What changed in this filing

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Item 1. Financial Statements

2021-02-09 compared with 2020-11-09 · 282 added, 179 removed, 741 unchanged (38% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

SEPTEMBER 30, 2020 AND JUNE 30, 2020

DECEMBER 31, 2020 AND JUNE 30, 2020

(In thousands, except par values)

September 30, June 30,

December 31, June 30,

Current assets:

44 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2020 AND 2019

(In thousands, except per share amounts)

Three Months Ended September 30,

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

2020 2019 2020 2019

Net sales $ 528,418 $ 506,784 $ 1,027,045 $ 988,860

4 unchanged sentences

Productivity and transformation costs

6,016 12,260 7,818 26,435

Proceeds from insurance claim

Long-lived asset impairment 32,497 —

— — — ( 2,562 )

Long-lived asset and intangibles impairment 25,179 1,889 57,676 1,889

Operating income 12,957 9,191 16,237 11,646

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Income (loss) from continuing operations before income taxes and equity in net loss of equity-method investees 11,665 3,210 13,865 ( 1,957 )

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

Provision for income taxes 8,438 1,020 21,400 489

Equity in net loss of equity-method investees 1,076 338 1,095 655

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) from continuing operations $ 2,151 $ 1,852 $ ( 8,630 ) $ ( 3,101 )

Net (loss) income from discontinued operations, net of tax ( 11 ) ( 2,816 ) 11,255 ( 104,884 )

Net income (loss) $ 2,140 $ ( 964 ) $ 2,625 $ ( 107,985 )

Net (loss) income per common share:

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

Net income (loss) per common share:

Basic net income (loss) per common share from continuing operations $ 0.02 $ 0.02 $ ( 0.09 ) $ ( 0.03 )

Basic net income (loss) per common share from discontinued operations — ( 0.03 ) 0.11 ( 1.01 )

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

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

Basic net income (loss) per common share $ 0.02 $ ( 0.01 ) $ 0.02 $ ( 1.04 )

Diluted net income (loss) per common share from continuing operations $ 0.02 $ 0.02 $ ( 0.09 ) $ ( 0.03 )

Diluted net income (loss) per common share from discontinued operations — ( 0.03 ) 0.11 ( 1.01 )

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

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

Diluted net income (loss) per common share $ 0.02 $ ( 0.01 ) $ 0.02 $ ( 1.04 )

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

Basic 100,117 104,318 100,837 104,272

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ( LOSS) (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2020 AND 2019

(In thousands)

Three Months Ended

September 30, 2020 September 30, 2019

December 31, 2020 December 31, 2019

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

3 unchanged sentences

Foreign currency translation adjustments before reclassifications $ 46,043 $ — 46,043 $ 48,655 $ — 48,655

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

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

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

Total other comprehensive income

101 ( 21 ) 80 52 ( 10 ) 42

Change in deferred (losses) gains on net investment hedging instruments

( 3,897 ) 818 ( 3,079 ) — — —

Total other comprehensive income (loss)

$ 42,247 $ 797 $ 43,044 $ 48,707 $ ( 10 ) $ 48,697

Total comprehensive income $ 45,184 $ 47,733

Six Months Ended

December 31, 2020 December 31, 2019

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

amount Tax (expense) benefit After-tax amount

Net income (loss) $ 2,625 $ ( 107,985 )

Other comprehensive income (loss):

Foreign currency translation adjustments before reclassifications $ 78,819 $ — 78,819 $ 9,713 $ — 9,713

Reclassification of currency translation adjustment included in Net income (loss) 1,181 — 1,181 95,120 — 95,120

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

151 ( 31 ) 120 ( 26 ) — ( 26 )

Change in deferred (losses) gains on net investment hedging instruments

( 7,684 ) 1,613 ( 6,071 ) — — —

Total other comprehensive income (loss)

$ 72,467 $ 1,582 $ 74,049 $ 104,807 $ — $ 104,807

Total comprehensive income (loss) $ 76,674 $ ( 3,178 )

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CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2020

(In thousands, except par values)

