What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2020-08-25 compared with 2019-08-29 · 882 added, 599 removed, 701 unchanged (68% of the section changed)

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Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets - June 30, 2019 and June 30, 2018

Consolidated Balance Sheets - June 30, 2020 and 2019

Consolidated Statements of Operations - Fiscal Years ended June 30, 2020, 2019 and 2018

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated August 25, 2020 expressed an unqualified opinion thereon.

Adoption of a New Accounting Standard

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases, which generally requires all leases be recognized in the statement of financial position, in 2020 due to the adoption of ASU No.

2016-02, Leases (Topic 842) .

Basis for Opinion

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Valuation of Goodwill and Trademarks and Trade names

Description of the Matter

At June 30, 2019, the Company’s goodwill and trademarks and trade names were $1.0 billion and $0.4 billion, respectively.

As discussed in Note 9 of the 2019 audited financial statements, goodwill and trademarks and trade names are qualitatively or quantitatively tested for impairment at least annually, or more frequently when necessary.

Description of the Matter At June 30, 2020, the Company’s goodwill and trademarks and trade names were $0.9 billion and $0.3 billion, respectively.

As discussed in Note 10 of the 2020 consolidated financial statements, goodwill and trademarks and trade names are qualitatively or quantitatively tested for impairment at least annually, or more frequently when necessary.

If the fair value of the intangible asset is less than its carrying amount, an impairment loss is recognized.

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The aforementioned assumptions are affected by expectations about future market or economic conditions that materially impact the fair value of the reporting units as well as the trademark and trade names.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s goodwill and trademark and trade name impairment evaluation process.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s goodwill and trademark and trade name impairment evaluation process.

For example, we tested controls over management’s review of the significant assumptions used in the reporting unit and trademark and trade name valuations as well as management’s review around the reasonableness of the data used in these valuations.

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Revenue Recognition

Description of the Matter

For the year ended June 30, 2019, the Company’s reported net sales from continuing operations was $2.3 billion.

As described in Note 2 of the 2019 audited financial statements, the Company provides certain retailers and distributors with trade and promotional incentive programs, which results in variable consideration and the Company having to estimate expected levels of promotions that are typically settled in a period after the sale taking place.

Description of the Matter For the year ended June 30, 20 20, the Company’s reported net sales from continuing operations was $2.1 billion.

As described in Note 2 of the 2020 consolidated financial statements, the Company provides certain retailers and distributors with trade and promotional incentive programs, which results in variable consideration and the Company having to estimate expected levels of promotions that are typically settled in a period after the sale taking place.

The estimated costs of these trade promotions and sales incentives are recorded as a reduction to revenue at the time a product is sold to the customer.

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The completeness of the trade promotions and sales incentives estimate could also be impacted by any undisclosed side arrangements.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s trade promotions and sales incentives estimation process.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s trade promotions and sales incentives estimation process.

For example, we tested controls over management’s review of the significant assumptions, such as the historical rate and timing of deductions, management’s review of the completeness and accuracy of the data used and other controls such as their retrospective review analysis.

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We also performed detailed transactional testing of customer deduction data underlying the estimate to validate the nature, timing and amount of deductions taken.

Additionally, we obtained confirmations from sales representatives and distributor customers in order to assess the completeness of incentive programs.

Measurement of SKU Rationalization Reserve

Description of the Matter

At June 30, 2019, the Company’s Stock Keeping Unit (“SKU”) rationalization inventory reserve was $12.4 million.

As discussed in Note 7 of the 2019 audited financial statements, the Company recorded inventory write-downs in connection with the discontinuance of slow-moving SKUs as part of a product rationalization initiative.

Inputs to the calculation of the reserve at year end related to those items in the SKU rationalization program that are subjective and judgmental, specifically the estimated selling price and the quantities to be sold.

Auditing management’s SKU rationalization reserves was complex as considerable management judgment was necessary in determining the amounts that would be reserved.

The significant estimates used in the calculation of the reserve include the estimated selling price and the quantities to be sold.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the SKU rationalization process.

For example, we tested controls over management’s review of the estimated selling prices and sales quantity data used in the inventory reserve calculation.

Our audit procedures to test the adequacy of the Company's SKU rationalization reserve included, among others, testing the accuracy and completeness of the underlying data, including the estimated selling price and quantities.

This testing included a retrospective review analysis of sales subsequent to the implementation of the SKU rationalization.

We also assessed the historical accuracy of management’s estimates related to previous SKU rationalization reserves and performed sensitivity analyses of significant assumptions (such as selling prices and sales quantity) to evaluate the impact that changes in these assumptions would have on the SKU rationalization inventory reserve.

Assessment of Realizability of Deferred Tax Assets

Description of the Matter

As more fully described in Note 12 to the consolidated financial statements, at June 30, 2019, the Company had deferred tax assets related to deductible temporary differences and carryforwards of $77.0 million, net of a $34.9 million valuation allowance.

Deferred tax assets are reduced by a valuation allowance if, based on the weight of all available evidence, in management’s judgment it is more likely than not that some portion, or all, of the federal, state and foreign deferred tax assets will not be realized.

Auditing management’s assessment of the realizability of its deferred tax assets involved complex auditor judgment because management’s estimate of future taxable income is highly judgmental and based on significant assumptions that may be affected by future market conditions and the Company’s performance.

How we addressed the matter in our audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets.

This included controls over management’s scheduling of the future reversal of existing taxable temporary differences and estimate of future taxable income.

Among other audit procedures performed, we tested the Company’s scheduling of the reversal of existing temporary taxable differences.

We also evaluated the assumptions used by the Company to develop estimates of future taxable income by jurisdiction and tested the completeness and accuracy of the underlying data used in its projections.

For example, we compared the estimates of future taxable income with the actual results of prior periods, as well as management’s consideration of other future market conditions.

We also assessed the accuracy of management’s historical projections and compared the estimate of future taxable income with other forecasted financial information prepared by the Company.

Additionally, we obtained confirmations from Company sales representatives in order to assess the completeness of incentive programs.

/s/ Ernst & Young LLP

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Cash and cash equivalents $ 37,771 $ 31,017

Accounts receivable, less allowance for doubtful accounts o f $588 and $1,828, respectively

Accounts receivable, less allowance for doubtful accounts of $ 638 and $ 588 , respectively

170,969 209,990

Inventories 248,170 299,341

Prepaid expenses and other current assets 104,024 51,391

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Property, plant and equipment, net 289,256 287,845

Goodwill 861,958 875,881

Trademarks and other intangible assets, net 346,462 380,286

Investments and joint ventures 17,439 18,890

Operating lease right-of-use assets 88,165 —

Other assets 24,238 58,764

Noncurrent assets of discontinued operations — 259,167

Total assets $ 2,188,452 $ 2,582,620

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Deferred income taxes 51,849 34,757

Operating lease liabilities, noncurrent portion 82,962 —

Other noncurrent liabilities 28,692 14,489

Noncurrent liabilities of discontinued operations — 17,361

Total liabilities 744,898 1,063,301

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Accumulated other comprehensive loss ( 171,392 ) ( 225,004 )

1,615,746 1,629,358

Treasury stock, at cost, 7,238 and 4,614 shares, respectively

( 172,192 ) ( 110,039 )

Total stockholders’ equity 1,443,554 1,519,319

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Fiscal Year Ended June 30,

2020 2019 2018

Net sales $ 2,053,903 $ 2,104,606 $ 2,265,670

Cost of sales 1,588,133 1,706,109 1,798,413

Gross profit 465,770 398,497 467,257

Selling, general and administrative expenses 324,376 314,000 316,285

Amortization of acquired intangibles 11,638 13,134 15,934

Project Terra costs and other

Chief Executive Officer Succession Plan expense, net

Productivity and transformation costs

48,789 40,107 16,822

Former Chief Executive Officer Succession Plan expense, net — 30,156 520

Proceeds from insurance claim ( 2,962 ) ( 4,460 ) —

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Long-lived asset and intangibles impairment 27,493 33,719 14,033

Operating (loss) income

Operating income (loss) 56,042 ( 32,493 ) 86,670

Interest and other financing expense, net 18,258 22,517 16,387

Other expense (income), net 3,956 994 ( 2,151 )

(Loss) income from continuing operations before income taxes and equity in net loss (income) of equity-method investees

(Benefit) provision for income taxes

Income (loss) from continuing operations before income taxes and equity in net loss (income) of equity-method investees

33,828 ( 56,004 ) 72,434

Provision (benefit) for income taxes 6,205 ( 3,232 ) ( 1,971 )

Equity in net loss (income) of equity-method investees 1,989 655 ( 339 )

Net (loss) income from continuing operations

Net (loss) income from discontinued operations, net of tax

Net income (loss) from continuing operations $ 25,634 $ ( 53,427 ) $ 74,744

Net loss from discontinued operations, net of tax ( 106,041 ) ( 129,887 ) ( 65,050 )

Net (loss) income $ ( 80,407 ) $ ( 183,314 ) $ 9,694

Net (loss) income per common share:

Basic net (loss) income per common share from continuing operations

Basic net (loss) income per common share from discontinued operations

Basic net income (loss) per common share from continuing operations $ 0.25 $ ( 0.51 ) $ 0.72

Basic net loss per common share from discontinued operations ( 1.02 ) ( 1.25 ) ( 0.63 )

Basic net (loss) income per common share $ ( 0.77 ) $ ( 1.76 ) $ 0.09

Diluted net (loss) income per common share from continuing operations

Diluted net (loss) income per common share from discontinued operations

Diluted net income (loss) per common share from continuing operations $ 0.25 $ ( 0.51 ) $ 0.72

Diluted net loss per common share from discontinued operations ( 1.02 ) ( 1.25 ) ( 0.63 )

Diluted net (loss) income per common share $ ( 0.77 ) $ ( 1.76 ) $ 0.09

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

Basic 103,618 104,076 103,848

Diluted 103,937 104,076 104,477

See notes to consolidated financial statements.

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FISCAL YEARS ENDED JUNE 30, 2020, 2019 AND 2018

(In thousands)

Fiscal Year Ended June 30, 2019

Fiscal Year Ended June 30, 2018

Fiscal Year Ended June 30, 2017

Tax (expense) benefit

After-tax amount

Tax (expense) benefit

After-tax amount

Tax (expense) benefit

After-tax amount

Fiscal Year Ended June 30, 2020 Fiscal Year Ended June 30, 2019 Fiscal Year Ended June 30, 2018

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

amount Tax (expense) benefit After-tax amount

Net (loss) income $ ( 80,407 ) $ ( 183,314 ) $ 9,694

Other comprehensive (loss) income:

Foreign currency translation adjustments

Change in deferred gains (losses) on cash flow hedging instruments

Change in unrealized (losses) gains on equity investment

Total other comprehensive (loss) income

Other comprehensive income (loss):

Foreign currency translation adjustments before reclassifications $ ( 37,847 ) $ — ( 37,847 ) $ ( 41,180 ) $ — ( 41,180 ) $ 11,497 $ — 11,497

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

Change in deferred (losses) gains on cash flow hedging instruments ( 1,007 ) 211 ( 796 ) 83 ( 15 ) 68 ( 82 ) 15 ( 67 )

Change in deferred (losses) gains on net investment hedging instruments ( 3,627 ) 762 ( 2,865 ) — — — — — —

Change in unrealized losses on equity investment — — — — — — ( 190 ) ( 1 ) ( 191 )

Total other comprehensive income (loss) $ 52,639 $ 973 $ 53,612 $ ( 41,097 ) $ ( 15 ) $ ( 41,112 ) $ 11,225 $ 14 $ 11,239

Total comprehensive (loss)

$ ( 26,795 ) $ ( 224,426 ) $ 20,933

See notes to consolidated financial statements.

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(In thousands, except par values)

Accumulated Other

Treasury Stock

Comprehensive

Income (Loss)

Common Stock Additional Accumulated Other

Amount Paid-in Retained Treasury Stock Comprehensive

Shares at $ 0.01

Capital Earnings Shares Amount Income (Loss) Total

Balance at June 30, 2017 107,989 $ 1,080 $ 1,137,724 $ 868,822 4,287 $ ( 99,315 ) $ ( 195,479 ) $ 1,712,832

Net income 9,694 9,694

Other comprehensive loss 11,239 11,239

Issuance of common stock pursuant to stock-based compensation plans

Stock-based compensation income tax effects

433 4 ( 4 ) —

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

183 ( 7,192 ) ( 7,192 )

Stock-based compensation

expense 10,476 10,476

Balance at June 30, 2018 108,422 $ 1,084 $ 1,148,196 $ 878,516 4,470 $ ( 106,507 ) $ ( 184,240 ) $ 1,737,049

Net income ( 183,314 ) ( 183,314 )

Cumulative effect of adoption of ASU 2016-01 ( 348 ) 348 —

Cumulative effect of adoption of ASU 2014-09 163 163

Other comprehensive income ( 41,112 ) ( 41,112 )

Issuance of common stock pursuant to stock-based compensation plans

411 4 ( 4 ) —

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

144 ( 3,532 ) ( 3,532 )

Stock-based compensation

expense 10,065 10,065

Balance at June 30, 2019 108,833 $ 1,088 $ 1,158,257 $ 695,017 4,614 $ ( 110,039 ) $ ( 225,004 ) $ 1,519,319

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Continued from previous page

Treasury Stock

Comprehensive

Income (Loss)

Common Stock Additional Accumulated

Amount Paid-in Retained Treasury Stock Comprehensive

Shares at $0.01 Capital Earnings Shares Amount Income (Loss) Total

Balance at June 30, 2019 108,833 $ 1,088 $ 1,158,257 $ 695,017 4,614 $ ( 110,039 ) $ ( 225,004 ) $ 1,519,319

Cumulative effect of adoption of ASU 2016-01

Net loss ( 80,407 ) ( 80,407 )

Cumulative effect of adoption of ASU 2016-02 ( 439 ) ( 439 )

Other comprehensive loss

Other comprehensive income 53,612 53,612

Issuance of common stock pursuant to stock-based compensation plans

290 4 ( 4 ) —

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

73 ( 1,931 ) ( 1,931 )

Repurchases of common stock 2,551 ( 60,222 ) ( 60,222 )

Stock-based compensation

expense 13,622 13,622

Balance at June 30, 2020 109,123 $ 1,092 $ 1,171,875 $ 614,171 7,238 $ ( 172,192 ) $ ( 171,392 ) $ 1,443,554

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Fiscal Year Ended June 30,

2020 2019 2018

CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) income $ ( 80,407 ) $ ( 183,314 ) $ 9,694

Net (loss) income from discontinued operations

Net (loss) income from continuing operations

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

Net loss from discontinued operations ( 106,041 ) ( 129,887 ) ( 65,050 )

Net income (loss) from continuing operations $ 25,634 $ ( 53,427 ) $ 74,744

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

Depreciation and amortization 52,088 50,898 54,335

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Stock-based compensation, net 13,078 9,900 11,177

Impairment charges

Goodwill impairment 394 — 7,700

Long-lived asset and intangibles impairment 27,493 33,719 14,033

Other non-cash items, net 3,906 1,193 ( 1,579 )

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Accounts receivable 33,856 26,658 ( 26,093 )

Inventories 33,236 30,550 ( 28,434 )

Other current assets ( 45,337 ) ( 7,215 ) ( 11,060 )

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Net cash provided by operating activities from continuing operations

156,914 39,333 114,396

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment ( 60,893 ) ( 75,792 ) ( 69,456 )

Proceeds from sale of assets and other

Proceeds from sale of businesses and other 15,765 7,145 738

Acquisitions of businesses, net of cash acquired — — ( 12,368 )

Net cash used in investing activities from continuing operations

( 45,128 ) ( 68,647 ) ( 81,086 )

CASH FLOWS FROM FINANCING ACTIVITIES

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Proceeds from (funding of) discontinued operations entities 305,645 56,643 ( 26,796 )

Acquisition related contingent consideration

Share repurchases ( 60,221 ) — —

Shares withheld for payment of employee payroll taxes ( 1,931 ) ( 3,532 ) ( 7,193 )

Net cash used in financing activities from continuing operations

( 104,466 ) ( 22,846 ) ( 75,421 )

Effect of exchange rate changes on cash ( 566 ) ( 1,522 ) 217

CASH FLOWS FROM DISCONTINUED OPERATIONS

Cash used in operating activities

Cash (used in) provided by operating activities ( 5,748 ) 1,936 ( 7,174 )

Cash provided by (used in) investing activities 297,592 36,605 ( 12,187 )

Cash (used in) provided by financing activities ( 299,816 ) ( 57,770 ) 27,300

Net cash used in discontinued operations

Net (decrease)/increase in cash and cash equivalents

Effect of exchange rate changes on cash - discontinued operations ( 537 ) ( 580 ) ( 20 )

Net cash (used in) provided by discontinued operations

( 8,509 ) ( 19,809 ) 7,919

Net decrease in cash and cash equivalents ( 1,755 ) ( 73,491 ) ( 33,975 )

Cash and cash equivalents at beginning of year 39,526 113,017 146,992

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Hain Celestial sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, drug and convenience stores in over 75 countries worldwide.

The Company manufactures, markets, distributes and sells organic and natural products under brand names that are sold as “better-for-you” products, with many recognized brands in the various market categories it serves, including Almond Dream ® , Arrowhead Mills ® , 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 ® , SunSpire ® , 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.

Historically, the Company divided its business into core platforms, which are defined by common consumer need, route-to-market or internal advantage and are aligned with the Company’s strategic roadmap to continue its leadership position in the organic and natural, “better-for-you” products industry.

Those core platforms within our United States segment are:

Better-for-You Baby , which includes infant foods, infant and toddler formula, toddler and kids foods and diapers that nurture and care for babies and toddlers, under the Earth’s Best ® and Ella’s Kitchen ® brands.

Better-for-You Pantry , which includes core consumer staples, such as MaraNatha ® , Arrowhead Mills ® , Imagine ® and Spectrum ® brands.

Better-for-You Snacking , which includes wholesome products for in-between meals, such as Terra ® , Sensible Portions ® and Garden of Eatin’ ® brands.

Fresh Living , which includes yogurt, plant-based proteins and other refrigerated products, such as The Greek Gods ® yogurt and Dream™ plant-based beverage brands.

Pure Personal Care , which includes personal care products focused on providing consumers with cleaner and gentler ingredients, such as JASON ® , Live Clean ® , Avalon Organics ® and Alba Botanica ® brands.

Tea , which includes tea products marketed under the Celestial Seasonings ® brand.

Additionally, beginning in fiscal 2017, the Company launched Hain Ventures (formerly known as “Cultivate Ventures”), a venture unit with a twofold purpose:

(i) to strategically invest in the Company’s smaller brands in high potential categories, by giving these brands a dedicated, creative focus for refresh and relaunch and;

(ii) to incubate and grow small acquisitions until they reach the scale required to migrate to the Company’s core platforms.

During fiscal 2019, the Company refined its strategy within the United States segment, focusing on simplifying the Company’s portfolio and reinvigorating profitable sales growth through removing uneconomic investment, realigning resources to coincide with individual brand role, reducing unproductive stock-keeping units (“SKUs”) and brands, and reassessing current pricing architecture.

As part of this initiative, the Company reviewed its product portfolio and divided it into “Get Bigger” and “Get Better” brand categories.

The Company’s “Get Bigger” brands represent its strongest brands with higher margins, which compete in categories with strong growth.

In order to capitalize on the potential of these brands, the Company began reallocating resources to optimize assortment and increase share of distribution.

In addition, the Company will increase its marketing and innovation investments.

The Company’s “Get Better” brands are the brands in which the Company is primarily focused on simplification and expansion of profit.

Some of these are low margin, non-strategic brands that add complexity with minimal benefit to the Company’s operations.

Accordingly, in fiscal 2019, the Company initiated a SKU rationalization, which included the elimination of approximately 350 low velocity SKUs.

