FULL POWER ENERGIZER HOLDINGS, INC.

YEAR 2000 ENERGIZER HOLDINGS, INC.power Energizer Holdings, Inc. ANNUAL REPORT 800 Chouteau Avenue

St. Louis, Missouri 63102 2000 ANNUAL REPORT 314.982.2000 www.energizer.com SELECTED FINANCIAL HIGHLIGHTS DIRECTORS S.C. Johnson & Son, Inc.

(millions) (diluted earnings per share) William H. Danforth (1)(2)(3)(4) Richard A. Liddy (1)(2)(3) EARNINGS YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, Trustee and former Chancellor, Chairman of the Board and Washington University Chief Executive Officer, 2000 1999 2000 1999 GenAmerica Corporation F.S. Garrison (1)(3)(4) Pro Forma Net Earnings, Chairman of the Board, Chairman of the Board, Excluding Unusuals * $163.1 $125.2 $ 1.69 $ 1.22 American Freightways, Inc. Reinsurance Group of America, Inc. (3)(4) R. David Hoover (2)(3)(4) Costs related to spin-off (3.3) – (0.04) – President, Vice Chairman and Joe R. Micheletto Loss on disposition of Spanish affiliate (15.7) – (0.16) – Chief Operating Officer, Ball Chief Executive Officer and Corporation President, Ralcorp Holdings, Restructuring charges – (8.3) – (0.08) Inc.

H. Fisk Johnson (2)(3) Pro Forma Net Earnings * 144.1 116.9 1.49 1.14 Chairman of the Board and J. Patrick Mulcahy Chairman, Chief Executive Officer, Energizer Holdings, Inc. Incremental interest expense, net of tax 10.0 21.2 0.11 0.21 Other pro forma costs, net of tax 1.7 5.1 0.02 0.05 OFFICERS Randy Rose Vice President, North America President and Chief Operating Capital loss tax benefits 24.4 16.6 0.25 0.16 William P. Stiritz Officer, Luis Plana Chairman of the Board; North America and Europe Vice President, Europe Historical Net Earnings from Chairman, Management Continuing Operations ** 180.2 159.8 1.87 1.56 Strategy and Finance Daniel J. Sescleifer Committee Executive Vice President, Net Gain (Loss) from Discontinued Finance and Control Steven Sanborn Operations 1.2 (79.8) 0.01 (0.78) J. Patrick Mulcahy Vice President, Technology, Chief Executive Officer Harry L. Strachan Research and Development Historical Basis Net Earnings ** $181.4 $ 80.0 $ 1.88 $ 0.78 Vice President and General Ward Klein Counsel Joseph Tisone Pro Forma Diluted Weighted Shares President and Chief Operating Vice President, Outstanding *** 96.3 102.6 Officer, Peter Conrad Global Manufacturing Asia Pacific and Latin America Vice President, Human Resources Robert K. Zimmermann Patrick C. Mannix Vice President, * Energizer Holdings, Inc. was spun off from Ralston Purina Company (Ralston) on April 1, 2000. The pro forma FY 2000 financial data is presented assuming the President, Kapila Gunawardana Global Lighting Products spin-off had occurred as of October 1, 1999. The pro forma FY 1999 financial data is presented assuming the spin-off had occurred as of October 1, 1998. Operations and Specialty Vice President, Pan Am ** The historical financial information for fiscal years 2000 and 1999 reflects periods during which Energizer was operated as a business segment of Ralston. Businesses Timothy Grosch Joseph McClanathan Secretary *** The pro forma diluted weighted shares outstanding is based on the weighted-average number of Ralston common shares outstanding prior to the spin-off (adjusted for the distribution of one share of Energizer stock for each three shares of Ralston stock) and the diluted weighted-average number of shares of Energizer stock outstanding from April 1, 2000 to September 30, 2000. CORPORATE HEADQUARTERS ANNUAL MEETING DIVIDENDS Energizer Holdings, Inc. The Company’s 2001 annual meeting of To date, the Company has not declared 800 Chouteau Avenue shareholders is scheduled for January 29, nor paid any cash dividend. St. Louis, Missouri 63102 2001 at 2:30 p.m. at the Auditorium at The ENERGIZER AT A GLANCE (314) 982-2000 St. Louis Art Museum, 1 Fine Arts Drive, SEC FORM 10-K www.energizer.com St. Louis, Missouri 63110-1380. Energizer Holdings, Inc. is the largest publicly traded primary battery/flashlight company in the world with Shareholders may receive a copy of the Company’s Annual Report to the Securities two of the most recognized brands in Energizer ® and Eveready ®. Energizer is traded on the New York Stock DATE AND STATE OF COMMON STOCK INFORMATION INCORPORATION and Exchange Commission on Form 10-K Exchange under the ENR symbol. On April 1, 2000, Ralston Purina Company free of charge by writing or calling the September 23, 1999 – Missouri distributed the outstanding capital stock of Investor Relations Department at Energizer’s Energizer Holdings, Inc. in a tax-free spin- corporate headquarters, as listed above, or Primary Batteries Energizer’s complete product portfolio of primary batteries includes offerings in all performance and FISCAL YEAR END off to shareholders. Energizer began trading by retrieving this information from the ® 2TM price categories – new super-premium Energizer e featuring titanium technology, premium Energizer alkaline, economy September 30 on the New York Stock Exchange under company’s Web site, www.energizer.com. Eveready Alkaline and Eveready carbon zinc, as well as industrial batteries for non-consumer applications and lithium the ticker symbol “ENR” on April 4, 2000. SHAREHOLDERS TRANSFER AGENT AND REGISTRAR batteries for high-performance applications. On November 10, 2000, there were 21,091 The table below indicates the reported Continental Stock Transfer & Trust Company shareholders of record. high and low sale prices of the Company’s 2 Broadway New York, NY 10004 Miniature Batteries Energizer’s complete line of miniature batteries delivers reliable power for a variety of small common stock, as reported on the New NUMBER OF EMPLOYEES (888) 509-5580 devices including electronic watches and cameras, calculators and personal organizers, keyless car remotes and handheld York Stock Exchange, for the fiscal quar- 3,415 – United States ters following the spin-off. electronic games, hearing aids and electronic thermometers. 7,065 – Outside United States FINANCIAL COMMUNITY INFORMATION FISCAL 2000 Flashlights and Lighting Products Energizer produces over 60 different flashlight and portable lighting devices INDEPENDENT ACCOUNTANTS Inquiries from institutional investors, PricewaterhouseCoopers LLP HIGH LOW financial analysts, registered representa- for use at home, work and recreation, for novelty uses and industrial applications. The company successfully introduced 1 13 tives, portfolio managers and individual St. Louis, Missouri Third Quarter 24 ⁄8 14 ⁄16 shareholders should be directed to Investor several new products during the year including the Rubber Two Way lantern, Folding Fluorescent lantern, Swivel Head 15 5 DESIGN: FALK HARRISON CREATIVE, ST. LOUIS, MISSOURI ST. HARRISON CREATIVE, DESIGN: FALK Fourth Quarter 24 ⁄16 18 ⁄16 Relations at Energizer’s corporate head- industrial flashlight and Energizer® Arc WhiteTM Hi Intensity Fluorescent flashlight. quarters listed above.

Copyright © 2000 Eveready Battery Company, Inc. Energizer, Energizer e2, Eveready, E-SNAP, Energizer Bunny, Arc White and Energizer Battery Character are trademarks or registered trademarks of Eveready Battery Company, Inc. All rights reserved. WELCOME TO THE ENERGIZER WORLD! THE NEW ENERGIZER CARRIES

ON A RESPECTED REPUTATION FOR PRODUCTS OF THE HIGHEST QUALITY

AND VALUE, AND A TRADITION OF TECHNOLOGY INNOVATION AND

CONTINUOUS IMPROVEMENT IN BATTERIES AND LIGHTING PRODUCTS –

BACKED BY WORLD-CLASS BRANDS, GLOBAL PRODUCTION AND BROAD

GEOGRAPHIC DISTRIBUTION, AND 10,480 HIGHLY SKILLED ASSOCIATES.

J. PATRICK MULCAHY Chief Executive Officer

abrand new company with a century of experience

To Our Shareholders On behalf of our directors, management and associates, I welcome you as shareholders of Energizer Holdings, Inc. – a new, 100-year-old company resulting from the April 1 spin-off from Ralston Purina Company.

The new Energizer ranks as the largest independent, publicly traded primary battery and flashlight company in the world and boasts two of the world’s most recognized brand names – Eveready® and Energizer®. We sell products in virtually every market around the globe through our far-reaching distribution system, supported by our highly efficient operations with principal plants located in North America, Asia and Europe.

Employee Ownership Among the key tenets of our new company is employee ownership, designed to drive perform- ance and instill accountability. Through creation of an Employee Stock Ownership Plan (ESOP), together with incentives for management to buy and hold company stock, Energizer employees currently own in excess of 5 percent of the outstanding common shares. The interests of our associates are, increasingly, linked directly to creating shareholder value. Key Events of Fiscal 2000 Without question, successfully executing the spin-off of our company from Ralston Purina was fiscal 2000’s major milestone – but certainly not the only one. We introduced Energizer® e2TM, the first super premium battery, and selectively launched Eveready® Alkaline to customers seeking to carry a value brand. Additionally, we continued to upgrade our lighting products and miniature battery lines with new products such as the Energizer® Arc WhiteTM Hi Intensity Fluorescent flashlight and Energizer e2 Photo Lithium batteries.

Strategic Organization With the addition of Energizer e2 and Eveready Alkaline to our portfolio of other Energizer and Eveready products, we now have the most complete array of batteries and flashlights to meet any customer’s needs in any market throughout the world.

To strengthen this leadership position, we have organized Energizer into three broad functions: “Makers,” “Sellers” and “Servers.” Dividing global operating responsibilities among highly experienced and capable executives allows them to focus on specific regions and businesses. Pat Mannix, President, leads the “Makers” organization with responsibility for Operations and Specialty Businesses, overseeing technology development and manufacturing operations worldwide. ENERGIZER 2000 ANNUAL REPORT Leading the “Sellers” organization is Randy Rose, President and Chief Operating Officer, North America and Europe, and 2 Ward Klein, President and Chief Operating Officer, Asia Pacific and Latin America. As retailers increasingly strive to build unique customer bases, the “Sellers” organization is charged with creating customer-specific solutions to grow sales.

Our “Servers” provide vital support in the areas of Human Resources, Legal, and Finance and Control.

While our focal points may differ, together we are team Energizer, collectively striving to deliver the highest service and quality product offerings to our customers.

Results and Future Outlook Driven both by the Y2K effect and the launch of Energizer e2, fiscal 2000 sales climbed 2 percent to $1,914.3 million, and pro forma earnings per share excluding unusual items increased 39 percent to $1.69.

Looking ahead, the general outlook for our business is favorable, fueled by positive trends in battery-powered devices. In the near term, however, we expect sales to be significantly lower in the first quarter compared to our extraordinary performance in the first quarter of fiscal 2000. In addition, the competitive environment is intensifying. We remain firmly focused on meeting both consumer and customer needs – and as a result, gaining increased shares of the battery and flashlight markets.

As a global organization, we face ever-changing challenges of competitive sets, retail formats, currency fluctuations, and shifting economic and political environments. As a free-standing company, we now have an organization totally focused on primary batteries and flashlights ... a structure more flexible than our competition to capitalize on emerging opportunities ... and more nimble to respond to and solve problems.

J. Patrick Mulcahy Chief Executive Officer Energizer Holdings, Inc. November 20, 2000 ALIGNING MUTUAL INTERESTS AT THE VERY HEART OF THE NEW

ENERGIZER IS AN EXCITING NEW CORPORATE CULTURE – A CULTURE

BASED ON EMPLOYEE OWNERSHIP AND INDIVIDUAL ACCOUNTABILITY.

ASSOCIATES ARE ABLE TO SHARE IN THE PERFORMANCE OF THE

COMPANY AND, INCREASINGLY, THEIR INTERESTS ARE TIED DIRECTLY

TO THE INTERESTS OF SHAREHOLDERS. accountablekey tenet of employee ownership 4 ENERGIZER 2000 ANNUAL REPORT RICHARD A.GRASSO. EXCHANGE CHAIRMANANDCEO TIONS FROMNEWYORKSTOCK (RIGHT) RECEIVESCONGRATULA- BOARD, CEOPATRICK MULCAHY ENERGIZER’S STOCKONTHEBIG CELEBRATING THELISTINGOF GOING ANDONWALL STREET HIGH-TECH GADGETS DIGITAL ASSISTANTS, ELECTRONIC GAMES ANDBATTERY-POWERED TOYS. ON HIGH-TECHDEVICES NOWEXTENDSTOWIRELESSPHONES ANDPAGERS, RADIOSANDCOMPACT DISCPLAYERS, CAMERAS ANDPERSONAL THE PUBLICCONTINUESITSUNABASHED AND UNABATED INFATUATION WITH PORTABLE ELECTRONICDEVICES.THIS GROWINGDEPENDENCE Miniatur We established the super-premium segmentwiththelaunchofEnergizer Primar To strategy capitalizeonthesecontinuingtrends,Energizerfollowsastraightforward PRODUCT PORTFOLIO single digits. marketwithhistoricalgrowthtrendsinthehigh battery alkaline batteriesarethefastest-growingsegmentofprimary life,higherpowerandperformance,smallersize.Particularlysuitedtotheserequirements, increasingly longerservice Secondly, thegrowingdependenceofconsumersonpower-hungry, high-drainportabledevicesrequiresbatterieswith batteries,growingatanannualrateof7percentoverthepastfiveyears. global demandforprimary and theshifttoalkalinebatteries.Thesteadilygrowingnumberofdevicesinconsumers aredrivenbytwokeytrends industry The dynamicsoftheglobalbattery batteriesandflashlights. advantage ofsignificanttrendsintheglobalmarketforprimary As astand-alonecompany, leadershipandtake Energizerisfocused,energizedandfullypoweredtoextenditsindustry leading brandnames array ofproductsintheindustry, capableofsatisfyingconsumerdemandsandbudgets,anchoredbytwotheworld the worldwithacomprehensiveportfolioofproductsatallperformanceandpricelevels.Today, wehavethebroadest electronic thermometers. organizers, keylesscarremotesandhandheldelectronicgames,hearing aidsand variety ofsmalldevicesincludingelectronicwatchesandcameras,calculators andpersonal chemistries includingsilveroxide,zinc-airandmanganesedioxide.Miniatures deliverlong-lasting,reliablepowerfora a comprehensiverangeofperformanceandpricing.Ourpremium positioned the company to compete in all segments and contend for the entire range of consumer alkaline battery purchases. positioned thecompanytocompeteinallsegmentsandcontendforentirerangeofconsumeralkalinebattery power, andvalue-priced product lines cell constructiontodeliverexceptionalpoweranddependability. NewE-SNAP consumer-friendly titaniumtechnologyandnew incorporatesproprietary features.Thishigh-performingnewbattery greater accuracy. We furtherfortified ourproductlineupwiththeintroductionof testeroffers improved portabilityandstorageconvenience,anewlyenhancedrecalibratedgauge-styleon-battery consumers reliableperformanceataneconomicpricefromarecognizable,trustedname. PORTABLE TECHNOLOGY y Batteries es Energizer – primary batteries,miniatures,andflashlightsotherlightingproducts. primary – ourflagshipEnergizer ’ s completelineofminiaturebatteries,accountingfor3percentnet sales,utilizesvarious Primary alkalineandcarbonzincbatteriesaccountfor83percentofglobalnetsalescomprise Primary Eveready carbon zincbatteriesoffereconomicdependability. Two initiativesduringtheyearfirmly ® brand andtheEveready Energizer – theproliferationofportableelectronicdevices ® ® brand. Ourportfolioconsistsofthreebasic e alkaline batteriesdeliverreliable,long-lasting 2 TM , combiningadvancedtechnologyand TM – tomeetconsumerneedsaround reclosable packaginggivesconsumers Eveready ’ handspromisescontinuedstrong Alkaline, givingvalue-conscious

’ s

variety POWER FOR EVERY NEED WITH THE INDUSTRY’S MOST COMPREHEN-

SIVE PRODUCT PORTFOLIO, ENERGIZER HELPS CONSUMERS IN EVERY

CORNER OF THE WORLD USE PORTABLE POWER TO ENJOY BETTER

LIVES – FROM A SIMPLE, BASIC FLASHLIGHT TO HIGH-END APPLICA-

TIONS SUCH AS PERSONAL ORGANIZERS AND PORTABLE CD PLAYERS.

productvariety offerings for every performance and price level 6 ENERGIZER 2000 ANNUAL REPORT AND ROLLOUTOFENERGIZER SPOTS INCLUDING NETWORKTELEVISION GLOBAL MARKETINGPROGRAM AN UNPRECEDENTED$100MILLION TELEVISION ADSSOAR HIGH-DRAIN DEVICES BATTERIES ANDINDOUBLE DIGITS INTHOSEMARKETSWHERECARBON ZINCBATTERIES STILL PREDOMINATE. EXCEPT INASIAAND AFRICA. DEMANDISEXPECTEDTOGROW 7-8PERCENTINGLOBALMARKETSALREADY DOMINATED BYALKALINE CONTINUING SHIFTIN CONSUMERPREFERENCESTHAT HASMADETHEMTHEDOMINATE PRIMARY BATTERY THROUGHOUTTHEWORLD, ALKALINE BATTERIES, PARTICULARLY SUITEDTOTHEREQUIREMENTSOF HIGH-DRAINPORTABLE ELECTRONICDEVICES,AREFUELINGTHE – ISSUPPORTING THELAUNCH ® e – 2 TM . South andCentralAmerica Eur Asia Pacific e Energizer Nor for 79percentofsalesand97operatingprofitin2000. The company major market. Energizer marketsbatteriesandlightingproductsinover140countries,withstrongsharepositionsnearlyevery GLOBAL MARKETS Energizer Bunny Flashlights a declineincarbonzincvolume.Energizer operating profitimprovedtoaslightloss.Decreasedsalesresultedprimarily fromtheimpactofcurrencydevaluationsand 1.7 sharepointsto32.9percentasmeasuredbyA.C.Nielsenforthe52-weekperiodendingSeptember30,2000. including nationaltelevision,majormarketingeventsandconsumer-driven promotions.TheEnergizer We areaggressivelysupportingtheseproductlaunchesandbrandswithincreasedlevelsofadvertisingpromotion annually. cells battery portfolio, whilealsocontributingtoprofitabilitybycreatingdevicespoweredover150millionprimary producer ofportablelightingproducts.Flashlightmanufacturingallowsustobringourcustomersacompleteproduct ago,Energizerhasextendeditsleadershiptobecometheworld Since inventingthefirstflashlightoveracentury devaluations. We successfullylaunched 25 percentinoperatingprofitforfiscal2000.Salesincreasesfromhigheralkalinevolumewerepartiallyoffsetbycurrency Century by Century the company carbon zincvolumeandcurrencydevaluations. global salesinfiscal2000.Salesandoperatingprofitdeclined6percent and17percent,respectively, resultingfromlower Tudor andEveready ope product intomoreAsianmarketsasproductioncapacitypermits. th America profit rose7percent.HighersalesvolumeresultedfromY2K-drivendemandearlyintheyearcoupledwithincremental ALKALINE DOMINANCE round ofparodyadvertisingfeaturingthepopularEnergizerBunny being supportedbyanunprecedented$100millionglobalmarketingcampaign.Inmid-September, werolledoutthelatest Accounting for14percentofglobalsales,theEuropeanmarketsuffered a14percentdecreaseinsales,while 2 Advertising Age ’ s operationsaremanagedinfourmajorgeographicareas,withNorthAmericaandAsiaPacificcombining sales duringthelastfourmonths.InUnitedStates,Energizer ’ s globalsalesforfiscal2000.Boostedbythe The thirdproductline The AsiaPacificmarket,accountingfor20percentofglobalsales,achievedgains2insalesand has becomeaconsumerfavoriteandwasrecentlynamedoneoftheTop 10AdvertisingIconsofthe The NorthAmericanmarket,includingtheUnitedStatesandCanada,accountedfor59percentof ® support ourportfoliostrategy. ® magazine. The SouthandCentralAmericanmarkets,includingMexico,accounted for7percentof – flashlightsandotherlightingproducts Energizer e ® is ourcorebrandinthismarket,whileotherbrandssuchasUCAR,Wonder, 2 in AustraliaandNewZealandduringtheyearwillrollout Energizer e ® . Sinceitfirstdebuted11yearsago,theunstoppable 2 launch, salesincreased8percentandoperating ’ s alkalinemarketshareatretailincreased – accountsfor7percentofnetsales. ® e 2 ’ s largest TM launch is NORTH AMERICA