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Shares at $ .01

Capital Earnings Shares Amount (Loss) Income Total

Capital Earnings Shares Amount Income (Loss) Total

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

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

Net income 2,140 2,140

Other comprehensive income 43,044 43,044

Issuance of common stock pursuant to stock-based compensation plans

162 2 ( 2 ) —

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

38 ( 1,255 ) ( 1,255 )

Repurchases of common stock 923 ( 29,684 ) ( 29,684 )

Stock-based compensation expense 3,823 3,823

Balance at December 31, 2020 109,339 $ 1,095 $ 1,180,062 $ 616,486 9,500 $ ( 245,651 ) $ ( 97,343 ) $ 1,454,649

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2019

(In thousands, except par values)

2 unchanged sentences

Shares at $ .01

Capital Earnings Shares Amount (Loss) Income Total

Capital Earnings Shares Amount Income (Loss) Total

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

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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 48,697 48,697

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

27 ( 671 ) ( 671 )

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

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

FOR THE SIX MONTHS ENDED DECEMBER 31, 2020 AND 2019

(In thousands)

Three Months Ended September 30,

Six Months Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES

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Stock-based compensation, net 8,190 5,820

Long-lived asset impairment 32,497 —

Long-lived asset and intangibles impairment 57,676 1,889

Other non-cash items, net ( 1,765 ) 2,661

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Accounts payable and accrued expenses 36,272 ( 30,345 )

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

Net cash provided by operating activities from continuing operations 104,530 17,148

CASH FLOWS FROM INVESTING ACTIVITIES

8 unchanged sentences

Proceeds from discontinued operations entities — 309,929

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

Repayments of other debt, net ( 1,711 ) ( 501 )

Share repurchases ( 71,736 ) —

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Net cash flows used in discontinued operations

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

Net increase (decrease) in cash and cash equivalents 22,850 ( 2,502 )

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

FOR THE SIX MONTHS ENDED DECEMBER 31, 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 included in the line item Assets held for sale on the Consolidated Balance Sheets as shown below, represents amounts included within held for sale accounting related to the sale of the Company's U.K.

fruit business, primarily consisting of the Orchard House Foods Limited business and associated brands.

Six Months Ended December 31,

Cash and cash equivalents $ 46,813 $ 37,024

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

The Company manufactures, markets, distributes and sells organic and natural products under brand names, 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 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's ® ™ (under license), MaraNatha ® , Natumi ® , New Covent Garden Soup Co.

® , Robertson’s ® , Sensible Portions ® , Spectrum ® , Sun-Pat ® , 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.

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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.

During the first quarter of fiscal 2021, the Company divested its Danival ® business.

Additionally, in January 2021, subsequent to the end of second quarter of fiscal 2021, the Company completed the sale of its U.K.

fruit business, primarily consisting of the Orchard House ® Foods Limited business and associated brands.

Assets and liabilities of this business are classified as held for sale in the Company's Consolidated Balance Sheet as of December 31, 2020.

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

Productivity and Transformation Costs

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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 relating to the sale and purchase of the Tilda Group Entities and certain other assets.

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.

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

Operating results for the six months ended December 31, 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.

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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 .

The adoption did not materially impact the Company's 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.

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

In October 2020, the FASB issued ASU 2020-10, Codification Improvements - Disclosures .

This ASU improves consistency by amending the codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology.

This ASU is effective for fiscal years beginning after December 15, 2020.

This ASU will not affect the Company's results of operations, cash flows or financial position.

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 September 30,

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

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

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

2020 2019 2020 2019

Net income (loss) from continuing operations $ 2,151 $ 1,852 $ ( 8,630 ) $ ( 3,101 )

Net (loss) income from discontinued operations ( 11 ) ( 2,816 ) 11,255 ( 104,884 )

Net income (loss) $ 2,140 $ ( 964 ) $ 2,625 $ ( 107,985 )

4 unchanged sentences

100,562 104,619 100,837 104,272

Basic net (loss) income per common share:

Basic net income (loss) per common share:

Continuing operations $ 0.02 $ 0.02 $ ( 0.09 ) $ ( 0.03 )

Discontinued operations — ( 0.03 ) 0.11 ( 1.01 )

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

Diluted net (loss) income per common share:

Basic net income (loss) per common share $ 0.02 $ ( 0.01 ) $ 0.02 $ ( 1.04 )

Diluted net income (loss) per common share:

Continuing operations $ 0.02 $ 0.02 $ ( 0.09 ) $ ( 0.03 )

Discontinued operations — ( 0.03 ) 0.11 ( 1.01 )

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.

