Energizer 2005 Annual Report Download - page 5

Sales of performance brands climbed 44
percent in fiscal 2005 and are becoming
akey profit contributor. Growth of our
Energizer®e2® Lithium brand has acceler-
ated in recent years due to the emergence
of digital devices for which this product is
ideally suited. Demand continues to out-
pace production and we areaggressively
adding capacity.
Competing in a relatively stable environ-
ment over time, our Batteries and Lighting
Products business provides steady cash
flow and is solidly positioned in the growing
segments of the market.
Razors and Blades. Our growth strategies
for SWS have been in place for two and a
half years and continue to deliver solid
results. Our foremost priority is to trade up
current SWS consumers to higher-priced,
higher-margin shaving systems through
product innovation. The success of this
effort in both men’s and women’s systems
is undeniable – in fact, products introduced
since our acquisition of SWS today account
for over one-third of total SWS sales.
Our second growth strategy is to expand
the SWS product line into new and under-
developed geographic markets by leveraging
our existing battery company infrastructure
and commercial platforms. Since the aquisi-
tion, we introduced shaving products in
southernLatin America, Southeast Asia and
areas of central and eastern Europe where
SWS had minimal presence and Energizer
had large operations. By fiscal year-end,
SWS sales in these underdeveloped mar-
kets had increased 23 percent collectively
over the prior year.
The third strategy is to reduce overhead
costs by continuing to lean our processes
down and to integrate SWS and Energizer,
whereappropriate. Todate, we have com-
pletely consolidated our batteryand blade
organizations in Latin America and many
parts of Asia, and consolidated certain
back-office functions in North America and
westernEurope. Our lean initiatives together
with our integration efforts have yielded
annualized savings of $18 million to date,
and we continue to exploreadditional cost
reduction opportunities, particularly in the
areas of global purchasing and logistics.
AChange in Leadership
During the year, the Board of Directors
increased the size of the Boardfrom 10 to
12. At the annual meeting in January 2005,
shareholders elected two new outside
directors – Bill G. Armstrong and John C.
Hunter – who bring a wealth of business
and leadership experience to our company.
The annual meeting also marked the retire-
ment of two inspirational leaders who have
had an immeasurable impact on the suc-
cess of this company.
J. Patrick Mulcahy served as Chief
Executive Officer of the company since its
spin-off in 2000 and devoted most of his
career to Energizer and its former parent,
Ralston Purina. Pat has been a leader, a
mentor and friend – fortunately for us and
the company, he continues to serve on the
Board as Vice Chairman.
Dr. William H. Danforth, Chancellor Emeritus
of Washington University in St. Louis, served
on the Board and various committees since
our spin-offand on the Boardof Ralston
Purina beginning in 1969. He is a man of
exceptional integrity and intellect, and his
wise counsel has served our company well.
Looking to the Future
We expect the future to be no less challeng-
ing than the present. The overall battery
market remains healthy and digital device
growth continues unabated. In the wet shave
market, we offer more and better products
than ever beforeand consumers continue
to trade up.
Going forward, we arefocused on two clearly
defined financial objectives – to generate
consistent annual earnings per share growth
and to maximize free cash flow. We fully
intend to achieve those objectives by suc-
cessfully executing our ongoing business
strategies – investing in our brands for
future growth, using cash flow to acquire
operating earnings and opportunistically
repurchasing our shares.
ENR 2005 Annual Report 3
David P. Hatfield
Executive Vice President
Chief Marketing Officer
Daniel J. Sescleifer
Executive Vice President
Chief Financial Officer
Ward M. Klein
Chief Executive Officer
Joseph E. Lynch
President and Chief
Executive Officer,
Schick-Wilkinson Sword
Gayle G. Stratmann
Vice President and
General Counsel
Joseph W.
McClanathan
President and Chief
Executive Officer,
Energizer Battery
Peter J. Conrad
Vice President, Human
Resources
Ward M. Klein
Chief Executive Officer
Energizer Holdings, Inc.
November 18, 2005