Personal Excess Liability Insurance Plan* 10(xx) Executive Retiree Life Plan* 10(xxi)Supplemental Executive Retirement Plan* 10(xxii)Form of Retention Letter* (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 filed with this report. 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* 13 Pages 10 to 48 of the Energizer Holdings, Inc. Year 2000 Annual Report which are incorporated herein by reference, are filed herewith. 21 Subsidiaries of Registrant 23 Consent of Independent Accountants. 27 Financial Data Schedule for 2000 Annual Period *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 15, 2000 SIGNATURE TITLE - --------- ----- /s/ Daniel J. Sescleifer - --------------------------- Daniel J. Sescleifer Executive Vice President, Finance and Control /s/ Mark A. Schafale - ----------------------- Mark A. Schafale 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 EX-10.1 2 0002.txt NON-QUALIFIED STOCK OPTION -------------------------- ENERGIZER HOLDINGS, INC. (the "Company"), effective September 18, 2000, grants this Non-Qualified Stock Option to H. Fisk Johnson ("Optionee") to purchase a total of 10,000 shares of Common Stock of the Company ("Common Stock") at a price of $____ per share pursuant to its Energizer Holdings, Inc. 2000 Incentive Stock Plan (the "Plan"). Subject to the provisions of the Plan and the following terms, Optionee may exercise this Option from time to time by tendering to the Company written notice of exercise together with the purchase price in cash, or in shares of Common Stock at their Fair Market Value as determined by the Board of Directors of the Company (the "Board"), provided that such shares have been held for at least six months. 1. Normal Exercise. This Option becomes exercisable at the rate of 20% of ---------------- the total shares on September 18 in each of the years 2001, 2002, 2003, 2004 and 2005. This Option remains exercisable through September 17, 2010 unless Optionee is no longer serving as a Director of the Company, in which case the Option is exercisable only in accordance with the provisions of paragraph 3 below. 2. Acceleration. Notwithstanding the above, any shares not previously ------------ forfeited under this Option will become fully exercisable before the normal exercise dates set forth in paragraph 1 hereof upon the occurrence of any of the following events while Optionee is serving on the Board: a. death of Optionee; b. declaration of Optionee's total and permanent disability; c. retirement, resignation or other termination from the Board; or d. a Change of Control of the Company. 3. Exercise After Certain Events. Upon the occurrence of any of the events ------------------------------ described below, any shares that are exercisable upon such occurrence shall remain exercisable during the period stated below, but, in any event, not later than September 17, 2010: a. Upon Optionee's retirement, resignation or other termination from the Board (other than a termination related to a declaration of forfeiture as described below), declaration of total and permanent disability or death, such shares that are exercisable (including any shares that are accelerated because of such events) shall remain exercisable for five years thereafter; or b. If the Board determines that this Option is forfeit pursuant to Section IV of the Plan because Optionee engages in competition with the Company or an Affiliate, or Optionee engages in any activity or conduct contrary to the best interests of the Company or any Affiliate, such shares that are then exercisable shall remain exercisable for seven days after such determination. 4. Forfeiture. This Option is subject to forfeiture for the reasons set ---------- forth in Section IV.A.1, 3 or 4 of the Plan. If there is a declaration of forfeiture, those shares that are exercisable at the time of the declaration may be exercised as set forth in paragraph 3 hereof; all other shares are forfeited. 5. Definitions. Unless otherwise defined in this Non-Qualified Stock ----------- Option, defined terms used herein shall have the same meaning as set forth in the Plan. "Change of Control" shall occur when (i) a person, as defined under securities laws of the United States, acquires beneficial ownership of more than 50% of the outstanding voting securities of the Company; or (ii) the directors of the Company immediately before a business combination between the Company and another entity, or a proxy contest for the election of directors, shall, as a result thereof, cease to constitute a majority of the Board of Directors of the Company of any successor to the Company. 6. Severability. The invalidity or unenforceability of any provision hereof ------------- in any jurisdiction shall not affect the validity or enforceability of the remainder hereof in that jurisdiction, or the validity or enforceability of this Non-Qualified Stock Option, including that provision, in any other jurisdiction. To the extent permitted by applicable law, the Company and Optionee each waive any provision of law that renders any provision hereof invalid, prohibited or unenforceable in any respect. If any provision of this Option is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. ACKNOWLEDGED AND ACCEPTED: ENERGIZER HOLDINGS, INC. ____________________________ Optionee By:_________________________ ____________________________ J. Patrick Mulcahy Date Chief Executive Officer EX-10.2 3 0003.txt 2000 RESTRICTED STOCK EQUIVALENT AWARD AGREEMENT Energizer Holdings, Inc. ("Company"), pursuant to its 2000 Incentive Stock Plan (the "Plan"), grants to H. Fisk Johnson ("Recipient") a Restricted Stock Equivalent Award of up to 10,000 Company restricted common stock equivalents. This Award Agreement is subject to the provisions of the Plan and to the following terms and conditions: 1. Restricted Stock Equivalents Award ------------------------------------- If, at any time or from time to time, within two years of the effective date of this Award Agreement, Recipient provides evidence to the Secretary of the Company, reasonably satisfactory to the Company, of his acquisition of shares of the Company's $.01 par value Common Stock ("Common Stock"), the Company will credit the Recipient with a restricted common stock equivalent (an "Equivalent") for each share of Common Stock so acquired, up to a maximum of 10,000 Equivalents, in the aggregate. (The shares of Common Stock which are acquired by the Recipient and matched by Equivalents are referred to as "Matched Common Stock" herein.) Deferrals into the Company's Deferred Compensation Plan will not be matched with Equivalents. 2. Holding Period for Matched Common Stock -------------------------------------------- The Recipient agrees that he shall not sell or transfer any portion of the Matched Common Stock for a period of three (3) years following the date of acquisition of such portion, provided, however, that if Recipient pledges any of the Matched Common Stock as collateral for any loan during that period, it shall not be deemed a sale or transfer of the shares for purposes of this Award Agreement. 3. Vesting; Payment ----------------- Each Equivalent will vest on the date that is three (3) years from the date of its crediting and convert, at that time, or otherwise as provided herein, into one share of Common Stock which will be issued to the Recipient. If Recipient, no later than thirty (30) days from the effective date of this Award Agreement, elects in writing to defer the conversion of Equivalents into shares of Common Stock, the Equivalents will not convert into Common Stock, and shares of Common Stock will not be issued to the Recipient, until the Recipient's termination of service on the Board of Directors of the Company. 4. Additional Cash Payment ------------------------- At the time of payment of shares of Common Stock to Recipient, as described in paragraph 3 above, Recipient will also receive an additional cash payment equal to the amount of dividends, if any, which would have been paid on the shares of Common Stock issued to him if he had actually acquired those shares on the date or dates of crediting of his Equivalents. No interest shall be included in the calculation of such additional cash payment. 5. Acceleration ------------ Notwithstanding the provisions of paragraph 3 above, all Equivalents credited to the Recipient will immediately vest, convert into shares of Common Stock and be paid to the Recipient, his designated beneficiary, or his legal representative, in accordance with the terms of the Plan, in the event of: (a) his death; (b) a declaration of his total and permanent disability; or (c) a Change of Control of the Company, which for purposes of this Award Agreement shall be deemed to occur when (i) a person, as defined under the U.S. securities laws, acquires beneficial ownership of more than fifty percent (50%) of the outstanding voting securities of the Company; or (ii) the directors of the Company immediately before a business combination between the Company and another entity, or a proxy contest for the election of directors, shall, as a result thereof, cease to constitute a majority of the Board of Directors of the Company (or a successor corporation of the Company). 6. Forfeiture ---------- All rights in and to any and all Equivalents granted pursuant to this Award Agreement, and to any shares of Common Stock into which they would convert, which have not vested as described in paragraph 3 of this Award Agreement shall be forfeited upon the Recipient's termination of service on the Board of Directors of the Company. In addition, any Equivalents granted pursuant to this Award Agreement which have not vested shall be forfeited if the shares of Matched Common Stock to which they relate are sold or transferred by the Recipient prior to three (3) years from the date of crediting of such Equivalents. 7. Shareholder Rights; Adjustment of Equivalents ------------------------------------------------- Recipient shall not be entitled, prior to the conversion of Equivalents into shares of Common Stock, to any rights as a shareholder with respect to such shares of Common Stock, including the right to vote, sell, pledge, transfer or otherwise dispose of the shares. Recipient shall, however, have the right to designate a beneficiary to receive such shares of Common Stock under this Award Agreement, subject to the provisions of Section V of the Plan. The number of Equivalents credited to Recipient may be adjusted, in the sole discretion of the Nominating and Executive Compensation Committee of the Company's Board of Directors, in accordance with the provisions of Section VI(F) of the Plan. 8. Other ----- The Company reserves the right, as determined by the Board of Directors of the Company, to convert this Award Agreement to a substantially equivalent award and to make any other modification it may consider necessary or advisable to comply with any applicable law or governmental regulation, or to preserve the tax deductibility of any payments hereunder. 9. Effective Date --------------- This Award Agreement shall be deemed to be effective as of the 18th day of September, 2000. ACKNOWLEDGED AND ACCEPTED: ENERGIZER HOLDINGS, INC. _________________________________ By:_______________________________ Recipient J. Patrick Mulcahy EX-10.3 4 0004.txt ENERGIZER HOLDINGS, INC. ------------------------ DEFERRED COMPENSATION PLAN --------------------------
TABLE OF CONTENTS ARTICLE PAGE - ------- --------------------------------------------------------------- ARTICLE I 1 INTRODUCTION 1 1.1 NAME OF PLAN/PURPOSE. 1 1.2 "TOP HAT" RETIREMENT BENEFIT PLAN. 1 1.3 EFFECTIVE DATE. 1 1.4 ADMINISTRATION. 1 1.5 APPENDICES. 2 ARTICLE II 4 DEFINITIONS AND CONSTRUCTION 4 2.1 DEFINITIONS. 4 2.2 NUMBER AND GENDER. 10 2.3 HEADINGS. 10 ARTICLE III 11 PARTICIPATION AND ELIGIBILITY 11 3.1 ELIGIBILITY. 11 3.2 PARTICIPATION. 11 3.3 DURATION OF PARTICIPATION. 11 ARTICLE IV 13 DEFERRAL AND MATCHING CONTRIBUTIONS 13 4.1 DEFERRALS BY PARTICIPANTS. 13 4.2 EFFECTIVE DATE OF DEFERRED COMPENSATION AGREEMENT. 13 4.3 MODIFICATION OR REVOCATION OF ELECTION OF PARTICIPANT. 14 4.4 MATCHING CONTRIBUTIONS. 14 4.5 MANDATED DEFERRALS. 15 ARTICLE V 16 VESTING 16 5.1 VESTING IN BASE SALARY DEFERRALS, BONUS DEFERRALS, DIRECTOR FEE DEFERRALS AND RALSTON PLAN ACCOUNT. 16 5.2 VESTING IN MATCHING CONTRIBUTIONS. 16 5.3 DEFERRAL PERIODS. 16 ARTICLE VI 18 ACCOUNTS 18 6.1 ESTABLISHMENT OF BOOKKEEPING ACCOUNT. 18 6.2 SUBACCOUNTS. 18 6.3 INVESTMENT OF ACCOUNTS. 18 6.4 HYPOTHETICAL NATURE OF ACCOUNTS. 19 ARTICLE VII 20 PAYMENT OF ACCOUNT 20 7.1 TIMING OF DISTRIBUTION OF BENEFITS. 20 7.2 ADJUSTMENT OF ACCOUNT UPON A DISTRIBUTION. 20 7.3 FORM OF PAYMENT OR PAYMENTS. 20 7.4 DEATH BENEFITS 21 7.5 DESIGNATION OF BENEFICIARIES. 22 7.6 UNCLAIMED BENEFITS. 22 7.7 WITHDRAWAL. 22 7.8 DISABILITY BENEFITS. 23 7.9 OFFSET OF BENEFIT BY CERTAIN AMOUNTS 23 ARTICLE VIII 24 ADMINISTRATION 24 ARTICLE IX 25 AMENDMENT AND TERMINATION 25 ARTICLE X 26 GENERAL PROVISIONS 26 10.1 NON-ALIENATION OF BENEFITS. 26 10.2 CONTRACTUAL RIGHT TO BENEFITS FUNDING. 26 10.3 INDEMNIFICATION AND EXCULPATION. 26 10.4 NO EMPLOYMENT AGREEMENT. 27 10.5 CLAIMS FOR BENEFITS. 27 10.6 SUCCESSOR TO COMPANY. 27 10.7 SEVERABILITY. 28 10.8 TRANSFER AMONG AFFILIATES. 28 10.9 ENTIRE PLAN. 28 10.10 PAYEE NOT COMPETENT. 28 10.11 TAX WITHHOLDING. 28 10.12 GOVERNING LAW. 29
AMENDMENT NO. 1 ENERGIZER HOLDINGS, INC. DEFERRED COMPENSATION PLAN ARTICLE I INTRODUCTION 1.1 NAME OF PLAN/PURPOSE. ENERGIZER HOLDINGS, INC. ("Company") established the ENERGIZER HOLDINGS, INC. DEFERRED COMPENSATION PLAN ("Plan") effective as of April 1, 2000. The Company now wishes to amend and completely restate the Plan effective as of April 1, 2000. The Plan is an unfunded deferred compensation plan for the benefit of certain designated management or highly compensated employees and Directors of the Company and its Subsidiaries. This Plan is intended to provide, in part, certain eligible employees and Directors of the Company and its Subsidiaries the opportunity to defer elements of their compensation or fees and to receive the benefit of additions to their deferrals. 1.2 "TOP HAT" RETIREMENT BENEFIT PLAN. The Plan is intended to be a nonqualified unfunded deferred compensation plan. The Plan is maintained for Directors and for a select group of management or highly compensated employees and, therefore, it is intended that the Plan will be exempt from Parts 2, 3 and 4 of Title I of ERISA. The Plan is not intended to qualify under Code Section 401(a). 1.3 EFFECTIVE DATE. This amendment and restatement of the Plan is effective as of April 1, 2000. 1.4 ADMINISTRATION. The Plan shall be administered by the Committee described in Article VIII. 1.5 APPENDICES. The Plan may be amplified or modified from time to time by Appendices. Each Appendix forms a part of the Plan and its provisions shall supersede Plan provisions as necessary to eliminate any inconsistencies. ARTICLE II DEFINITIONS AND CONSTRUCTION 2.1 DEFINITIONS. For purposes of the Plan, the following words and phrases, whether or not capitalized, shall have the respective meanings set forth below, unless the context clearly requires a different meaning: (a) "ACCOUNT" means the bookkeeping account maintained on behalf of each Participant pursuant to Article VI that is credited with Base Salary Deferrals, Bonus Deferrals, Matching Contributions, Director Fee Deferrals, and Retention Payment Deferrals pursuant to Article IV, amounts allocated to the Participant's Ralston Plan Account, and dividend equivalents as described in Section 6.3, interest equivalents, if applicable, and equivalents of earnings, if any, distributed with respect to other investment funds whose results are reflected in measurement funds offered pursuant to the Plan. Statements of Accounts issued to Participants also will reflect the market value of investment funds selected by the Participants for their Accounts, as of the appropriate Valuation Date. The market value of a particular investment fund in a Participant's Account will be determined as of the appropriate Valuation Date at the time of Distribution or transfer to another investment fund in the Plan, notwithstanding that the market value attributed to such investment funds may vary from day to day. (b) "ACQUIRING PERSON" means any person or group of Affiliates or Associates who is or becomes the beneficial owner, directly or indirectly, of shares representing 20% or more of the total votes of the outstanding stock entitled to vote at a meeting of shareholders. (c) "AFFILIATE" or "ASSOCIATE" shall have the meanings set forth in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended. (d) "BASE SALARY" means, with respect to an Employee, the annual cash compensation relating to services performed during any calendar year, whether or not actually paid in such calendar year or included on the Federal Income Tax Form W-2 for such calendar year, excluding bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, and other fees, automobile and other allowances paid to a Participant for employment services rendered (whether or not such allowances are included in the Employee's gross income). Base Salary shall be calculated before reduction for compensation voluntarily or mandatorily deferred or contributed by the Participant pursuant to all qualified or non-qualified plans of the Company and any Subsidiary and shall be calculated to include amounts not otherwise included in the Participant's gross income under Code Sections 125, 402(e)(3), 402(h) or 403(b) pursuant to plans established by the Company; provided however, that all such amounts will be included in compensation only to the extent that, had there been no such plan, the amount would have been payable in cash to the Employee. (e) "BASE SALARY DEFERRAL" means the amount of a Participant's Base Salary that the Participant elects to have withheld on a pre-tax basis from his Base Salary and credited to his Account pursuant to Section 4.1. (f) "BENEFICIAL OWNER" shall mean a person who shall be deemed to have acquired "beneficial ownership" of, or to "beneficially own," any securities: (i) which such person or any of such persons Affiliates or Associates beneficially owns, directly or indirectly; (ii) which such person or any of such person's Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or upon the exercise of currently exercisable conversion or exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the Beneficial Owner of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such person or any of such person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (b) the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy or consent given to such person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) which are beneficially owned, directly or indirectly, by any other person with which such person or any of such person's Affiliates or Associates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting or disposing of any securities of Company. Notwithstanding anything in this definition of "Beneficial Owner" to the contrary, the phrase "then outstanding," when used with reference to a person's beneficial ownership of securities of Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such person would be deemed to own beneficially hereunder. (g) "BENEFICIARY" means the person or entity designated by the Participant to receive benefits which may be payable on or after the Participant's death in accordance with Section 7.4. (h) "BOARD" means the Board of Directors of the Company. (i) "BONUS COMPENSATION" means the amount awarded to a Participant for a Plan Year under any bonus plan maintained by the Company and/or a Subsidiary which the Committee permits to be deferred under the Plan. (j) "BONUS DEFERRAL" means the amount of a Participant's Bonus Compensation that the Participant elects to have withheld on a pre-tax basis from his Bonus Compensation and credited to his Account pursuant to Section 4.1. (k) "CHANGE OF CONTROL" shall mean the time when (a) any Acquiring Person, either individually or together with such person's Affiliates or Associates, shall have become the Beneficial Owner, director or indirectly, of more than 20% of the total votes of the outstanding stock of Energizer Holdings, Inc.; (b) individuals who shall qualify as Continuing Directors shall have ceased for any reason to constitute at least a majority of the Board; or (c) a majority of the individuals who shall qualify as Continuing Directors shall approve a declaration that a Change of Control has occurred. (l) "CODE" means the Internal Revenue Code of 1986, as amended, and all valid regulations thereunder. (m) "COMMITTEE" means the Nominating and Executive Compensation Committee of the Board which administers the Plan in accordance with Article VIII. (n) "COMPANY" means Energizer Holdings, Inc. and any successor thereto. (o) "CONTINUING DIRECTOR" means any member of the Board, while such person is a member of such Board, who is not an Affiliate or Associate of an Acquiring Person or of any such Acquiring Person's Affiliate or Associate and was a member of such Board prior to the time when such Acquiring Person became an Acquiring Person, and any successor of a Continuing Director, while such successor is a member of such Board, who is not an Acquiring Person or an Affiliate or Associate of an Acquiring Person or a representative or nominee of an Acquiring Person or of any Affiliate or Associate of such Acquiring Person and is recommended or elected to succeed the Continuing Director by a majority of the Continuing Directors. (p) "DEFERRAL PERIOD" means the period of time for which a Participant elects to defer receipt of his Base Salary Deferrals, and Bonus Deferrals, credited to such Participant's Account for a Plan Year. A Participant's election of a Deferral Period made with respect to such Base Salary Deferrals, and Bonus Deferrals for a Plan Year shall apply to Retention Payment Deferrals and Matching Contributions made by the Company with respect to such Bonus Deferrals and Retention Payment Deferrals for such Plan Year. A --------- Participant who is a Director may not elect a Deferral Period with respect to Director Fee Deferrals. (q) "DEFERRALS" means (i) with respect to a Participant who is an Employee, Base Salary Deferrals and/or Bonus Deferrals, (ii) with respect to a Participant who is a Director, Director Fee Deferrals, and (iii) with respect to certain Participants, Retention Payment Deferrals. (r) "DEFERRED COMPENSATION AGREEMENT" means the written agreement or electronic means by which a Participant elects the amount of Deferrals for a Plan Year, the Deferral Period, the deemed investment and the form of payment for the Deferrals and Matching Contributions, allocated to such Participant's Account for a Plan Year. A Participant's election with respect to the deemed investment and form of payment of Salary Deferrals and