Diluted net income (loss) per common share $ 0.02 $ ( 0.01 ) $ 0.02 $ ( 1.04 )

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

Due to the net loss from continuing operations in the six months ended December 31, 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 211 and 485 restricted stock awards and stock options excluded from our calculation of diluted net income (loss) per sha re for the three months ended December 31, 2020 and 2019, respectively, as such awards were anti-dilutive.

Additionally, there were 1,419 and 2,550 stock-based awards excluded for the three months ended December 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 709 and 689 restricted stock awards and stock options excluded from the calculation of diluted net income (loss) per share for the six months ended December 31, 2020 and December 31, 2019, respectively, as such awards were anti-dilutive.

Additionally, there were 1,429 and 2,745 stock-based awards excluded for the six months ended December 31, 2020 and December 31, 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 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.

During the six months ended December 31, 2020, the Company repurchased 2,204 shares under the repurchase program for a total of

$ 71,693 , excluding commissions, at an average price of $ 32.53 per share.

As of December 31, 2020, the Company had $ 118,136 of remaining authorization under the share repurchase program.

ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

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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.

This decision supported the Company's overall strategy as the Fruit business did not align, and had limited synergies, with the rest of the Company's businesses.

Fruit operated out of the United Kingdom and was part of the Company's International reportable segment, comprising 6.8 % and 9.7 % of the Company's net sales during the six months ended December 31, 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 as of September 30 and December 31, 2020, recognizing a pre-tax non-cash loss for the three and six months ended December 31, 2020 of $ 23,596 and $ 56,093 , respectively, to reduce the carrying value to its estimated fair value, les s costs to sell.

The sale of the Fruit business was completed on January 13, 2021, as disclosed in Note 20, Subsequent Event .

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 $ 13,808

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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.

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

Discontinued Operations

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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 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.

The Company also entered into certain ancillary agreements with Ebro Foods S.A.

(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 September 30,

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

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

2020 2019 2020 2019

Net sales $ — $ 2,667 $ — $ 30,399

1 unchanged sentence

Gross profi t

— 171 — 3,751

Selling, general and administrative expense — 246 — 5,185

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Net loss from discontinued operations before income taxes — ( 4,651 ) ( 75 ) ( 89,988 )

(Benefit) provision for income taxes (3)

Provision (benefit) for income taxes (3)

11 ( 1,835 ) ( 11,320 ) 13,865

Net income (loss) from discontinued operations, net of tax $ 11,256 $ ( 101,037 )

Net (loss) income from discontinued operations, net of tax $ ( 11 ) $ ( 2,816 ) $ 11,245 $ ( 103,853 )

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

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

(3) Includes $ 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.

(3) Includes $ 11,331 of tax benefit related to the legal entity reorganization for the six months ended December 31, 2020, as well as a tax benefit related to the gain on the sale of Tilda of $ 1,250 and $ 15,250 for the three and six months ended December 31, 2019.

There were no assets or liabilities from discontinued operations associated with Tilda as of December 31, 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 Hain Pure Protein Corporation ("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 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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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.

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

Sale of HPPC and Empire Kosher

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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 September 30,

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

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

2020 2019 2020 2019

Net sales $ — $ — $ — $ —

3 unchanged sentences

Asset impairments — — — —

Other expense ( 10 ) —

Other expense (income) — — ( 10 ) —

Loss on sale of discontinued operations (1)

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

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

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

During the six months ended December 31, 2020 and the fiscal year ended June 30, 2020, the Company recorded inventory write-downs of $ 311 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,

9 unchanged sentences

$ 296,013 $ 289,256

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.

Depreciation and amortization expense for the three months ended December 31, 2020 and 2019 was $ 7,481 and $ 8,024 , respectively.

Depreciation and amortization expense for the six months ended December 31, 2020 and 2019 was $ 17,184 and $ 15,729 , respectively.

