Energizer 2001 Annual Report Download - page 36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
(Dollars in millions except per share data)
The Investment in Discontinued Operations at September 30, 1999 was primarily comprised of Ñxed
assets, inventory and accounts receivable and payable. Results for discontinued operations for 1999 were as
follows: net sales, $64.2; loss before income taxes, $9.0; income tax beneÑt, $3.4; and net loss from
discontinued operations, $5.6.
(5) Restructuring Activities
Because there continues to be a migration of consumer demand from carbon zinc to alkaline batteries, a
comprehensive study of Energizer's carbon zinc facilities to determine the optimum number of carbon zinc
manufacturing plants was completed in the fourth quarter of Ñscal 2001. Energizer also reviewed its worldwide
operations in light of competitive market conditions and available technologies and techniques, and is
adjusting its organization accordingly. As a result, Energizer adopted restructuring plans to eliminate carbon
zinc capacity, and to reduce and realign certain selling, production, research and administrative functions. The
total cost associated with this plan is expected to be $35.6 before taxes, of which $29.8, or $19.4 after-tax, was
recorded in the fourth quarter, with the remainder expected to be recorded in the Ñrst quarter of Ñscal 2002.
These restructuring activities are expected to improve the Company's operating eÇciency, downsize and
centralize corporate functions, and decrease costs. The plans will result in the closure of one carbon zinc
production facility in South and Central America, and the severance of 570 employees, consisting of
375 production and 195 sales, research and administrative employees, primarily in the United States and
South and Central America.
The restructuring charges consist of non-cash Ñxed asset impairment charges of $11.1 for the closed
carbon zinc plant and production equipment, enhanced pension beneÑts for certain terminated U.S. employees
of $8.3, cash severance payments of $6.3, and other cash charges of $4.1.
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 classiÑed 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 beneÑts of $3.2, other cash costs of $.2
and Ñxed asset impairments of $4.0. The Ñxed 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
Ñnancial problems in the Asian market, which resulted in contractions in battery markets in this area. All
actions associated with these charges were completed as of September 30, 2000.
The remaining $2.5 represented additional net provisions related to prior years' restructuring plans.
Additional termination beneÑts of $5.5 primarily represent enhanced severance related to a European plant
closing in the 1997 restructuring plan. Additional provisions for other cash costs of $1.8 were recorded for Ñxed
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-oÅs, which were more than
oÅset by a reclassiÑcation 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.
As of September 30, 2001, except for the disposition of certain assets held for disposal, all activities
associated with the 1994 through 1999 restructuring plans are complete. The carrying value of assets held for
disposal under all restructuring plans was $2.6 at September 30, 2001.
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