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Item 1. Financial Statements

2020-11-09 compared with 2020-05-07 · 433 added, 442 removed, 487 unchanged (64% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

MARCH 31, 2020 AND JUNE 30, 2019

SEPTEMBER 30, 2020 AND JUNE 30, 2020

(In thousands, except par values)

March 31, June 30,

September 30, June 30,

Current assets:

4 unchanged sentences

Prepaid expenses and other current assets 55,151 95,690

Current assets of discontinued operations — 110,048

Assets held for sale 71,023 8,334

Total current assets 612,751 560,934

5 unchanged sentences

Other assets 23,872 24,238

Noncurrent assets of discontinued operations — 259,167

Total assets $ 2,199,734 $ 2,188,452

4 unchanged sentences

Current portion of long-term debt 445 1,656

Current liabilities of discontinued operations — 31,703

Liabilities related to assets held for sale 26,209 3,567

Total current liabilities 329,003 300,277

3 unchanged sentences

Other noncurrent liabilities 31,161 28,692

Noncurrent liabilities of discontinued operations — 17,361

Total liabilities 763,153 744,898

18 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

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

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(In thousands, except per share amounts)

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

2020 2019 2020 2019

Three Months Ended September 30,

Net sales $ 498,627 $ 482,076

2 unchanged sentences

Selling, general and administrative expenses 79,152 80,680

Amortization of acquired intangibles 3,174 3,265 9,446 9,946

Amortization of acquired intangible assets 2,433 3,083

Productivity and transformation costs

11,514 9,408 37,949 29,613

Chief Executive Officer Succession Plan expense, net

— 455 — 30,156

Proceeds from insurance claim

( 400 ) — ( 2,962 ) —

Accounting review and remediation costs, net of insurance proceeds — — — 4,334

Long-lived asset and intangibles impairment 13,525 — 15,414 23,709

Operating income (loss) 19,135 18,992 30,781 ( 29,852 )

Long-lived asset impairment 32,497 —

Operating income 3,280 2,455

Interest and other financing expense, net 2,453 6,294

1 unchanged sentence

Income (loss) from continuing operations before income taxes and equity in net loss of equity-method investees 2,200 ( 5,167 )

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

Provision (benefit) for income taxes 12,962 ( 531 )

Equity in net loss of equity-method investees 19 317

Net income (loss) from continuing operations $ 25,036 $ 8,783 $ 21,935 $ ( 46,091 )

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

Net loss from continuing operations $ ( 10,781 ) $ ( 4,953 )

Net income (loss) from discontinued operations, net of tax 11,266 ( 102,068 )

Net income (loss) $ 485 $ ( 107,021 )

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

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

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

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

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

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

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

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

Net (loss) income per common share:

Basic net loss per common share from continuing operations $ ( 0.11 ) $ ( 0.05 )

Basic net income (loss) per common share from discontinued operations 0.11 ( 0.98 )

Basic net loss per common share $ — $ ( 1.03 )

Diluted net loss per common share from continuing operations $ ( 0.11 ) $ ( 0.05 )

Diluted net income (loss) per common share from discontinued operations 0.11 ( 0.98 )

Diluted net loss per common share $ — $ ( 1.03 )

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

Basic 101,558 104,225

Diluted 101,558 104,225

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

See notes to consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ( LOSS) (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(In thousands)

Three Months Ended

March 31, 2020 March 31, 2019

September 30, 2020 September 30, 2019

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

1 unchanged sentence

Net income (loss) $ 485 $ ( 107,021 )

Other comprehensive (loss) income:

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

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

Total other comprehensive (loss) income

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

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

Nine Months Ended

March 31, 2020 March 31, 2019

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

amount Tax (expense) benefit After-tax amount

Net loss $ ( 83,646 ) $ ( 169,763 )

Other comprehensive income (loss):

2 unchanged sentences

Change in deferred gains (losses) on cash flow hedging instruments 50 ( 10 ) 40 ( 78 ) 10 ( 68 )

Total other comprehensive income (loss)

Change in deferred gains (losses) on net investment hedging instruments ( 3,787 ) 795 ( 2,992 ) — — —

Total other comprehensive income

$ 30,220 $ 785 $ 31,005 $ 56,100 $ 10 $ 56,110

Total comprehensive loss $ ( 31,045 ) $ ( 190,338 )

Total comprehensive income (loss) $ 31,490 $ ( 50,911 )

See notes to consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2020

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020

(In thousands, except par values)

4 unchanged sentences

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

Net loss ( 107,021 ) ( 107,021 )

Net income 485 485

Cumulative effect of adoption of ASU 2016-13

Other comprehensive income 56,110 56,110

Issuance of common stock pursuant to stock-based compensation plans

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

( 310 ) ( 310 )

Stock-based compensation expense 3,281 3,281

Balance at September 30, 2019 108,873 $ 1,089 $ 1,161,537 $ 587,557 4,631 $ ( 110,351 ) $ ( 168,894 ) $ 1,470,938

Net loss ( 964 ) ( 964 )

Other comprehensive income 31,005 31,005

Issuance of common stock pursuant to stock-based compensation plans

146 2 ( 2 ) —

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

20 ( 468 ) ( 468 )

Stock-based compensation expense 3,083 3,083

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

Net income 24,339 24,339

Cumulative effect of adoption of ASU 2016-02 — —

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

Issuance of common stock pursuant to stock-based compensation plans

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

20 ( 523 ) ( 523 )

Repurchases of common stock 1,281 ( 42,052 ) ( 42,052 )

Stock-based compensation expense 4,367 4,367

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

Balance at September 30, 2020 109,177 $ 1,093 $ 1,176,241 $ 614,346 8,539 $ ( 214,712 ) $ ( 140,387 ) $ 1,436,581

