For the six months ended March 31, 2010, net sales increased $108.2 million or 13%.  This increase includes approximately $38 million of favorable currencies and $66 million from Edge and Skintimate shave preparations.  Excluding both of these impacts, net sales were essentially flat.  Wet Shave sales decreased 1% on lower sales of disposables and men's systems.  Skin Care sales increased 5% on higher sales of Hawaiian Tropic.  Infant Care sales increased 4% on continued growth in Diaper Genie and cups, partially offset by lower sales of bottles.  Feminine Care sales decreased 5% as lower sales of Gentle Glide were partially offset by continued strong growth of Sport.  

Segment profit for the six months increased $43.4 million or 23%.  Excluding the impact of favorable currencies of approximately $19 million, segment profit increased approximately $23 million due to the inclusion of Edge and Skintimate shave preparations, as profits for these products for fiscal 2010 are concentrated in the first half due to the timing of A&P activities.

Other Items

Corporate and other expenses increased $3.9 million for the quarter and $12.7 million for the current six months due primarily to higher expense in fiscal 2010 as the prior year three and six month periods included a reduction in expense due to a decline in the underlying values of certain deferred compensation liabilities as a result of the economic downturn.  In addition, the current six month period includes higher stock award amortization.    

Interest expense decreased $3.4 million for the quarter and $10.4 million for the six month period due primarily to lower average outstanding debt.  Other net financing items were favorable $7.2 million for the quarter due to lower foreign exchange losses in the current quarter.  For the six month period, other net financing items were unfavorable by $7.5 million due to the Venezuela devaluation charge noted previously, partially offset by lower foreign exchange losses in other areas.    

For the six months, the effective tax rate was 34.5%, up compared to the prior six months due primarily to the non-deductible nature of a large portion of the Venezuela devaluation charge. Excluding the impact of the Venezuela devaluation charge, the effective tax rate for the six months of fiscal 2010 was 32.5% versus 31.8% in the prior year six month period.  

For the quarter, capital expenditures were $25.3 million, and depreciation expense was $31.4 million.  For the current six months, capital expenditures were $48.5 million and depreciation expense was $61.4 million.  

Energizer's Debt to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) Ratio for the last four quarters, as defined by the company's credit agreements, was 2.99 to 1.00.  The ratio includes the negative impact of the Venezuela devaluation charge as a reduction to EBITDA.  At March 31, 2010, the company's debt level was $2.4 billion, with $2.2 billion, or 92%, at fixed rates averaging 5.19%.  In addition, the company's reported cash at March 31, 2010 was $396.2 million.  

Outlook

Previously, we expressed our intention to increase our investment in advertising and promotion and certain innovation and growth initiatives in fiscal 2010.  This remains our objective.  While advertising and promotion was lower on a dollar and a percentage of net sales basis in the first half of fiscal 2010, we continue to track to an estimated advertising and promotion spend in the range of 11% to 12% of net sales for the full year of fiscal 2010, due in part, to support the April 6 launch of Schick Hydro in North America, the new men's shaving system, and increased spending behind Edge and Skintimate shave preparations.

Excluding Venezuela, and based on current foreign exchange rates, we estimate currencies will favorably impact operating profit by approximately $15 to $20 million, net of the impact of hedging activities, through the balance of the fiscal year versus the same period in the prior year.  

Finally, commodity and raw material prices have increased in recent months.  However, our hedging activities and supply contract terms should delay the negative impact on product cost through the remainder of fiscal 2010.  We expect raw material and commodity costs to be $8 to $10 million favorable over the balance of the year as compared to the same period last year.  

While Energizer Holdings, Inc. reports financial results in accordance with accounting principles generally accepted in the U.S. ("GAAP"), this press release includes non-GAAP measures.  These non-GAAP measures, such as comparison changes excluding the impact of currencies, the acquisition of Edge and Skintimate shave preparation brands, and the Venezuelan devaluation charge, are not in accordance with, nor are they a substitute for, GAAP measures.  The Company believes these non-GAAP measures provide a more meaningful comparison to the corresponding reported period and assist investors in performing analysis consistent with financial models developed by research analysts.  Investors should consider non-GAAP measures in addition to, not as a substitute for, or superior to, the comparable GAAP measures.

SOURCE Energizer Holdings, Inc.