Energizer Holdings, Inc. A YEAR OF RETURN 2012 Annual Report Financial Highlights Energizer Holdings, Inc. is a consumer goods company operating globally in the broad categories of personal care and household products. The Personal Care Division offers a diversified range of consumer products in the wet shave, skin care, feminine care and infant care categories with well-established brand names such as Schick®, Wilkinson Sword® and Personna® men’s and women’s shaving systems and disposable razors; Edge® and Skintimate® shave preparations; Playtex® tampons, infant feeding, Diaper Genie® and gloves; Banana Boat® and Hawaiian Tropic® sun care products; and Wet Ones® moist wipes. The Household Products Division offers consumers a broad range of household and specialty batteries and portable lighting products, anchored by the universally recognized Energizer® and Eveready® brands. The company markets its products throughout most of the world. Energizer® is traded on the NYSE under the ticker symbol ENR. YEAR ENDED SEPTEMBER 30, 2012 2011 2010 2009 2008 (in millions, except per share data) NET EaRNINGS Net Earnings, excluding inventory write-up $ 408.9 $ 265.6 $ 403.0 $ 300.1 $ 345.8 Acquisition inventory write-up, net of taxes(a) (4.4) (2.3) (16.5) Net Earnings $ 408.9 $ 261.2 $ 403.0 $ 297.8 $ 329.3 DILUTED EaRNINGS PER SHARE Net Earnings, excluding inventory write-up $ 6.22 $ 3.78 $ 5.72 $ 4.76 $ 5.87 Acquisition inventory write-up, net of taxes(a) (.06) (0.04) (0.28) Net Earnings $ 6.22 $ 3.72 $ 5.72 $ 4.72 $ 5.59 Diluted Weighted-Average Shares Outstanding 65.7 70.3 70.5 63.1 58.9 FREE CasH FLOW(b) Operating Cash Flow $ 631.6 $ 412.5 $ 652.4 $ 489.2 $466.5 Capital Expenditures (111.0) (98.0) (108.7) (139.7) (160.0) Free Cash Flow $ 520.6 $ 314.5 $ 543.7 $ 349.5 $ 306.5 In addition to its earnings presented in accordance with generally accepted accounting principles (GAAP), Energizer® has presented certain non-GAAP measures in the table above, which it believes are useful to readers in addition to traditional GAAP measures. These measures should be considered as an alternative to, but not superior to or as a substitute for, the comparable GAAP measures. (a) Earnings are presented with and without the impact of a write-up on inventory acquired through the purchase of American Safety Razor in Fiscal 2011, the purchase of Edge® and Skintimate® shave preparation brands in 2009 and the purchase of Playtex Products, Inc. in 2008. GAAP requires inventory to be valued at fair market value less the cost of disposal and a profit allowance for the selling effort, as opposed to its historical manufacturing cost. As a result, there was an allocation of purchase price to acquired inventory in 2011, 2009 and 2008. 2011 includes a charge of $7.0 million, pre-tax, or $4.4 million, after-tax. 2009 includes a charge of $3.7 million, pre-tax, or $2.3 million, after-tax, and 2008 includes a charge of $27.5 million, pre-tax, or $16.5 million, after-tax, all related to higher than historical manufacturing cost. Inventory value and cost of product sold for all product manufactured after the acquisition date are based upon actual production costs, as dictated by GAAP. Energizer® believes presenting earnings excluding the inventory write-up is useful to investors as an additional basis for comparison across all periods presented. (b) Free cash flow is defined as net cash provided by operating activities net of capital expenditures, i.e., additions to property, plant and equipment. The Company views free cash flow as an important indicator of its ability to repay debt, fund growth and return cash to shareholders. Free cash flow is not a measure of the residual cash flow that is available for discretionary expenditures, since the Company has certain non-discretionary obligations, such as debt service, that are not deducted from the measure. 1 Energizer Holdings, Inc. 2012 Annual Report NET SALES DILUTED EARNINGS PER SHARE in billions $4.57 $6.22 $4.65 $4.33 $4.25 $5.72 $4.00 $5.59 $4.72 $3.72 08 09 10 11 12 08 09 10 11 12 In 2012, Energizer Holdings began to see the return on our 2011 investments, with record earnings per share driven by the growth portfolio of our Personal Care business and improved cost structure in our Household Products business. Going forward, our investments help us build a stronger, more innovative Energizer that delivers products aimed at improving quality of life while creating value for our shareholders. SEGMENT BREAKDOWN 54% 54% Personal Care Personal Care 46% 46% Household Products Household Products Net Sales Segment Profit 2 Energizer Holdings, Inc. 2012 Annual Report To Our Shareholders WARD M. KLEIN Chief Executive Officer We called Fiscal 2011 the “Year of Investment” as we The successful execution of our plans allowed us to made incremental investments to drive future growth enter fiscal 2013 