Energizer 2002 Annual Report Download - page 20

assumptions made are accumulated and amortized over future periods
and therefore, generally affect Energizer’s recognized expense and
recorded obligation in such future periods. Significant differences in actual
experience or significant changes in assumptions may materially affect
pension and other postretirement obligations.
Valuation of Long-Lived Assets Energizer periodically evaluates its
long-lived assets, including goodwill and intangible assets, for potential
impairment indicators. Judgments regarding the existence of impairment
indicators are based on legal factors, market conditions and operational
performance. Future events could cause Energizer to conclude that impair-
ment indicators exist. Energizer uses the discounted cash flows method to
determine if impairment exists. This requires management to make
assumptions regarding future income, working capital and discount rates,
which affect the impairment calculation.
Income Taxes Energizer estimates income taxes and the income tax rate
in each jurisdiction that it operates. This involves estimating taxable earn-
ings, specific taxable and deductible items, the likelihood of generating
sufficient future taxable income to utilize deferred tax assets, and possible
exposures related to future tax audits. To the extent these estimates
change, adjustments to income taxes are made in the period in which the
estimate is changed.
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 Energizer’s estimates of its share of total United States retail
alkaline market, its positioning to meet consumer demand and the ben-
efits of its portfolio of products, future cost savings and operating effi-
ciencies associated with Energizer’s restructuring activity, as well as the
potential for future restructuring, the anticipated adequacy of cash flows
and Energizer’s ability to meet liquidity requirements, the impact of cur-
rency and economic declines in Latin America, and changes in the
value of local currencies, the adverse effect of inflationary pressures
and their impact on Energizer’s operations, the impact of future expen-
ditures for environmental matters and environmental control equipment,
the estimates of Energizer’s future tax rates, the impact of adverse
changes in interest rates, the market risk of foreign currency deriva-
tives, and the potential loss in value of Energizer’s net foreign currency
investment in foreign subsidiaries, 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 its United States alkaline market
share may be inaccurate, or may not reflect segments of the retail
market. Shifts in consumer demands or needs, competitive activity or
product improvements, or further retailer consolidations, may dilute or
defeat the benefits of Energizer’s consumer positioning and strategy.
Severance costs and other expenses associated with current and
proposed restructuring activity may be higher than anticipated, and
there may be unknown expenses associated with these activities.
In addition, expected improvements in operating efficiency may not
materialize, and the cost reductions actually realized as a result of
restructuring activity may be less significant than anticipated. The migra-
tion of demand from carbon zinc to alkaline, or from alkaline to other
technologies may increase the likelihood of future restructuring activities
and charges. 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 liq-
uidity requirements, fund capital expenditures or service its debt as it
becomes due. United States or international political or economic crises
could result in higher levels of inflation than anticipated, and Energizer
may not be able to realize cost reductions, productivity improvements or
price increases which are substantial enough to counter the inflationary
impact. Unknown environmental liabilities and greater than anticipated
remediation expenses or environmental control expenditures could have
a material impact on Energizer’s financial position. Energizer’s overall
tax rate in future years may be higher than anticipated because of
unforeseen changes in the tax laws or applicable rates, higher taxes on
repatriated earnings, or increased foreign losses. Economic turmoil and
currency fluctuations could increase Energizer’s risk from unfavorable
impacts on variable-rate debt, currency derivatives and other financial
instruments, as well as increase the potential loss in value of its net
foreign currency investment in foreign subsidiaries. Additional risks and
uncertainties include those detailed from time to time in Energizer’s pub-
licly filed documents, including its Registration Statement on Form 10, as
amended, and its Current Report on Form 8-K dated April 25, 2000.
Energizer Holdings, Inc.
Management’s Discussion and Analysis of Results of Operations and Financial Condition Continued
(Dollars in millions except per share and percentage data)
ENR 2002 Annual Report Page 18