7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 23, 2003
ENERGIZER HOLDINGS, INC.
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(Exact name of Registrant as specified in its charter)
MISSOURI 1-15401 No. 43-1863181
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
533 MARYVILLE UNIVERSITY DRIVE, ST. LOUIS, MO 63141
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(Address of Principal Executive Offices) (Zip Code)
(314) 985-2000
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(Registrant's telephone number, including area code)
Item 5. Other Events and Regulation FD Disclosure
The Company today issued the following press release:
ENERGIZER HOLDINGS, INC. ANNOUNCES SECOND QUARTER RESULTS
St. Louis, Missouri, April 23, 2003 - Energizer Holdings, Inc, [NYSE: ENR],
today announced results of its second quarter ended March 31, 2003. Net
earnings for the quarter were $33.0 million, or $0.37 per diluted share, versus
net earnings of $20.0 million, or $0.21 per diluted share in the second fiscal
quarter of 2002. Included in the prior year second quarter earnings are a
restructuring provision of $2.9 million, after taxes, or $0.03 per share, and a
bad debt reserve of $6.1 million, after taxes, or $0.07 per share. For the
current quarter, sales increased 7% to $362.6 million and segment profit
increased 21% to $71.7 million, primarily on increases in the Europe and Asia
Pacific regions. General corporate and other expenses declined $0.7 million,
and interest and other financing items declined $1.6 million.
For the six months ended March 31, 2003, net earnings were $119.4 million, or
$1.33 per diluted share, compared to net earnings of $90.4 million, or $0.98 per
diluted share, in the same period last year. Intellectual property rights
income of $3.7 million, after taxes, or $0.04 per share, is included in the
current six month results. Included in the six months ended March 31, 2002, are
restructuring provisions and related costs of $5.8 million, after taxes, or
$0.06 per diluted share, and a bad debt reserve of $6.1 million, after taxes, or
$0.07 per diluted share. Sales for the six months increased $27.6 million, or
3%, on increases in all regions except South and Central America. Geographic
segment income increased $13.1 million on higher results in Europe and Asia.
General corporate and other expenses declined $4.1 million, and interest and
other financing items declined $5.0 million.
North America
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Net sales to customers for the second quarter of $197.2 million increased $13.0
million, or 7%, due to higher volume, partially offset by unfavorable pricing
and product mix. The volume increase was primarily driven by large cell size
alkaline and lighting product units, which increased 58% and 38%, respectively,
reflecting increased demand from government agencies and consumers related to
potential terrorism and security concerns. Smaller alkaline cell size unit
volume, which accounts for the majority of alkaline sales, increased 4%; however
price per unit declined due to residual holiday promotional pack sales and other
promotional discounting in response to recent competitive activity.
In the U.S., retail alkaline category units grew an estimated 12% compared to
the same quarter last year, while category value increased 3%, reflecting
continued promotions and lower everyday pricing by retailers. Retailer
consumption of Energizer's alkaline products increased an estimated 5% in units
and 1% in value for the quarter. Energizer estimates its share of the alkaline
battery market at approximately 30% for the quarter, a loss of approximately one
share point compared to the same quarter last year. The company estimates that
overall retail inventory levels at March 31, 2003, are at, or slightly below,
seasonal normal levels.
"Recently, our main U.S. competitor announced pricing and promotional changes,
which generally reduce both the everyday battery price as well as the depth and
frequency of promotional discounting going forward," said Pat Mulcahy, Chief
Executive Officer. "This is directionally consistent with our pricing and
promotional efforts over the last two years which have allowed us to improve our
overall profitability. Effective April 14, 2003, we have adjusted our pricing
and promotional structure in order to solidify our position relative to
competition. Looking ahead, we believe we are positioned to optimize
Energizer's performance within a healthier battery category."
Gross margin for the quarter declined $3.8 million, or 4%, as the margin
contribution of incremental volume was more than offset by lower net pricing
after promotional discounts. The most significant volume increases were in the
lower margin large cell sizes and lighting products.
Segment profit increased $3.8 million. The prior year second quarter included a
$10.0 million write-off of Kmart's accounts receivable in response to its
bankruptcy filing. Excluding this write-off, operating margin declined $6.2
million, or 12% on lower gross margin and higher advertising and promotion
expense.
For the six months, sales increased $12.5 million, or 2%, due to improved
non-alkaline product volume, partially offset by unfavorable pricing and product
mix. Gross margin for the six months decreased $6.4 million, or 2%, as
unfavorable pricing and product mix was partially offset by increased volumes.
Segment profit decreased $1.0 million. However, absent the accounts receivable
write-off mentioned above, segment profit decreased $11.0 million, reflecting
the lower gross margin and higher advertising and promotion expense.