with a robust Personal Care segment that and efficiency. Highlights included the global launch of offers substantial growth opportunities and a Household our innovative new shaving platform, Schick Hydro®; Products segment better positioned to continue to deliver a restructuring of our battery operations that increased the strong cash flow that funds that growth. manufacturing efficiency and simplified distribution; and the acquisition of American Safety Razor (ASR), 2012 Financial Results which broadened our razor and blade product portfolio Reflecting the impact of our investments in the new and increased manufacturing scale. Schick Hydro® platform and increased operating effi- Those investments paved the way for 2012 as a ciency, our diluted earnings per share for fiscal 2012 were “Year of Return,” with innovation-driven profit growth a record $6.22. in our Personal Care businesses and increased efficiency Our Personal Care segment achieved a 16.8 percent in our manufacturing operations for both batteries and increase in segment profit, excluding the unfavorable personal care. impact of currencies, delivering the benefits of our 3 Energizer Holdings, Inc. 2012 Annual Report U.S. MARKET SHARE POSITION* Batteries and Lighting Wet Shave HOUSEHOLD & SPECIALTY BATTERIES, LIGHTING PRODUCTS MEN’S SHAVING SYSTEMS, WOMEN’S SHAVING SYSTEMS, DISPOSABLE SHAVERS Skin Care SUN CARE, HAND & FACE TOWELETTES Feminine Care TAMPONS Wet Shave SHAVE PREPS 1 2 * Market share data based on company estimates. Infant Care BOTTLES & CUPS, DISPOSABLE DIAPER SYSTEMS investments in innovative new products. Despite Skin Care net sales increased due to higher negative global battery trends, spending reductions and volumes, with particular strength in our international efficiency improvements enabled our Household Prod- markets, and three of our new products were among the ucts segment to achieve a 3 percent increase in segment top five new products in the U.S. sun care market for profit, excluding the impact of unfavorable currencies. the year. In Feminine Care, we Our international businesses, which operate through- launched Gentle Glide® 360°, the out the world, continued to be a strong contributor, first product in the plastic tampon representing about 48 percent of revenues. category that features three layers of protection. Innovation that drives growth In Infant Care, our Diaper The successful launch of Schick Hydro® is the most Genie® diaper disposal system prominent example of our strategy of achieving growth is a success story, with sales up by expanding our product categories through innovation, five percent in 2012. We brought and the benefits of that strategy can be found throughout that innovation into the pet care our Personal Care businesses. market with the 2012 launch of Schick Hydro® is not just a new product; it is a new Litter Genie®. Response from cat The revolutionary cat litter disposal system that helps platform for growth. We built upon that platform in owners has been enthusiastic, and control litter odor and helps make litter maintenance 2012 with the new Schick Hydro 5 Power Select™ and we recently expanded distribution virtually effortless. with Schick Hydro Silk®, which extended the Schick from specialty pet stores to the Hydro® platform to the women’s system market. Schick mass and club channels in the U.S. With the American Hydro Silk® helped increase our U.S. market share for Pet Products Association estimating that one-third of women’s shave systems by 1.9 points, to 39.1 percent, U.S. households own at least one cat, this is clearly a and growth in both handles and cartridges drove total high-potential market for us. sales of Schick Hydro® men’s sys- tems up more than 40 percent in A platform for growth fiscal 2012. Overall, strong sales Our growth platform starts with well-known and by both Schick Hydro® men’s respected international brands that hold number one or and Schick Hydro Silk® drove two shares in most markets in which we compete. We a 6 percent increase in overall have broad product portfolios in our major categories – Schick Hydro® system net sales Playtex Sport grew by wet shave, sun care, and batteries. Our ability to offer 1.5 share points and during 2012, adding one point now has a 10% share in products across all price points enables us to provide the U.S. tampon market. to our U.S. share of the branded It’s the only tampon with our trade customers – from “mom and pop” convenience razor and blade market. sport-level protection. stores to giant warehouse clubs – with product selections 4 Energizer Holdings, Inc. 2012 Annual Report Men’s Schick Hydro 5 Power Select™ Men’s Schick Hydro® 5 SCHICK HYDRO® BRAND Building off of the successful launch of Schick Hydro® for Men, which was launched in 2010, Schick Hydro Silk® and Schick Hydro 5 Power Select™ were launched in January 2012.