What changed in this filing

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Item 1. Financial Statements

2023-02-07 compared with 2022-11-08 · 348 added, 197 removed, 584 unchanged (48% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

SEPTEMBER 30, 2022 AND JUNE 30, 2022

DECEMBER 31, 2022 AND JUNE 30, 2022

(In thousands, except par values)

September 30, June 30,

December 31, June 30,

Current assets:

43 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2022 AND 2021

(In thousands, except per share amounts)

Three Months Ended September 30,

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

2022 2021 2022 2021

Net sales $ 454,208 $ 476,941 $ 893,559 $ 931,844

4 unchanged sentences

Productivity and transformation costs

Proceeds from insurance claim

986 2,786 1,759 6,769

Long-lived asset impairment 340 303 340 303

Operating income 27,389 32,021 43,212 57,568

1 unchanged sentence

Other income, net ( 1,062 ) ( 9,070 ) ( 2,852 ) ( 9,858 )

Income from operations before income taxes and equity in net loss of equity-method investees 9,936 24,479

Income before income taxes and equity in net loss of equity-method investees 17,639 38,499 27,575 62,978

Provision for income taxes 6,357 7,145 8,988 11,687

10 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2022 AND 2021

(In thousands)

Three Months Ended

September 30, 2022 September 30, 2021

December 31, 2022 December 31, 2021

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

1 unchanged sentence

Net income $ 10,966 $ 30,889

Other comprehensive loss:

Other comprehensive income (loss):

Foreign currency translation adjustments before reclassifications 59,674 — 59,674 ( 2,143 ) — ( 2,143 )

Change in deferred gains on cash flow hedging instruments

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

( 2,475 ) 610 ( 1,865 ) 682 ( 144 ) 538

Change in deferred losses on fair value hedging instruments

Change in deferred gains on fair value hedging instruments 691 ( 170 ) 521 — — —

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

( 6,285 ) 1,553 ( 4,732 ) 1,709 ( 360 ) 1,349

Change in deferred gains on net investment hedging instruments

Total other comprehensive income (loss)

$ 51,605 $ 1,993 $ 53,598 $ 248 $ ( 504 ) $ ( 256 )

Total other comprehensive loss

Total comprehensive income $ 64,564 $ 30,633

Six Months Ended

December 31, 2022 December 31, 2021

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

amount Tax (expense) benefit After-tax amount

Net income $ 17,889 $ 50,300

Other comprehensive income (loss):

Foreign currency translation adjustments before reclassifications ( 7,476 ) — ( 7,476 ) ( 24,948 ) — ( 24,948 )

Change in deferred gains on cash flow hedging instruments

11,755 ( 3,028 ) 8,727 726 ( 153 ) 573

Total comprehensive loss $ ( 45,539 ) $ ( 1,552 )

Change in deferred gains on fair value hedging instruments 418 ( 100 ) 318 — — —

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

( 511 ) 78 ( 433 ) 3,997 ( 841 ) 3,156

Total other comprehensive income (loss)

$ 4,186 $ ( 3,050 ) $ 1,136 $ ( 20,225 ) $ ( 994 ) $ ( 21,219 )

Total comprehensive income $ 19,025 $ 29,081

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2022

(In thousands, except par values)

11 unchanged sentences

Balance at September 30, 2022 111,114 1,112 1,207,120 776,021 21,798 ( 725,914 ) ( 216,944 ) 1,041,395

Net income 10,966 10,966

Other comprehensive income 53,598 53,598

Issuance of common stock pursuant to stock-based compensation plans

Employee shares withheld for taxes

39 ( 754 ) ( 754 )

Stock-based compensation expense 3,435 3,435

Balance at December 31, 2022 111,256 $ 1,113 $ 1,210,555 $ 786,987 21,837 $ ( 726,668 ) $ ( 163,346 ) $ 1,108,641

See notes to consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2021

(In thousands, except par values)

2 unchanged sentences

Shares at $ .01

Capital Earnings Shares Amount Income (Loss) Total

Capital Earnings Shares Amount Loss Total

Balance at June 30, 2021 109,507 $ 1,096 $ 1,187,530 $ 691,225 10,438 $ ( 283,957 ) $ ( 73,011 ) $ 1,522,883

7 unchanged sentences

Balance at September 30, 2021 109,568 1,096 1,191,817 710,636 14,992 ( 460,819 ) ( 93,974 ) 1,348,756

Net income 30,889 30,889

Other comprehensive loss ( 256 ) ( 256 )

