Energizer 2003 Annual Report Download - page 2

ENERGIZER IS TRADED ON THE NEW YORK STOCK EXCHANGE UNDER THE ENR SYMBOL. ENERGIZER IS ONE OF
THE WORLD’S LARGEST MANUFACTURERS OF PRIMARY BATTERIES AND FLASHLIGHTS AND A GLOBAL LEADER IN THE
DYNAMIC BUSINESS OF PROVIDING PORTABLE POWER. IN ADDITION, ENERGIZER IS THE PARENT COMPANY OF SCHICK-
WILKINSON SWORD (SWS), THE SECOND LARGEST MANUFACTURER OF WET SHAVE PRODUCTS IN THE WORLD.
Net Sales
in billions
$2.23
03
$1.74
02
$1.69
01
Earnings
Per Share*
$2.5903
$2.01
02
$1.01
01
* Excluding unusual
items as noted in the
tables to the left.
YEAR ENDED SEPTEMBER 30, 2003 2002 2001
Net Earnings (in millions)
Net Earnings, excluding certain unusual items $ 228.2 $ 186.4 $ 95.1
SWS inventory write-up, net of tax (a) (58.3)
Provision for goodwill impairment, net of tax (b) (119.0)
Amortization, net of tax (b) (15.1)
Net Earnings/(Loss) $ 169.9 $ 186.4 $ (39.0)
Diluted Earnings Per Share
Net Earnings, excluding certain unusual items $2.59 $2.01 $ 1.01
SWS inventory write-up, net of tax (a) (0.66)
Provision for goodwill impairment, net of tax (b) (1.27)
Amortization, net of tax (b) (0.16)
Net Earnings/(Loss) $1.93 $2.01 $ (0.42)
Diluted Weighted-Average Shares Outstanding 88.2 92.8 94.1
Non-GAAP Financial Presentation
In addition to its earnings presented in accordance with generally accepted accounting principles (GAAP), Energizer has presented certain non-GAAP earnings in the table above
which it believes are useful to readers in addition to traditional GAAP measures. These measures should not be considered as an alternative to comparable GAAP measures.
(a) In 2003, earnings are presented with and without the impact of a write-up recorded on inventory acquired through the purchase of Schick-Wilkinson Sword (SWS) from
Pfizer. GAAP requires inventory to be valued as if Energizer was a distributor purchasing the inventory at fair market value, as opposed to its historical manufacturing cost.
As a result, there was a one-time allocation of purchase price to the acquired inventory which was $89.7 million, pre-tax, or $58.3 million, after tax, higher than historical
manufacturing cost. Because inventory value and cost of product sold for all product manufactured after the acquisition date are based upon actual production costs, as
dictated by GAAP, Energizer believes presenting earnings excluding the inventory write-up is useful to investors as an additional basis for comparison to prior and
subsequent periods.
(b) In 2001, earnings are presented with and without the impact of a provision for goodwill impairment and amortization of goodwill and certain other intangible assets.
The provision for goodwill impairment recorded in 2001 was necessary to write-off nearly all of the carrying value of goodwill related to Energizer’s European battery
operations due to a number of years of declining earnings and cash flows from those operations. Energizer believes presenting earnings without such provision is useful
in allowing the reader to understand the results of fiscal 2001 as an additional perspective to traditional GAAP measures. Additionally, in 2002, Energizer adopted SFAS
142, “Goodwill and Other Intangible Assets,” which eliminates the amortization of goodwill and certain other intangible assets for years after 2001. Energizer believes it
is useful to exclude amortization in 2001 to provide a consistent basis for comparing to 2002 and 2003, which do not include such amortization.