59% Net Sales ASIA PACIFIC

20% Net Sales

EUROPE

14% Net Sales powering

SOUTH AND CENTRAL AMERICA the world 7% Net Sales with strategic manufacturing and distribution

FROM PRODUCTION PLANTS ON FOUR CONTINENTS – IN THE UNITED

STATES AND IN LOCALES WITH EXOTIC NAMES LIKE TECAMEC, MANDAUE

CEBU, JURONG, NAKURU AND LA CHAUX-DE-FONDS – ENERGIZER

MANUFACTURES, MARKETS AND DISTRIBUTES PRODUCTS TO

CUSTOMERS AND CONSUMERS IN 140 COUNTRIES. 8 ENERGIZER 2000 ANNUAL REPORT NATIONAL RETAILER WEBSITES. ONLINE FROMAGROWINGNUMBEROF CAN ALSOBEORDEREDCONVENIENTLY THE WORLD,ENERGIZER THOUSANDS OFRETAILERS AROUND ALREADY AVAILABLE AT HUNDREDSOF DON SUPPORT TOHELP ENHANCETHEOVERALLBATTERY CATEGORY. THEPORTABLE ENERGIZER PROVIDESRETAILER CUSTOMERSWITH ACOMPLETEPRODUCTPORTFOLIO BACKEDBYTOTAL CATEGORY MANAGEMENT HIGH-PROFIT PRODUCT INAHIGHTRAFFICAREAFOROPTIMUM SALES. RETAILER SUPPORT ’ T FORGETTHEBATTERIES ® BATTERIES GLOBAL PRESENCE 2000. ThedevelopmentofEnergizer We havesignificantly increasedspendingonresearchanddevelopmentinrecentyears,reaching$50millionfiscal Resear E-Commer management. managementandintegratedcategory inventory customer supportincludesplanningandconsultation,jointpromotionaladvertisingefforts,in-storemerchandising, tomers bysupplyingsolutionstoboostsales,increasemarginsandimprovesupplychainefficiencies.Ourindustry-leading Beyond itscomprehensiveproductofferings,thecompanyseekstodevelopandsolidifyrelationshipswithmajorretailercus- Customers Pr Futur products toanycustomeranywhereintheworld exchanges.We havethecapabilitytodeliveranarrayof department, toyandelectronicspecialtystores;military disers, warehouseclubsanddollarstores;supermarkets,drugstoresconveniencehardwarehomecenters; HomeDepot.com, Officedepot.com,ToysRUs.com andWalmart.com. retailers suchasBatteries.comandBatteriesdirect.comtorecognizedAmazon.com,Bestbuy.com, of itsdistributionstrategy. Ourproductsarecurrentlysoldbyanumberofleadingonlinemerchants and technologyinnovation;aworkforce ofmotivated,enthusiasticassociates. and inkeygeographicmarkets;strongestablishedallianceswithretailer customers;undisputedleadershipinR&D by strongworld-classbrands;aglobalproductioncomplexwithsufficient capacity;significantmarketshareworldwide adequate forcurrentrequirementsaswellanticipatedfuturegrowth. reflect theglobalshiftinpreferenceforalkalinebatteriesovercarbonzincbatteries,ourcombinedmanufacturingcapacityi cellseachyear.geographically dispersedalkalineproductionplants,produceapproximately6billionbattery Restructuredto that includes22manufacturingplantsin15countriesonfourcontinents.Thesestrategicallysituatedfacilities,includingfi Energizer andthemorethan800patentapplicationscurrentlypending. batteries. Ourleadershipininnovationisreflectedaswellbythemorethan800U.S.andforeignpatentsowned first miniaturesilveroxidebatteries,thelithiumirondisulfidebuttoncellandon-labeltesterforalkaline use in1896,thiscommitmenthasgivenbirthtotheworld forconsumer cellbattery technological improvementandproductinnovation.Beginningwiththeintroductionoffirstdry technology start-upsandrawmaterialsuppliers. and keydevelopersofnewtechnologyincludinguniversities,government laboratories,privateresearchcompanies,small To leverageourinternalresources,wehaveexpanded collaborativeallianceswithleadingtechnologicalorganizations oduction Complex e Outlook TOTAL CATEGORY MANAGEMENT ch andDevelopment ce Energizer distributesitsproductstoconsumersthroughabroadrangeofretailersincludingmassmerchan- As anextensionofitsstrongcustomernetwork,Energizeristappingthepotentiale-commerceaspart Energizer iswellpositionedandaggressivelypoisedforgrowth:astrategic productportfolioanchored To supportitsworldwidesalesanddistribution,Energizeroperatesaglobalproductioncomplex e Bolstering ourmanufacturingoperationsisalong-standingcommitmenttocontinued ® 2 MERCHANDISER ENABLES RETAILERS TOPOSITIONTHIS e 2 TM , forexample,representsaninvestmentintechnologyofmorethan$50 million. – fromasidewalkstandinChinatohypermarketEurope. ’ s firstalkalinezincmanganesedioxidecylindricalbatteries,the – frombattery-specific

ve s 2000$ financial review

TABLE OF CONTENTS

10 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 19 SUMMARY SELECTED HISTORICAL FINANCIAL INFORMATION 20 RESPONSIBILITY FOR FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS 21 CONSOLIDATED FINANCIAL STATEMENTS 25 NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS INSIDE BACK COVER CORPORATE INFORMATION 10 ENERGIZER 2000 ANNUAL REPORT markets a complete line of primary alkalineandcarbonzincbatteries markets acomplete lineofprimary business ofproviding portablepower. Energizermanufacturesand batteries andflashlightsagloballeaderinthedynamic primary Energizer istheworld BUSINESS OVERVIEW Note 23totheConsolidatedFinancial Statements. Earnings fortheyearsendedSeptember30,2000and1999in or offutureresultsEnergizer. SeeProForma Statementof a separate,independentcompanyduringtheperiodspresented indicative ofresultsthatwouldhaveoccurredhadEnergizerbeen a separate,independentcompany, andmaynotnecessarilybe and adjustmentsthatwouldhavebeenincurredhadEnergizer in thesefinancialstatementsdoesnotincludecertainexpenses as whollyownedsubsidiariesofRalston.Thefinancialinformation and reflectperiodsduringwhichtheEnergizerbusinessesoperated all periodspriortothespin-offarepresentedonacombinedbasis six monthsendedSeptember30,2000.Thefinancialstatementsfor results ofoperationsEnergizeronastand-alonebasisforthe Ralston forthesixmonthspriortospin-offandconsolidated combined resultsofoperationstheEnergizerbusinessesunder Cash FlowsfortheyearendedSeptember30,2000include consolidated basis.TheStatementofEarningsand The BalanceSheetasofSeptember30,2000ispresentedona in atax-freespin-off. distributed thecommonstockofEnergizertoitsshareholders of RalstonPurinaCompany(Ralston).Onthatdate, Prior toApril1,2000,Energizerwasawhollyownedsubsidiary BASIS OFPRESENTATION and relatednotes. read inconjunctionwiththeConsolidatedFinancialStatements results, liquidityandcapitalresources.Thisdiscussionshouldbe (Energizer) historicalbasisresultsofoperations,operatingsegment inreviewingEnergizerHoldingsInc.’sment considersnecessary ofthekeyfactorsmanage- The followingdiscussionisasummary (Dollars inmillionsexceptpershareandpercentagedata) AND FINANCIALCONDITION ANAL MANAGEMENT’S DISCUSSIONAND YSIS OFRESUL ’ s largestpubliclytradedmanufacturer of TS OFOPERA TIONS primarily underthebrands consumer take away will likely decline in thefirst quarter of fiscal returns tonormalgrowth trends, high single digits.Asthe category same quarterlast year, compared tohistoricalgrowthtrendsinthe through December intheUnitedStatesincreased28% overthe According toA.C.Nielsen,thealkaline dollarsalesforOctober 1,2000. disruptions relatedtothedatechange onJanuary from retailcustomersandconsumers inanticipationofpotential America andAsiaPacificregions, related toincreaseddemand levels inthefirstquarteroffiscal2000,particularlyNorth experiencedunprecedentedgrowth category battery The primary 32.9% in2000. marketwas34.0%in1998,31.2% in1999and alkaline battery According toA.C.Nielsen,Energizer compete forconsumeracceptanceandlimitedretailshelfspace. manufacturers and onaglobalbasis,asnumberoflargebattery businessishighlycompetitive,bothintheUnitedStates The battery and 79%,respectively, of2000segmentprofitandsales. America andAsiaPacificareaswhichtogetheraccountfor97% Mexico). SegmentprofitandsalesareconcentratedintheNorth Asia Pacific,EuropeandSouthCentralAmerica(including areas Energizer of technology. globaltrends,includingtheevolution structure inlightofpervasive productioncapacityanditsbusiness continues toreviewitsbattery in allworldareaswiththeexceptionofAsiaandAfrica.Energizer battery and 1999.Alkalinebatteriesarenowthedominantprimary production capacityandcertainadministrativefunctionsin1998 has recordedprovisionsrelatedtorestructuringitsworldwidebattery from carbonzincbatteriestoalkalinebatteries.Assuch,Energizer products battery There hasbeenacontinuingshiftwithinprimary merchandisers, wholesalersandothercustomers. through adirectsalesforce,andalsodistributors,tomass ucts aremarketedandsoldinmorethan140countriesprimarily manufacturing facilitiesin15countriesonfourcontinents.Itsprod- other lightingproducts.Energizeranditssubsidiariesoperate22 as wellminiatureandrechargeablebatteries,flashlights – NorthAmerica(includingtheUnitedStatesandCanada), ’ s operationsaremanagedviafourmajorgeographic Energizer e ’ s dollarshareoftheU.S. 2 , Energizer and Eveready, 2001 relative to the same quarter last year. In addition, retail inven- operations increased $23.3, or $.35 and $.34 per basic and diluted tory levels at December 31, 1999, were above historical norms due share, respectively, in 2000. This increase is primarily attributable to Y2K-driven ordering which further increased Energizer’s sales in to improved operating results in North America and Asia Pacific and the first quarter of fiscal 2000. As such, Energizer anticipates report- lower corporate overhead, partially offset by higher interest expense ing significantly lower year over year sales for its first fiscal quarter on the debt assumed as part of the spin-off from Ralston. of 2001. Earnings from continuing operations decreased $48.4, or $.49 The Asia Pacific area experienced significant currency devaluations per basic and diluted share, in 1999. Included in both periods are and economic contraction in 1998 and early 1999, with more stable provisions for restructuring and capital loss tax benefits. Excluding trends emerging more recently in most markets. Changes in the these items, earnings from continuing operations decreased $21.1, value of local currencies or economic contractions in this area or $.22 per basic and diluted share, in 1999. This decrease is pri- may continue to impact segment profitability. In particular, recent marily attributable to declines in the Europe and Asia Pacific areas currency declines in Australia, New Zealand and the Philippines partially offset by increases in North America. have been unfavorable to Energizer during 2000 and into 2001. The euro and certain other European currencies are at or near historical Discontinued operations consist of Energizer’s worldwide recharge- 11 low points relative to the U.S. dollar. Currency devaluation was a able Original Equipment Manufacturers’ (OEM) battery business. significant unfavorable factor in 2000 and continues into 2001. In March 1999, the Board of Directors of Ralston announced its intention to exit this business to allow Energizer to focus on its HIGHLIGHTS primary battery business. On November 1, 1999, this business was sold to Moltech Corporation for approximately $20.0. Net earnings were $181.4 for the year ended September 30, 2000, compared to $80.0 in 1999. Earnings per share were $1.89 and $1.88 on a basic and diluted basis, respectively, compared to OPERATING RESULTS earnings per basic and diluted share of $.78 in the prior year. Net Sales Included in net earnings are earnings from continuing operations Net sales increased $42.0 or 2% in 2000 compared to 1999 of $180.2 and $159.8 in 2000 and 1999, respectively. Current primarily on growth in North America, partially offset by declines year net earnings include a net gain on disposition of discontinued in Europe. In 1999, sales decreased $49.5 or 3% as declines in operations of $1.2 related to the final settlement of the sale of Europe and, to a lesser extent, the Asia Pacific and South and discontinued operations. Fiscal 1999 results include a net loss from Central America regions were partially offset by increases in North discontinued operations of $5.6 and a net loss on the disposition of America. See comments on sales changes by region in the Segment discontinued operations of $74.2. Results section below.

Net earnings were $164.7, or $1.62 per basic and diluted share, for Gross Margin the year ended September 30, 1998. Included in 1998 net earnings are earnings from continuing operations of $208.2 and a net loss Gross margin dollars increased $65.2 or 7% in 2000 on increases from discontinued operations of $43.5. in North America and Asia Pacific, partially offset by declines in Europe. Gross margin percentage improved 2.4 percentage points

Earnings from continuing operations increased $20.4, or $.32 and in 2000 to 49.1% on higher volume and lower production costs in $.31 per basic and diluted share, respectively, in 2000. Included in North America and Asia as well as lower costs in South and Central 2000 results are costs related to the spin-off of $5.5 pretax, $3.3 America. Gross margin dollars declined $43.0 or 5% in 1999 on after-tax, loss on disposition of Spanish affiliate of $15.7, and capi- lower sales and lower margin percentage. The margin percentage in tal loss tax benefits of $24.4. Fiscal 1999 results include provisions 1999 was off 1.0 percentage point to 46.7% compared to 1998 with for restructuring of $9.9 pretax, $8.3 after-tax, and capital loss tax decreases in all regions except North America. benefits of $16.6. Excluding these items, earnings from continuing 12 ENERGIZER 2000 ANNUAL REPORT by unfavorablepricing andproductmix.Segmentprofit increased $45.8. Inaddition, favorableproductioncostswere partially offset volume. Grossmarginincreased$53.7 withvolumecontributing sales inthelastfourmonthsof yearaccountfortheincreased Nor Energizer Segment Results 1998, respectively. percent ofsaleswas9.8%,8.8%and9.6%in2000,1999 11% withdeclinesinallregions.Advertisingandpromotionasa in Europe.In1999,advertisingandpromotiondecreased$19.3or ing higherspendinginNorthAmerica,partiallyoffsetbyadecrease Advertising andpromotionincreased$23.1or14%in2000reflect- Advertising andPromotion in 2000,1999and1998,respectively. administrative expenseswere19.7%,21.2%and20.7%ofsales offset byhighergeneralcorporateexpenses.Selling,and as decreasesinEuropeandSouthCentralAmericawere selling, generalandadministrativeexpenseswereflatwith1998 in NorthAmericanmarketinganddistributioncosts.In1999, below, anddecreasesinEuropewerepartiallyoffsetbyincreases or 5%in2000onlowergeneralcorporateexpenses,asdiscussed Selling, generalandadministrativeexpensesdecreased$19.3 Selling, GeneralandAdministrative intersegment sales. Financial Statements.Segmentprofitabilityincludesprofitonthese sales andexternalaspresentedinNote21totheConsolidated at market-basedpricesandrepresentthedifferencebetweentotal goodwill andintangibles.Intersegmentsalesaregenerallyvalued development expenses,restructuringchargesandamortizationof on operatingprofitbeforegeneralcorporateexpenses,researchand Financial Statements.Energizerevaluatessegmentprofitabilitybased ing segmentinformationpresentedinNote21totheConsolidated Mexico). ThisstructureisthebasisforEnergizer Asia Pacific,EuropeandSouthCentralAmerica(including areas driven demandearlyinthefiscalyear andincremental mix. Alkalineunitvolumeincreased 11%over1999.StrongY2K- higher volume,partiallyoffsetbyunfavorablepricingandproduct th America – NorthAmerica(includingtheUnitedStatesandCanada), ’ s operationsaremanagedviafourmajorgeographic Net salesincreased$86.1or8%in2000on ’ s reportableoperat- Energizer e 2 to the increased advertisingandpromotionof$27.6,primarilyrelated $20.5 or7%ashighergrossmarginwaspartiallyoffsetby Asia Pacific Eur associated withincreased efficienciesfollowingaplant closingin decline reflectslower sales,partiallyoffsetbylower productioncosts primarily onunfavorablecurrency impacts of$18.3.Theremaining zinc unitvolumedeclined14%.Gross margindecreased$21.0, partially offsetbya1%alkalinevolume gain.Fortheyear, carbon volume of$11.8andunfavorablepricingproductmix$6.9, in 2000reflectingcurrencydevaluationof$28.2,lowercarbonzinc and promotion. decrease inexchangelossesanda$4.0advertising and lowersales.Partiallyoffsettingthesedeclineswerea$6.2 Gross margindeclined$21.3duetohigherproductioncosts Segment profitforAsiaPacificdecreased$11.1or11%in1999. decreases of5%wereoffsetbya4%increaseinalkalinevolume. accounted for$12.0ofthesalesdecline.Carbonzincvolume Net salesdecreased$12.1or3%in1999.Currencydevaluations administrative expenseswereup1%comparedto1999. costs resultingfromaplantclosingin1999.Selling,generaland of factorsincludinghigherproductionfacilityutilizationandlower higher intersegmentsales.Lowerproductioncostsreflectavariety $23.3 duetolowerproductioncosts,highercustomersalesand Pacific increased$22.7or25%,in2000.Grossmargin by a2%declineincarbonzincvolume.SegmentprofitforAsia $12.7 or3%.Alkalinevolumeincreasesof8%werepartiallyoffset 2000. Excludingcurrencydevaluationsof$4.3,netsalesincreased an $8.4decreaseinadvertisingandpromotionexpenditures. general andadministrativeexpensesof$4.4werelargelyoffsetby Increased marketinganddistributioncostsof$5.0increased of thehighergrossmarginassociatedwithincreaseinsales. profit forNorthAmericaincreased$11.6or4%in1999asaresult and productmix.Alkalinevolumeincreased8%in1999.Segment $55.2 ofthesalesincrease,partiallyoffsetbyunfavorablepricing Net salesincreased$30.5or3%in1999.Volume contributed distribution expenses. ope Energizer e Net salestocustomersforEuropedecreased$44.3or14% Net salestocustomersincreased$8.4or2%in 2 launch, aswellhighermarketingand 1999. Segment results for Europe improved $1.0 to a loss of $.2. attributable to lower usage of production capacity in the Mexican Net currency impacts in 2000 were unfavorable $6.8 compared plant. Lower other operating costs and a decrease of $2.1 in to 1999. Absent currency impacts, segment results improved $7.8 exchange losses partially offset the earnings decline. Operating cost despite a $2.6 decrease in gross margin. The improvement reflects reductions included decreased advertising and promotion expenses lower costs following sales and administrative realignment last year. of $4.7 and lower general and administrative expenses of $2.4 resulting from actions taken to offset lower plant utilization and from planned reorganization and restructuring in Brazil. Net sales to customers decreased $48.7 or 13% in 1999 compared to 1998 primarily on lower volume. Alkaline and carbon zinc vol- General Corporate Expenses umes declined 5% and 19%, respectively, accounting for $33.3 of the sales decline. Pricing and product mix negatively impacted General corporate expenses decreased $16.6 in 2000 to $37.4, sales by $17.0 in 1999. The majority of the pricing and product mix compared to $54.0 in 1999, due to higher pension income and decline, $9.8, was driven by Energizer’s move from a sales force to a lower consulting, reorganization and information systems costs as distributor model in several countries during 1999. The remainder of well as a lighting product recall charge in 1999. These costs were the decline reflects competitive and retail pressures. Segment results partially offset by additional costs associated with operating as a for Europe declined by $12.5 to a loss of $1.2 in 1999. Production stand-alone company for the last six months of fiscal 2000. Fiscal 13 inefficiencies related to a plant closing and other costs associated 2001 will include a full year of stand-alone costs, an estimated with restructuring activities accounted for $6.5 of the decline. increase of $4.0. Corporate expenses in 1999 increased $7.8 com- Excluding these costs, segment profit declined $6.0 as sales pared to 1998 due to higher consulting costs, the product recall declines of $48.7 were partially offset by a $28.3 decrease in cost charge discussed above and increases in various other corporate of products sold associated with the lower sales and a $15.1 costs. As a percent of sales, general corporate expenses were 2.0% decrease in overhead reflecting results of the restructuring of the in 2000 compared to 2.9% in 1999 and 2.4% in 1998. European business operations, including the move to the distributor sales model in several countries. Research and Development Expense Research and development expense of $49.9 in 2000 increased South and Central America Net sales decreased $8.2 or 6% 3% in 2000, 4% in 1999 and 11% in 1998. These increases are in 2000, primarily on lower volume and on currency devaluation attributable to Energizer’s ongoing effort to maintain technological which could not be mitigated through pricing actions. Carbon zinc leadership in the primary battery business. As a percent of sales, volume declined 6% while alkaline increased 1%. Despite the sales research and development expense was 2.6% in 2000 and 1999 decrease, gross margin increased $1.2 or 2%, as unfavorable compared to 2.4% in 1998. currency impacts of $7.2 were more than offset by lower production costs, favorable pricing and product mix. Segment profit for South Costs Related to Spin-off and Central America decreased $2.4 or 17% in 2000 as higher Energizer recorded one-time spin-related costs of $5.5 pre-tax, or marketing, distribution and management costs were partially offset $3.3 after-tax. These costs include legal fees, charges related to the by the gross margin increase. vesting of certain compensation benefits and other costs triggered by or associated with the spin-off. Net sales decreased $19.2 or 13% in 1999 compared to 1998. Of this decline, $19.0 was due to currency devaluation. Favorable pricing and product mix of $16.0 was offset by volume declines Loss on Disposition of Spanish Affiliate of 10% for alkaline and 17% for carbon zinc batteries. Energizer recorded a $15.7 pre-tax loss on the sale of its Spanish affiliate prior to the spin-off. The loss was a non-cash write-off of

