What changed in this filing

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Item 1. Financial Statements

2020-05-07 compared with 2020-02-06 · 197 added, 156 removed, 732 unchanged (33% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019 AND JUNE 30, 2019

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

MARCH 31, 2020 AND JUNE 30, 2019

(In thousands, except par values)

December 31, June 30,

ASSETS (Unaudited)

March 31, June 30,

Current assets:

46 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2019 AND 2018

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2020 AND 2019

(In thousands, except per share amounts)

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2020 2019 2020 2019

14 unchanged sentences

Interest and other financing expense, net 4,037 5,994 15,068 15,736

Other expense, net 1,244 371 2,572 971

Other (income) expense, net ( 260 ) 1,067 2,312 2,038

Income (loss) from continuing operations before income taxes and equity in net loss of equity-method investees 15,358 11,931 13,401 ( 47,626 )

Provision (benefit) for income taxes 1,020 5,097 489 ( 4,869 )

(Benefit) provision for income taxes ( 10,242 ) 2,943 ( 9,753 ) ( 1,926 )

Equity in net loss of equity-method investees 564 205 1,219 391

1 unchanged sentence

Net loss from discontinued operations, net of tax ( 697 ) ( 74,620 ) ( 105,581 ) ( 123,672 )

Net loss $ ( 964 ) $ ( 66,501 ) $ ( 107,985 ) $ ( 103,926 )

Net income (loss) $ 24,339 $ ( 65,837 ) $ ( 83,646 ) $ ( 169,763 )

Net income (loss) per common share (1) :

1 unchanged sentence

Basic net loss per common share from discontinued operations ( 0.01 ) ( 0.72 ) ( 1.01 ) ( 1.19 )

Basic net loss per common share $ ( 0.01 ) $ ( 0.64 ) $ ( 1.04 ) $ ( 1.00 )

Basic net income (loss) per common share $ 0.23 $ ( 0.63 ) $ ( 0.80 ) $ ( 1.63 )

Diluted net income (loss) per common share from continuing operations $ 0.24 $ 0.08 $ 0.21 $ ( 0.44 )

Diluted net loss per common share from discontinued operations ( 0.01 ) ( 0.72 ) ( 1.01 ) ( 1.19 )

Diluted net loss per common share $ ( 0.01 ) $ ( 0.64 ) $ ( 1.04 ) $ ( 1.00 )

Diluted net income (loss) per common share $ 0.23 $ ( 0.63 ) $ ( 0.80 ) $ ( 1.63 )

Shares used in the calculation of net income (loss) per common share:

1 unchanged sentence

Diluted 104,337 104,334 104,489 104,045

(1) Net income (loss) per common share may not add in certain periods due to rounding.

See notes to consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2019 AND 2018

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2020 AND 2019

(In thousands)

Three Months Ended

December 31, 2019 December 31, 2018

March 31, 2020 March 31, 2019

Tax (expense) benefit After-tax amount Pre-tax

Tax (expense) benefit After-tax amount

Net loss $ ( 964 ) $ ( 66,501 )

Other comprehensive income (loss):

Net income (loss) $ 24,339 $ ( 65,837 )

Other comprehensive (loss) income:

Foreign currency translation adjustments before reclassifications $ ( 52,315 ) $ — ( 52,315 ) $ 20,934 $ — 20,934

Change in deferred gains (losses) on cash flow hedging instruments 134 ( 25 ) 109 ( 52 ) 10 ( 42 )

Total other comprehensive income (loss)

Total other comprehensive (loss) income

$ ( 52,181 ) $ ( 25 ) $ ( 52,206 ) $ 20,882 $ 10 $ 20,892

Total comprehensive income (loss) $ 47,733 $ ( 94,449 )

Six Months Ended

December 31, 2019 December 31, 2018

Total comprehensive loss $ ( 27,867 ) $ ( 44,945 )

Nine Months Ended

March 31, 2020 March 31, 2019

amount Tax (expense) benefit After-tax amount Pre-tax

4 unchanged sentences

Reclassification of currency translation adjustment included in Net loss from discontinued operations, net of tax 95,120 — 95,120 — — —

Change in deferred losses on cash flow hedging instruments ( 26 ) — ( 26 ) — — —

Change in deferred gains (losses) on cash flow hedging instruments 108 ( 25 ) 83 ( 52 ) 10 ( 42 )

Total other comprehensive income (loss)

5 unchanged sentences

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2019

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2020

(In thousands, except par values)

20 unchanged sentences

Balance at December 31, 2019 109,019 $ 1,091 $ 1,164,618 $ 586,593 4,658 $ ( 111,022 ) $ ( 120,197 ) $ 1,521,083

Net income 24,339 24,339

Cumulative effect of adoption of ASU 2016-02 — —

Other comprehensive loss ( 52,206 ) ( 52,206 )

Issuance of common stock pursuant to stock-based compensation plans

Shares withheld for payment of employee payroll taxes due on shares issued under stock-based compensation plans

20 ( 523 ) ( 523 )

Repurchases of common stock 2,439 ( 57,406 )

Stock-based compensation expense 3,761 3,761

Balance at March 31, 2020 109,089 $ 1,092 $ 1,168,378 $ 610,932 7,117 $ ( 168,951 ) $ ( 172,403 ) $ 1,439,048

See notes to consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2018

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2019

(In thousands, except par values)

22 unchanged sentences

Balance at December 31, 2018 108,691 $ 1,087 $ 1,150,239 $ 774,405 4,584 $ ( 109,429 ) $ ( 225,359 ) $ 1,590,943

Net loss ( 65,837 ) ( 65,837 )

Other comprehensive income 20,892 20,892

Issuance of common stock pursuant to stock-based compensation plans

Shares withheld for payment of employee payroll taxes due on shares issued under stock-based compensation plans

8 ( 149 ) ( 149 )

Stock-based compensation expense 3,943 3,943

Balance at March 31, 2019 108,713 $ 1,087 $ 1,154,182 $ 708,568 4,592 $ ( 109,578 ) $ ( 204,467 ) $ 1,549,792

See notes to consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED DECEMBER 31, 2019 AND 2018

FOR THE NINE MONTHS ENDED MARCH 31, 2020 AND 2019

(In thousands)

Six Months Ended December 31,

Nine Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

Net loss from discontinued operations ( 105,581 ) ( 123,672 )

Net loss from continuing operations ( 3,101 ) ( 54,874 )

Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities from continuing operations:

Net income (loss) from continuing operations 21,935 ( 46,091 )

Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities from continuing operations:

Depreciation and amortization 40,069 37,548

11 unchanged sentences

Accounts payable and accrued expenses ( 42,972 ) ( 24,191 )

Net cash provided by (used in) operating activities - continuing operations 17,148 ( 4 )

Net cash provided by operating activities - continuing operations 64,092 18,331

CASH FLOWS FROM INVESTING ACTIVITIES

7 unchanged sentences

Repayments under term loan ( 206,250 ) ( 11,250 )

Proceeds from discontinued operations entities 309,929 13,550

Proceeds from (funding of) discontinued operations entities 305,247 ( 33,815 )

Repayments of other debt, net ( 1,502 ) ( 1,689 )

Share repurchases ( 57,406 ) —

Shares withheld for payment of employee payroll taxes ( 1,506 ) ( 3,071 )