Bonus Deferrals shall apply to the Retention Payment Deferrals and to the Matching Contributions made by the Company with respect to such Bonus Deferrals and Retention Payment Deferrals for such Plan Year. The Deferred Compensation Agreement may also include benefits to the Participant or his Beneficiary or other changes in the provisions of the Plan which are different from those set forth in the Plan. (s) "DIRECTOR" means any member of the Board who is not an officer or Employee of the Company and/or a Subsidiary. (t) "DIRECTOR FEE DEFERRALS" means the amount of Director Fees which a Participant elects to have withheld on a pre-tax basis from his Director Fees and credited to his Account pursuant to Section 4.1. (u) "DIRECTOR FEES" means the amount of cash paid to a Director, including but not limited to board of director fees, committee fees, annual retainer director fees and such other amounts paid to a Director, for services as a Director of the Company or a Subsidiary. (v) "DISABILITY" or "DISABLED" means such physical or mental illness that prevents the Participant from reporting to work and performing duties for the Company and/or Subsidiary, as determined by the Committee. (w) "EFFECTIVE DATE" means April 1, 2000. (x) "EMPLOYEE" means any individual who is classified by the Company or a Subsidiary, and reported on the payroll records of the Company or a Subsidiary, as a common-law employee of the Company or a Subsidiary, regardless of such individual's status under common law, including whether such individual is or has been determined by a third party (including, without limitation, a government agency or board or court or arbitrator) to be an employee of the Company, or any Affiliated Company for any purpose, including, for purposes of any employee benefit plan of the Company or any Affiliated Company (including this Plan) or for purposes of federal, state, or local tax withholding, employment tax, or employment law. (y) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. (z) "MARKET VALUE" means the average of the closing stock price of the Stock as reported by the New York Stock Exchange - Composite Transactions during the ten (10) trading days immediately preceding the date in question, or, if the Stock is not quoted on such composite tape or if such Stock is not listed on such exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the Stock is listed, or if the Stock is not listed on any such exchange, the average of the closing bid quotations with respect to a share of the Stock during the ten (10) days immediately preceding the date in question on the NASDAQ Stock Market National Market System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of the Stock as determined by a majority of the Continuing Directors in good faith. For purposes of converting to Stock, the amounts allocated to a Participant under the Ralston Plan as of March 31, 2000 that were invested in the Ralston Purina Equity Option, (i) the amounts invested in the Ralston Purina Equity Option were converted to cash using the average of the closing stock price of the Ralston shares during the last ten (10) trading days in March, 2000, and such cash was then converted to Stock using the average of the closing price of the Stock during the last ten (10) trading days in April, 2000. (aa) "MATCHING CONTRIBUTION" means the amount of the contribution made by the Company and/or a Subsidiary on behalf of a Participant who elects to make Bonus Deferrals and/or Retention Agreement Deferrals to the Plan for a Plan Year, subject to the provisions of Section 4.4. (bb) "PARTICIPANT" means each Employee who has been selected for participation in the Plan and each Director who has become a Participant pursuant to Article III. (cc) "PLAN" means the ENERGIZER HOLDINGS, INC. DEFERRED COMPENSATION PLAN, as amended from time to time. (dd) "PLAN YEAR" means the twelve-consecutive month period commencing January 1 of each year and ending on December 31, except that the first Plan Year shall be the period beginning on April 1, 2000 and ending on December 31, 2000. (ee) "RALSTON PLAN" means the Ralston Purina Company Deferred Compensation Plan for Key Employees. (ff) "RALSTON PLAN ACCOUNT" means the amounts allocated to the Account of a Participant under the Ralston Plan as of March 31, 2000 (including amounts attributable to services performed on or before March 31, 3000 and not paid until after such date but that are subject to a deferral election pursuant to the Ralston Plan). (gg) "RETENTION AGREEMENT PAYMENT" means a payment payable to a Participant as of January 15, 2001, pursuant to a Retention Agreement between the Participant and the Company. (hh) "RETENTION PAYMENT DEFERRAL" means the amount of the Retention Agreement payment that a Participant elects to have withheld on a pre-tax basis from his Retention Agreement Repayment and credited to his Account pursuant to Section 4.1. (ii) "RETIREMENT" means (i) with respect to a Participant who is an Employee, the date such Participant is entitled to a benefit (whether or not such benefit has commenced) under the terms of the Energizer Holdings, Inc. Retirement Plan, and (ii) with respect to a Participant who is a Director, the date such Director resigns or is removed as a Director of the Company and Subsidiaries following attainment of age 70. (jj) "STOCK" means shares of the Company's common stock, par value $.01 per share, which consists of shares of a class of common stock designated as Energizer Common Stock ("ENR Stock") or any such other security outstanding upon the reclassification or redesignation of the Company's ENR Stock or any other outstanding class or series of common stock of the Company, including, without limitation, any stock split-up, stock dividend, creation of tracking stock, or other distributions of stock in respect of stock, or any reverse stock split-up, or recapitalization of the Company or any merger or consolidation of the Company with any Affiliate, or any other transaction, whether or not with or into or otherwise involving an Acquiring Person. (kk) "STOCK UNIT" means a stock unit that is equivalent to one share of Stock. (ll) "STOCK UNIT FUND" means the Energizer Common Stock Unit Fund. (mm) "SUBSIDIARY" means any trade or business under common control with the Company as defined in Code Section 1563(a)(1). (nn) "TERMINATION FOR CAUSE" means a Participant's termination of employment with the Company and its Subsidiaries because the Participant willfully engaged in gross misconduct; provided, however, that a "Termination for Cause" shall not include a termination attributable to: (i) poor work performance, bad judgment or negligence on the part of the Participant; or (ii) an act or omission reasonable believed by the Participant in good faith to have been in or not opposed to the best interests of his employer and reasonably believed by the Participant to be lawful. (oo) "TRUST" means the fund, if any, established in consequence of and for the purpose of the Plan, to be held in trust by the Trustee, from which Trust benefits under the Plan may be paid. (pp) "TRUST AGREEMENT" means the Trust under the Energizer Holdings, Inc. Deferred Compensation Plan made and entered into by the Company with the Trustee pursuant to the Plan, as said Trust Agreement may be amended from time to time. (qq) "TRUSTEE" means any person, persons or corporation designated by the Company from time to time to hold, invest and disburse, in accordance with the Plan and Trust Agreement, the assets of the Plan. (rr) "VALUATION DATE" means each business day that the New York Stock Exchange is open for business, unless changed by the Committee, and each special valuation date designated by the Committee. 2.2 NUMBER AND GENDER. Wherever appropriate herein, words used in the singular shall be considered to include the plural and words used in the plural shall be considered to include the singular. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender. 2.3 HEADINGS. The headings of Articles and Sections herein are included solely for convenience and do not bear on the interpretation of the text. If there is any conflict between such headings and the text of the Plan, the text shall control. As used in the Plan, the terms "Article", "Section" and "Appendix" mean the text that accompanies the specified Article, Section or Appendix of the Plan. ARTICLE III PARTICIPATION AND ELIGIBILITY 3.1 ELIGIBILITY. (a) Employees - The Committee shall select who is eligible to --------- participate in the Plan from among the management and highly compensated Employees of the Company and its Subsidiaries who are subject to the income tax laws of the United States. In making its selections hereunder, the Committee shall take into consideration the nature of the services rendered or to be rendered to the Company and its Subsidiaries by an Employee, his present and potential contribution to the success of the Company and its Subsidiaries, and such other factors as the Committee deems relevant in accomplishing the purposes of the Plan. The Committee shall notify each Participant of his selection as a Participant. (b) Directors - A Director is eligible to participate in the Plan. --------- 3.2 PARTICIPATION. An Employee or Director shall become a Participant effective as of the date the Committee determines, which date shall be on or after the date his Deferred Compensation Agreement becomes effective. Subject to the provisions of Section 3.3, a Participant shall remain eligible to continue participation in the Plan for each Plan Year following his initial year of participation in the Plan. The terms of the Plan shall govern the benefits, if any, payable to the Participant or his Beneficiary, except as otherwise provided in the Participant's Deferred Compensation Agreement. 3.3 DURATION OF PARTICIPATION. (a) Employee - A Participant who is an Employee shall cease to be -------- a Participant as of the date on which his or her employment with the Company and all Subsidiaries terminates or is deemed terminated by the Company, the date the Committee terminates such Participant's participation in the Plan or the date on which the Plan terminates, whichever date is earliest. If the Committee determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with the provisions of Section 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the right, in its sole discretion, to (i) terminate any deferral election the Participant has made for the remainder of the Plan Year in which the Participant's membership changes, (ii) prevent the Participant from making future deferral elections, and/or (iii) immediately distribute the Participant's Account in which he is vested and terminate the Participant's participation in the Plan. (b) Director - A Participant who is a Director shall cease to be a -------- Participant as of the date on which he ceases to be a Director, the date the Committee terminates such Participant's participation in the Plan or the date on which the Plan terminates, whichever date is earliest. ARTICLE IV DEFERRAL AND MATCHING CONTRIBUTIONS 4.1 DEFERRALS BY PARTICIPANTS. (a) Deferral Elections by Participants - Before the first day of ------------------------------------ each Plan Year (or the remaining portion thereof for an Employee or Director who commences participation in the Plan other than on the first day of a Plan Year), a Participant may file with the Committee a Deferred Compensation Agreement pursuant to which such Participant elects to make Deferrals for such Plan Year. Any such Participant election shall be subject to any maximum or minimum percentage or dollar amount limitations and to any other rules prescribed by the Committee in its sole discretion. (b) Crediting of Deferral Amounts - Base Salary Deferrals will be ------------------------------ credited to the Account of each Participant as of the last day of each calendar month, provided that such Participant is an Employee on the last day of such calendar month. A Participant whose employment terminates with the Company and all Subsidiaries during the calendar month shall be paid in cash the amount of his Base Salary Deferrals for such month. Bonus Deferrals will be credited to the Account of each Participant as soon as administratively feasible after such Bonus Compensation otherwise would have been paid to the Participant in cash, provided that the Participant is an Employee as of such date. A Participant whose employment terminates with the Company and all Subsidiaries before his Bonus Compensation would have been paid to him in cash will be paid his Bonus Deferral in cash. Director Fee Deferrals will be credited to the Account of each Participant as soon as administratively feasible after such Director Fees otherwise would have been paid to the Participant in cash, provided that the Participant is a Director as of such date. A Participant whose relationship as a Director terminates before his Director Fees would have been paid to him in cash will be paid his Director Fee Deferrals in cash. Retention Payment Deferrals will be credited to the Account of each Participant as soon as administratively feasible after such Retention Agreement Payment would have been paid to the Participant in cash, provided that the Participant is an Employee as of such date. 4.2 EFFECTIVE DATE OF DEFERRED COMPENSATION AGREEMENT. A Participant's initial Deferred Compensation Agreement shall be effective as of the date the Participant commences participation in the Plan. Each subsequent Deferred Compensation Agreement shall become effective on the first day of the Plan Year to which it relates. If a Participant fails to complete a Deferred Compensation Agreement on or before the date the Participant commences participation in the Plan or the first day of any Plan Year, the Participant shall be deemed to have elected not to make Deferrals for such Plan Year (or remaining portion thereof if the Participant enters the Plan other than on the first day of a Plan Year). 4.3 MODIFICATION OR REVOCATION OF ELECTION OF PARTICIPANT. A Participant may not discontinue or change the amount of his Deferrals during a Plan Year. Under no circumstances may a Participant's Deferred Compensation Agreement be made, modified or revoked retroactively. 4.4 MATCHING CONTRIBUTIONS. For each Plan Year, the Company and/or its Subsidiaries shall make a Matching Contribution with respect to a Participant's Bonus Deferrals for such Plan Year; provided however, that (i) the amount, if any, of such Matching Contributions for each Plan Year shall be determined by the Company in its sole discretion, and (ii) that such Bonus Deferrals by Employees for such Plan Year must be invested in the Stock Unit Fund as provided in Section 6.3 for a period of not less than twelve (12) months beginning on the date such Bonus Deferrals are credited to such Participant's Account in order to receive such Matching Contribution. Matching Contributions with respect to Bonus Deferrals invested in the Stock Unit Fund shall be credited to the Account of a Participant as of the date such Bonus Deferrals are credited to the Participant's Account; provided however, Matching Contributions proportionately attributable to Bonus Deferrals that are withdrawn by a Participant from the Stock Unit Fund within twelve (12) months beginning on the date such Bonus Deferrals are credited to such Participant's Account, shall be forfeited by such Participant. For each Plan Year, the Company shall make a Matching Contribution with respect to a Participant's Director Fee Deferrals for such Plan Year. The amount, if any, of such Matching Contribution shall be determined by the Company in its sole discretion. The Company and/or its Subsidiaries shall make a Matching Contribution with respect to a Participant's Retention Payment Deferral; provided however, that (i) such Matching Contribution shall be made only with respect to such Participant's Retention Payment Deferrals for which a restricted stock equivalent award pursuant to a 2000 Restricted Stock Equivalent Award Agreement has not been, or may not be, issued, and (ii) the amount, if any, of such Matching Contribution shall be determined by the Company in its sole discretion. Matching Contributions with respect to Retention Payment Deferrals invested in the Stock Unit Fund shall be credited to the Account of a Participant as of the date such Retention Payment Deferrals are credited to the Participant's Account; provided however, Matching Contributions proportionately attributable to Retention Payment Deferrals that are withdrawn by a Participant from the Stock Unit Fund within thirty-six (36) months beginning on the date such Retention Payment Deferrals are credited to such Participant's Account, shall be forfeited by such Participant. 4.5 MANDATED DEFERRALS. If the Committee mandates the deferral of any compensation in order to preserve the deductibility of such compensation when paid, under Code Section 162(m), such amounts shall remain deferred until such time as the Committee directs. Such mandated deferrals shall not be entitled to a Matching Contribution and shall be paid in a lump sum as soon as practicable after they become deductible by the Company or its Subsidiaries as determined by the Committee. ARTICLE V VESTING 5.1 VESTING IN BASE SALARY DEFERRALS, BONUS DEFERRALS, DIRECTOR FEE DEFERRALS AND RALSTON PLAN ACCOUNT. A Participant shall always be 100% vested in the amounts allocated to his Account attributable to his Base Salary Deferrals, Bonus Deferrals, Retention Payment Deferrals and Director Fee Deferrals. A Participant shall also be 100% vested in his Ralston Plan Account. 5.2 VESTING IN MATCHING CONTRIBUTIONS. (a) Employees - A Participant who is an Employee shall become 100% --------- vested in the amounts allocated to his Account attributable to his Matching Contributions for a Plan Year, upon the expiration of thirty-six (36) months beginning on the first day of the first full month following the date such Matching Contributions are credited to his Account; provided, however, that in the event such Participant's employment is terminated with the Company and all Subsidiaries for any reason other than Retirement, death, Disability, involuntary termination (other than Termination for Cause) or upon a Change of Control, the amounts allocated to his Account attributable to his Matching Contributions in which such Participant is vested shall be determined as of the date of such termination of employment. Notwithstanding the foregoing, a Participant who is an Employee shall, become 100% vested in the amounts allocated to his Account attributable to his Matching Contributions upon the Participant's Retirement, death, Disability, involuntary termination (other than Termination for Cause) or upon a Change of Control. (b) Directors - A Participant who is a Director, shall always be --------- 100% vested in the amounts allocated to his Account attributable to his Matching Contributions. 5.3 DEFERRAL PERIODS. (a) Employees - A Participant who is an Employee must specify on --------- the Deferred Compensation Agreement, the Deferral Period for the Deferrals for the Plan Year to which the Deferred Compensation Agreement relates, subject to certain rules as prescribed by the Committee from time to time. A Participant shall elect one of the Deferral Period options as follows: (1) a Deferral Period of at least three (3) years pursuant to which a distribution is made in January of the fourth (or later) Plan Year following the Plan Year for which the election of Base Salary Deferrals, and Bonus Deferrals and Matching Contributions thereon, were made, and (2) termination of employment with the Company and all Subsidiaries for any reason. (b) Directors - A Participant who is a Director may not elect a --------- Deferral Period with respect to Director Fee Deferrals. Payment of such Director Fee Deferrals shall be made in accordance with the provisions of Section 7.1. ARTICLE VI ACCOUNTS 6.1 ESTABLISHMENT OF BOOKKEEPING ACCOUNT. A separate bookkeeping account shall be maintained for each Participant. Such account shall be credited with the Deferrals made by the Participant pursuant to Section 4.1, the Matching Contributions made by the Company or a Subsidiary pursuant to Section 4.4, and amounts allocated to his Ralston Plan Account. Such account also shall reflect the investment results described in Section 6.3. 6.2 SUBACCOUNTS. Within each Participant's bookkeeping account, separate subaccounts may be maintained to the extent necessary for the administration of the Plan. For example, it may be necessary to maintain separate subaccounts where the Participant has specified different Deferral Periods, methods of payment or investment directions with respect to his Deferrals for different Plan Years. 6.3 INVESTMENT OF ACCOUNTS. A Participant shall elect to invest the amounts credited to his Account in such measurement funds as are selected by the Energizer Plans Investment Committee in its sole discretion, including but not limited to the Stock Unit Fund. The Energizer Plans Investment Committee may change or eliminate such measurement funds from time to time. The investment of such funds, or change in such investments, shall be made in accordance with such rules and procedures established by the Committee. A Participant's Account shall consist of a cash subaccount and a stock subaccount. Amounts allocated to the cash subaccount shall be invested in investments other than Stock Units. Amounts allocated to the stock subaccount shall be maintained as Stock Units. A Participant shall elect on his Deferred Compensation Agreement the portion of his Deferrals for a Plan Year that will be allocated to a cash subaccount and to the stock subaccount. The balance of a Participant's Account as of any date is the aggregate of the cash subaccount and the stock subaccount as of such date. The balance of each cash subaccount shall be expressed in United States dollars. The balance of each stock subaccount shall be expressed in the numbers of shares of Stock deemed allocated to such subaccount, with fractional shares of Stock calculated to three decimal places. The number of Stock Units allocated to the stock subaccount as of any date shall be equal to the quotient of the amount allocated to the stock subaccount divided by the Market Value on such date. Upon the occurrence of any stock split-up, stock dividend, issuance of any tracking stock, combination or reclassification with respect to any outstanding series or class of Stock, or consolidation, merger or sale of all or substantially all of the assets of the Company, the number of Stock Units in each stock subaccount shall, to the extent appropriate as determined by the Committee in its sole discretion, be adjusted accordingly. To the extent dividends on any class or series of outstanding Stock are paid, dividend equivalents and fractions thereof shall be calculated with respect to balances of such Stock equivalents in the Participant's stock subaccount, converted to additional equivalents of such Stock and credited to the Participant's stock subaccount as of the dividend payment dates. The number of Stock equivalents to be credited as of each such date shall be determined by dividing the amount of the dividend equivalent by the Market Value of the relevant Stock on the dividend payment date. The Participant's stock subaccount shall continue to earn such dividend equivalents until fully distributed. Matching Contributions and Retention Payment Deferrals must be invested in the Stock Unit Fund for a period of not less than thirty-six (36) months beginning on the date the applicable of such Matching Contributions and Retention Payment Deferrals are credited to a Participant's Account. Director Fee Deferrals must be invested in the Stock Unit Fund for a period of not less than twelve (12) months beginning on the first day of the calendar year in which they are earned. As of each Valuation Date, a Participant's Account shall be valued in accordance with this Section and any rules and procedures established by the Committee. 