The elimination of these SKUs is expected to impact sales growth in the next fiscal year, but is expected to result in expanded profits and a remaining set of core SKUs that will maintain their shelf space in the store.

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 (discussed further below) and WestSoy ® tofu, seitan and tempeh businesses in the United States.

Additionally, on August 27, 2019, the Company sold the entities comprising its Tilda operating segment and certain other assets of the Tilda business.

See Note 21, Subsequent Event, for additional information.

Productivity and Transformation

The Company manufactures, markets, distributes and sells organic and natural products under brand names that are sold as “better-for-you” products, with many recognized brands in the various market categories it serves, including Celestial Seasonings ® , Clarks ™ , Cully & Sully ® , Dream ® , Earth’s Best ® , Ella’s Kitchen ® , Farmhouse Fare ™ , Frank Cooper’s ® , GG UniqueFiber ® , Gale’s ® , Garden of Eatin’ ® , Hain Pure Foods ® , Hartley’s ® , Health Valley ® , Imagine ® , Joya ® , Lima ® , Linda McCartney ® (under license), MaraNatha ® , Natumi ® , New Covent Garden Soup Co.

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

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

The Company continues to execute the four key pillars of its strategy to:

(1) simplify its portfolio;

(2) strengthen its capabilities;

(3) expand profit margins and cash flow;

and (4) reinvigorate profitable topline growth.

The Company has executed this strategy, with a focus on discontinuing uneconomic investment, realigning resources to coincide with brand importance, reducing unproductive stock-keeping units (“SKUs”) and brands and reassessing current pricing architecture.

As part of this initiative, the Company reviewed its product portfolio within North America and d ivided it into “Get Bigger” and “Get Better” brand categories.

The Company’s “Get Bigger” brands represent its strongest brands with higher margins, which compete in categories with strong growth potential.

The Company has concentrated its investment in marketing, innovation and other resources to prioritize spending for these brands, in an effort to reinvigorate profitable topline growth, optimize assortment and increase share of distribution.

The Company’s “Get Better” brands are the brands in which the Company is primarily focused on simplification and expansion of profit margin.

Some of these brands have historically been low margin, non-strategic brands that added complexity with minimal benefit to the Company’s operations.

During the fourth quarter of fiscal 2019, the Company initiated a SKU rationalization that included the elimination of approximately 350 low velocity and low profitability SKUs.

These SKU rationalizations are expected to result in expanded future profits and a remaining set of core SKUs that will m aintain their shelf space in the store.

In addition, 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.

During fiscal 2019, for example, the Company divested its Hain Pure Protein reportable segment and its WestSoy ® tofu, seitan and tempeh businesses.

In fiscal 2020, the Company divested its Tilda business and its Arrowhead Mills ® , SunSpire ® , Europe's Best ® , Casbah ® , Rudi’s Gluten-Free Bakery ™ , Rudi’s Organic Bakery ® and Fountain of Truth ™ brands.

More recently, the Company divested its Danival ® business in July 2020.

See No te 25, Su bsequent Events, for additional information.

Productivity and Transforma tion Costs

As part of the Company’s historical strategic review, it focused on a productivity initiative, which it called “Project Terra.” A key component of this project was the identification of global cost savings, and the removal of complexity from the business.

This review has included and continues to include streamlining the Company’s manufacturing plants, co-packers and supply chain, eliminating served categories or brands within those categories, and product rationalization initiatives which are aimed at eliminating slow moving SKUs.

In fiscal 2019, the Company announced a new transformation initiative, of which one aspect is to identify additional areas of productivity savings to support sustainable profitable performance.

I n fiscal 2019, the Company announced a strategy that includes as one of its key pillars identifying areas of cost savings and operating efficiencies to expand profit margins and cash flow.

As part of this overall strategy and the key pillar of realizing

savings and efficiencies, during fiscal 2020, the Company began the integration of its United States and Canada operations in alignment with the North America reportable segment structure.

The Company will carry out additional productivity initiatives under this strategy in fiscal 2021.

Productivity and transformation costs include costs, such as consulting and severance costs, relating to streamlining the Company’s manufacturing plants, co-packers and supply chain, eliminating served categories or brands within those categories, and product rationalization initiatives which are aimed at eliminating slow moving SKUs.

Discontinued Operations

In March 2018, the Company’s Board of Directors approved a plan to sell all of the operations of the Hain Pure Protein Corporation (“HPPC”) operating segment, which includes the Plainville Farms and FreeBird businesses, and the EK Holdings, Inc.

(“Empire Kosher” or “Empire”) operating segment, which were reported in the aggregate as the Hain Pure Protein reportable segment.

These dispositions were being undertaken to reduce complexity in the Company’s operations and simplify the Company’s brand portfolio, in addition to allowing additional flexibility to focus on opportunities for growth and innovation in the Company’s more profitable and faster growing core businesses.

Collectively, these dispositions represent a strategic shift that will have a major impact on the Company’s operations and financial results and have been accounted for as discontinued operations.

On February 15, 2019, the Company completed the sale of substantially all of the assets used primarily for the Plainville Farms business (a component of HPPC).

On June 28, 2019, the Company completed the sale of the remainder of HPPC and Empire Kosher which includes the FreeBird and Empire Kosher businesses.

See Note 5, Discontinued Operations, for additional information.

On August 27, 2019, the Company and Ebro Foods S.A.

(the “Purchaser”) entered into, and consummated the transactions contemplated by, an agreement relating to the sale and purchase of the Tilda Group Entities and certain other assets.

On February 15, 2019, the Company completed the sale of substantially all of the assets used primarily for the Plainville Farms business, a component of the Company’s Hain Pure Protein Corporation (“HPPC”) operating segment.

On June 28, 2019, the Company completed the sale of the remainder of HPPC and Empire Kosher which included the FreeBird and Empire Kosher businesses.

These dispositions were undertaken to reduce complexity in the Company’s operations and simplify the Company’s brand portfolio, in addition to allowing additional flexibility to focus on opportunities for growth and innovation in the Company’s more profitable and faster growing core businesses.

Collectively, these dispositions were reported in the aggregate as the Hain Pure Protein reportable segment.

These dispositions represented strategic shifts that had a major impact on the Company’s operations and financial results, and therefore, the Company is presenting the operating results and cash flows of the Tilda operating segment and the Hain Pure Protein reportable segment within discontinued operations in the current and prior periods.

The assets and liabilities of the Tilda operating segment are presented as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of June 30, 2019.

See Note 5, Di scontinued Operations and Assets Held for Sale, for additional information.

Change in Reportable Segments

Historically, the Company had three reportable segments:

United States, United Kingdom and Rest of World.

Effective July 1, 2019, the Company reassessed its segment reporting structure and as a result, the Canada and Hain Ventures operating segments, which were included within the Rest of World reportable segment, were moved to the United States reportable segment and renamed the North America reportable segment.

Additionally, the Europe operating segment, which was included in the Rest of World reportable segment, was combined with the United Kingdom reportable segment and renamed the International reportable segment.

Accordingly, the Company now operates under two reportable segments:

North America and International.

Prior period segment information contained herein has been adjusted to reflect the Company’s new operating and reporting structure.

See Note 22, Segment Information , for additional information.

Basis of Presentation

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Unless otherwise indicated, references in these consolidated financial statements to 2020, 2019 and 2018 or “fiscal” 2020, 2019 and 2018 or other years refer to our fiscal year ended June 30 of that respective year and references to 2021 or “fiscal” 2021 refer to our fiscal year ending June 30, 2021.

Reclassifications

Certain prior year amounts have been reclassified to conform with current year presentation.

Discontinued Operations

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Shipping and handling costs are accounted for as a fulfillment activity of our promise to transfer products to our customers and are included in cost of sales line item on the Consolidated Statements of Operations.

During the fourth quarter of fiscal 2016, the Company identified the practice of granting additional concessions to certain distributors in the United States and commenced an internal accounting review in order to (i) determine whether the revenue associated with those concessions was accounted for in the correct period and (ii) evaluate its internal control over financial reporting.

During the fourth quarter of fiscal 2016, the Company commenced an internal accounting review with respect to the timing of recording revenue associated with concessions provided to distributors in the United States.

The Audit Committee of the Company’s Board of Directors separately conducted an independent review of these matters and retained independent counsel to assist in their review.

On November 16, 2016, the Company announced that the independent review of the Audit Committee was completed and that the review found no evidence of intentional wrongdoing in connection with the preparation of the Company’s financial statements.

Management’s internal accounting review included consideration of certain side agreements and concessions provided to distributors in the United States in fiscal 2016, including payment terms beyond the customer’s standard terms, rights of return of product and post-sale concessions, most of which were associated with sales that occurred at the end of the quarter.

It had been the Company’s policy to record revenue related to these distributors when title of the product transfers to the distributor.

The Company concluded that its historical accounting policy for these distributors is appropriate as the sales price is fixed or determinable at the time ownership transfers to these distributors, based on the Company’s ability to make a reasonable estimate of future returns and certain concessions at the time of shipment.

In November 2016, the Company announced that the independent review of the Audit Committee was completed and that the review found no evidence of intentional wrongdoing in connection with the preparation of the Company’s financial statements.

In particular, the Company concluded that its historical accounting policy for recording revenue and concessions related to distributors was appropriate.

In December 2018, the Company and the Securities and Exchange Commission (“SEC”) settled the SEC’s charges against the Company with respect to these matters without a monetary penalty on the Company.

Variable Consideration

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Disaggregation of Net Sales

The Company does not disaggregate revenue below the segment revenues level disclosed in Note 19, Segment Information , as all revenues are recognized at a point in time and the Company’s segment revenues depict how the economic factors affect the nature, amount, and timing and uncertainty of cash flows.

The Company does not disaggregate revenue below the segment revenues level disclosed in N ote 22, Segment Information , as all revenues are recognized at a point in time and the Company’s segment revenues depict how the econ omic factors affect the nature, amount, and timing and uncertainty of cash flows.

Valuation of Accounts and Chargebacks Receivable and Concentration of Credit Risk

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Credit losses have been within the Company’s expectations in recent years.

While one of the Company’s customers represented approximately 12% and 11% of trade receivables balances as of June 30, 2019 and 2018 , respectively, the Company believes that there is no significant or unusual credit exposure at this time.

While one of the Company’s customers represented approximately 13 % of trade receivables balances as of both June 30, 2020 and 2019, the Company believes that there is no significant or unusual credit exposure at this time.

Based on cash collection history and other statistical analysis, the Company estimates the amount of unauthorized deductions customers have taken that we expect will be collected and repaid in the near future and records a chargeback receivable.

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The Company’s manufacturing plants and distribution centers, and their related assets, are reviewed when impairment indicators are present by analyzing underlying cash flow projections.

The Company believes no impairment of the carrying value of such assets exists other than as disclosed under Note 8, Property, Plant and Equipment, Net, and Note 5, Discontinued Operations .

The Company believes no impairment of the carrying value of such assets exists other than as disclosed under Note 8, Property, Plant and Equipment, Net and Note 5, Discontinued Operations and Assets Held for Sale .

Ordinary repairs and maintenance costs are expensed as incurred.

The Company utilizes the following ranges of asset lives:

Buildings and improvements

10 - 40 years

Machinery and equipment

Furniture and fixtures

Buildings and improvements 10 - 40 years

Machinery and equipment 3 - 20 years

Furniture and fixtures 3 - 15 years

Leasehold improvements are amortized over the shorter of the respective initial lease term or the estimated useful life of the assets, and generally range from 3 to 15 years.

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If the carrying value of a reporting unit exceeds its fair value, the Company would then compare the carrying value of the goodwill to its implied fair value in order to determine the amount of the impairment, if any.

Indefinite-lived intangible assets are tested for impairment by comparing the fair value of the asset to the carrying value.

Fair value is determined based on a relief from royalty method that include significant management assumptions such as revenue growth rates, weighted average cost of capital, and assumed royalty rates.

If the fair value is less than the carrying value, the asset is reduced to fair value.

Indefinite-lived intangible assets, which are not amortized, consist primarily of acquired trademarks and trade names.

Indefinite-lived intangible assets are evaluated on an annual basis in conjunction with the Company’s evaluation of goodwill, or on an interim basis if and when events or circumstances change that would more likely than not reduce the fair value of any of its indefinite-life intangible assets below their carrying value.

In assessing fair value, the Company utilizes a “relief from royalty” methodology.

This approach involves two steps:

(i) estimating the royalty rates for each trademark and (ii) applying these royalty rates to a projected net sales stream and discounting the resulting cash flows to determine fair value.

If the carrying value of the indefinite-lived intangible assets exceeds the fair value of the asset, the carrying value is written down to fair value in the period identifie d.

This method includes significant management assumptions such as revenue growth rates, weighted average cost of capital and assumed royalty rates.

See Note 10, Goodwill and Other Intangible Assets, for information on goodwill and intangibles impairment charges.

Transfer of Financial Assets

The Company accounts for transfers of financial assets, such as non-recourse accounts receivable factoring arrangements, when the Company has surrendered control over the related assets.

Determining whether control has transferred requires an evaluation of relevant legal considerations, an assessment of the nature and extent of the Company’s continuing involvement with the assets transferred and any other relevant considerations.

The Company has a non-recourse factoring arrangement in which eligible receivables are sold to a third-party buyer in exchange for cash.

The Company transferred accounts receivables in their entirety to the buyer and satisfied all of the conditions to report the transfer of financial assets in their entirety as a sale.

The principal amount of receivables sold under this arrangement was $ 108,928 during the year ended June 30, 2020, and no amounts were sold in the years ended June 30, 2019 and 2018.

The incremental cost of factoring receivables under this arrangement is included in interest and other financing expense, net in the Company’s Consolidated Statements of Operations.

The proceeds from the sale of receivables are included in cash from operating activities in the accompanying Consolidated Statements of Cash Flows.

Cost of Sales

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Proceeds from Insurance Claims

In July of 2019, the Company received $7,027 as partial payment from an insurance claim relating to business disruption costs associated with a co-packer, $4,460 of which was recognized in fiscal 2019 as it relates to reimbursement of costs already incurred.

The Company will record an additional $2,567 in the first quarter of fiscal 2020.

In July of 2019, the Company received $ 7,027 as partial payment from an insurance claim relating to business disruption costs associated with a co-packer, $ 4,460 of which was recognized in fiscal 2019 as it related to reimbursement of costs incurred in that fiscal year.

The Company recorded an additional $ 2,567 in the first quarter of fiscal 2020 and received an additional $ 462 of proceeds in the third quarter of fiscal 2020.

The Company follows the liability method of accounting for income taxes.

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The Company recognizes liabilities for uncertain tax positions based on a two-step process prescribed by the authoritative guidance.

The first step requires the Company to determine if the weight of available evidence indicates that the tax position has met the threshold for recognition;

The first step requires the Company to determine if the weight of available evidence indicates that the tax position has

met the threshold for recognition;

therefore, the Company must evaluate whether it is more likely than not that the position will be sustained on audit, including resolution of any related appeals or litigation processes.

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At June 30, 2020 and 2019, the carrying values of financial instruments such as accounts receivable, accounts payable, accrued expenses and other current liabilities, as well as borrowings under our credit facility and other borrowings, approximated fair value based upon either the short-term maturities or market interest rates of these instruments.

Derivative Instruments

The Company utilizes derivative instruments, principally foreign exchange forward contracts, to manage certain exposures to changes in foreign exchange rates.

The Company’s contracts are hedges for transactions with notional balances and periods consistent with the related exposures and do not constitute investments independent of these exposures.

These contracts, which are designated and documented as cash flow hedges, qualify for hedge accounting treatment in accordance with ASC 815,

Derivatives and Hedging .

Exposure to counterparty credit risk is considered low because these agreements have been entered into with high quality financial institutions.

All derivative instruments are recognized on the Consolidated Balance Sheets at fair value.

The effective portion of changes in the fair value of derivative instruments that qualify for cash flow hedge accounting treatment are recognized in stockholders’ equity as a component of accumulated other comprehensive (loss)/income until the hedged item is recognized in earnings.

Changes in the fair value of fair value hedges, derivatives that do not qualify for hedge accounting treatment, as well as the ineffective portion of any cash flow hedges, are recognized currently in earnings as a component of other (income)/expense, net in the accompanying financial statements.

Derivative Instruments and Hedging Activities

Issued by the Financial Accounting Standards Board (“FASB”), ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of:

(a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows.

Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

As required by ASC 815, the Company records all derivatives on the balance sheet at fair value.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation.

Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

The effective portion of changes in the fair value of derivative instruments that qualify for cash flow hedge and net investment hedge accounting treatment are recognized in stockholders’ equity as a component of accumulated other comprehensive (loss) income until the hedged item is recognized in earnings.

Changes in the fair value of fair value hedges, derivatives that do not qualify for hedge accounting treatment, as well as the ineffective portion of any cash flow hedges, are recognized currently in earnings as a component of other (income) expense, net or interest and other financing expense, net in the accompanying financial statements.

The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

Stock-Based Compensation

The Company has employee and director stock-based compensation plans.

The Company uses the fair market value of the Company’s common stock on the grant date to measure fair value for service-based and performance-based awards, and a Monte Carlo simulation model to determine the fair value of market-based awards.

The fair value of stock-based compensation awards is recognized as an expense over the vesting period using the straight-line method.

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If the actual forfeitures differ from the estimate, additional adjustments to compensation expense may be required in future periods.

The Company receives an income tax deduction in certain tax jurisdictions for restricted stock grants when they vest and for stock options exercised by employees equal to the excess of the market value of our common stock on the date of exercise over the option price.

The Company receives an income tax deduction in certain tax jurisdictions for restricted stock grants when they vest and for stock options exercised by employees equal to the excess of the market value of the Company’s common stock on the date of exercise over the option price.

Excess tax benefits (tax benefits resulting from tax deductions in excess of compensation cost recognized) are classified as a cash flow provided by operating activities in the accompanying Consolidated Statements of Cash Flows.

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Once such impairment test is performed, a loss is recognized based on the amount, if any, by which the carrying value exceeds the estimated fair value for assets to be held and used.

See Note 8, Property, Plant and Equipment , Net, and Note 5, Discontinued Operations, for information on long-lived asset impairment charges.

See Note 8, Property, Plant and Equipment , Net, and Note 5, Discontinued Operations and Assets Held for Sale, for information on long-lived asset impairment charges.

Effective July 1, 2019, arrangements containing leases are evaluated as an operating or finance lease at lease inception.

For operating leases, the Company recognizes an operating right-of-use ("ROU") asset and operating lease liability at lease commencement based on the present value of lease payments over the lease term.

With the exception of certain finance leases, an implicit rate of return is not readily determinable for the Company's leases.

For these leases, an incremental borrowing rate is used in determining the present value of lease payments and is calculated based on information available at the lease commencement date.

The incremental borrowing rate is determined using a portfolio approach based on the rate of interest the Company would have to pay to borrow funds on a collateralized basis over a similar term.

The Company references market yield curves which are risk-adjusted to approximate a collateralized rate in the currency of the lease.

These rates are updated on a quarterly basis for measurement of new lease obligations.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

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.

Operating lease assets are presented as operating lease ROU assets, and corresponding operating lease liabilities are presented within accrued expenses and other current liabilities (current portions), and as operating lease liabilities, noncurrent portion, on the Company’s Consolidated Balance Sheet.

Finance lease assets are included in property, plant and equipment, net, and corresponding finance lease liabilities are included within current portion of long-term debt and long-term debt, less current portion, on the Company’s Consolidated Balance Sheet.

Net (Loss) Income Per Share

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Diluted net (loss) income per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.

Newly Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) .

Recently Adopted Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, R evenue from Contracts with Customers (Topic 606) .

This guidance outlines a single, comprehensive model for accounting for revenue from contracts with customers, providing a single five-step model to be applied to all revenue transactions.