Issuance of common stock pursuant to stock-based compensation plans

1,436 14 ( 14 ) —

Employee shares withheld for taxes

654 ( 29,858 ) ( 29,858 )

Repurchase of common stock 2,027 ( 89,831 ) ( 89,831 )

Stock-based compensation expense 4,156 4,156

Balance at December 31, 2021 111,004 $ 1,110 $ 1,195,959 $ 741,525 17,673 $ ( 580,508 ) $ ( 94,230 ) $ 1,263,856

See notes to consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 AND 2021

(In thousands)

Three Months Ended September 30,

Six Months Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 17,889 $ 50,300

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

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization 24,125 21,758

2 unchanged sentences

Stock-based compensation, net 7,429 8,443

Long-lived asset impairment 340 303

Gain on sale of assets ( 3,395 ) ( 8,921 )

9 unchanged sentences

Purchases of property, plant and equipment ( 14,055 ) ( 27,996 )

Acquisitions of businesses, net of cash acquired — ( 254,569 )

Investments and joint ventures, net 433 ( 514 )

5 unchanged sentences

Repayments under bank revolving credit facility ( 194,750 ) ( 330,000 )

Borrowings under term loan — 300,000

Payments of other debt, net ( 159 ) ( 3,185 )

2 unchanged sentences

( 983 ) ( 31,033 )

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

( 10,892 ) 208,849

Effect of exchange rate changes on cash ( 2,517 ) ( 3,204 )

Net decrease in cash and cash equivalents ( 13,718 ) ( 46,909 )

Net (decrease) increase in cash and cash equivalents ( 22,075 ) 1,331

Cash and cash equivalents at beginning of period 65,512 75,871

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(and its subsidiary That's How We Roll LLC) and KTB Foods Inc., collectively doing business as "That's How We Roll" ("THWR"), the producer and marketer of ParmCrisps ® and Thinsters ® .

See Note 4, Acquisition, for details.

See Note 4, Acquisition and Disposition, for details.

BASIS OF PRESENTATION

9 unchanged sentences

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

Operating results for the three months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2023.

Operating results for the six months ended December 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2023.

Please refer to the Notes to the Consolidated Financial Statements as of June 30, 2022 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

3 unchanged sentences

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

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

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

transferred and any other relevant considerations.

The Company has non-recourse financing arrangements in which eligible receivables are sold to third-party buyers in exchange for cash.

The Company transferred accounts receivable in their entirety to the buyers and satisfied all of the conditions to re port the transfer of financial assets in their entirety as a sale.

The principal amount of receivables sold under these arrangements w as $ 83,659 a nd $ 22,889 during the three months ended September 30, 2022 and 2021,

respectively.

The principal amount of receivables sold under these arrangements w as $ 189,794 and $ 64,133 during the six months ended December 31, 2022 and 2021, respectively.

The incremental cost of financing receivables under these arrangements is included in selling, general and administrative expenses on the Company’s Consolidated Statements of Operations.

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

Recently Adopted Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2020-04, "Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting".

The guidance allows for companies to:

(1) account for certain contract modifications as a continuation of the existing contract without additional analysis;

(2) continue hedge accounting when certain critical terms of a hedging relationship change and assess effectiveness in ways that disregard certain potential sources of ineffectiveness;

and (3) make a one-time sale and/or transfer of certain debt securities from held-to-maturity to available-for-sale or trading.

This ASU is available for adoption by the Company and applies prospectively to contract modifications and hedging relationships.

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

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848, which extends the provisions of Topic 848 to December 31, 2024.

ASU 2020-04 allows for different elections to be made at different points in time and the timing of those elections will be documented as applicable.

For the avoidance of doubt, the Company intends to reassess its elections of optional expedients and exceptions included within ASU 2020-04 related to its hedging activities and will document the election of these items on a quarterly basis or when changes/additions are necessary.

During fiscal year 2023, the Company adopted hedge accounting expedients related to probability of forecasted transactions to assert probability of the hedged interest (payments/receipts) regardless of any expected modification in terms related to reference rate reform.

The Company has also adopted the Secured Overnight Financing Rate (“SOFR”) as the alternative reference rate to replace LIBOR with respect to the Company’s long-term debt.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

The Company is continuing to assess the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net income per share utilized to calculate earnings per share on the Consolidated Statements of Operations:

Three Months Ended September 30,

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

2022 2021 2022 2021

Net income $ 10,966 $ 30,889 $ 17,889 $ 50,300

2 unchanged sentences

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

198 772 192 544

Diluted weighted average shares outstanding

89,578 94,808 89,535 96,123

There were 489 and nil restricted stock awards excluded from our calculation of diluted net income per sha re for the three months ended September 30, 2022 and 2021, respectively, as such awards were anti-dilutive.