6.4 HYPOTHETICAL NATURE OF ACCOUNTS. The Account established under this Article VI shall be hypothetical in nature and shall be maintained for bookkeeping purposes only. Neither the Plan nor any of the Accounts (or subaccounts) established hereunder shall hold any actual funds or assets. The right of any person to receive one or more payments under the Plan shall be an unsecured claim against the general assets of the Company. Any liability of the Company to any Participant, former Participant, or Beneficiary with respect to a right to payment shall be based solely upon contractual obligations created by the Plan. Neither the Company and/or any Subsidiary, the Board, nor any other person shall be deemed to be a trustee of any amounts to be paid under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and/or any Subsidiary and a Participant or any other person. ARTICLE VII PAYMENT OF ACCOUNT 7.1 TIMING OF DISTRIBUTION OF BENEFITS. (a) Employees - With respect to a Participant who is an Employee, --------- the Participant's Account in which such Participant is vested, shall be distributed (or begin to be distributed, in the case of annual installment payments) to such Participant as soon as practicable following the date the Deferral Period for such Deferrals ends. In the event such Participant's employment is terminated with the Company and all Subsidiaries for any reason prior to the end of the Deferral Period for such Deferrals, the total amount of the Participant's Account in which such Participant is vested shall be distributed (or begin to be distributed, in the case of the annual installment payments) to such Participant as soon as practicable following such termination of employment notwithstanding the Deferral Period elected by such Participant with respect to such Deferrals. (b) Directors - With respect to a Participant who is a Director, --------- distribution of the Participant's Account shall be made not later than sixty (60) days following the date the Participant's relationship as a Director terminates. 7.2 ADJUSTMENT OF ACCOUNT UPON A DISTRIBUTION. Upon a distribution pursuant to this Article VII, the balance of a Participant's Account shall be determined as of the Valuation Date immediately preceding the date of the distribution to be made and shall be credited with declared dividends, if any, and adjusted for investment results which have accrued to the date of distribution but which have not been allocated to his Account. 7.3 FORM OF PAYMENT OR PAYMENTS. The amounts allocated to a Participant's Account attributable to Deferrals and Matching Contributions, made to the Plan for a Plan Year, shall be distributed to the Participant in accordance with the form of payment specified as follows: (a) Lump Sum Payment-A Participant who is an Employee shall be ------------------ paid his benefit in the form of a lump sum payment if the vested amount to be distributed to such Participant, determined as of the date such amount is to be distributed, is less than $50,000. A Participant who is a Director shall receive payment of his Account in a lump sum payment. (b) Annual Installment Payment-A Participant who is an Employee ---------------------------- may elect, in his Deferred Compensation Agreement, to be paid his benefit in a series of annual installment payments provided that the vested amount of the total installment payments to be distributed to such Participant, determined as of the date such amount is to be distributed, is equal to or greater than $50,000. If a Participant does not elect payment in the form of installment payments or if the vested amount of the total installment payments to be distributed to such Participant determined as of the date such amount is to commence to be distributed is less than $50,000 at the time such payment is to be made, his benefit shall be paid in the form of a lump sum payment. If a benefit is to paid in a series of annual installment payments, the annual installment payments may be made for a period equal to five (5) or ten (10) years. Annual installments shall commence within 60 days of termination of employment with the Company and all Subsidiaries provided that the vested amount of the total installment payments to be distributed to such Participant determined as of the date such amount is to commence to be distributed is equal to or greater than $50,000. Subsequent annual installment payments shall be paid as soon as administratively feasible after January l of each year. The amount of each annual installment payment shall be calculated by multiplying the total amount to be distributed to such Participant by a fraction, the numerator of which is one, and the denominator of which is the remaining number of annual installment payments to be made to the Participant. 7.4 DEATH BENEFITS (a) Employees - In the event of the death of a Participant who is --------- an Employee prior to attainment of age fifty (50) years, the total amount allocated to the Participant's Account shall be paid in a lump sum to the Beneficiary. If a Participant who is an Employee dies on or after attainment of age fifty (50) years, the total amount allocated to the Participant's Account shall be paid to the Participant's Beneficiary in accordance with the applicable form of distribution elected by the Participant. If no Beneficiary is designated, then benefits shall be paid in a lump sum to the Participant's estate or as provided by law. Distribution shall be made (and, in the case of installment payments, shall commence) no later than sixty (60) days following the Participant's death. (b) Directors - In the event of the death of a Participant who is --------- a Director, the amount credited to the Participant's Account shall be paid in a lump sum not later than sixty (60) days following the date of such Participant's death. 7.5 DESIGNATION OF BENEFICIARIES. A Participant may designate the Beneficiary or Beneficiaries to whom his benefit under the Plan shall be paid if he dies before he receives complete payment of such benefit. A Beneficiary designation (i) must be made on a beneficiary designation form provided by the Committee, (ii) shall be effective on the date such designation form is actually received by the Committee, and (iii) shall revoke all prior designations made by the Participant. A Beneficiary designation form received by the Committee after the date of the Participant's death shall be null and void. If a Participant has not designated a Beneficiary, if no designated Beneficiary survives the Participant or if the Beneficiary designation is legally invalid for any reason, then, the Participant's Beneficiary shall be the Participant's executor or administrator, or his heirs at law if there is no administration of such Participant's estate. If the Committee is in doubt as to the right of any such Beneficiary to receive any benefits under the Plan, it may pay such benefits, in its sole and absolute discretion, to the legal representative of the Participant's estate, and upon such payment neither the Committee, the Company, nor the Plan shall have further liability for such payment. 7.6 UNCLAIMED BENEFITS. In the case of a benefit payable on behalf of such Participant, if the Committee is unable to locate the Participant or Beneficiary to whom such benefit is payable, such benefit may be forfeited to the Company, upon the Committee's determination. Notwithstanding the foregoing, if subsequent to any such forfeiture the Participant or Beneficiary to whom such benefit is payable makes a valid claim for such benefit, such forfeited benefit shall be paid by the Company or restored to the Plan by the Company. 7.7 WITHDRAWAL. A Participant (or, after a Participant's death, his or her Beneficiary) may elect, at any time, to withdraw all of his Account in accordance with such rules and procedures prescribed by the Committee. No partial withdrawals of a Participant's Account may be made. The Participant (or his or her Beneficiary) shall make this election by giving the Committee advance written notice of the election in a form determined from time to time by the Committee. The Participant (or his or her Beneficiary) shall be paid the withdrawal amount within 60 days of his or her election. The Committee may impose suspensions of future deferrals or other penalties as a condition to such withdrawals. The payment of this Withdrawal Amount shall not be subject to the deduction limitation under Code Section 162(m). 7.8 DISABILITY BENEFITS. (a) Disabled Employees - With respect to a Participant who is an ------------------- Employee and who becomes Disabled but remains in the employ of the Company or a Subsidiary, distribution of such Participant's vested Account shall be made as soon as practicable following the date such Participant requests distribution of his vested Account due to Disability. (b) Disabled Directors - With respect to a Participant who is a ------------------- Director and who becomes Disabled but remains a Director, distribution of such Participant's Account shall be made as soon as practicable following the date such Participant requests distribution of his Account due to Disability. 7.9 OFFSET OF BENEFIT BY CERTAIN AMOUNTS The Committee in its sole and absolute discretion, may offset any benefit payable to a Participant or Beneficiary pursuant to this Article VII, by any amounts the Participant or Beneficiary may owe the Company or any Subsidiaries. ARTICLE VIII ADMINISTRATION The Plan shall be administered by the Committee. The Committee shall have all powers necessary or appropriate to enable it to carry out its administrative duties. Not in limitation, but in application of the foregoing, the Committee shall have the duty and power to interpret the Plan and determine all questions that may arise hereunder as to the status and rights of Employees, Participants, and Beneficiaries. The Committee may exercise the powers hereby granted in its sole and absolute discretion. The decisions of the Committee, including but not limited to interpretations and determinations of amounts due under the Plan, shall be final and binding on all parties. No member of the Committee shall be personally liable for any actions taken by the Committee unless the member's action involves willful misconduct. The Committee may delegate its administrative responsibilities to any Employee of the Company provided such designation is in writing. ARTICLE IX AMENDMENT AND TERMINATION The power to amend, modify or terminate the Plan in whole or in part and at any time is reserved to the Committee. Notwithstanding the foregoing, no amendment or modification which would reasonably be considered to be adverse to a Participant or Beneficiary may apply to or affect the terms of any deferral of compensation that was approved prior to the effective date of such amendment or modification without the consent of the Participant or Beneficiary affected thereby. The Board reserves the right to terminate the Plan in whole or in part, but such termination shall not affect the Deferred Compensation Agreements then in effect, except that no additional amounts may be deferred by Participants to the Plan after the date of termination of the Plan. Upon termination of the Plan, all benefits shall be paid at such time and in such manner as provided in Article VII. ARTICLE X GENERAL PROVISIONS 10.1 NON-ALIENATION OF BENEFITS. No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or change any right or benefit under this Plan shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits. If the Participant or Beneficiary becomes bankrupt, or attempts to anticipate, alienate, sell, assign, pledge, encumber, or change any right hereunder, then such right or benefit shall, in the discretion of the Committee, cease and terminate, and in such event, the Committee may hold or apply the same or any part thereof for the benefit of the Participant or Beneficiary, spouse, children, or other dependents, or any of them in such manner and in such amounts and proportions as the Committee may deem proper. 10.2 CONTRACTUAL RIGHT TO BENEFITS FUNDING. The Plan creates and vests in each Participant a contractual right to the benefits to which he is entitled hereunder, enforceable by the Participant against the Company. The benefits to which a Participant is entitled under the Plan shall be paid from the general assets of the Company or from the Trust that may be established or maintained to provide such benefits. If a Trust is established and maintained, amounts deposited with the Trustee shall be held and disposed of in accordance with the terms of the Trust Agreement and payments made under the terms of the Trust Agreement shall be in satisfaction of claims against the Company under the Plan. Nothing in the Plan or Trust Agreement shall relieve the Company of its liabilities to pay amounts under the Plan except to the extent that such liabilities are met from the use of the assets held in Trust. 10.3 INDEMNIFICATION AND EXCULPATION. The members of the Committee and their agents, and the officers, directors and employees of the Company and any Subsidiary shall be indemnified and held harmless by the Company against and from any and all loss, cost, liability, or expense that may be imposed upon or reasonably incurred by them in connection with or resulting from any claim, action, suit, or proceeding to which they may be a party or in which they may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by them in settlement (with the Company's written approval) or paid by them in satisfaction of a judgment in any such action, suit, or proceeding. The foregoing provision shall not be applicable to any person if the loss, cost, liability, or expense is due to such person's gross negligence or willful misconduct. 10.4 NO EMPLOYMENT AGREEMENT. The Plan is not a contract of employment, and participation in the Plan shall not confer on any Employee the right to be retained in the employ of the Company and/or any Subsidiary. 10.5 CLAIMS FOR BENEFITS. A Participant or Beneficiary may claim any benefit to which he or she is entitled under this Plan by a written notice to the Committee. If a claim is denied, it must be denied within a reasonable period of time, and be contained in a written notice stating the following: (a) The specific reason for the denial. (b) Specific reference to the Plan provision on which the denial is based. (c) Description of additional information necessary for the claimant to present his claim, if any, and an explanation of why such material is necessary. (d) An explanation of the Plan's claims review procedure. The claimant will have sixty (60) days to request a review of the denial by the Committee, which will provide a full and fair review. The request for review must be in writing delivered to the Committee. The claimant may review pertinent documents, and he may submit issues and comments in writing. The decision by the Committee with respect to the review must be given within sixty (60) days after receipt of the request, unless special circumstances require an extension (such as for a hearing). In no event shall the decision be delayed beyond one hundred and twenty (120) days after receipt of the request for review. The decision shall be written in a manner calculated to be understood by the claimant, and it shall include specific reasons and refer to specific Plan provisions as to its effect. 10.6 SUCCESSOR TO COMPANY. The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company's obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform. Accordingly, this Plan and the related Deferred Compensation Agreements shall be binding upon, and the term "Company" shall include any successor or assignee to the business or assets of the Company. 10.7 SEVERABILITY. In the event any provision of the Plan shall be held invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted, and the Company shall have the privilege and opportunity to correct and remedy such questions of illegality or invalidity by amendment as provided in the Plan. 10.8 TRANSFER AMONG AFFILIATES. In the event the employment of a Participant is transferred from the Company to any corporation or other entity that is an affiliate of the Company and that adopts this Plan, or is transferred from one such affiliate to another, the benefits attributable to compensation deferred with respect to each such entity shall be credited to a separate bookkeeping account. Each such corporation shall pay the benefit that is reflected in the Participant accounts established with respect to such corporation. The Company hereby guarantees payment of the total benefit, regardless of which entity is primarily liable for payment of any portion of such benefit. 10.9 ENTIRE PLAN. This document and any amendments contain all the terms and provisions of the Plan and shall constitute the entire Plan, any other alleged terms or provisions being of no effect. 10.10 PAYEE NOT COMPETENT. In the event that the Committee shall find that the Participant is unable to care for his affairs because of illness or accident, the Committee may direct that any benefit payment due him, unless claim shall have been made therefor by a duly appointed legal representative, be paid to his spouse, a child, a parent or other blood relative, or to a person with whom he resides, and any such payment so made shall be a complete discharge of the liabilities of the Plan therefor. 10.11 TAX WITHHOLDING. The Company shall withhold from amounts due under this Plan, the amount necessary to enable the Company to remit to the appropriate government entity or entities on behalf of the Participant as may be required by the federal income tax withholding provisions of the Code, by an applicable state's income tax, or by an applicable city, county or municipality's earnings or income tax act. The Company shall withhold from the payroll of, or collect from, a Participant the amount necessary to remit on behalf of the Participant any FICA taxes which may be required with respect to amounts accrued by a Participant hereunder, as determined by the Company. 10.12 GOVERNING LAW. To the extent not superseded by the laws of the United States, this Plan shall be construed and governed in accordance with the laws of the state of Missouri. EX-10.4 5 0005.txt ENERGIZER DEFERRED COMPENSATION PLAN MARCH 30, 2000 March 30, 2000 PERSONAL AND CONFIDENTIAL TO: PARTICIPANTS IN THE ENERGIZER HOLDINGS, INC. DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES The Energizer Holdings, Inc. Deferred Compensation Plan for Key Employees (the "Energizer Plan") provides you the opportunity to defer all or a portion of your Incentive Plan Bonus and/or annual base salary. In general, deferring compensation has the advantage of postponing payment of income tax and allowing any earnings on the deferred amount to accumulate free of tax until distributed. The information contained in this packet has been assembled for two reasons. First, we want to give you the opportunity to defer compensation for the rest of calendar year 2000 into Energizer's Plan. If you do not complete and return the enclosed forms you will not be able to continue Deferrals for calendar year 2000. Second, we want to let you know what will be happening to compensation you previously deferred into the Ralston Purina Deferred Compensation Plan (the "Ralston Plan") as a result of the spin-off of Energizer from Ralston Purina. ACTION NOW This packet contains two forms for you to complete and return to Compensation Resource Group, the company that administers the Energizer Plan, so that they are RECEIVED ON OR BEFORE APRIL 21,2000. - - "2000 Election Form" - - "Beneficiary Designation Form" Each of these forms will be described in more detail below. Please return both forms -- whether or not you make a Deferral - to Compensation Resource Group (CRG) either by fax or mail (in the enclosed pre-addressed envelope), so that they are RECEIVED NO LATER THAN APRIL 21, 2000. DEFERRAL OF COMPENSATION FOR THE REMAINDER OF CALENDAR YEAR 2000 2000 ELECTION FORM - Your December, 1999 Deferral election under the Ralston - -------------------- Plan will be govern deferral of your First Half Fiscal Year 2000 Incentive Bonus and your base annual salary through March 31, 2000. This "2000 Election Form" controls any Deferral of your Second Half Fiscal Year 2000 Incentive Bonus and any Deferral of your base annual salary from May 1, 2000 through the end of calendar year 2000. If CRG does not receive your completed "2000 Election Form" by the April 21, 2000 deadline, you cannot defer any compensation for the remainder of calendar year 2000. BENEFICIARY DESIGNATION FORM - Your beneficiary designation under the Ralston - ------------------------------ Plan will not be carried over to the Energizer Plan. This form will make that selection now. If you do not complete and return this form, you can select a Beneficiary at any time. However, in the event of your death prior to completing your "Beneficiary Designation Form", payments under the Energizer Plan will be made to your estate. GENERAL INFORMATION ABOUT THE ENERGIZER PLAN - ------------------------------------------------- The Energizer Plan carries over several features from the Ralston Plan: The ability to DEFER UP TO 75% OF YOUR ANNUAL BASE SALARY. INTERMEDIATE-TERM DEFERRAL OPTIONS that allow you to defer compensation for periods as short as three years to help meet shorter-term financial needs such as funding a child's college education or financing a future home purchase. Payment distribution options that provide 5 or 10 year ANNUAL INSTALLMENT PAYMENTS if you have a balance in your account of at least $50,000 when you leave Energizer's employment. The opportunity to transfer existing