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The Company adopted ASU 2016-01 in the three months ended September 30, 2018, which resulted in a net decrease to beginning retained earnings of $ 348 on July 1, 2018, representing the accumulated unrealized losses (net of tax) reported in accumulated other comprehensive income (loss) for available-for-sale equity securities on June 30, 2018.

We no longer classify equity investments as trading or available-for-sale and no longer recognize unrealized holding gains and losses on equity securities previously classified as available-for-sale in other comprehensive income (loss) as a result of adoption of ASU 2016-01.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718):

Scope of Modification Accounting , which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.

The guidance is effective for annual periods beginning after December 15, 2017.

The Company adopted the provisions of ASU 2016-15 as of July 1, 2018.

There was no impact on the Company's consolidated financial statements resulting from the adoption of this guidance.

The Company no longer classifies equity investments as trading or available-for-sale and no longer recognizes unrealized holding gains and losses on equity securities previously classified as available-for-sale in other comprehensive income (loss) as a result of adoption of ASU 2016-01.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) .

The Company adopted ASU 2016-02 effective July 1, 2019, using a modified retrospective approach.

As permitted by the new guidance, the Company elected the package of practical expedients, which among other things, allowed historical lease classification to be carried forward.

Excluding Tilda, adoption of the new standard resulted in the recording of operating lease ROU assets and lease liabilities as of July 1, 2019 of $ 87,414 and $ 92,982 , respectively, with the difference largely due to prepaid and deferred rent that were reclassified to the ROU asset value.

In addition, the Company recorded a cumulative-effect adjustment to opening retained earnings of $ 439 at adoption for the impairment of an abandoned ROU asset for a manufacturing facility in the United Kingdom that was previously impaired and the remaining lease payments were accounted for under ASC Topic 420, Exit or Disposal Obligations .

The standard did not materially affect the Company’s consolidated net income (loss) or cash flows.

See Note 9 , Leases , for further details.

Recently Issued Accounting Pronouncements Not Yet Effective

In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842) .

The amendments in this ASU replace most of the existing U.S.

GAAP lease accounting guidance in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.

The ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those years, with early adoption permitted.

The ASU requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach.

In July 2018, the FASB approved amendments to create an optional transition method that will provide an option to use the effective date of ASC 842 as the date of initial application of the transition.

Under the new transition method, a reporting entity would initially apply the new lease requirements at the effective date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, continue to report comparative periods presented in the financial statements in the period of adoption in accordance with current U.S.

GAAP (i.e., ASC 840, Leases) and provide the required disclosures under ASC 840 for all periods presented under current U.S.

As part of the Company’s assessment work to-date, the Company has formed an implementation work team to perform a comprehensive evaluation of the impact of the adoption of this guidance, which includes assessing the Company’s lease portfolio, the impact to business processes and internal controls over financial reporting and the related disclosure requirements.

Additionally, the Company has implemented lease accounting software to assist in the quantification of the expected impact on the Company’s Consolidated Balance Sheet and to facilitate the calculations of the related accounting entries and disclosures, as well as to facilitate accounting, presentation and disclosure for all leases after the initial date of application under the new standard.

The Company will adopt ASC 842 during the first quarter of fiscal 2020 using the modified retrospective method.

The new guidance will be applied to leases that exist or are entered into on or after July 1, 2019 without adjusting comparative periods in the financial statements.

The Company will utilize the package of practical expedients under ASC 842, which allows entities to (1) not reassess whether any expired or existing contracts are or contain leases, (2) retain the classification of leases (e.g., operating or finance lease) existing as of the date of adoption and (3) not reassess initial direct costs for any existing leases.

Based on the most recent assessment of existing leases, the Company expects to record lease liabilities in the range of $85,000 to $95,000 , with a corresponding amount for the right-of-use assets, which will also be adjusted by reclassifications of existing assets and liabilities primarily related to deferred rent.

The Company does not expect the adoption of ASC 842 to have a material impact on the Company’s results of operations or cash flows.

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 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 January 2017, the FASB, issued ASU 2017-04, Simplifying the Test for Goodwill Impairment , which removes the second step of the goodwill impairment test that requires a hypothetical purchase price allocation.

A goodwill impairment will now be the

amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

This guidance is effective for interim and annual reporting periods beginning after December 15, 2019.

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The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

CHIEF EXECUTIVE OFFICER SUCCESSION PLAN

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement:

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 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 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 intra-period 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

On June 24, 2018, the Company entered into a CEO succession plan, whereby the Company’s former CEO, Irwin D.

Simon, agreed to terminate his employment with the Company upon the hiring of a new CEO (the “Succession Agreement”).

On October 26, 2018, the Company’s Board of Directors appointed Mark L.

Schiller as President and CEO, succeeding Mr.

In connection with the appointment, on October 26, 2018, the Company and Mr.

Schiller entered into an employment agreement, which was approved by the Board, with Mr.

Schiller’s employment commencing on November 5, 2018.

Accordingly, Mr.

Simon’s employment with the Company terminated on November 4, 2018.

Cash Separation Payments

The Succession Agreement provided Mr.

Simon with a cash separation payment of $ 34,295 payable in a single lump sum and cash benefits continuation costs of $ 208 .

These costs were recognized from June 24, 2018 through November 4, 2018.

Expense recognized in connection with these payments was $33,051 and $1,452 in the twelve months ended June 30, 2019 and 2018.

These costs were recognized from June 24, 2018 through November 4, 2018, at which time the Company’s new CEO, Mark L.

Schiller, commenced his employment.

Expense recognized in connection with these payments was $ 33,051 and $ 1,452 during the twelve months ended June 30, 2019 and June 30, 2018, respectively.

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

Consulting Agreement

Additionally, the Succession Agreement allowed for acceleration of vesting of all service-based awards outstanding at the termination of Mr.

Simon’s employment.

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 Former Chief Executive Officer Succession Plan expense, net in the Consolidated Statements of Operations.

As further discussed in Note 15, 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.

Acco rdingly, 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’s stock awards during the twelve months ended June 30, 2019.

On October 26, 2018, the Company and Mr.

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

Simon was entitled to receive an aggregate consulting fee of $975 as compensation for his services during the consulting term, which was fully recognized in the Consolidated Statement of Operations as a component of “Chief Executive Officer Succession Plan expense, net” in the twelve months ended June 30, 2019 .

Long Term Incentive Award

Simon was granted 164 total shareholder return (“TSR”) performance based awards on September 26, 2017.

The performance period was set to end on June 30, 2019.

Under the Succession Agreement, he was entitled to compensation if the TSR components were met.

The Succession Agreement modified Mr.

Simon’s award such that his award went from improbable of being earned to probable since the Succession Agreement allowed him to be eligible for the award while he is no longer an employee.

Accordingly, the Company determined that a Type III modification pursuant to ASC 718 occurred.

Therefore, in accordance with ASC 718, the Company determined the fair value of the replacement award as of the modification date, utilizing the Monte Carlo valuation model.

As a result, the fair value of the TSR performance based awards granted on September 26, 2017 was reduced from $31.60 per share to $3.19 per share based on the lower likelihood of attainment, resulting in revised expense of $524 , which was amortized on a straight-line basis from June 24, 2018 through November 4, 2018.

In the fiscal year ended June 30, 2018, the Company reversed the previously recognized stock-based compensation expense of $2,244 and recognized $22 of stock-based compensation expense associated with the modified grant, resulting in a net reduction to stock-based compensation expense of $2,222 in the twelve months ended June 30, 2018 associated with the modification of this grant recognized in the Consolidated Statement of Operations.

Additionally, the Succession Agreement allowed for acceleration of vesting of all service-based awards outstanding at the Succession Date.

In connection with these accelerations, the Company recognized $19 in the twelve months ended June 30, 2018.

In connection with the aforementioned items, the Company recorded a net benefit of $2,203 as a component of “Chief Executive Officer Succession Plan expense, net” in the twelve months ended June 30, 2018 .

Simon received an aggregate consulting fee of $ 975 as compensation for his services during the consulting term, which was fully recognized in the Consolidated Statement of Operations as a component of Former Chief Executive Officer Succession Plan expense, net in the twelve months ended June 30, 2019.

EARNINGS (LOSS) PER SHARE

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Fiscal Year Ended June 30,

Net (loss) income from continuing operations

Net (loss) income from discontinued operations, net of tax

2020 2019 2018

Net income (loss) from continuing operations $ 25,634 $ ( 53,427 ) $ 74,744

Net loss from discontinued operations, net of tax $ ( 106,041 ) $ ( 129,887 ) $ ( 65,050 )

Net (loss) income $ ( 80,407 ) $ ( 183,314 ) $ 9,694

Basic weighted average shares outstanding

103,618 104,076 103,848

Effect of dilutive stock options, unvested restricted stock and

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Diluted weighted average shares outstanding

103,937 104,076 104,477

Basic net (loss) income per common share:

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

Due to our net loss in the twelve months ended June 30, 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 share because the effect would have been anti-dilutive to the computations.

Due to our net loss from continuing operations in the fiscal year ended June 30, 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 share because the effect would have been anti-dilutive.

Diluted earnings per share for the fiscal years ended June 30, 2020 and 2018 includes the dilutive effects of common stock equivalents such as stock options and unvested restricted stock awards.

There were 3,625 , 560 and 271 stock-based awards excluded from our diluted net (loss) income per share calculations for the fiscal years ended June 30, 2019 , 2018 and 2017 , respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods.

Additionally, 659 , 4 and 12 restricted stock awards were excluded from our diluted net (loss) income per share calculation for the fiscal years ended June 30, 2019 , 2018 and 2017 , respectively, as such awards were anti-dilutive.

There were 110 potential shares of common stock issuable upon exercise of stock options excluded from our diluted net loss per share calculation for the fiscal year ended June 30, 2019 , as they were anti-dilutive due to the net loss recorded in the period.

No such awards were excluded for the fiscal years ended June 30, 2018 and 2017 .

Share Repurchase Program

On June 21, 2017, the Company's Board of Directors authorized the repurchase of up to $250,000 of the Company’s issued and

outstanding common stock.

Repurchases may be made from time to time in the open market, pursuant to pre-set trading plans, in private transactions or otherwise.

The authorization does not have a stated expiration date.

The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations.

The Company did not repurchase any shares under this program in fiscal 2019, 2018 or 2017, and accordingly, as of the end of fiscal 2019, we had $250,000 of remaining capacity under our share repurchase program.

There were 428 , 769 and 4 restricted stock awards and stock options excluded from our calculation of diluted net (loss) income per share for the fiscal years ended June 30, 2020, 2019 and 2018, respectively, as such awards were anti-dilutive.

Additionally, there were 2,645 , 3,625 and 560 stock-based awards excluded for the fiscal years ended June 30, 2020, 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.

DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

Discontinued Operations

Sale of Tilda Business

On August 27, 2019, the Company sold the entities comprising its Tilda operating segment (the “Tilda Group Entities”) and certain other assets of the Tilda business to the Purchaser for an aggregate price of $ 342,000 in cash, subject to customary post-closing adjustments based on the balance sheets of the Tilda business.

The other assets sold in the transaction consisted of raw materials, consumables, packaging, and finished and unfinished goods related to the Tilda business held by other Company entities that are not Tilda Group Entities.

In January 2020, the Company and the Purchaser agreed to fully resolve all matters relating to post-closing adjustments to the sale price, resulting in a final aggregate sale price of $ 341,800 .

The Company used the proceeds from the sale to pay down the remaining outstanding borrowings under its term loan and a portion of its revolving credit facility.

The Company also entered into certain ancillary agreements with the Purchaser and certain of the Tilda Group Entities in connection with the sale, including a transitional services agreement (the "TSA") pursuant to which the Company and the Purchaser provided transitional services to one another, and business transfer agreements pursuant to which the applicable Tilda Group Entities would transfer certain non-Tilda assets and liabilities in India and the United Arab Emirates to subsidiaries of the Company to be formed in those countries.

Additionally, the Company distributed certain Tilda products in the United States, Canada and Europe through the expiration of the TSA.

The TSA expired during the second quarter of fiscal 2020.

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 income (loss) from discontinued operations, net of tax” in our Consolidated Statements of Operations:

Fiscal Year Ended June 30,

2020 2019 2018

Net sales $ 30,399 $ 197,862 $ 192,099

Cost of sales 26,648 151,146 143,908

Gros s (loss) pro fit

3,751 46,716 48,191

Selling, general and administrative expense 5,185 26,949 25,349

Amortization of acquired intangibles and other expense 1,172 2,189 3,536

Interest expense (1)

2,432 13,561 10,538

Translation loss (2)

Gain on sale of discontinued operations ( 9,386 ) — —

Net (loss) income from discontinued operations before income taxes ( 90,772 ) 4,017 8,768

Provision for income taxes (3)

12,909 535 1,084

Net (loss) income from discontinued operations, net of tax $ ( 103,681 ) $ 3,482 $ 7,684

(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 provision related to the tax gain on the sale of Tilda of $ 13,960 for the twelve months ended June 30, 2020.

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

There were no assets or liabilities from discontinued operations associated with Tilda as of June 30, 2020.

ASSETS June 30, 2019

Cash and cash equivalents $ 8,509

Accounts receivable, less allowance for doubtful accounts 26,955

Inventories 65,546

Prepaid expenses and other current assets 9,038

Total current assets of discontinued operations (1)

Property, plant and equipment, net 40,516

Goodwill 133,098

Trademarks and other intangible assets, net 84,925

Other assets 628

Total noncurrent assets of discontinued operations (1)

Total assets of discontinued operations $ 369,215

Accounts payable $ 18,341

Accrued expenses and other current liabilities 4,675

Current portion of long-term debt 8,687

Total current liabilities of discontinued operations (1)

Deferred tax liabilities 17,153

Other noncurrent liabilities 208

Total noncurrent liabilities of discontinued operations (1)

Total liabilities of discontinued operations (1)

(1) Assets and liabilities from discontinued operations were classified as current and noncurrent at June 30, 2019 as they did not meet the held-for-sale criteria.

Sale of Hain Pure Protein Reportable Segment

In March 2018, the Company’s Board of Directors approved a plan to sell all of the operations of the Hain Pure Protein Corporation (“HPPC”) operating segment, which included the Plainville Farms and FreeBird businesses, and the EK Holdings, Inc.

(“Empire Kosher” or “Empire”) operating segment, which were reported in the aggregate as the Hain Pure Protein reportable segment.

Collectively, these dispositions represented a strategic shift that will have a major impact on the Company’s operations and financial results and have been accounted for as discontinued operations.

Collectively, these dispositions represented a strategic shift that had a major impact on the Company’s operations and financial results and have been accounted for as discontinued operations.

The Company is presenting the operating results and cash flows of Hain Pure Protein within discontinued operations in the current and prior periods.

The assets and liabilities of Hain Pure Protein are presented as assets and liabilities of discontinued operations in the Consolidated Balance Sheets for all periods presented.

The Company recorded reserves of $ 109,252 and $ 78,464 in fiscal years ended June 30, 2019 and 2018, respectively, to adjust the carrying value of Hain Pure Protein and Empire Kosher to its fair value, less its cost to sell, which is reflected in net (loss) income from discontinued operations, net of taxes in each respective period.

The reserves were recorded due to negative market conditions in the sector, resulting in the Company lowering the projected long-term growth rate and profitability levels of HPPC and to adjust the carrying value of Hain Pure Protein to its estimated selling price.

Sale of Plainville Farms Business

On February 15, 2019, the Company completed the sale of substantially all of the assets used primarily for the Plainville Farms business (a component of HPPC), which included $25,000 in cash to the purchaser, for a nominal purchase price.

In addition, the purchaser assumed the current liabilities of the Plainville Farms business as of the closing date.

As a condition to consummating the sale, the Company entered into a Contingent Funding and Earnout Agreement, which provides for the issuance by the Company of an irrevocable stand-by letter of credit of $10,000 which expires nineteen months after issuance.

The Company is entitled to receive an earnout not to exceed, in the aggregate, 120% of the maximum amount that the purchaser draws on the letter of credit at any point from the date of issuance through the expiration of the letter of credit.

Sale of Plainville Farms Business (“Plainville”)

On February 15, 2019, the Company completed the sale of substantially all of the assets used primarily for Plainville (a component of HPPC), which included $ 25,000 in cash to the purchaser, for a nominal purchase price.

In addition, the purchaser assumed the current liabilities of Plainville as of the closing date.

As a condition to consummating the sale, the Company entered into a Contingent Funding and Earnout Agreement, which provides for the issuance by the Company of an irrevocable stand-by letter of credit (the “Letter of Credit”) of $ 10,000 which expires nineteen months after issuance.

The Company is

entitled to receive an earnout not to exceed, in the aggregate, 120 % of the maximum amount that the purchaser draws on the Letter of Credit at any point from the date of issuance through the expiration of the Letter of Credit.

Earnout payments are based on a specified percentage of annual free cash flow achieved for all fiscal years ending on or prior to June 30, 2026.

If a change in control of the purchaser 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.

If a subsequent change in control of Plainville 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 June 30, 2020, the Company had not recorded an asset associated with the earnout.

As a result of the disposition, the Company recognized a pre-tax loss on sale of $40,223 , or $29,685 net of tax, in the twelve months ended June 30, 2019 to write down the assets and liabilities to the final sales price less costs to sell, inclusive of the $10,000 stand-by letter of credit.

As a result of the disposition, the Company recognized a pre-tax loss on sale of $ 40,223 , or $ 29,685 net of tax, in the twelve months ended June 30, 2019 to write down the assets and liabilities to the final sales price less costs to sell, inclusive of the Letter of Credit.

Sale of HPPC and Empire Kosher

On June 28, 2019, the Company completed the sale of the remainder of HPPC and EK Holdings, which includes the FreeBird and Empire Kosher businesses.

On June 28, 2019, the Company completed the sale of the remainder of HPPC and EK Holdings, which included the FreeBird and Empire Kosher businesses.

The purchase price, net of customary adjustments based on the closing balance sheet of HPPC, was $ 77,714 .

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Fiscal Year Ended June 30,

2020 2019 2018

Net sales $ — $ 408,109 $ 509,475

Cost of sales — 409,433 486,023

Gros s (loss) pro fit

— ( 1,324 ) 23,452

Asset impairments — 109,252 78,464

1 unchanged sentence

Other expense — 9,088 4,699

Loss on sale of discontinued operations before income taxes

Loss on sale of discontinued operations 3,043 40,859 —

Net (loss) income from discontinued operations before income taxes ( 3,043 ) ( 176,907 ) ( 78,454 )

1 unchanged sentence

Net (loss) income from discontinued operations, net of tax $ ( 2,359 ) $ ( 133,369 ) $ ( 72,734 )

Assets and liabilities of discontinued operations presented in the Consolidated Balance Sheets as of June 30, 2018 are included in the following table:

Cash and cash equivalents

Accounts receivable, less allowance for doubtful accounts

Prepaid expenses and other current assets

Property, plant and equipment, net

Trademarks and other intangible assets, net

Impairments of long-lived assets held for sale

Current assets of discontinued operations

Accounts payable

Accrued expenses and other current liabilities

Deferred tax liabilities

Other noncurrent liabilities

Current liabilities of discontinued operations

The Company accounts for acquisitions in accordance with ASC 805, Business Combinations .

The results of operations of the acquisitions have been included in the consolidated results from their respective dates of acquisition.

The purchase price of each acquisition is allocated to the tangible assets, liabilities and identifiable intangible assets acquired based on their estimated fair values.

Acquisitions may include contingent consideration, the fair value of which is estimated on the acquisition date as the present value of the expected contingent payments, determined using weighted probabilities of possible payments.

The fair values assigned to identifiable intangible assets acquired were determined primarily by using an income approach which was based on assumptions and estimates made by management.

Significant assumptions utilized in the income approach were based on Company specific information and projections which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance.

