Energizer 2003 Annual Report Download - page 5

ENR 2003 ANNUAL REPORT Page 3
organization and global scale. Following the acquisition, we realigned
our organizational structure and now operate in three distinct business
segments: North America Battery, International Battery, and Razors
and Blades.
BUSINESS OUTLOOK
The outlook for our Batteries and Lighting Products business remains
cloudy as a result of competitive dynamics. This year, lower everyday
pricing coupled with residual promotional activity eroded overall category
pricing in the U.S. battery market. Although it remains unclear whether
the category has reached long-term pricing and promotional stability,
the price realignment may reduce “high/low” selling, resulting in lower
promotions and less volatility.
In this uncertain climate, our company is well positioned to optimize our
performance within a healthier battery category. This is still a good busi-
ness to be in, marked by growing demand, brand strength and solid cash
flow. We remain convinced that our broad product portfolio will allow us
to compete effectively going forward.
Our Razors and Blades business, with high-quality products and a
defensible market position, provides a solid opportunity to grow sales
and margins. The launches of Intuition™ and QUATTRO™ are being well
received in the marketplace and should continue to build momentum.
SHARE REPURCHASE UPDATE
In the first half of the year, we were able to repurchase 5 million shares
of common stock at an average price of $26.53 per share, completing
the May 2002 authorization. Since our spin-off in April 2000 through
November 18, 2003, we have repurchased 14.0 million shares. In July,
the Board of Directors issued a new authorization to repurchase an
additional 10 million shares, and we plan to opportunistically make pur-
chases subject to management’s discretion and corporate objectives.
BOARD OF DIRECTORS AND MANAGEMENT CHANGES
We continue to seek added independence and seasoned oversight in the
makeup of our Board of Directors. During the year, John Roberts, retired
managing partner of the Mid-South Region of Arthur Andersen LLP, and
John E. Klein, president and chief executive officer of Bunge North
America, Inc., were appointed to the Board.
We also want to acknowledge the valued contributions of H. Fisk
Johnson who resigned from the Board due to the demands of his
position and a potential conflict of interest arising from competition
between S.C. Johnson’s shaving products business and our SWS
business. In addition, Sheridan Garrison has chosen not to stand for
re-election after three-plus years of service. His last meeting will be
January 2004, and we thank him for his exceptional service to this
new public company.
After 41 years of service, Pat Mannix will retire as an officer of the
company on March 31, 2004. He has held positions in many areas of
executive management and his leadership has contributed greatly to
the company’s success. He will be missed both personally and profes-
sionally by his Energizer colleagues.
IN CONCLUSION
Energizer is a small company and we intend to continue looking at
ourselves as a small company, one that has to watch its pennies and
focus squarely on its two main businesses – batteries and razors.
We’re not trying to hit home runs ... we would rather hit singles and
win the game over time.
We are cash-flow driven and this fundamental focus gives us the
resources to take advantage of opportunities, to invest in new product
launches and to maintain a strong balance sheet. In today’s relatively
low interest environment, we continue to seek acquisition opportunities
that would fit within our organization.
Our management team stepped up quickly and decisively to the SWS
opportunity, and brings a high level of integrity to any decision we
make. The SWS management team, with a similar leadership style and
culture, is a welcome and valued addition.
J. PATRICK MULCAHY
Chief Executive Officer
Energizer Holdings, Inc.
November 18, 2003