Net cash provided by financing activities - continuing operations

Net cash (used in) provided by financing activities - continuing operations

( 18,917 ) 3,384

Effect of exchange rate changes on cash - continuing operations ( 2,110 ) ( 774 )

4 unchanged sentences

297,592 ( 33,561 )

Cash used in financing activities

Cash (used in) provided by financing activities

( 299,418 ) 30,582

3 unchanged sentences

( 8,509 ) ( 17,057 )

Net decrease in cash and cash equivalents and restricted cash ( 2,502 ) ( 34,975 )

Net increase (decrease) in cash and cash equivalents and restricted cash 2,023 ( 47,326 )

Cash and cash equivalents at beginning of period 39,526 113,018

Cash and cash equivalents and restricted cash at end of period $ 41,549 $ 65,692

$ 37,024 $ 78,043

cash and cash equivalents of discontinued operations — ( 11,263 )

10 unchanged sentences

The Company manufactures, markets, distributes and sells organic and natural products under brand names that are sold as “better-for-you” products, providing consumers with the opportunity to lead A Healthier Way of Life™.

Hain Celestial is a leader in many organic and natural products categories, with many recognized brands in the various market categories it serves, including Almond Dream ® , Bearitos ® , Better Bean ® , BluePrint ® , Casbah ® , Celestial Seasonings ® , Clarks™, Coconut Dream ® , Cully & Sully ® , Danival ® , DeBoles ® , Earth’s Best ® , Ella’s Kitchen ® , Europe’s Best ® , Farmhouse Fare™, Frank Cooper’s ® , Gale’s ® , Garden of Eatin’ ® , GG UniqueFiber ® , Hain Pure Foods ® , Hartley’s ® , Health Valley ® , Imagine ® , Johnson’s Juice Co.™, Joya ® , Lima ® , Linda McCartney ® (under license), MaraNatha ® , Mary Berry (under license), Natumi ® , New Covent Garden Soup Co.

® , Orchard House ® , Rice Dream ® , Robertson’s ® , Rudi’s Gluten-Free Bakery™, Rudi’s Organic Bakery ® , Sensible Portions ® , Spectrum ® Organics, Soy Dream ® , Sun-Pat ® , Sunripe ® , Terra ® , The Greek Gods ® , Walnut Acres ® , Yorkshire Provender ® , Yves Veggie Cuisine ® and William’s™.

Hain Celestial is a leader in many organic and natural products categories, with ma ny recognized brands in the various market categories it serves, including Almond Dream ® , Bearitos ® , Better Bean ® , BluePrint ® , Celestial Seasonings ® , Clarks™, Coconut Dream ® , Cully & Sully ® , Danival ® , DeBoles ® , Earth’s Best ® , Ella’s Kitchen ® , Farmhouse Fare™, Frank Cooper’s ® , Gale’s ® , Garden of Eatin’ ® , GG UniqueFiber ® , Hain Pure Foods ® , Hartley’s ® , Health Valley ® , Imagine ® , Johnson’s Juice Co.™, Joya ® , Lima ® , Linda McCartney ® (under license), MaraNatha ® , Mary Berry (under license), Natumi ® , New Covent Garden Soup Co.

® , Orchard House ® , Rice Dream ® , Robertson’s ® , Sensible Portions ® , Spectrum ® Organics, Soy Dream ® , Sun-Pat ® , Sunripe ® , Terra ® , The Greek Gods ® , Walnut Acres ® , Yorkshire Provender ® , Yves Veggie Cuisine ® and William’s™.

The Company’s personal care products are marketed under the Alba Botanica ® , Avalon Organics ® , Earth’s Best ® , JASON ® , Live Clean ® and Queen Helene ® brands.

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As part of the Company’s overall strategy, the Company may seek to dispose of businesses and brands that are less profitable or are otherwise less of a strategic fit within our core portfolio.

Accordingly, the Company divested of all of its operations of the Hain Pure Protein reportable segment and WestSoy® tofu, seitan and tempeh businesses in the United States in fiscal 2019, the entities comprising its Tilda operating segment and certain other assets of the Tilda business in August 2019 and its Arrowhead Mills® and SunSpire® brands in October 2019.

Accordingly, the Company divested of all of its operations of the Hain Pure Protein reportable segment and WestSoy® tofu, seitan and tempeh businesses in the United States in fiscal 2019, the entities comprising its Tilda operating segment and certain other assets of the Tilda business in August 2019, its Arrowhead Mills® and SunSpire® brands in October 2019, and its Europe's Best® and Casbah® brands in March 2020.

Productivity and Transformation Costs

32 unchanged sentences

The unaudited consolidated financial statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair presentation for interim periods.

Operating results for the three and six months ended December 31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020.

Operating results for the three and nine months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020.

Please refer to the Notes to the Consolidated Financial Statements as of June 30, 2019 and for the fiscal year then ended included in the Form 10-K for information not included in these condensed notes.

11 unchanged sentences

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Leases with an initial term of 12 months or less are not recognized on the Company's balance sheet.

Leases with an initial term of 12 months or less are not recognized on the Company's Consolidated Balance Sheets.

The Company has elected to separate lease and non-lease components.

8 unchanged sentences

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected versus incurred credit losses for most financial assets.

The new guidance is effective for interim and annual periods beginning after December 15, 2019.

The new guidance is effective for annual periods beginning after December 15, 2019, and for interim periods within those fiscal years.

The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

1 unchanged sentence

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements for fair value measurement by removing, modifying or adding certain disclosures.

The new guidance is effective for interim and annual periods beginning after December 15, 2019.

The new guidance is effective for annual periods beginning after December 15, 2019, and for interim periods within those fiscal years.

The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract , which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The amended guidance is effective for interim and annual periods beginning after December 15, 2019.

The amended guidance is effective for annual periods beginning after December 15, 2019, and for interim periods within those fiscal years.

The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes which simplifies various aspects related to accounting for income taxes and eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating taxes during the quarters and the recognition of deferred tax liabilities for outside basis differences.

The new guidance is effective for annual periods beginning after December 15, 2021, and for interim periods within those fiscal years.

The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

FORMER CHIEF EXECUTIVE OFFICER SUCCESSION PLAN

5 unchanged sentences

Schiller, commenced his employment.

Expense recognized in connection with these payments was $ 9,080 and $ 33,051 in the three and six months ended December 31, 2018.

Expense recognized in connection with these payments was $ 33,051 during the nine months ended March 31, 2019.

The cash separation payment was paid on May 6, 2019.

1 unchanged sentence

Simon’s employment.

In connection with these accelerations, the Company recognized additional stock-based compensation expense of $ 429 ratably through November 4, 2018, of which $ 117 was recognized in the three months ended December 31, 2018.

In connection with these accelerations, the Company recognized additional stock-based compensation expense of $ 429 ratably through November 4, 2018.

The aforementioned impacts were recorded in Chief Executive Officer Succession Plan expense, net in the Consolidated Statements of Operations.

There were no charges recognized during the three months ended March 31, 2019 related to the cash separation payment or cash benefits continuation costs.

As further discussed in Note 13, Stock-based Compensation and Incentive Performance Plans, in the three months ended September 30, 2018, the Company’s Compensation Committee determined that no awards would be paid or vested pursuant to the 2016-2018 LTIP.