The excess of the purchase price over the fair value of the identified assets and liabilities has been recorded as goodwill.

The costs related to all acquisitions have been expensed as incurred and are included in “Project Terra costs and other” in the Consolidated Statements of Operations.

Acquisition-related costs of $409 and $2,035 were expensed in the fiscal years ended June 30, 2018 and 2017 , respectively.

Acquisition-related costs for the fiscal year ended June 30, 2019 were de minimis.

The expenses incurred primarily related to professional fees and other transaction related costs associated with our recent acquisitions.

There were no acquisitions completed in the fiscal year ended June 30, 2019 .

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

Assets Held for Sale

The Company entered into a definitive stock purchase agreement on June 30, 2020 for the sale of its Danival business, and the transaction was completed on July 21, 2020.

During fiscal 2020, the Company recorded a pre-tax noncash loss of $ 13,052 to reduce the carrying value of the Danival business to its estimated fair value, less costs to sell.

This included the noncash impairment charge of the relative fair value of goodwill allocated to the Danival business, a part of the International segment, of $ 394 included in Goodwill impairment in the Company’s Consolidated Statement of Operations.

Also included in the pre-tax noncash loss were noncash impairment charges for intangibles consisting of trade name and customer lists, fixed assets and inventory totaling $ 12,658 included in Long-lived assets and intangibles impairment in the Company’s Consolidated Statement of Operations.

The estimated fair value, less costs to sell, reflects the amount of consideration the Company expected to receive upon closing of the transaction as of June 30, 2020.

As of June 30, 2020, the Company determined the held for sale criteria was met and classified the assets and liabilities to held for sale.

Current assets held for sale of $ 8,333 are included in the Consolidated Balance Sheet as a component of Prepaid expenses and other current assets and current liabilities held for sale of $ 3,567 are included in the Consolidated Balance Sheet as a component of Accrued expenses and other current liabilities.

The Company deconsolidated the net assets of the Danival business upon closing of sale, which occurred during the first quarter of fiscal 2021.

There were no acquisitions completed in the fiscal years ended June 30, 2020 and 2019.

On December 1, 2017, the Company acquired Clarks UK Limited (“Clarks”), a leading maple syrup and natural sweetener brand in the United Kingdom.

1 unchanged sentence

Consideration for the transaction, inclusive of a subsequent working capital adjustment, consisted of cash, net of cash acquired, totaling £ 9,179 (approximately $ 12,368 at the transaction date exchange rate).

Additionally, contingent consideration of up to a maximum of £1,500 is payable based on the achievement of specified operating results over the 18 -month period following completion of the acquisition.

Additionally, contingent consideration of up to a maximum of £ 1,500 was payable based on the achievement of specified operating results over an 18-month period following completion of the acquisition;

no contingent consideration amounts were paid, and the arrangement expired during fiscal 2019.

Clarks is included in our United Kingdom operating segment.

Net sales and income before income taxes attributable to the Clarks acquisition included in our consolidated results for the fiscal year ended June 30, 2018 represented less than 1 % of our consolidated results.

On June 19, 2017, the Company acquired Sonmundo, Inc.

d/b/a The Better Bean Company (“Better Bean”), which offers prepared beans and bean-based dips sold in refrigerated tubs under the Better Bean TM brand.

Consideration for the transaction consisted of cash, net of cash acquired, totaling $3,434 .

Additionally, contingent consideration of up to a maximum of $4,000 is payable based on the achievement of specified operating results over the three -year period following the closing date.

Better Bean is included in our Hain Ventures operating segment, which is part of the Rest of World segment.

Net sales and income before income taxes attributable to the Better Bean acquisition and included in our consolidated results for the fiscal year ended June 30, 2017 were less than 1% of consolidated results.

On April 28, 2017, the Company acquired The Yorkshire Provender Limited (“Yorkshire Provender”), a producer of premium branded soups based in North Yorkshire in the United Kingdom.

Yorkshire Provender supplies leading retailers, on-the-go food outlets and food service providers in the United Kingdom.

Consideration for the transaction consisted of cash, net of cash acquired, totaling £12,465 (approximately $16,110 at the transaction date exchange rate).

Additionally, contingent consideration of up to a maximum of £1,500 is payable based on the achievement of specified operating results at the end of the three -year period following the closing date.

Yorkshire Provender is included in our United Kingdom operating and reportable segment.

Net sales and income before income taxes attributable to Yorkshire Provender and included in our consolidated results for the fiscal year ended June 30, 2017 were less than 1% of consolidated results.

The costs related to all acquisitions have been expensed as incurred and are included in Productivity and transformation costs in the Consolidated Statements of Operations.

Acquisition-related costs of $ 409 were expensed in the fiscal years ended June 30, 2018.

Acquisition-related costs for the fiscal year ended June 30, 2020 and 2019 were de minimis.

The expenses incurred primarily related to professional fees and other transaction-related costs associated with these acquisitions.

Inventories consisted of the following:

2020 June 30,

Finished goods $ 158,162 $ 199,754

Raw materials, work-in-progress and packaging 90,008 99,587

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

In the twelve months ended June 30, 2019 , the Company recorded inventory write-downs of $12,381 in connection with the discontinuance of slow moving SKUs as part of a product rationalization initiative, $10,346 of which was recorded in the three months ended June 30, 2019.

In the twelve months ended June 30, 2018, the Company recorded an inventory write-down of $4,913 in connection with the discontinuance of slow moving SKUs as part of a product rationalization initiative.

$ 248,170 $ 299,341

In the twelve months ended June 30, 2020 and June 30, 2019, the Company recorded inventory write-downs of $ 4,175 and $ 12,381 , respectively, primarily related to the discontinuance of slow moving SKUs as part of product rationalization initiatives.

PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:

2020 June 30,

Land $ 13,866 $ 14,240

Buildings and improvements 74,325 83,151

4 unchanged sentences

Construction in progress 16,489 35,786

Accumulated depreciation

514,457 506,304

Accumulated depreciation and impairment 225,201 218,459

$ 289,256 $ 287,845

Depreciation expense for the fiscal years ended June 30, 2020, 2019, and 2018 was $ 31,409 , $ 28,922 and $ 29,849 , respectively.

During fiscal 2019 , the Company determined that it was more likely than not that certain fixed assets of two of its manufacturing facilities would be sold or otherwise disposed of before the end of their estimated useful lives due to the Company’s decision to consolidate manufacturing of certain fruit-based and soup products in the United Kingdom.

During fiscal 2020, the Company recorded $ 12,313 of non-cash impairment charges primarily related to a write-down of building improvements, machinery and equipment in the United States and Europe used to manufacture certain slow moving or low margin SKUs, held for sale accounting of Danival and consolidation of certain office space and manufacturing facilities.

In fiscal 2019, the Company determined that it was more likely than not that certain fixed assets of two of its manufacturing facilities would be sold or otherwise disposed of before the end of their estimated useful lives due to the Company’s decision to consolidate manufacturing of certain fruit-based and soup products in the United Kingdom.

As such, the Company recorded a $ 6,166 non-cash impairment charge related to the closures of these facilities.

During fiscal 2019 , the Company recorded non-cash impairment charges of $9,653 to write down the value of certain machinery and equipment no longer in use in the United States and United Kingdom, some of which was used to manufacture certain slow moving SKUs that were discontinued.

Additionally, the Company recorded non-cash impairment charges of $ 9,653 to write down the value of certain machinery and equipment no longer in use in the United States and United Kingdom, some of which was used to manufacture certain slow moving SKUs that were discontinued.

In fiscal 2018, the Company determined that it was more likely than not that certain fixed assets at three of its manufacturing facilities would be sold or otherwise disposed of before the end of their estimated useful lives due to the Company’s decision to utilize third-party manufacturers for two facilities in the United States and to consolidate manufacturing of certain soup products in the United Kingdom.

As such, the Company recorded a $6,344 non-cash impairment charge primarily related to the closures of these facilities and included $3,767 as assets held for sale within “Prepaid expenses and other current assets” in its June 30, 2018 Consolidated Balance Sheet.

Additionally, the Company recorded a $2,057 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 and included $686 as assets held for sale within “Prepaid expenses and other current assets” in its June 30, 2018 Consolidated Balance Sheet.

In fiscal 2017, the Company determined that it was more likely than not that certain fixed assets at one of its manufacturing facilities in the United Kingdom would be sold or otherwise disposed of before the end of their estimated useful lives due to the Company’s decision to exit its own-label chilled desserts business over the next twelve months.

As such, the Company recorded a $23,712 non-cash impairment charge related to the long-lived assets associated with the own-label chilled desserts business to their estimated fair values, which was equal to its salvage value.

Additionally, the Company recorded a $2,661 non-cash impairment charge related to fixed assets in the United States.

As such, the Company recorded a $ 6,344 non-cash impairment charge primarily related to the closures of these facilities.

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

The Company determines if an arrangement is or contains a lease at inception.

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

The Company’s lease agreements generally do not contain residual value guarantees or material restrictive covenants.

A limited number of lease agreements include rental payments adjusted periodically for inflation.

Certain 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;

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 fiscal year ended June 30, 2020 were as follows:

Fiscal Year Ended

June 30, 2020

Operating lease expenses (a)

Finance lease expenses (a)

Variable lease expenses 2,570

Short-term lease expenses 1,723

Total lease expenses $ 24,471

(a) Operating lease expenses and finance lease expenses include $ 1,505 and $ 251 of ROU asset impairment charges, respectively, associated with the Company’s ongoing productivity and transformation costs initiatives.

Of this amount, $ 929 was recognized as a component of Long-lived asset and intangibles impairment on the Consolidated Statement of Operations with the remainder recognized as a component of Cost of Sales.

Supplemental balance sheet information related to leases was as follows:

Leases Classification June 30, 2020

Operating lease ROU assets Operating lease right-of-use assets $ 88,165

Finance lease ROU assets, net Property, plant and equipment, net 691

Total leased assets $ 88,856

Operating Accrued expenses and other current liabilities $ 12,338

Finance Current portion of long-term debt 308

Operating Operating lease liabilities, noncurrent portion 82,962

Finance Long-term debt, less current portion 316

Total lease liabilities $ 95,924

Additional information related to leases is as follows:

Fiscal Year Ended

June 30, 2020

Supplemental cash flow information

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 17,290

Operating cash flows from finance leases $ 26

Financing cash flows from finance leases $ 543

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

Operating leases $ 104,915

Finance leases $ 1,475

Weighted average remaining lease term:

Operating leases 10.0 years

Finance leases 2.5 years

Weighted average discount rate:

Operating leases 3.0 %

Finance leases 2.3 %

(b) 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 fiscal year ended June 30, 2020.

Maturities of lease liabilities as of June 30, 2020 were as follows:

Fiscal Year Operating leases Finance leases Total

2021 $ 14,781 $ 308 $ 15,089

2022 13,798 205 14,003

2023 12,833 95 12,928

2024 10,941 18 10,959

2025 9,521 6 9,527

Thereafter 51,545 — 51,545

Total lease payments 113,419 632 114,051

Imputed interest 18,119 8 18,127

Total lease liabilities $ 95,300 $ 624 $ 95,924

The aggregate minimum future lease payments for operating leases at June 30, 2019, adjusted for discontinued operations, were as follows:

2020 $ 19,066

Thereafter 44,452

At June 30, 2020, the Company has additional operating leases that had not yet commenced.

Obligations under these leases are approximately $ 9,797 and the leases are expected to commence during the fiscal year ending June 30, 2021 with lease terms ranging from 10 to 11 years, excluding renewal options.

GOODWILL AND OTHER INTANGIBLE ASSETS

The following table shows the changes in the carrying amount of goodwill by business segment:

United States

United Kingdom

Rest of World

North America International Total

Balance as of June 30, 2018 (1)

Acquisition activity

Reallocation of goodwill between reporting units (2)

Impairment charge

$ 612,457 $ 273,206 $ 885,663

Translation and other adjustments, net 133 ( 9,915 ) ( 9,782 )

Balance as of June 30, 2019 (1)

612,590 263,291 875,881

Divestiture ( 5,009 ) — ( 5,009 )

Impairment charge — ( 394 ) ( 394 )

Translation and other adjustments, net ( 1,526 ) ( 6,994 ) ( 8,520 )

Balance as of June 30, 2020 $ 606,055 $ 255,903 $ 861,958

(1) The total carrying value of goodwill is reflected net of $126,577 of accumulated impairment charges, of which $97,358 related to the Company’s United Kingdom operating segment and $29,219 related to the Company’s Europe operating segment.

(2) Effective July 1, 2017, due to changes to the Company’s internal management and reporting structure, the United Kingdom operations of the Ella’s Kitchen® brand, which was previously included within the United States reportable segment, was moved to the United Kingdom reportable segment.

Goodwill totaling $35,519 was reallocated to the United Kingdom reportable segment in connection with this change.

See Note 1, Business, and Note 19, Segment Information, for additional information on the Company’s operating and reportable segments.

(3) The total carrying value of goodwill is reflected net of $134,277 of accumulated impairment charges, of which $97,358 related to the Company’s United Kingdom operating segment, $29,219 related to the Company’s Europe operating segment and $7,700 related to the Company’s Hain Ventures operating segment.

Additions during the fiscal year ended June 30, 2018 were due to the acquisition of Clarks on December 1, 2017.

The Company completed its annual goodwill impairment analysis in the fourth quarter of fiscal 2019 , in conjunction with its budgeting and forecasting process for fiscal year 2020, and concluded that no indicators of impairment existed at any of its reporting units.

(1) The total carrying value of goodwill is reflected net of $ 134,277 of accumulated impairment charges, of which $ 97,358 related to the Company’s United Kingdom operating segment, $ 29,219 related to the Company’s Europe operating segment and $ 7,700 related to the Company’s former Hain Ventures operating segment.

During fiscal 2019, the Company’s reporting units were Hain Pure Personal Care, Grocery and Snacks and Celestial Tea in the United States reportable segment, Hain Daniels, Ella’s Kitchen and Tilda in the United Kingdom reportable segment and Hain Canada, Hain Europe and Hain Ventures within the Rest of World reportable segment.

As discussed in Note 22 , 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.

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 $ 2,037 during the fiscal year ended June 30, 2020.

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.

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 fiscal year ended June 30, 2020 as a result of the transactions was insignificant.

During May 2020, the Company completed the divestiture of its Rudi’s business, a component of the United States reporting unit.

Goodwill of $ 212 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.

The gain/loss on sale recognized during the fiscal year ended June 30, 2020 as a result of the transaction was insignificant.

During June 2020, in anticipation of the Company’s divestiture of its Danival business, a component of the Europe reporting unit, the good will of $ 394 assigned to the business on a relative fair value basis was impaired based on the expected selling price.

See Note 5, Discontinued Operations and Assets Held for Sale , for a discussion of the sale completed after the fiscal 2020 period.

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 and Assets Held for Sale .

Therefore, goodwill associated with Tilda is presented within Noncurrent assets of discontinued operations in the Consolidated Balance Sheet as of June 30, 2019.

The Company completed its annual goodwill impairment analysis in the fourth quarter of fiscal 2020, in conjunction with its budgeting and forecasting process for fiscal year 2021, and concluded that no impairment existed at any of its reporting units.

Other Intangible Assets

The following table sets forth balance sheet information for intangible assets, excluding goodwill, subject to amortization and intangible assets not subject to amortization:

2020 June 30,

Non-amortized intangible assets:

Trademarks and trade names (1)

$ 278,103 $ 291,199

Amortized intangible assets:

Other intangibles 184,854 204,630

accumulated amortization

accumulated amortization and impairment ( 116,495 ) ( 115,543 )

Net carrying amount $ 346,462 $ 380,286

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

Indefinite-lived intangible assets, which are not amortized, consist primarily of acquired trade names and trademarks.

In assessing fair value, the Company utilizes a “relief from royalty” methodology.

This approach involves two steps:

(i) estimating the royalty rates for each trademark and (ii) applying these royalty rates to a projected net sales stream and discounting the resulting cash flows to determine fair value.

If the carrying value of the indefinite-lived intangible assets exceeds the fair value of the asset, the carrying value is written down to fair value in the period identified.

The Company completed its annual assessment of impairment for indefinite-lived intangible assets i n the fourth quarter of fiscal 2020.

The assessment indicated that the fair value of the Company’s trade names exceeded their carrying values and no impairment existed except as described below.

During the second and third quarters of fiscal 2020, in association with the sale or discontinuation of certain businesses and brands, the Company determined that certain of its indefinite-lived trade names were impaired due to the carrying value of the trade names exceeding their fair values, and therefore an impairment charge of $ 9,539 was recognized ($ 4,007 in the North America segment and $ 5,532 in the International segment).

In the second quarter of fiscal 2019, the Company determined that an indicator of impairment existed in certain of the Company’s indefinite-lived tradenames.

The result of this interim assessment indicated that the fair value of certain of the Company’s tradenames was below their carrying value, and therefore an impairment charge of $17,900 was recognized ( $11,300 in the United States segment, $3,813 in the Rest of World segment and $2,787 in the United Kingdom segment) during the fiscal year ended June 30, 2019 .

The result of the annual assessment for the year ended June 30, 2019 indicated that the fair value of the Company’s trade names exceeded their carrying values and no indicators of impairment were present.

During the fiscal year ended June 30, 2018 , an impairment charge of $5,632 ( $5,100 in the Rest of World segment and $532 in the United Kingdom segment) related to certain of the Company’s trade names was recognized.

The result of this interim assessment indicated that the fair value of certain of the Company’s tradenames was below their carrying value, and therefore an impairment charge of $ 17,900 was recognized ($ 15,113 in the North America segment and $ 2,787 in the International segment) during the fiscal year ended June 30, 2019.

For the fiscal year ended June 30, 2018, a trade name impairment charge of $ 5,632 ($ 5,100 in the North America segment and $ 532 in the International segment) was recorded.

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

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Fiscal Year Ended June 30,

2020 2019 2018

Amortization of intangible assets $ 11,638 $ 13,134 $ 15,934

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Fiscal Year Ending June 30,

2021 2022 2023 2024 2025

Estimated amortization expense $ 9,807 $ 9,564 $ 9,023 $ 6,768 $ 5,753

The weighted average remaining amortization period of amortized intangible assets is 9.1 years .

In the fourth quarter of fiscal 2020, the Company recognized impairment charges relating to customer relationships of certain brand divestitures totaling $ 4,455 , all within the North America segment.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:

June 30, 2020 June 30, 2019

Payroll, employee benefits and other administrative accruals $ 74,544 $ 77,339

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Other accruals (1)

$ 127,612 $ 114,265

(1) Included within other accruals in fiscal 2020 are $ 12,338 of short-term operating lease liabilities (see Note 9, Leases), $ 3,567 of current liabilities held for sale (see Note 5, Discontinued Operations and Assets Held for Sale) and $ 263 of short-term derivative liabilities (see Note 18, Derivatives and Hedging Instruments).

DEBT AND BORROWINGS

Debt and borrowings consisted of the following:

June 30, 2020 June 30, 2019

Revolving credit facility $ 280,000 $ 420,575

Term loan — 206,250

Unamortized issuance costs — ( 1,022 )

Tilda short-term borrowing arrangements

Other borrowings (1)

282,774 630,769

Short-term borrowings and current portion of long-term debt 1,656 17,232

Long-term debt, less current portion $ 281,118 $ 613,537

(1) Included in other borrowings are $ 308 of short term finance lease obligations as discussed in Note 9, Leases.

Credit Agreement

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Borrowings under the Credit Agreement may be used to provide working capital, finance capital expenditures and permitted acquisitions, refinance certain existing indebtedness and for other lawful corporate purposes.

The Credit Agreement provides for multicurrency borrowings in Euros, Pounds Sterling and Canadian Dollars as well as other currencies which may be designated.

The Credit Agreement provides for multicurrency borrowings in Euros, British Pounds Sterling and Canadian Dollars as well as other currencies which may be designated.