As of December 31, 2020, the Company reclassified $ 24,971 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 was an impairment charge of $ 1,333 recorded during the three and six months ended December 31, 2020 and no impairment charge recorded during the six months ended December 31, 2019.

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

7 unchanged sentences

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

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

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

Three Months Ended Six Months Ended

December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019

Operating lease expenses $ 4,205 $ 4,800 $ 8,161 $ 9,489

4 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

Leases Classification September 30, 2020 June 30, 2020

Leases Classification December 31, 2020 June 30, 2020

Operating lease ROU assets, net Operating lease right-of-use assets $ 89,971 $ 88,165

1 unchanged sentence

Finance lease ROU assets, net Property, plant and equipment, net 386 691

Finance lease ROU assets, net Assets held for sale 356 —

Total leased assets $ 96,320 $ 88,856

2 unchanged sentences

Finance Current portion of long-term debt 239 308

Finance Liabilities related to assets held for sale 296 —

Operating Operating lease liabilities, noncurrent portion 83,268 82,962

2 unchanged sentences

Additional information related to leases is as follows:

Three Months Ended

September 30, 2020 September 30, 2019

Six Months Ended

December 31, 2020 December 31, 2019

Supplemental cash flow information

13 unchanged sentences

(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:

The balance as of December 31, 2019 also included $ 87,414 relating to the impact of the adoption of ASU 2016-02 effective July 1, 2019.

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

Fiscal Year Operating leases Finance leases Total

19 unchanged sentences

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

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

At December 31, 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.

6 unchanged sentences

Translation and other adjustments, net 2,150 27,208 29,358

Balance as of September 30, 2020 (a)

Balance as of December 31, 2020 (a)

$ 608,205 $ 268,788 $ 876,993

(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 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.

As of September 30 and December 31, 2020, operations of the United Kingdom Fruit business, a part of the International reportable segment, were 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 December 31, 2020.

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

1 unchanged sentence

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.

No impairment was recorded during the six months ended December 31, 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,

6 unchanged sentences

Net carrying amount $ 326,272 $ 346,462

(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.

(a) The gross carrying value of trademarks and tradenames is reflected net of $ 93,273 of accumulated impairment charges as of both December 31, 2020 and June 30, 2020.

There were no events or circumstances that warranted an interim impairment test for indefinite-lived intangible assets during the six months ended December 31, 2020 or 2019.

As of September 30 and December 31, 2020, $ 36,074 of customer relationship assets, net, and $ 1,230 of tradenames, were reclassified to Assets held for sale in relation to the held for sale classification of the Fruit business.

During the six months ended December 31, 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.

1 unchanged sentence

Amortization expense included in continuing operations was as follows:

Three Months Ended September 30,

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

2020 2019 2020 2019

Amortization of acquired intangibles $ 2,193 $ 3,189 $ 4,626 $ 6,272

1 unchanged sentence

Debt and borrowings consisted of the following:

September 30,

2020 June 30,

5 unchanged sentences

Credit Agreement

On February 6, 2018, the Company entered into the Third Amended and Restated Credit Agreement (the “Credit Agreement”).

The Credit Agreement provides for a $ 1,000,000 revolving credit facility through February 6, 2023 and provides for a $ 300,000 term loan.

On February 6, 2018, the Company entered into the Third Amended and Restated Credit Agreement (as amended, the “Credit Agreement”).

The Credit Agreement provides for a $ 1,000,000 revolving credit facility through February 6, 2023 and provided for a $ 300,000 term loan.

Under the Credit Agreement, the revolving credit facility may be increased by an additional uncommitted $ 400,000 , provided certain conditions are met.

5 unchanged sentences

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

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.

As of December 31, 2020, there were $ 293,000 of borro wings outstanding under the revolving credit f acility and $ 6,394 let ters of credit outstanding under the Credit Agreement.

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

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 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.

As of December 31, 2020, $ 700,606 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 September 30, 2020 was 1.52 % .

The weighted average interest rate on outstanding borrowings under the Amended Credit Agreement at December 31, 2020 was 1.40 % .

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.

2 unchanged sentences

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

The effective income tax rate from continuing operations was expense of 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 rate from continuing operations was expense of 72.3 % and 31.8 % for the three months ended December 31, 2020 and 2019, respectively.