Accordingly, the Company recorded a benefit of $ 5,065 associated with the reversal of previously accrued amounts under the net sales portion of the 2016-2018 LTIP associated with Mr.

Simon during the nine months ended March 31, 2019.

The recognition of this benefit did not impact the three months ended March 31, 2019.

On October 26, 2018, the Company and Mr.

2 unchanged sentences

The term of the Consulting Agreement commenced on November 5, 2018 and continued until February 5, 2019.

Simon received an aggregate consulting fee of $ 975 as compensation for his services during the consulting term, of which $ 650 was recognized in the Consolidated Statements of Operations as a component of “Chief Executive Officer Succession Plan expense, net” in the three and six months ended December 31, 2018.

Simon received an aggregate consulting fee of $ 975 as compensation for his services during the consulting term, of which $ 325 and $ 975 was recognized in the Consolidated Statements of Operations as a component of “Chief Executive Officer Succession Plan expense, net” in the three and nine months ended March 31, 2019, respectively.

EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted net income (loss) per share:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2020 2019 2020 2019

1 unchanged sentence

Net loss from discontinued operations, net of tax ( 697 ) ( 74,620 ) ( 105,581 ) ( 123,672 )

Net loss $ ( 964 ) $ ( 66,501 ) $ ( 107,985 ) $ ( 103,926 )

Net income (loss) $ 24,339 $ ( 65,837 ) $ ( 83,646 ) $ ( 169,763 )

Basic weighted average shares outstanding

1 unchanged sentence

Effect of dilutive stock options, unvested restricted stock and unvested restricted share units

305 217 297 —

Diluted weighted average shares outstanding

3 unchanged sentences

Discontinued operations ( 0.01 ) ( 0.72 ) ( 1.01 ) ( 1.19 )

Basic net loss per common share $ ( 0.01 ) $ ( 0.64 ) $ ( 1.04 ) $ ( 1.00 )

Basic net income (loss) per common share $ 0.23 $ ( 0.63 ) $ ( 0.80 ) $ ( 1.63 )

Diluted net income (loss) per common share (1) :

1 unchanged sentence

Discontinued operations ( 0.01 ) ( 0.72 ) ( 1.01 ) ( 1.19 )

Diluted net loss per common share $ ( 0.01 ) $ ( 0.64 ) $ ( 1.04 ) $ ( 1.00 )

Diluted net income (loss) per common share $ 0.23 $ ( 0.63 ) $ ( 0.80 ) $ ( 1.63 )

(1) Net income (loss) per common share may not add in certain periods due to rounding.

Basic net income (loss) per share excludes the dilutive effects of stock options, unvested restricted stock and unvested restricted share units.

Due to our net losses in the six months ended December 31, 2019 and the three and six months ended December 31, 2018, all common stock equivalents such as stock options and unvested restricted stock awards have been excluded from the computation of diluted net loss per common share because the effect would have been anti-dilutive to the computations in each period.

There were 485 and 498 restricted stock awards and stock options excluded from our calculation of diluted net income (loss) per share for the three months ended December 31, 2019 and 2018, respectively, as such awards were anti-dilutive.

Additionally, there were 2,550 and 1,152 stock-based awards excluded for the three months ended December 31, 2019 and 2018, respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods.

There were 689 and 464 restricted stock awards and stock options excluded from our calculation of diluted net loss per share for the six months ended December 31, 2019 and 2018, respectively, as such awards were anti-dilutive.

Additionally, there were 2,745 and 710 stock-based awards excluded for the six months ended December 31, 2019 and 2018, respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods.

Due to our net loss in the nine months ended March 31, 2019, all common stock equivalents such as stock options and unvested restricted stock awards have been excluded from the computation of diluted net loss per common share because the effect would have been anti-dilutive to the computations in the period.

Diluted earnings per share for the three and nine months ended March 31, 2020 and the three months ended March 31, 2019 includes the dilutive effects of common stock equivalents such as stock options and unvested restricted stock awards.

There were 512 and 273 restricted stock awards and stock options excluded from our calculation of diluted net income (loss) per share for the three months ended March 31, 2020 and 2019, respectively, as such awards were anti-dilutive.

Additionally, there were 2,616 and 3,071 stock-based awards excluded for the three months ended March 31, 2020 and 2019, respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods.

There were 450 and 731 restricted stock awards and stock options excluded from our calculation of diluted net income (loss) per share for the nine months ended March 31, 2020 and 2019, respectively, as such awards were anti-dilutive.

Additionally, there were 2,685 and 3,117 stock-based awards excluded for the nine months ended March 31, 2020 and 2019, respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods.

Share Repurchase Program

3 unchanged sentences

The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations, including the Company’s historical strategy of pursuing accretive acquisitions.

As of December 31, 2019, the Company had not repurchased any shares under this program and had $ 250,000 of remaining capacity under the share repurchase program.

During the three and nine months ended March 31, 2020, the Company repurchased 2,439 shares under the repurchase program for a total of $ 57,357 , excluding commissions, at an average price of $ 23.52 per share.

As of March 31, 2020, the Company had $ 192,643 of remaining authorization under the share repurchase program.

DISCONTINUED OPERATIONS

9 unchanged sentences

The disposition of the Tilda operating segment represented a strategic shift that had a major impact on the Company’s operations and financial results and has been accounted for as discontinued operations.

The following table presents the major classes of Tilda’s results within “Net loss from discontinued operations, net of tax” in our Consolidated Statements of Operations:

Three Months Ended December 31, Six Months Ended December 31,

The following table presents the major classes of Tilda’s results within “Net income (loss) from discontinued operations, net of tax” in our Consolidated Statements of Operations:

Three Months Ended March 31, Nine Months Ended March 31,

2020 2019 2020 2019

12 unchanged sentences

( 965 ) 171 12,900 247

Net (loss) income from discontinued operations, net of tax $ ( 2,816 ) $ 2,509 $ ( 103,853 ) $ 2,495

Net income (loss) from discontinued operations, net of tax $ 425 $ 1,305 $ ( 103,428 ) $ 3,800

(1) Interest expense was allocated to discontinued operations based on borrowings repaid with proceeds from the sale of Tilda.

(2) At the completion of the sale of Tilda, the Company reclassified $ 95,120 of related cumulative translation losses from Accumulated other comprehensive loss to discontinued operations, net of tax.

(3) Includes a tax (benefit) provision related to the tax gain on the sale of Tilda of $( 1,250 ) and $ 15,250 for the three and six months ended December 31, 2019, respectively.

(3) Includes a tax (benefit) provision related to the tax gain on the sale of Tilda of $( 750 ) and $ 14,500 for the three and nine months ended March 31, 2020, respectively.

Assets and liabilities of discontinued operations associated with Tilda presented in the Consolidated Balance Sheets as of June 30, 2019 are included in the following table:

32 unchanged sentences

If a subsequent change in control of the Plainville Farms business occurs prior to June 30, 2026, the purchaser will pay the Company 120 % of the difference between the amount drawn on the Letter of Credit less the sum of all earnout payments made prior to such time up to the net proceeds received by the purchaser.

At December 31, 2019, the Company had not recorded an asset associated with the earnout.

At March 31, 2020, the Company had not recorded an asset associated with the earnout.