In addition, certain wholly-owned foreign subsidiaries of the Company may be designated as co-borrowers.

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The Credit Agreement also requires the Company to satisfy certain financial covenants.

On the date the Credit Agreement was consummated, these covenants included maintaining a consolidated interest coverage ratio (as defined in the Credit Agreement) of no less than 4.0 to 1.0 and a consolidated leverage ratio (as defined in the Credit Agreement) of no more than 3.5 to 1.0.

The consolidated leverage ratio is subject to a step-up to 4.0 to 1.0 for the four full fiscal quarters following an acquisition.

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

As of June 30, 2019 , there were $420,575 and $206,250 of borrowings outstanding under the revolving credit facility and term loan, respectively, and $9,698 letters of credit outstanding under the Amended Credit Agreement.

On November 7, 2018, the Company amended the Credit Agreement to modify the calculation of the consolidated leverage ratio related to costs associated with CEO succession as well as the Project Terra cost reduction programs.

On February 6, 2019, the Company entered into an amendment to the Credit Agreement, whereby its allowable consolidated leverage ratio increased to no more than 4.0 to 1.0 as of December 31, 2018 and no more than 3.75 to 1.0 as of March 31, 2019 and June 30, 2019.

Under the terms of the February 6, 2019 amendment, the consolidated leverage ratio would return to 3.5 to 1.0 beginning in the period ending September 30, 2019.

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 increased to no more than 5.0 to 1.0 from March 31, 2019 to December 31, 2019, no more than 4.75 to 1.0 at March 31, 2020, no more than 4.25 to 1.0 at June 30, 2020 and no more than 4.0 to 1.0 on September 30, 2020 and thereafter.

The allowable consolidated leverage ratio for each period was decreased by 0.25 upon sale of the Company’s remaining Hain Pure Protein business.

Additionally, the Company’s required consolidated interest coverage ratio (as defined in the Credit Agreement) was reduced to no less than 3.0 to 1 through March 31, 2020, no less than 3.75 to 1 through March 31, 2021 and no less than 4.0 to 1 thereafter.

As part of the Amended Credit Agreement, HPPC was released from its obligations as a borrower and a guarantor under the Credit Agreement.

Company and its material domestic subsidiaries, including stock of each of their direct subsidiaries and intellectual property, subject to agreed upon exceptions.

As of June 30, 2020, there were $ 280,000 of borrowings outstanding under the revolving credit facility and $ 9,698 letters of credit outstanding under the Credit Agreement.

During fiscal 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.

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.

Additionally, the Company’s required consolidated interest coverage ratio is no less than 3.0 to 1 through March 31, 2020, no less than 3.75 to 1 through March 31, 2021 and no less than 4.0 to 1 thereafter.

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 June 30, 2020, $ 710,302 was available under the Amended Credit Agreement, and the Company was in compliance with all associated covenants, as amended by the Amended Credit Agreement.

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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.

The term loan has required installment payments due on the last day of each fiscal quarter commencing June 30, 2018 in an amount equal to $3,750 and can be prepaid in whole or in part without premium or penalty.

On June 28, 2019, the Company completed the sale of the Company’s remaining Hain Pure Protein business and utilized the proceeds from the sale, net of transaction related costs, to prepay a portion of the term loan.

See Note 5, Discontinued Operations, for information on the sale of the Hain Pure Protein business.

In connection with the prepayment of debt, the Company wrote-off unamortized issuance costs of $372 .

Tilda Short-Term Borrowing Arrangements

Tilda, formerly a component of the Company’s United Kingdom reportable segment, maintained short-term borrowing arrangements primarily used to fund the purchase of rice from India and other countries.

The maximum borrowings permitted under all such arrangements were £52,000 .

Outstanding borrowings were collateralized by the current assets of Tilda, typically had six -month terms and bore interest at variable rates typically based on LIBOR plus a margin (weighted average interest rate of approximately 4.38% at June 30, 2019 ).

As of June 30, 2019 and 2018 , there were $8,687 and $9,338 of borrowings under these arrangements, respectively.

See Note 21, Subsequent Event, for information on the sale of the Tilda business.

Maturities of all debt instruments at June 30, 2020, are as follows:

Due in Fiscal Year

Due in Fiscal Year Amount

Interest paid during the fiscal years ended June 30, 2020, 2019 and 2018 amounted to $ 15,514 , $ 20,396 and $ 13,745 , respectively.

The components of (loss) income from continuing operations before income taxes and equity in net loss (income) of equity-method investees were as follows:

The components of income (loss) from continuing operations before income taxes and equity in net loss (income) of equity-method investees were as follows:

Fiscal Year Ended June 30,

The (benefit) provision for income taxes consisted of the following:

2020 2019 2018

Domestic $ ( 29,339 ) $ ( 120,969 ) $ ( 3,379 )

Foreign 63,167 64,965 75,813

Total $ 33,828 $ ( 56,004 ) $ 72,434

The provision (benefit) for income taxes consisted of the following:

Fiscal Year Ended June 30,

2020 2019 2018

Federal $ ( 44,595 ) $ 3,639 $ ( 312 )

State and local 619 760 1,383

Foreign 14,021 16,075 17,683

( 29,955 ) 20,474 18,754

Federal 33,007 ( 21,538 ) ( 22,612 )

State and local 3,414 1,188 1,973

Foreign ( 261 ) ( 3,356 ) ( 86 )

36,160 ( 23,706 ) ( 20,725 )

Total $ 6,205 $ ( 3,232 ) $ ( 1,971 )

For the fiscal year ended June 30, 2020, the Company paid cash for income taxes, net of refunds, of $ 16,162 .

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Fiscal Year Ended June 30,

2020 % 2019 % 2018 %

Expected United States federal income tax at statutory rate $ 7,104 21.0 % $ ( 11,761 ) 21.0 % $ 20,354 28.1 %

State income taxes, net of federal (benefit) provision ( 668 ) ( 1.9 ) % ( 8,922 ) 15.9 % 2,774 3.8 %

Domestic manufacturing deduction

Foreign income at different rates 382 1.1 % 763 ( 1.4 ) % ( 3,825 ) ( 5.3 ) %

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Change in valuation allowance 4,499 13.3 % 8,938 ( 16.0 ) % 119 0.2 %

Unrealized foreign exchange losses

Change in reserves for uncertain tax positions 7,925 23.4 % 841 ( 1.5 ) % ( 3,859 ) ( 5.3 ) %

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Tax Act’s impact of deferred taxes (b) — — % — — % ( 25,006 ) ( 34.5 ) %

Global Intangible Low Taxed Income

Reduction of deferred tax liabilities resulting from change in United Kingdom tax rate

(Benefit) provision for income taxes

(a) For the year ended June 30, 2018, the Company accrued a provisional estimate of $7,054 of tax expense for the Tax Act’s one-time transition tax on the foreign subsidiaries’ accumulated, unremitted earnings in accordance with U.S.

Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB 118”).

Additionally, during fiscal year June 30, 2019, the Company recorded $6,834 of tax expense upon finalizing its analysis of the impact from the Tax Act.

(b) For the year ended June 30, 2018, the Company accrued $25,006 in provisional tax benefit related to the net change in deferred tax liabilities stemming from the Tax Cuts and Jobs Act’s (the “Tax Act”) reduction of the U.S.

tax (benefit) on foreign earnings 7,449 22.0 % 3,872 ( 6.9 ) % — — %

CARES Act ( 25,668 ) ( 75.9 ) % — — % — — %

Other 5,182 15.3 % ( 3,797 ) 6.9 % ( 1,398 ) ( 1.9 ) %

Provision (benefit) for income taxes $ 6,205 18.3 % $ ( 3,232 ) 5.8 % $ ( 1,971 ) ( 2.7 ) %

(a) For the year ended June 30, 2018, the Company accrued a provisional estimate of $ 7,054 of tax expense for the Tax Cuts and Jobs Act’s (the “Tax Act”) one-time transition tax on the foreign subsidiaries’ accumulated, unremitted earnings in

accordance with U.S.

Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB No.118”).

Additionally, during fiscal year 2019, the Company recorded $ 6,834 of tax expense upon finalizing its analysis of the impact from the Tax Act.

(b) For the year ended June 30, 2018, the Company accrued $ 25,006 in provisional tax benefit related to the net change in deferred tax liabilities stemming from the Tax Act’s reduction of the U.S.

federal tax rate from 35% to 21% and disallowance of certain incentive based compensation tax deductibility under Internal Revenue Code 162(m).

There was an immaterial tax benefit recorded for the period ended June 30, 2019 related to return to provision adjustments.

There was an immaterial tax benefit recorded for fiscal 2019 related to return to provision adjustments.

With the effective date of January 1, 2018, the Tax Act also introduced a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries and a measure to tax certain intercompany payments under the base erosion anti-abuse tax “BEAT” regime.

For the fiscal year ended June 30, 2019, the Company did not generate intercompany transactions that met the BEAT threshold but did generate GILTI tax.

For the fiscal years ended June 30, 2020 and 2019, the Company did not generate intercompany transactions that met the BEAT threshold but did generate GILTI tax.

The Company elected to account for GILTI tax as a current period cost and recorded an expense of $ 3,850 during the fiscal year ended June 30, 2020.

The GILTI of $ 3,850 is included in U.S.

tax (benefit) on foreign earnings in the effective tax rate which also includes tax expense related to Subpart F Income and unremitted earnings in the total.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.

Deferred tax assets and liabilities consisted of the following:

June 30, 2020 June 30, 2019

Noncurrent deferred tax assets (liabilities):

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Stock-based compensation 1,417 827

Unremitted earnings of foreign subsidiaries ( 1,212 ) —

Lease liability 14,096 —

Lease ROU assets ( 12,807 ) —

Other 4,006 3,995

Valuation allowances ( 41,941 ) ( 34,912 )

Noncurrent deferred tax liabilities, net (1)

(1) Includes $29,951 of non-current deferred tax assets included within Other Assets on the June 30, 2019 consolidated balance sheet.

$ ( 51,787 ) $ ( 5,275 )

(1) Includes $ 62 and $ 29,482 of non-current deferred tax assets included within Other Assets on the June 30, 2020 and 2019 Consolidated Balance Sheets.

At June 30, 2020 and 2019, the Company had U.S.

federal net operating loss (“NOL”) carryforwards of approximately $201,242 and $23,057 , respectively, the majority of which will not expire until 2036.

federal net operating loss (“NOL”) carryforwards of approximately $ 19,141 and $ 201,242 , respectively, certain of which will not expire until 2036.

Certain of these federal loss carryforwards are subject to Internal Revenue Code Section 382 which imposes limitations on utilization following certain changes in ownership of the entity generating the loss carryforward.

The Company had foreign NOL carryforwards of approximately $ 12,587 and $ 23,761 at June 30, 2020 and 2019, respectively, the majority of which are indefinite lived.

At June 30, 2019 , the Company utilized the U.S.

federal foreign tax credit carryforward of approximately $877 .

On March 27, 2020, H.R.

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

Some of the significant tax law changes in accordance with the CARES Act are to increase the limitation on deductible business interest expense for 2019 and 2020, allow for the five-year carryback of NOLs 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 carried back net operating losses generated in the June 30, 2019 tax year for five years, resulting in an income tax benefit of $ 18,949 .

The $ 18,949 income tax benefit represents the Federal rate differential between 35% and 21%.

In addition, there was an indirect tax benefit of $ 6,719 related to discontinued operations due to the CARES Act.

Accordingly, the gross benefit recorded under the CARES Act in fiscal 2020 is $ 25,668 prior to the reserve under ASC 740-10.

The benefit of $ 18,949 and reversal of the deferred tax asset on federal NOLs of $ 33,551 resulted in a tax refund receivable of $ 52,500 which is included as a component of Prepaid expenses and other current assets on the Consolidated Balance Sheets.

The Company historically considered the undistributed earnings of its foreign subsidiaries to be indefinitely reinvested and as a result has not provided for taxes on such earnings.

The company has not changed previous indefinite reinvestment assertion following the enactment of the Tax Act, which required a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign subsidiaries.

At June 30, 2019 , cumulative undistributed earnings of foreign subsidiaries were approximately $289,076 which partially have been already subjected to U.S.

transition tax as part of the Tax Act.

If the company determines that all or a portion of its foreign earnings are no longer indefinitely reinvested, then the company may be subject to additional foreign withholding taxes and U.S.

state income taxes, beyond the Tax Act’s one-time transition tax.

To achieve its cash management objectives, during the fourth quarter of fiscal 2020, the Company reversed its reinvestment assertion on $ 93,359 of foreign earnings and recorded a deferred tax liability of $ 1,212 .

The Company continues to reinvest $ 641,841 of undistributed earnings of its foreign subsidiaries and may be subject to additional foreign withholding taxes and U.S.

state income taxes if it reverses its indefinite reinvestment assertion on these foreign earnings in the future.

All other outside basis differences not related to earnings were impractical to account for at this period of time and are currently considered as being permanent in duration.

As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date.

Accounting for income taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized.

In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, we establish a valuation allowance.

We have recorded valuation allowances in the amounts of $34,912 and $20,831 at June 30, 2019 and 2018 , respectively.

During fiscal 2019, we recorded a partial valuation allowance against our state deferred tax assets and state net operating loss carryforwards as it is not more likely than not that the state tax attributes will be realized.

In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, the Company establishes a valuation allowance.

The Company has recorded valuation allowances in the amounts of $ 41,941 and $ 34,912 at June 30, 2020 and 2019, respectively.

During fiscal 2019, the Company recorded a partial valuation allowance against state deferred tax assets and state net operating loss carryforwards as it is not more likely than not that the state tax attributes will be realized.

The partial state valuation allowance was retained for fiscal 2020.

The changes in valuation allowances against deferred income tax assets were as follows:

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Fiscal Year Ended June 30,

2020 2019 2018

Balance at beginning of year $ 11,869 $ 6,730 $ 11,602

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As of June 30, 2020, the Company had $ 20,899 of unrecognized tax benefits, of which $ 17,087 represents the amount that, if recognized, would impact the effective tax rate in future periods.

As of June 30, 2018 and 2017 , the Company had $6,730 and $11,602 , respectively, of unrecognized tax benefits of which $2,917 and $6,409 , respectively, would impact the effective income tax rate in future periods.

As of June 30, 2019 and 2018, the C ompany had $ 11,869 and $ 6,730 , respectively, of unrecognized tax benefits of which $ 8,057 and $ 2,917 , respectively, would impact the effective income tax rate in future periods.

Accrued liabilities for interest and penalties were $ 2,166 and $ 275 at June 30, 2020 and 2019, respectively.

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Given the uncertainty regarding when tax authorities will complete their examinations and the possible outcomes of their examinations, a current estimate of the range of reasonably possible significant increases or decreases of income tax that may occur within the next twelve months cannot be made.

Although there are various tax audits currently ongoing, the Company does not believe the ultimate outcome of such audits will have a material impact on the Company’s consolidated financial statements.

Although there are various

tax audits currently ongoing, the Company does not believe the ultimate outcome of such audits will have a material impact on the Company’s consolidated financial statements.

STOCKHOLDERS’ EQUITY

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Foreign currency translation adjustments:

Other comprehensive (loss) income before reclassifications (1)

Other comprehensive loss before reclassifications (1)

$ ( 37,847 ) $ ( 41,180 )

Amounts reclassified into income (2)

Deferred gains (losses) on cash flow hedging instruments:

Other comprehensive income before reclassifications

Other comprehensive (loss) income before reclassifications ( 1,413 ) 94

Amounts reclassified into income (3)

Unrealized gain on equity investment:

Deferred gains (losses) on net investment hedging instruments:

Other comprehensive loss before reclassifications ( 2,788 ) —

Other comprehensive (loss) income

Amounts reclassified into income (4)

Cumulative effect of adoption of ASU 2016-01 — 348

Other comprehensive income (loss) $ 53,612 $ ( 40,764 )

(1) Foreign currency translation adjustments included intra-entity foreign currency transactions that were of a long-term investment nature and were a loss of $ 898 and a gain of $ 619 for the fiscal years ended June 30, 2020 and 2019, respectively.

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 $32 and $132 for the fiscal years ended June 30, 2019 and 2018 , 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 the Consolidated Statements of Operations as follows:

Fiscal Year Ended June 30,

Cost of sales $ 103 $ 32

Interest and other financing expense, net $ 72 $ —

Other expense (income), net $ ( 959 ) $ —

(4) Amounts reclassified into income for deferred gains (losses) on net investment hedging instruments are recognized in “Interest and other financing expense, net” in the Consolidation Statements of Operations and were $ 98 and $ 0 for the fiscal years ended June 30, 2020 and 2019, respectively

Share Repurchase Program

On June 21, 2017, the Company's Board of Directors authorized the repurchase of up to $ 250,000 of the Company’s issued and

outstanding common stock.

Repurchases may be made from time to time in the open market, pursuant to pre-set trading plans, in private transactions or otherwise.

The authorization does not have a stated expiration date.

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.

During the fiscal year ended June 30, 2020, the Company repurchased 2,551 shares under the repurchase program for a total of $ 60,171 , excluding commissions, at an average price of $ 23.59 per share.

As of June 30, 2020, the Company had $ 189,829 of remaining authorization under the share repurchase program.

The Company did not repurchase any shares under this program in fiscal 2019 or 2018.

STOCK-BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS

The Company has one shareholder-approved plan, the Amended and Restated 2002 Long-Term Incentive and Stock Award Plan, under which the Company’s officers, senior management, other key employees, consultants and directors may be granted options to purchase the Company’s common stock or other forms of equity-based awards.

The Company also grants shares under its 2019 Equity Inducement Award Program to induce selected individuals to become employees of the Company.

2002 Long-Term Incentive and Stock Award Plan, as amended

In November 2002, our stockholders approved the 2002 Long-Term Incentive and Stock Award Plan.

An aggregate of 3,200 shares of common stock were originally reserved for issuance under this plan.

At various Annual Meetings of Stockholders, including the 2014 Annual Meeting, the plan was amended to increase the number of shares issuable to 31,500 shares.

The plan provides for the granting of stock options, stock appreciation rights, restricted stock, restricted share units, performance shares, performance share units and other equity awards to employees, directors and consultants.

Awards denominated in shares of common stock other than options and stock appreciation rights will be counted against the available share limit as two and seven hundredths shares for every one share covered by such award.

All of the options granted to date under the plan have been incentive or non-qualified stock options providing for the exercise price equal to the fair market price at the date of grant.

Stock option awards granted under the plan expire seven years after the date of grant.

Options and other stock-based awards vest in accordance with provisions set forth in the applicable award agreements.

No awards shall be granted under this plan after November 20, 2024.

As of June 30, 2019 , no options are outstanding under the plan.

There were no options granted under this plan in fiscal years 2019 , 2018 or 2017 .

There were 1,626 , 685 and 195 shares of restricted stock and restricted share units granted under this plan during fiscal years 2019 , 2018 and 2017 , respectively, of which 1,130 , 307 and 0 , respectively, are subject to the achievement of minimum performance goals established under those programs or market conditions.

At June 30, 2019 , 1,898 unvested restricted stock and restricted share units were outstanding under this plan, and there were 3,774 shares available for grant under this plan.

At June 30, 2019 , there were no options outstanding under this plan.

At June 30, 2019, there were 122 options outstanding that were granted under a prior Celestial Seasonings plan.

Although no further awards can be granted under the prior Celestial Seasonings plan, the options outstanding continue in accordance with the terms of the plan and grants.

The Company has one stockholder approved plan, the Amended and Restated 2002 Long-Term Incentive and Stock Award Plan (the “2002 Plan”), under which the Company’s officers, senior management, other key employees, consultants and directors may be granted equity-based awards.

The Company also grants equity awards under its 2019 Equity Inducement Award Program (the “2019 Inducement Program”) to induce selected individuals to become employees of the Company.