See notes to consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2019

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019

(In thousands, except par values)

6 unchanged sentences

Cumulative effect of adoption of ASU 2016-02

Cumulative effect of adoption of ASU 2014-09 163 163

Other comprehensiv e loss

( 439 ) ( 439 )

Issuance of common stock pursuant to stock-based compensation plans

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

35 ( 979 ) ( 979 )

Stock-based compensation expense 135 135

Balance at September 30, 2018 108,507 $ 1,085 $ 1,148,330 $ 840,906 4,505 $ ( 107,486 ) $ ( 197,411 ) $ 1,685,424

Net loss ( 66,501 ) ( 66,501 )

Other comprehensive loss ( 27,948 ) ( 27,948 )

Issuance of common stock pursuant to stock-based compensation plans

184 2 ( 2 ) —

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

Other comprehen sive income

56,110 56,110

Stock-based compensation expense 1,911 1,911

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

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

Other comprehensive income 20,892 20,892

Issuance of common stock pursuant to stock-based compensation plans

2 unchanged sentences

Stock-based compensation expense 3,281 3,281

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

Balance at September 30, 2019 108,873 $ 1,089 $ 1,161,537 $ 587,557 4,631 $ ( 110,351 ) $ ( 168,894 ) $ 1,470,938

See notes to consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2020 AND 2019

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(In thousands)

Nine Months Ended March 31,

Three Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss $ ( 83,646 ) $ ( 169,763 )

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

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

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

Net income (loss) $ 485 $ ( 107,021 )

Net income (loss) from discontinued operations 11,266 ( 102,068 )

Net loss from continuing operations ( 10,781 ) ( 4,953 )

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

Depreciation and amortization 13,761 13,923

Deferred income taxes ( 930 ) ( 4,404 )

Chief Executive Officer Succession Plan expense, net — 29,727

Equity in net loss of equity-method investees 19 317

Stock-based compensation, net 4,367 2,737

Long-lived asset and intangibles impairment 15,414 23,709

Long-lived asset impairment 32,497 —

Other non-cash items, net ( 1,667 ) 1,764

Increase (decrease) in cash attributable to changes in operating assets and liabilities:

(Decrease) increase in cash attributable to changes in operating assets and liabilities:

Accounts receivable ( 3,575 ) ( 853 )

3 unchanged sentences

Accounts payable and accrued expenses 15,612 ( 20,972 )

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

Net cash provided by (used in) operating activities from continuing operations 40,669 ( 3,581 )

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment ( 46,961 ) ( 55,073 )

Purchases of property, plant and equipment ( 12,155 ) ( 13,164 )

Proceeds from sale of businesses and other 4,427 —

Net cash used in investing activities - continuing operations

Net cash used in investing activities from continuing operations

( 7,728 ) ( 13,164 )

3 unchanged sentences

Repayments under term loan — ( 206,250 )

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

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

Proceeds from discontinued operations entities — 312,195

(Repayments) borrowings of other debt, net ( 1,439 ) 9

Share repurchases ( 42,052 ) —

Shares withheld for payment of employee payroll taxes ( 468 ) ( 312 )

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

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

( 35,959 ) 7,142

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

Effect of exchange rate changes on cash from continuing operations 2,500 ( 892 )

CASH FLOWS FROM DISCONTINUED OPERATIONS

Cash used in operating activities

( 6,146 ) ( 13,627 )

Cash provided by (used in) investing activities

297,592 ( 33,561 )

Cash (used in) provided by financing activities

( 299,418 ) 30,582

Effect of exchange rate changes on cash - discontinued operations

Cash provided by investing activities

Cash used in financing activities

— ( 306,366 )

Effect of exchange rate changes on cash from discontinued operations

Net cash flows used in discontinued operations

( 8,509 ) ( 17,057 )

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

Net decrease in cash and cash equivalents ( 518 ) ( 19,004 )

Cash and cash equivalents at beginning of period 37,771 39,526

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

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

Cash and cash equivalents and restricted cash of continuing operations at end of period $ 41,549 $ 54,429

Cash and cash equivalents at end of period $ 37,253 $ 20,522

See notes to consolidated financial statements.

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(In thousands)

Cash and cash equivalents included in the line item Assets held for sale on the Consolidated Balance Sheet as shown below, represents amounts included within held for sale accounting related to the sale of the Company's United Kingdom's fruit business, the Orchard House Foods Limited business and associated brands.

Three Months Ended September 30,

Cash and cash equivalents $ 27,523 $ 20,522

Cash and cash equivalents classified in assets held for sale 9,730 —

Total cash and cash equivalents shown in the Consolidated Statements of Cash Flows $ 37,253 $ 20,522

See notes to consolidated financial statements.

THE HAIN CELESTIAL GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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The Hain Celestial Group, Inc., a Delaware corporation (collectively, along with its subsidiaries, the “Company,” and herein referred to as “Hain Celestial,” “we,” “us” and “our”), was founded in 1993 and is headquartered in Lake Success, New York.

The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet — To Create and Inspire A Healthier Way of Life TM and be the leading marketer, manufacturer and seller of organic and natural, “better-for-you” products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience.

The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet — To Create and Inspire A Healthier Way of Life TM and be the leading marketer, manufacturer and seller of organic and natural products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience.

The Company is committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes.

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, providing consumers with the opportunity to lead A Healthier Way of Life™.