Sale of HPPC and Empire Kosher

4 unchanged sentences

The following table presents the major classes of Hain Pure Protein’s results within “Net loss from discontinued operations, net of tax” in our Consolidated Statements of Operations:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2020 2019 2020 2019

6 unchanged sentences

Loss on sale of discontinued operations (1)

1,781 40,223 3,205 40,223

Net loss from discontinued operations before income taxes ( 1,781 ) ( 97,340 ) ( 3,205 ) ( 176,507 )

2 unchanged sentences

(1) Primarily relates to preliminary closing balance sheet adjustments.

There were no assets or liabilities from discontinued operations associated with Hain Pure Protein at December 31, 2019 or June 30, 2019.

There were no assets or liabilities from discontinued operations associated with Hain Pure Protein at March 31, 2020 or June 30, 2019.

Inventories consisted of the following:

4 unchanged sentences

At each period end, inventory is reviewed to ensure that it is recorded at the lower of cost or net realizable value.

During the six months ended December 31, 2019 and the fiscal year ended June 30, 2019, the Company recorded inventory write-downs of $ 3,916 and $ 12,381 , respectively, in connection with the discontinuance of slow moving SKUs as part of a product rationalization initiative.

During the nine months ended March 31, 2020 and the fiscal year ended June 30, 2019, the Company recorded inventory write-downs of $ 5,278 and $ 12,381 , respectively, primarily related to the discontinuance of slow moving SKUs as part of a product rationalization initiative.

PROPERTY, PLANT AND EQUIPMENT, NET

11 unchanged sentences

$ 287,629 $ 287,845

Depreciation and amortization expense for the three months ended December 31, 2019 and 2018 was $ 8,024 and $ 6,757 , respectively.

Such expense for the six months ended December 31, 2019 and 2018 was $ 15,729 and $ 14,230 , respectively.

In the six months ended December 31, 2018, the Company recorded $ 5,275 of non-cash impairment charges primarily related to the Company’s decision to consolidate manufacturing of certain fruit-based products in the United Kingdom.

Depreciation and amortization expense for the three months ended March 31, 2020 and 2019 was $ 7,789 and $ 7,105 , respectively.

Such expense for the nine months ended March 31, 2020 and 2019 was $ 23,518 and $ 21,335 , respectively.

In each of the three and nine months ended March 31, 2020, the Company recorded $ 5,875 of non-cash impairment charges primarily related to a write-down of certain machinery and equipment in the United States and Europe used to manufacture certain slow moving or low margin SKUs.

In the nine months ended March 31, 2019, the Company recorded $ 5,275 of non-cash impairment charges primarily related to the Company’s decision to consolidate manufacturing of certain fruit-based products in the United Kingdom.

Additionally, the Company recorded a $ 534 non-cash impairment charge to write-down the value of certain machinery and equipment used to manufacture certain slow moving SKUs in the United States that were discontinued.

There were no impairment charges recorded during the six months ended December 31, 2019.

The Company leases office space, warehouse and distribution facilities, manufacturing equipment and vehicles primarily in North America and Europe.

4 unchanged sentences

Some of the Company’s leases contain variable lease payments, which are expensed as incurred unless those payments are based on an index or rate.

Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement and included in the measurement of the lease liability;

Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease

commencement and included in the measurement of the lease liability;

thereafter, changes to lease payments due to rate or index changes are recorded as variable lease expense in the period incurred.

The Company does not have any related party leases, and sublease transactions are de minimis.

The components of lease expenses for the three and six months ended December 31, 2019 were as follows:

Three Months Ended Six Months Ended

December 31, 2019 December 31, 2019

The components of lease expenses for the three and nine months ended March 31, 2020 were as follows:

Three Months Ended Nine Months Ended

March 31, 2020 March 31, 2020

Operating lease expenses $ 4,545 $ 14,034

Finance lease expenses 272 761

Amortization of ROU assets 168 448

Interest on lease liabilities 20 41

Total finance lease expenses 188 489

Variable lease expenses 633 1,873

2 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

Leases Classification December 31, 2019

Leases Classification March 31, 2020

Operating lease ROU assets Operating lease right-of-use assets $ 81,959

7 unchanged sentences

Additional information related to leases is as follows:

Six Months Ended

December 31, 2019

Nine Months Ended

March 31, 2020

Supplemental cash flow information

3 unchanged sentences

Financing cash flows from finance leases $ 372

Right-of-use assets obtained in exchange for lease obligations (a) :

ROU assets obtained in exchange for lease obligations (a) :

Operating leases $ 94,389

6 unchanged sentences

Finance leases 2.9 %

(a) Right-of-use assets obtained in exchange for lease obligations includes the impact of the adoption of ASU 2016-02 effective July 1, 2019 (see Note 2) and leases which commenced, were modified or terminated during the six months ended December 31, 2019.

Maturities of lease liabilities as of December 31, 2019 were as follows:

(a) ROU assets obtained in exchange for lease obligations includes the impact of the adoption of ASU 2016-02 effective July 1, 2019 (see Note 2) and leases which commenced, were modified or terminated during the nine months ended March 31, 2020.

Maturities of lease liabilities as of March 31, 2020 were as follows:

Fiscal Year Operating leases Finance leases Total

11 unchanged sentences

Thereafter 44,452

At December 31, 2019, the Company had additional leases that had not yet commenced.

At March 31, 2020, the Company had additional leases that had not yet commenced.

Obligations under these leases are not material.

6 unchanged sentences

Translation and other adjustments, net ( 3,192 ) ( 6,825 ) ( 10,017 )

Balance as of December 31, 2019 (a)

Balance as of March 31, 2020 (a)

$ 604,601 $ 256,466 $ 861,067

2 unchanged sentences

As discussed in Note 17, Segment Information, effective July 1, 2019, the Company changed its segment reporting structure due to changes in how the Company’s Chief Operating Decision Maker (“CODM”) assesses the Company’s performance and allocates resources as a result of a change in the Company’s strategy.

In connection with these changes, the Company’s reporting units now consist of the United States (as a single reporting unit) and Hain Canada within the North America reportable segment and Hain Daniels, Ella’s Kitchen, Tilda (prior to its sale on August 27, 2019) and Hain Europe within the International reportable segment.

connection with these changes, the Company’s reporting units now consist of the United States (as a single reporting unit) and Hain Canada within the North America reportable segment and Hain Daniels, Ella’s Kitchen, Tilda (prior to its sale on August 27, 2019) and Hain Europe within the International reportable segment.

The brands constituting the Hain Ventures reporting unit were combined within the United States and Hain Canada reporting units, and its goodwill was reallocated to the United States and Canada operating segments on a relative fair value basis.

The Company completed an assessment for potential impairment of the goodwill both prior and subsequent to the aforementioned changes and determined that no impairment indicators were present.

On October 7, 2019, the Company completed the divestiture of its Arrowhead and Sunspire businesses, components of the United States reporting unit, for a purchase price of $ 13,347 following post-closing adjustments, recognizing a loss on sale of $ 1,783 during the three and six months ended December 31, 2019.

On October 7, 2019, the Company completed the divestiture of its Arrowhead and SunSpire businesses, components of the United States reporting unit, for a purchase price of $ 13,347 following post-closing adjustments, recognizing a loss on sale of $ 2,037 during the nine months ended March 31, 2020, $ 254 of which was recognized during the third quarter.