The 2002 Plan and 2019 Inducement Program are collectively referred to as the “Stock Award Plans”.

In conjunction with the Stock Award Plans, the Company maintains a long-term incentive program (the “LTI Program”) that provide for performance and market equity awards that can be earned over defined performance periods.

There were 990 , 2,106 and 685 shares underlying restricted stock awards (“RSAs”) or restricted share units (“RSUs”) granted under the Stock Award Plans during fiscal years 2020, 2019 and 2018, respectively, of which 554 , 1,610 and 307 , respectively, were granted under the LTI Program and are subject to the achievement of minimum performance goals or market conditions, with the remaining being service-based awards.

For performance awards and market awards, the foregoing share figures are stated at target levels, and the awards generally provide for vesting at 150 % or 300 % of the target level.

There were no options granted under the Stock Award Plans during fiscal years 2020, 2019 and 2018.

At June 30, 2020, there were 5,473 and 1,886 shares available for grant under the 2002 Plan and 2019 Inducement Program, respectively.

Apart from the Stock Award Plans, the Company granted an award of performance share units to the Company’s CEO in fiscal year 2019.

The award has a target payout of 350 shares of common stock and a maximum payout of 1,050 shares of common stock.

See “Restricted Stock – CEO Inducement Grant” below.

Restricted Stock

Awards of restricted stock are either RSAs or RSUs that are issued at no cost to the recipient.

RSA holders have all rights of a stockholder at the grant date, subject to certain restrictions on transferability and a risk of forfeiture.

Shares underlying RSUs are not issued until vesting.

Both award types are subject to continued employment and vesting conditions in accordance with provisions set forth in the applicable award agreements.

The Company also grants market-based RSUs that vest contingent on meeting specific Total Shareholder Return (“TSR”) targets over a specified time period, and performance-based RSUs that vest contingent on meeting specific financial results within a specified time period.

Performance-based and market-based RSUs are issued in the form of performance share units (“PSUs”).

A summary of the restricted stock activity (includes all RSAs, RSUs and PSUs) for the last three fiscal years ended June 30 is as follows:

2020 Weighted

(per share) 2019 Weighted

(per share) 2018 Weighted

Non-vested - beginning of period 2,729 $ 12.94 1,057 $ 22.29 992 $ 27.59

Granted 990 $ 17.36 2,457 $ 11.84 685 $ 26.13

Vested ( 291 ) $ 23.28 ( 411 ) $ 27.36 ( 433 ) $ 36.68

Forfeited ( 1,379 ) $ 8.80 ( 374 ) $ 18.33 ( 187 ) $ 31.15

Non-vested - end of period 2,049 $ 15.85 2,729 $ 12.94 1,057 $ 22.29

At June 30, 2020 and 2019, the table above includes a total of 918 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 June 30, 2020 and 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.

A summary of the fair value of restricted stock (includes all RSAs, RSUs and PSUs) granted and vested, and the tax benefit recognized from restricted stock vesting, for the last three fiscal years ended June 30 is as follows:

Fiscal Year Ended June 30,

2020 2019 2018

Fair value of restricted stock granted $ 17,179 $ 29,067 $ 17,898

Fair value of restricted stock vested $ 6,775 $ 11,232 $ 15,736

Tax benefit recognized from restricted stock vesting $ 939 $ 3,241 $ 5,235

At June 30, 2020, $ 18,713 of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested restricted stock awards was expected to be recognized over a weighted-average period of approximately 2.1 years.

Long-Term Incentive Program

The participants of the LTI Program include certain of the Company’s executive officers and other key executives.

The LTI Program is administered by the Compensation Committee which is responsible for, among other items, selecting the specific performance measures for awards, setting the target performance required to receive an award after the completion of the performance period, and determining the specific payout to the participants.

Any stock-based awards issued under the LTI Program are generally issued pursuant to and are subject to the terms and conditions of the 2002 Plan and 2019 Inducement Program, as applicable.

The CEO Inducement Grant (discussed below) was granted outside of the Stock Award Plans.

The LTI Program consists of certain performance-based long-term incentive plans that provide for PSUs that can be earned over defined performance periods.

• 2019-2021 LTIP - Vesting is pursuant to the achievement of pre-established three-year compound annual TSR targets over the period from November 6, 2018 to November 6, 2021.

The TSR levels are aligned with the CEO Inducement Grant (discussed below), with total shares eligible to vest ranging from zero to 300 % of the target award amount.

Certain shares are subject to a holding period of one year after the vesting date, resulting in an illiquidity discount being applied to the grant date fair value for such shares.

There were 554 and 912 PSUs granted during fiscal years 2020 and 2019, respectively, relating to the 2019-2021 LTIP plan.

Grant date fair values ranged from $ 5.95 to $ 25.86 per unit for PSUs granted during fiscal 2020.

Grant date fair values ranged from $ 5.26 to $ 10.65 per unit for PSUs granted during fiscal year 2019.

No such awards were granted during fiscal 2018.

• 2018-2020 LTIP - Vesting is pursuant to a defined calculation of relative TSR over the period from January 24, 2019 to June 30, 2020, with total shares eligible to vest ranging from zero to 150 % of the grant.

There were 45 PSUs granted during fiscal year 2019 with a grant date fair value of $ 18.32 per unit.

No such awards were granted during fiscal 2020 or 2018.

In the first quarter of fiscal 2021, the Compensation Committee determined that all outstanding awards under the 2018-2020 LTIP vested at 150% as a result of the maximum relative TSR target having been met.

• 2016-2018 and 2017-2019 LTIP - Vesting was dependent upon achievement of specified net sales growth targets, and a defined calculation of relative TSR over the period from July 1, 2015 to June 30, 2018 and from July 1, 2017 to June 30, 2019, for the 2016-2018 LTIP and 2017-2019 LTIP, respectively.

In the first quarter of fiscal 2019, the Compensation Committee determined that no awards would be paid or vested pursuant to the 2016-2018 LTIP or 2017-2019 LTIP as a result of the failure to meet the performance conditions.

Accordingly, the awards were forfeited, and in the first quarter of fiscal 2019, the Company recorded a benefit of $ 6,482 associated with the reversal of previously accrued amounts under the net sales portion of the 2016-2018 LTIP, of which $ 5,065 was recorded in Former Chief Executive Officer Succession Plan expense, net on the Consolidated Statements of Operations.

Additionally, the Company recorded benefits of $ 1,129 and $ 1,867 associated with the reversal of previously accrued amounts under the portions of the 2017-2019 LTIP that were dependent on the achievement of pre-determined performance measures of net sales and relative TSR.

CEO Inducement Grant

On November 6, 2018, the Company’s CEO, Mark L.

Schiller received a market-based PSU award with a target payout of 350 shares of common stock and a maximum payout of 1,050 shares of common stock.

The award will vest pursuant to the achievement of pre-established three-year compound annual TSR levels over the period from November 6, 2018 to November 6, 2021.

No PSUs will vest if the three-year compound annual TSR is below 15 %.

These PSUs are subject to a holding period of one year after the vesting date.

As such, an illiquidity discount was applied to the grant date fair value.

The total grant date fair value of the award was estimated to be $ 7,571 , or $ 21.63 per target share.

Total compensation cost related to this award recognized in the fiscal year ended June 30, 2020 and 2019 was $ 2,526 and $ 1,636 , respectively.

This PSU award was granted outside of the Stock Award Plans.

Separately, the Company also issued 79 three-year service-based RSAs to Mr.

Schiller in November 2018 under the 2002 Plan.

In the twelve months ended June 30, 2019, the Company issued 173 PSUs to certain key executives vesting over a period of one to two years based upon the achievement of certain market and/or performance based metrics being met.

Summary of Stock-Based Compensation

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

Fiscal Year Ended June 30,

2020 2019 2018

Selling, general and administrative expense

Chief Executive Officer Succession Plan expense, net

$ 13,078 $ 9,471 $ 13,380

Former Chief Executive Officer Succession Plan expense, net — 429 ( 2,203 )

Discontinued operations 544 165 —

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Related income tax benefit $ 1,518 $ 1,189 $ 2,165

In the fiscal year ended June 30, 2019, the Company recorded a benefit of $1,867 related to the reversal of expense associated with the total share return (“TSR”) Grant under the 2017-2019 LTIP, as defined and discussed further below.

In the fiscal year ended June 30, 2018, the Company recorded a net benefit of $ 2,203 primarily in connection with the modification of Irwin D.

Simon’s TSR performance based awards granted on September 26, 2017.

Refer to Note 3, Chief Executive Officer Succession Plan, for further discussion.

Restricted Stock

Awards of restricted stock may be either grants of restricted stock or restricted share units that are issued at no cost to the recipient.

For restricted stock grants, at the date of grant the recipient has all rights of a stockholder, subject to certain restrictions on transferability and a risk of forfeiture.

For restricted share units, legal ownership of the shares is not transferred to the employee until the unit vests.

Restricted stock and restricted share unit grants vest in accordance with provisions set forth in the applicable award agreements, which may include performance criteria for certain grants.

The compensation cost of these awards is determined using the fair market value of the Company’s common stock on the date of the grant.

Compensation expense for restricted stock awards with a service condition is recognized on a straight-line basis over the vesting term.

Compensation expense for restricted stock awards with a performance condition is recorded when the achievement of the performance criteria is probable and is recognized over the performance and vesting service periods.

A summary of the restricted stock and restricted share units activity for the three fiscal years ended June 30 is as follows:

Non-vested restricted stock and restricted share units - beginning of year

Non-vested restricted stock and restricted share units - end of year

Fiscal Year Ended June 30,

Fair value of restricted stock and restricted share units granted

Fair value of shares vested

Tax benefit recognized from restricted shares vesting

At June 30, 2019 , $23,942 of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested restricted stock awards was expected to be recognized over a weighted-average period of approximately 2.1 years.

Refer to Note 3, Former Chief Executive Officer Succession Plan, for further discussion.

Stock Options

A summary of the stock option activity for the three fiscal years ended June 30 is as follows:

Outstanding at beginning of year

Outstanding at end of year

Options exercisable at end of year

Fiscal Year Ended June 30,

Intrinsic value of options exercised

Cash received from stock option exercises

Tax benefit recognized from stock option exercises

The Company did not grant any stock options in fiscal years 2020, 2019 or 2018, and there were no stock options exercised during these periods.

There were no stock options outstanding under the Stock Award Plans at June 30, 2020.

There were 122 options outstanding at June 30, 2020, 2019 and 2018, relating to a grant under a prior Celestial Seasonings plan.

Although no further awards can be granted under the prior Celestial Seasonings plan, the options outstanding continue in accordance with the terms of the plan and grant.

For options outstanding and exercisable at June 30, 2020, the aggregate intrinsic value (the difference between the closing stock price on the last day of trading in the year and the exercise price) was $ 3,567 , and the weighted average remaining contractual life was 11.0 years.

The weighted average exercise price of these options was $ 2.26 .

At June 30, 2020, there was no unrecognized compensation expense related to stock option awards.

Long-Term Incentive Plan

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

The LTI Plan currently consists of four performance-based long-term incentive plans (the “2016-2018 LTIP”, “2017-2019 LTIP”, “2018-2020 LTIP” and “2019-2021 LTIP”) that provide for performance equity awards that can be earned over defined performance periods.

Participants in the LTI Plan include certain of the Company’s executive officers and other key executives.

The Compensation Committee administers the LTI Plan and is responsible for, among other items, selecting the specific performance measures for awards and setting the target performance required to receive an award after the completion of the performance period.

The Compensation Committee determines the specific payout to the participants.

Any such stock-based awards shall be issued pursuant to and be subject to the terms and conditions of the Amended and Restated 2002 Long-Term Incentive and Stock Award Plan, as in effect and as amended from time-to-time, and the 2019 Equity Inducement Award Program, as applicable.

Grants Made Pursuant to the Amended and Restated 2002 Long-Term Incentive and Stock Award Plan

2019-2021 LTIP

On January 24, 2019, upon adoption of the 2019-2021 LTIP, the Compensation Committee granted 912 performance share units (“PSUs”), the achievement of which is dependent upon a defined calculation of relative TSR over the period from November 6, 2018 to November 6, 2021.

The PSUs granted represent 100% of the targeted award and will vest pursuant to the achievement of pre-established three -year compound annual TSR levels that are aligned with the CEO inducement grant (as further discussed below).

The number of shares actually issued will range from zero to 300% of the shares granted.

No PSUs will vest if the three -year compound annual TSR is below 15% .

Of the 912 PSUs issued, 451 are subject to a holding period of one year after the vesting date.

As such, an illiquidity discount was applied to the grant date fair value for those shares subject to the one year holding period.

The total grant date fair value with and without the illiquidity discount was estimated to be $5.99 and $5.26 per share, respectively.

The total grant date fair value of this award was $5,132 .

Total compensation cost related to this PSU award was $872 in the twelve months ended June 30, 2019.

The Company also issued 156 three -year time-based restricted share units under the 2019-2021 LTIP.

2018-2020 LTIP

Upon adoption of the 2018-2020 LTIP, the Compensation Committee granted 45 PSUs, the achievement of which is dependent upon a defined calculation of relative TSR over the period from January 24, 2019 to June 30, 2020.

The total grant date fair value of this award was estimated to be $18.32 per share, or $819 .

2016-2018 and 2017-2019 LTIP

Upon adoption of the 2016-2018 LTIP and 2017-2019 LTIP, the Compensation Committee granted PSUs to each participant, the achievement of which is dependent upon a defined calculation of relative TSR over the period from July 1, 2015 to June 30, 2018 and from July 1, 2017 to June 30, 2019 (the “TSR Grant”), respectively.

The grant date fair value for these awards was separately estimated based on a Monte Carlo simulation that calculated the likelihood of goal attainment.

Each performance unit translates into one unit of common stock.

The TSR Grant represents half of each participant’s target award.

The other half of the 2016-2018 LTIP and 2017-2019 LTIP is based on the Company’s achievement of specified net sales growth targets over the respective three -year period.

If the targets are achieved, the award in connection with the 2017-2019 LTIP may be paid only in unrestricted shares of the Company’s common stock.

In the first quarter of fiscal 2019, in connection with the 2016-2018 LTIP, for the three -year performance period of July 1, 2015 through June 30, 2018, the Compensation Committee determined that the adjusted operating income goal required to be met for Section 162(m) funding was not achieved and determined that no awards would be paid or vested pursuant to the 2016-2018 LTIP.

Accordingly, the 223 unvested performance stock unit awards previously granted in connection with the relative TSR portion of the award were forfeited, and amounts accrued relating to the net sales portion of the award were reversed.

As such, in the first quarter of fiscal 2019, the Company recorded a benefit of $6,482 associated with the reversal of previously accrued amounts under the net sales portion of the 2016-2018 LTIP, of which $5,065 was recorded in Chief Executive Officer Succession Plan expense, net on the Consolidated Statements of Operations.

In connection with the 2017-2019 LTIP, in the first quarter of fiscal 2019, the Company determined that the achievement of the adjusted operating income goal required to be met for Section 162(m) funding was not probable.

Accordingly, in the first quarter of fiscal 2019, the Company recorded benefits of $1,129 and $1,867 associated with the reversal of previously accrued amounts under the portions of the 2017-2019 LTIP that were dependent on the achievement of pre-determined performance measures of net sales and relative TSR, respectively.

In the twelve months ended June 30, 2019, the Company granted 262 time-based restricted share units to certain key employees and members of the Company’s Board of Directors that vest primarily over three years.

Additionally, the Company issued 173 PSUs to certain key executives vesting over a period of one to two years based upon the achievement of certain market and/or performance based metrics being met.

Grants Made Pursuant to the 2019 Equity Inducement Award Program

The primary purpose of the 2019 Equity Inducement Award Program is to further the long term stability and success of the Company by providing a program to reward selected individuals newly hired as employees of the Company with grants of inducement awards.

Shares issued under this program are granted outside of the Amended and Restated 2002 Long-Term Incentive and Stock Award Plan.

At June 30, 2019 , 1,412 unvested restricted stock and restricted share units were outstanding under this plan, and there were 1,588 shares available for grant under this plan.

In the twelve months ended June 30, 2019, the Compensation Committee granted 1,398 PSUs to selected individuals hired as employees of the Company, the achievement of which is dependent upon a defined calculation of relative TSR over the period from November 6, 2018 to November 6, 2021.

The PSUs granted represent 300% of the targeted award and will vest pursuant to the achievement of pre-established three -year compound annual TSR levels, which are aligned with the CEO Inducement Grant (defined and discussed further below).

Additionally, 14 time-based restricted share units were granted under the 2019 Equity Inducement Award Program in fiscal 2019.

The number of PSUs expected to be earned, based upon the achievement of the TSR market condition, is factored into the grant date Monte Carlo valuation.

Compensation expense is recognized on a straight-line basis over the service period, regardless of the eventual number of PSUs that are earned based upon the market condition, provided that each grantee remains an employee at the end of the performance period.

Compensation expense is reversed if at any time during the service period a grantee is no longer an employee.

With the exception of the April 25, 2019 grant, these PSUs are subject to a holding period of one year after the vesting date.

As such, an illiquidity discount was applied to the grant date fair value.

Shares Issued

Fair Value Per Share

Grant Date Fair Value

February 19, 2019

March 29, 2019

April 15, 2019

April 25, 2019

The fair value per share amounts reflect the number of shares granted at 300% of the target award.

The total number of shares actually issued will range from zero to 1,398 .

No PSUs will vest if the three -year compound annual TSR is below 15% .

Total compensation cost related to these awards recognized in the fiscal year ended June 30, 2019 was $289 .

CEO Inducement Grant

On November 6, 2018, Mr.

Schiller received an award of 1,050 PSUs intended to represent the total three -year long-term incentive opportunity that would have been made in fiscal years 2019 – 2021.

The PSUs will vest pursuant to the achievement of pre-established three -year compound annual TSR levels.

The number of shares actually issued will range from zero to 1,050 .

No PSUs will vest if the three -year compound annual TSR is below 15% .

This award was granted outside of Amended and Restated 2002 Long-Term Incentive and Stock Award Plan and the 2019 Equity Inducement Award Program.

The number of PSUs expected to be earned, based upon the achievement of the TSR market condition, is factored into the grant date Monte Carlo valuation.

Compensation expense is recognized on a straight-line basis over the three -year service period, regardless of the eventual number of PSUs that are earned based upon the market condition, provided Mr.

Schiller remains an employee at the end of the three -year period.

Compensation expense is reversed if at any time during the three -year service period Mr.

Schiller is no longer an employee, subject to certain termination and change in control eligibility provisions.

These PSUs are subject to a holding period of one year after the vesting date.

As such, an illiquidity discount was applied to the grant date fair value.

The total grant date fair value of the award was estimated to be $7,571 , or $7.21 per share.

Total compensation cost related to this award recognized in the fiscal year ended June 30, 2019 was $1,636 .

The Company also issued 79 three -year time-based restricted share units to Mr.

INVESTMENTS AND JOINT VENTURES

Equity method investment

On October 27, 2015, the Company acquired a 14.9% interest in Chop’t Creative Salad Company LLC (“Chop’t”).

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”).

Chop’t develops and operates fast-casual, fresh salad restaurants in the Northeast and Mid-Atlantic United States.

Chop’t markets and sells certain of the Company’s branded products and provides consumer insight and feedback.

The investment is being accounted for as an equity method investment due to the Company’s representation on the Board of Directors.

During fiscal 2018, the Company’s ownership interest was reduced to 13.4% due to the distribution of additional ownership interests.

Further ownership interest distributions could potentially dilute the Company’s ownership interest to as low as 11.9% .

At June 30, 2019 and June 30, 2018 , the carrying value of the Company’s investment in Chop’t was $14,632 and $15,524 , respectively, and is included in the Consolidated Balance Sheets as a component of “Investments and joint ventures.”

