Energizer 2000 Annual Report Download - page 27

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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 stock-
holders. 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 manu-
facturing 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 sub-
sidiaries. 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 interna-
tional 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 contin-
gent 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 liabili-
ties 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.