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

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

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

The Company’s strategy is to focus on simplifying the Company’s portfolio and reinvigorating profitable sales growth through discontinuing uneconomic investment, realigning resources to coincide with individual brand roles, 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 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 current 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 and WestSoy® tofu, seitan and tempeh businesses in the United States in fiscal 2019, the entities comprising its Tilda operating segment and certain other assets of the Tilda business in August 2019, its Arrowhead Mills® and SunSpire® brands in October 2019, and its Europe's Best® and Casbah® brands in March 2020.

The Company manufactures, markets, distributes and sells organic and natural products under brand names, with ma ny 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.

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 its 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.

Additionally, in the first quarter of fiscal 2021, the Company began to actively market the sale of the United Kingdom's fruit business, the Orchard House ® Foods Limited business and associated brands, and thus, its assets and liabilities are classified as held for sale in the Company's Consolidated Balance Sheet as of September 30, 2020.

See Note 4, Assets Held for Sale and Discontinued Operations , for additional information and discussion of this planned divestiture.

Productivity and Transformation 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.

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.

In 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.

In addition, during fiscal 2021, the Company initiated cost reduction programs for its international businesses in the United Kingdom and Europe.

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.

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

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

(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.

2 unchanged sentences

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, Discontinued Operations , 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 17, Segment Information , for additional information.

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 peri ods.

Se e Note 4, Assets Held for Sale and Discontinued Operations , for additional information.

BASIS OF PRESENTATION

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

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

Operating results for the three months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2021.

Please refer to the Notes to the Consolidated Financial Statements as of June 30, 2020 and for the fiscal year then ended included in the Form 10-K for information not included in these condensed notes.

All amounts in the unaudited consolidated financial statements, notes and tables have been rounded to the nearest thousand, except par values and per share amounts, unless otherwise indicated.

Reclassifications

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

Significant Accounting Policies

1 unchanged sentence

Included herein are certain updates to those policies.

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.

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

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

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

Valuation of Accounts Receivable

The Company maintains an allowance for expected uncollectible accounts receivable which is recorded as an offset to trade accounts receivable on the Consolidated Balance Sheets.

Effective July 1, 2020, collectability of accounts receivable is assessed by applying a historical loss-rate methodology in accordance with Accounting Standards Codification ("ASC") Topic 326, Financial Instruments - Credit Losses , adjusted as necessary based on the Company's review of accounts receivable on an individual basis, specifically

identifying customers with known disputes or collectability issues, and experience with trade receivable aging categories.

The Company also considers market conditions and current and expected future economic conditions to inform adjustments to historical loss data.

Changes to the allowance, if any, are classified as bad debt provisions in the Consolidated Statements of Operations.

Recently Adopted Accounting Pronouncements

The Company adopted Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) , 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 8, Leases , for further details.

Recently Issued Accounting Pronouncements Not Yet Effective

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 June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Measurement of Credit Losses on Financial Instrum ents , which requires measurement and recognition of expected versus incurred credit losses for most financial assets.

The ASU applies to trade and other receivables recorded on the Consolidated Balance Sheets.

The Company adopted the standard on July 1, 2020 using the modified retrospective transition method, recognizing an adjustment to beginning retained earnings of $ 310 reflecting the cumulative impact of adoption.

The adoption did not materially impact our results of operations or financial position, and as a result, comparisons between periods were not materially affected by the adoption of ASU 2016-13 .

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.

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

The Company adopted ASU 2017-04 on July 1, 2020, and the adoption of this standard did not have an impact on the Company’s consolidated financial statements.

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

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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.

The Company adopted ASU 2018-13 on July 1, 2020, and the adoption of this standard did not have an impact on the Company’s 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.

The Company adopted ASU 2018-15 on July 1, 2020, and the adoption of this standard did not have an impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Effective

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

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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”).

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, at which time the Company’s new CEO, Mark L.

Schiller, commenced his employment.

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

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

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

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

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

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

Simon during the nine months ended March 31, 2019.

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

On October 26, 2018, the Company and Mr.

Simon entered into a consulting agreement (the “Consulting Agreement”) in order to, among other things, assist Mr.

Schiller with his transition as the Company’s incoming CEO.

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

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

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform.

ASU 2020-04 is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022.

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

EARNINGS (LOSS) PER SHARE

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

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

2020 2019 2020 2019

Net income (loss) from continuing operations $ 25,036 $ 8,783 $ 21,935 $ ( 46,091 )

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

Three Months Ended September 30,

Net loss from continuing operations $ ( 10,781 ) $ ( 4,953 )

Net income (loss) from discontinued operations 11,266 ( 102,068 )

Net income (loss) $ 485 $ ( 107,021 )

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

305 217 297 —

Diluted weighted average shares outstanding

101,558 104,225

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

Basic net (loss) income per common share:

Continuing operations $ ( 0.11 ) $ ( 0.05 )

Discontinued operations 0.11 ( 0.98 )

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

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

Basic net loss per common share $ — $ ( 1.03 )

Diluted net (loss) income per common share:

Continuing operations $ ( 0.11 ) $ ( 0.05 )

Discontinued operations 0.11 ( 0.98 )

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

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

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

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

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

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

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

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

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

Diluted net loss per common share $ — $ ( 1.03 )

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 three months ended September 30, 2020 and 2019, all common stock equivalents such as stock options and unvested restricted stock awards have been excluded from the computation of diluted net loss per common share because the effect would have been anti-dilutive to the computations in the period.

There were 440 and 786 restricted stock awards and stock options excluded from our calculation of diluted net income (loss) per share for the three months ended September 30, 2020 and 2019, respectively, as such awards were anti-dilutive.

Additionally, there were 2,548 and 2,910 stock-based awards excluded for the three months ended September 30, 2020 and 2019, respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods.