Segment profit for South and Central America decreased $2.4 or goodwill and cumulative translation accounts of the Spanish affiliate. 14% in 1999. Gross margin declined $13.0, much of which was Ralston recognized capital loss tax benefits related to the Spanish 14 ENERGIZER 2000 ANNUAL REPORT these charges werecompleted asofSeptember 30,2000. marketsinthisarea.Substantially allactionsassociated with battery cial problemsinthe Asianmarket,whichresultedin contractionsin of oneplantinAsia.Thisclosure wasprecipitatedbythefinan- mately 170productionandadministrative employeesandtheclosure The 1999restructuringplanprovided fortheterminationofapproxi- assets wereidledandscrappedin1999. for theproductionoflithiumcoincellsinNorthAmerica.These of $4.0.Thefixedassetimpairmentsprimarilyrelatetoassetsused benefits of$3.2,othercashcosts$.2andfixedassetimpairments The pre-taxchargeof$7.4for1999plansconsistedtermination production capacityinNorthAmericaandAsia. relates to1999restructuringplansfortheeliminationofcertain Consolidated StatementofEarnings.Ofthenetpre-taxcharge,$7.4 write-downs andisclassifiedascostofproductssoldinthe $8.3 after-tax, or$9.9pre-tax,$2.1ofwhichrepresentedinventory During 1999,Energizerrecordednetprovisionsforrestructuringof through 2000follows. A detaileddiscussionofsuchchargesandexpendituresduring1998 to enhancemanagementeffectivenessandreduceoverheadcosts. and staffingreorganizationsreductionsinvariousworldareas more efficientlocationsinanefforttoachievelowerproductcosts, for themovementandconsolidationofalkalineproductiontonewor continuestodecline,plantclosures demand forthistypeofbattery These chargesincludeareductionincarbonzincplantcapacityas recorded restructuringchargeseachyearfrom1994through1999. zinc toalkalinebatteries.Inresponsethesechanges,Energizerhas years, andtherecontinuestobeamigrationofdemandfromcarbon businesshasintensifiedinrecent battery Competition intheprimary Restructuring Charges sale of$24.4,whicharereflectedinEnergizer Financial Statements. September 30,2000aspresentedinNote23totheConsolidated included intheProFormaStatementofEarningsforyearended been realizedbyEnergizeronastand-alonebasis,thusarenot Spanish transaction.Suchcapitallossbenefitswouldnothave statements andresultedinanetafter-tax gainof$8.7onthe ’ s historicalfinancial proceeds fromassetsales relatedtothe1994, 1995and1996 disposal. Thereversals included$9.4ofgreaterthan anticipated $2.6 forpreviously heldforuseassetsthatwereidled andheldfor additional chargesprimarilyrelated toassetdispositioncostsof charges offsetby$18.9ofreversals ofprioryears ing plans,wererecordedin1998, comprised of$3.7additional In addition,netreversalsof$15.2, relatedtoprioryears with the1998chargeswerecompleteasofSeptember30,2000. certain assetsheldfordisposal,substantiallyallactionsassociated costs of$1.6andotherexit$.7.Exceptfordisposition of $.8,bothrelatingtoassetsheldfordisposal,leasetermination consisted ofdemolitioncosts$1.5andenvironmentalexit non-cash investmentwrite-offof$1.5.Theothercashcosts$4.6 other cashcostsof$4.6,fixedassetimpairments$1.1anda ment ofapproximately420salesandadministrativeemployees, benefits of$29.3,whichprovidedfortheterminationorearlyretire- The total1998pre-taxchargeof$36.5consistedtermination European salesforcesandrelatedemployeereductions. business operationsrestructuring,primarilyareorganizationof requirementsandEuropean meeting certainageandservice early retirementoptionofferedtomostU.S.Energizeremployees $36.5 relatedto1998restructuringplans,includingavoluntary the ConsolidatedStatementofEarnings.Ofnetpre-taxcharge, write-downsandisclassifiedascostofproductssoldin inventory turing of$12.8,or$21.3onapre-taxbasis,which$.3represents During 1998,Energizerrecordednetafter-tax provisionsforrestruc- 1994, 1995and1997restructuringplans. 1999 wereassetproceedsgreaterthananticipatedof$5.4relatedto soldinconnectionwiththe1997plan.Alsorecorded subsidiary sive incometonetofcumulativetranslationadjustmentfora more thanoffsetbyareclassificationof$4.5fromothercomprehen- write-offs,whichwere non-cash chargesof$2.1relatetoinventory 1997 restructuringplanthatwereidledandheldfordisposal.Other disposition costsforpreviouslyhelduseassetsrelatedtothe provisions forothercashcostsof$1.8wererecordedfixedasset enhanced severancerelatedtoaEuropeanplantclosing.Additional of $5.5relatedtothe1997restructuringplanprimarilyrepresent to prioryears The remaining$2.5representsadditionalnetprovisionsrelated ’ restructuringplans.Additionalterminationbenefits ’ charges.The ’ restructur- restructuring plans. In addition, $8.5 of termination benefits Income Taxes recorded in 1997 were reversed in 1998, due primarily to the Income taxes, which include federal, state and foreign taxes, were modification of a European plant closing plan, driven by the 35.5%, 35.6% and 20.7% of earnings from continuing operations changing business environment in Europe. The modifications before income taxes in 2000, 1999 and 1998, respectively. Income resulted in the termination of approximately 200 fewer employees taxes include certain unusual items in all years, the most significant than originally anticipated. of which are described below:

Annual pre-tax cost savings from the 1999 restructuring plans • In 2000, the income tax percentage was favorably impacted by have been or are expected to be as follows: 2000 – $.3 and $1.4 the recognition of $24.4 of U.S. capital loss tax benefits related thereafter. Annual pre-tax cost savings from the 1998 restructuring to the disposition of Energizer’s Spanish affiliate. plans have been or are expected to be as follows: 1999 – $12.0;

2000 and thereafter – $13.0. Annual pre-tax cost savings from the • Capital loss tax benefits of $16.6 and $48.4 were recognized in 1997 restructuring plans have been or are expected to be as follows: 1999 and 1998, respectively, and were primarily related to prior 1998 – $9.0; 1999 – $19.0; 2000 and thereafter – $23.0. years’ restructuring actions.

15 As of September 30, 2000, except for the disposition of certain • In 1999, the income tax percentage was unfavorably impacted by assets held for disposal, substantially all activities associated with pre-tax restructuring provisions that did not result in tax benefits 1994 through 1997 restructuring plans are complete. The remaining due to tax loss situations or particular statutes of a country. accrual related to these plans was $2.1 at September 30, 2000 and primarily represents asset disposition costs. The carrying value of Excluding unusual items, the income tax percentage was 41.8% in assets held for disposal under all restructuring plans was $6.7 at 2000, 41.3% in 1999 and 39.2% in 1998. September 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES Energizer expects to fund the remaining costs of these restructuring Cash flows from continuing operations totaled $289.6 in 2000, actions with funds generated from operations. $337.2 in 1999 and $232.6 in 1998. The 14% decrease in cash flows from continuing operations in 2000 is due primarily to See Note 5 to the Consolidated Financial Statements for a table increased inventory levels and the realization of capital loss tax which presents, by major cost component and by year of provision, benefits in fiscal 1999, partially offset by higher cash earnings and activity related to the restructuring charges discussed above during proceeds from the sale of accounts receivable. The 45% increase in fiscal years 2000, 1999 and 1998, including any adjustments to the cash flows from continuing operations in 1999 resulted primarily original charges. from higher cash earnings and also from favorable changes in working capital items. Interest and Other Financial Items

Interest expense increased $19.9 in 2000 primarily in the last six Working capital was $401.7 and $478.1 at September 30, 2000 months of the year reflecting incremental debt assumed by Energizer and 1999, respectively. Capital expenditures totaled $72.8, $69.2 immediately prior to the spin-off. Interest expense decreased $3.5 in and $102.8 in 2000, 1999 and 1998, respectively. These expendi- 1999 compared to 1998 primarily due to lower rates on foreign debt. tures were primarily funded by cash flow from operations. Capital Other financing-related costs were favorable $4.3 in 2000 compared expenditures of approximately $90.0 are anticipated in 2001 and to 1999 primarily due to lower foreign exchange losses partially are expected to be financed with funds generated from operations. offset by the discount on the sale of accounts receivable financing Net transactions with Ralston, prior to the spin-off, resulted in arrangement. Other financing costs were unfavorable $6.0 in 1999 cash usage of $210.7, $293.7 and $154.7 in 2000, 1999 and compared to 1998 primarily due to higher foreign exchange losses 1998, respectively. in 1999. 16 ENERGIZER 2000 ANNUAL REPORT common stockhad beenpurchasedundertheauthorization. November 10,2000, approximately1,150,000shares ofEnergizer of Energizer repurchase planauthorizingthe ofupto5millionshares In September2000,Energizer the saleofaccountsreceivable. Consolidated FinancialStatementsforfurtherdiscussionregarding interim fundingfacilitiesasdiscussedabove.SeeNote12tothe $100.0 ofproceedsfromthisarrangement,whichwasusedtorepay ofEnergizer.bankruptcy-remote subsidiary Energizerreceived a poolofdomestictradeaccountsreceivabletowhollyowned Energizer enteredintoanagreementtosell,onongoingbasis, September 30,2000. these ratioswouldhavebeen1.5to1and6.81,respectively, at which assumesthepost-spindebtwasoutstandingforfullyear, was 11.2to1asofSeptember30,2000.Onaproformabasis, EBITDA was1.5to1andtheratioofEBITtotalinterestexpense On ahistoricalbasis,Energizer must exceed3to1. greater than3to1andtheratioofitsEBITtotalinterestexpense the ratioofEnergizer available asofSeptember30,2000.Underthetermsfacilities, total committeddebtfacilitiesof$625.0,which$255.0remained long-term debtrangefrom7.3%to8.0%.Energizermaintains term debthasavariableinterestrate.Theratesonthe 7.1% and7.8%,respectively. Approximately$195.0ofthelong- rate onthedomesticshort-termandlong-termdebtisapproximately below; andothershort-termborrowings.Theaverageinterest an agreementtoselldomestictradereceivablesasdiscussed under revolvingcreditfacilities,generallywith5yearmaturities; of $175.0withmaturities3to10years;borrowings$195.0 financing agreementsincludethefollowing:privateplacementnotes the interimfundingfacilities.AsofSeptember30,2000,Energizer Energizer enteredintoseparatefinancingagreementsandrepaid tions ofthosefacilitiestoEnergizer. InAprilandMay, 2000, several interimfundingfacilitiesandassignedallrepaymentobliga- Immediately priortothespin-off,Ralstonborrowed$478.0through ’ s commonstock.Subsequenttoyear-end through ’ s totalindebtednesstoitsEBITDAcannotbe ’ s BoardofDirectorsapprovedashare ’ s ratiooftotalindebtednessto ’ s can begiveninthisregard. the maturityofEnergizer to meetshort-termandlong-termliquidityrequirementsprior periodic borrowingsunderexistingcreditfacilitieswillbeadequate Energizer believesthatcashflowsfromoperatingactivitiesand also berequiredtoshareinthecost ofcleanupwithrespecttoa three yearsendedSeptember30,2000. that inflationhasnothadasignificantimpactonoperationsinthe tain reasonableprofitmargins.Itismanagement and productivityimprovementsaswellpriceincreasestomain- Energizer triestominimizetheseeffectsthroughcostreductions and relateddepreciationhighermaterial,laborothercosts. adverse effectonEnergizerthroughhigherassetreplacementcosts pressuresmayhavean Management recognizesthatinflationary INFLATION cost ofcleanupwithrespecttonine federal Compensation andLiabilityAct, mayberequiredtoshareinthe party contribution, thatithasbeenidentifiedasa Protection Agency, stateagencies,and/orprivatepartiesseeking Energizer hasreceivednoticesfromtheU.S.Environmental waste handlinganddisposal. safety, airandwaterquality, undergroundfuelstoragetanksand and theenvironment.Theseregulationsprimarilyrelatetoworker and locallawsregulationsintendedtoprotectthepublichealth business,aresubjecttovariousfederal,state,foreign in thebattery The operationsofEnergizer, likethoseofothercompaniesengaged ENVIRONMENTAL MATTERS in 2000wasalsohigherduetoY2K-drivendemand. in 2000,1999and1998,respectively. Thefirstquarterpercentage quarter salesaccountedfor35%,31%and33%oftotalnet the Christmasholidayseason,particularlyinNorthAmerica.First of thefiscalyearbyadditionalsalesvolumeassociatedwith Energizer SEASONAL FACTORS ” (PRP)undertheComprehensiveEnvironmental Response, ’ s resultsaresignificantlyimpactedinthefirstquarter ’ s creditfacilities,althoughnoguarantee “ “ Superfund potentially responsible ’ s view, however, ” sites.Itmay state-designated site. Liability under the applicable federal and state MARKET RISK SENSITIVE INSTRUMENTS statutes which mandate cleanup is strict, meaning that liability may AND POSITIONS attach regardless of lack of fault, and joint and several, meaning that The market risk inherent in Energizer’s financial instruments and a liable party may be responsible for all of the costs incurred in positions represents the potential loss arising from adverse changes investigating and cleaning up contamination at a site. However, in interest rates and foreign currency exchange rates. The following liability in such matters is typically shared by all of the financially risk management discussion and the estimated amounts generated viable responsible parties. from the sensitivity analyses are forward-looking statements of market risk assuming certain adverse market conditions occur. The amount of Energizer’s ultimate liability in connection with those sites may depend on many factors, including the volume and toxicity Interest Rates of material contributed to the site, the number of other PRPs and Energizer has interest-rate risk with respect to interest expense on their financial viability, and the remediation methods and technology variable rate debt. At September 30, 2000 and 1999, Energizer had to be used. $330.0 and $120.7 variable rate debt outstanding. A hypothetical 10% adverse change in all interest rates would have had an annual In addition, Energizer undertook certain programs to reduce or unfavorable impact of $2.6 and $.9 in 2000 and 1999, respectively, 17 eliminate the environmental contamination at the rechargeable on Energizer’s earnings and cash flows based upon these year-end battery facility in Gainesville, Florida, which was divested in debt levels. The primary interest rate exposures on variable rate debt 1999. In the event that the buyer would become unable to continue are with respect to U.S. rates and short-term local currency rates in such programs, Energizer could be required to bear financial certain Asian and Latin American countries. responsibility for such programs as well as for other known and unknown environmental conditions at the site. Foreign Currency Exchange Rates

Many European countries, as well as the European Union, have been Energizer employs a foreign currency hedging strategy which very active in adopting and enforcing environmental regulations. In focuses on mitigating potential losses in earnings or cash flows on many developing countries in which Energizer operates, there has foreign currency transactions, primarily anticipated intercompany not been significant governmental regulation relating to the environ- purchase transactions and intercompany borrowings. External pur- ment, occupational safety, employment practices or other business chase transactions and intercompany dividends and service fees matters routinely regulated in the United States. As such economies with foreign currency risk are also hedged from time to time. The develop, it is possible that new regulations may increase the risk primary currencies to which Energizer’s foreign affiliates are exposed and expense of doing business in such countries. include the U.S. dollar, euro, Singapore dollar, Indonesian rupiah and British pound, while domestic affiliates are primarily exposed

