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Brands for Life
ENERGIZER HOLDINGS, INC.
2008 Annual Report

Table of contents

  • Page 1
    Brands for Life ENERGIZER HOLDINGS, INC. 2008 Annual Report

  • Page 2
    ... of household and personal care products. The Household Products Division gives consumers the broadest range of portable power solutions, anchored by the universally recognized Energizer® and Eveready® brands, plus specialty batteries, Energi To Go® chargers and a complete line of battery-powered...

  • Page 3
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 1 Ward M. Klein, Chief Executive Officer TO OUR SHAREHOLDERS OUR BIGGEST CHALLENGE AND GREATEST ACCOMPLISHMENT IN FISCAL 2008 HAS BEEN BRINGING PLAYTEX PRODUCTS ONBOARD AND FUSING PLAYTEX WITH SCHICK TO FORM A NEW PERSONAL CARE DIVISION. AS PART OF ...

  • Page 4
    ... existing global distribution and commercial structure. OPERATIONAL PERFORMANCE The Household Products Division, consisting of our battery and lighting products businesses, accounted for 57 percent of company sales and 60 percent of profits in fiscal 2008. The Personal Care Division, including...

  • Page 5
    ... Ultimate Lithium, the world's longest-lasting AA and AAA batteries in high-tech devices - enhanced to now last up to eight times longer in digital cameras compared to Energizer® Max®*. Employing a new segmented approach to lithium, we recently launched Energizer® Advanced Lithium as a lower-cost...

  • Page 6
    ... WORK AND OUTDOORS. 4 ENERGIZER HOLDINGS, INC. 2008 Annual Report Energizer® Lithium Batteries Engineered to deliver optimal performance for today's powerhungry gadgets, Energizer® Ultimate Lithium is the world's longest-lasting AA and AAA in high-tech devices, while Energizer® Advanced Lithium...

  • Page 7
    ... its current high-performing hearing aid batteries with equally performing Energizer® Zero MercuryTM, the world's first mercury-free hearing aid battery. Weather Ready® Lantern Part of a hard-working line of preparedness/emergency lights, the Energizer® Weather Ready® 100 Hour LED Area Lantern...

  • Page 8
    6 ENERGIZER HOLDINGS, INC. 2008 Annual Report SUCCESSFULLY FUSING OUR SCHICK-WILKINSON SWORD BUSINESS AND RECENT PLAYTEX ACQUISITION INTO A NEW PERSONAL CARE DIVISION, WE OFFER CONSUMERS A PORTFOLIO OF RECOGNIZED, RESPECTED BRANDS ACROSS A RANGE OF CATEGORIES - FROM WET SHAVE, SUN AND SKIN CARE, ...

  • Page 9
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 7 Quattro® Titanium Trimmer The first and only razor that shaves, edges and trims, the innovative Schick® Quattro® Titanium Trimmer features a built-in, battery-powered trimmer in the waterproof handle. Intuition® Plus® Refreshing Moisture The ...

  • Page 10
    8 ENERGIZER HOLDINGS, INC. 2008 Annual Report Banana Boat® and Hawaiian Tropic® Sun Care Products New Banana Boat® Ultra Defense™ Continuous Clear Spray protects and hydrates with patented AvoTriplex™ technology and moisturizing aloe vera and vitamins A and E. Formulated with exotic ...

  • Page 11
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 9 Playtex® Diaper Genie II Elite™ Proven No. 1 in odor control with antimicrobial protection built into the plastic to inhibit odorcausing bacteria, the next-generation Diaper Genie II Elite™ Advanced Disposal System includes new features that make ...

  • Page 12
    ... and lanterns are increasingly migrating from traditional incandescent bulbs to LED technology, a shift that has been led by Energizer. The Company offers a full range of lighting solutions, including the headlight line, which allows users to keep their hands free and focused on their activity. As...

  • Page 13
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 11 growth. The category is extremely competitive with competitors vying for consumer loyalty and retail shelf space. A significant portion of SWS's product cost is closely tied to the U.S. dollar and the euro. As such, SWS results are highly sensitive ...

  • Page 14
    ... the Company are managed via two segments - Household Products (battery and lighting products) and Personal Care (wet shave, skin, feminine and infant care). Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based compensation costs...

  • Page 15
    ... no hurricane-related consumption. Volume growth reï¬,ected increased unit shipments in lithium and rechargeable batteries primarily in the more developed markets. Gross profit dollars increased $82.8 in 2007 as higher sales and favorable currency were partially offset by higher product costs, due...