The effective income tax rate from continuing operations was expense of 154.3 % and 25.0 % for the six months ended December 31, 2020 and 2019, respectively.

The effective income tax rates from continuing operations for the period ended December 31, 2020 were impacted by various discrete items including the tax impact of the U.K.

Fruit business impairment, 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 and six months ended December 31, 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.

In December 2020, the Company received $ 28,784 including $ 90 of interest from the CARES Act refund claim filed in July 2020.

The income tax expense from discon tinued operations was expense of $ 11 and a benefit of $ 11,320 for the three and six months ended December 31, 2020 , respectively, while the income tax from discontinued operations was a benefit of $ 1,835 and expense of $ 13,472 for the three and six months ended December 31, 2019, respectively.

The benefit for income tax for the six months ended December 31, 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.

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

ACCUMULATED OTHER COMPREHENSI VE LOSS

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

Three Months Ended September 30,

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

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

2020 2019 2020 2019

Foreign currency translation adjustments:

2 unchanged sentences

Amounts reclassified into income (2)

— — 1,181 95,120

Deferred gains (losses) on cash flow hedging instruments:

Other comprehensive loss before reclassifications ( 883 ) —

Amounts reclassified into income (3)

Amount of (loss) gain recognized in AOCL on derivatives (3)

( 906 ) 84 ( 1,789 ) —

Amount of loss reclassified from AOCL into Expense (3)

986 ( 42 ) 1,909 ( 26 )

Deferred gains (losses) on net investment hedging instruments:

Other comprehensive loss before reclassifications ( 2,890 ) —

Amounts reclassified into income (3)

Amount of (loss) gain recognized in AOCL on derivatives (3)

( 2,980 ) — ( 5,870 ) —

Amount of gain reclassified from AOCL into income (3)

( 99 ) — ( 201 ) —

Net change in accumulated other comprehensive loss $ 43,044 $ 48,697 $ 74,049 $ 104,807

(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.

(1) Foreign currency translation adjustments included intra-entity foreign currency transactions that were of a long-term investment nature and were a net gain of $ 0 and $ 613 for the three months ended December 31, 2020 and 2019, respectively.

Foreign currency translation adjustments included intra-entity foreign currency transactions that were of a long-term investment nature and were a net loss of $ 0 and $ 250 for the six months ended December 31, 2020 and 2019, respectively.

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

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) 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

1 unchanged sentence

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 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 September 30,

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

2020 2019 2020 2019

Selling, general and administrative expense

6 unchanged sentences

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:

A summary of the restricted stock activity (including all RSAs, RSUs and PSUs) for the six months ended December 31, 2020 is as follows:

Number of Shares

5 unchanged sentences

Forfeited ( 62 ) $ 16.62

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.

Non-vested RSAs, RSUs and PSUs outstanding at December 31, 2020 1,961 $ 16.49

At December 31, 2020 and June 30, 2020, the table above includes a total of 1,407 and 1,384 shares (including an inducement grant of 350 shares made to the Company's 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,

Six Months Ended December 31,

Fair value of RSAs, RSUs and PSUs granted $ 6,101 $ 8,963

1 unchanged sentence

Tax benefit recognized from restricted shares vesting $ 939 $ ( 58 )

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.

At December 31, 2020, there was $ 16,107 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 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.

At December 31, 2020 and June 30, 2020, the carrying value of the Company’s investment in Chop’t was $ 11,424 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.

(a) Hutchison Hain Organic Holdings Limited, a joint venture with Hutchison China Meditech Ltd., accounted for under the equity method of accounting, (b) Hain Future Natural Products Private Ltd., a joint venture with Future Consumer Ltd, accounted for under the equity method of accounting, and (c) Yeo Hiap Seng Limited, in which the Company holds a less than 1 % eq uity ownership interest.

The carrying value of these combined investments was $ 5,502 and $ 4,646 as of December 31, 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

5 unchanged sentences

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

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

Cash equivalents $ 7 $ 7 $ — $ —

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

Derivative financial instruments $ 602 $ — $ 602 $ —

14 unchanged sentences

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

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.