It is difficult to quantify with certainty the potential financial impact to the Swiss franc. of actions regarding expenditures for environmental matters, particu- larly remediation and future capital expenditures for environmental Energizer’s hedging strategy involves the use of natural hedging control equipment. Nevertheless, based upon the information cur- techniques, where possible, such as the offsetting or netting of rently available, Energizer believes that its ultimate liability arising like foreign currency cash flows. Where natural hedging techniques from such environmental matters, taking into account established are not possible, foreign currency derivatives with durations of gen- accruals of $3.6 for estimated liabilities, should not be material to erally one year or less may be used, including forward exchange its financial position. Such liability could, however, be material contracts, purchased put and call options, and zero-cost option to results of operations or cash flows for a particular quarter or collars. Energizer policy allows foreign currency derivatives to be annual period. used only for identifiable foreign currency exposures and, therefore, 18 ENERGIZER 2000 ANNUAL REPORT Statements intheManagement FORWARD-LOOKING INFORMATION See discussioninNote2totheConsolidatedFinancialStatements. RECENTLY ISSUEDACCOUNTINGSTANDARDS Energizer 2000 and1999,respectively. Thepotentiallossinvalueof year-end exchangerateswas$515.1and$545.1 atSeptember30, foreign subsidiariesandaffiliatestranslatedintoU.S.dollarsusing Asian currencies.Energizer Chinese renminbi,Australiandollar, Indonesianrupiahandother and otherLatinAmericancurrencies;theSingaporedollar, the SwissfrancandotherEuropeancurrencies;Mexicanpeso In termsofforeigncurrencytranslationrisk,Energizerisexposedto countries,primarilyinLatinAmerica. currencies ofhyperinflationary liabilitiesin Energizer attemptstolimititsU.S.dollarnetmonetary ment inforeigncurrenciesasconsiderednecessary. Additionally, Capital structuringtechniquesareusedtomanagethenetinvest- a result,Energizerdoesnotgenerallyhedgethesenetinvestments. subsidiaries withafunctionalcurrencyotherthantheU.S.dollar. As Energizer generallyviewsaslong-termitsinvestmentsinforeign and 1999amountsto$2.6$1.5,respectively. of Energizer the contractsaredesignatedashedges.Accordingly, themarketrisk fully offsetbyexchangegainsontheunderlyingexposuresforwhich balance sheetexposures,asanylossesonthesecontractswouldbe does notincludeforeigncurrencyderivativesthathedgeexisting adverse changeinallforeigncurrencyexchangerates.Marketrisk contracts atfiscalyearend,resultingfromahypothetical10% fair valueofnetcurrencypositionsforoutstandingforeign Market riskofforeigncurrencyderivativesisthepotentiallossin purposes wherethesoleobjectiveistogenerateprofits. Energizer doesnotenterintoforeigncurrencycontractsfortrading to $51.5and$54.5,respectively. currency exchangeratesatSeptember30,2000and1999amounts resulting fromahypothetical10%adversechangeinquotedforeign of OperationsandFinancialCondition andothersectionsofthis ’ s netforeigncurrencyinvestmentinsubsidiaries ’ s foreigncurrencyderivativesatSeptember30,2000 ’ s netforeigncurrencyinvestmentin ’ s DiscussionandAnalysisofResults Form 8-KdatedApril25,2000. Statement onForm10,asamended, anditsCurrentReporton time inEnergizer Additional risksanduncertaintiesincludethosedetailedfromtimeto financial instrumentsorfromtheextensionofcredittocustomers. could increaseEnergizer currency fluctuationsandunforeseencustomerfinancialdifficulties itsdebtasitbecomesdue.Economic turmoil, expenditures orservice future operatingexpensesandliquidityrequirements,fundcapital with itsdebtcovenants,couldlimitEnergizer Energizer market shareforEnergizer. Unforeseenfluctuationsinlevelsof segmentmayalsonegativelyaffectsalesor private-label battery Competition forkeyretailcustomersandgrowthofthelower-price ing campaigns,retaildiscountsandotherpromotionalactivities. competitive activity, includingnewproductintroductionsoradvertis- affect itsfinancialperformanceandcouldcauseEnergizer Energizer advisesreadersthatvariousrisksanduncertaintiescould date made. statements,whichspeakonlyasofthe on anyforward-looking Act of1995.Energizercautionsreadersnottoplaceunduereliance ments withinthemeaningofPrivateSecuritiesLitigationReform state- concentration ofcredit,maybeconsideredforward-looking flows, andtheriskassociatedwithfinancialinstruments share andsalesinfutureperiods,theadequacyofcash trends,Energizermarket statements regardinganticipatedcategory Annual ReporttoShareholdersthatarenothistorical,particularly Energizer growth.Withinthecategory,devices couldalsoaffectcategory and continuinggrowthinconsumerdemandforportableelectronic alkalinebatteries.Generaleconomicconditions growth forprimary technologiescouldallsignificantlyaffectcontinuedcategory battery rechargeable batteries,andthedevelopmentofnewnon-alkaline performanceandincreasingconsumeracceptanceof battery batteries,improvementsinrechargeable lifeofprimary in theservice significantly affectthedemandforbatteries.Continuingimprovements and otherdevicesthatutilizebatteriesasapowersourcemay or projected.Technological ordesignchangesinportableelectronic results forfutureperiodstodiffermateriallyfromthoseanticipated ’ ’ s operatingcashflows,orinabilitytomaintaincompliance s salesandmarketsharemaybenegativelyaffectedby ’ s publiclyfileddocuments,including itsRegistration ’ s riskfromcurrencyhedgesandother ’ s abilitytomeet ’ s actual SUMMARY SELECTED HISTORICAL FINANCIAL INFORMATION (Dollars in millions except per share data)

Statement of Earnings Data FOR THE YEAR ENDED SEPTEMBER 30,

2000 1999 1998 1997 1996 Net Sales $ 1,914.3 $1,872.3 $1,921.8 $ 2,005.8 $ 2,023.5 Depreciation and Amortization 82.0 94.9 101.2 112.3 122.6 Earnings from Continuing Operations before Income Taxes (a) 279.2 248.2 262.5 203.9 271.4 Income Taxes 99.0 88.4 54.3 44.6 106.3 Earnings from Continuing Operations (b) 180.2 159.8 208.2 159.3 165.1 Net Earnings 181.4 80.0 164.7 159.8 169.1 Earnings Per Share from Continuing Operations: Basic $ 1.88 $ 1.56 $ 2.05 $ 1.56 $ 1.62 Diluted $ 1.87 $ 1.56 $ 2.05 $ 1.56 $ 1.62 Average Shares Outstanding (c) 96.1 102.6 101.6 102.1 101.8 19

Balance Sheet Data SEPTEMBER 30,

2000 1999 1998 1997 1996 Working Capital $ 401.7 $ 478.1 $ 478.5 $ 489.6 $ 532.3 Property at Cost, Net 485.4 472.8 476.9 494.2 543.2 Additions (during the period) 72.8 69.2 102.8 98.8 95.7 Depreciation (during the period) 57.9 68.4 74.1 79.5 81.4 Total Assets 1,793.5 1,833.7 2,077.6 2,113.6 2,146.9 Long-term Debt 370.0 1.9 1.3 21.3 43.1

(a) Results for the year ended September 30, 2000 include a loss on disposition of Spanish affiliate of $15.7 and costs related to the spin-off of $5.5. Prior results include restructuring charges of $9.9, $21.3, $83.7 and $3.4 for the years ended September 30, 1999, 1998, 1997 and 1996, respectively.

(b) Earnings from continuing operations include the following unusual items: FOR THE YEAR ENDED SEPTEMBER 30,

2000 1999 1998 1997 1996 After-tax restructuring charges $ – $ (8.3) $ (12.8) $ (72.0) $ (2.2) Capital loss tax benefits 24.4 16.6 48.4 35.9 – Foreign tax credit refunds – ––20.5 – Loss on disposition of Spanish affiliate (15.7) –– –– After-tax costs related to spin-off (3.3) –– –– Total $ 5.4 $ 8.3 $ 35.6 $ (15.6) $ (2.2)

(c) Average shares outstanding is based on the weighted-average number of shares of Ralston common stock outstanding prior to the spin-off (adjusted for the distribution of one share of Energizer stock for each three shares of Ralston stock) and the weighted-average number of shares of Energizer stock outstanding from April 1, 2000 through September 30, 2000. 20 ENERGIZER 2000 ANNUAL REPORT to theAuditCommittee. independence, PricewaterhouseCoopersLLPhasdirectaccess to discussauditandfinancialreportingmatters.To assure management, internalauditandtheindependentaccountants solely ofnonmanagementdirectors,meetsperiodicallywith The BoardofDirectors,throughitsAuditCommitteeconsisting relative tothescopeoftheirauditsfinancialstatements. control forthepurposeofestablishingabasisreliancethereon States. Thesestandardsincludeastudyandevaluationofinternal accordance withgenerallyacceptedauditingstandardsintheUnited is shownbelow. Thisreportstatesthattheauditsweremadein ants, ontheirauditsoftheaccompanyingfinancialstatements The reportofPricewaterhouseCoopersLLP, independentaccount- are importantelementsofthesecontrolsystems. policies andprocedures,anextensiveprogramofinternalaudits establishment andcommunicationofaccountingadministrative statements. Theselectionandtrainingofqualifiedpersonnel,the and thatthefinancialrecordsarereliableforpreparing are safeguardedagainstlossfromunauthorizeduseordisposition it believesareadequatetoprovidereasonableassurancethatassets Energizer maintainsaccountingandinternalcontrolsystems,which of operationsandcashflows. management, fairlypresentEnergizer accounting principlesintheUnitedStates,andopinionof ments havebeenpreparedinconformancewithgenerallyaccepted Holdings, Inc.aretheresponsibilityofitsmanagement.Thesestate- The preparationandintegrityofthefinancialstatementsEnergizer RESPONSIBILITY FORFINANCIALST ’ s financialposition,results A TEMENTS financial statementsaretheresponsibilityofEnergizer accounting principlesgenerallyacceptedintheUnitedStates.These years intheperiodendedSeptember30,2000,conformitywith results oftheiroperationsandcashflowsforeachthethree Inc. anditssubsidiariesatSeptember30,20001999,the all materialrespects,thefinancialpositionofEnergizerHoldings, income, ofcashflowsandshareholdersequitypresentfairly, in the relatedconsolidatedstatementsofearningsandcomprehensive In ouropinion,theaccompanyingconsolidatedbalancesheetand Energizer Holdings,Inc. To theShareholdersandBoardofDirectors REPOR October 31,2000 St. Louis,Missouri PricewaterhouseCoopers LLP expressed above. believe thatourauditsprovideareasonablebasisfortheopinion and evaluatingtheoverallfinancialstatementpresentation.We principles usedandsignificantestimatesmadebymanagement, disclosures inthefinancialstatements,assessingaccounting examining, onatestbasis,evidencesupportingtheamountsand statements arefreeofmaterialmisstatement.Anauditincludes audit toobtainreasonableassuranceaboutwhetherthefinancial in theUnitedStateswhichrequirethatweplanandperform statements inaccordancewithauditingstandardsgenerallyaccepted statements basedonouraudits.We conductedourauditsofthese ment; ourresponsibilityistoexpressanopiniononthesefinancial T OFINDEPENDENTACCOUNT ’ s manage- ANTS CONSOLIDATED STATEMENT OF EARNINGS AND COMPREHENSIVE INCOME (Dollars in millions except per share data)

YEAR ENDED SEPTEMBER 30,

2000 1999 1998

Statement of Earnings: Net Sales $ 1,914.3 $ 1,872.3 $ 1,921.8 Costs and Expenses Cost of products sold 974.7 997.9 1,004.4 Selling, general and administrative 378.0 397.3 397.9 Advertising and promotion 187.4 164.3 183.6 Research and development 49.9 48.5 46.6 Costs related to spin-off 5.5 –– Loss on disposition of Spanish affiliate 15.7 –– Provisions for restructuring – 7.8 21.0 Interest expense 27.5 7.6 11.1 Other financing items, net (3.6) 0.7 (5.3) 21 1,635.1 1,624 .1 1,659.3 Earnings from Continuing Operations before Income Taxes 279.2 248.2 262.5 Income Taxes (99.0) (88.4) (54.3) Earnings from Continuing Operations 180.2 159.8 208.2 Net Earnings/(Loss) from Discontinued Operations – (5.6) (43.5) Net Gain/(Loss) on Disposition of Discontinued Operations 1.2 (74.2) – Net Earnings $ 181.4 $ 80.0 $ 164.7

Earnings Per Share Basic Earnings from Continuing Operations $ 1.88 $ 1.56 $ 2.05 Net Earnings/(Loss) from Discontinued Operations – (0.06) (0.43) Net Gain/(Loss) on Disposition of Discontinued Operations 0.01 (0.72) – Net Earnings $ 1.89 $ 0.78 $ 1.62 Diluted Earnings from Continuing Operations $ 1.87 $ 1.56 $ 2.05 Net Earnings/(Loss) from Discontinued Operations – (0.06) (0.43) Net Gain/(Loss) on Disposition of Discontinued Operations 0.01 (0.72) – Net Earnings $ 1.88 $ 0.78 $ 1.62

Statement of Comprehensive Income: Net Earnings $ 181.4 $ 80.0 $ 164.7 Other Comprehensive Income, Net of Tax Foreign currency translation adjustments (31.9) 7.8 (30.4) Foreign currency reclassification adjustments 9.7 (4.5) – Minimum pension liability adjustment (1.1) –– Comprehensive Income $ 158.1 $ 83.3 $ 134.3

The above financial statement should be read in conjunction with the Notes to Consolidated Financial Statements. 22 ENERGIZER 2000 ANNUAL REPORT The abovefinancialstatementshouldbereadin conjunctionwiththeNotestoConsolidatedFinancialStatements. Current Liabilities Liabilities andShareholdersEquity Current Assets Assets (Dollars inmillionsexceptpersharedata) CONSOLIDATED BALANCESHEET Shareholders Equity Other Liabilities Long-term Debt Property atCost Net InvestmentinDiscontinuedOperations Investments andOtherAssets Accumulated othercomprehensiveincome Retained earnings Additional paid-incapital Notes payable Trade receivables,net Ralston's netinvestmentinEnergizer Other currentliabilities Current maturitiesoflong-termdebt Accumulated depreciation Construction inprogress Other currentassets Cash andcashequivalents Common stock Preferred stock Accounts payable andequipment Machinery Buildings Land Inventories September 30,2000 Total Total Shareholders Equity Total Total CurrentAssets Total CurrentLiabilities – – $.01parvalue,issued95,552,711at $.01parvalue,noneoutstanding 11.9 $ 1,793.5 $ $ 1,793.5 $ 1,019.8 (106.5) 2000 140.6 377.8 930.3 278.7 459.1 180.6 738.2 783.9 156.7 370.0 528.6 248.6 145.0 135.0 485.4 534.4 816.9 14.6 59.8 47.7 1.0 – – – – SEPTEMBER 30, 1,833.7 $ 0.3 $ 1,833.7 $ 27.8 $ 1,312.9 1,312.9 1,010.1 1999 495.9 248.5 128.6 118.5 472.8 537.3 816.7 143.0 319.7 974.0 121.3 383.0 441.9 23.0 33.5 16.9 67.2 1.9 – – – – – CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in millions)

YEAR ENDED SEPTEMBER 30,

2000 1999 1998 Cash Flow from Operations Net earnings $ 181.4 $ 80.0 $ 164.7 Adjustments to reconcile net earnings to net cash flow from operations: Depreciation and amortization 82.0 94.9 101.2 Translation and exchange loss 1.9 9.0 10.4 Deferred income taxes 5.9 70.4 (36.6) Loss on sale of Spanish affiliate 15.7 –– Non-cash restructuring charges/(reversals) – (2.2) (6.5) Net (earnings)/loss from discontinued operations (1.2) 79.8 43.5 Sale of accounts receivable 100.0 –– Changes in assets and liabilities used in operations: (Increase)/decrease in accounts receivable, net (25.3) (6.4) (34.2) 23 (Increase)/decrease in inventories (90.8) 22.1 (2.8) (Increase)/decrease in other current assets 18.7 (13.9) 3.6 Increase/(decrease) in accounts payable 24.2 (21.3) 0.2 Increase/(decrease) in other current liabilities (16.8) 16.2 1.5 Other, net (6.1) 8.6 (12.4) Cash flow from continuing operations 289.6 337.2 232.6 Cash flow from discontinued operations 54.7 15.1 8.7 Net cash flow from operations 344.3 352.3 241.3

Cash Flow from Investing Activities Property additions (72.8) (69.2) (102.8) Proceeds from sale of OEM business 20.0 –– Proceeds from sale of assets 3.2 1.4 14.1 Other, net (8.7) (0.5) 4.6 Cash used by investing activities – continuing operations (58.3) (68.3) (84.1) Cash used by investing activities – discontinued operations (0.7) (3.7) (13.2) Net cash used by investing activities (59.0) (72.0) (97.3)

Cash Flow from Financing Activities Net cash proceeds from issuance of long-term debt 407.0 1.0 13.8 Principal payments on long-term debt (including current maturities) (449.5) (13.3) (35.1) Cash proceeds from issuance of notes payables with maturities greater than 90 days 6.1 14.7 10.2 Cash payments on notes payables with maturities greater than 90 days (3.7) (0.1) – Net increase/(decrease) in notes payable with maturities of 90 days or less (50.2) (12.0) 32.8 Net transactions with Ralston prior to spin-off (210.7) (293.7) (154.7) Net cash used by financing activities (301.0) (303.4) (133.0) Effect of Exchange Rate Changes on Cash (0.2) 1.8 (4.6) Net Increase/(Decrease) in Cash and Cash Equivalents (15.9) (21.3) 6.4 Cash and Cash Equivalents, Beginning of Period 27.8 49.1 42.7 Cash and Cash Equivalents, End of Period $ 11.9 $ 27.8 $ 49.1 Non-cash transactions: Debt assigned by Ralston $ 478.0 $ – $ –

The above financial statement should be read in conjunction with the Notes to Consolidated Financial Statements. 24 ENERGIZER 2000 ANNUAL REPORT aac tSpebr3,20 $ 121.6 700.3 $ The abovefinancialstatementshouldbereadinconjunctionwiththeNotestoConsolidatedFinancialStatements. Balance atSeptember30,2000 (732.8) 80.0 Minimum pensionliabilityadjustment (1.4) Foreign currencytranslationadjustment Net earnings 1,312.9 $ Distribution toRalston (301.7) 164.7 3.3 Balance atMarch 31,2000 Foreign currencytranslationadjustment Net transactionswithRalston 1,531.3 $ Net earnings (151.2) Balance atSeptember30,1999 (30.4) Foreign currencytranslationadjustment Net transactionswithRalston 1,548.2 $ Net earnings Balance atSeptember30,1998 Foreign currencytranslationadjustment Net transactionswithRalston Net earnings Balance atSeptember30,1997 (Dollars inmillions) CONSOLIDATED STATEMENT OFSHAREHOLDERSEQUITY ’ hrhles$(0.)$. $8. $(84.6) $ $783.9 $1.0 (700.3) $ s shareholders netetSokCptlErig Income Earnings Capital Stock Investment Ralston e omnPi nRtie Comprehensive Retained Paidin Common Net ’ – diinlOther Additional s $1.0 (106.5) $783.9 $ $59.8 59.8 $ Accumulated (20.8) (1.1) NOTES TO CONSOLIDATED FINANCIAL basis and reflect periods during which the Energizer businesses STATEMENTS operated as wholly owned subsidiaries of Ralston. The financial (Dollars in millions except per share data) information in these financial statements does not include certain expenses and adjustments that would have been incurred had (1) BASIS OF PRESENTATION Energizer been a separate, independent company, and may not On June 10, 1999, the Board of Directors of Ralston approved in necessarily be indicative of results that would have occurred had principle a plan to spin off its battery business to the Ralston stock- Energizer been a separate, independent company during the periods holders. In September 1999, Energizer Holdings, Inc. (Energizer) presented or of future results of Energizer. was incorporated in Missouri as an indirect subsidiary of Ralston. (2) SUMMARY OF ACCOUNTING POLICIES Effective April 1, 2000, Energizer became an independent, publicly Energizer’s significant accounting policies, which conform to owned company as a result of the distribution by Ralston of generally accepted accounting principles in the United States Energizer’s $.01 par value common stock to the Ralston stockholders and are applied on a consistent basis among all years presented, at a distribution ratio of one for three (the spin-off). Prior to the except as indicated, are described below. spin-off, Energizer operated as a wholly owned subsidiary of Ralston. 25 Ralston received a ruling from the Internal Revenue Service stating Principles of Consolidation – These financial statements the distribution qualified as a tax-free spin-off. include the accounts of Energizer and its majority-owned sub- sidiaries. All significant intercompany transactions are eliminated. Energizer is the world’s largest publicly traded manufacturer of Investments in affiliated companies, 20% through 50% owned, are primary batteries and flashlights and a global leader in the dynamic carried at equity. A one-month lag is utilized in reporting all interna- business of providing portable power. Energizer manufactures and tional subsidiaries in Energizer’s consolidated financial statements. markets a complete line of primary alkaline and carbon zinc batteries

2 under the brands Energizer e , Energizer and Eveready, as well as Use of Estimates – The preparation of financial statements in miniature and rechargeable batteries, and flashlights and other conformity with generally accepted accounting principles requires lighting products. Energizer and its subsidiaries operate 22 manu- management to make estimates and assumptions that affect the facturing facilities in 15 countries on four continents. Its products reported amounts of assets and liabilities, the disclosure of contin- are marketed and sold in more than 140 countries primarily gent assets and liabilities at the date of the financial statements, and through a direct sales force, and also through distributors, to the reported amounts of revenues and expenses during the reporting mass merchandisers, wholesalers and other customers. period. Actual results could differ from those estimates.