  • Page 16
    14 ENERGIZER HOLDINGS, INC. 2008 Annual Report Management's Discussion and Analysis of Results of Operations and Financial Condition (Dollars in millions, except per share and percentage data) Looking forward, similar to Household Products, commodities, raw materials and other inï¬,ationary input...

  • Page 17
    ... with increases in production related capital for existing businesses and planned spending for Playtex. Such capital expenditures are expected to be financed with funds generated from operations. Financing Activities The Company's total borrowings were $2,959.9 at September 30, 2008. The Company...

  • Page 18
    16 ENERGIZER HOLDINGS, INC. 2008 Annual Report Management's Discussion and Analysis of Results of Operations and Financial Condition (Dollars in millions, except per share and percentage data) A summary of the Company's significant contractual obligations at September 30, 2008 is shown below: ...

  • Page 19
    ... Household Products net sales in 2008, 2007 and 2006, respectively. In addition, natural disasters, such as hurricanes, can create conditions that drive exceptional needs for portable power and spike battery and lighting products sales. Customer orders for the Company's Sun Care products are highly...

  • Page 20
    18 ENERGIZER HOLDINGS, INC. 2008 Annual Report Management's Discussion and Analysis of Results of Operations and Financial Condition (Dollars in millions, except per share and percentage data) CRITICAL ACCOUNTING POLICIES The Company identified the policies below as critical to its business ...

  • Page 21
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 19 As of the measurement date, uncertainty in economic markets and the credit crisis produced an increase in yields in corporate bonds rated as high-quality. Discount rates based on high-quality corporate bonds increased as well, leading to decreases in ...

  • Page 22
    ..., as well as competitive activity, could significantly and negatively impact future growth and performance of the Company's businesses, including the Company's trade-up strategy for batteries and lighting products and the international expansion of the Playtex product lines. Continued EPS growth...

  • Page 23
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 21 Summary Selected Historical Financial Information (Dollars in millions, except per share data) Statement of Earnings Data FOR THE YEARS ENDED SEPTEMBER 30, 2008 (a) 2007 2006 2005 2004 Net sales Depreciation and amortization Earnings before income ...

  • Page 24
    ... 2008 Annual Report RESPONSIBILITY FOR FINANCIAL STATEMENTS The preparation and integrity of the financial statements of Energizer Holdings, Inc. (the Company) are the responsibility of its management. These statements have been prepared in conformance with generally accepted accounting principles...

  • Page 25
    ... Standard No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an Amendment to FASB Statements No. 87, 88, 106, and 132(R), as of September 30, 2007. A company's internal control over financial reporting is a process designed to provide reasonable assurance...

  • Page 26
    24 ENERGIZER HOLDINGS, INC. 2008 Annual Report Consolidated Statements of Earnings and Comprehensive Income (Dollars in millions, except per share data) Statement of Earnings YEARS ENDED SEPTEMBER 30, 2008 2007 2006 Net sales Cost of products sold Gross profit Selling, general and ...

  • Page 27
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 25 Consolidated Balance Sheets (Dollars in millions, except par values) SEPTEMBER 30, 2008 2007 Assets Current assets Cash and cash equivalents Trade receivables, net Inventories Other current assets Total current assets Property, plant and equipment...

  • Page 28
    26 ENERGIZER HOLDINGS, INC. 2008 Annual Report Consolidated Statements of Cash Flows (Dollars in millions) YEARS ENDED SEPTEMBER 30, 2008 2007 2006 Cash Flow from Operations Net earnings Adjustments to reconcile net earnings to net cash ï¬,ow from operations: Depreciation and amortization ...

  • Page 29
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 27 Consolidated Statements of Shareholders' Equity (Dollars in millions, shares in thousands) DOLLARS 2008 2007 2006 2008 SHARES 2007 2006 Common stock: Balance at beginning of year Activity under stock plans Ending balance Additional paid-in capital:...

  • Page 30
    ... at fair value on the date of acquisition. Fair value was established using a cost approach for the operating fixed assets and comparable sales and property assessment data for the valuation of land. Expenditures for new facilities and expenditures that substantially increase the useful life...

  • Page 31
    ... care sales and cost of sales, and record an accrued liability on our Consolidated Balance Sheet for anticipated returns based upon an estimated return level. Customers are required to pay for the sun care product purchased under the required terms. Due to the seasonal nature of sun care, we offer...