account balances, except for Company matching contributions, to eleven possible options: NINE INVESTMENTS FUNDS which mirror the returns of the Vanguard mutual funds that are available under the Energizer Savings Investment Plan, a Prime Rate Fund, and the Energizer Common Stock Fund. Incentive Plan Bonus Deferrals into the Energizer Common Stock Fund will continue to receive A 25% COMPANY MATCH. Transaction flexibility including DAILY INVESTMENT REALLOCATIONS, interactive voice response system, Internet access to account balance information, and quarterly account statements. Plan Administration by Compensation Resource Group (CRG) However, unlike the Ralston Plan, Company matching contributions under the Energizer Plan now will VEST after thirty-six (36) months, rather than upon attainment of age fifty (50). Retirement, death or Disability also will continue to accelerate vesting. YOUR MARCH 31, 2000 ACCOUNT BALANCE UNDER THE RALSTON PLAN Your prior account balance in the Ralston Plan, including any Incentive Plan Bonus or Annual Salary Deferrals through March 31, 2000, will be fully vested and transferred to your account in the Energizer Plan. All Company matching contributions associated with these Deferrals also will be fully vested and transferred to your Energizer Plan account. Your Ralston Plan account balance when transferred to the Energizer Plan will mirror the funds in which your Ralston Plan account balance is currently invested, except that your account balance credited to the Ralston Common Stock fund will be converted to the Energizer Common Stock fund. There will be a 6-week freeze on participant activity in order to allow CRG to establish each participant's account in the Energizer Plan. Since your account under the Ralston Plan will be fully vested in the Energizer Plan, once the administrative freeze lifts, you can choose to move any of these vested monies into other Measurement Funds by contacting CRG. Any First Half Fiscal Year 2000 Incentive Bonus Plan payment which you deferred will be governed by the Deferral election you submitted in December, 1999. However, the portion of your First Half Fiscal Year 2000 Incentive Bonus which you allocated to the Ralston Common Stock Fund in December of 1999 will automatically be allocated to Energizer Common Stock Fund. Since these Deferrals, including any associated matching contribution by the Energizer, also will be vested as part of the spin-off, you may move these funds to other Measurement Funds, if you choose once the administrative freeze is lifted. IMPORTANT DATES APRIL 1, 2000 begins the freeze on participant activity so that CRG can set up the Energizer Plan. During this time participants cannot move money in their Account between Measurement Funds. APRIL 21, 2000 is the deadline for CRG to receive your "2000 Election Form" and your "Beneficiary Designation Form" either by fax or mail. MAY 15, 2000 is when we currently estimate that the freeze will be lifted by CRG and participants may begin accessing their Accounts again and reallocating Account investments. The attached Questions and Answers will give you more information about the Plan, and a plan document will be forwarded to you in the near future. Please review the enclosed information carefully; then, using the enclosed pre-addressed envelope, return both forms -- whether or not you make a Deferral - - TO COMPENSATION RESOURCE GROUP (CRG) EITHER BY FAX OR MAIL SO THAT THEY ARE RECEIVED NO LATER THAN APRIL 21, 2000. If you have any questions concerning this information, please contact Compensation Resource Group at 1-800-405-0911 or Stacy Wegmann at 314-982-1979. Geraldine S. Auger Director, Organizational Development and Compensation Energizer Holdings, Inc. Telephone 314-982-1215 Enclosures ENERGIZER HOLDINGS, INC. Deferred Compensation Plan 2000 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 DEFERRALELECTION 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 2000 Base Salary starting with the May payroll following my enrollment (maximum deferral is 75%). ================================================================================ INCENTIVE PLAN BONUS I elect to defer _______%, OR all up to $_______, OR defer all in excess of $_______ of my Second Half Fiscal Year 2000 Incentive Plan Bonus. ================================================================================ NON-PARTICIPATION I elect not to defer calendar 2000 Base Salary or Second Half Fiscal Year Incentive Plan Bonus. ================================================================================ CALENDAR 2000 BASE SALARY INVESTMENT ELECTION (PLEASE SELECT IN WHOLE PERCENTAGE INCREMENTS; TOTAL MUST EQUAL 100%) ================================================================================ I elect to invest my calendar 2000 Base Salary deferrals in the following Measurement Funds: ================================================================================
CALENDAR 2000 BASE SALARY INVESTMENT ELECTION (PLEASE SELECT IN WHOLE PERCENTAGE INCREMENTS; TOTAL MUST EQUAL 100%) =========================================================================================================== I elect to invest my calendar 2000 Base Salary deferrals in the following Measurement Funds: Energizer Holdings, Inc. Common Stock Vanguard International Growth Fund ____% Prime Rate Fund ____% Vanguard Life Strategy Income Fund ____% Vanguard Wellington Fund ____% Vanguard Life Strategy Conservative Growth Fund ____% Vanguard 500 Index ____% Vanguard Life Strategy Moderate Growth Fund ____% Vanguard Windsor II Fund ____% Vanguard Life Strategy Growth Fund ____% Vanguard Small-Cap Index ____% ===========================================================================================================
SECOND HALF FISCAL YEAR 2000 INCENTIVE PLAN BONUS INVESTMENT ELECTION (PLEASE SELECT IN WHOLE PERCENTAGE INCREMENTS; TOTAL MUST EQUAL 100%) ========================================================================================================== I elect to invest my Second Half Fiscal Year 2000 Incentive Plan Bonus deferrals in the following Measurement Funds: Energizer Holdings, Inc. Common Stock ____% Prime Rate Fund ____% Vanguard International Growth Fund ____% Vanguard Wellington Fund ____% Vanguard Life Strategy Income Fund Vanguard 500 Index ____% Vanguard Life Strategy Conservative Growth Fund ____% Vanguard Windsor II Fund ____% Vanguard Life Strategy Moderate Growth Fund ____% Vanguard Small-Cap Index ____% Vanguard Life Strategy Growth Fund ========================================================================================================== (OVER)
ELECTION OF DATE AND FORM OF PAYMENT FOR 2000 DEFERRALS (PLEASE SELECT A DATE AND FORM OF PAYMENT) ================================================================================ I elect to receive _______% of my calendar 2000 Base Salary Deferrals and/or my Second Half Fiscal Year 2000 Incentive Plan Bonus Deferrals and the associated earnings, on ___________________(cannot be sooner than January 1, 2004). 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 2000 Base Salary Deferrals and/or my Second Half Fiscal Year 2000 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 ON OR BEFORE APRIL 21, 2000 TO: COMPENSATION RESOURCE GROUP ATTN: LAURA POPE 633 WEST FIFTH STREET, 52ND FLOOR LOS ANGELES, CA 90071 FAX (213) 438-6600 EX-10.5 6 0006.txt ENERGIZER DEFERRED COMPENSATION PLAN DECEMBER 6, 2000 December 6, 2000 PERSONAL AND CONFIDENTIAL TO: PARTICIPANTS IN THE ENERGIZER HOLDINGS, INC. DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES The Energizer Holdings, Inc. Deferred Compensation Plan for Key Employees (the "Energizer Plan") provides you the opportunity to defer all or a portion of your Incentive Plan Bonus and/or annual base salary. In general, deferring compensation has the advantage of postponing payment of income tax and allowing any earnings on the deferred amount to accumulate free of tax until distributed. ACTION NOW This packet contains two forms for you to complete and return to Compensation Resource Group, the company that administers the Energizer Plan, so that they are RECEIVED ON OR BEFORE DECEMBER 29, 2000. - - 2001 Election Form - - Beneficiary Designation Form Each of these forms will be described in more detail below. Please return both forms -- whether or not you make a Deferral - to Compensation Resource Group (CRG) either by fax or mail (in the enclosed pre-addressed envelope), so that they are RECEIVED NO LATER THAN DECEMBER 29, 2000. If you do not complete and return the enclosed forms you will not be able to make Deferrals for calendar year 2001. DEFERRAL OF COMPENSATION FOR CALENDAR YEAR 2001 2001 ELECTION FORM - This "2001 Election Form" controls any Deferral of your - -------------------- Fiscal Year 2001 Incentive Bonus and any Deferral of your base annual salary from January 1, 2001 through the end of calendar year 2001. If CRG does not receive your completed "2001 Election Form" by the DECEMBER 29, 2000 deadline, you cannot defer any compensation for the calendar year 2001. BENEFICIARY DESIGNATION FORM - Your beneficiary designation selection should be - ----------------------------- made with this form. If you do not complete and return this form, the Beneficiary Designation form you submitted earlier this year will apply. Or, alternatively, you can select a Beneficiary at any time. In the event of your death prior to completing your "Beneficiary Designation Form", payments under the Energizer Plan will be made to your estate. GENERAL INFORMATION ABOUT THE ENERGIZER PLAN - ------------------------------------------------- The Energizer Plan offers several features: The ability to DEFER UP TO 75% OF YOUR ANNUAL BASE SALARY. INTERMEDIATE-TERM DEFERRAL OPTIONS that allow you to defer compensation for periods as short as three years to help meet shorter-term financial needs such as funding a child's college education or financing a future home purchase. Payment distribution options that provide for lump sum payment or for 5 or 10 year ANNUAL INSTALLMENT PAYMENTS if you have a balance in your account of at least $50,000 when you leave Energizer's employment. The opportunity to transfer existing account balances, except for Company matching contributions, to ELEVEN POSSIBLE INVESTMENT FUNDS: nine funds which mirror the returns of the Vanguard mutual funds that are available under the Energizer Savings Investment Plan, a Prime Rate Fund, and the Energizer Common Stock Fund. Incentive Plan Bonus Deferrals into the Energizer Common Stock Fund will receive A 25% COMPANY MATCH. Transaction flexibility including DAILY INVESTMENT REALLOCATIONS, interactive voice response system, Internet access to account balance information, and quarterly account statements. Plan Administration by Compensation Resource Group (CRG) Company matching contributions under the Energizer Plan will VEST after thirty-six (36) months. Retirement, death or Disability also will continue to accelerate vesting. NEXT STEPS - ----------- The attached Questions and Answers will give you more information about the Plan. Please review the enclosed information carefully; then, using the enclosed pre-addressed envelope, return both forms -- whether or not you make a Deferral - TO COMPENSATION RESOURCE GROUP (CRG) EITHER BY FAX OR MAIL SO THAT THEY ARE RECEIVED NO LATER THAN DECEMBER 29, 2000. If you have any questions concerning this information, please contact Compensation Resource Group at 1-800-405-0911 or Stacy Wegmann at 314-982-1979. Geraldine S. Auger Vice President, Global HR Programs Energizer Holdings, Inc. Telephone 314-982-1215 Enclosures 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%)
I elect to invest my calendar 2001 Base Salary deferrals in the following Measurement Funds: 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 ____%
================================================================================ FISCAL YEAR 2001 INCENTIVE PLAN BONUS 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: 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 ____%
(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 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%) ================================================================================
I elect to invest my calendar 2001 Base Salary deferrals in the following Measurement Funds: 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 ____%
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 90071-2086 FAX: (213) 438-6600 EX-10.6 7 0007.txt INDEMNIFICATION AGREEMENT This Indemnification Agreement dated as of the ___ day of ______, 2000 by and between Energizer Holdings, Inc. (the "Company") and _____________________ ("Executive"), WITNESSETH: WHEREAS, the Company and Executive have entered into a 2000 Restricted Stock Equivalents Award Agreement dated as of May 8, 2000 (the "Award Agreement"), pursuant to which the Company has agreed to award the Executive, up to the limit set forth in the Award Agreement, a restricted stock equivalent for every share of the Company's $.01 par value common stock ("Common Stock") that the Executive acquires prior to May 8, 2002; and WHEREAS, the Company recognizes that the Executive's acquisition of shares of Common Stock may create financial difficulties for the Executive and that Executive may be required to borrow funds necessary to acquire such shares of Common Stock; and WHEREAS, the Company has arranged for Bank of America to extend a loan commitment to Executive in order to enable Executive to acquire shares of Common Stock, and has agreed to guarantee the total amount of any loan extended by Bank of America to Executive; NOW THEREFORE, in consideration of the Company's guarantee of his loan from Bank of America, Executive hereby agrees to indemnify and hold harmless the Company, to the full extent lawful, from and against all losses, claims, damages, liabilities and expenses incurred by the Company in connection with, or arising out of, its guarantee of said loan. Executive further agrees that he will promptly reimburse the Company for all expenses (including reasonable fees and disbursements of counsel) as they may be incurred by the Company in connection with investigating, preparing for or defending any pending or threatened claim or action by Bank of America in respect of which indemnification may be sought hereunder, and in enforcing this Indemnification Agreement. In addition, Executive hereby grants the Company the right, exercisable at its discretion and to the extent permitted by law, to withhold from any and all amounts payable to Executive by the Company such amounts as the Company reasonably deems necessary in full or partial satisfaction of Executive's obligation to the Company pursuant to this Indemnification Agreement. Executive's indemnity and reimbursement obligations under this Indemnification Agreement shall be in addition to any liability that he may have, at common law or otherwise, and shall be binding on his successors and assigns. Upon demand for payment by Bank of America under the terms of said guarantee, the Company agrees to notify Executive in writing of such demand, but failure to so notify Executive will not relieve him of any liability which he may have hereunder unless, and only to the extent that, such failure results in the forfeiture by Executive of substantial rights and defenses with respect to the loan or the guarantee. Solely for purposes of enforcing this Indemnification Agreement, Executive hereby consents to personal jurisdiction, service and venue in any court in which any claim or proceeding which is subject to, or which may give rise to a claim for indemnification under, this Indemnification Agreement is brought against the Company. This Indemnification Agreement shall be deemed made in the State of Missouri. This Indemnification Agreement and all controversies arising from or relating to performance under this Indemnification Agreement shall be governed by and construed in accordance with the laws of the State of Missouri, without giving effect to such states rules concerning conflicts of laws. ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR ACTION ARISING OUT OF THIS INDEMNIFICATION AGREEMENT IS HEREBY WAIVED. If any provision of this Indemnification Agreement shall be held invalid or unenforceable to any extent, ther remainder thereof and the application of such provision to other circumstances shall not be affected thereby and such provision shall be enforced to the greatest extent permitted by applicable law and such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof. No failure or delay in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right. This Indemnification Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single agreement. No modifications of or amendments to this Indemnification Agreement shall be valid or binding unless set forth in writing and duly executed by all parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement on the day and year first above written. _____________________________ ENERGIZER HOLDINGS, INC. EXECUTIVE By: __________________________ Title: _________________________ Executive Officers That Have Entered Into Indemnification Agreement Mr. Zimmermann Mr. Strachan Mr. Rose Mr. McClanathan Mr. Conrad Mr. Sanborn EX-13 8 0008.txt 2000.$ financial review - ------------------------------------------------------------------------------ TABLE OF CONTENTS 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 19 SUMMARY SELECTED HISTORICAL FINANCIAL INFORMATION 20 RESPONSIBILITY FOR FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS 21 CONSOLIDATED FINANCIAL STATEMENTS 25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS INSIDE BACK COVER CORPORATE INFORMATION 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. The Balance Sheet as of September 30, 2000 is 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 Pro Forma Statement of Earnings for the years ended September 30, 2000 and 1999 in Note 23 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 e2, Energizer and Eveready, as well as miniature and rechargeable batteries, and flashlights and other lighting products. Energizer and its subsidiaries operate 22 manufacturing 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 within primary battery products from carbon zinc batteries to alkaline batteries. As such, Energizer has recorded provisions related to restructuring its worldwide battery production capacity and certain administrative functions in 1998 and 1999. Alkaline batteries are now the dominant primary battery in all world areas with the exception of Asia and Africa. Energizer continues 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 (including the United States and Canada), 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 97% and 79%, respectively, of 2000 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. According to A.C. Nielsen, Energizer's dollar share of the U.S. alkaline battery market was 34.0% in 1998, 31.2% in 1999 and 32.9% in 2000. The primary battery category experienced unprecedented growth levels in the first quarter of fiscal 2000, particularly in the North America and Asia Pacific regions, related to increased demand from retail customers and consumers in anticipation of potential disruptions related to the date change on January 1, 2000. According to A. C. Nielsen, the alkaline dollar sales for October through December in the United States increased 28% over the same quarter last year, compared to historical growth trends in the high single digits. As the category returns to normal growth trends, consumer take away will likely decline in the first quarter of fiscal - --- 1 0 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T 2001 relative to the same quarter last year. In addition, retail inventory levels at December 31, 1999, were above historical norms due to Y2K-driven ordering which further increased Energizer's sales in the first quarter of fiscal 2000. As such, Energizer anticipates reporting significantly lower year over year sales for its first fiscal quarter of 2001. The Asia Pacific area experienced significant currency devaluations and economic contraction in 1998 and early 1999, with more stable trends emerging more recently in most markets. Changes in the value of local currencies or economic contractions in this area may continue to impact segment profitability. In particular, recent currency declines in Australia, New Zealand and the Philippines have been unfavorable to Energizer during 2000 and into 2001. The euro and certain other European currencies are at or near historical low points relative to the U.S. dollar. Currency devaluation was a significant unfavorable factor in 2000 and continues into 2001. HIGHLIGHTS Net earnings were $181.4 for the year ended September 30, 2000, compared to $80.0 in 1999. Earnings per share were $1.89 and $1.88 on a basic and diluted basis, respectively, compared to earnings per basic and diluted share of $.78 in the prior year. Included in net earnings are earnings from continuing operations of $180.2 and $159.8 in 2000 and 1999, respectively. Current year net earnings include a net gain on disposition of discontinued operations of $1.2 related to the final settlement of the sale of discontinued operations. Fiscal 1999 results include a net loss from discontinued operations of $5.6 and a net loss on the disposition of discontinued operations of $74.2. Net earnings were $164.7, or $1.62 per basic and diluted share, for the year ended September 30, 1998. Included in 1998 net earnings are earnings from continuing operations of $208.2 and a net loss from discontinued operations of $43.5. Earnings from continuing operations increased $20.4, or $.32 and $.31 per basic and diluted share, respectively, in 2000. Included in 2000 results are costs related to the spin-off of $5.5 pretax, $3.3 after-tax, loss on disposition of Spanish affiliate of $15.7, and capital loss tax benefits of $24.4. Fiscal 1999 results include provisions for restructuring of $9.9 pretax, $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 is 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. Earnings from continuing operations decreased $48.4, or $.49 per basic and diluted share, in 1999. Included in both periods are provisions for restructuring and capital loss tax benefits. Excluding these items, earnings from continuing operations decreased $21.1, or $.22 per basic and diluted share, in 1999. This decrease is primarily attributable to declines in the Europe and Asia Pacific areas partially offset by increases in North America. Discontinued operations consist of Energizer's worldwide rechargeable Original Equipment Manufacturers' (OEM) battery business. In March 1999, the Board of Directors of Ralston announced its intention to exit this business to allow Energizer to focus on its primary battery business. On