The Balance Sheet as of September 30, 2000 is presented on a Foreign Currency Translation – Financial statements of foreign consolidated basis. The Statement of Earnings and Statement of operations where the local currency is the functional currency are Cash Flows for the year ended September 30, 2000 include the translated using end-of-period exchange rates for assets and liabili- combined results of operations of the Energizer businesses under ties and average exchange rates during the period for results of Ralston for the six months prior to the spin-off and the consolidated operations. Related translation adjustments are reported as a results of operations of Energizer on a stand-alone basis for the component within accumulated other comprehensive income in six months ended September 30, 2000. The financial statements the shareholders equity section of the Consolidated Balance Sheet. for all periods prior to the spin-off are presented on a combined 26 ENERGIZER 2000 ANNUAL REPORT Financial Instr are generallyincludedinearnings. in earnings.Gainsandlossesfromforeigncurrencytransactions rates ofexchange,andrelatedtranslationadjustmentsareincluded depreciation andexpensearetranslatedathistorical tion practicesdifferinthatinventories,properties,accumulated and forcountrieswhichareconsideredhighlyinflationary, transla- dollaristhefunctionalcurrency U.S. operationswherethe For foreign NOTES TOCONSOLIDA generally notdisposed ofpriortosettlementdate;however, ifan F/X cost basisofthe asset orliabilitybeinghedged.F/X instrumentsare losses, ifany, onzero-costoptioncollarsaredeferred aspartofthe the ConsolidatedStatementofEarnings. Unrealizedgainsand F/X instrumentinselling,generaland administrativeexpensesin paid forpurchasedoptionsareamortized, overthelifeofrelated contractsarerecognized, andpremiums foreign exchangeforward recorded onthesehedgedexposures.Premiumsordiscounts offset intheConsolidatedStatementofEarningsbygainsorlosses F/X instrumentsthathedgeexistingbalancesheetexposuresare Consolidated StatementofEarnings.However, gainsorlossesfrom nized currentlyinselling,generalandadministrativeexpensesthe or anticipatedtransactionsthatarenotfirmlycommittedrecog- F/X instrumentsusedashedgesofexistingbalancesheetexposures underlying transaction.Realizedandunrealizedgainsorlossesfrom Consolidated StatementofEarningsinthesameperiodas of theassetorliabilitybeinghedgedandarerecognizedin that hedgefirmcommitmentsaredeferredaspartofthecostbasis Realized andunrealizedgainslossesfromF/Xinstruments instruments aregenerally12monthsorless. attributes andtherelatedmarketconditions.Thetermsofsuch F/X instrumentsusedareselectedbasedontheirriskreduction extent, tomanageothertransactionandtranslationexposures. company purchasesandintercompanyborrowingsand,toalesser to reducetransactionexposuresassociatedwithanticipatedinter- purchased optionsandzero-costoptioncollars,areusedprimarily Foreign exchange(F/X)instruments,includingcurrencyforwards, or issuedfortradingpurposes. inherent toitsbusinessoperations.Suchinstrumentsarenotheld the managementofforeigncurrencyandinterest-raterisksthatare uments TED FINANCIALST – Energizerusesfinancialderivativesin A TEMENTS – (otne)(Dollarsinmillionsexceptpersharedata) (continued) recognized immediatelyintheConsolidatedStatementofEarnings. of priortothesettlementdate,anydeferredgainorlosswouldbe instrument andtheunderlyinghedgedtransactionweredisposed Capitalized Softwar Inventories Cash Equivalents Goodwill andOtherIntangibleAssets Depr Pr first-in, first-out(FIFO)method. with costgenerallybeingdeterminedusingaverageorthe in 2000,1999and1998,respectively. for buildings.Depreciationexpensewas$57.9,$68.4and$74.1 andequipment and10to50years three to25yearsformachinery on theestimatedusefullives.Estimatedlivesrangefrom straight-line basisbychargestocostsorexpensesatratesbased on thedispositionarereflectedinearnings. depreciation areremovedfromtheaccountsandgainsorlosses disposedof,therelatedcostandaccumulated retired orotherwise and minorrenewalsareexpensedasincurred.Whenpropertyis interest duringconstruction,arecapitalized.Maintenance,repairs tures thatsubstantiallyincreasetheusefullifeofproperty, including purchased. liquid investmentswithamaturityofthreemonthsorlesswhen of CashFlows,cashequivalentsareconsideredtobeallhighly ing fromthreetosevenyears. using thestraight-linemethodoverperiodsofrelatedbenefitrang- included inInvestmentsandOtherAssets.Thesecostsareamortized oper benefit rangingfromsevento40years. amortized onastraight-linebasisover estimatedperiodsofrelated which consistprimarilyofpatents, tradenamesandtrademarks,is 40 years.Thecosttopurchaseordevelop otherintangibleassets, over aperiodof25years,withsomeamountsbeingamortized of acquiredbusinesses,isrecordedonastraight-linebasisprimarily goodwill, representingtheexcessofcostovernettangibleassets eciation ty atCost – Inventoriesarevaluedatthelowerofcostormarket, – Depreciationisgenerallyprovidedonthe – – Expendituresfornewfacilitiesandexpendi- ForpurposesoftheConsolidatedStatement e Costs – Capitalizedsoftwarecostsare – Amortizationof Impairment of Long-Lived Assets – Energizer reviews long- Earnings Per Share – Basic earnings per share is based on the lived assets, including goodwill and other intangible assets, for average number of shares outstanding during the period subsequent impairment whenever events or changes in business circumstances to the spin-off. Diluted earnings per share is based on the average indicate that the remaining useful life may warrant revision or that number of shares used for the basic earnings per share calculation, the carrying amount of the long-lived asset may not be fully recov- adjusted for the dilutive effect of stock options and restricted stock erable. Energizer performs undiscounted cash flow analyses to equivalents. For all periods prior to the spin-off, shares used in the determine if an impairment exists. If an impairment is determined to earnings per share calculation are based on the weighted-average exist, any related impairment loss is calculated based on fair value. number of shares of Ralston common stock outstanding adjusted Impairment losses on assets to be disposed of, if any, are based on for the distribution of one share of Energizer stock for each three the estimated proceeds to be received, less costs of disposal. shares of Ralston stock.

Revenue Recognition – Revenue is recognized upon shipment Accounting for Stock-Based Compensation – Energizer of product to customers. Sales discounts, returns and allowances accounts for stock options using the intrinsic value method as are included in net sales, and the provision for doubtful accounts prescribed by Accounting Principles Board Opinion No. 25 (APB is included in selling, general and administrative expenses in the 25). Pro forma disclosures required under Statement of Financial 27 Consolidated Statement of Earnings. Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” as if Energizer had adopted the fair value based Advertising and Promotion Costs – Energizer advertises method of accounting for stock options, are presented in Note 8 to and promotes its products through national and regional media. the Consolidated Financial Statements. Products are also advertised and promoted through cooperative programs with retailers. Energizer expenses advertising and promo- Environmental Remediation Liabilities – Accruals for tion costs as incurred. Due to the seasonality of the business, with environmental remediation are recorded when it is probable that a typically higher sales and volume during the holidays in the first liability has been incurred and the amount of the liability can be quarter, advertising and promotion costs incurred during interim reasonably estimated, based on current law and existing technolo- periods are generally expensed ratably in relation to revenues. gies. These accruals are adjusted periodically as assessments take place and remediation efforts progress, or as additional technical Research and Development Costs – Research and develop- or legal information becomes available. ment costs are expensed as incurred. Accruals for environmental remediation are included in other Income Taxes – Energizer follows the liability method of current liabilities or other liabilities, depending on their nature, accounting for income taxes. Deferred income taxes are recognized in the Consolidated Balance Sheet and are recorded at for the effect of temporary differences between financial and tax undiscounted amounts. reporting. No additional U.S. taxes have been provided on earnings of foreign subsidiaries expected to be reinvested indefinitely. Reclassifications – Certain reclassifications have been Additional income taxes are provided, however, on planned made to the prior year financial statements to conform to the repatriation of foreign earnings after taking into account tax-exempt current presentation. earnings and applicable foreign tax credits. Management assesses the realizability of deferred tax assets and provides valuation allowances as deemed necessary. 28 ENERGIZER 2000 ANNUAL REPORT is effectiveforfiscalyearsendingafterDecember15,2000.The Financial AssetsandExtinguishmentsofLiabilities. Standards No.140, In September2000,FASB issuedStatementofFinancial Accounting in FinancialStatements. issued StaffAccountingBulletin(SAB)101, In December1999,theSecuritiesandExchangeCommission(SEC) Recently IssuedAccountingPr NOTES TOCONSOLIDA 00-10 and00-14.EITF00-10, In addition,theEmergingIssuesTask Force(EITF)issuedEITF tion, presentationanddisclosureofrevenueinfinancialstatements. reclassifications maybenecessary. to haveamaterialeffectonitsresultsofoperations,however, certain 2001. Energizerdoesnotexpecttheadoptionofthesestatements 00-10 andEITF00-14nolaterthanthefourthquarteroffiscalyear and freeproduct.EnergizerwillberequiredtoadoptSAB101,EITF provides guidanceonaccountingfordiscounts,coupon,rebates handling. EITF00-14, classification ofamountsbilledtocustomersforshippingand Handling FeesandCosts, on itsconsolidatedfinancialpositionorresultsofoperations. implementation ofthisstandardwillnothaveamaterialeffect quarter offiscalyear2001.Energizerhasdeterminedthatthe Energizer hasadoptedtheprovisionsofSFAS 133asofthefirst derivative andwhetheritqualifiesforhedgeaccounting.Accordingly, derivatives areaccountedfordependingontheintendeduseof at fairvalue.Gainsorlossesresultingfromchangesinthevalueof financial instrumentsonthebalancesheetasassetsorliabilities, June 15,2000.Thestatementsrequiretherecognitionofderivative are effectiveforallfiscalquartersofyearsbeginningafter No. 138(SFAS 138),anamendmentofSFAS 133.Thesestatements in June2000,issuedStatementofFinancialAccountingStandards for DerivativeInstrumentsandHedgingActivities Statement ofFinancialAccountingStandardsNo.133, 1998, theFinancialAccountingStandardsBoard(FASB) issued “ Accounting forTransfers of andServicing “ TED FINANCIALST Accounting forCertainSalesIncentives, ” SAB101providesguidanceonrecogni- ” providesguidanceonearningsstatement “ Accounting forShippingand onouncements A TEMENTS “ Revenue Recognition ” Thestatement – ” (SFAS 133)and (otne)(Dollarsinmillionsexceptpersharedata) (continued) “ – Accounting

In June ” vrms fSA 125 over mostofSFAS transfers offinancialassetsandcollateral.Thestatementcarries dards foraccountinganddisclosuresecuritizationsother statement replacesFASB StatementNo.125andrevisesthestan- or resultsofoperations. will nothaveamaterialeffectonitsconsolidatedfinancialposition as such,Energizerbelievesthattheimplementationofthisstandard Cash Management (3) RELATED PARTY ACTIVITY Ralston Shar to thespin-off. were$4.0forthesix-monthperiodsubsequent for suchservices 1998, respectively. ActualexpensespaidbyEnergizertoRalston ended March31,2000andyearsSeptember30,1999 charged toEnergizerwere$9.6,$20.0and$20.9forthesixmonths ment believestobereasonable.Costsofthesesharedservices allocated toEnergizergenerallybasedonutilization,whichmanage- were listed above,aswelllegalandfinancialsupportservices, ters. Priortothespin-off,expensesrelatedsharedservices systems, benefits,advertisingandfacilitiesforEnergizer toEnergizer,certain generalandadministrativeservices including Bridging AgreementunderwhichRalstonhascontinuedtoprovide basis andRalstonfundedEnergizer Cash depositsfromEnergizerweretransferredtoRalstononadaily in acentralizedcashmanagementsystemadministeredbyRalston. with Ralston. payable. Nointerestwaschargedorcreditedontransactions as required.Unpaidbalancesofcheckswereincludedinaccounts receivable betweenEnergizerandRalston. Also includedinRalston of currenciesrelativetotheU.S.dollaroverperiodinvestment. countries of$84.6asMarch31,2000representingnetdevaluation are cumulativetranslationadjustmentsfornon-hyperinflationary ed Ser ’ s NetInvestment vices ’ s provisionswithoutreconsiderationand, – EnergizerandRalstonhaveenteredintoa – Priortothespin-off,Energizerparticipated ’ s NetInvestmentareaccountspayableand –

Included inRalston ’ s disbursementbankaccounts ’ s NetInvestment ’ s headquar- (4) DISCONTINUED OPERATIONS 1999 1998 Net sales $ 64.2 $ 149.4 In March 1999, the Board of Directors of Ralston announced Earnings/(loss) before its intention to exit Energizer’s worldwide rechargeable Original income taxes $ (9.0) $ (70.6) Equipment Manufacturers’ (OEM) battery business to allow Energizer Income taxes benefit/(provision) 3.4 27.1 to focus on its primary battery business. On November 1, 1999, the Net earnings/(loss) from discontinued operations $ (5.6) $ (43.5) OEM business was sold to Moltech Corporation for approximately $20.0. This segment is accounted for as a discontinued operation in Energizer’s consolidated financial statements. (5) RESTRUCTURING ACTIVITIES Competition in the primary battery business has intensified in In fiscal 2000, Energizer recognized an after-tax gain of $1.2 on the recent years, and there continues to be a migration of demand from disposition of discontinued operations related to the final settlement carbon zinc to alkaline batteries. In response to these changes, of the sale transaction. Energizer has recorded restructuring charges each year from 1994 through 1999. These charges include a reduction in carbon zinc Included in the fiscal year 1999 Net Loss on Disposition of plant capacity as demand for this type of battery continues to

Discontinued Operations are estimated operating losses during decline, plant closures for the movement and consolidation of 29 the divestment period of $15.0 pre-tax, or $9.6 after-tax, and a alkaline production to new or more efficient locations in an effort loss on disposition of $95.6 pre-tax, or $64.6 after-tax. Actual to achieve lower product costs, and staffing reorganizations and pre-tax operating losses during the divestment period through reductions in various world areas to enhance management effective- September 30, 1999, totaled $12.5. ness and reduce overhead costs. A detailed discussion of such charges and expenditures during 1998 through 2000 follows. The net loss for 1998 includes an after-tax provision of $42.7, primarily representing an impairment write-down of lithium ion During 1999, Energizer recorded net provisions for restructuring of rechargeable battery assets of the OEM business. Fair value of $8.3 after-tax, or $9.9 pre-tax, $2.1 of which represented inventory those assets was primarily determined based upon estimates of write-downs and is classified as cost of products sold in the recovery value for unique manufacturing equipment. Due to rapid Consolidated Statement of Earnings. Of the net pre-tax charge, $7.4 changes in the business environment since the beginning of the relates to the 1999 restructuring plans for the elimination of certain lithium ion project in 1996, it became more economical to source production capacity in North America and in Asia. lithium ion cells from other manufacturers.

The pre-tax charge of $7.4 for 1999 plans consisted of termination The Investment in Discontinued Operations at September 30, 1999 benefits of $3.2, other cash costs of $.2 and fixed asset impairments was primarily comprised of fixed assets, inventory and accounts of $4.0. The fixed asset impairments primarily relate to assets used receivable and payable. Results for discontinued operations are for the production of lithium coin cells in North America. These presented in the following table. assets were idled and scrapped in 1999. 30 ENERGIZER 2000 ANNUAL REPORT retirement ofapproximately420sales andadministrativeemployees, benefits of$29.3,whichprovidedfortheterminationorearly The total1998pre-taxchargeof$36.5consistedtermination of Europeansalesforcesandrelatedemployeereductions. business operationsrestructuring,primarilyareorganization requirements and European meeting certainageandservice early retirementoptionofferedtomostU.S.Energizeremployees $36.5 relatedto1998restructuringplans,includingavoluntary the ConsolidatedStatementofEarnings.Ofnetpre-taxcharge, write-downsandisclassifiedascostofproductssoldin inventory turing of$12.8,or$21.3onapre-taxbasis,which$.3represents During 1998,Energizerrecordednetafter-tax provisionsforrestruc- 1994, 1995and1997restructuringplans. 1999 wereassetproceedsgreaterthananticipatedof$5.4relatedto soldinconnectionwiththe1997plan.Alsorecorded subsidiary sive incometonetofcumulativetranslationadjustmentfora more thanoffsetbyareclassificationof$4.5fromothercomprehen- write-offs,whichwere non-cash chargesof$2.1relatetoinventory 1997 restructuringplanthatwereidledandheldfordisposal.Other disposition costsforpreviouslyhelduseassetsrelatedtothe provisions forothercashcostsof$1.8wererecordedfixedasset enhanced severancerelatedtoaEuropeanplantclosing.Additional of $5.5relatedtothe1997restructuringplanprimarilyrepresent to prioryears The remaining$2.5representsadditionalnetprovisionsrelated September 30,2000. actions associatedwiththesechargeswerecompletedasof marketsinthisarea.Substantiallyall in contractionsbattery by thefinancialproblemsinAsianmarket,whichresulted the closureofoneplantinAsia.Thiswasprecipitated approximately 170productionandadministrativeemployees The 1999restructuringplanprovidedfortheterminationof NOTES TOCONSOLIDA ’ restructuringplans.Additionalterminationbenefits TED FINANCIALST A TEMENTS – (otne)(Dollarsinmillionsexceptpersharedata) (continued) September 30,2000. assets heldfordisposalunderallrestructuringplanswas$6.7at valueof primarily representsassetdispositioncosts.Thecarrying accrual relatedtotheseplanswas$2.1atSeptember30,2000and 1994 through1997restructuringplansarecomplete.Theremaining assets heldfordisposal,substantiallyallactivitiesassociatedwith As ofSeptember30,2000,exceptforthedispositioncertain than originallyanticipated. resulted intheterminationofapproximately200feweremployees the changingbusinessenvironmentinEurope.Themodifications to themodificationofaEuropeanplantclosingplan,drivenby benefits recordedin1997werereversed1998dueprimarily and 1996restructuringplans.Inaddition,$8.5oftermination anticipated proceedsfromassetsalesrelatedtothe1994,1995 and heldfordisposal.Thereversalsincluded$9.4ofgreaterthan tion costsof$2.6forpreviouslyhelduseassetsthatwereidled charges. Theadditionalchargesprimarilyrelatedtoassetdisposi- of additionalchargesoffsetby$18.9reversalsprioryears restructuring plans,wererecordedin1998,comprisedof$3.7 In addition,netreversalsof$15.2,thatrelatedtoprioryears with the1998chargeswerecompleteasofSeptember30,2000. certain assetsheldfordisposal,substantiallyallactionsassociated costs of$1.6andotherexit$.7.Exceptfordisposition of $.8,bothrelatingtoassetsheldfordisposal,leasetermination consisted ofdemolitioncosts$1.5andenvironmentalexit non-cash investmentwrite-offof$1.5.Theothercashcosts$4.6 other cashcostsof$4.6,fixedassetimpairments$1.1anda ’ ’ The following table presents, by major cost component and by year above during fiscal years 2000, 1999 and 1998, including any of provision, activity related to the restructuring charges discussed adjustments to the original charges.