  • Page 32
    ... Tropic, Wet Ones, Playtex tampons, Playtex infant feeding products, Playtex household gloves, and Playtex Diaper Genie. Playtex operates six facilities in the U.S. The Acquisition will allow the Company to expand its product portfolio and presence in the Personal Care business, including achieving...

  • Page 33
    ...adjustment. As part of its business planning cycle, the Company performed its annual impairment test in the fourth quarter of fiscal 2008, 2007 and 2006. Impairment testing was performed for each of the Company's reporting units, Household Products, Wet Shave and Playtex. No impairments were identi...

  • Page 34
    32 ENERGIZER HOLDINGS, INC. 2008 Annual Report Notes to Consolidated Financial Statements (Dollars in millions, except per share and percentage data) The Company had indefinite-lived trademarks and tradenames of $1,591.0 at September 30, 2008 and $277.9 at September 30, 2007. Changes in indefi...

  • Page 35
    ... reviews its Household Products and Personal Care business models to identify potential improvements and cost savings. A project commenced in 2006 to improve effectiveness and reduce costs of European packaging, warehouse and distribution activities, including the closing of the Company's battery...

  • Page 36
    ... into the Energizer Common Stock Unit Fund, and vested company matching deferrals, may be transferred to other investment options offered under the plan after specified restriction periods. At the time of termination of employment, or for directors, at the time of termination of service on the...

  • Page 37
    ...2008 Annual Report 35 The following table summarizes nonqualified ENR stock option activity during the current year (shares in millions): WeightedAverage Exercise Price The following table summarizes RSE activity during the current year (shares in millions): WeightedAverage Grant Date Fair Value...

  • Page 38
    36 ENERGIZER HOLDINGS, INC. 2008 Annual Report Notes to Consolidated Financial Statements (Dollars in millions, except per share and percentage data) The Company currently provides other postretirement benefits, consisting of health care and life insurance benefits for certain groups of retired...

  • Page 39
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 37 On September 30, 2007, the Company adopted SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106 and 132(R)". The table below reï¬,ects the impact of ...

  • Page 40
    38 ENERGIZER HOLDINGS, INC. 2008 Annual Report Notes to Consolidated Financial Statements (Dollars in millions, except per share and percentage data) The expected return on plan assets was determined based on historical and expected future returns of the various asset classes, using the target ...

  • Page 41
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 39 that 20% or more of the outstanding ENR stock is actually acquired (other than in connection with a Permitted Offer), the exercise price of each Right will be adjusted so that the holder (other than the person or member of the group that made the ...

  • Page 42
    ..., and as such would generally not terminate such contracts. 15. ENVIRONMENTAL AND LEGAL MATTERS Government Regulation and Environmental Matters The operations of the Company, like those of other companies engaged in the Household Products and Personal Care businesses, are subject to various federal...

  • Page 43
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 41 17. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION The components of certain balance sheet accounts at September 30 for the years indicated are as follows: 2008 2007 Inventories Raw materials and supplies Work in process Finished products Total ...

  • Page 44
    ...Company are managed via two segments - Household Products (Battery and Lighting Products) and Personal Care (wet shave, skin, feminine and infant care). Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based compensation costs, costs...

  • Page 45
    ENERGIZER HOLDINGS, INC. 2008 Annual Report 43 Notes to Consolidated Financial Statements (Dollars in millions, except per share and percentage data) 2008 2007 2006 Net Sales Household Products Personal Care Total net sales $2,474.3 1,856.7 $4,331.0 $2,376.3 988.8 $3,365.1 $2,147.1 929.8 $3,...

  • Page 46
    ... seasonal sun care shipments. The fourth quarter of 2008 also included higher hurricane-related shipments and early holiday season buy-in as discussed in Management's Discussion and Analysis of Results of Operations and Financial Conditions. First Second Third Fourth Fiscal 2008 Net sales Gross pro...

  • Page 47
    ... Energizer's World Headquarters, 533 Maryville University Drive, St. Louis, Missouri 63141. Common Stock Information The table below sets for the fiscal quarter indicated the reported high and low sale prices of the Company's common stock, as reported on the New York Stock Exchange Fiscal 2008 High...

  • Page 48
    ... HOLDINGS, INC. 533 Maryville University Drive St. Louis, Missouri 63141 314.985.2000 www.energizer.com © 2008 Energizer. Energizer, Energizer Bunny Design, Eveready, Schick and other marks included in this Annual Report are trademarks of Energizer, its affiliates and its subsidiaries. Playtex...