Energizer 2004 Annual Report Download - page 2

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Net Sales
in billions
Financial Highlights
YEAR ENDED SEPTEMBER 30, 2004 2003 2002
Net Earnings (in millions)
Net Earnings, excluding certain unusual items $267.4 $ 228.2 $ 186.4
SWS inventory write-up, net of tax (a) (58.3)
Net Earnings $267.4 $ 169.9 $ 186.4
Diluted Earnings Per Share
Net Earnings, excluding certain unusual items $ 3.21 $ 2.59 $ 2.01
SWS inventory write-up, net of tax (a) (0.66)
Net Earnings $ 3.21 $ 1.93 $ 2.01
Diluted Weighted-Average Shares Outstanding 83.4 88.2 92.8
Free Cash Flow (in millions) (b)
Operating cash flow $485.7 $442.1 $206.1
Additions to property, plant and equipment (121.4) (73.0) (40.7)
Disposals of property, plant and equipment 4.3 9.0 7.3
Free Cash Flow $368.6 $378.1 $172.7
Non-GAAP Financial Presentation
In addition to its earnings presented in accordance with generally accepted accounting principles (GAAP), Energizer has presented certain non-GAAP measures 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) Free cash flow is defined as net cash from operations, less net additions to and disposals of property, plant and equipment.The Company views free cash flow as an important indicator of its ability to repay debt, fund growth and return
cash to shareholders. Free cash flow is not a measure of the residual cash flow that is available for discretionary expenditures, since the Company has certain non-discretionary obligations, such as debt service, that are not deducted
from the measure.
$2.01
2002 2003 2004
$2.59
$3.21
$1.74
2002 2003 2004
$2.23
$2.81
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.
Earnings Per Share
Excluding unusual items as noted in the tables above.