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 June 30, 2020 and 2019, the carrying value of the Company’s investment in Chop’t was $ 12,793 and $ 14,632 , respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.

The Company also holds the following investments:

(a) Hutchison Hain Organic Holdings Limited (“HHO”) with Hutchison China Meditech Ltd., a joint venture accounted for under the equity method of accounting, (b) Hain Future Natural Products Private Ltd.

(“HFN”) with Future Consumer Ltd, a joint venture accounted for under the equity method of accounting and (c) Yeo Hiap Seng Limited (“YHS”), a 1 % equity ownership interest accounted for under the equity method of accounting.

The carrying value of these combined investments was $ 4,646 and $ 4,258 as of June 30, 2020 and 2019, respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE

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The following table presents by level within the fair value hierarchy, assets and liabilities measured at fair value on a recurring basis as of June 30, 2020:

(Level 1) Significant

(Level 2) Significant

Cash equivalents $ 7 $ 7 $ — $ —

Forward foreign currency contracts

Derivative financial instruments 1,014 — 1,014 —

Equity investment 562 562 — —

Forward foreign currency contracts

$ 1,583 $ 569 $ 1,014 $ —

Derivative financial instruments 6,405 — 6,405 —

Total $ 6,405 $ — $ 6,405 $ —

The following table presents by level within the fair value hierarchy, assets and liabilities measured at fair value on a recurring basis as of June 30, 2019:

(Level 1) Significant

(Level 2) Significant

Cash equivalents $ 44 $ 44 $ — $ —

Forward foreign currency contracts

Derivative financial instruments 626 — 626 —

Equity investment 621 621 — —

Forward foreign currency contracts

Contingent consideration, non-current

$ 1,291 $ 665 $ 626 $ —

Derivative financial instruments 103 — 103 —

Total $ 103 $ — $ 103 $ —

The equity investment consists of the Company’s less than 1 % investment in Yeo Hiap Seng Limited, a food and beverage manufacturer and distributor based in Singapore.

5 unchanged sentences

Although the Company believes its estimates and assumptions are reasonable, different assumptions, including those regarding the operating results of the respective businesses, or changes in the future may result in different estimated amounts.

In connection with the acquisitions of Better Bean and Yorkshire Provender during fiscal 2017, payments of a portion of the respective purchase prices were contingent upon the achievement of certain operating results.

Contingent consideration of up to a maximum of $4,000 related to the Better Bean acquisition is payable based on the achievement of specified operating results over the three years following the closing date.

Contingent consideration of up to a maximum of £1,500 related to the Yorkshire Provender acquisition is payable based on the achievement of specified operating results at the end of the three -year period following the closing date.

In connection with the acquisition of Clarks during fiscal 2018, payment of a portion of the purchase price is contingent upon the achievement of certain operating results.

Contingent consideration of up to a maximum of £1,500 is payable based on the achievement of specified operating results over the 18 -month period following completion of the acquisition.

In connection with the acquisition of Clarks during fiscal 2018, payment of a portion of the purchase price was contingent upon the achievement of certain operating results.

Contingent consideration of up to a maximum of £ 1,500 was payable based on the achievement of specified operating results over an 18-month period following completion of the acquisition;

no contingent consideration amounts were paid, and the arrangement expired during fiscal 2019.

The following table summarizes the Level 3 activity:

5 unchanged sentences

Balance at end of year $ — $ —

(1) The change in the fair value of contingent consideration is included in “Project Terra costs and other” in the Company’s Consolidated Statements of Operations.

In the fiscal years ended June 30, 2019 and 2018, the Company recorded net benefits of $1,870 and $2,281 , respectively.

(1) The change in the fair value of contingent consideration is included in Productivity and transformation costs in the Company’s Consolidated Statements of Operations.

In the fiscal year ended June 30, 2019, the Company recorded a net benefit $ 1,870 , with no corresponding amount in fiscal 2020.

The net benefit in the fiscal year ended June 30, 2019 was due to a decrease in the fair value of contingent consideration related to Clarks.

The net benefit in the fiscal year ended June 30, 2018 was due to a decrease in the fair value of contingent consideration related

to Better Bean and Yorkshire Provender.

The decreases in each period were due to lower probability of achievement of specified operating results.

The decrease in the period was due to lower probability of achievement of specified operating results.

There were no transfers of financial instruments between the three levels of fair value hierarchy during the fiscal years ended June 30, 2020 or 2019.

2 unchanged sentences

Derivative Instruments

The Company primarily has exposure to changes in foreign currency exchange rates relating to certain anticipated cash flows and firm commitments from its international operations.

The Company may enter into certain derivative financial instruments, when available on a cost-effective basis, to manage such risk.

Derivative financial instruments are not used for speculative purposes.

The fair value of these derivatives is included in prepaid expenses and other current assets and accrued expenses and other current liabilities in the Consolidated Balance Sheets.

For derivative instruments that qualify as hedges of probable forecasted cash flows, the effective portion of changes in fair value is temporarily reported in accumulated other comprehensive income and recognized in earnings when the hedged item affects earnings.

Fair value hedges and derivative instruments not designated as hedges are marked-to-market each reporting period with any unrealized gains or losses recognized in earnings.

Derivative instruments designated at inception as hedges are measured for effectiveness at the inception of the hedge and on a quarterly basis.

These assessments determine whether derivatives designated as qualifying hedges continue to be highly effective in off-setting changes in the cash flows of hedged items.

Any ineffective portion of change in fair value is not deferred in accumulated other comprehensive income and is included in current period results.

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 fiscal years ended June 30, 2019 and June 30, 2018 .

The notional and fair value amounts of cash flow hedges at June 30, 2019 were $2,275 and $83 of net assets, respectively.

There were no cash flow hedges or fair value hedges outstanding as of June 30, 2018 .

The notional amounts of foreign currency exchange contracts not designated as hedges at June 30, 2019 and June 30, 2018 were $41,845 and $20,986 , respectively.

The fair values of foreign currency exchange contracts not designated as hedges at June 30, 2019 and June 30, 2018 were $440 and $338 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 in the fiscal years ended June 30, 2019 and 2018 .

The Company uses interest rate swaps to manage its interest rate risk and cross-currency swaps and foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency exchange rates.

The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative.

This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts).

The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

In accordance with the provisions of ASC 820, Fair Value Measurements , we incorporate credit valuation adjustments to appropriately reflect both the Company’s nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

In adjusting the fair value of the Company’s derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties.

The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation.

As a result, all of the derivatives held as of June 30, 2020 and 2019 were classified as Level 2 of the fair value hierarchy.

The fair value estimates presented in the fair value hierarchy tables above are based on information available to management as of June 30, 2020 and 2019.

These estimates are not necessarily indicative of the amounts we could ultimately realize.

DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions.

The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities.

The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments.

Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s receivables and borrowings.

Certain of the Company’s foreign operations expose the Company to fluctuations of foreign exchange rates.

These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency.

The Company enters into derivative financial instruments to protect the value or fix the amount of certain assets and liabilities in terms of its functional currency, the U.S.

Accordingly, the Company uses derivative financial instruments to manage and mitigate such risks.

The Company does not use derivatives for speculative or trading purposes.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.

To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

During fiscal 2020, such derivatives were used to hedge the variable cash flows associated with existing variable rate debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated other comprehensive loss and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt.

During fiscal 2021, the Company estimates that an additional $ 272 will be reclassified as an increase to interest expense.

As of June 30, 2020, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivative Number of Instruments Notional Amount

Interest Rate Swap 4 $ 230,000

Cash Flow Hedges of Foreign Exchange Risk

The Company is exposed to fluctuations in various foreign currencies against its functional currency, the U.S.

The Company uses foreign currency derivatives including cross-currency swaps to manage its exposure to fluctuations in the USD-EUR exchange rates.

Cross-currency swaps involve exchanging fixed-rate interest payments for fixed-rate interest receipts, both of which will occur at the USD-EUR forward exchange rates in effect upon entering into the instrument.

The Company also uses forward contracts to manage its exposure to fluctuations in the GBP-EUR exchange rates.

The Company designates these derivatives as cash flow hedges of foreign exchange risks.

For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified in the period(s) during which the hedged transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction.

During fiscal 2021, the Company estimates that an additional $ 181 relating to cross-currency swaps will be reclassified as an increase to interest income.

As of June 30, 2020, the Company had the following outstanding foreign currency derivatives that were used to hedge its foreign exchange risks:

Foreign Currency Derivative Number of Instruments Notional Sold Notional Purchased

Cross-currency swap 1 € 24,700 $ 26,775

Foreign currency forward contract 1 £ 850 € 1,000

Net Investment Hedges

The Company is exposed to fluctuations in foreign exchange rates on investments it holds in its European foreign entities and their exposure to the Euro.

The Company uses fixed-to-fixed cross-currency swaps to hedge its exposure to changes in the foreign exchange rate on its foreign investment in Europe.

Currency forward agreements involve fixing the USD-EUR exchange rate for delivery of a specified amount of foreign currency on a specified date.

The currency forward agreements are typically cash settled in U.S.

Dollars for their fair value at or close to their settlement date.

Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency fixed-rate payments over the life of the agreement.

For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in Accumulated other comprehensive loss as part of the cumulative translation adjustment.

Amounts are reclassified out of Accumulated other comprehensive loss into earnings when the hedged net investment is either sold or substantially liquidated.

As of June 30, 2020, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations:

Foreign Currency Derivative Number of Instruments Notional Sold Notional Purchased

Cross-currency swap 2 € 76,969 $ 83,225

Non-Designated Hedges

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements and/or the Company has not elected to apply hedge accounting.

Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.

As of June 30, 2020, the Company had outstanding derivatives that were not designated as hedges in qualifying hedging relationships consisting of foreign currency forward contracts with a notional amount of $ 32,386 .

The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of June 30, 2020:

Asset Derivatives Liability Derivatives

Balance Sheet Location Fair Value Balance Sheet Location Fair Value

Derivatives designated as hedging instruments:

Interest rate swaps Prepaid expenses and other current assets $ — Accrued expenses and other current liabilities / Other noncurrent liabilities $ 856

Cross-currency swaps Prepaid expenses and other current assets 746 Other noncurrent liabilities 5,475

Foreign currency forward contracts Prepaid expenses and other current assets 75 Other noncurrent liabilities —

Total derivatives designated as hedging instruments 821 6,331

Derivatives not designated as hedging instruments:

Foreign currency forward contracts Prepaid expenses and other current assets 193 Accrued expenses and other current liabilities 74

Total derivative instruments $ 1,014 $ 6,405

The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of June 30, 2019:

Asset Derivatives Liability Derivatives

Balance Sheet Location Fair Value Balance Sheet Location Fair Value

Derivatives designated as hedging instruments:

Foreign currency forward contracts Prepaid expenses and other current assets $ 83 Other noncurrent liabilities $ 103

Total derivatives designated as hedging instruments 83 103

Derivatives not designated as hedging instruments:

Foreign currency forward contracts Prepaid expenses and other current assets 543 Accrued expenses and other current liabilities —

Total derivative instruments $ 626 $ 103

The following table presents the pre-tax effect of cash flow hedge accounting on Accumulated other comprehensive loss as of June 30, 2020, 2019 and 2018:

Derivatives in Cash Flow Hedging Relationships Amount of Gain (Loss) Recognized in OCI on Derivatives Location of Gain (Loss) Reclassified from Accumulated OCL into Income Amount of Gain (Loss) Reclassified from Accumulated OCL into Income

Fiscal Year Ended June 30, Fiscal Year Ended June 30,

2020 2019 2018 2020 2019 2018

Interest rate swaps $ ( 817 ) $ — $ — Interest and other financing expense, net $ ( 40 ) $ — $ —

Cross-currency swaps ( 1,069 ) — — Interest and other financing expense, net / Other expense (income), net 927 — —

Foreign currency forward contracts 95 113 45 Cost of sales ( 103 ) ( 30 ) ( 127 )

Total $ ( 1,791 ) $ 113 $ 45 $ 784 $ ( 30 ) $ ( 127 )

The following table presents the pre-tax effect of the Company’s derivative financial instruments electing cash flow hedge accounting on the Consolidated Statements of Operations as of June 30, 2020 and 2019:

Location and Amount of Gain (Loss) Recognized in the Consolidated Statement of Operations on Cash Flow Hedging Relationships

Fiscal Year Ended June 30, 2020 Fiscal Year Ended June 30, 2019

Cost of sales Interest and other financing expense, net Other expense (income), net Cost of sales Interest and other financing expense, net Other expense (income), net

The effects of cash flow hedging:

Gain (loss) on cash flow hedging relationships

Interest rate swaps

Amount of gain (loss) reclassified from accumulated OCL into income $ — $ 40 $ — $ — $ — $ —

Cross-currency swaps

Amount of gain (loss) reclassified from accumulated OCL into income $ — $ 32 $ ( 959 ) $ — $ — $ —

Foreign currency forward contracts

Amount of gain (loss) reclassified from accumulated OCL into income $ 103 $ — $ — $ 30 $ — $ —

The following table presents the pre-tax effect of the Company’s net investment hedges on Accumulated other comprehensive loss and the Consolidated Statements of Operations as of June 30, 2020, 2019 and 2018:

Derivatives in Net Investment Hedging Relationships Amount of Gain (Loss) Recognized in OCI on Derivatives Location of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing) Amount of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing)

Fiscal Year Ended June 30, Fiscal Year Ended June 30,

2020 2019 2018 2020 2019 2018

Cross-currency swaps $ ( 3,529 ) $ — $ — Interest and other financing expense, net $ 98 $ — $ —

The following table presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Consolidated Statements Operations as of June 30, 2020, 2019 and 2018:

Derivatives Not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income on Derivatives

Fiscal Year Ended June 30,

2020 2019 2018

Foreign currency forward contracts Other expense (income), net $ 119 $ 440 $ 337

Credit-Risk-Related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision providing that upon certain defaults by the Company on any of its indebtedness, the Company could also be declared in default on its derivative obligations.

TERMINATION BENEFITS RELATED TO PRODUCTIVITY AND TRANSFORMATION INITIATIVES

As a part of the ongoing productivity and transformation initiatives as a part of the Company’s strategic objective to expand profit margins and cash flow, the Company initiated a reduction in workforce at targeted locations in the United States as well as at certain locations internationally.

The reduction in workforce associated with these initiatives may result in additional charges throughout fiscal 2021.

The following table displays the termination benefits and personnel realignment activities and liability balances relating to the reduction in workforce for the year ended as of June 30, 2020:

Balance at June 30, 2019 Charges (reversals) Amounts Paid Foreign Currency Translation & Other Adjustments Balance at June 30, 2020

Termination benefits and personnel realignment $ 5,603 $ 22,143 $ ( 16,346 ) $ 141 $ 11,541

The liability balance as of June 30, 2020 and 2019 is included within Accrued expenses and other current liabilities on the Company’s Consolidated Balance Sheets.

Additional non-cash impairment charges related to the Company’s productivity and transformation costs initiative have been incurred and are discussed within Note 8, Property, Plant and Equipment, Net , and Note 9, Leases .

COMMITMENTS AND CONTINGENCIES

Lease commitments and rent expense

The Company leases office, manufacturing and warehouse space.

These leases provide for additional payments of real estate taxes and other operating expenses over a base period amount.

The aggregate minimum future lease payments for these operating leases at June 30, 2019 are as follows:

Rent expense charged to operations for the fiscal years ended June 30, 2019 , 2018 and 2017 was $37,091 , $36,054 and $35,153 , respectively.

Off Balance Sheet Arrangements

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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 current and 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.

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.

Defendants filed a motion to dismiss the Amended Complaint on October 3, 2017 which the Court granted on March 29, 2019, dismissing the case in its entirety, without prejudice to replead.

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 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 have until September 3, 2019 to submit a reply.

Co-Lead Plaintiffs filed an opposition on August 5, 2019, and

Defendants submitted a reply on September 3, 2019.

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.

Co-Lead Plaintiffs filed their appellate brief on August 18, 2020.

Defendants will submit a scheduling request within 14 days after the filing of Co-Lead Plaintiffs’ appellate brief to schedule the filing of their opposition brief.

Stockholder Derivative Complaints Filed in State Court

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Heyer, et al.

(the “Paperny Complaint”), was filed in New York State Supreme Court in Nassau County against the Board of Directors and certain officers of the Company alleging breach of fiduciary duty, unjust enrichment, lack of oversight and corporate waste.

On December 2, 2016 and December 29, 2016, two additional stockholder derivative complaints were filed in New York State Supreme Court in Nassau County against the Board of Directors and certain officers under the captions Scarola v.

(the “Paperny Complaint”), was filed in New York State Supreme Court in Nassau County against the former Board of Directors and certain former officers of the Company alleging breach of fiduciary duty, unjust enrichment, lack of oversight and corporate waste.

On December 2, 2016 and December 29, 2016, two additional stockholder derivative complaints were filed in New York State Supreme Court in Nassau County against the former Board of Directors and certain former officers under the captions Scarola v.

Simon (the “Scarola Complaint”) and Shakir v.

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Defendants moved to dismiss the Second Amended Derivative Complaint on August 7, 2019.

Co-Lead Plaintiffs must file any opposition to Defendants’ motion to dismiss by September 6, 2019, and Defendants have until September 20, 2019 to submit a reply.

Co-Lead Plaintiffs filed an opposition to Defendants’ motion to dismiss, and Defendants submitted a reply on September 20, 2019.

On May 18, 2020, the Court granted Defendants’ motion to dismiss the Second Amended Derivative Complaint.

Plaintiffs did not file notice of appeal, and their time to do so has run.

Accordingly, the Company considers this matter complete.

Additional Stockholder Class Action and Derivative Complaints Filed in Federal Court

On April 19, 2017 and April 26, 2017, two class action and stockholder derivative complaints were filed in the Eastern District of New York against the Board of Directors and certain officers of the Company under the captions Silva v.

On April 19, 2017 and April 26, 2017, two class action and stockholder derivative complaints were filed in the Eastern District of New York against the former Board of Directors and certain former officers of the Company under the captions Silva v.

Simon, et al.

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Both the Silva Complaint and the Barnes Complaint allege violation of securities law, breach of fiduciary duty, waste of corporate assets and unjust enrichment.

On May 23, 2017, an additional stockholder filed a complaint under seal in the Eastern District of New York against the Board of Directors and certain officers of the Company.

The complaint alleged that the Company’s directors and certain officers made materially false and misleading statements in press releases and SEC filings regarding the Company’s business, prospects and financial results.

On May 23, 2017, an additional stockholder filed a complaint under seal in the Eastern District of New York against the former Board of Directors and certain former officers of the Company.

The complaint alleged that the Company’s former directors and certain former officers made materially false and misleading statements in press releases and SEC filings regarding the Company’s business, prospects and financial results.

The complaint also alleged that the Company violated its by-laws and Delaware law by failing to hold its 2016 Annual Stockholders Meeting and includes claims for breach of fiduciary duty, unjust enrichment and corporate waste.

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The Plaintiffs filed their consolidated amended complaint under seal on October 26, 2017.

On December 20, 2017, the parties agreed to stay Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint through and including 30 days after a decision was rendered on the motion to dismiss the Amended Complaint in the consolidated Consolidated Securities Action, described above.

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.

This deadline was extended, and Defendants moved to dismiss the Consolidated Stockholder Class and Derivative Action Complaint on June 23, 2020, with Plaintiffs’ opposition due August 7, 2020.

On July 24, 2020, Plaintiffs made a stockholder litigation demand on the current Board containing overlapping factual allegations to those set forth in the Consolidated Stockholder Class and Derivative Action.

The Board of Directors will evaluate the demand and determine what, if any, actions to take in response.

On August 10, 2020, the Court vacated the briefing schedule on Defendants’ pending motion to dismiss in order to give the Board of Directors time to consider the demand.