1998 Rollforward 1999 Rollforward 2000 Rollforward Beginning Provision/ Ending Beginning Provision/ Ending Beginning Provision/ Ending Balance Reversals Activity Balance Balance Reversals Activity Balance Balance Reversals Activity Balance 1994 Plan Termination benefits 0.2 – (0.2) ––––––––– Other cash costs 1.2 – (1.2) ––––––––– Fixed asset impairments – (5.8) 5.8 ––(2.0) 2.0 ––––– Total 1.4 (5.8) 4.4 ––(2.0) 2.0 –––––

1995 Plan Termination benefits 2.1 0.3 (1.5) 0.9 0.9 0.1 (1.0) ––––– Other cash costs 1.9 0.5 (1.2) 1.2 1.2 – (0.4) 0.8 0.8 – (0.8) – Fixed asset impairments – (2.2) 2.2 ––(1.5) 1.5 ––––– Other non-cash charges – (0.4) 0.4 ––––––––– Total 4.0 (1.8) (0.1) 2.1 2.1 (1.4) 0.1 0.8 0.8 – (0.8) –

1996 Plan 31 Termination benefits 1.1 (0.6) (0.5) ––––––––– Other cash costs 1.7 – (0.7) 1.0 1.0 – (0.2) 0.8 0.8 ––0.8 Fixed asset impairments – (1.4) 1.4 ––––––––– Total 2.8 (2.0) 0.2 1.0 1.0 – (0.2) 0.8 0.8 ––0.8

1997 Plan Termination benefits 42.6 (8.5) (15.4) 18.7 18.7 5.5 (20.1) 4.1 4.1 – (4.1) – Other cash costs 2.2 2.3 (2.3) 2.2 2.2 1.8 (2.7) 1.3 1.3 ––1.3 Fixed asset impairments –––– –(1.9) 1.9 ––––– Other non-cash charges – 0.6 (0.6) ––(2.4) 2.4 ––––– Total 44.8 (5.6) (18.3) 20.9 20.9 3.0 (18.5) 5.4 5.4 – (4.1) 1.3

1998 Plan Termination benefits – 29.3 (15.0) 14.3 14.3 0.8 (13.5) 1.6 1.6 – (1.6) – Other cash costs – 4.6 (1.9) 2.7 2.7 0.5 (1.2) 2.0 2.0 – (0.2) 1.8 Fixed asset impairments – 1.1 (1.1) ––––––––– Other non-cash charges – 1.5 (1.5) ––1.6 (1.6) ––––– Total – 36.5 (19.5) 17.0 17.0 2.9 (16.3) 3.6 3.6 – (1.8) 1.8

1999 Plan Termination benefits –––– –3.2 (2.5) 0.7 0.7 – (0.7) – Other cash costs –––– –0.2 (0.2) ––––– Fixed asset impairments –––– –4.0 (4.0) ––––– Total –––– –7.4 (6.7) 0.7 0.7 – (0.7) – Grand Total $53.0 $21.3 $(33.3) $41.0 $41.0 $9.9 $(39.6) $11.3 $11.3 $ – $(7.4) $3.9

(6) INCOME TAX Had the Energizer tax provision been calculated as if Energizer was Prior to the spin-off, U.S. income tax payments, refunds, credits, a separate, independent U.S. taxpayer, the income tax provision provision and deferred tax components have been allocated to would have been higher by approximately $23.4 in 2000. The higher Energizer in accordance with Ralston’s tax allocation policy. Such provision is due primarily to the $24.4 of capital loss benefits that policy allocates tax components included in the consolidated would not be realized on a stand-alone basis. income tax return of Ralston to Energizer to the extent such compo- nents were generated by or related to Energizer. Subsequent to the spin-off, taxes are provided on a stand-alone basis. 32 ENERGIZER 2000 ANNUAL REPORT Deferred: Net taxbenefitonsaleofSpanishaffiliate Taxes onrepatriationofforeignearnings Foreign taxinexcessoffederalrate Other, net rate Computed taxatfederalstatutory federalratefollows: A reconciliationofincometaxeswiththeamountscomputedatstatutory Pre-tax earnings Foreign United States The sourceofpre-taxearningswas: Provision forIncomeTaxes Currently payable: The provisionsforincometaxesconsistedofthefollowingyearsendedSeptember30: NOTES TOCONSOLIDA State incometaxes,netoffederaltaxbenefit Recognition ofU.S.capitallosses in excessoffederalrate State United States State Foreign Foreign United States Total Deferred Total Current TED FINANCIALST prtosConsolidated Operations Continuing prtosConsolidated Operations Continuing 0. 200.5 201.9$ $ 7. $277.8 279.2 $ 96.4 $ 99.0 $ 45.2 $ 47.5 $ A TEMENTS 7377.3 77.3 90.5 36.6 93.1 36.6 . 5.9 4.5 1.2 5.9 4.5 1.2 8.7 9.0 . 0.2 0.2 2000 2000 – (otne)(Dollarsinmillionsexceptpersharedata) (continued) 9035.5% 99.0 $ 7735% 97.7 $ 1.)(6.7) (18.9) 07 (0.2) (0.7) . 2.3 3.0 2.1 6.4 8.5 6.0 –– 2000 otnigContinuing Continuing prtosCnoiae prtosConsolidated Operations Consolidated Operations otnigContinuing Continuing prtosCnoiae prtosConsolidated Operations Consolidated Operations 84$4. 43$27.2 $ 54.3 $ 48.6 $ 88.4 $ 41.2 $ 47.5 $ (27.0) $ (17.5) $ 9. 7. 7. $102.4 $172.1 75.4 $ 197.2 $ 4. 2. 6. $191.9 262.5 $ $128.7 $ 248.2 043. 3.)(57.2) (36.6) (57.1) 84.4 37.0 (39.0) 39.2 90.9 36.9 39.1 70.4 9.4 27.8 68.6 18.0 27.6 105. 0489.5 90.4 53.3 51.0 05 22 03 (2.8) (0.3) (2.2) (0.5) . . . 2.7 2.7 6.2 2.3 6.5 2.3 8.6 7.9 843.%$5. 20.7% 54.3 $ 35.6% 88.4 $ 693%$9. 35% 91.9 $ 35% 86.9 $ 991998 1999 991998 1999 1.)(.)(84 (18.4) (48.4) (6.6) (16.6) 29 12 55 (2.1) (5.5) (1.2) (2.9) . . . 2.9 1.8 1.5 7.5 4.8 4.0 3.1 3.4 1.9 7.8 8.4 4.8 ––––– 991998 1999 In 2000, Energizer recorded U.S. capital loss tax benefits of $24.4 Tax loss carryforwards of $11.0 expired in 2000, primarily due to related to the sale of Energizer’s Spanish affiliate. Energizer recog- the sale of Energizer’s Spanish affiliate. Future expiration of tax loss nized capital loss tax benefits of $16.6 and $48.4 in 1999 and 1998, carryforwards and tax credits, if not utilized, are as follows: 2001, respectively, primarily related to past restructuring actions. The $.8; 2002, $.8; 2003, $2.2; 2004, $6.7; 2005, $3.6; thereafter or capital loss benefits are not recognized in Energizer’s pro forma no expiration, $11.5. The valuation allowance is primarily attributed financial results (see Note 23) as Energizer would not have been to deferred tax assets related to certain accrued liabilities, tax loss able to realize these benefits on a stand-alone basis. carryforwards and tax credits outside the United States. The valua- tion allowance decreased $35.7 in 2000 primarily due to the The effective tax rate for discontinued operations is higher than the decrease in tax loss carryforwards discussed above and other federal statutory rate in 1999 and 1998 due to state income taxes. deferred tax assets disposed of as part of the sale of Energizer’s Spanish affiliate. The deferred tax assets and deferred tax liabilities recorded on the balance sheet as of September 30 are as follows: At September 30, 2000, approximately $65.9 of foreign subsidiary net earnings were considered permanently invested in those busi- 2000 1999 nesses. Accordingly, U.S. income taxes have not been provided for Deferred Tax Liabilities: 33 such earnings. It is not practicable to determine the amount of Depreciation and property differences $ (61.1) $ (64.7) unrecognized deferred tax liabilities associated with such earnings. Pension plans (31.9) – Gross deferred tax liabilities (93.0) (64.7) Deferred Tax Assets: Accrued liabilities 45.7 64.3 Tax loss carryforwards and tax credits 25.6 46.4 Intangible assets 42.6 37.6 Postretirement benefits other than pensions 28.8 – Inventory differences 5.2 3.5 Other 8.8 12.1 Gross deferred tax assets 156.7 163.9 Valuation allowance (31.1) (66.8) Net deferred tax assets $ 32.6 $ 32.4

Total deferred tax assets/liabilities shown above include current and non-current amounts. 34 ENERGIZER 2000 ANNUAL REPORT Diluted earningspershare Denominator Numerator share isbasedontheaveragenumberofsharesusedforbasic from April1,2000toSeptember30,2000.Dilutedearningsper weighted-average numberofsharesEnergizerstockoutstanding Energizer stockforeachthreesharesofRalstonstock)andthe March 31,2000(adjustedforthedistributionofoneshare of sharesRalstonstockoutstandingduringthesixmonthsended basic earningspershareisbasedontheweighted-averagenumber ended September30,2000,thenumberofsharesusedtocompute basis earningsforthethreeyearspresentedbelow. Fortheyear Earnings persharehasbeencalculatedusingEnergizer (7) EARNINGSPERSHARE NOTES TOCONSOLIDA Basic earningspershare Net earnings/(loss)fromdiscontinuedoperations Earnings fromcontinuingoperations Net earnings/(loss)fromdiscontinuedoperations Denominator forbasicearningspershare Net lossfromdiscontinuedoperations Net Earnings Net gain/(loss)ondispositionofdiscontinuedoperations Net Earnings Net gain/(loss)ondispositionofdiscontinuedoperations Net Earnings Gain/(loss) ondispositionofdiscontinuedoperations Numerator forbasicanddilutiveearningspershare Earnings fromcontinuingoperations Effect ofdilutivesecurities Denominator fordilutiveearningspershare Weighted-average sharesand assumedconversions Restricted stockequivalents Weighted-average shares Earnings fromcontinuingoperations Stock options TED FINANCIALST A TEMENTS – – (otne)(Dollarsinmillionsexceptpersharedata) (continued) – ’ s historical – earnings pershare. The followingtablesetsforththecomputationofbasicanddiluted each threesharesofRalstonstock. adjusted forthedistributionofoneshareEnergizerstock number ofsharesRalstonstockoutstandingduringtheperiod, compute earningspershareisbasedontheweighted-average September 30,1999and1998,thenumberofsharesusedto stock optionsandrestrictedequivalents.Fortheyearsended earnings persharecalculation,adjustedforthedilutiveeffectof 1.88 $ 1.87 $ 1.89 $ 1.88 $ 181.4 $ 1.2 $ $ 180.2 $ 2000 96.3 96.1 0.01 0.01 0.2 0.1 0.1 – – –

FOR THEYEARENDEDSEPTEMBER30, .8$1.62 0.78 $ $ 2.05 1.56$ $ 1.62 0.78$ $ 2.05 1.56$ $ $ (43.5) $ 164.7 80.0$ $ (74.2) $ (5.6) $ 208.2 159.8$ $ 102.6 101.6 102.6 101.6 991998 1999 00)(0.43) (0.72) (0.06) (0.43) (0.72) (0.06) – – –

– – – – – –

(8) STOCK-BASED COMPENSATION equal to 25% for employees, and 33 1/3% for directors, of the Energizer’s 2000 Incentive Stock Plan was adopted by the Board of amount deferred. This additional company match vests immediately Directors in March 2000 and is being submitted to shareholders for for directors and three years from the date of initial crediting for their approval, with respect to future awards which may be granted employees. Amounts deferred into the Energizer Common Stock under the Plan, at the 2001 Annual Meeting of Shareholders. Under Unit Fund, and vested company matching deferrals, may be trans- the Plan, awards to purchase shares of Energizer’s common stock ferred to other investment options offered under the Plan. At the time may be granted to directors, officers and key employees. A maxi- of termination of employment, or for directors, at the time of termi- mum of 15.0 million shares of Energizer (ENR) stock was approved nation of service on the Board, or at such other time for distribution to be issued under the Plan. At September 30, 2000, there were which may be elected in advance by the participant, the number of 7.0 million shares available for future awards. equivalents then credited to the participant’s account is determined and then an amount in cash equal to the fair value of an equivalent