Goodwill of $ 4,357 was assigned to the divested businesses on a relative fair value basis.

An interim impairment analysis was performed for the United States reporting unit both before and after the sale, noting no impairment indicators were present.

During March 2020, the Company completed the divestiture of its Europe's Best and Casbah businesses, components of the Canada reporting unit, in two separate transactions for a combined purchase price of $ 1,759 .

Goodwill of $ 440 was assigned to the divested businesses on a relative fair value basis.

An interim impairment analysis was performed for the Canada reporting unit both before and after the sale, noting no impairment indicators were present.

The gain/loss on sale recognized during the three months ended March 31, 2020 as a result of the transactions was insignificant.

Beginning in the three months ended September 30, 2019, operations of Tilda have been classified as discontinued operations as discussed in Note 5, Discontinued Operations .

10 unchanged sentences

Net carrying amount $ 355,714 $ 380,286

(a) The gross carrying value of trademarks and tradenames is reflected net of $ 85,623 and $ 83,734 of accumulated impairment charges as of December 31, 2019 and June 30, 2019, respectively.

During the three months ended December 31, 2019 and 2018, the Company determined that indicators of impairment existed in certain of the Company’s indefinite-lived tradenames.

(a) The gross carrying value of trademarks and tradenames is reflected net of $ 93,273 and $ 83,734 of accumulated impairment charges as of March 31, 2020 and June 30, 2019, respectively.

During the nine months ended March 31, 2020 and 2019, the Company determined that indicators of impairment existed in certain of the Company’s indefinite-lived tradenames.

The Company performed interim impairment analyses during the respective periods, and determined that the fair value of certain of the Company’s tradenames was below their carrying value.

During the three months ended December 31, 2019, an impairment charge of $ 1,889 was recognized in the North America segment.

During the three months ended December 31, 2018, an impairment charge of $ 17,900 was recognized ($ 15,113 in the North America segment and $ 2,787 in the International segment).

During the three and nine months ended March 31, 2020, the Company recognized impairment charges of $ 7,650 ($ 2,118 in the North America segment and $ 5,532 in the International segment) and $ 9,539 ($ 4,007 in the North America segment and $ 5,532 in the International segment), respectively.

During the nine months ended March 31, 2019, the Company recognized an impairment charge of $ 17,900 ($ 15,113 in the North America segment and $ 2,787 in the International segment).

There were no such impairment charges recognized during the three months ended March 31, 2019.

Amortized intangible assets, which are deemed to have a finite life, primarily consist of customer relationships and are amortized over their estimated useful lives of 3 to 25 years.

Amortization expense included in continuing operations was as follows:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2020 2019 2020 2019

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Obligations under the Credit Agreement are guaranteed by certain existing and future domestic subsidiaries of the Company.

As of December 31, 2019, there were $ 321,700 of borrowings outstanding under the revolving credit facility and $ 9,698 letters of credit outstanding under the Credit Agreement.

In the six months ended December 31, 2019, the Company used the proceeds from the sale of Tilda, net of transaction costs, to prepay the entire principal amount of term loan outstanding under its credit facility and to partially pay down its revolving credit facility.

As of March 31, 2020, there were $ 362,169 of borrowings outstanding under the revolving credit facility and $ 9,698 letters of credit outstanding under the Credit Agreement.

In the nine months ended March 31, 2020, the Company used the proceeds from the sale of Tilda, net of transaction costs, to prepay the entire principal amount of term loan outstanding under its credit facility and to partially pay down its revolving credit facility.

In connection with the prepayment, the Company wrote off unamortized deferred debt issuance costs of $ 973 , recorded in Interest and other financing expense, net in the Consolidated Statements of Operations.

On May 8, 2019, the Company entered into the Third Amendment to the Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), whereby, among other things, its allowable consolidated leverage ratio (as defined in the Credit

Agreement) and interest coverage ratio (as defined in the Credit Agreement) were adjusted.

The Company’s allowable consolidated leverage ratio is no more than 4.75 to 1.0 from March 31, 2019 to December 31, 2019, no more than 4.50 to 1.0 at March 31, 2020, no more than 4.0 to 1.0 at June 30, 2020 and no more than 3.75 to 1.0 on September 30, 2020 and thereafter.

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The Amended Credit Agreement also required that the Company and the subsidiary guarantors enter into a Security and Pledge Agreement pursuant to which all of the obligations under the Amended Credit Agreement are secured by liens on assets of the Company and its material domestic subsidiaries, including stock of each of their direct subsidiaries and intellectual property, subject to agreed upon exceptions.

As of December 31, 2019, $ 668,602 was available under the Amended Credit Agreement, and the Company was in compliance with all associated covenants, as amended by the Amended Credit Agreement.

As of March 31, 2020, $ 628,133 was available under the Amended Credit Agreement, and the Company was in compliance with all associated covenants, as amended by the Amended Credit Agreement.

The Amended Credit Agreement provides that loans will bear interest at rates based on (a) the Eurocurrency Rate, as defined in the Credit Agreement, plus a rate ranging from 0.875 % to 2.50 % per annum;

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dollars will bear interest at the Base Rate plus the Applicable Rate, and Global Swing Line loans denominated in foreign currencies shall bear interest based on the overnight Eurocurrency Rate for loans denominated in such currency plus the Applicable Rate.

The weighted average interest rate on outstanding borrowings under the Amended Credit Agreement at December 31, 2019 was 3.12 %.

The weighted average interest rate on outstanding borrowings under the Amended Credit Agreement at March 31, 2020 was 2.51 %.

Additionally, the Amended Credit Agreement contains a Commitment Fee, as defined in the Amended Credit Agreement, on the amount unused under the Amended Credit Agreement ranging from 0.20 % to 0.45 % per annum, and such Commitment Fee is determined in accordance with a leverage-based pricing grid.

In general, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes.

The Company calculated its tax rate on a discrete basis for the six months ended December 31, 2018 due to significant variations in the relationship between tax expense and projected pre-tax income.

The Company calculated its tax rate on a discrete basis for the nine months ended March 31, 2019 due to significant variations in the relationship between tax expense and projected pre-tax income.

Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability on the effective tax rates from quarter to quarter.

The Company’s effective tax rate may change from period-to-period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes and tax audit settlements.

The effective income tax rate from continuing operations was expense of 31.8 % and 19.1 % for the three months ended December 31, 2019 and 2018, respectively.

The effective income tax rate from continuing operations was expense of 25.0 % and a benefit of 8.2 % for the six months ended December 31, 2019 and 2018, respectively.

The effective income tax rates from continuing operations in all periods were impacted by provisions in the Tax Cuts and Jobs Act (the "Tax Act"), primarily related to Global Intangible Low Taxed Income and limitations on the deductibility of executive compensation.

The effective income tax rates in each period were also impacted by the geographical mix of earnings and state valuation allowance.

During the three months ended December 31, 2018, the Company finalized its accounting for income tax effects of the Tax Act and recorded additional expense related to its transition tax liability.

The income tax from discontinued operations was a benefit of $ 1,835 and expense of $ 13,472 for the three and six months ended December 31, 2019, respectively, while the income tax benefit from discontinued operations was $ 22,859 and $ 27,544 for the three and six months ended December 31, 2018, respectively.