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

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, as these balances represent the estimated fair value, less costs to sell (See Note 4, Assets Held for Sale and Discontinued Operations ).

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

10 unchanged sentences

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.

As a result, all of the derivatives held as of December 31, 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 December 31, 2020 and June 30, 2020.

These estimates are not necessarily indicative of the amounts we could ultimately realize.

15 unchanged sentences

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:

During the three and six months ended December 31, 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 AOCL and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

Amounts reported in AOCL 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 six months of fiscal 2021, the Company estimates that an additional $ 159 will be reclassified as an increase to interest expense.

As of December 31, 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

6 unchanged sentences

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:

For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in AOCL 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 six months of fiscal 2021, the Company estimates that an additional $ 73 relating to cross-currency swaps will be reclassified as an increase to interest income.

As of December 31, 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

7 unchanged sentences

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:

For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in AOCL as part of the cumulative translation adjustment.

Amounts are reclassified out of AOCL into earnings when the hedged net investment is either sold or substantially liquidated.

As of December 31, 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

3 unchanged sentences

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:

As of December 31, 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 $ 37,375 .

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 December 31, 2020:

Asset Derivatives Liability Derivatives

18 unchanged sentences

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,

The following table presents the pre-tax effect of cash flow hedge accounting on AOCL as of the three months ended December 31, 2020 and 2019:

Derivatives in Cash Flow Hedging Relationships Amount of Gain (Loss) Recognized in OCI on Derivatives Location of Gain (Loss) Reclassified from AOCL into Income Amount of Gain (Loss) Reclassified from AOCL into Income

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

2020 2019 2020 2019

3 unchanged sentences

Total $ ( 1,147 ) $ 104 $ ( 1,248 ) $ ( 52 )

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:

The following table presents the pre-tax effect of cash flow hedge accounting on AOCL as of the six months ended December 31, 2020 and 2019:

Six Months Ended December 31,

2020 2019 2020 2019

Interest rate swaps $ 123 $ — Interest and other financing expense, net $ ( 130 ) $ —

Cross-currency swaps ( 2,386 ) — Interest and other financing expense, net / Other expense (income), net ( 2,359 ) —

Foreign currency forward contracts ( 2 ) ( 6 ) Cost of sales 73 26

Total $ ( 2,265 ) $ ( 6 ) $ ( 2,416 ) $ 26

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

Three Months Ended December 31, 2020 Three Months Ended December 31, 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

2 unchanged sentences

Interest rate swaps

Amount of gain (loss) reclassified from accumulated OCL into income $ — $ ( 58 ) $ — $ — $ — $ —

Amount of (loss) gain reclassified from AOCL into income $ — $ ( 72 ) $ — $ — $ — $ —

Cross-currency swaps

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

Amount of gain (loss) reclassified from AOCL into income $ — $ 40 $ ( 1,216 ) $ — $ — $ —

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:

Amount of (loss) gain reclassified from AOCL into income $ — $ — $ — $ ( 52 ) $ — $ —

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

Six Months Ended December 31, 2020

Six Months Ended December 31, 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 (loss) gain reclassified from AOCL into income $ — $ ( 130 ) $ — $ — $ — $ —

Cross-currency swaps

Amount of gain (loss) reclassified from AOCL into income $ — $ 81 $ ( 2,440 ) $ — $ — $ —

Foreign currency forward contracts

Amount of (loss) gain reclassified from AOCL into income $ 73 $ — $ — $ 26 $ — $ —

The following table presents the pre-tax effect of the Company’s net investment hedges on AOCL and the Consolidated Statements of Operations for the three months ended December 31, 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,

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

2020 2019 2020 2019

Cross-currency swaps $ ( 3,772 ) $ — Interest and other financing expense, net $ 125 $ —

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:

The following table presents the pre-tax effect of the Company’s net investment hedges on AOCL and the Consolidated Statements of Operations for the six months ended December 31, 2020 and 2019:

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

2020 2019 2020 2019

Cross-currency swaps $ ( 7,430 ) $ — Interest and other financing expense, net $ 254 $ —

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 )

Three Months Ended December 31,

Foreign currency forward contracts Other (income) expense, net $ ( 523 ) $ ( 336 )

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

Six Months Ended December 31,

Foreign currency forward contracts Other (income) expense, net $ ( 399 ) $ ( 505 )

Credit-Risk-Related Contingent Features

3 unchanged sentences

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

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 December 31, 2020:

Balance at June 30, 2020 Charges (reversals) Amounts Paid Foreign Currency Translation & Other Adjustments Balance at December 31, 2020

Termination benefits and personnel realignment $ 11,541 $ 2,456 $ ( 7,186 ) $ 62 $ 6,873

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.