Options which have been granted under the Plan have been granted number of shares of ENR stock is paid to the participant. at the market price on the grant date and generally vest ratably over four or five years. Awards have a maximum term of 10 years. Energizer applies APB 25 and related interpretations in accounting for its stock-based compensation. Accordingly, charges to earnings 35 Restricted stock and restricted stock equivalent awards may also for stock-based compensation were $4.8 in 2000. Had cost for be granted under the Plan. During 2000, the Board of Directors stock-based compensation been determined based on the fair value approved the grants of up to 635,000 restricted stock equivalents to method set forth under SFAS 123, Energizer’s net earnings and earn- a group of key employees and directors upon their purchase of an ings per share would have been reduced to the pro forma amounts equal number of shares of ENR stock within a specified period. The indicated in the table below. Pro forma amounts are for disclosure restricted stock equivalents will vest three years from their respective purposes only and may not be representative of future calculations. dates of grant and will convert into unrestricted shares of ENR stock Fiscal 2000 at that time, or, at the recipient’s election, will convert at the time Basic Diluted of the recipient’s retirement or other termination of employment. As Net Earnings Earnings Earnings per Share per Share of September 30, 2000, 488,415 restricted stock equivalents had As reported $181.4 $1.89 $1.88 been granted. The weighted-average fair value for restricted stock Pro forma $176.1 $1.83 $1.83 equivalents granted in 2000 was $18.30. The weighted-average fair value for options granted in fiscal 2000 was $7.13 per option. This was estimated at the grant date using the Under the terms of the Plan, option shares and prices, and restricted Black-Scholes option pricing model with the following weighted- stock and stock equivalent awards, are adjusted in conjunction with average assumptions: stock splits and other recapitalizations so that the holder is in the same economic position before and after these equity transactions. 2000 Risk-free interest rate 5.85% Energizer also permits deferrals of bonus and salary, and, for Expected life of option 7.5 years Expected volatility of directors, retainers and fees, under the terms of its Deferred ENR stock 20.30% Compensation Plan. Under this Plan, employees or directors Expected dividend deferring amounts into the Energizer Common Stock Unit Fund yield on ENR stock –% are credited with a number of stock equivalents based on the fair value of ENR stock at the time of deferral. In addition, during 2000, they were credited with an additional number of stock equivalents 36 ENERGIZER 2000 ANNUAL REPORT rne .717.41 17.41 7.37 7.37 Exercisable on September30 Outstanding onSeptember30 Cancelled Exercised Granted about PensionsandOtherPostretirement Benefits. is presentedinaccordancewithSFAS 132, The followingpensionandotherpostretirement benefitinformation pension andpostretirementbenefitsbelow. benefits providedbyRalston.Seefurtherdiscussionofpre-spin management employeeswereeligibleforcertainpostretirement defined benefitplans.Inaddition,certaingroupsofretireesand Prior tothespin-off,EnergizeremployeesparticipatedinRalston adjustments willcontinueintothefuture. benefits areadjustedperiodically, anditisexpectedthatsuch groups ofretiredemployees.Retireecontributionsforhealthcare consisting ofhealthcareandlifeinsurancebenefitsforcertain Energizer currentlyprovidesotherpostretirementbenefits, not significantintheaggregate. by locallaworcoordinatedwithgovernment-sponsoredplans,are retirement andterminationbenefitplans,someofwhicharerequired Certain otherforeignpensionarrangements,thatincludevarious andearnings. based onyearsofservice employees inothercountries.Theplansprovideretirementbenefits substantially allofitsemployeesintheUnitedStatesandcertain Energizer hasseveraldefinedbenefitpensionplanscovering BENEFITS (9) PENSIONPLANSANDOTHERPOSTRETIREMENT Outstanding onOctober1 follows (sharesinmillions). ofnonqualifiedENRstockoptionsoutstandingisas A summary NOTES TOCONSOLIDA TED FINANCIALST A TEMENTS “ hrsExercise Price Shares Employers – –– –– – ” – (otne)(Dollarsinmillionsexceptpersharedata) (continued) 2000 ’ Disclosures Weighted-Average $ $ ’ s – – of theplansforperiodsubsequenttospin-off. The followingtablespresentthebenefitobligationandfundedstatus Change inPlanAssets: Change inBenefitObligation: these nonqualifiedplansasofSeptember 30,2000. $9.4 atSeptember30,2000.There arenoplanassetsfor excess ofplanassets,theprojected benefitobligationwas For pensionplanswithaccumulatedbenefitobligationsin Amounts RecognizedintheConsolidatedBalanceSheet: Funded Status: eeispi 1.)(1.0) (10.0) 4.2 (1.3) Foreign currencyexchange Benefits paid loss Actuarial (gain)/ eeispi (00 (2.0) (10.0) 1.0 1.2 0.2 Foreign currencyexchange 16.6 Benefits paid 4.5 Plan participants Company contributions Actual returnonplanassets 83.7 $ 2.8 Fair valueofplanassetsat 0.1 351.6 $ 11.8 Benefit obligationatendofyear 7.8 Amendments Plan participants 77.6 $ Interest cost 345.6 cost Service $ Benefit obligationatApril1,2000 e mutrcgie 46$(87.7) $ 94.6 0.2 $ (87.7) $ (9.4) Net amountrecognized 102.0 $ Accumulated other Intangible asset (87.7) $ Accrued benefitliability (3.6) 94.6 Prepaid benefitcost $ (2.3) 1.1 (81.8) 0.4 $ benefitcost Prepaid/(accrued) (113.0) 206.1 Unrecognized nettransitionasset $ cost Unrecognized priorservice Unrecognized netloss/(gain) Funded statusoftheplan Fair valueofplanassetsat aecags(7.0) rate changes pi ,20 5. 1.7 $ 558.9 $ April 1,2000 opeesv noe1.8 comprehensive income 1.9 $ 557.7 $ (9.2) end ofyear rate changes ’ ’ cnrbtos021.0 0.2 contributions 0.2 contributions eso Postretirement Pension September 30,2000 – – – – – – – Pension assets consist primarily of listed common stocks and Pre-Spin Pension Plans and Other Postretirement bonds. The U.S. plan held approximately 1.7 million shares of Benefits Prior to the spin-off, Energizer participated in Ralston’s Energizer common stock at September 30, 2000, with a market noncontributory defined benefit pension plans (Plans), which value of $42.4. covered substantially all regular employees in the United States and certain employees in other countries. In fiscal 1999, Ralston The following table presents pension and postretirement expense amended the qualified U.S. Pension Plan to allow employees to for the period subsequent to the spin-off (six months ended make an irrevocable election effective January 1, 1999 between September 30, 2000). two pension benefit formulas. Prior to this time, one benefit formula was used. Also effective January 1, 1999, assets of the Pension Postretirement Plan provide employee benefits in addition to normal retirement Service cost $ 7.8 $ 0.1 benefits. The additional benefit was equal to a 300% match on Interest cost 11.8 2.8 Expected return on plan assets (22.4) – participants’ after-tax contributions of 1% or 1.75% to the Savings Amortization of unrecognized Investment Plan. The cost of the Plans allocated to Energizer was prior service cost – (0.1) based on Energizer’s percentage of the total liability of the Plans, Amortization of unrecognized as shown in the table below. transition asset 0.1 – 37 Recognized net actuarial (gain)/loss (1.5) – Certain other foreign pension arrangements, that included various Net periodic benefit retirement and termination benefit plans, some of which are required cost/(income) $ (4.2) $ 2.8 by local law or coordinated with government-sponsored plans, were The following table presents assumptions, which reflect weighted- not material in the aggregate. averages for the component plans, used in determining the above information. Prior to the spin-off, Ralston provided health care and life insurance benefits for certain groups of retired Energizer employees who met Pension Postretirement Discount rate 6.7% 7.0% specified age and years of service requirements. The cost of these Expected return on plan assets 8.7% – benefits was allocated to Energizer based on Energizer’s percentage Compensation increase rate 5.2% – of the total liability related to these benefits. Ralston also sponsored plans whereby certain management employees could defer Assumed health care cost trend rates have been used in the compensation for cash benefits after retirement. The cost of valuation of postretirement health insurance benefits. The trend these postretirement benefits is shown in the table below. rate is 6.5% in 2000 and thereafter for all retirees. A one percentage point increase in health care cost trend rates in each year would The following table presents the net expense/(income) allocated increase the accumulated postretirement benefit obligation as of to Energizer for the respective plans prior to the spin-off. September 30, 2000 by $4.9 and the net periodic postretirement benefit cost by $.4. A one percentage point decrease in the health 2000 1999 1998 care cost trend rates in each year would decrease the accumulated Defined benefit plans $(2.1) $5.2 $0.3 postretirement benefit obligation as of September 30, 2000 by $4.4 Postretirement benefits 3.3 5.8 4.3 and the net periodic postretirement benefit cost for 2000 by $.3. 38 ENERGIZER 2000 ANNUAL REPORT 12 below, andrepaidtheinterim-fundingfacilities. agreement toselldomestictradereceivablesasdiscussedinNote Energizer enteredintoseparatefinancingagreements,includingan obligations ofthosefacilitiestoEnergizer. InApril andMay2000, several interim-fundingfacilitiesandassignedallrepayment Immediately priortothespin-off,Ralstonborrowed$478.0through (11) DEBT and $8.2in1998. was $1.2forthesixmonthsendedMarch31,2000,$3.0in1999 recorded costsasallocatedbyRalston.Theamountofsuch are showninthetablebelow. Priortothespin-off,Energizer within thepensionplanat300%.Amountschargedtoexpense the savingsplan.Thisparticipantafter-tax contributionwasmatched make after-tax contributionsof1%or1.75%compensationinto tions upto4%ofcompensation.Inaddition,participantscould thereafter, Ralstonmatched25%ofparticipants 1,1999and OnJanuary 20% incrementsforeachyearofservice. Ralston matchedbefore-taxparticipantcontributionsinincreasing to July1,1993.Foremployeeshiredonorafter1993, contributions upto6%ofcompensationforemployeeshiredprior 1999, Ralstongenerallymatched100%ofparticipants 1, amended thecontributionstructureofplans.PriortoJanuary sponsored definedcontributionplans.Infiscal1999,Ralston in theUnitedStateswereeligibletoparticipateRalston- Prior tothespin-off,substantiallyallregularEnergizeremployees off fromRalston,Energizercharged$1.8toexpenseinfiscal2000. matched withinthepensionplanat325%.Subsequenttospin- into thesavingsplan.Thisparticipantafter-tax contributionis participants canmakeafter-tax contributionsof1%compensation before-tax contributionsupto6%ofcompensation.Inaddition, tially allU.S.employees.Energizermatches50%ofparticipants Energizer sponsorsemployeesavingsplans,whichcoversubstan- (10) DEFINEDCONTRIBUTIONPLAN NOTES TOCONSOLIDA TED FINANCIALST A TEMENTS ’ before-taxcontribu- – (otne)(Dollarsinmillionsexceptpersharedata) (continued) ’ before-tax ’ The detailoflong-termdebtatSeptember30isasfollows. average interestrateof7.9%and7.3%,respectively. one yearof$135.0and$118.5,respectively, andhadaweighted- payable tofinancialinstitutionswithoriginalmaturitiesoflessthan Notes payableatSeptember30,2000and1999,consistedofnotes thereafter Other, interestratesranging Revolving CreditFacility, interest Less currentportion Private Placement,interestrates Liabilities. Transfers ofFinancial AssetsandExtinguishmentsof andServicing as aSpecialPurposeEntity(SPE)underSFAS 125, ofEnergizer.bankruptcy-remote subsidiary qualifies Thesubsidiary a poolofdomestictradeaccountsreceivabletowhollyowned Energizer enteredintoanagreementtosell,onongoingbasis, (12) SALEOFACCOUNTSRECEIVABLE ending September30,2003 Aggregate maturitiesonalllong-termdebtareasfollows:Year 1. the ratioofitsEBITtototalinterestexpensemustexceed3 1and indebtedness toitsEBITDAcannotbegreaterthan3 Under thetermsoffacilities,ratioEnergizer September 30,2000. of $625.0,which$255.0remainedavailableas Energizer maintainstotalcommittedlong-termdebtfacilities from 7.6%to18.9%at9-30-99 7.8%, due2005 rates rangingfrom7.4%to due 1999to2002 due 2003to2010 ranging from7.8%to8.0%, Total long-termdebt – ” TheSPE $50.0. ’ s solepurposeistheacquisitionofreceivables – $15.0;2005 – $305.0;and “ Accounting for 175.0 $ 370.0 $ ’ s total 370.0 195.0 2000 – – 1.9 $ $ 1999 (0.3) 2.2 2.2 – – from Energizer and the sale of its interests in the receivables to will be adjusted so that the holder (other than the person or member a multi-seller receivables securitization company. The SPE is not of the group that made the acquisition) may then purchase a share consolidated for financial reporting purposes. Energizer’s investment of ENR stock at one-third of its then-current market price. If in the SPE is classified as Other Current Assets on the Consolidated Energizer merges with any other person or group after the Rights Balance Sheet as disclosed below. become exercisable, a holder of a Right may purchase, at the exer- cise price, common stock of the surviving entity having a value As of September 30, 2000, Energizer had sold $257.1 of outstanding equal to twice the exercise price. If Energizer transfers 50% or more accounts receivable to the SPE. The SPE sold the receivables of its assets or earnings power to any other person or group after the to an unrelated third party for $100.0 in cash and maintains a Rights become exercisable, a holder of a Right may purchase, at the subordinated retained interest in the remaining $157.1 of receiv- exercise price, common stock of the acquiring entity having a value ables, which is equivalent to Energizer’s investment in the SPE. The equal to twice the exercise price. net proceeds of the transaction were used to reduce various debt instruments. The proceeds are reflected as operating cash flows in Energizer can redeem the Rights at a price of $.01 per Right at any Energizer’s Consolidated Statement of Cash Flows. time prior to the time a person or group actually acquires 20% or more of the outstanding ENR stock (other than in connection with a 39 (13) PREFERRED STOCK Permitted Offer). In addition, following the acquisition by a person or group of at least 20%, but not more than 50% of the outstanding Energizer’s Articles of Incorporation authorize Energizer to ENR stock (other than in connection with a Permitted Offer), issue up to 10 million shares of $.01 par value of preferred Energizer may exchange each Right for one share of ENR stock. stock. As of September 30, 2000, there were no shares of Energizer’s Board of Directors may amend the terms of the Rights preferred stock outstanding. at any time prior to the time a person or group acquires 20% or more of the outstanding ENR stock (other than in connection with (14) SHAREHOLDERS EQUITY a Permitted Offer) and may amend the terms to lower the threshold On March 16, 2000, the Board of Directors declared a dividend for exercise of the Rights. If the threshold is reduced it cannot be of one share purchase right (Right) for each outstanding share lowered to a percentage which is less than 10%, or, if any share- of ENR common stock. Each Right entitles a shareholder of ENR holder holds 10% or more of the outstanding ENR stock at that stock to purchase an additional share of ENR stock at an exercise time, the reduced threshold must be greater than the percentage price of $150, which price is subject to antidilution adjustments. held by that shareholder. The Rights will expire on April 1, 2010. Rights, however, may only be exercised if a person or group has acquired, or commenced a public tender for 20% or more of the At September 30, 2000, there were 300 million shares of ENR stock outstanding ENR stock, unless the acquisition is pursuant to a authorized, of which 8,013,000 shares were reserved for issuance tender or exchange offer for all outstanding shares of ENR stock under the 2000 Incentive Stock Plan. and a majority of the Board of Directors determines that the price and terms of the offer are adequate and in the best interests of In September 2000, Energizer’s Board of Directors approved a share shareholders (a Permitted Offer). At the time that 20% or more repurchase plan authorizing the repurchase of up to 5 million shares of the outstanding ENR stock is actually acquired (other than in of Energizer’s common stock. connection with a Permitted Offer), the exercise price of each Right 40 ENERGIZER 2000 ANNUAL REPORT Concentration ofCr Currency Instrument For MANAGEMENT (15) FINANCIALINSTRUMENTSANDRISK NOTES TOCONSOLIDA one yearorless. to creditormarketloss.Foreigncurrencycontractsaregenerallyfor outstanding anddonotrepresenttheamountofEnergizer year-end. Thesecontractualamountsrepresenttransactionvolume and purchasedcurrencyoptionsinU.S.dollarequivalentsat the contractualamountsofEnergizer The tablebelowsummarizes,byinstrumentandmajorcurrency, fees. and service purchase transactionsandintercompanyreceivables,dividends currency transactionstowhichEnergizerisexposedincludeexternal purchase transactionsandintercompanyborrowings.Otherforeign currency exposuresareprimarilyrelatedtoanticipatedintercompany in earningsorcashflowsonforeigncurrencytransactions.Foreign and entersintozero-costoptioncollarstomitigatepotentiallosses contractsand,toalesserextent,purchasesoptions exchange forward counterparties bothinternallyandby usingoutsideratingagencies. Energizer continuallymonitorspositions with,andcreditratingsof, of positionsarestrictlymonitoredatalltimes. markets. Riskofcurrencypositionsandmarket-to-marketvaluation exchange contractsonanyotherorover-the-counter foreign exchangecontractsthroughbrokersnordoesittrade Energizer maintainslinesofcredit.doesnotenterinto financial institutionsandaregenerallywithwhich currency contractsconsistofanumbermajorinternational eign Cur Options Canadian dollar Other currencies Swiss franc Forwards r ency Contracts TED FINANCIALST edit Risk – Energizerentersintoforeign – Thecounterpartiestoforeign ’ s forward exchangecontracts s forward A TEMENTS 122.5 $ 117.2 2000 25.0 25.0 – 5.3 (otne)(Dollarsinmillionsexceptpersharedata) (continued) ’ s exposure 133.4 $ 124.2 1999 17.7 17.7 9.2 respect toaccountsreceivable. significant riskoflossfromaconcentrationcreditexistswith presents aninherentuncertainty, Energizerdoesnotbelievea require collateral.Whilethecompetitivenessofretailindustry financial conditionandcreditworthiness,butdoesnotgenerally world. Energizerperformsongoingevaluationsofitscustomers supermarket andotherchannelsofdistributionthroughoutthe retail trade,includingthoseinmassmerchandising,drugstore, Energizer sellstoalargenumberofcustomersprimarilyinthe such lossesarenotanticipatedduetothecontrolfeaturesmentioned. these counterpartiesexposesEnergizertopotentialcreditlosses, ments itentersintowithanyoneparty. Whilenonperformanceby Energizer hasimplementedpolicieswhichlimittheamountofagree- Fair V considerations, Energizerwouldbe requiredtomakeatotalnet currency exchangeratesandremaining maturities.Basedonthese the absenceofquotedmarketprices, suchfactorsasinterestrates, ing first,quotedmarketpricesofcomparable agreements,orin Energizer wouldreceiveorpaytoterminatethecontracts,consider- The fairvalueofforeigncurrencycontractsistheamountthat September 30,1999. long-term debtwasdeemedtoapproximateitsbookvalueat least annually. Therefore,thefairmarketvalueofEnergizer credit facilitiesthatprovidedforperiodicinterestrateresets,at debt representedborrowingsinforeigncountriesundervarious arrangements. AsofSeptember30,1999,Energizer from independentpricingsourcesforsimilartypesofborrowing value ofthelong-termdebtisestimatedusingyieldsobtained valueof$370.0.Thefair was $371.9comparedtoitscarrying At September30,2000,thefairmarketvalueoflong-termdebt on thebalancesheetapproximatefairvalue. amounts short-term borrowings,includingnotespayable,carrying agreements. Duetothenatureofcashandequivalents long-term debt,foreigncurrencycontractsandinterestrateswap instruments includecashandequivalents,short-term alue ofFinancialInstr uments – Energizer ’ s long-term ’ s financial ’ ’ s payment of $2.4 and $2.7 to counterparties for outstanding foreign In addition, Energizer undertook certain programs to reduce or currency contracts at September 30, 2000 and 1999, respectively. eliminate the environmental contamination at the rechargeable bat- However, these payments are unlikely due to the fact that Energizer tery facility in Gainesville, Florida, which was divested in November enters into foreign currency contracts to hedge identifiable foreign 1999. In the event that the buyer would become unable to continue currency exposures, and as such would generally not terminate such programs, Energizer could be required to bear financial such contracts. responsibility for such programs as well as for other known and unknown environmental conditions at the site. (16) ENVIRONMENTAL AND LEGAL MATTERS Many European countries, as well as the European Union, have been Government Regulations and Environmental Matters – The very active in adopting and enforcing environmental regulations. In operations of Energizer, like those of other companies engaged in the many developing countries in which Energizer operates, there has battery business, are subject to various federal, state, foreign and not been significant governmental regulation relating to the environ- local laws and regulations intended to protect the public health and ment, occupational safety, employment practices or other business the environment. These regulations primarily relate to worker safety, matters routinely regulated in the United States. As such economies air and water quality, underground fuel storage tanks, and waste develop, it is possible that new regulations may increase the risk handling and disposal. 41 and expense of doing business in such countries.

Energizer has received notices from the U.S. Environmental It is difficult to quantify with certainty the potential financial impact Protection Agency, state agencies and/or private parties seeking of actions regarding expenditures for environmental matters, particu- contribution, that it has been identified as a “potentially responsible larly remediation, and future capital expenditures for environmental party” (PRP) under the Comprehensive Environmental Response, control equipment. Nevertheless, based upon the information Compensation and Liability Act and may be required to share in currently available, Energizer believes that its ultimate liability the cost of cleanup with respect to nine federal “Superfund” sites. arising from such environmental matters, taking into account It may also be required to share in the cost of cleanup with respect established accruals of $3.6 for estimated liabilities, should not to a state-designated site. Liability under the applicable federal and be material to its financial position. Such liability could, however, state statutes which mandate cleanup is strict, meaning that liability be material to results of operations or cash flows for a particular may attach regardless of lack of fault, and joint and several, meaning quarter or annual period. that a liable party may be responsible for all of the costs incurred in investigating and cleaning up contamination at a site. However, Legal Proceedings – On April 8, 1998, Zinc Products Company, liability in such matters is typically shared by all of the financially a division of Alltrista Corp., a supplier of zinc cans used in the man- viable responsible parties. ufacture of batteries, filed suit in federal district court for the Eastern District of Tennessee against Energizer, claiming breach of contract The amount of Energizer’s ultimate liability in connection with those when Energizer closed its Fremont, Ohio plant. The plaintiff claims sites may depend on many factors, including the volume and toxicity lost profits and other damages of approximately $2.8. The case has of material contributed to the site, the number of other PRPs and been set for trial in January 2001. their financial viability, and the remediation methods and technology to be used. 42 ENERGIZER 2000 ANNUAL REPORT tracted periodsoftime.Theamountallegedliability, ifany, from involve complexissuesoflawandfact,mayproceedforpro- stagesand Many oftheforegoinglegalmattersareinpreliminary the Energizerbusiness. proceedings invariousjurisdictionsarisingoutoftheoperations Energizer anditssubsidiariesarepartiestoanumberofotherlegal granted inthespringof2000. under thelicense.Energizerfiledamotiontodismiss,whichwas of Californiaseekingadditionalpaymentsapproximately$1.0 September 9,1999inthefederaldistrictcourtforCentralDistrict matter, judgmentsuiton StrategicElectronicsfiledadeclaratory 29,1998.Inarelated naming EnergizerasadefendantonJanuary 2,1998.Kodakfiledasimilarappeal, Washington, D.C.onFebruary licensed toDuracell)wasappealedthefederaldistrictcourtfor patent claimsandthoseofEastmanKodakCompany(whichare several years.Anearlierdecision,whichdeniedEnergizer tester.relating touseoftheon-battery Adecisionisnotexpectedfor between StrategicElectronics(Energizer The U.S.PatentOfficecontinuestoreviewtheinterferenceclaims NOTES TOCONSOLIDA TED FINANCIALST ’ s licensor)andDuracell A TEMENTS – (otne)(Dollarsinmillionsexceptpersharedata) (continued) ’ s separate or cashflowsforaparticularquarterannualperiod. These liabilities,however, couldbematerialtoresultsofoperations taking intoaccountestablishedaccrualsforestimatedliabilities. be asserted,shouldnotmaterialtoEnergizer legal claimsandknownpotentialwhicharelikelyto liability, ifany, arisingfrompendinglegalproceedings,asserted based uponpresentinformation,Energizerbelievesthatitsultimate these proceedingscannotbedeterminedwithcertainty. However, Lease Commitments (17) OTHERCOMMITMENTSANDCONTINGENCIES 2003 of September30,2000were:2001 ments undernoncancellableoperatingleasesineffectas $19.7 in2000,1999and1998,respectively. Total rentalexpenseforalloperatingleaseswas$17.5,$21.5and – $8.4;2004 – $7.4;2005 – Futureminimumrentalcommit- – $7.1;andthereafter – $16.7;2002 ’ s financialposition, – $9.5; – $34.3. (18) SUPPLEMENTAL BALANCE SHEET INFORMATION 2000 1999 Inventories Raw materials and supplies $ 64.0 $ 74.0 Work in process 87.0 80.5 Finished products 308.1 228.5 Total Inventories $ 459.1 $ 383.0 Other Current Assets Investment in SPE (see Note 12) $ 157.1 $ – Miscellaneous receivables 36.6 52.7 Deferred income tax benefits 38.9 34.6 Prepaid expenses 44.1 32.4 Other 2.0 1.6 Total Other Current Assets $ 278.7 $ 121.3 Investments and Other Assets Goodwill (net of accumulated amortization: 2000 – $117.0; 1999 – $120.2) $ 168.0 $ 205.0 43 Other intangible assets (net of accumulated amortization: 2000 – $356.1; 1999 – $343.3) 82.4 94.4 Pension asset 102.0 – Deferred charges and other assets 25.4 20.3 Total Investments and Other Assets $ 377.8 $ 319.7 Other Current Liabilities Accrued advertising, promotion and allowances $ 123.2 $ 110.0 Restructuring reserves 3.9 11.3 Salaries, vacations and incentive compensation 47.4 48.9 Other 74.1 78.3 Total Other Current Liabilities $ 248.6 $ 248.5 Other Non-current Liabilities Postretirement benefit liability $ 87.7 $ – Other non-current liability 69.0 23.0 Total Other Non-current Liabilities $ 156.7 $ 23.0

(19) SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION

2000 1999 1998 Interest paid $ 19.5 $ 11.7 $ 14.9 Income taxes paid 86.5 44.0 81.2