The parties must provide the Court with an update on or before September 7, 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.

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On an annual basis, we may, in our sole discretion, make certain matching contributions.

For the fiscal years ended June 30, 2018 and 2017 , we made contributions to the Plan of $1,371 and $1,367 , respectively, including with respect to employees of Hain Pure Protein.

For the fiscal years ended June 30, 2020 and 2018, we made contributions to the Plan of $ 2,464 and $ 1,371 , respectively, including with respect to employees of Hain Pure Protein in 2018.

There were no contributions made in fiscal 2019.

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SEGMENT INFORMATION

The Company is managed in seven operating segments:

the United States, United Kingdom, Tilda, Ella’s Kitchen UK, Europe, Canada and Hain Ventures (formerly known as Cultivate Ventures).

Beginning in the third quarter ended March 31, 2018, the Hain Pure Protein operations were classified as discontinued operations as discussed in “Note 5, Discontinued Operations .” Therefore, segment information presented excludes the results of Hain Pure Protein.

On August 27, 2019, the Company sold its Tilda business as discussed in “Note 21, Subsequent Event .”

Net sales and operating income are the primary measures used by the Company’s Chief Operating Decision Maker (“CODM”) to evaluate segment operating performance and to decide how to allocate resources to segments.

The CODM is the Company’s Chief Executive Officer.

Expenses related to certain centralized administration functions that are not specifically related to an operating segment are included in “Corporate and Other.” Corporate and Other expenses are comprised mainly of the compensation and related expenses of certain of the Company’s senior executive officers and other selected employees who perform duties related to the entire enterprise, as well as expenses for certain professional fees, facilities and other items which benefit the Company as a whole.

Additionally, Project Terra costs and other, along with accounting review and remediation costs, are included in “Corporate and Other.” Expenses that are managed centrally, but can be attributed to a segment, such as employee benefits and certain facility costs, are allocated based on reasonable allocation methods.

Assets are reviewed by the CODM on a consolidated basis and therefore are not reported by operating segment.

Prior to July 1, 2019, the Company’s operations were managed in seven operating segments:

the United States, United Kingdom, Tilda, Ella’s Kitchen UK, Europe, Canada and Hain Ventures.

For segment reporting purposes, based on economic similarity as outlined within ASC 280, Segment Reporting , the Company elected to combine the United Kingdom, Tilda and Ella’s Kitchen UK operating segments into one reportable segment known as United Kingdom.

Additionally, the Canada, Europe and Hain Ventures operating segments were combined as the Rest of World reportable segment.

Separately, the United States operating segment comprised its own reportable segment.

Effective July 1, 2019, the Company reassessed its segment reporting structure due to changes in how the Company’s CODM assesses the Company’s performance and allocates resources as a result of a change in the Company’s strategy, which includes creating synergies among the Company’s United States and Canada businesses, as well as among the Company’s international businesses in the United Kingdom and Europe.

As a result, the Canada and Hain Ventures operating segments, which were included within the Rest of World reportable segment, were moved to the United States reportable segment and renamed the North America reportable segment.

Accordingly, the Company now operates under two reportable segments:

North America and International.

Prior period segment information has been adjusted to reflect the Company’s new operating and reporting structure.

Additionally, the Tilda operating segment was classified as discontinued operations as discussed in Note 5, Discontinued Operations and Assets Held for Sale .

Segment information presented herein excludes the results of Tilda for all periods presented.

The following tables set forth financial information about each of the Company’s reportable segments.

Information about total assets by segment is not disclosed because such information is not reported to or used by the Company’s CODM for purposes of assessing segment performance or allocating resources.

Transactions between reportable segments were insignificant for all periods presented.

Fiscal Years Ended June 30,

United States

United Kingdom

Rest of World

Operating (Loss) Income:

United States

United Kingdom

Rest of World

Fiscal Year Ended June 30,

2020 2019 2018

North America $ 1,171,478 $ 1,195,979 $ 1,295,413

International 882,425 908,627 970,257

$ 2,053,903 $ 2,104,606 $ 2,265,670

Operating Income (Loss):

North America $ 95,934 $ 32,682 $ 104,025

International 55,333 58,808 57,630

151,267 91,490 161,655

Corporate and Other (2)

One of our customers accounted for approximately 11% , 11% , and 12% of our consolidated net sales for the fiscal years ended June 30, 2019 , 2018 and 2017 , respectively, which were primarily related to the United States and United Kingdom segments.

A second customer accounted for approximately, 10% , 11% and 11% of our consolidated net sales for the fiscal years ended June 30, 2019 , 2018 and 2017 , respectively, which were primarily related to the United States segment.

For the fiscal year ended June 30, 2019 , Corporate and Other included $30,156 of Chief Executive Officer Succession Plan expense, net, $28,443 of Project Terra costs and other and $4,334 of accounting review and remediation costs.

Corporate and Other for the fiscal year ended June 30, 2019 also included impairment charges of $17,900 ( $11,300 related to the United States segment, $2,787 related to the United Kingdom segment and $3,813 in the Rest of World segment) related to certain of the Company’s tradenames and a $4,460 benefit for proceeds received in connection with an insurance recovery.

For the fiscal year ended June 30, 2018 , Corporate and Other included $10,118 of Project Terra costs and other and $9,293 of accounting review and remediation costs, net of insurance proceeds.

Corporate and Other for the fiscal year ended June 30, 2018 also included impairment charges of $5,632 ( $5,100 related to the Rest of World segment and $532 related to the United Kingdom segment) related to certain of the Company’s trade names.

For the fiscal year ended June 30, 2017 , Corporate and Other included $29,562 of accounting review and remediation costs and $10,388 of Project Terra costs and other.

Corporate and Other for the fiscal year ended June 30, 2017 also included impairment charges of $14,079 ( $7,579 related to the United Kingdom segment and $6,500 related to the United States segment) related to certain of the Company’s trade names and a $26,373 impairment charge primarily related to long-lived assets associated with the exit of certain portions of our own-label chilled desserts business in the United Kingdom segment.

( 95,225 ) ( 123,983 ) ( 74,985 )

$ 56,042 $ ( 32,493 ) $ 86,670

(1) One of our customers accounted for approximately 12 %, 11 %, and 11 % of our consolidated net sales for the fiscal years ended June 30, 2020, 2019 and 2018, respectively, which were primarily related to the United States and United Kingdom operating segments.

A second customer accounted for approximately, 9 %, 10 % and 12 % of our consolidated net sales for the fiscal years ended June 30, 2020, 2019 and 2018, respectively, which were primarily related to the United States operating segment.

(2) For the fiscal year ended June 30, 2020, Corporate and Other included expenses of $ 32,664 related to Productivity and transformation costs and trade name impairment charges of $ 9,539 ($ 4,007 related to North America and $ 5,532 related to International), partially offset by a benefit of $ 2,962 of proceeds from insurance claim.

For the fiscal year ended June 30, 2019, Corporate and Other included $ 30,156 of Former Chief Executive Officer Succession Plan expense, net, $ 28,443 of Productivity and transformation costs and $ 4,334 of accounting review and remediation costs.

Corporate and Other for the fiscal year ended June 30, 2019 also included trade name impairment charges of $ 17,900 ($ 15,113 related to North America and $ 2,787 related to International) and a $ 4,460 benefit for proceeds received in connection with an insurance recovery.

For the fiscal year ended June 30, 2018, Corporate and Other included $ 10,118 of Productivity and transformation costs and $ 9,293 of Accounting review and remediation costs, net of insurance proceeds.

Corporate and Other for the fiscal year ended June 30, 2018 also included trade name impairment charges of $ 5,632 ($ 5,100 related to North America and $ 532 related to International).

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

Fiscal Year Ended June 30,

2020 2019 2018

Grocery $ 1,423,761 $ 1,512,868 $ 1,650,336

Snacks 309,261 296,123 302,859

Personal Care 192,875 180,141 196,195

Tea 128,006 115,474 116,280

Total $ 2,053,903 $ 2,104,606 $ 2,265,670

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

Fiscal Year Ended June 30,

2020 2019 2018

United States $ 1,016,230 $ 1,052,930 $ 1,138,749

United Kingdom 650,416 704,524 762,706

All Other 387,257 347,152 364,215

Total $ 2,053,903 $ 2,104,606 $ 2,265,670

The Company’s long-lived assets, which primarily represent net property, plant and equipment, by geographic region are as follows:

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United States

$ 115,211 $ 115,866

United Kingdom

136,845 132,876

78,815 87,277

Total $ 330,871 $ 336,019

QUARTERLY FINANCIAL DATA (UNAUDITED)

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Three Months Ended

March 31, 2019

December 31, 2018

September 30, 2018

Operating income (loss)

2020 March 31, 2020 December 31, 2019 September 30, 2019

Net sales $ 511,746 $ 553,297 $ 506,784 $ 482,076

Gross profit $ 129,937 $ 132,395 $ 105,607 $ 97,831

Operating income $ 25,261 $ 19,135 $ 9,191 $ 2,455

Income (loss) before income taxes and equity in earnings of equity-method investees $ 20,427 $ 15,358 $ 3,210 $ ( 5,167 )

Net income (loss) from continuing operations $ 3,699 $ 25,036 $ 1,852 $ ( 4,953 )

Net loss from discontinued operations, net of tax $ ( 460 ) $ ( 697 ) $ ( 2,816 ) $ ( 102,068 )

Net income (loss) $ 3,239 $ 24,339 $ ( 964 ) $ ( 107,021 )

Net income (loss) per common share:

Basic net income (loss) per common share from continuing operations $ 0.04 $ 0.24 $ 0.02 $ ( 0.05 )

Basic net loss per common share from discontinued operations $ — $ ( 0.01 ) $ ( 0.03 ) $ ( 0.98 )

Basic net income (loss) per common share $ 0.04 $ 0.23 $ ( 0.01 ) $ ( 1.03 )

Diluted net income (loss) per common share from continuing operations $ 0.04 $ 0.24 $ 0.02 $ ( 0.05 )

Diluted net loss per common share from discontinued operations $ — $ ( 0.01 ) $ ( 0.03 ) $ ( 0.98 )

Diluted net income (loss) per common share $ 0.04 $ 0.23 $ ( 0.01 ) $ ( 1.03 )

Net income from continuing operations in the quarter ended June 30, 2020 was impacted by a goodwill impairment charge of $ 394 relating to the Company’s anticipated divestiture of its Danival business and by $ 6,438 ($ 5,897 net of tax) of non-cash impairment charges primarily related to a write-down of building improvements, machinery and equipment in the United States and Europe used to manufacture certain slow moving or low margin SKUs, held for sale accounting of Danival and consolidation of certain office space and manufacturing facilities.

The current period charge also includes $ 4,455 ($ 3,274 net of tax) of intangible impairment relating to the divestiture of certain brands.

Net income from continuing operations in the quarter ended March 31, 2020 was impacted by impairment charges of $ 7,650 ($ 5,706 net of tax) related to indefinite-lived intangible assets (trade names) and $ 5,875 ($ 5,265 net of tax) 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.

Additionally, in the quarter ended March 31, 2020, there was an inventory write-down of $ 1,362 ($ 1,005 net of tax) in connection with the discontinuance of slow moving SKUs as part of a product rationalization initiative.

Net loss from discontinued operations in the quarter ended March 31, 2020 was impacted by a $ 540 ($ 362 net of tax) adjustment to the sale of Tilda entities relating to post-closing adjustments.

Net income from continuing operations in the quarter ended December 31, 2019 was impacted by impairment charges of $ 1,889 ($ 1,389 net of tax) related to indefinite-lived intangible assets (trade names) and an inventory write-down of $ 3,927 ($ 2,896 net of tax) in connection with the discontinuance of slow moving SKUs as part of a product rationalization initiative.

Net loss from discontinued operations in the quarter ended December 31, 2019 was impacted by a $ 3,752 ($ 2,720 net of tax) adjustment to the sale of Tilda entities relating to post-closing adjustments.

Net loss from discontinued operations in the quarter ended September 30, 2019 was primarily impacted by a reclassification of $ 95,120 of cumulative translation losses from accumulated comprehensive loss to the Company’s results of the Tilda business’ discontinued operations.

The expense for income taxes for the three months ended September 30, 2019 was impacted by $ 16,500 of tax related to the tax gain on the sale of the Tilda entities.

Three Months Ended

2019 March 31, 2019 December 31, 2018 September 30, 2018

Net sales $ 505,305 $ 547,257 $ 533,566 $ 518,478

Gross profit $ 95,030 $ 113,208 $ 101,351 $ 88,908

Operating (loss) income $ ( 2,641 ) $ 18,992 $ ( 20,880 ) $ ( 27,964 )

(Loss) income before income taxes and equity in earnings of equity-method investees $ ( 8,378 ) $ 11,931 $ ( 26,679 ) $ ( 32,878 )

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Net loss from discontinued operations, net of tax $ ( 6,215 ) $ ( 74,620 ) $ ( 34,714 ) $ ( 14,338 )

Net loss $ ( 13,551 ) $ ( 65,837 ) $ ( 66,501 ) $ ( 37,425 )

Net (loss) income per common share:

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Net loss from discontinued operations in the quarter ended March 31, 2019 included a pre-tax loss on sale on the disposition of the Plainville Farms business of $ 40,223 ($ 29,511 net of tax) to write down the assets and liabilities to the final sales price less costs to sell and asset impairments of $ 51,348 ($ 37,532 net of tax), each as a component of net loss on discontinued operations, net of tax.

The quarter ended December 31, 2018 was impacted by $10,148 ( $7,484 net of tax) of Chief Executive Officer Succession Plan expense, net, $920 ( $678 net of tax) related to professional fees associated with our internal accounting review and the independent review by the Audit Committee and other related matters, impairment charges of $17,900 ( $13,374 net of tax) related to indefinite-lived intangible assets (trade names) and asset impairment charges in discontinued operations of $54,946 ( $40,314 net of tax).

The quarter ended September 30, 2018 was impacted by $19,553 ( $14,420 net of tax) of Chief Executive Officer Succession Plan expense, net, $3,414 ( $2,518 net of tax) related to professional fees associated with our internal accounting review and the independent review by the Audit Committee and other related matters, $4,243 ( $3,436 net of tax) primarily related to the closure of a manufacturing facility of fruit-based products in the United Kingdom and asset impairment charges in discontinued operations of $2,958 ( $2,170 net of tax).

Three Months Ended

March 31, 2018

December 31, 2017

September 30, 2017

Operating income

Income before income taxes and equity in earnings of equity-method investees

Net (loss) income from continuing operations

Net (loss) income from discontinued operations, net of tax

Net (loss) income

Net (loss) income per common share:

Basic net (loss) income per common share from continuing operations

Basic net (loss) income per common share from discontinued operations

Basic net (loss) income per common share

Diluted net (loss) income per common share from continuing operations

Diluted net (loss) income per common share from discontinued operations

Diluted net (loss) income per common share

The quarter ended June 30, 2018 was impacted by goodwill impairment charges of $7,700 ( $5,553 net of tax) in the Hain Ventures (formerly known as Cultivate Ventures) operating segment, impairment charges of $5,632 ( $5,192 net of tax) related to indefinite-lived intangible assets (trade names), as well as a $113 ( $104 net of tax) impairment charge primarily related to the closure of manufacturing facilities in the United States.

Additionally, the quarter ended June 30, 2018 was impacted by $2,887 ( $1,941 net of tax) related to professional fees associated with our internal accounting review and remediation costs, net of insurance proceeds.

Net loss from discontinued operations in the quarter ended June 30, 2018 was impacted by asset impairment charges of $78,464 ( $52,699 net of tax) to adjust the carrying value of Hain Pure Protein to its fair value, less its cost to sell.

The quarter ended March 31, 2018 was impacted by impairment charges of $2,557 ( $2,050 net of tax) primarily related to the closure of a manufacturing facility of certain soup products in the United Kingdom, as well as an impairment charge of $2,057 ( $1,648 net of tax) related to the discontinuation of additional slow moving SKUs in the United States as part of an ongoing product rationalization initiative.

Additionally, the quarter ended March 30, 2018 was impacted by $3,313 ( $2,654 net of tax) related to professional fees associated with our internal accounting review and remediation costs.

The quarter ended December 31, 2017 was impacted by impairment charges of $3,449 ( $2,593 net of tax) related to the closure of a facility in the United States, as well as $4,451 ( $3,346 net of tax) related to professional fees associated with our internal accounting review and remediation costs.

The quarter ended September 30, 2017 was impacted by $3,642 ( $2,638 net of tax) related to professional fees associated with our internal accounting review and insurance proceeds of $5,000 ( $3,622 net of tax) related to the reimbursement of costs incurred as part of the internal accounting review and the independent review by the Audit Committee and other related matters.

The quarter ended December 31, 2018 was impacted by $ 10,148 ($ 7,484 net of tax) of Former Chief Executive Officer Succession Plan expense, net, $ 920 ($ 678 net of tax) related to professional fees associated with our internal accounting review and the independent review by the Audit Committee and other related matters, impairment charges of $ 17,900 ($ 13,374 net of tax) related to indefinite-lived intangible assets (trade names) and asset impairment charges in discontinued operations of $ 54,946 ($ 40,314 net of tax).

The quarter ended September 30, 2018 was impacted by $ 19,553 ($ 14,420 net of tax) of Former Chief Executive Officer Succession Plan expense, net, $ 3,414 ($ 2,518 net of tax) related to professional fees associated with our internal accounting review and the independent review by the Audit Committee and other related matters, $ 4,243 ($ 3,436 net of tax) primarily related to the closure of a manufacturing facility of fruit-based products in the United Kingdom and asset impairment charges in discontinued operations of $ 2,958 ($ 2,170 net of tax).

RELATED PARTY TRANSACTIONS

A member of our Board of Directors is also the chair of the board of one of the Company’s suppliers, for which the Company incurs expenses in the ordinary course of business.

The Company incurred expenses of $ 19,551 , $ 21,633 and $ 22,400 in fiscal years 2020, 2019 and 2018, respectively, to the supplier and affiliated entities.

A former member of our Board of Directors is a partner in a law firm which provides legal services to the Company.

The Company incurred expenses of $ 4,242 , $ 2,592 and $ 1,700 in fiscal years 2020, 2019 and 2018, respectively, to the law firm and affiliated entities.

The director resigned from the Board in February 2020.

SUBSEQUENT EVENT

On August 27, 2019, the Company and Ebro Foods S.A.

(the “Purchaser”) entered into, and consummated the transactions contemplated by, an Agreement relating to the sale and purchase of the Tilda operating segment and certain other assets (the “Sale and Purchase Agreement”).

Under the Sale and Purchase Agreement, the Company sold the entities comprising its Tilda operating segment and certain other assets of the Tilda business to the Purchaser for an aggregate price of $342,000 in cash, subject to customary post-closing adjustments based on the balance sheets of the Tilda business.

The other assets sold in the transaction consist of raw materials, consumables, packaging, and finished and unfinished goods related to the Tilda business held by other Company entities that are not Tilda Group Entities.

The Sale and Purchase Agreement contains representations, warranties and covenants that are customary for a transaction of this nature.

The Company also entered into certain ancillary agreements with the Purchaser and certain of the Tilda Group Entities in connection with the Sale and Purchase Agreement, including a transitional services agreement pursuant to which the Company and the Purchaser will provide transitional services to one another, and business transfer agreements pursuant to which the applicable Tilda Group Entities will transfer certain non-Tilda assets and liabilities in India and the United Arab Emirates to subsidiaries of the Company to be formed in those countries.

On July 21, 2020, the Company completed the sale of the Danival business.

As of June 30, 2020, all assets and liabilities related to Danival were classified as held for sale within the Company’s Consolidated Balance Sheet.

See Note 5, Discontinued Operations and Assets Held for Sale , for additional information on the transaction.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data