The liability balance as of December 31, 2020 and June 30, 2020 is included within Accrued expenses and other current liabilities on the Company’s Consolidated Balance Sheets.

COMMITMENTS AND CONTINGENCIES

12 unchanged sentences

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

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

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”).

8 unchanged sentences

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

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

Defendants filed their opposition brief on November 17, 2020, and Plaintiffs filed their reply brief on December 8, 2020.

Accordingly, Co-Lead Plaintiffs’ appeal is fully briefed.

Oral argument has not yet been scheduled.

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.

15 unchanged sentences

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

This deadline was extended, and Defendants moved to dismiss the Consolidated Stockholder Class and Derivative Action Complaint on June 23, 2020, with Plaintiffs’ opposition due August 7, 2020.

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.

2 unchanged sentences

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.

On November 6, 2020, Plaintiffs and Defendants notified the Court that Plaintiffs were evaluating the rejection of the demand, sought certain additional information and were assessing next steps, and requested that the Court extend the stay for an additional 30 days, to on or around December 7, 2020.

Plaintiffs and Defendants filed a joint status report on December 7, 2020 requesting that the Court enter an order staying any applicable deadlines until January 15, 2021 to allow for the production of certain materials by the Board of Directors for review by Plaintiffs.

On January 15, 2021, Plaintiffs and Defendants filed a joint status report requesting that the Court enter an order extending the stay of any applicable deadlines to February 26, 2021, which the Court so-ordered.

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.

15 unchanged sentences

Transactions between reportable segments were insignificant for all periods presented.

Three Months Ended September 30,

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

2020 2019 2020 2019

North America $ 282,612 $ 280,693 $ 563,280 $ 552,394

8 unchanged sentences

$ 12,957 $ 9,191 $ 16,237 $ 11,646

(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.

(a) In addition to general Corporate and Other expenses as described above, for the three months ended December 31, 2020, Corporate and Other included $ 2,735 of Productivity and transformation costs.

For the three months ended December 31, 2019, Corporate and Other included $ 9,835 of Productivity and transformation costs and tradename impairment charges of $ 1,889 (related to North America).

For the six months ended December 31, 2020, Corporate and Other included $ 3,538 of Productivity and transformation costs.

For the six months ended December 31, 2019, Corporate and Other included $ 20,570 of Productivity and transformation costs and tradename impairment charges of $ 1,889 (related to North America), partially offset by a benefit of $ 2,562 of proceeds from insurance claim.

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

Three Months Ended September 30,

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

2020 2019 2020 2019

Grocery $ 364,689 $ 357,972 $ 708,437 $ 707,774

4 unchanged sentences

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

Three Months Ended September 30,

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

2020 2019 2020 2019

United States $ 244,344 $ 242,891 $ 484,060 $ 479,225

3 unchanged sentences

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,

5 unchanged sentences

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.

The Company incurred expenses of $ 4,366 and $ 5,430 in the three months ended December 31, 2020 and 2019, respectively, to the supplier and affiliated entities.

For the six months ended December 31, 2020 and 2019, the Company incurred expenses of $ 9,156 and $ 10,593 , 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 Company incurred expenses of $ 777 and $ 1,745 in the three months ended December 31, 2020 and 2019 , respectively, and $ 1,216 and $ 2,488 in the six months ended December 31, 2020 and 2019 , respectively, to the law firm and affiliated entities.

The director resigned from the Board in February 2020.

SUBSEQUENT EVENT

On January 13, 2021, the Company completed the sale of the Fruit business.

As of December 31, 2020, all assets and liabilities related to the Fruit business were classified as held for sale within the Company's Consolidated Balance Sheet.

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

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