Energizer 2001 Annual Report Download - page 32

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 oÅ its battery
business to the Ralston stockholders. In September 1999, Energizer Holdings, Inc. (""Energizer'') was
incorporated in Missouri as an indirect subsidiary of Ralston.
EÅective 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-oÅ). Prior to the spin-oÅ, Energizer operated as a wholly owned
subsidiary of Ralston. Ralston received a ruling from the Internal Revenue Service stating the distribution
qualiÑed as a tax-free spin-oÅ.
Energizer is the world's largest publicly traded manufacturer of primary batteries and Öashlights 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 Öashlights and other lighting products.
Energizer and its subsidiaries operate 22 manufacturing and packaging 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.
Financial statements as of and for periods after the spin-oÅ are 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-
oÅ and the consolidated results of operations of Energizer on a stand-alone basis for the six months ended
September 30, 2000. The Ñnancial statements for all periods prior to the spin-oÅ are presented on a combined
basis and reÖect periods during which the Energizer businesses operated as wholly owned subsidiaries of
Ralston. The Ñnancial information in these Ñnancial 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 the pro forma statement of
earnings for the years ended September 30, 2000 and 1999 in Note 22.
(2) Summary of Accounting Policies
Energizer's signiÑcant 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 Ó These Ñnancial statements include the accounts of Energizer and its
majority-owned subsidiaries. All signiÑcant intercompany transactions are eliminated. Investments in aÇliated
companies, 20% through 50% owned, are carried at equity. Energizer historically reported results of
international operations on a one-month lag. As such, prior year amounts represent results of international
operations for September through August combined with the U.S. results for October through September.
Beginning in Ñscal 2001, Energizer synchronized international operations' reporting to be consistent with U.S.
reporting. As a result, the Ñscal 2000 loss from international operations of $3.3 was recorded directly to
retained earnings.
The eÅects of the change on the year ended September 30, 2000 are presented in Note 22. The eÅect of
the change is not signiÑcant to the balance sheet or cash Öow, and as a result, the September 30, 2000 balance
sheet and the cash Öow have not been adjusted.
Use of Estimates Ó The preparation of Ñnancial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that aÅect the reported
amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Ñnancial
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