November 1, 1999, this business was sold to Moltech Corporation for approximately $20.0. OPERATING RESULTS NET SALES Net sales increased $42.0 or 2% in 2000 compared to 1999 primarily on growth in North America, partially offset by declines in Europe. In 1999, sales decreased $49.5 or 3% as declines in Europe and, to a lesser extent, the Asia Pacific and South and Central America regions were partially offset by increases in North America. See comments on sales changes by region in the Segment Results section below. GROSS MARGIN Gross margin dollars increased $65.2 or 7% in 2000 on increases in North America and Asia Pacific, partially offset by declines in Europe. Gross margin percentage improved 2.4 percentage points in 2000 to 49.1% on higher volume and lower production costs in North America and Asia as well as lower costs in South and Central America. Gross margin dollars declined $43.0 or 5% in 1999 on lower sales and lower margin percentage. The margin percentage in 1999 was off 1.0 percentage point to 46.7% compared to 1998 with decreases in all regions except North America. - --- 1 1 SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses decreased $19.3 or 5% in 2000 on lower general corporate expenses, as discussed below, and decreases in Europe were partially offset by increases in North American marketing and distribution costs. In 1999, selling, general and administrative expenses were flat with 1998 as decreases in Europe and South and Central America were offset by higher general corporate expenses. Selling, general and administrative expenses were 19.7%, 21.2% and 20.7% of sales in 2000, 1999 and 1998, respectively. ADVERTISING AND PROMOTION Advertising and promotion increased $23.1 or 14% in 2000 reflecting higher spending in North America, partially offset by a decrease in Europe. In 1999, advertising and promotion decreased $19.3 or 11% with declines in all regions. Advertising and promotion as a percent of sales was 9.8%, 8.8% and 9.6% in 2000, 1999 and 1998, respectively. SEGMENT RESULTS Energizer's operations are managed via four major geographic areas - North America (including the United States and Canada), 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 21 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 21 to the Consolidated Financial Statements. Segment profitability includes profit on these intersegment sales. NORTH AMERICA Net sales increased $86.1 or 8% 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 e2 sales in the last four months of the year account for the increased volume. Gross margin increased $53.7 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 of $27.6, primarily related to the Energizer e2 launch, as well as higher marketing and distribution expenses. Net sales increased $30.5 or 3% in 1999. Volume contributed $55.2 of the sales increase, partially offset by unfavorable pricing and product mix. Alkaline volume increased 8% in 1999. Segment profit for North America increased $11.6 or 4% in 1999 as a result of the higher gross margin associated with the increase in sales. Increased marketing and distribution costs of $5.0 and increased general and administrative expenses of $4.4 were largely offset by an $8.4 decrease in advertising and promotion expenditures. ASIA PACIFIC Net sales to customers increased $8.4 or 2% in 2000. Excluding - ------------ currency devaluations of $4.3, net sales increased $12.7 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. Gross margin increased $23.3 due to 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. Selling, general and administrative expenses were up 1% compared to 1999. Net sales decreased $12.1 or 3% in 1999. Currency devaluations accounted for $12.0 of the sales decline. Carbon zinc volume decreases of 5% were offset by a 4% increase in alkaline volume. Segment profit for Asia Pacific decreased $11.1 or 11% in 1999. Gross margin declined $21.3 due to higher production costs and lower sales. Partially offsetting these declines were a $6.2 decrease in exchange losses and a $4.0 decrease in advertising and promotion. EUROPE Net sales to customers for Europe decreased $44.3 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%. Gross margin decreased $21.0, primarily on unfavorable currency impacts of $18.3. The remaining decline reflects lower sales, partially offset by lower production costs associated with increased efficiencies following a plant closing in - --- 1 2 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T 1999. 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 despite a $2.6 decrease in gross margin. The improvement reflects lower costs following sales and administrative realignment last year. Net sales to customers decreased $48.7 or 13% in 1999 compared to 1998 primarily on lower volume. Alkaline and carbon zinc volumes declined 5% and 19%, respectively, accounting for $33.3 of the sales decline. Pricing and product mix negatively impacted sales by $17.0 in 1999. The majority of the pricing and product mix decline, $9.8, was driven by Energizer's move from a sales force to a distributor model in several countries during 1999. The remainder of the decline reflects competitive and retail pressures. Segment results for Europe declined by $12.5 to a loss of $1.2 in 1999. Production inefficiencies related to a plant closing and other costs associated with restructuring activities accounted for $6.5 of the decline. Excluding these costs, segment profit declined $6.0 as sales declines of $48.7 were partially offset by a $28.3 decrease in cost of products sold associated with the lower sales and a $15.1 decrease in overhead reflecting results of the restructuring of the European business operations, including the move to the distributor sales model in several countries. SOUTH AND CENTRAL AMERICA Net sales decreased $8.2 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 $1.2 or 2%, as unfavorable currency impacts of $7.2 were more than offset by lower production costs, 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. Net sales decreased $19.2 or 13% in 1999 compared to 1998. Of this decline, $19.0 was due to currency devaluation. Favorable pricing and product mix of $16.0 was offset by volume declines of 10% for alkaline and 17% for carbon zinc batteries. Segment profit for South and Central America decreased $2.4 or 14% in 1999. Gross margin declined $13.0, much of which was attributable to lower usage of production capacity in the Mexican plant. Lower other operating costs and a decrease of $2.1 in exchange losses partially offset the earnings decline. Operating cost reductions included decreased advertising and promotion expenses of $4.7 and lower general and administrative expenses of $2.4 resulting from actions taken to offset lower plant utilization and from planned reorganization and restructuring in Brazil. GENERAL CORPORATE EXPENSES General corporate expenses decreased $16.6 in 2000 to $37.4, compared to $54.0 in 1999, 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 associated with operating as a stand-alone company for the last six months of fiscal 2000. Fiscal 2001 will include a full year of stand-alone costs, an estimated increase of $4.0. Corporate expenses in 1999 increased $7.8 compared to 1998 due to higher consulting costs, the product recall charge discussed above and increases in various other corporate costs. As a percent of sales, general corporate expenses were 2.0% in 2000 compared to 2.9% in 1999 and 2.4% in 1998. RESEARCH AND DEVELOPMENT EXPENSE Research and development expense of $49.9 in 2000 increased 3% in 2000, 4% in 1999 and 11% in 1998. These increases are attributable to Energizer's ongoing effort to maintain technological leadership in the primary battery business. As a percent of sales, research and development expense was 2.6% in 2000 and 1999 compared to 2.4% in 1998. COSTS RELATED TO SPIN-OFF 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. LOSS ON DISPOSITION OF SPANISH AFFILIATE 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 - --- 1 3 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 23 to the Consolidated Financial Statements. RESTRUCTURING CHARGES Competition in the primary battery business has intensified in recent years, and there continues to be a migration of demand from carbon zinc to alkaline batteries. In response to these changes, Energizer has recorded restructuring charges each year from 1994 through 1999. These charges include 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 1998 through 2000 follows. 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 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. Substantially all actions associated with these charges were completed as of September 30, 2000. The remaining $2.5 represents additional net provisions related to prior years' restructuring plans. Additional termination benefits of $5.5 related to the 1997 restructuring plan primarily represent enhanced severance related to a European plant closing. 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. During 1998, Energizer recorded net after-tax provisions for restructuring of $12.8, or $21.3 on a pre-tax basis, of which $.3 represents inventory write-downs and is classified as cost of products sold in the Consolidated Statement of Earnings. Of the net pre-tax charge, $36.5 related to 1998 restructuring plans, including a voluntary early retirement option offered to most U.S. Energizer employees meeting certain age and service requirements and European business operations restructuring, primarily a reorganization of European sales forces and related employee reductions. The total 1998 pre-tax charge of $36.5 consisted of termination benefits of $29.3, which provided for the termination or early retirement of approximately 420 sales and administrative employees, other cash costs of $4.6, fixed asset impairments of $1.1 and a non-cash investment write-off of $1.5. The other cash costs of $4.6 consisted of demolition costs of $1.5 and environmental exit costs of $.8, both relating to assets held for disposal, lease termination costs of $1.6 and other exit costs of $.7. Except for disposition of certain assets held for disposal, substantially all actions associated with the 1998 charges were complete as of September 30, 2000. In addition, net reversals of $15.2, related to prior years' restructuring plans, were recorded in 1998, comprised of $3.7 of additional charges offset by $18.9 of reversals of prior years' charges. The additional charges primarily related to asset disposition costs of $2.6 for previously held for use assets that were idled and held for disposal. The reversals included $9.4 of greater than anticipated proceeds from asset sales related to the 1994, 1995 and 1996 - --- 1 4 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T restructuring plans. In addition, $8.5 of termination benefits recorded in 1997 were reversed in 1998, due primarily to the modification of a European plant closing plan, driven by the changing business environment in Europe. The modifications resulted in the termination of approximately 200 fewer employees than originally anticipated. Annual pre-tax cost savings from the 1999 restructuring plans have been or are expected to be as follows: 2000 - $.3 and $1.4 thereafter. Annual pre-tax cost savings from the 1998 restructuring plans have been or are expected to be as follows: 1999 - $12.0; 2000 and thereafter - $13.0. Annual pre-tax cost savings from the 1997 restructuring plans have been or are expected to be as follows: 1998 - $9.0; 1999 - $19.0; 2000 and thereafter - $23.0. As of September 30, 2000, except for the disposition of certain assets held for disposal, substantially all activities associated with 1994 through 1997 restructuring plans are complete. The remaining accrual related to these plans was $2.1 at September 30, 2000 and primarily represents asset disposition costs. The carrying value of assets held for disposal under all restructuring plans was $6.7 at September 30, 2000. 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 which presents, by major cost component and by year of provision, activity related to the restructuring charges discussed above during fiscal years 2000, 1999 and 1998, including any adjustments to the original charges. INTEREST AND OTHER FINANCIAL ITEMS Interest expense increased $19.9 in 2000 primarily in the last six months of the year reflecting incremental debt assumed by Energizer immediately prior to the spin-off. Interest expense decreased $3.5 in 1999 compared to 1998 primarily due to lower rates on foreign debt. Other financing-related costs were favorable $4.3 in 2000 compared to 1999 primarily due to lower foreign exchange losses partially offset by the discount on the sale of accounts receivable financing arrangement. Other financing costs were unfavorable $6.0 in 1999 compared to 1998 primarily due to higher foreign exchange losses in 1999. INCOME TAXES Income taxes, which include federal, state and foreign taxes, were 35.5%, 35.6% and 20.7% of earnings from continuing operations before income taxes in 2000, 1999 and 1998, respectively. Income taxes include certain unusual items in all years, the most significant of which are described below: * In 2000, the income tax percentage was favorably impacted by the recognition of $24.4 of U.S. capital loss tax benefits related to the disposition of Energizer's Spanish affiliate. * Capital loss tax benefits of $16.6 and $48.4 were recognized in 1999 and 1998, respectively, 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 41.8% in 2000, 41.3% in 1999 and 39.2% in 1998. LIQUIDITY AND CAPITAL RESOURCES Cash flows from continuing operations totaled $289.6 in 2000, $337.2 in 1999 and $232.6 in 1998. The 14% decrease in cash flows from continuing operations in 2000 is 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. The 45% increase in cash flows from continuing operations in 1999 resulted primarily from higher cash earnings and also from favorable changes in working capital items. Working capital was $401.7 and $478.1 at September 30, 2000 and 1999, respectively. Capital expenditures totaled $72.8, $69.2 and $102.8 in 2000, 1999 and 1998, respectively. These expenditures were primarily funded by cash flow from operations. Capital expenditures of approximately $90.0 are anticipated in 2001 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, $293.7 and $154.7 in 2000, 1999 and 1998, respectively. - --- 1 5 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 and repaid the interim funding facilities. As of September 30, 2000, Energizer's financing agreements include the following: private placement notes of $175.0 with maturities of 3 to 10 years; borrowings of $195.0 under revolving credit facilities, generally with 5 year maturities; an agreement to sell domestic trade receivables as discussed below; and other short-term borrowings. The average interest rate on the domestic short-term and long-term debt is approximately 7.1% and 7.8%, respectively. Approximately $195.0 of the long-term debt has a variable interest rate. The interest rates on the long-term debt range from 7.3% to 8.0%. Energizer maintains total committed debt facilities of $625.0, of which $255.0 remained available as of September 30, 2000. 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. On a historical basis, Energizer's ratio of total indebtedness to EBITDA was 1.5 to 1 and the ratio of EBIT to total interest expense was 11.2 to 1 as of September 30, 2000. On a pro forma basis, which assumes the post-spin debt was outstanding for the full year, these ratios would have been 1.5 to 1 and 6.8 to 1, respectively, at September 30, 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 proceeds from this arrangement, which was used to repay interim funding facilities as discussed above. See Note 12 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. Subsequent to year-end through November 10, 2000, approximately 1,150,000 shares of Energizer common stock had been purchased under the authorization. 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, 2000. SEASONAL FACTORS Energizer's results are significantly impacted in the first quarter of the fiscal year by the additional sales volume associated with the Christmas holiday season, particularly in North America. First quarter sales accounted for 35%, 31% and 33% of total net sales in 2000, 1999 and 1998, 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. 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 - --- 1 6 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T 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 1999. 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 $3.6 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 annual period. 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, 2000 and 1999, Energizer had $330.0 and $120.7 variable rate debt outstanding. A hypothetical 10% adverse change in all interest rates would have had an annual unfavorable impact of $2.6 and $.9 in 2000 and 1999, 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 U.S. rates and 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, primarily 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, euro, Singapore dollar, Indonesian rupiah and 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 durations 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, - --- 1 7 Energizer does not enter into foreign currency contracts for trading purposes where the sole objective is to generate profits. 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, 2000 and 1999 amounts to $2.6 and $1.5, 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 peso and other Latin American currencies; and the Singapore dollar, Chinese renminbi, Australian dollar, Indonesian rupiah 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 $515.1 and $545.1 at September 30, 2000 and 1999, 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, 2000 and 1999 amounts to $51.5 and $54.5, 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 anticipated category trends, Energizer market share and sales in future periods, the future adequacy of cash flows, and the risk associated with financial instruments and the concentration of credit, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Energizer cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Energizer advises readers that various risks and uncertainties could affect its financial performance and could cause Energizer's actual results for future periods to differ materially from those anticipated or projected. Technological or design changes in portable electronic and other devices that utilize batteries as a power source may significantly affect the demand for batteries. Continuing improvements in the service life of primary batteries, improvements in rechargeable battery performance and increasing consumer acceptance of rechargeable batteries, and the development of new non-alkaline battery technologies could all significantly affect continued category growth for primary alkaline batteries. General economic conditions and continuing growth in consumer demand for portable electronic devices could also affect category growth. Within the category, Energizer's sales and market share may be negatively affected by competitive activity, including new product introductions or advertising campaigns, retail discounts and other promotional activities. Competition for key retail customers and growth of the lower-price private-label battery segment may also negatively affect sales or market share for Energizer. Unforeseen fluctuations in levels of Energizer's operating cash flows, or inability to maintain compliance with its debt covenants, could limit Energizer's ability to meet future operating expenses and liquidity requirements, fund capital expenditures or service its debt as it becomes due. Economic turmoil, currency fluctuations and unforeseen customer financial difficulties could increase Energizer's risk from currency hedges and other financial instruments or from the extension of credit to customers. Additional risks and uncertainties include those detailed from time to time in Energizer'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. - --- 1 8 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T - ------------------------------------------------------------------------------------------------------------------ SUMMARY SELECTED HISTORICAL FINANCIAL INFORMATION (Dollars in millions except per share data)
STATEMENT OF EARNINGS DATA FOR THE YEAR ENDED SEPTEMBER 30, ---------- 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------ Net Sales $1,914.3 $1,872.3 $1,921.8 $2,005.8 $2,023.5 Depreciation and Amortization 82.0 94.9 101.2 112.3 122.6 Earnings from Continuing Operations before Income Taxes 279.2 248.2 262.5 203.9 271.4 Income Taxes 99.0 88.4 54.3 44.6 106.3 Earnings from Continuing Operations 180.2 159.8 208.2 159.3 165.1 Net Earnings 181.4 80.0 164.7 159.8 169.1 Earnings Per Share from Continuing Operations: Basic $ 1.88 $ 1.56 $ 2.05 $ 1.56 $ 1.62 Diluted $ 1.87 $ 1.56 $ 2.05 $ 1.56 $ 1.62 Average Shares Outstanding 96.1 102.6 101.6 102.1 101.8 ----------
BALANCE SHEET DATA SEPTEMBER 30, ---------- 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------ Working Capital $ 401.7 $ 478.1 $ 478.5 $ 489.6 $ 532.3 Property at Cost, Net 485.4 472.8 476.9 494.2 543.2 Additions (during the period) 72.8 69.2 102.8 98.8 95.7 Depreciation (during the period) 57.9 68.4 74.1 79.5 81.4 Total Assets 1,793.5 1,833.7 2,077.6 2,113.6 2,146.9 Long-term Debt 370.0 1.9 1.3 21.3 43.1 ---------- Results for the year ended September 30, 2000 include a loss on disposition of Spanish affiliate of $15.7 and costs related to the spin-off of $5.5. Prior results include restructuring charges of $9.9, $21.3, $83.7 and $3.4 for the years ended September 30, 1999, 1998, 1997 and 1996, respectively. Earnings from continuing operations include the following unusual items:
FOR THE YEAR ENDED SEPTEMBER 30, ---------- 2000 1999 1998 1997 1996 - ----------------------------------------------------------------------------------------------------------------- After-tax restructuring charges $ - $(8.3) $(12.8) $(72.0) $(2.2) Capital loss tax benefits 24.4 16.6 48.4 35.9 - Foreign tax credit refunds - - - 20.5 - Loss on disposition of Spanish affiliate (15.7) - - - - After-tax costs related to spin-off (3.3) - - - - - ----------------------------------------------------------------------------------------------------------------- Total $ 5.4 $ 8.3 $ 35.6 $(15.6) $(2.2) ================================================================================================================= Average shares outstanding is based on the weighted-average number of shares of Ralston common stock outstanding prior to the spin-off (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 through September 30, 2000.