(20) ALLOWANCE FOR DOUBTFUL ACCOUNTS

2000 1999 1998 Balance at beginning of year $ 19.3 $ 19.6 $ 19.6 Provision charged to expense 5.1 6.7 3.4 Write-offs, less recoveries (5.9) (7.0) (3.4) Transfer to SPE (see Note 12) (6.0) –– Balance at end of year $ 12.5 $ 19.3 $ 19.6 44 ENERGIZER 2000 ANNUAL REPORT Depreciation and Amortization Operating ProfitbeforeRestructuringCharges South andCentralAmerica North America Net Sales ating profit,exclusiveofgeneralcorporateexpenses,restructuring disclosed below. Segmentperformanceisevaluatedbasedonoper- Energizer basisfor is the and SouthCentralAmerica(includingMexico).Thisstructure (including theUnitedStatesandCanada),AsiaPacific,Europe, are managedviafourmajorgeographicareas lights andotherlightingproductsthroughouttheworld.Operations alkaline, carbonzinc,miniatureandspecialtybatteries,flash- cellbatteriesincluding Energizer manufacturesandmarketsdry (21) SEGMENTINFORMATION NOTES TOCONSOLIDA Europe Asia Pacific Europe Amortization Loss ondispositionofSpanishaffiliate Restructuring charges General corporateexpenses Europe South andCentralAmerica Asia Pacific North America Interest andotherfinancialitems Research anddevelopmentexpense South andCentralAmerica Asia Pacific North America Total NetSales Costs relatedtospin-off Operating profitbeforerestructuring Total segmentprofitability Total Depreciation Expense Total EarningsfromContinuingOperations charges andamortization before IncomeTaxes TED FINANCIALST ’ eotbeoeaigsegmentinformation operating s reportable A TEMENTS – NorthAmerica – (otne)(Dollarsinmillionsexceptpersharedata) (continued) ,2. $1,122.0 1,226.3 $ ae Sales Sales oa External Total 4. 126.4 272.7 144.2 393.2 281.2 462.9 2000 $1,914.3 1998, respectively, primarilyinNorthAmerica. for 15.3%,13.5%and11.5%oftotalnetsalesin2000,1999 these intersegmentsales.Onesinglemassmerchandiseraccounted presented inthetablebelow. Segmentprofitabilityincludesprofiton represent thedifferencebetweentotalsalesandexternalas Intersegment salesaregenerallyvaluedatmarket-basedpricesand global basisatthecorporatelevel. items, suchasinterestincomeandexpense,aremanagedona charges andamortizationofgoodwillintangibles.Financial 1159$,3. 1143$1,005.4 $ $1,104.3 $1,035.9 $1,135.9 ae ae ae Sales Sales Sales Sales oa xenlTtlExternal Total External Total 5. 3. 7. 153.8 365.7 396.9 179.9 369.5 448.6 134.6 317.0 384.8 151.2 320.3 430.0 991998 1999 57.9 $ 34.8 $ 279.2 $ 311.9 $ 348.4 435.7 111.9 (23.9) (24.1) (15.7) (49.9) (37.4) 2000 12.4 12.1 1823$1,921.8 $ $1,872.3 (5.5) (0.2) 3.0 7.7 – 84$74.1 $ 68.4 $ 50.1 $ 262.5 45.0 $ $ 248.2 $ 279.8 $ 291.4 $ 9. 315.5 291.4 408.3 393.9 991998 1999 2.)(25.9) (25.0) (46.6) (46.2) (48.5) (54.0) 0312.4 10.0 10.3 11.1 16.9 100.3 14.5 89.2 83 (5.8) (8.3) (21.3) (9.9) 11.3 (1.2) . 1.6 2.0 –– –– 2000 1999 1998 Assets at Year End North America $ 956.5 $ 815.5 $ 888.0 Asia Pacific 245.7 271.4 265.0 Europe 244.7 282.2 334.6 South and Central America 96.2 98.0 92.7 Subtotal 1,543.1 1,467.1 1,580.3 Goodwill and other intangible assets 250.4 299.4 340.7 Investment in discontinued operations – 67.2 156.6 Total Assets $ 1,793.5 $ 1,833.7 $ 2,077.6

Capital Expenditures North America $ 56.0 $ 39.6 $ 53.7 Asia Pacific 8.4 18.4 32.6 Europe 6.0 8.9 8.1 South and Central America 2.4 2.3 8.4 45 Total Capital Expenditures $ 72.8 $ 69.2 $ 102.8

Geographic Segment Information

Net Sales United States $ 1,052.3 $ 977.6 $ 950.0 International 862.0 894.7 971.8 Total Net Sales $ 1,914.3 $ 1,872.3 $ 1,921.8

Long Lived Assets United States $ 517.9 $ 404.6 $ 426.3 International 345.3 387.9 410.7 Total Long Lived Assets $ 863.2 $ 792.5 $ 837.0

Supplemental product information is presented below for revenues from external customers.

Net Sales Alkaline Batteries $ 1,281.2 $ 1,211.0 $ 1,189.4 Carbon Zinc Batteries 316.4 358.8 419.7 Lighting Products 127.6 128.6 131.0 Miniature Batteries 64.5 65.2 65.7 Other 124.6 108.7 116.0 Total Net Sales $ 1,914.3 $ 1,872.3 $ 1,921.8 46 ENERGIZER 2000 ANNUAL REPORT Third quarter of oneshareEnergizer stockforeachthreesharesofRalstonstock. the weighted-averagenumber ofsharesRalstoncommonstockoutstanding adjustedforthedistribution (b) Forallperiodsprior to thespin-off,sharesusedinearningsper sharecalculationarebasedon 230.0 485.0 $ 183.1 399.2 $ 61.3 184.0 405.7 $ 21.7 (2.8) 277.3 582.4 $ 22.0 First quarter (2.8) 224.0 (a) Earningsfromcontinuingoperationsincludethefollowingitems: 54.8 478.0 $ 196.9 402.8 $ 36.6 167.3 359.9 $ 23.2 351.4 673.6 Loss fromdiscontinuedoperations $ Earnings fromcontinuingoperations(a) 15.7 Gross profit Net sales Fiscal 1999 104.7 Basic andDilutedEarningsPerShare(b) Gain ondispositionofdiscontinuedoperations Earnings fromcontinuingoperations(a) Gross profit Net sales Fiscal 2000 Energizer The resultsofanysinglequarterarenotnecessarilyindicative (Unaudited) (22) QUARTERLY FINANCIALINFORMATION NOTES TOCONSOLIDA Second quarter Fourth quarter Basic andDilutedEarningsPerShare(b) Loss ondispositionofdiscontinuedoperations Restructuring Restructuring Capital losstaxbenefits Capital losstaxbenefits Restructuring Loss ondispositionofSpanishaffiliate Costs relatedtospin-off Restructuring Capital losstaxbenefits e anns$10 $01 $02 $0.38 $ 0.24 $ 36.6 0.18 $ 23.2 0.38 1.07 $ $ 16.9 0.24 $ 0.17 104.7 $ 1.07 $ $ Net earnings Net gainondiscontinuedoperations Earnings fromcontinuingoperations Net earnings e anns(os 20 5.)2. 61.3 0.60 $ 21.7 0.21 $ $ (55.0) (0.73) 0.21 $ $ 52.0 (0.03) 0.55 $ $ Net lossondiscontinuedoperations Earnings fromcontinuingoperations Net earnings/(loss) e anns(os .2 05)$02 $0.60 $ 0.21 $ (0.52) $ 0.52 $ Net earnings/(loss) ’ s resultsforthefullyear. NetearningsofEnergizerare TED FINANCIALST A TEMENTS – (otne)(Dollarsinmillionsexceptpersharedata) (continued) $ 2000 (15.7) 24.4 (3.3) – – – – – – – (6.2) $ 1999 13.3 (8.5) 6.3 3.3 0.1 – – – volume associatedwiththeChristmasholidayseason. significantly impactedinthefirstquarterbyadditionalsales is eodTidFourth Third Second First is eodTidFourth Third Second First – – – 1.2 $00 $ 0.01 $ (74.2) – – – – –

$

$ – – – – –

(23) PRO FORMA FINANCIAL RESULTS The pro forma statement of earnings may not necessarily reflect the The pro forma consolidated statements of earnings for the years consolidated results of operations that would have existed had the ended September 30, 1999 and 2000 present the consolidated spin-off been effected on the dates specified nor are they necessarily results of Energizer’s operations assuming the spin-off had occurred indicative of future results. as of October 1, 1998. Such statement of earnings has been pre- pared by adjusting the historical statement of earnings to indicate the effect of estimated costs and expenses and the recapitalization associated with the spin-off.

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (Dollars in millions except per share data – unaudited)

YEAR ENDED SEPTEMBER 30, 2000 Adjustments Related to Historic Distribution Pro Forma 47 Net Sales $1,914.3 $ 1,914.3 Costs and Expenses Cost of products sold 974.7 974.7 Selling, general and administrative 374.4 4.0 (a) 378.4 0.8 (b) (0.8) (c) Advertising and promotion 187.4 187.4 Research and development 49.9 49.9 Costs related to spin-off 5.5 5.5 Loss on disposition of Spanish affiliate 15.7 15.7 Interest 27.5 17.1 (d) 44.6 1,635.1 21.1 1,656.2 Earnings from Continuing Operations before Income Taxes 279.2 (21.1) 258.1 Income Taxes (99.0) (23.4) (e) (114.0) 8.4 (f) Earnings from Continuing Operations $ 180.2 $ (36.1) $ 144.1 Earnings Per Share from Continuing Operations (g) Basic $1.88 $1.50 Diluted $1.87 $1.49 Weighted-average Shares of Common Stock (g) Basic 96.1 96.1 Diluted 96.3 96.3

(a) To reflect the incremental costs associated with becoming a stand-alone company (e) To reflect taxes as if Energizer was a single, stand-alone U.S. taxpayer. including Board of Director costs, stock exchange registration fees, shareholder record keeping services, external financial reporting, treasury services, tax planning (f) To reflect tax effect of the above pro forma adjustments. and compliance, certain legal expenses and compensation planning and administration. (g) The number of shares used to compute earnings per share is based on the weighted- (b) To adjust pension income on plan assets transferred to Energizer plans upon the spin-off. average number of shares of Ralston stock outstanding during the six months ended March 31, 2000 (adjusted for the distribution of one share of Energizer stock for each (c) To eliminate expense of certain postretirement benefits to be retained by Ralston. three shares of Ralston stock) and the weighted-average number of shares of Energizer stock outstanding from April 1, 2000 to September 30, 2000. (d) To reflect the increase in interest expense associated with debt levels assigned to Energizer upon the spin-off. The adjustment reflects an average interest rate of 6.7% for $67.0 of incremental notes payable and 7.2% for $411.0 of incremental long-term debt. Approximately $303.0 of the incremental debt has a variable interest rate. A 1/8% variation in the interest rate would change interest expense by $.4. 48 ENERGIZER 2000 ANNUAL REPORT egtdaeaeSae fCmo tc h 0. 102.6 1.14 116.9 $ $ (42.9) $ 1,872.3 $ 159.8 102.6 $ (d) In additiontocostsdescribedabove,compensationforcertainexecutiveofficerswill 1.56 (c) To eliminateexpenseofcertainpostretirementbenefitstoberetainedbyRalston. $ (b) To reflectpensionincomeonplanassetstobetransferredEnergizerplansupon (a) To reflecttheincrementalcostsassociatedwithbecomingastand-alonecompanyincluding 1,872.3 $ Weighted-average Sharesof Common Stock(h) Earnings PerSharefromContinuingOperations(h) Earnings fromContinuingOperations Costs andExpenses Net Sales (Dollars inmillionsexceptpersharedata PRO FORMACONSOLIDATED STATEMENT OFEARNINGS NOTES TOCONSOLIDA noeTxs(84 1.)()(91.5) (f) (11.2) (88.4) 208.4 (39.8) 248.2 Income Taxes Earnings fromContinuingOperationsbeforeIncomeTaxes certain legalexpensesandcompensationplanningadministration. taxplanningandcompliance, services, externalfinancialreporting,treasury services, Board ofDirectorcosts,stockexchangeregistrationfees,shareholderrecordkeeping the increasecannotbedeterminedatthistime. be higherthanthecostsincludedinhistoricalfinancialstatements.Theamountof the distribution. neet763. e 44.5 (e) 36.9 7.6 Interest rvsosfrrsrcuig787.8 48.5 164.3 7.8 48.5 164.3 Provisions forrestructuring Research anddevelopment Advertising andpromotion oto rdcssl 9. 997.9 400.9 (a) 8.0 997.9 398.0 Selling, generalandadministrative Cost ofproductssold TED FINANCIALST – unaudited) A TEMENTS – (otne)(Dollarsinmillionsexceptpersharedata) (continued) (h) The numberofsharesusedtocomputeearningspershareisbasedontheweighted- (g) To reflecttaxeffectoftheaboveproformaadjustments. (f) To reflecttaxesasifEnergizerwasasingle,stand-aloneU.S.taxpayer. (e) To reflecttheincreaseininterestexpenseassociatedwithdebtlevelstobeassumedat interest expenseby$.4. payable willhaveavariableinterestrate.A1/8%variationintheratewouldchange notes payableand7.7%for$343.9ofincrementallong-termdebt.The Distribution Date.Theadjustmentreflectsaninterestrateof7.0%for$150.0incremental stock foreachthreesharesofRalstonstock. September 30,1999,adjustedfortheanticipateddistributionofoneshareEnergizer average numberofsharesRalstonstockoutstandingduringtheyearended 1,624.1 39.8 1,663.9 itrcDsrbto ProForma Distribution Historic YEAR ENDEDSEPTEMBER30,1999 Adjustments Related to 18 (c) (1.8) (b) (3.3) . (g) 8.1 (d) SELECTED FINANCIAL HIGHLIGHTS DIRECTORS S.C. Johnson & Son, Inc.

(millions) (diluted earnings per share) William H. Danforth (1)(2)(3)(4) Richard A. Liddy (1)(2)(3) EARNINGS YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, Trustee and former Chancellor, Chairman of the Board and Washington University Chief Executive Officer, 2000 1999 2000 1999 GenAmerica Corporation F.S. Garrison (1)(3)(4) Pro Forma Net Earnings, Chairman of the Board, Chairman of the Board, Excluding Unusuals * $163.1 $125.2 $ 1.69 $ 1.22 American Freightways, Inc. Reinsurance Group of America, Inc. (3)(4) R. David Hoover (2)(3)(4) Costs related to spin-off (3.3) – (0.04) – President, Vice Chairman and Joe R. Micheletto Loss on disposition of Spanish affiliate (15.7) – (0.16) – Chief Operating Officer, Ball Chief Executive Officer and Corporation President, Ralcorp Holdings, Restructuring charges – (8.3) – (0.08) Inc.

H. Fisk Johnson (2)(3) Pro Forma Net Earnings * 144.1 116.9 1.49 1.14 Chairman of the Board and J. Patrick Mulcahy Chairman, Chief Executive Officer, Energizer Holdings, Inc. Incremental interest expense, net of tax 10.0 21.2 0.11 0.21 Other pro forma costs, net of tax 1.7 5.1 0.02 0.05 OFFICERS Randy Rose Vice President, North America President and Chief Operating Capital loss tax benefits 24.4 16.6 0.25 0.16 William P. Stiritz Officer, Luis Plana Chairman of the Board; North America and Europe Vice President, Europe Historical Net Earnings from Chairman, Management Continuing Operations ** 180.2 159.8 1.87 1.56 Strategy and Finance Daniel J. Sescleifer Committee Executive Vice President, Net Gain (Loss) from Discontinued Finance and Control Steven Sanborn Operations 1.2 (79.8) 0.01 (0.78) J. Patrick Mulcahy Vice President, Technology, Chief Executive Officer Harry L. Strachan Research and Development Historical Basis Net Earnings ** $181.4 $ 80.0 $ 1.88 $ 0.78 Vice President and General Ward Klein Counsel Joseph Tisone Pro Forma Diluted Weighted Shares President and Chief Operating Vice President, Outstanding *** 96.3 102.6 Officer, Peter Conrad Global Manufacturing Asia Pacific and Latin America Vice President, Human Resources Robert K. Zimmermann Patrick C. Mannix Vice President, * Energizer Holdings, Inc. was spun off from Ralston Purina Company (Ralston) on April 1, 2000. The pro forma FY 2000 financial data is presented assuming the President, Kapila Gunawardana Global Lighting Products spin-off had occurred as of October 1, 1999. The pro forma FY 1999 financial data is presented assuming the spin-off had occurred as of October 1, 1998. Operations and Specialty Vice President, Pan Am ** The historical financial information for fiscal years 2000 and 1999 reflects periods during which Energizer was operated as a business segment of Ralston. Businesses Timothy Grosch Joseph McClanathan Secretary *** The pro forma diluted weighted shares outstanding is based on the weighted-average number of Ralston common shares outstanding prior to the spin-off (adjusted for the distribution of one share of Energizer stock for each three shares of Ralston stock) and the diluted weighted-average number of shares of Energizer stock outstanding from April 1, 2000 to September 30, 2000. CORPORATE HEADQUARTERS ANNUAL MEETING DIVIDENDS Energizer Holdings, Inc. The Company’s 2001 annual meeting of To date, the Company has not declared 800 Chouteau Avenue shareholders is scheduled for January 29, nor paid any cash dividend. St. Louis, Missouri 63102 2001 at 2:30 p.m. at the Auditorium at The ENERGIZER AT A GLANCE (314) 982-2000 St. Louis Art Museum, 1 Fine Arts Drive, SEC FORM 10-K www.energizer.com St. Louis, Missouri 63110-1380. Energizer Holdings, Inc. is the largest publicly traded primary battery/flashlight company in the world with Shareholders may receive a copy of the Company’s Annual Report to the Securities two of the most recognized brands in Energizer ® and Eveready ®. Energizer is traded on the New York Stock DATE AND STATE OF COMMON STOCK INFORMATION INCORPORATION and Exchange Commission on Form 10-K Exchange under the ENR symbol. On April 1, 2000, Ralston Purina Company free of charge by writing or calling the September 23, 1999 – Missouri distributed the outstanding capital stock of Investor Relations Department at Energizer’s Energizer Holdings, Inc. in a tax-free spin- corporate headquarters, as listed above, or Primary Batteries Energizer’s complete product portfolio of primary batteries includes offerings in all performance and FISCAL YEAR END off to shareholders. Energizer began trading by retrieving this information from the ® 2TM price categories – new super-premium Energizer e featuring titanium technology, premium Energizer alkaline, economy September 30 on the New York Stock Exchange under company’s Web site, www.energizer.com. Eveready Alkaline and Eveready carbon zinc, as well as industrial batteries for non-consumer applications and lithium the ticker symbol “ENR” on April 4, 2000. SHAREHOLDERS TRANSFER AGENT AND REGISTRAR batteries for high-performance applications. On November 10, 2000, there were 21,091 The table below indicates the reported Continental Stock Transfer & Trust Company shareholders of record. high and low sale prices of the Company’s 2 Broadway New York, NY 10004 Miniature Batteries Energizer’s complete line of miniature batteries delivers reliable power for a variety of small common stock, as reported on the New NUMBER OF EMPLOYEES (888) 509-5580 devices including electronic watches and cameras, calculators and personal organizers, keyless car remotes and handheld York Stock Exchange, for the fiscal quar- 3,415 – United States ters following the spin-off. electronic games, hearing aids and electronic thermometers. 7,065 – Outside United States FINANCIAL COMMUNITY INFORMATION FISCAL 2000 Flashlights and Lighting Products Energizer produces over 60 different flashlight and portable lighting devices INDEPENDENT ACCOUNTANTS Inquiries from institutional investors, PricewaterhouseCoopers LLP HIGH LOW financial analysts, registered representa- for use at home, work and recreation, for novelty uses and industrial applications. The company successfully introduced 1 13 tives, portfolio managers and individual St. Louis, Missouri Third Quarter 24 ⁄8 14 ⁄16 shareholders should be directed to Investor several new products during the year including the Rubber Two Way lantern, Folding Fluorescent lantern, Swivel Head 15 5 DESIGN: FALK HARRISON CREATIVE, ST. LOUIS, MISSOURI ST. HARRISON CREATIVE, DESIGN: FALK Fourth Quarter 24 ⁄16 18 ⁄16 Relations at Energizer’s corporate head- industrial flashlight and Energizer® Arc WhiteTM Hi Intensity Fluorescent flashlight. quarters listed above.

Copyright © 2000 Eveready Battery Company, Inc. Energizer, Energizer e2, Eveready, E-SNAP, Energizer Bunny, Arc White and Energizer Battery Character are trademarks or registered trademarks of Eveready Battery Company, Inc. All rights reserved. FULL POWER ENERGIZER HOLDINGS, INC.

YEAR 2000 ENERGIZER HOLDINGS, INC.power Energizer Holdings, Inc. ANNUAL REPORT 800 Chouteau Avenue

St. Louis, Missouri 63102 2000 ANNUAL REPORT 314.982.2000 www.energizer.com