Share Repurchase Program

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

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

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

During the three months ended September 30, 2020, the Company repurchased 1,281 shares under the repurchase program for a total of $ 42,027 , excluding commissions, at an average price of $ 32.81 per share.

As of September 30, 2020, the Company had $ 147,803 of remaining authorization under the share repurchase program.

ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

Assets Held for Sale

In August 2020, the Company’s Board of Directors approved a plan to sell the operations of its prepared fresh fruit, fresh fruit drinks and fresh fruit desserts division ("Fruit"), primarily consisting of the Orchard House Foods Limited business and associated brands.

This decision supports the Company's overall strategy as the Fruit business does not align and has limited synergies with the rest of the Company's businesses.

Fruit operates out of the United Kingdom and is part of the Company's International reportable segment, comprising 7.8 % and 11.3 % of the Company's net sales during the three months ended September 30, 2020 and 2019, respectively.

The Company determined that the held for sale criteria was met and classified the assets and liabilities of the Fruit business as held for sale during the quarter ended September 30, 2020, recognizing a pre-tax non-cash loss of $ 32,497 to reduce the carrying value to its estimated fair value, less costs to sell.

The assets and liabilities of the Fruit business classified as held for sale in the Company's Consolidated Balance Sheets consisted of the following:

September 30,

Cash and cash equivalents $ 9,730

Accounts receivable, less allowance for doubtful accounts 13,873

Inventories 3,990

Prepaid expenses and other current assets 3,609

Property, plant and equipment, net 23,060

Goodwill 13,486

Other intangible assets, net 32,806

Operating lease right-of-use assets 2,765

Allowance for reduction of assets held for sale ( 32,296 )

Assets held for sale $ 71,023

Accounts payable $ 10,810

Accrued expenses and other current liabilities 4,631

Operating lease liabilities 2,591

Deferred tax liabilities 6,633

Other liabilities 1,544

Liabilities related to assets held for sale $ 26,209

The Company entered into a definitive stock purchase agreement on June 30, 2020 for the sale of its Danival business, a component of the International reportable segment, and the transaction closed on July 21, 2020.

As of June 30, 2020, the Company determined the held for sale criteria was met, resulting in assets held for sale of $ 8,334 and related liabilities held for sale of $ 3,567 being included in the Company's Consolidated Balance Sheet as of June 30, 2020.

These assets and liabilities were previously presented within Prepaid and other current assets and Accrued expenses and other liabilities, respectively, in the Form 10-K and have been reclassified to conform to current year presentation.

The Company deconsolidated the net assets of the Danival business upon closing of sale during the quarter ended September 30, 2020.

Discontinued Operations

Sale of Tilda Business

On August 27, 2019, the Company and the Purchaser entered into and consummated the transactions contemplated by the Sale and Purchase Agreement.

Under the Sale and Purchase Agreement, 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.

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.

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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 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 (the "TSA") pursuant to which the Company and the Purchaser 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.

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

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 (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 transferred 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, which 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:

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

2020 2019 2020 2019

Three Months Ended September 30,

Net sales $ — $ 27,732

1 unchanged sentence

Gross profi t

— 12,061 3,751 35,669

Selling, general and administrative expense — 4,939

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Interest expense (1)

— 3,395 2,432 10,177

Translation loss (2)

Loss (gain) on sale of discontinued operations 540 — ( 9,630 ) —

Net (loss) income from discontinued operations before income taxes ( 540 ) 1,476 ( 90,528 ) 4,047

Gain on sale of discontinued operations — ( 13,922 )

Net loss from discontinued operations before income taxes ( 75 ) ( 85,337 )

(Benefit) provision for income taxes (3)

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

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

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

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.

(3) Includes $ 11,331 of tax benefit related to the legal entity reorganization and $ 16,500 of tax expense related to the tax gain on the sale of Tilda for the three months ended September 30, 2020 and 2019, respectively.

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

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 HPPC operating segment, which included the Plainville Farms and FreeBird businesses, and the EK Holdings, Inc.

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.

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

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 provided 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.

As of June 30, 2019, the purchaser has fully drawn against the Letter of Credit.

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.

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

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

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 pu rchaser.

At September 30, 2020, the Company had not recorded an asset associated with the earnout.

Sale of HPPC and Empire Kosher

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

The Company is in the process of finalizing the closing adjustments.

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

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

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

2020 2019 2020 2019

Three Months Ended September 30,

Net sales $ — $ —

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Loss on sale of discontinued operations (1)

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

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

Net income (loss) from discontinued operations before income taxes 10 ( 1,424 )

Benefit for income taxes — ( 393 )

Net loss from discontinued operations, net of tax $ ( 1,122 ) $ ( 75,925 ) $ ( 2,153 ) $ ( 127,472 )

Net income (loss) from discontinued operations, net of tax $ 10 $ ( 1,031 )

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

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

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

Inventories consisted of the following:

September 30,

2020 June 30,

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

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

During the three months ended September 30, 2020 and the fiscal year ended June 30, 2020, the Company recorded inventory write-downs of $ 204 and $ 4,175 , 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:

September 30,

2020 June 30,

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$ 275,708 $ 289,256

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

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

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

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

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

Depreciation and amortization expense for the three months ended September 30, 2020 and 2019 was $ 9,703 and $ 7,705 , respectively.

In the three months ended September 30, 2020, the Company reclassified $ 23,060 of Property, plant and equipment, net to Assets held for sale as part of the held for sale accounting related to the Company's Fruit business (see Note 4, Assets Held for Sale and Discontinued Operations , for more information related to the held for sale assets).

There were no impairment charges recorded in the three months ended September 30, 2019.