The expense for income taxes for the six months ended December 31, 2019 was impacted by $ 15,250 of tax related to the tax gain on the sale of the Tilda Group Entities.

The benefit from income taxes for the three and six months ended December 31, 2018 includes the reversal of the $ 12,250 deferred tax liability previously recorded related to Hain Pure Protein being classified as held-for-sale.

Additionally, the three and six month tax benefit is impacted by the tax effect of current period book losses as well as deferred tax benefit arising from asset impairment charges.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in accumulated other comprehensive loss:

Three Months Ended December 31, Six Months Ended December 31,

On March 27, 2020, H.R.

748, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into legislation which includes tax provisions relevant to businesses that will impact taxes related to 2018, 2019, and 2020.

Some of the significant tax law changes are to increase the limitation on deductible business interest expense for 2019 and 2020, allow for the five year carryback of net operating losses for 2018-2020, suspend the 80% limitation of taxable income for net operating loss carryforwards for 2018-2020, provide for the acceleration of depreciation expense from 2018 and forward on qualified improvement property, and accelerate the ability to claim refunds of Alternative Minimum Tax ("AMT") credit carryforwards.

The Company is required to recognize the effect on the consolidated financial statements in the period the law was enacted, which is March 31, 2020.

The Company is carrying back net operating losses generated in the June 30, 2019 tax year for five years, resulting in an estimated income statement benefit of $ 12,538 , excluding the indirect tax benefit of $ 2,800 related to discontinued operations, and a tax refund receivable of $ 48,415 which is included as a component of Prepaid expenses and other current assets on the Consolidated Balance Sheets.

The Company continues to assess the impact of the CARES Act and additional guidance that is released related to COVID-19.

The effective income tax rate from continuing operations was a benefit of 66.7 % and expense of 24.7 % for the three months ended March 31, 2020 and 2019, respectively.

The effective income tax rate from continuing operations was a benefit of 72.8 % and a benefit of 4.0 % for the nine months ended March 31, 2020 and 2019, respectively.

The effective income tax rate from continuing operations for the period ended March 31, 2020 was impacted by provisions of the CARES Act.

The Company recorded an income statement benefit of $ 12,538 related to the net operating loss carryback provision of the CARES Act, net of a reserve under ASC 740-10, but excluding the indirect tax benefit of $ 2,800 related to discontinued operations.

This benefit is primarily due to the Company's ability to realize net operating losses at 35% (previous Federal income tax rate), while the deferred tax asset was established at 21% (current Federal income tax rate).

The effective income tax rates from continuing operations for all periods were impacted by provisions in the Tax Cuts and Jobs Act (the "Tax Act"), primarily related to Global Intangible Low Taxed Income and limitations on the deductibility of executive compensation.

The effective income tax rates in each period were also impacted by the geographical mix of earnings.

The income tax from discontinued operations was a benefit of $ 1,624 and expense of $ 11,848 for the three and nine months ended March 31, 2020, respectively, while the income tax benefit from discontinued operations was $ 21,244 and $ 48,788 for the three and nine months ended March 31, 2019, respectively.

The expense for income taxes for the nine months ended March 31, 2020 was impacted by $ 14,500 of tax related to the tax gain on the sale of the Tilda Group Entities.

The benefit from income taxes for the three and nine months ended March 31, 2019 includes the reversal of the $ 12,250 deferred tax liability previously recorded related to Hain Pure Protein being classified as held-for-sale.

Additionally, the three and nine month tax benefit is impacted by the tax effect of current period book losses as well as deferred tax benefit arising from asset impairment charges.

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table presents the changes in accumulated other comprehensive (loss) income:

Three Months Ended March 31, Nine Months Ended March 31,

2020 2019 2020 2019

Foreign currency translation adjustments:

Other comprehensive income (loss) before reclassifications (1)

Other comprehensive (loss) income before reclassifications (1)

$ ( 52,315 ) $ 20,934 $ ( 42,602 ) $ ( 20,533 )

1 unchanged sentence

Deferred gains (losses) on cash flow hedging instruments:

Other comprehensive income (loss) before reclassifications — ( 42 ) — ( 42 )

Amounts reclassified into income (3)

42 — ( 26 ) —

Net change in accumulated other comprehensive loss $ 48,697 $ ( 27,948 ) $ 104,807 $ ( 41,467 )

(1) Foreign currency translation adjustments included intra-entity foreign currency transactions that were of a long-term investment nature and were net gains of $ 613 and net losses of $ 313 for the three months ended December 31, 2019 and 2018, respectively, and net losses of $ 250 and $ 472 for the six months ended December 31, 2019 and 2018, respectively.

Net change in accumulated other comprehensive (loss) income $ ( 52,206 ) $ 20,892 $ 52,601 $ ( 20,575 )

(1) Foreign currency translation adjustments included intra-entity foreign currency transactions that were of a long-term investment nature and were net losses of $ 453 and $ 403 for the three months ended March 31, 2020 and 2019, respectively, and net losses of $ 703 and $ 875 for the nine months ended March 31, 2020 and 2019, respectively.

(2) Foreign currency translation gains or losses of foreign subsidiaries related to divested businesses are reclassified into income once the liquidation of the respective foreign subsidiaries is substantially complete.

At the completion of the sale of Tilda, the Company reclassified $ 95,120 of translation losses from accumulated comprehensive loss to the Company’s results of discontinued operations.

(3) Amounts reclassified into income for deferred gains (losses) on cash flow hedging instruments are recorded in Cost of sales in the Consolidated Statements of Operations and, before taxes, were $ 52 and $( 26 ) in the three and six months ended December 31, 2019, respectively.

There were no amounts reclassified into income in the three and six months ended December 31, 2018.

(3) Amounts reclassified into income for deferred gains (losses) on cash flow hedging instruments are recorded in Cost of sales in the Consolidated Statements of Operations and, before taxes, were $ 134 and $ 108 in the three and nine months ended March 31, 2020, respectively.

There were no amounts reclassified into income in the three and nine months ended March 31, 2019.

STOCK-BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS

2 unchanged sentences

The Company maintains a long-term incentive program (the “LTI Plan”).

As of December 31, 2019, the LTI Plan consisted of two performance-based long-term incentive plans (the “2018-2020 LTIP” and “2019-2021 LTIP”) that provide for performance equity awards that can be earned over defined performance periods.

As of December 31, 2018, the Company maintained the 2017-2019 LTIP in addition to a 2016-2018 LTIP that provided for performance equity awards that could have been earned over a three -year performance period.

As of March 31, 2020, the LTI Plan consisted of two performance-based long-term incentive plans (the “2018-2020 LTIP” and “2019-2021 LTIP”) that provide for performance equity awards that can be earned over defined performance periods.

As of March 31, 2019, the Company maintained the 2017-2019 LTIP in addition to a 2016-2018 LTIP that provided for performance equity awards that could have been earned over a three -year performance period.

The Company's plans are described in Note 14, Stock-Based Compensation and Incentive Performance Plans , in the Notes to the Consolidated Financial Statements in the Form 10-K.