- --- 1 9 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. REPORT OF INDEPENDENT ACCOUNTANTS - --------------------------------- To the Shareholders and Board of Directors of Energizer Holdings, Inc. In our opinion, the accompanying consolidated balance sheet 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, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2000, in conformity with accounting principles generally accepted in the United States. 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 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 the opinion expressed above. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP St. Louis, Missouri October 31, 2000 - --- 2 0 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T - ------------------------------------------------------------------------------------------------------------------ CONSOLIDATED STATEMENT OF EARNINGS AND COMPREHENSIVE INCOME (Dollars in millions except per share data)
YEAR ENDED SEPTEMBER 30, ---------- 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------ STATEMENT OF EARNINGS: Net Sales $1,914.3 $1,872.3 $1,921.8 - ------------------------------------------------------------------------------------------------------------------ Costs and Expenses Cost of products sold 974.7 997.9 1,004.4 Selling, general and administrative 378.0 397.3 397.9 Advertising and promotion 187.4 164.3 183.6 Research and development 49.9 48.5 46.6 Costs related to spin-off 5.5 - - Loss on disposition of Spanish affiliate 15.7 - - Provisions for restructuring - 7.8 21.0 Interest expense 27.5 7.6 11.1 Other financing items, net (3.6) 0.7 (5.3) - ------------------------------------------------------------------------------------------------------------------ 1,635.1 1,624.1 1,659.3 - ------------------------------------------------------------------------------------------------------------------ Earnings from Continuing Operations before Income Taxes 279.2 248.2 262.5 Income Taxes (99.0) (88.4) (54.3) - ------------------------------------------------------------------------------------------------------------------ Earnings from Continuing Operations 180.2 159.8 208.2 Net Earnings/(Loss) from Discontinued Operations - (5.6) (43.5) Net Gain/(Loss) on Disposition of Discontinued Operations 1.2 (74.2) - - ------------------------------------------------------------------------------------------------------------------ Net Earnings $ 181.4 $ 80.0 $ 164.7 ================================================================================================================== EARNINGS PER SHARE Basic Earnings from Continuing Operations $ 1.88 $ 1.56 $ 2.05 Net Earnings/(Loss) from Discontinued Operations - (0.06) (0.43) Net Gain/(Loss) on Disposition of Discontinued Operations 0.01 (0.72) - - ------------------------------------------------------------------------------------------------------------------ Net Earnings $ 1.89 $ 0.78 $ 1.62 ================================================================================================================== Diluted Earnings from Continuing Operations $ 1.87 $ 1.56 $ 2.05 Net Earnings/(Loss) from Discontinued Operations - (0.06) (0.43) Net Gain/(Loss) on Disposition of Discontinued Operations 0.01 (0.72) - - ------------------------------------------------------------------------------------------------------------------ Net Earnings $ 1.88 $ 0.78 $ 1.62 ================================================================================================================== STATEMENT OF COMPREHENSIVE INCOME: Net Earnings $ 181.4 $ 80.0 $ 164.7 - ------------------------------------------------------------------------------------------------------------------ Other Comprehensive Income, Net of Tax Foreign currency translation adjustments (31.9) 7.8 (30.4) Foreign currency reclassification adjustments 9.7 (4.5) - Minimum pension liability adjustment (1.1) - - - ------------------------------------------------------------------------------------------------------------------ Comprehensive Income $ 158.1 $ 83.3 $ 134.3 ==================================================================================================================
The above financial statement should be read in conjunction with the Notes to Consolidated Financial Statements. - --- 2 1 - ------------------------------------------------------------------------------------------------------------------ CONSOLIDATED BALANCE SHEET (Dollars in millions except per share data)
SEPTEMBER 30, ----------- 2000 1999 - ------------------------------------------------------------------------------------------------------------------ ASSETS Current Assets Cash and cash equivalents $ 11.9 $ 27.8 Trade receivables, net 180.6 441.9 Inventories 459.1 383.0 Other current assets 278.7 121.3 - ------------------------------------------------------------------------------------------------------------------ Total Current Assets 930.3 974.0 ================================================================================================================== Investments and Other Assets 377.8 319.7 Net Investment in Discontinued Operations - 67.2 Property at Cost Land 14.6 16.9 Buildings 140.6 143.0 Machinery and equipment 816.9 816.7 Construction in progress 47.7 33.5 - ------------------------------------------------------------------------------------------------------------------ 1,019.8 1,010.1 Accumulated depreciation 534.4 537.3 - ------------------------------------------------------------------------------------------------------------------ 485.4 472.8 - ------------------------------------------------------------------------------------------------------------------ Total $1,793.5 $1,833.7 ================================================================================================================== LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities Current maturities of long-term debt $ - $ 0.3 Notes payable 135.0 118.5 Accounts payable 145.0 128.6 Other current liabilities 248.6 248.5 - ------------------------------------------------------------------------------------------------------------------ Total Current Liabilities 528.6 495.9 Long-term Debt 370.0 1.9 Other Liabilities 156.7 23.0 Shareholders Equity Preferred stock - $.01 par value, none outstanding - - Common stock - $.01 par value, issued 95,552,711 at September 30, 2000 1.0 - Additional paid-in capital 783.9 - Retained earnings 59.8 - Accumulated other comprehensive income (106.5) - Ralston's net investment in Energizer - 1,312.9 - ------------------------------------------------------------------------------------------------------------------ Total Shareholders Equity 738.2 1,312.9 - ------------------------------------------------------------------------------------------------------------------ Total $1,793.5 $1,833.7 ==================================================================================================================
The above financial statement should be read in conjunction with the Notes to Consolidated Financial Statements. - --- 2 2 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T - ------------------------------------------------------------------------------------------------------------------ CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in millions)
YEAR ENDED SEPTEMBER 30, ----------- 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------ CASH FLOW FROM OPERATIONS Net earnings $ 181.4 $ 80.0 $ 164.7 Adjustments to reconcile net earnings to net cash flow from operations: Depreciation and amortization 82.0 94.9 101.2 Translation and exchange loss 1.9 9.0 10.4 Deferred income taxes 5.9 70.4 (36.6) Loss on sale of Spanish affiliate 15.7 - - Non-cash restructuring charges/(reversals) - (2.2) (6.5) Net (earnings)/loss from discontinued operations (1.2) 79.8 43.5 Sale of accounts receivable 100.0 - - Changes in assets and liabilities used in operations: (Increase)/decrease in accounts receivable, net (25.3) (6.4) (34.2) (Increase)/decrease in inventories (90.8) 22.1 (2.8) (Increase)/decrease in other current assets 18.7 (13.9) 3.6 Increase/(decrease) in accounts payable 24.2 (21.3) 0.2 Increase/(decrease) in other current liabilities (16.8) 16.2 1.5 Other, net (6.1) 8.6 (12.4) - ------------------------------------------------------------------------------------------------------------------ Cash flow from continuing operations 289.6 337.2 232.6 Cash flow from discontinued operations 54.7 15.1 8.7 - ------------------------------------------------------------------------------------------------------------------ Net cash flow from operations 344.3 352.3 241.3 - ------------------------------------------------------------------------------------------------------------------ CASH FLOW FROM INVESTING ACTIVITIES Property additions (72.8) (69.2) (102.8) Proceeds from sale of OEM business 20.0 - - Proceeds from sale of assets 3.2 1.4 14.1 Other, net (8.7) (0.5) 4.6 - ------------------------------------------------------------------------------------------------------------------ Cash used by investing activities - continuing operations (58.3) (68.3) (84.1) Cash used by investing activities - discontinued operations (0.7) (3.7) (13.2) - ------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (59.0) (72.0) (97.3) - ------------------------------------------------------------------------------------------------------------------ CASH FLOW FROM FINANCING ACTIVITIES Net cash proceeds from issuance of long-term debt 407.0 1.0 13.8 Principal payments on long-term debt (including current maturities) (449.5) (13.3) (35.1) Cash proceeds from issuance of notes payables with maturities greater than 90 days 6.1 14.7 10.2 Cash payments on notes payables with maturities greater than 90 days (3.7) (0.1) - Net increase/(decrease) in notes payable with maturities of 90 days or less (50.2) (12.0) 32.8 Net transactions with Ralston prior to spin-off (210.7) (293.7) (154.7) - ------------------------------------------------------------------------------------------------------------------ Net cash used by financing activities (301.0) (303.4) (133.0) - ------------------------------------------------------------------------------------------------------------------ Effect of Exchange Rate Changes on Cash (0.2) 1.8 (4.6) - ------------------------------------------------------------------------------------------------------------------ Net Increase/(Decrease) in Cash and Cash Equivalents (15.9) (21.3) 6.4 Cash and Cash Equivalents, Beginning of Period 27.8 49.1 42.7 - ------------------------------------------------------------------------------------------------------------------ Cash and Cash Equivalents, End of Period $ 11.9 $ 27.8 $ 49.1 ================================================================================================================== Non-cash transactions: Debt assigned by Ralston $ 478.0 $ - $ - ==================================================================================================================
The above financial statement should be read in conjunction with the Notes to Consolidated Financial Statements. - --- 2 3 - ----------------------------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (Dollars in millions)
Accumulated Ralston's Additional Other Net Common Paid in Retained Comprehensive Investment Stock Capital Earnings Income - ----------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1997 $1,548.2 Net earnings 164.7 Net transactions with Ralston (151.2) Foreign currency translation adjustment (30.4) - ----------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1998 $1,531.3 Net earnings 80.0 Net transactions with Ralston (301.7) Foreign currency translation adjustment 3.3 - ----------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1999 $1,312.9 Net earnings 121.6 Net transactions with Ralston (732.8) Foreign currency translation adjustment (1.4) - ----------------------------------------------------------------------------------------------------------------------- Balance at March 31, 2000 $ 700.3 Distribution to Ralston's shareholders $ (700.3) $1.0 $783.9 $ (84.6) Net earnings $59.8 Foreign currency translation adjustment (20.8) Minimum pension liability adjustment (1.1) ======================================================================================================================= Balance at September 30, 2000 $ - $1.0 $783.9 $59.8 $(106.5) =======================================================================================================================
The above financial statement should be read in conjunction with the Notes to Consolidated Financial Statements. - --- 2 4 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T 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 e2, Energizer and Eveready, as well as miniature and rechargeable batteries, and flashlights and other lighting products. Energizer and its subsidiaries operate 22 manufacturing 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. The Balance Sheet as of September 30, 2000 is 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. (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. A one-month lag is utilized in reporting all international subsidiaries in Energizer's consolidated financial statements. 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. - --- 2 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)(DOLLARS IN MILLIONS - ------------------------------------------ EXCEPT PER SHARE DATA) For foreign operations where the U.S. dollar is the functional currency and for countries which 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 - Energizer uses financial derivatives 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. Realized and unrealized gains and losses from F/X instruments that hedge firm commitments are deferred as part of the cost basis of the asset or liability being hedged and are recognized in the Consolidated Statement of Earnings in the same period as the underlying transaction. Realized and unrealized gains or losses from F/X instruments used as hedges of existing balance sheet exposures or anticipated transactions that are not firmly committed are recognized currently in selling, general and administrative expenses in the Consolidated Statement of Earnings. However, gains or losses from F/X instruments that hedge existing balance sheet exposures are offset in the Consolidated Statement of Earnings by gains or losses recorded on these hedged exposures. Premiums or discounts on foreign exchange forward contracts are recognized, and premiums paid for purchased options are amortized, over the life of the related F/X instrument in selling, general and administrative expenses in the Consolidated Statement of Earnings. Unrealized gains and losses, if any, on zero-cost option collars are deferred as part of the cost basis of the asset or liability being hedged. F/X instruments are generally not disposed of prior to settlement date; however, if an F/X instrument and the underlying hedged transaction were disposed of prior to the settlement date, any deferred gain or loss would be recognized immediately in the Consolidated Statement of Earnings. 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 - -------------------------- Investments and Other Assets. These costs are amortized using the straight-line method over periods of related benefit ranging from three 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 25 years for machinery and equipment and 10 to 50 years for buildings. Depreciation expense was $57.9, $68.4 and $74.1 in 2000, 1999 and 1998, respectively. 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. - --- 2 6 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T 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 an impairment exists. If an 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 upon shipment of product to - ------------------- customers. Sales discounts, returns and allowances are included in net sales, and 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. Products are also advertised and promoted through cooperative programs with retailers. Energizer expenses advertising and promotion costs as 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. RESEARCH AND DEVELOPMENT COSTS - Research and development costs are expensed - ------------------------------ as incurred. INCOME TAXES - Energizer follows the liability method of accounting for - ------------ income taxes. Deferred income taxes are recognized for the effect of temporary differences between financial and tax reporting. No additional U.S. taxes have been provided on earnings of foreign subsidiaries expected to be reinvested indefinitely. Additional income taxes are provided, however, on planned repatriation of foreign earnings after taking into account tax-exempt earnings and applicable foreign tax credits. Management assesses the realizability of deferred tax assets and provides valuation allowances as deemed necessary. EARNINGS PER SHARE - Basic earnings per share is based on the average number - ------------------ of shares outstanding during the period subsequent to the spin-off. 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. For all 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. ACCOUNTING FOR STOCK-BASED COMPENSATION - Energizer accounts for stock - --------------------------------------- options using the intrinsic value method as prescribed by Accounting Principles Board Opinion No. 25 (APB 25). Pro forma disclosures required under Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," as if Energizer had adopted the fair value based method of accounting for stock options, are presented in Note 8 to the Consolidated Financial Statements. ENVIRONMENTAL REMEDIATION LIABILITIES - 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. Accruals for environmental remediation are included in other current liabilities or other liabilities, depending on their nature, in the Consolidated Balance Sheet and are recorded at undiscounted amounts. RECLASSIFICATIONS - Certain reclassifications have been made to the prior - ----------------- year financial statements to conform to the current presentation. - --- 2 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)(DOLLARS IN MILLIONS - ------------------------------------------ EXCEPT PER SHARE DATA) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial - ----------------------------------------- Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133) and in June 2000, issued Statement of Financial Accounting Standards No. 138 (SFAS 138), an amendment of SFAS 133. These statements are effective for all fiscal quarters of fiscal years beginning after June 15, 2000. The statements require the recognition of derivative financial instruments on the balance sheet as assets or liabilities, at fair value. Gains or losses resulting from changes in the value of derivatives are accounted for depending on the intended use of the derivative and whether it qualifies for hedge accounting. Accordingly, Energizer has adopted the provisions of SFAS 133 as of the first quarter of fiscal year 2001. Energizer has determined that the implementation of this standard will not have a material effect on its consolidated financial position or results of operations. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements." SAB 101 provides guidance on recognition, presentation and disclosure of revenue in financial statements. In addition, the Emerging Issues Task Force (EITF) issued EITF 00-10 and 00-14. EITF 00-10, "Accounting for Shipping and Handling Fees and Costs," provides guidance on earnings statement classification of amounts billed to customers for shipping and handling. EITF 00-14, "Accounting for Certain Sales Incentives," provides guidance on accounting for discounts, coupon, rebates and free product. Energizer will be required to adopt SAB 101, EITF 00-10 and EITF 00-14 no later than the fourth quarter of fiscal year 2001. Energizer does not expect the adoption of these statements to have a material effect on its results of operations, however, certain reclassifications may be necessary. In September 2000, FASB issued Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." The statement is effective for fiscal years ending after December 15, 2000. The statement replaces FASB Statement No. 125 and revises the standards for accounting and disclosure for securitizations and other transfers of financial assets and collateral. The statement carries over most of SFAS 125's provisions without reconsideration and, as such, Energizer believes that the implementation of this standard will not have a material effect on its consolidated financial position or results of operations. (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, advertising and facilities for Energizer's 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, $20.0 and $20.9 for the six months ended March 31, 2000 and years ended September 30, 1999 and 1998, respectively. Actual expenses paid by Energizer to Ralston for such services were $4.0 for the six-month period subsequent to the spin-off. 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. - --- 2 8 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T (4) DISCONTINUED OPERATIONS In March 1999, the Board of Directors of Ralston announced its intention to exit Energizer's worldwide rechargeable Original Equipment Manufacturers' (OEM) battery business to allow Energizer to focus on its primary battery business. 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. The net loss for 1998 includes an after-tax provision of $42.7, primarily representing an impairment write-down of lithium ion rechargeable battery assets of the OEM business. Fair value of those assets was primarily determined based upon estimates of recovery value for unique manufacturing equipment. Due to rapid changes in the business environment since the beginning of the lithium ion project in 1996, it became more economical to source lithium ion cells from other manufacturers. 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 are presented in the following table. 1999 1998 - ------------------------------------------------------------------------- Net sales $64.2 $ 149.4 ========================================================================= Earnings/(loss) before income taxes $(9.0) $ (70.6) Income taxes benefit/(provision) 3.4 27.1 - ------------------------------------------------------------------------- Net earnings/(loss) from discontinued operations $(5.6) $ (43.5) ========================================================================= (5) RESTRUCTURING ACTIVITIES Competition in the primary battery business has intensified in recent years, and there continues to be a migration of demand from carbon zinc to alkaline batteries. In response to these changes, Energizer has recorded restructuring charges each year from 1994 through 1999. These charges include 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 1998 through 2000 follows. 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. - --- 2 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)(DOLLARS IN MILLIONS - ------------------------------------------ EXCEPT PER SHARE DATA) 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. Substantially all actions associated with these charges were completed as of September 30, 2000. The remaining $2.5 represents additional net provisions related to prior years' restructuring plans. Additional termination benefits of $5.5 related to the 1997 restructuring plan primarily represent enhanced severance related to a European plant closing. 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. During 1998, Energizer recorded net after-tax provisions for restructuring of $12.8, or $21.3 on a pre-tax basis, of which $.3 represents inventory write-downs and is classified as cost of products sold in the Consolidated Statement of Earnings. Of the net pre-tax charge, $36.5 related to 1998 restructuring plans, including a voluntary early retirement option offered to most U.S. Energizer employees meeting certain age and service requirements and European business operations restructuring, primarily a reorganization of European sales forces and related employee reductions. The total 1998 pre-tax charge of $36.5 consisted of termination benefits of $29.3, which provided for the termination or early retirement of approximately 420 sales and administrative employees, other cash costs of $4.6, fixed asset impairments of $1.1 and a non-cash investment write-off of $1.5. The other cash costs of $4.6 consisted of demolition costs of $1.5 and environmental exit costs of $.8, both relating to assets held for disposal, lease termination costs of $1.6 and other exit costs of $.7. Except for disposition of certain assets held for disposal, substantially all actions associated with the 1998 charges were complete as of September 30, 2000. In addition, net reversals of $15.2, that related to prior years' restructuring plans, were recorded in 1998, comprised of $3.7 of additional charges offset by $18.9 of reversals of prior years' charges. The additional charges primarily related to asset disposition costs of $2.6 for previously held for use assets that were idled and held for disposal. The reversals included $9.4 of greater than anticipated proceeds from asset sales related to the 1994, 1995 and 1996 restructuring plans. In addition, $8.5 of termination benefits recorded in 1997 were reversed in 1998 due primarily to the modification of a European plant closing plan, driven by the changing business environment in Europe. The modifications resulted in the termination of approximately 200 fewer employees than originally anticipated. As of September 30, 2000, except for the disposition of certain assets held for disposal, substantially all activities associated with 1994 through 1997 restructuring plans are complete. The remaining accrual related to these plans was $2.1 at September 30, 2000 and primarily represents asset disposition costs. The carrying value of assets held for disposal under all restructuring plans was $6.7 at September 30, 2000. - --- 3 0 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T The following table presents, by major cost component and by year of provision, activity related to the restructuring charges discussed above during fiscal years 2000, 1999 and 1998, including any adjustments to the original charges.
1998 Rollforward 1999 Rollforward - ------------------------------------------------------------------------------------------------------------------------ Beginning Provision/ Ending Beginning Provision/ Ending Balance Reversals Activity Balance Balance Reversals Activity Balance - ------------------------------------------------------------------------------------------------------------------------ 1994 PLAN Termination benefits 0.2 - (0.2) - - - - - Other cash costs 1.2 - (1.2) - - - - - Fixed asset impairments - (5.8) 5.8 - - (2.0) 2.0 - - ------------------------------------------------------------------------------------------------------------------------ Total 1.4 (5.8) 4.4 - - (2.0) 2.0 - - ------------------------------------------------------------------------------------------------------------------------ 1995 PLAN Termination benefits 2.1 0.3 (1.5) 0.9 0.9 0.1 (1.0) - Other cash costs 1.9 0.5 (1.2) 1.2 1.2 - (0.4) 0.8 Fixed asset impairments - (2.2) 2.2 - - (1.5) 1.5 - Other non-cash charges - (0.4) 0.4 - - - - - - ------------------------------------------------------------------------------------------------------------------------ Total 4.0 (1.8) (0.1) 2.1 2.1 (1.4) 0.1 0.8 - ------------------------------------------------------------------------------------------------------------------------ 1996 PLAN Termination benefits 1.1 (0.6) (0.5) - - - - - Other cash costs 1.7 - (0.7) 1.0 1.0 - (0.2) 0.8 Fixed asset impairments - (1.4) 1.4 - - - - - - ------------------------------------------------------------------------------------------------------------------------ Total 2.8 (2.0) 0.2 1.0 1.0 - (0.2) 0.8 - ------------------------------------------------------------------------------------------------------------------------ 1997 PLAN Termination benefits 42.6 (8.5) (15.4) 18.7 18.7 5.5 (20.1) 4.1 Other cash costs 2.2 2.3 (2.3) 2.2 2.2 1.8 (2.7) 1.3 Fixed asset impairments - - - - - (1.9) 1.9 - Other non-cash charges - 0.6 (0.6) - - (2.4) 2.4 - - ------------------------------------------------------------------------------------------------------------------------ Total 44.8 (5.6) (18.3) 20.9 20.9 3.0 (18.5) 5.4 - ------------------------------------------------------------------------------------------------------------------------ 1998 PLAN Termination benefits - 29.3 (15.0) 14.3 14.3 0.8 (13.5) 1.6 Other cash costs - 4.6 (1.9) 2.7 2.7 0.5 (1.2) 2.0 Fixed asset impairments - 1.1 (1.1) - - - - - Other non-cash charges - 1.5 (1.5) - - 1.6 (1.6) - - ------------------------------------------------------------------------------------------------------------------------ Total - 36.5 (19.5) 17.0 17.0 2.9 (16.3) 3.6 - ------------------------------------------------------------------------------------------------------------------------ 1999 PLAN Termination benefits - - - - - 3.2 (2.5) 0.7 Other cash costs - - - - - 0.2 (0.2) - Fixed asset impairments - - - - - 4.0 (4.0) - Total - - - - - 7.4 (6.7) 0.7 - ------------------------------------------------------------------------------------------------------------------------ Grand Total $53.0 $21.3 $(33.3) $41.0 $41.0 $9.9 $(39.6) $11.3 ========================================================================================================================
2000 Rollforward - ----------------------------------------------------------------------- Beginning Provision/ Ending Balance Reversals Activity Balance - ----------------------------------------------------------------------- 1994 PLAN Termination benefits - - - - Other cash costs - - - - Fixed asset impairments - - - - - ----------------------------------------------------------------------- Total - - - - - ----------------------------------------------------------------------- 1995 PLAN Termination benefits 0.8 - (0.8) - Fixed asset impairments - - - - Other non-cash charges - - - - - ----------------------------------------------------------------------- Total 0.8 - (0.8) - - ----------------------------------------------------------------------- 1996 PLAN Termination benefits - - - - Other cash costs 0.8 - - 0.8 Fixed asset impairments - - - - - ----------------------------------------------------------------------- Total 0.8 - - 0.8 - ----------------------------------------------------------------------- 1997 PLAN Termination benefits 4.1 - (4.1) - Other cash costs 1.3 - - 1.3 Fixed asset impairments - - - - Other non-cash charges - - - - - ----------------------------------------------------------------------- Total 5.4 - (4.1) 1.3 - ----------------------------------------------------------------------- 1998 PLAN Termination benefits 1.6 - (1.6) - Other cash costs 2.0 - (0.2) 1.8 Fixed asset impairments - - - - Other non-cash charges - - - - - ----------------------------------------------------------------------- Total 3.6 - (1.8) 1.8 - ----------------------------------------------------------------------- 1999 PLAN Termination benefits 0.7 - (0.7) - Other cash costs - - - - Fixed asset impairments - - - - - ----------------------------------------------------------------------- Total 0.7 - (0.7) - - ----------------------------------------------------------------------- Grand Total $11.3 $ - $(7.4) $3.9 =======================================================================
(6) INCOME TAX Prior to the 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. - --- 3 1 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)(DOLLARS IN MILLIONS - ------------------------------------------ EXCEPT PER SHARE DATA) The provisions for income taxes consisted of the following for the years ended September 30:
-------------------------- 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------------- CONTINUING Continuing Continuing OPERATIONS CONSOLIDATED Operations Consolidated Operations Consolidated - ----------------------------------------------------------------------------------------------------------------------- Currently payable: United States $47.5 $45.2 $(17.5) $(27.0) $ 47.5 $ 41.2 State 9.0 8.7 7.9 8.6 6.5 6.2 Foreign 36.6 36.6 27.6 27.8 36.9 37.0 - ----------------------------------------------------------------------------------------------------------------------- Total Current 93.1 90.5 18.0 9.4 90.9 84.4 - ----------------------------------------------------------------------------------------------------------------------- Deferred: United States 1.2 1.2 68.6 39.1 (39.0) (57.1) State 0.2 0.2 (0.5) (2.2) (0.3) (2.8) Foreign 4.5 4.5 2.3 2.3 2.7 2.7 - ----------------------------------------------------------------------------------------------------------------------- Total Deferred 5.9 5.9 70.4 39.2 (36.6) (57.2) - ----------------------------------------------------------------------------------------------------------------------- Provision for Income Taxes $99.0 $96.4 $ 88.4 $ 48.6 $ 54.3 $ 27.2 =======================================================================================================================
The source of pre-tax earnings was:
-------------------------- 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------------- CONTINUING Continuing Continuing OPERATIONS CONSOLIDATED Operations Consolidated Operations Consolidated - ----------------------------------------------------------------------------------------------------------------------- United States $201.9 $200.5 $197.2 $ 75.4 $172.1 $102.4 Foreign 77.3 77.3 51.0 53.3 90.4 89.5 - ----------------------------------------------------------------------------------------------------------------------- Pre-tax earnings $279.2 $277.8 $248.2 $128.7 $262.5 $191.9 =======================================================================================================================
A reconciliation of income taxes with the amounts computed at the statutory federal rate follows:
--------------------- 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------------- Computed tax at federal statutory rate $ 97.7 35% $ 86.9 35% $ 91.9 35% State income taxes, net of federal tax benefit 6.0 2.1 4.8 1.9 4.0 1.5 Foreign tax in excess of federal rate 8.5 3.0 8.4 3.4 4.8 1.8 Taxes on repatriation of foreign earnings 6.4 2.3 7.8 3.1 7.5 2.9 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) (48.4) (18.4) Other, net (0.7) (0.2) (2.9) (1.2) (5.5) (2.1) - ----------------------------------------------------------------------------------------------------------------------- $ 99.0 35.5% $ 88.4 35.6% $ 54.3 20.7% =======================================================================================================================
- --- 3 2 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T 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 and $48.4 in 1999 and 1998, respectively, primarily related to past restructuring actions. The capital loss benefits are not recognized in Energizer's pro forma financial results (see Note 23) 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 and 1998 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: ------------ 2000 1999 - -------------------------------------------------------------------------- Deferred Tax Liabilities: Depreciation and property differences $(61.1) $(64.7) Pension plans (31.9) - - -------------------------------------------------------------------------- Gross deferred tax liabilities (93.0) (64.7) ========================================================================== Deferred Tax Assets: Accrued liabilities 45.7 64.3 Tax loss carryforwards and tax credits 25.6 46.4 Intangible assets 42.6 37.6 Postretirement benefits other than pensions 28.8 - Inventory differences 5.2 3.5 Other 8.8 12.1 - -------------------------------------------------------------------------- Gross deferred tax assets 156.7 163.9 - -------------------------------------------------------------------------- Valuation allowance (31.1) (66.8) - -------------------------------------------------------------------------- Net deferred tax assets $ 32.6 $ 32.4 ========================================================================== Total deferred tax assets/liabilities shown above include current and non-current amounts. Tax loss carryforwards of $11.0 expired in 2000, primarily due to the sale of Energizer's Spanish affiliate. Future expiration of tax loss carryforwards and tax credits, if not utilized, are as follows: 2001, $.8; 2002, $.8; 2003, $2.2; 2004, $6.7; 2005, $3.6; thereafter or no expiration, $11.5. The valuation allowance is primarily attributed to deferred tax assets related to certain accrued liabilities, tax loss carryforwards and tax credits outside the United States. The valuation allowance decreased $35.7 in 2000 primarily due to the decrease in tax loss carryforwards discussed above and other deferred tax assets disposed of as part of the sale of Energizer's Spanish affiliate. At September 30, 2000, approximately $65.9 of foreign subsidiary net earnings were 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. - --- 3 3 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)(DOLLARS IN MILLIONS - ------------------------------------------ EXCEPT PER SHARE DATA) (7) EARNINGS PER SHARE Earnings per share has been calculated using Energizer's historical basis earnings for the three years presented below. 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. 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. For the years ended September 30, 1999 and 1998, 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. The following table sets forth the computation of basic and diluted earnings per share.
FOR THE YEAR ENDED SEPTEMBER 30, --------------- 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------- Numerator Numerator for basic and dilutive earnings per share - Earnings from continuing operations $180.2 $159.8 $208.2 - ---------------------------------------------------------------------------------------------------------------------- Net loss from discontinued operations $ - $ (5.6) $(43.5) Gain/(loss) on disposition of discontinued operations $ 1.2 $(74.2) $ - - ---------------------------------------------------------------------------------------------------------------------- Net Earnings $181.4 $ 80.0 $164.7 ====================================================================================================================== Denominator Denominator for basic earnings per share Weighted-average shares 96.1 102.6 101.6 - ---------------------------------------------------------------------------------------------------------------------- Effect of dilutive securities Stock options 0.1 - - Restricted stock equivalents 0.1 - - - ---------------------------------------------------------------------------------------------------------------------- 0.2 - - Denominator for dilutive earnings per share - Weighted-average shares and assumed conversions 96.3 102.6 101.6 ====================================================================================================================== Basic earnings per share Earnings from continuing operations $ 1.88 $ 1.56 $ 2.05 Net earnings/(loss) from discontinued operations - (0.06) (0.43) Net gain/(loss) on disposition of discontinued operations 0.01 (0.72) - - ---------------------------------------------------------------------------------------------------------------------- Net Earnings $ 1.89 $ 0.78 $ 1.62 ====================================================================================================================== Diluted earnings per share Earnings from continuing operations $ 1.87 $ 1.56 $ 2.05 Net earnings/(loss) from discontinued operations - (0.06) (0.43) Net gain/(loss) on disposition of discontinued operations 0.01 (0.72) - - ---------------------------------------------------------------------------------------------------------------------- Net Earnings $ 1.88 $ 0.78 $ 1.62 ======================================================================================================================
- --- 3 4 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T (8) STOCK-BASED COMPENSATION Energizer's 2000 Incentive Stock Plan was adopted by the Board of Directors in March 2000 and is being submitted to shareholders for their approval, 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 may be granted to directors, officers and key employees. A maximum of 15.0 million shares of Energizer (ENR) stock was approved to be issued under the Plan. At September 30, 2000, there were 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 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. As of September 30, 2000, 488,415 restricted stock equivalents had been granted. The weighted-average fair value for restricted stock equivalents granted in 2000 was $18.30. 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 $4.8 in 2000. 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.
Fiscal 2000 - ------------------------------------------------------------------------------ Basic Diluted Net Earnings Earnings Earnings per Share per Share - ------------------------------------------------------------------------------ As reported $181.4 $1.89 $1.88 Pro forma $176.1 $1.83 $1.83
The weighted-average fair value for options granted in fiscal 2000 was $7.13 per option. This was estimated at the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions:
----------------- 2000 - ------------------------------------------------------------------------------ Risk-free interest rate 5.85% Expected life of option 7.5 YEARS Expected volatility of ENR stock 20.30% Expected dividend yield on ENR stock -% -----------------
- --- 3 5 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).
2000 - ---------------------------------------------------------------------- Weighted-Average Shares Exercise Price - ---------------------------------------------------------------------- Outstanding on October 1 - $ - Granted 7.37 17.41 Exercised - - Cancelled - - Outstanding on September 30 7.37 17.41 Exercisable on September 30 - $ -
(9) 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. Certain other foreign pension arrangements, that include various retirement and termination benefit plans, some of which are required by local law or coordinated with government-sponsored plans, are not significant in the aggregate. 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, and it is expected that such adjustments will continue into the future. 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. See further discussion of pre-spin pension and postretirement benefits below. The following pension and other postretirement benefit information is presented in accordance with SFAS 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." The following tables present the benefit obligation and funded status of the plans for the period subsequent to the spin-off.
September 30, 2000 - ------------------------------------------------------------------------------ Pension Postretirement - ------------------------------------------------------------------------------ CHANGE IN BENEFIT OBLIGATION: Benefit obligation at April 1, 2000 $ 345.6 $ 77.6 Service cost 7.8 0.1 Interest cost 11.8 2.8 Plan participants' contributions 0.2 - Actuarial (gain)/loss (1.3) 4.2 Benefits paid (10.0) (1.0) Foreign currency exchange rate changes (7.0) - Amendments 4.5 - - ------------------------------------------------------------------------------ Benefit obligation at end of year $ 351.6 $ 83.7 ============================================================================== CHANGE IN PLAN ASSETS: Fair value of plan assets at April 1, 2000 $ 558.9 $ 1.7 Actual return on plan assets 16.6 0.2 Company contributions 1.2 1.0 Plan participants' contributions 0.2 1.0 Benefits paid (10.0) (2.0) Foreign currency exchange rate changes (9.2) - - ------------------------------------------------------------------------------ Fair value of plan assets at end of year $ 557.7 $ 1.9 ============================================================================== FUNDED STATUS: Funded status of the plan $ 206.1 $ (81.8) Unrecognized net loss/(gain) (113.0) (2.3) Unrecognized prior service cost 0.4 (3.6) Unrecognized net transition asset 1.1 - ------------------------------------------------------------------------------ Prepaid/(accrued) benefit cost $ 94.6 $ (87.7) ============================================================================== AMOUNTS RECOGNIZED IN THE CONSOLIDATED BALANCE SHEET: Prepaid benefit cost $ 102.0 $ - Accrued benefit liability (9.4) (87.7) Intangible asset 0.2 - Accumulated other comprehensive income 1.8 - - ------------------------------------------------------------------------------ Net amount recognized $ 94.6 $ (87.7) ==============================================================================
For pension plans with accumulated benefit obligations in excess of plan assets, the projected benefit obligation was $9.4 at September 30, 2000. There are no plan assets for these nonqualified plans as of September 30, 2000. - --- 3 6 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T Pension assets consist primarily of listed common stocks and bonds. The U.S. plan held approximately 1.7 million shares of Energizer common stock at September 30, 2000, with a market value of $42.4. The following table presents pension and postretirement expense for the period subsequent to the spin-off (six months ended September 30, 2000).
Pension Postretirement - ------------------------------------------------------------------------------ Service cost $ 7.8 $ 0.1 Interest cost 11.8 2.8 Expected return on plan assets (22.4) - Amortization of unrecognized prior service cost - (0.1) Amortization of unrecognized transition asset 0.1 - Recognized net actuarial (gain)/loss (1.5) - - ------------------------------------------------------------------------------ Net periodic benefit cost/(income) $ (4.2) $ 2.8 ==============================================================================
The following table presents assumptions, which reflect weighted-averages for the component plans, used in determining the above information.
Pension Postretirement - ------------------------------------------------------------------------------ Discount rate 6.7% 7.0% Expected return on plan assets 8.7% - Compensation increase rate 5.2% -
Assumed health care cost trend rates have been used in the valuation of postretirement health insurance benefits. The trend rate is 6.5% in 2000 and thereafter for all retirees. A one percentage point increase in health care cost trend rates in each year would increase the accumulated postretirement benefit obligation as of September 30, 2000 by $4.9 and the net periodic postretirement benefit cost by $.4. A one percentage point decrease in the health care cost trend rates in each year would decrease the accumulated postretirement benefit obligation as of September 30, 2000 by $4.4 and the net periodic postretirement benefit cost for 2000 by $.3. 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. Certain other foreign pension arrangements, that included various retirement and termination benefit plans, some of which are required by local law or coordinated with government-sponsored plans, were not material in the aggregate. Prior to the spin-off, Ralston provided health care and life insurance benefits for certain groups of retired Energizer employees who met specified age and years of service requirements. 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. The following table presents the net expense/(income) allocated to Energizer for the respective plans prior to the spin-off.
-------- 2000 1999 1998 - --------------------------------------------------------------------------- Defined benefit plans $(2.1) $5.2 $0.3 Postretirement benefits 3.3 5.8 4.3 --------
- --- 3 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - - ------------------------------------------ (CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA) (10) 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%. 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. In fiscal 1999, Ralston amended the contribution structure of the plans. Prior to January 1, 1999, Ralston generally matched 100% of participants' before-tax contributions up to 6% of compensation for employees hired prior to July 1, 1993. For employees hired on or after July 1, 1993, Ralston matched before-tax participant contributions in increasing 20% increments for each year of service. On January 1, 1999 and thereafter, Ralston matched 25% of participants' before-tax contributions up to 4% of compensation. In addition, participants could make after-tax contributions of 1% or 1.75% of compensation into the savings plan. This participant after-tax contribution was matched within the pension plan at 300%. Amounts charged to expense are shown in the table below. 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, $3.0 in 1999 and $8.2 in 1998. (11) 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 12 below, and repaid the interim-funding facilities. Notes payable at September 30, 2000 and 1999, consisted of notes payable to financial institutions with original maturities of less than one year of $135.0 and $118.5, respectively, and had a weighted-average interest rate of 7.9% and 7.3%, respectively. The detail of long-term debt at September 30 is as follows.