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

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

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

commencement and included in the measurement of the lease liability;

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

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

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

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

Three Months Ended Nine Months Ended

March 31, 2020 March 31, 2020

The components of lease expenses for the three months ended September 30, 2020 were as follows:

Three Months Ended

September 30, 2020 September 30, 2019

Operating lease expenses $ 3,956 $ 4,689

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Supplemental balance sheet information related to leases was as follows:

Leases Classification March 31, 2020

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

Leases Classification September 30, 2020 June 30, 2020

Operating lease ROU assets, net Operating lease right-of-use assets $ 89,397 $ 88,165

Operating lease ROU assets, net Assets held for sale 2,765 —

Finance lease ROU assets, net Property, plant and equipment, net 435 691

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Operating Accrued expenses and other current liabilities $ 13,146 $ 12,338

Operating Liabilities related to assets held for sale 2,591 —

Finance Current portion of long-term debt 228 308

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Additional information related to leases is as follows:

Nine Months Ended

March 31, 2020

Three Months Ended

September 30, 2020 September 30, 2019

Supplemental cash flow information

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Weighted average remaining lease term:

Operating leases 8.4 years

Finance leases 2.3 years

Operating leases 10.1 years 8.9 years

Finance leases 2.1 years 2.3 years

Weighted average discount rate:

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Finance leases 2.6 % 2.2 %

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

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

(a) ROU assets obtained in exchange for lease obligations includes leases which commenced, were modified or terminated.

The three months ended September 30, 2019 also includes $ 87,414 relating to the impact of the adoption of ASU 2016-02 effective July 1, 2019.

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

Fiscal Year Operating leases Finance leases Total

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Total lease liabilities $ 98,699 $ 438 $ 99,137

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

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

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

Obligations under these leases are not material.

Total lease payments 113,419 632 114,051

Imputed interest 18,119 8 18,127

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

At September 30, 2020, the Company had an operating lease that had not yet commenced.

Obligations under this lease are approximately $ 6,095 , and the lease is expected to commence during the fiscal year ending Jun e 30, 2021 with a lease term of 10 years, excluding renewal options.

GOODWILL AND OTHER INTANGIBLE ASSETS

3 unchanged sentences

$ 606,055 $ 255,903 $ 861,958

Divestiture ( 4,797 ) — ( 4,797 )

Reclassification of goodwill to Assets held for sale — ( 13,486 ) ( 13,486 )

Translation and other adjustments, net 540 11,335 11,875

Balance as of March 31, 2020 (a)

Balance as of September 30, 2020 (a)

$ 606,595 $ 253,752 $ 860,347

(a) 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, whose goodwill and accumulated impairment charges were reallocated within the North America reportable segment to the United States and Canada operating segments on a relative fair value basis.

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

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 nine months ended March 31, 2020, $ 254 of which was recognized during the third quarter.

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

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

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

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

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

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

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

Therefore, goodwill associated with Tilda is presented as Assets of discontinued operations in the consolidated financial statements.

During the three months ended September 30, 2020, operations of the United Kingdom's Fruit business, a part of the International reportable segment, have been classified as held for sale and therefore, goodwill associated with Fruit was reclassified to Assets held for sale within the Consolidated Balance Sheet as of September 30, 2020.

See Note 4, Assets Held for Sale and Discontinued Operations , for more information.

The Fruit business was a component of the Company's Hain Daniels reporting unit prior to being classified as held for sale.

The decision to sell the business was a triggering event requiring an interim goodwill impairment test for the Hain Daniels reporting unit.

No impairment was recorded in the three months ended September 30, 2020.

Other Intangible Assets

The following table includes the gross carrying amount and accumulated amortization, where applicable, for intangible assets, excluding goodwill:

September 30,

2020 June 30,

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Net carrying amount $ 319,760 $ 346,462

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

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

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

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

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

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

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

(a) The gross carrying value of trademarks and tradenames is reflected net of $ 93,273 of accumulated impairment charges as of both September 30, 2020 and June 30, 2020.

There were no events or circumstances that warranted an interim impairment test for indefinite-lived intangible assets during the three months ended September 30, 2020 or 2019.

During the three months ended September 30, 2020, $ 32,806 of customer relationship assets were reclassified to Assets held for sale in relation to the held for sale classification of the Fruit business.

During the three months ended September 30, 2020, the Company reclassified certain of its indefinite-lived intangible assets consisting of trademarks and tradenames to definite-lived intangible assets and began amortization of these assets.

The annualized amortization expense of these assets is $ 914 and will amortize over an estimated useful life of 10 years.

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

Amortization expense included in continuing operations was as follows:

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

2020 2019 2020 2019

Three Months Ended September 30,

Amortization of acquired intangibles $ 2,433 $ 3,083

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Debt and borrowings consisted of the following:

September 30,

2020 June 30,

Revolving credit facility $ 288,000 $ 280,000

Term loan — 206,250

Unamortized issuance costs — ( 1,022 )

Other borrowings 1,487 2,774

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

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

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

As of September 30, 2020, there were $ 288,000 of borro wings outstanding under the revolving credit f acility and $ 9,698 let ters of credit outstanding under the Credit Agreement.

In the three months ended September 30, 2019, the Company used the proceeds from the sale of Tilda, net of transaction costs, to prepay the entire principal amount of term loan outstanding under its credit facility and to partially pay down its revolving credit facility.

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.

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

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

As of September 30, 2020, $ 702,302 was available under the Amended Credit Agreement, and the Company was in compliance with all associated covenants, as amended by the Amended Credit Agreement.

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

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

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

The weighted average interest rate on outstanding borrowings under the Amended Credit Agreement at September 30, 2020 was 1.52 % .

