Energizer 2014 Annual Report Download - page 12

Sources and Availability of Raw Materials
The principal raw materials used by Energizer include electrolytic manganese dioxide, zinc, silver, nickel, acetylene black,
graphite, steel cans, nylon, brass wire, separator paper, and potassium hydroxide, for batteries, and steel, zinc, various plastic
resins, synthetic rubber resins, soap based lubricants and various packaging materials, for wet shave products, and certain
naturally derived fibers, resin-based plastics and certain chemicals for the Playtex product lines - are sourced on a regional or
global basis. The prices and availability of these raw materials have fluctuated over time. Energizer believes that adequate
supplies of the raw materials required for its operations are available at the present time, although we cannot predict the future
availability or prices of such materials. These raw materials are generally available from a number of different sources, and the
prices of those raw materials are susceptible to currency fluctuations and price fluctuations due to transportation, government
regulations, price controls, economic climate, or other unforeseen circumstances. In the past, Energizer has not experienced any
significant interruption in availability of raw materials. We believe we have extensive experience in purchasing raw materials
in the commodity markets. From time to time, management has purchased materials or entered into forward contracts for
various ingredients to assure supply and to protect margins on anticipated sales volume.
Sales and Distribution
Energizer's products are marketed primarily through a direct sales force, but also through exclusive and non-exclusive
distributors and wholesalers. In the U.S., the Household Products and Personal Care segments have separate dedicated
commercial organizations, reflecting the scale and importance of these businesses. Outside the U.S., the commercial teams
currently market our full portfolio of product offerings. In connection with the proposed spin-off transaction, we are in the
process of establishing separate dedicated commercial organizations globally. Energizer distributes its products to consumers
through numerous retail locations worldwide, including mass merchandisers and warehouse clubs, food, drug and convenience
stores, electronics specialty stores and department stores, hardware and automotive centers, military stores and e-commerce.
Although a large percentage of Energizer's sales are attributable to a relatively small number of retail customers, in fiscal
2014, only Wal-Mart Stores, Inc. and its subsidiaries, as a group, accounted for more than ten percent of Energizer's annual
sales. For fiscal year 2014, this customer accounted for, in the aggregate, approximately 17.2% of Energizer's sales. Because of
the short period between order and shipment date (generally less than one month) for most of our orders, the dollar amount of
current backlog is not material and is not considered to be a reliable indicator of future sales volume.
Patents, Technology and Trademarks
Energizer owns a number of U.S., Canadian and foreign trademarks, which Energizer considers of substantial importance
and which are used individually or in conjunction with other Energizer trademarks. These include Eveready, Energizer,
Energizer Max, Schick, Schick Hydro, Schick Hydro Silk, Wilkinson Sword, Intuition, Hydro, Quattro, Xtreme, Protector, Silk
Effects, Slim Twin, Exacta, Edge, Skintimate, Personna, Capri, Matrix 3, Magnum 5, Speed 3, Vogue, Dermablade, Banana
Boat, Hawaiian Tropic, Coolzone, Sport Performance, Ultramist, Binky, Diaper Genie, Drop-Ins, Lil' Gripper, Coolster, Gentle
Glide, Play On, 360° Protection & Design, HandSaver, Twist 'N Click & design, Sipster, Sport, VentAire, Wet Ones, Stayfree,
Carefree, o.b. and the Energizer Bunny and the Energizer Man character. As a result of the Playtex acquisition, Energizer also
owns royalty-free licenses in perpetuity to the Playtex and Living trademarks in the United States, Canada and many foreign
jurisdictions related to certain feminine hygiene, baby care, gloves and other products, but excluding certain apparel related
products.
Energizer's ability to compete effectively in the battery and portable lighting, wet shave, skin care, feminine care and infant
care categories depends, in part, on our ability to maintain the proprietary nature of technology and manufacturing processes
through a combination of patent and trade secret protection, non-disclosure agreements and licensing agreements. Energizer
owns or licenses from third parties a considerable number of patents, patent applications and other technology which Energizer
believes are significant to its business. These relate primarily to battery product and lighting device improvements, additional
battery product features, shaving product improvements and additional features, plastic applicators for tampons, baby bottles
and nipples, disposable liners and plastic holders for the nurser systems, children's drinking cups, pacifiers, sunscreen
formulations, diaper disposal systems, breast pump products and improvements, and manufacturing processes.
As of September 30, 2014, Energizer owned (directly or beneficially) approximately 1,460 unexpired United States patents
which have a range of expiration dates from October 2014 to December 2033 and had approximately 188 United States patent
applications pending. We routinely prepare additional patent applications for filing in the United States. Energizer also actively
pursues foreign patent protection in a number of foreign countries. As of September 30, 2014, Energizer owned (directly or
beneficially) approximately 3,349 foreign patents and had approximately 584 patent applications pending in foreign countries.
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