Compensation cost and related income tax benefits recognized in the Consolidated Statements of Operations for stock-based compensation plans were as follows:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2020 2019 2020 2019

5 unchanged sentences

Related income tax benefit $ 630 $ 470 $ 1,300 $ 765

During the six months ended December 31, 2018, the Company determined that the achievement of the adjusted operating income goals required to be met for Section 162(m) funding were not probable and therefore no awards would be paid or vested

pursuant to the 2016-2018 LTIP and 2017-2019 LTIP.

As such, in the six months ended December 31, 2018, the Company recorded a benefit of $ 9,478 associated with the reversal of previously accrued amounts for awards under these plans that were dependent on the achievement of pre-determined performance measures.

During the nine months ended March 31, 2019, the Company determined that the achievement of the adjusted operating income goals required to be met for Section 162(m) funding were not probable and therefore no awards would be paid or vested pursuant to the 2016-2018 LTIP and 2017-2019 LTIP.

As such, in the nine months ended March 31, 2019, the Company recorded a benefit of $ 9,478 associated with the reversal of previously accrued amounts for awards under these plans that were dependent on the achievement of pre-determined performance measures.

Of this amount, $ 5,065 was recorded in Chief Executive Officer Succession Plan expense, net, and $ 4,413 was recorded to Selling, general and administration expense (including $ 1,867 of stock-based compensation expense).

Restricted Stock

A summary of the restricted stock and restricted share unit activity for the six months ended December 31, 2019 is as follows:

A summary of the restricted stock and restricted share unit activity for the nine months ended March 31, 2020 is as follows:

Number of Shares

5 unchanged sentences

Forfeited ( 1,249 ) $ 8.41

Non-vested restricted stock, restricted share units, and performance units outstanding at December 31, 2019 1,933 $ 15.48

At December 31, 2019 and June 30, 2019 , the table above includes a total of 1,318 and 1,964 shares, respectively, that represent the target number of shares that may be earned under non-vested performance equity awards that are eligible to vest at 300 % of target depending on the achievement of pre-defined performance criteria.

Additionally, at December 31, 2019 and June 30, 2019 , the table above includes a total of 29 and 42 shares, respectively, that represent the target number of shares that may be earned under non-vested performance equity awards that are eligible to vest at 150 % of target depending on the achievement of pre-defined performance criteria.

Six Months Ended December 31,

Non-vested restricted stock, restricted share units, and performance units outstanding at March 31, 2020 2,192 $ 15.82

At March 31, 2020 and June 30, 2019, the table above includes a total of 1,048 and 1,964 shares, respectively, that represent the target number of shares that may be earned under non-vested performance equity awards that are eligible to vest at 300 % of target depending on the achievement of pre-defined performance criteria.

Additionally, at March 31, 2020 and June 30, 2019, the table above includes a total of 29 and 42 shares, respectively, that represent the target number of shares that may be earned under non-vested performance equity awards that are eligible to vest at 150 % of target depending on the achievement of pre-defined performance criteria.

Nine Months Ended March 31,

Fair value of restricted stock and restricted share units granted $ 16,634 $ 24,734

1 unchanged sentence

Tax (benefit) expense recognized from restricted shares vesting $ ( 102 ) $ 3,331

At December 31, 2019, there was $ 20,957 of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested restricted stock awards which is expected to be recognized over a weighted average period of 1.8 years.

At March 31, 2020, there was $ 23,325 of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested restricted stock awards which is expected to be recognized over a weighted average period of 2.0 years.

Stock Options

A summary of the stock option activity for the six months ended December 31, 2019 is as follows:

A summary of the stock option activity for the nine months ended March 31, 2020 is as follows:

Number of Options Weighted

2 unchanged sentences

Exercised — —

Options outstanding and exercisable at December 31, 2019

Options outstanding and exercisable at March 31, 2020

122 $ 2.26 11.3 $ 2,891

At December 31, 2019, there was no unrecognized compensation expense related to stock option awards.

At March 31, 2020, there was no unrecognized compensation expense related to stock option awards.

On October 27, 2015, the Company acquired a minority equity interest in Chop’t Creative Salad Company LLC, predecessor to Chop't Holdings, LLC (“Chop’t”).

1 unchanged sentence

The investment is being accounted for as an equity method investment due to the Company’s representation on the Board of Directors of Chop’t.

At December 31, 2019 and June 30, 2019, the carrying value of the Company’s investment in Chop’t was $ 14,287 and $ 14,632 , respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.

At March 31, 2020 and June 30, 2019, the carrying value of the Company’s investment in Chop’t was $ 13,755 and $ 14,632 , respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE

5 unchanged sentences

• Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following table presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2019:

Cash equivalents $ 3,006 $ 3,006 $ — $ —

The following table presents assets and liabilities measured at fair value on a recurring basis as of March 31, 2020:

Forward foreign currency contracts 992 — 992 —

12 unchanged sentences

Fair value is measured using the market approach based on quoted prices.

Company utilizes the income approach to measure fair value for its foreign currency forward contracts.

The Company utilizes the income approach to measure fair value for its foreign currency forward contracts.

The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates and forward prices.

At December 31, 2019 and June 30, 2019, the probability of payment related to existing contingent consideration arrangements was remote.

At March 31, 2020 and June 30, 2019, the probability of payment related to existing contingent consideration arrangements was remote.

Accordingly, no liability was recorded on the Consolidated Balance Sheets in either period.

There were no transfers of financial instruments between the three levels of fair value hierarchy during the six months ended December 31, 2019 and December 31, 2018.

There were no transfers of financial instruments between the three levels of fair value hierarchy during the nine months ended March 31, 2020 and March 31, 2019.

The carrying amount of cash and cash equivalents, accounts receivable, net, accounts payable and certain accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these financial instruments.

13 unchanged sentences

The Company will discontinue cash flow hedge accounting when the forecasted transaction is no longer probable of occurring on the originally forecasted date or when the hedge is no longer effective.

There were no discontinued foreign exchange hedges for the three and six months ended December 31, 2019 and December 31, 2018.

The notional amount of cash flow hedges at December 31, 2019 and June 30, 2019 was $ 10,095 and $ 2,275 , respectively.

The fair value of cash flow hedges at December 31, 2019 and June 30, 2019 was $ 102 of net liabilities and $ 83 of net assets, respectively.

The notional amounts of foreign currency exchange contracts not designated as hedges at December 31, 2019 and June 30, 2019 were $ 58,746 and $ 41,845 , respectively.

The fair values of foreign currency exchange contracts not designated as hedges at December 31, 2019 and June 30, 2019 were $ 233 of net liabilities and $ 440 of net assets, respectively.

Gains and losses related to both designated and non-designated foreign currency exchange contracts are recorded in the Company’s Consolidated Statements of Operations based upon the nature of the underlying hedged transaction and were not material for the three and six months ended December 31, 2019 and December 31, 2018.

There were no discontinued foreign exchange hedges for the three and nine months ended March 31, 2020 and March 31, 2019.

The notional amount of cash flow hedges at March 31, 2020 and June 30, 2019 was $ 6,051 and $ 2,275 , respectively.

The fair value of cash flow hedges at March 31, 2020 and June 30, 2019 was $ 257 and $ 83 of net assets, respectively.

The notional amounts of foreign currency exchange contracts not designated as hedges at March 31, 2020 and June 30, 2019 were $ 45,768 and $ 41,845 , respectively.