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

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

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

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

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

On March 27, 2020, H.R.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

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

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

2020 2019 2020 2019

The effective income tax rate from continuing operations was expense of 589.2 % and a benefit of 10.3 % for the three months ended September 30, 2020 and 2019, respectively.

The effective income tax rate from continuing operations for the period ended September 30, 2020 was impacted by various discrete items including the tax impact of the United Kingdom Fruit business reserve, the enacted change in the United Kingdom's corporate income tax rate to 19% and a legal entity reorganization completed during the quarter ended September 30, 2020.

In addition, the effective income tax rates from continuing operations for the three months ended September 30, 2020 and 2019 were impacted by provisions in the Tax Cuts and Jobs Act (the "Tax Act"), primarily related to Global Intangible Low Taxed Income ("GILTI") and limitations on the deductibility of executive compensation.

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

In August 2020, the Company received $ 25,033 including $ 1,227 of interest from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") refund claim filed in July 2020.

The remaining receivable balance of $ 28,694 is included in Prepaid expenses and other current assets as of September 30, 2020.

The income tax benefit from discon tinued operations was $ 11,331 for the three months ended September 30, 2020 , while the income tax expense from discontinued operations was $ 15,307 for the three months ended September 30, 2019.

The benefit for income tax for the three months ended September 30, 2020 was impacted by a legal entity reorganization allowing the Company to reduce the U.S.

GILTI tax impact on the sale of the Tilda entities.

The expense from 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.

ACCUMULATED OTHER COMPREHENSI VE LOSS

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

Three Months Ended September 30,

Foreign currency translation adjustments:

Other comprehensive (loss) income before reclassifications (1)

Other comprehensive income (loss) before reclassifications (1)

$ 32,776 $ ( 38,942 )

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Deferred gains (losses) on cash flow hedging instruments:

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

Other comprehensive loss before reclassifications ( 883 ) —

Amounts reclassified into income (3)

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

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

Deferred gains (losses) on net investment hedging instruments:

Other comprehensive loss before reclassifications ( 2,890 ) —

Amounts reclassified into income (3)

Net change in accumulated other comprehensive loss $ 31,005 $ 56,110

(1) Foreign currency translation adjustments included intra-entity foreign currency transactions that were of a long-term investment nature and were net losses of $ 0 and $ 863 for the three months ended September 30, 2020 and 2019, respectively.

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

During the three months ended September 30, 2020, the Company reclassified $ 1,181 of translation losses from accumulated comprehensive loss to Other (income) expense, net on the Consolidated Statement of Operations.

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

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

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

(3) See Note 15, Derivatives and Hedging Activities, for the amounts reclassified into income for deferred gains (losses) on cash flow hedging instruments recorded in the Consolidated Statements of Operations in the three months ended September 30, 2020 and 2019.

STOCK-BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS

The Company has one stockholder 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.

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

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

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

The Company 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 shares 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 provides for performance and market equity awards that can be earned over defined performance periods.

The Company's plans are described in Note 15, Stock-Based Compensation and Incentive Performance Plans , in the Notes to the Consolidated Financial Statements in the Form 10-K.

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

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

2020 2019 2020 2019

Three Months Ended September 30,

Selling, general and administrative expense

$ 4,367 $ 2,737

Chief Executive Officer Succession Plan expense, net

Discontinued operations — 544

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Related income tax benefit $ 807 $ 373

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

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

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

Restricted Stock

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

Awards of restricted stock are either restricted stock awards ("RSAs") or restricted stock units ("RSUs") that are issued at no cost to the recipient.

Performance-based or market-based RSUs are issued in the form of performance share units ("PSUs").

A summary of the restricted stock activity (including all RSAs, RSUs and PSUs) for the three months ended September 30, 2020 is as follows:

Number of Shares

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Value (per share)

Non-vested restricted stock, restricted share units, and performance units outstanding at June 30, 2019 2,729 $ 12.94

Non-vested RSAs, RSUs and PSUs outstanding at June 30, 2020 2,049 $ 15.85

Granted 133 $ 33.14

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Forfeited ( 49 ) $ 14.18

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

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

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

Nine Months Ended March 31,

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

Non-vested RSAs, RSUs and PSUs outstanding at September 30, 2020 2,089 $ 16.79

At September 30, 2020 and June 30, 2020, the table above includes a total of 1,321 and 1,384 shares (including an inducement grant of 350 shares made to our CEO as previously disclosed), respectively, that represent the target number of shares that may be earned based on pre-defined market conditions that are eligible to vest ranging from zero to 300 % of target.

Vested shares during the current period include a total of 20 shares under the 2018-2020 LTIP that actually vested at 150 % of target based on achievement of the maximum relative TSR target.

Three Months Ended September 30,

Fair value of RSAs, RSUs and PSUs granted $ 4,398 $ 59

Fair value of shares vested $ 1,056 $ 770

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

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

Stock Options

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

Number of Options Weighted

Intrinsic Value

Options outstanding and exercisable at June 30, 2019 122 $ 2.26

Exercised — —

Options outstanding and exercisable at March 31, 2020

122 $ 2.26 11.3 $ 2,891

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

Tax benefit recognized from restricted shares vesting $ 152 $ 59

At September 30, 2020, there was $ 18,677 of unrecognized stock-based compensation expense related to non-vested restricted stock awards which is expected to be recognized over a weighted average period of 2.3 years.

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

1 unchanged sentence

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

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

At September 30, 2020 and June 30, 2020, the carrying value of the Company’s investment in Chop’t was $ 12,465 and $ 12,793 , 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.

with Future Consumer Ltd, a joint venture accounted for under the equity method of accounting, and (c) Yeo Hiap Seng Limited, for which the Company holds a less than 1 % eq uity ownership interest.

The carrying value of these combined investments was $ 5,434 and $ 4,646 as of September 30, 2020 and June 30, 2020, 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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• Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

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

Forward foreign currency contracts 992 — 992 —

The following table presents assets and liabilities measured at fair value on a recurring basis as of September 30, 2020:

Cash equivalents $ 7 $ 7 $ — $ —

Derivative financial instruments 885 — 885 —

Equity investment 512 512 — —

Total $ 1,404 $ 519 $ 885 $ —

Forward foreign currency contracts $ 122 $ — $ 122 $ —

Derivative financial instruments $ 11,232 $ — $ 11,232 $ —

Total $ 11,232 $ — $ 11,232 $ —

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Cash equivalents $ 7 $ 7 $ — $ —

Forward foreign currency contracts 626 — 626 —

Derivative financial instruments 1,014 — 1,014 —

Equity investment 562 562 — —

Total $ 1,583 $ 569 $ 1,014 $ —

Forward foreign currency contracts $ 103 $ — $ 103 $ —

Derivative financial instruments $ 6,405 $ — $ 6,405 $ —

Total $ 6,405 $ — $ 6,405 $ —

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

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

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

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

There were no transfers of financial instruments between the three levels of fair value hierarchy during the three months ended September 30, 2020 or 2019.

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

The Company’s debt approximates fair value due to the debt bearing fluctuating market interest rates (see Note 9, Debt and Borrowings ).

In addition to the instruments named above, the Company also makes fair value measurements in connection with its interim and annual goodwill and tradename impairment testing.

In addition to the instruments named above, the Company makes fair value measurements in connection with its assets and liabilities classified as held for sale related to the Fruit and Danival businesses as of September 30, 2020 and June 30, 2020, respectively, as these balances represent the estimated fair value, less costs to sell.

The Company also makes fair value measurements in connection with its interim and annual goodwill and tradename impairment testing.

These measurements fall into Level 3 of the fair value hierarchy (See Note 8, Goodwill and Other Intangible Assets ).

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 loss 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 as hedges at inception are measured for effectiveness at inception and on a quarterly basis.

These assessments determine whether derivatives designated as qualifying hedges continue to be highly effective in offsetting changes in the cash flows of hedged items.

Any ineffective portion of change in fair value is not deferred in Accumulated other comprehensive loss and is included in current period earnings.

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

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

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

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

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

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

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

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 , the Company incorporates 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 September 30, 2020 and June 30, 2020 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 September 30, 2020 and June 30, 2020.

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 risks 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 the three months ended September 30, 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 deb t.

During the remaining nine months of fiscal 2021, the Company estimates that an additional $ 211 will be reclassified as an increase to interest expense.

As of September 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 instr ument.

The Company, at times, 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 loss 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 the remaining nine months of fiscal 2021, the Company estimates that an additional $ 123 relating to cross-currency swaps will be reclassified as an increase to interest income.

As of September 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

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 September 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 September 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 $ 24,734 .

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 September 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 $ 737

Cross-currency swaps Prepaid expenses and other current assets 674 Other noncurrent liabilities 10,407

Total derivatives designated as hedging instruments 674 11,144

Derivatives not designated as hedging instruments:

Foreign currency forward contracts Prepaid expenses and other current assets 211 Accrued expenses and other current liabilities 88

Total derivative instruments $ 885 $ 11,232

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 pre-tax effect of cash flow hedge accounting on Accumulated other comprehensive loss as of September 30, 2020 and 2019:

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

Three Months Ended September 30, Three Months Ended September 30,

2020 2019 2020 2019

Interest rate swaps $ 61 $ — Interest and other financing expense, net $ ( 58 ) $ —

Cross-currency swaps ( 1,177 ) — Interest and other financing expense, net / Other expense (income), net ( 1,183 ) —

Foreign currency forward contracts ( 2 ) ( 6 ) Cost of sales 73 78

Total $ ( 1,118 ) $ ( 6 ) $ ( 1,168 ) $ 78

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 September 30, 2020 and 2019:

Location and Amount of Gain (Loss) Recognized in the Consolidated Statement of Operations on Cash Flow Hedging Relationships

Three Months Ended September 30, 2020 Three Months Ended September 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 $ — $ ( 58 ) $ — $ — $ — $ —

Cross-currency swaps

Amount of gain (loss) reclassified from accumulated OCL into income $ — $ 41 $ ( 1,224 ) $ — $ — $ —

Foreign currency forward contracts

Amount of gain (loss) reclassified from accumulated OCL into income $ 73 $ — $ — $ 78 $ — $ —

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 September 30, 2020 and 2019:

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)

Three Months Ended September 30, Three Months Ended September 30,

2020 2019 2020 2019

Cross-currency swaps $ ( 3,658 ) $ — Interest and other financing expense, net $ 129 $ —

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 September 30, 2020 and 2019:

Derivatives Not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income on Derivatives

Three Months Ended September 30,

Foreign currency forward contracts Other expense (income), net $ 124 $ ( 169 )

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 related to 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 are expected to result in 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 period ended as of September 30, 2020:

Balance at June 30, 2020 Charges (reversals) Amounts Paid Foreign Currency Translation & Other Adjustments Balance at September 30, 2020

Termination benefits and personnel realignment $ 11,541 $ 352 $ ( 4,735 ) $ 100 $ 7,258

The liability balance as of September 30, 2020 and June 30, 2020 is included within Accrued expenses and other current liabilities on the Company’s Consolidated Balance Sheets.