-------- 2000 1999 - ------------------------------------------------------------------------- Private Placement, interest rates ranging from 7.8% to 8.0%, due 2003 to 2010 $ 175.0 $ - Revolving Credit Facility, interest rates ranging from 7.4% to 7.8%, due 2005 195.0 - Other, interest rates ranging from 7.6% to 18.9% at 9-30-99 due 1999 to 2002 - 2.2 - ------------------------------------------------------------------------- 370.0 2.2 Less current portion - (0.3) - ------------------------------------------------------------------------- Total long-term debt $ 370.0 $ 1.9 =========================================================================
Energizer maintains total committed long-term debt facilities of $625.0, of which $255.0 remained available as of September 30, 2000. 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: Year ending September 30, 2003 - $15.0; 2005 - $ 305.0; and thereafter - $50.0. (12) 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) under SFAS 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." The SPE's sole purpose is the acquisition of receivables - --- 3 8 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T from Energizer and the sale of its interests in the receivables to a multi-seller receivables securitization company. The SPE is not consolidated for financial reporting purposes. Energizer's investment in the SPE is classified as Other Current Assets on the Consolidated Balance Sheet as disclosed below. As of September 30, 2000, Energizer had sold $257.1 of outstanding accounts receivable to the SPE. The SPE sold the receivables to an unrelated third party for $100.0 in cash and maintains a subordinated retained interest in the remaining $157.1 of receivables, which is equivalent to Energizer's investment in the SPE. 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. (13) 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, 2000, there were no shares of preferred stock outstanding. (14) 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. At September 30, 2000, there were 300 million shares of ENR stock authorized, of which 8,013,000 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. - --- 3 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - - ------------------------------------------ (CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA) (15) 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. 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.
-------- 2000 1999 - ------------------------------------------------------------------------- INSTRUMENT Forwards $ 122.5 $ 133.4 Options 25.0 17.7 CURRENCY Swiss franc 117.2 124.2 Canadian dollar 25.0 17.7 Other currencies 5.3 9.2 - -------------------------------------------------------------------------
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 which 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. FAIR VALUE OF 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, 2000, the fair market value of long-term debt was $371.9 compared to its carrying value of $370.0. The fair value of the long-term debt is estimated using yields obtained from independent pricing sources for similar types of borrowing arrangements. As of September 30, 1999, Energizer's long-term debt represented borrowings in foreign countries under various credit facilities that provided for periodic interest rate resets, at least annually. Therefore, the fair market value of Energizer's long-term debt was deemed to approximate its book value at September 30, 1999. 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 be required to make a total net - --- 4 0 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T payment of $2.4 and $2.7 to counterparties for outstanding foreign currency contracts at September 30, 2000 and 1999, 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. (16) ENVIRONMENTAL AND LEGAL MATTERS GOVERNMENT REGULATIONS 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 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 $3.6 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 annual period. LEGAL PROCEEDINGS - On April 8, 1998, Zinc Products Company, a division - ----------------- of Alltrista Corp., a supplier of zinc cans used in the manufacture of batteries, filed suit in federal district court for the Eastern District of Tennessee against Energizer, claiming breach of contract when Energizer closed its Fremont, Ohio plant. The plaintiff claims lost profits and other damages of approximately $2.8. The case has been set for trial in January 2001. - --- 4 1 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - - ------------------------------------------ (CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA) The U.S. Patent Office continues to review the interference claims between Strategic Electronics (Energizer's licensor) and Duracell relating to use of the on-battery tester. A decision is not expected for several years. An earlier decision, which denied Energizer's separate patent claims and those of Eastman Kodak Company (which are licensed to Duracell) was appealed to the federal district court for Washington, D.C. on February 2, 1998. Kodak filed a similar appeal, naming Energizer as a defendant on January 29, 1998. In a related matter, Strategic Electronics filed a declaratory judgment suit on September 9, 1999 in the federal district court for the Central District of California seeking additional payments of approximately $1.0 under the license. Energizer filed a motion to dismiss, which was granted in the spring of 2000. 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 the foregoing 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 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. (17) OTHER COMMITMENTS AND CONTINGENCIES LEASE COMMITMENTS - Future minimum rental commitments under noncancellable - ----------------- operating leases in effect as of September 30, 2000 were: 2001 - $16.7; 2002 - - $9.5; 2003 - $8.4; 2004 - $7.4; 2005 - $7.1; and thereafter - $34.3. Total rental expense for all operating leases was $17.5, $21.5 and $19.7 in 2000, 1999 and 1998, respectively. - --- 4 2 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T (18) SUPPLEMENTAL BALANCE SHEET INFORMATION
-------- 2000 1999 - -------------------------------------------------------------------------------------------- INVENTORIES Raw materials and supplies $ 64.0 $ 74.0 Work in process 87.0 80.5 Finished products 308.1 228.5 - -------------------------------------------------------------------------------------------- Total Inventories $ 459.1 $ 383.0 ============================================================================================ OTHER CURRENT ASSETS Investment in SPE (see Note 12) $ 157.1 $ - Miscellaneous receivables 36.6 52.7 Deferred income tax benefits 38.9 34.6 Prepaid expenses 44.1 32.4 Other 2.0 1.6 - -------------------------------------------------------------------------------------------- Total Other Current Assets $ 278.7 $ 121.3 ============================================================================================ INVESTMENTS AND OTHER ASSETS Goodwill (net of accumulated amortization: 2000 - $117.0; 1999 - $120.2) $ 168.0 $ 205.0 Other intangible assets (net of accumulated amortization: 2000 - $356.1; 1999 - $343.3) 82.4 94.4 Pension asset 102.0 - Deferred charges and other assets 25.4 20.3 - -------------------------------------------------------------------------------------------- Total Investments and Other Assets $ 377.8 $ 319.7 ============================================================================================ OTHER CURRENT LIABILITIES Accrued advertising, promotion and allowances $ 123.2 $ 110.0 Restructuring reserves 3.9 11.3 Salaries, vacations and incentive compensation 47.4 48.9 Other 74.1 78.3 - -------------------------------------------------------------------------------------------- Total Other Current Liabilities $ 248.6 $ 248.5 ============================================================================================ OTHER NON-CURRENT LIABILITIES Postretirement benefit liability $ 87.7 $ - Other non-current liability 69.0 23.0 - -------------------------------------------------------------------------------------------- Total Other Non-current Liabilities $ 156.7 $ 23.0 ============================================================================================
(19) SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------- Interest paid $ 19.5 $ 11.7 $ 14.9 Income taxes paid 86.5 44.0 81.2 - ----------------------------------------------------------------------------------------------------------- (20) ALLOWANCE FOR DOUBTFUL ACCOUNTS -------- 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------- Balance at beginning of year $ 19.3 $ 19.6 $ 19.6 Provision charged to expense 5.1 6.7 3.4 Write-offs, less recoveries (5.9) (7.0) (3.4) Transfer to SPE (see Note 12) (6.0) - - - ----------------------------------------------------------------------------------------------------------- Balance at end of year $ 12.5 $ 19.3 $ 19.6 ===========================================================================================================
- --- 4 3 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - - ------------------------------------------ (CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA) (21) 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 (including the United States and Canada), 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 15.3%, 13.5% and 11.5% of total net sales in 2000, 1999 and 1998, respectively, primarily in North America.
---------------------- 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------- NET SALES TOTAL EXTERNAL Total External Total External SALES SALES Sales Sales Sales Sales - ----------------------------------------------------------------------------------------------------------------- North America $ 1,226.3 $ 1,122.0 $ 1,135.9 $ 1,035.9 $ 1,104.3 $ 1,005.4 Asia Pacific 462.9 393.2 430.0 384.8 448.6 396.9 Europe 281.2 272.7 320.3 317.0 369.5 365.7 South and Central America 144.2 126.4 151.2 134.6 179.9 153.8 - ----------------------------------------------------------------------------------------------------------------- Total Net Sales $ 1,914.3 $ 1,872.3 $ 1,921.8 =================================================================================================================
2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------- OPERATING PROFIT BEFORE RESTRUCTURING CHARGES AND AMORTIZATION North America $ 311.9 $ 291.4 $ 279.8 Asia Pacific 111.9 89.2 100.3 Europe (0.2) (1.2) 11.3 South and Central America 12.1 14.5 16.9 - ----------------------------------------------------------------------------------------------------------------- Total segment profitability 435.7 393.9 408.3 General corporate expenses (37.4) (54.0) (46.2) Research and development expense (49.9) (48.5) (46.6) - ----------------------------------------------------------------------------------------------------------------- Operating profit before restructuring charges and amortization 348.4 291.4 315.5 Restructuring charges - (9.9) (21.3) Costs related to spin-off (5.5) - - Loss on disposition of Spanish affiliate (15.7) - - Amortization (24.1) (25.0) (25.9) Interest and other financial items (23.9) (8.3) (5.8) - ----------------------------------------------------------------------------------------------------------------- Total Earnings from Continuing Operations before Income Taxes $ 279.2 $ 248.2 $ 262.5 ================================================================================================================= DEPRECIATION North America $ 34.8 $ 45.0 $ 50.1 Asia Pacific 12.4 11.1 10.0 Europe 7.7 10.3 12.4 South and Central America 3.0 2.0 1.6 - ----------------------------------------------------------------------------------------------------------------- Total Depreciation Expense $ 57.9 $ 68.4 $ 74.1 =================================================================================================================
- --- 4 4 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T
---------- 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------- ASSETS AT YEAR END North America $ 956.5 $ 815.5 $ 888.0 Asia Pacific 245.7 271.4 265.0 Europe 244.7 282.2 334.6 South and Central America 96.2 98.0 92.7 - ----------------------------------------------------------------------------------------------------------------- Subtotal 1,543.1 1,467.1 1,580.3 Goodwill and other intangible assets 250.4 299.4 340.7 Investment in discontinued operations - 67.2 156.6 - ----------------------------------------------------------------------------------------------------------------- Total Assets $1,793.5 $1,833.7 $2,077.6 ================================================================================================================= CAPITAL EXPENDITURES North America $ 56.0 $ 39.6 $ 53.7 Asia Pacific 8.4 18.4 32.6 Europe 6.0 8.9 8.1 South and Central America 2.4 2.3 8.4 - ----------------------------------------------------------------------------------------------------------------- Total Capital Expenditures $ 72.8 $ 69.2 $ 102.8 ================================================================================================================= Geographic Segment Information NET SALES United States $1,052.3 $ 977.6 $ 950.0 International 862.0 894.7 971.8 - ----------------------------------------------------------------------------------------------------------------- Total Net Sales $1,914.3 $1,872.3 $1,921.8 ================================================================================================================= LONG LIVED ASSETS United States $ 517.9 $ 404.6 $ 426.3 International 345.3 387.9 410.7 - ----------------------------------------------------------------------------------------------------------------- Total Long Lived Assets $ 863.2 $ 792.5 $ 837.0 ================================================================================================================= Supplemental product information is presented below for revenues from external customers. NET SALES Alkaline Batteries $1,281.2 $1,211.0 $1,189.4 Carbon Zinc Batteries 316.4 358.8 419.7 Lighting Products 127.6 128.6 131.0 Miniature Batteries 64.5 65.2 65.7 Other 124.6 108.7 116.0 - ----------------------------------------------------------------------------------------------------------------- Total Net Sales $1,914.3 $1,872.3 $1,921.8 =================================================================================================================
- --- 4 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - - ------------------------------------------ (CONTINUED) (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA) (22) 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 Christmas holiday season.
First Second Third Fourth - ---------------------------------------------------------------------------------------------------------------------- FISCAL 2000 Net sales $ 673.6 $ 359.9 $ 402.8 $ 478.0 Gross profit 351.4 167.3 196.9 224.0 Earnings from continuing operations 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 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 First Second Third Fourth - ---------------------------------------------------------------------------------------------------------------------- FISCAL 1999 Net sales $ 582.4 $ 405.7 $ 399.2 $ 485.0 Gross profit 277.3 184.0 183.1 230.0 Earnings from continuing operations 54.8 22.0 21.7 61.3 Loss from discontinued operations (2.8) (2.8) - - Loss on disposition of discontinued operations - (74.2) - - Net earnings/(loss) 52.0 (55.0) 21.7 61.3 Basic and Diluted Earnings Per Share Earnings from continuing operations $ 0.55 $ 0.21 $ 0.21 $ 0.60 Net loss on discontinued operations $ (0.03) $ (0.73) $ - $ - Net earnings/(loss) $ 0.52 $ (0.52) $ 0.21 $ 0.60 Earnings from continuing operations include the following items:
---------- 2000 1999 - ------------------------------------------------------------------------- First quarter Restructuring $ - $ (6.2) Second quarter Costs related to spin-off (3.3) - Loss on disposition of Spanish affiliate (15.7) - Restructuring - 0.1 Capital loss tax benefits 24.4 - Third quarter Restructuring - (8.5) Capital loss tax benefits - 3.3 Fourth quarter Restructuring - 6.3 Capital loss tax benefits - 13.3 - ------------------------------------------------------------------------- For all 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.
- --- 4 6 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T (23) PRO FORMA FINANCIAL RESULTS The pro forma consolidated statements of earnings for the years ended September 30, 1999 and 2000 present the consolidated results of Energizer's operations assuming the spin-off had occurred as of October 1, 1998. Such statement of earnings has been prepared by adjusting the historical statement of earnings to indicate the effect of estimated costs and expenses and the recapitalization associated with the spin-off. 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. - ---------------------------------------------------------------------------------------------------------------------- PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (Dollars in millions except per share data - unaudited)
YEAR ENDED SEPTEMBER 30, 2000 Adjustments Related to Historic Distribution Pro Forma - ---------------------------------------------------------------------------------------------------------------------- Net Sales $ 1,914.3 $ 1,914.3 Costs and Expenses Cost of products sold 974.7 974.7 Selling, general and administrative 374.4 4.0 378.4 0.8 (0.8) Advertising and promotion 187.4 187.4 Research and development 49.9 49.9 Costs related to spin-off 5.5 5.5 Loss on disposition of Spanish affiliate 15.7 15.7 Interest 27.5 17.1 44.6 - ---------------------------------------------------------------------------------------------------------------------- 1,635.1 21.1 1,656.2 - ---------------------------------------------------------------------------------------------------------------------- Earnings from Continuing Operations before Income Taxes 279.2 (21.1) 258.1 Income Taxes (99.0) (23.4) (114.0) 8.4 - ---------------------------------------------------------------------------------------------------------------------- Earnings from Continuing Operations $ 180.2 $ (36.1) $ 144.1 ====================================================================================================================== Earnings Per Share from Continuing Operations Basic $1.88 $1.50 Diluted $1.87 $1.49 Weighted-average Shares of Common Stock Basic 96.1 96.1 Diluted 96.3 96.3 - ---------------------------------------------------------------------------------------------------------------------- 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. To adjust pension income on plan assets transferred to Energizer plans upon the spin-off. To eliminate expense of certain postretirement benefits to be retained by Ralston. To reflect the increase in interest expense associated with debt levels assigned to Energizer upon the 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. To reflect taxes as if Energizer was a single, stand-alone U.S. taxpayer. To reflect tax effect of the above pro forma adjustments. 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 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.
- --- 4 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - - ------------------------------------------ (CONTINUED)(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA) - ---------------------------------------------------------------------------------------------------------------------- PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (Dollars in millions except per share data - unaudited)
YEAR ENDED SEPTEMBER 30, 1999 Adjustments Related to Historic Distribution Pro Forma - ---------------------------------------------------------------------------------------------------------------------- Net Sales $ 1,872.3 $ 1,872.3 Costs and Expenses Cost of products sold 997.9 997.9 Selling, general and administrative 398.0 8.0 400.9 (3.3) (1.8) Advertising and promotion 164.3 164.3 Research and development 48.5 48.5 Provisions for restructuring 7.8 7.8 Interest 7.6 36.9 44.5 - ---------------------------------------------------------------------------------------------------------------------- 1,624.1 39.8 1,663.9 - ---------------------------------------------------------------------------------------------------------------------- Earnings from Continuing Operations before Income Taxes 248.2 (39.8) 208.4 Income Taxes (88.4) (11.2) (91.5) 8.1 - ---------------------------------------------------------------------------------------------------------------------- Earnings from Continuing Operations $ 159.8 $ (42.9) $ 116.9 ====================================================================================================================== Earnings Per Share from Continuing Operations $ 1.56 $ 1.14 Weighted-average Shares of Common Stock 102.6 102.6 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. To reflect pension income on plan assets to be transferred to Energizer plans upon the distribution. To eliminate expense of certain postretirement benefits to be retained by Ralston. 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. To reflect the increase in interest expense associated with debt levels to be assumed at Distribution Date. The adjustment reflects an 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. To reflect taxes as if Energizer was a single, stand-alone U.S. taxpayer. To reflect tax effect of the above pro forma adjustments. 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 year ended September 30, 1999, adjusted for the anticipated distribution of one share of Energizer stock for each three shares of Ralston stock.
- --- 4 8 E N E R G I Z E R 2 0 0 0 A N N U A L R E P O R T EX-21 9 0009.txt
ENERGIZER SUBSIDIARIES 11/1/00 ------------------------------------- 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 51% Joint Venture Eveready Energizer Miniatures Limited India 49% Joint Venture PT Energizer Indonesia Indonesia 80% 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% 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% - ----------------------------------------- ---------------- ---------------------- * In liquidation.
EX-23 10 0010.txt 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 31, 2000 relating to the financial statements, which appears in the Annual Report to Shareholders 2000, which is incorporated in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP St. Louis, Missouri December 15, 2000 EX-27 11 0011.txt
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 9/30/2000 ENERGIZER HOLDINGS, INC. CONSOLIDATED BALANCE SHEET AND 9/30/2000 AND 9/30/1999 CONSOLIDATED STATEMENTS OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS 12-MOS SEP-30-2000 SEP-30-1999 SEP-30-2000 SEP-30-1999 11,900 0 0 0 193,100 0 (12,500) 0 459,100 0 278,700 0 1,019,800 0 (534,400) 0 1,793,500 0 528,600 0 370,000 0 0 0 0 0 1,000 0 737,200 0 1,793,500 0 1,914,300 0 1,914,300 0 974,700 0 974,700 0 627,800 0 5,100 0 27,500 0 279,200 0 99,000 0 180,200 0 1,200 0 0 0 0 0 181,400 0 1.89 0.78 1.88 0.78 ACTUAL AMOUNTS ARE LISTED, NOT MULTIPLIERS OF 1,000. INFORMATION PREVIOUSLY FILED AS PART OF FORM 10.
-----END PRIVACY-ENHANCED MESSAGE-----