The fair values of foreign currency exchange contracts not designated as hedges at March 31, 2020 and June 30, 2019 were $ 613 and $ 440 of net assets, respectively.

Gains and losses related to non-designated foreign currency exchange contracts are recorded in the Company’s Consolidated Statements of Operations based upon the nature of the underlying hedged transaction and were not material for the three and nine months ended March 31, 2020 and March 31, 2019.

COMMITMENTS AND CONTINGENCIES

10 unchanged sentences

On June 5, 2017, the court issued an order for consolidation, appointment of Co-Lead Plaintiffs and approval of selection of co-lead counsel.

Pursuant to this order, the Securities

Complaints were consolidated under the caption In re The Hain Celestial Group, Inc.

Pursuant to this order, the Securities Complaints were consolidated under the caption In re The Hain Celestial Group, Inc.

Securities Litigation (the “Consolidated Securities Action”), and Rosewood Funeral Home and Salamon Gimpel were appointed as Co-Lead Plaintiffs.

On June 21, 2017, the Company received notice that plaintiff Spadola voluntarily dismissed his claims without prejudice to his ability to participate in the Consolidated Securities Action as an absent class member.

The Co-Lead Plaintiffs in the Consolidated Securities Action filed a Consolidated Amended Complaint on August 4, 2017 and a Corrected Consolidated Amended Complaint on September 7, 2017 on behalf of a purported class consisting of all persons who purchased or otherwise acquired Hain Celestial securities between November 5, 2013 and February 10, 2017 (the “Amended Complaint”).

The Co-Lead Plaintiffs in the Consolidated

Securities Action filed a Consolidated Amended Complaint on August 4, 2017 and a Corrected Consolidated Amended Complaint on September 7, 2017 on behalf of a purported class consisting of all persons who purchased or otherwise acquired Hain Celestial securities between November 5, 2013 and February 10, 2017 (the “Amended Complaint”).

The Amended Complaint named as defendants the Company and certain of its former officers (collectively, “Defendants”) and asserted violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results and internal controls.

1 unchanged sentence

Co-Lead Plaintiffs filed a Second Amended Consolidated Class Action Complaint on May 6, 2019 (the “Second Amended Complaint”).

The Second Amended Complaint again names as defendants the Company and certain of its current and former officers and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegations similar to those in the Amended Complaint, including materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results and internal controls.

The Second Amended Complaint again named as defendants the Company and certain of its current and former officers and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegations similar to those in the Amended Complaint, including materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results and internal controls.

Defendants filed a motion to dismiss the Second Amended Complaint on June 20, 2019.

Co-Lead Plaintiffs filed an opposition on August 5, 2019, and Defendants submitted a reply on September 3, 2019.

This motion is fully briefed, and the parties await a decision.

On April 6, 2020, the Court granted Defendants' motion to dismiss the Second Amended Complaint in its entirety, with prejudice.

Co-Lead Plaintiffs filed a notice of appeal on May 5, 2020 indicating their intent to appeal the Court’s decision dismissing the Second Amended Complaint to the United States Court of Appeals for the Second Circuit.

Stockholder Derivative Complaints Filed in State Court

36 unchanged sentences

On March 29, 2019, the Court in the Consolidated Securities Action granted Defendants’ motion, dismissing the Amended Complaint in its entirety, without prejudice to replead.

Co-Lead Plaintiffs in the Consolidated Securities Action filed a second amended complaint on May 6, 2019.

The parties to the Consolidated Stockholder Class and Derivative Action agreed to continue the stay of Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint.

The stay is continued through 30 days after the Court rules on the motion to dismiss the Second Amended Complaint in the Consolidated Securities Action.

Co-Lead Plaintiffs in the Consolidated Securities Action filed the Second Amended Complaint on May 6, 2019.

The parties to the Consolidated Stockholder Class and Derivative Action agreed to continue the stay of Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint through 30 days after a decision on Defendants' motion to dismiss the Second Amended Complaint in the Consolidated Securities Action.

On April 6, 2020, the Court granted Defendants’ motion to dismiss the Second Amended Complaint in the Consolidated Securities Action, with prejudice.

Pursuant to the terms of the stay, Defendants in the Consolidated Stockholder Class and Derivative Action had until May 6, 2020 to answer, move, or otherwise respond to the complaint in this matter.

On April 28, 2020, the Court entered an order extending Defendants’ time to respond to June 9, 2020.

In addition to the litigation described above, the Company is and may be a defendant in lawsuits from time to time in the normal course of business.

24 unchanged sentences

Transactions between reportable segments were insignificant for all periods presented.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2020 2019 2020 2019

9 unchanged sentences

$ 19,135 $ 18,992 $ 30,781 $ ( 29,852 )

(a) In addition to general Corporate and Other expenses as described above, for the three months ended December 31, 2019, Corporate and Other includes $ 9,835 of Productivity and transformation costs and tradename impairment charges of $ 1,889 (related to North America).

For the three months ended December 31, 2018, Corporate and Other includes $ 10,148 of Chief Executive Officer Succession Plan expense, net, $ 5,506 of Productivity and transformation costs, $ 920 of accounting review and remediation costs, net of insurance proceeds, and tradename impairment charges of $ 17,900 ($ 15,113 related to North America;

$ 2,787 related to International).

In addition to general Corporate and Other expenses as described above, for the six months ended December 31, 2019, Corporate and Other includes $ 20,570 of Productivity and transformation costs and tradename impairment charges of $ 1,889 (related to North America), partially offset by a benefit of $ 2,562 of proceeds from insurance claim.

For the six months ended December 31, 2018, Corporate and Other includes $ 29,701 of Chief Executive Officer Succession Plan expense, net, $ 13,483 of Productivity and transformation costs, $ 4,334 of accounting review and remediation costs, net of insurance proceeds, and tradename impairment charges of $ 17,900 ($ 15,113 related to North America;

(a) In addition to general Corporate and Other expenses as described above, for the three months ended March 31, 2020, Corporate and Other includes $ 5,572 of Productivity and transformation costs and tradename impairment of $ 7,650 ($ 2,118 related to North America;

$ 5,532 related to International), partially offset by a benefit of $ 400 of proceeds from insurance claim.

For the three months ended March 31, 2019, Corporate and Other includes $ 455 of Chief Executive Officer Succession Plan expense, net and $ 7,562 of Productivity and transformation costs.

In addition to general Corporate and Other expenses as described above, for the nine months ended March 31, 2020, Corporate and Other includes $ 26,142 of Productivity and transformation costs and tradename impairment charges of $ 9,539 ($ 4,007 related to North America;

$ 5,532 related to International), partially offset by a benefit of $ 2,962 of proceeds from insurance claim.

For the nine months ended March 31, 2019, Corporate and Other includes $ 30,156 of Chief Executive Officer Succession Plan expense, net, $ 21,045 of Productivity and transformation costs, $ 4,334 of accounting review and remediation costs, net of insurance proceeds, and tradename impairment charges of $ 17,900 ($ 15,113 related to North America;

$ 2,787 related to International).

The Company's net sales by product category are as follows:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2020 2019 2020 2019

5 unchanged sentences

The Company’s net sales by geographic region, which are generally based on the location of the Company’s subsidiaries, were as follows:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2020 2019 2020 2019

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements