Energizer 2006 Annual Report Download - page 2

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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 manu-
facturing 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 capital expenditures. 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. From April 1, 2000 to September 30, 2006, cumulative operating cash flow
and capital expenditures were $2.22 billion and $(0.55) billion, respectively. Cumulative free cash flow for the period April 1, 2000 to September 30, 2006 was $1.67 billion.
YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002
Net Earnings (in millions)
Net Earnings, excluding certain unusual items $ 260.9 $ 280.7 $ 261.0 $ 221.8 $ 178.4
SWS inventory write-up, net of tax (a) (58.3)
Net Earnings $ 260.9 $ 280.7 $ 261.0 $ 163.5 $ 178.4
Diluted Earnings Per Share
Net Earnings, excluding certain unusual items $4.14 $ 3.82 $ 3.13 $ 2.51 $ 1.92
SWS inventory write-up, net of tax (a) (0.66)
Net Earnings $4.14 $ 3.82 $ 3.13 $ 1.85 $ 1.92
Diluted Weighted-Average Shares Outstanding 63.1 73.5 83.4 88.2 92.8
Free Cash Flow (in millions) (b)
Operating cash flow $373.0 $ 295.9 $ 479.3 $ 437.9 $ 205.5
Capital expenditures (94.9) (103.0) (121.4) (73.0) (40.7)
Free Cash Flow $278.1 $ 192.9 $ 357.9 $ 364.9 $ 164.8
FINANCIAL HIGHLIGHTS
Energizer Holdings, Inc., a global leader in the dynamic business of providing portable power,
ranks among the world’s largest manufacturers of primary batteries and flashlights. Energizer is
also the parent company of Schick-Wilkinson Sword, the second largest manufacturer of wet shave
products in the world. Energizer trades on the New York Stock Exchange under the symbol ENR.
2004 2005 20062002 2003
$1.74
$2.23
$2.81
$2.99
$3.08
Net Sales
in billions
2004 2005 20062002 2003
$1.92
$2.51
$3.13
$3.82
$4.14
Earnings Per Share
excluding unusual items as noted above