Asia Pacific
Net sales for the quarter increased $3.3 million, or 4%, as favorable currency
impacts of $3.4 million and higher volumes through retail channels were
partially offset by unfavorable pricing and product mix. For the six months,
net sales increased $6.9 million, or 4%, due to higher alkaline volume and a
$5.8 million favorable currency impact, partially offset by unfavorable pricing
and product mix. Segment profit increased $4.3 million for the quarter and six
months, primarily due to increased sales.
Europe
Second quarter net sales increased $7.8 million, or 13%, due to favorable
currency impacts of $10.6 million, partially offset by lower volume, primarily
carbon zinc. Segment profit improved $6.1 million, primarily due to favorable
currency impacts of $5.3 million.
For the six months, sales increased $14.0 million, or 9%, as favorable currency
impacts of $18.8 million and favorable pricing and product mix were partially
offset by lower carbon zinc volume. Segment profit increased $13.5 million,
primarily due to currency impacts of $9.4 million and favorable pricing and
product mix.
South and Central America
Net sales for the quarter decreased $1.2 million, or 6%, due to negative
currency impacts of $4.8 million, partially offset by pricing actions. Segment
profit decreased $1.7 million to $0.1 million due to $3.0 million of unfavorable
currency impacts and higher volumes in lower margin markets, partially offset by
higher prices.
For the six months, net sales decreased $5.8 million, or 10%, due to unfavorable
currency impacts of $16.1 million, partially offset by improved pricing and
product mix and higher volumes in lower margin markets. Segment profit
decreased $3.7 million, or 50%, due to lower sales.
Other Items
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Corporate and other expenses decreased $0.7 million and $4.1 million for the
quarter and the six months, respectively, reflecting lower compensation costs
related to incentive plans and stock price, partially offset by lower pension
income. Interest and other financing items decreased $1.6 million for the
quarter and $5.0 million for the six months, reflecting lower average
borrowings.
The income tax rate was 28.1% for the current quarter, compared to 25.4% for the
same period last year and 36.0% for the first quarter of fiscal 2003. The
change in the rate from the first quarter to the second quarter reflects a
reduction necessary to bring the rate for the six months in line with
expectations for the full year. For the six months ended March 31, 2003, the
income tax rate was 34.0% versus 37.2% for the same period a year ago,
reflecting improved foreign operating results.
During the quarter, Energizer repurchased 4.3 million shares of its common stock
for a total of 5.0 million shares purchased in fiscal year 2003. Capital
expenditures and depreciation expense for the quarter were $8.2 million and
$15.0 million, respectively. For the six months, capital expenditures were
$14.1 million, and depreciation expense was $29.8 million.
On March 28, 2003, Energizer announced that it had completed the purchase of
Schick-Wilkinson Sword from Pfizer Inc for $930 million. Operating results will
be reported in Energizer's earnings and cash flow statements beginning in
Energizer's third quarter. Including borrowings related to the acquisition,
Energizer's total debt was $1,096.3 million.
# # #
Statements in this press release that are not historical, particularly
statements regarding estimates of category growth, retailer consumption of
Energizer's products, Energizer's market share, and retailer inventory levels,
and Energizer's anticipated full-year tax rate, 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. Energizer's
estimates of battery category growth and value decline, total retail unit
consumption of its battery products, Energizer market share and retailer
inventory levels may be inaccurate, or may not reflect significant segments of
the retail market. Moreover, Energizer sales volumes in future quarters may lag
unit consumption if retailers are currently carrying inventories in excess of
Energizer's estimates, or if those retailers elect to further contract their
inventory levels. The adverse impact of competitors' pricing and promotional
activities may be more significant than anticipated, and Energizer's pricing and
promotional structure may not be effective in protecting its competitive
position. Profit margins in the battery category may not stabilize or improve,
but instead may continue to decline. Energizer's overall tax rate for the year
may be higher or lower than anticipated because of unforeseen changes in the tax
laws or applicable rates, higher taxes on repatriated earnings, or changes in
foreign loss estimates. Additional risks and uncertainties include those
detailed from time to time in Energizer's publicly filed documents, including
Energizer's Registration Statement on Form 10, its Annual Report on Form 10-K
for the Year ended September 30, 2002, its quarterly report on Form 10Q for the
period ended December 31, 2002, and its Current Report on Form 8-K dated April
25, 2000.
SIGNATURES:
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENERGIZER HOLDINGS, INC.
By:/s/ Daniel J. Sescleifer
Daniel J. Sescleifer
Executive Vice President and Chief Financial Officer
Dated: April 23, 2003