COMMITMENTS AND CONTINGENCIES

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

The Co-Lead Plaintiffs in the Consolidated

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

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

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

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

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

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.

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

Stockholder Derivative Complaints Filed in State Court

On September 16, 2016, a stockholder derivative complaint, Paperny v.

Heyer, et al.

(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.

Simon (the “Shakir Complaint” and, together with the Paperny Complaint and the Scarola Complaint, the “Derivative Complaints”), respectively.

Both the Scarola Complaint and the Shakir Complaint alleged breach of fiduciary duty, lack of oversight and unjust enrichment.

On February 16, 2017, the parties for the Derivative Complaints entered into a stipulation consolidating the matters under the caption In re The Hain Celestial Group (the “Consolidated Derivative Action”) in New York State Supreme Court in Nassau County, ordering the Shakir Complaint as the operative complaint.

On November 2, 2017, the parties agreed to stay the Consolidated Derivative Action.

Co-Lead Plaintiffs requested leave to file an amended consolidated complaint, and on January 14, 2019, the Court partially lifted the stay, ordering Co-Lead Plaintiffs to file their amended complaint by March 7, 2019.

Co-Lead Plaintiffs filed a Verified Amended Shareholder Derivative Complaint on March 7, 2019.

The Court continued the stay pending a decision on Defendants’ motion to dismiss in the Consolidated Securities Action (referenced above).

After the Court in the Consolidated Securities Action dismissed the Amended Complaint, the Court in the Consolidated Derivative Action ordered Co-Lead Plaintiffs to file a second amended complaint no later than July 8, 2019.

Co-Lead Plaintiffs filed a Verified Second Amended Shareholder Derivative Complaint on July 8, 2019 (the “Second Amended Derivative Complaint”).

Defendants moved to dismiss the Second Amended Derivative Complaint on August 7, 2019.

Co-Lead Plaintiffs filed an opposition to Defendants’ motion to dismiss, and Defendants submitted a reply on September 20, 2019.

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

Co-Lead Plaintiffs filed their appellate brief on August 18, 2020.

Defendants' opposition brief is due on November 17, 2020.

Additional Stockholder Class Action and Derivative Complaints Filed in Federal Court

4 unchanged sentences

(the “Barnes Complaint”), respectively.

Both the Silva Complaint and the Barnes Complaint allege violation of securities law, breach of fiduciary duty, waste of corporate assets and unjust enrichment.

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 former Board of Directors and certain former officers of the Company.

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

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

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.

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.

On each of September 8 and October 8, 2020, the Court extended its stay of any applicable deadlines for 30 days to give the Board of Directors additional time to complete its evaluation of the demand.

On November 3, 2020, Plaintiffs were informed that the Board of Directors had finished investigating and resolved, among other things, that the demand should be rejected.

On November 6, 2020, Plaintiffs and Defendants notified the Court that Plaintiffs are in the process of evaluating the rejection of the demand, seeking certain additional information and assessing next steps and requested that the Court extend the stay for an additional 30 days, to on or around December 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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SEGMENT INFORMATION

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 Accounting Standards Codification ("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:

In accordance with ASC 280, Segment Reporting , the Company, based on economic similarity, defines its operating segments as the following five segments:

the United States, United Kingdom (Hain Daniels), Ella's Kitchen UK, Europe and Canada.

Similarly, under the same guidance, the Company 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 .

Segment information presented herein excludes the results of Tilda for all periods presented.

Net sales and operating income are the primary measures used by the Company’s CODM to evaluate segment operating performance and to decide how to allocate resources to segments.

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 CEO.

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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.

The Company’s CODM does not use segment asset information to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed.

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.

The following tables set forth financial information about each of the Company’s reportable segments.

Transactions between reportable segments were insignificant for all periods presented.

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

2020 2019 2020 2019

Three Months Ended September 30,

North America $ 280,668 $ 271,701

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$ 3,280 $ 2,455

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

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

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

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

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

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

$ 2,787 related to International).

(a) In addition to general Corporate and Other expenses as described above, for the three months ended September 30, 2020, Corporate and Other includes $ 803 of Productivity and transformation costs.

For the three months ended September 30, 2019, Corporate and Other includes $ 10,735 of Productivity and transformation costs, partially offset by a benefit of $ 2,562 of proceeds from insurance claim.

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

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

2020 2019 2020 2019

Three Months Ended September 30,

Grocery $ 343,749 $ 349,802

Snacks 81,159 76,399

Tea 33,372 31,784 93,855 93,113

Personal Care 48,982 34,437

Tea 24,737 21,438

Total $ 498,627 $ 482,076

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

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

2020 2019 2020 2019

Three Months Ended September 30,

United States $ 239,717 $ 236,334

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Total $ 498,627 $ 482,076

The Company’s long-lived assets, which primarily represent net property, plant and equipment, by geographic area were as follows:

The Company’s long-lived assets, which primarily represent net property, plant and equipment, operating lease right-of-use assets and noncurrent other assets by geographic area were as follows:

September 30,

2020 June 30,

3 unchanged sentences

Total $ 414,728 $ 401,879

RELATED PARTY TRANSACTIONS

The non-employee chair of the Company's 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 $ 4,810 and $ 5,163 in the three months ended September 30, 2020 and 2019, respectively, to the supplier and affiliated entities.

A former member of the Company's Board of Directors is a partner in a law firm which provides legal services to the Company.

During the time the director was a member of the Company's Board of Directors, the Company incurred expenses of $ 440 and $ 743 in the three months ended September 30, 2020 and 2019 , respectively, to the law firm and affiliated entities.

The director resigned from the Board in February 2020.

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

What changed 10-Q

Item 1. Financial Statements