Additionally, 298 and 1,299 stock-based awards outstanding at September 30, 2022 and 2021, respectively, were excluded from the calculation of diluted net income per share for the three months ended September 30, 2022 and 2021, 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 372 and 316 restricted stock awards excluded from our calculation of diluted net income per sha re for the three months ended December 31, 2022 and 2021, respectively, as such awards were anti-dilutive.

There were 453 and 158 stock-based awards comprised of restricted stock awards and stock options excluded from the calculation of diluted net income per share for the six months ended December 31, 2022 and 2021, respectively, as such awards were anti-dilutive.

Additionally, 401 and 76 stock-based awards outstanding at December 31, 2022 and 2021, respectively, were excluded from the calculation of diluted net income per share for the three months ended December 31, 2022 and 2021, respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods.

Furthermore, 286 and 76 stock-based awards outstanding at December 31, 2022 and 2021, respectively, were excluded from the calculation of diluted net income per share for the six months ended December 31, 2022 and 2021, 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

In January 2022, the Company's Board of Directors authorized the repurchase of up to $ 200,000 of the Company’s issued and outstanding common stock.

In January 2022, the Company's Board of Directors (the "Board") authorized the repurchase of up to $ 200,000 of the Company’s issued and outstanding common stock.

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

1 unchanged sentence

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, 2022, the Company did not repurchase any shares under the repurchase program.

As of September 30, 2022, the Company had $ 173,514 of remaining authorization under the share repurchase program.

During the three months ended September 30, 2021, the Company repurchased 4,525 shares under the repurchase program for a total of $ 175,597 , excluding commissions, at an average price of $ 38.80 per share.

Repurchases made during the three months ended September 30, 2021, were made under a previous Board of Directors authorization.

During the six months ended December 31, 2022, the Company did not repurchase any shares under the repurchase program.

As of December 31, 2022, the Company had $ 173,514 of remaining authorization under the share repurchase program.

During the six months ended December 31, 2021, the Company repurchased 6,552 shares under the repurchase program for a total of $ 265,420 excluding commissions, at an average price of $ 40.50 per share.

Repurchases made during the six months ended December 31, 2021, were made under a previous Board authorization.

ACQUISITION AND DISPOSITION

That's How We Roll

1 unchanged sentence

Consideration for the transaction consisted of cash, net of cash acquired, totaling $ 260,185 .

Of the total consideration, $ 259,985 was paid with the remaining $ 439 payable as of September 30, 2022.

The ac quisition was funded with borrowings under the Credit Agreement (as defined in Note 9, Debt and Borrowings ).

Of the total consideration, $ 259,985 was paid with the remaining $ 200 payable as of December 31, 2022.

Th e ac quisition was funded with borrowings under the Credit Agreement (as defined in Note 9, Debt and Borrowings ).

During the three months ended December 31, 2022 the Company finalized the purchase price allocation and recognized a measurement period adjustment of $ 794 to acquired deferred tax assets, with a related impact to goodwill.

Results of THWR are included in the United States operating segment, a component of the North America reportable segment.

THWR's net sales included in our consolidated results were 3.6 % of consolidated net sales for the three months ended September 30, 2022.

THWR's net sales included in our consolidated results were 3.5 % of consolidated net sales for the three and six months ended December 31, 2022.

The following table provides unaudited pro forma results of operations had the acquisition been completed at the beginning of fiscal 2022.

The pro forma information reflects certain adjustments related to the acquisition but does not reflect any potential operating efficiencies or cost savings that may result from the acquisition.

Accordingly, this information has been provided for illustrative

purposes only and does not purport to be indicative of the actual results that would have been achieved by the Company for the periods presented or that will be achieved by the combined company in the future.

Accordingly, this information has been provided for illustrative purposes only and does not purport to be indicative of the actual results that would have been achieved by the Company for the periods presented or that will be achieved by the combined company in the future.

The pro forma information has been adjusted to give effect to items that are directly attributable to the transactions and are expected to have a continuing impact on the combined results.

Unaudited supplemental pro forma information

Three Months Ended

September 30, 2022 September 30, 2021

Three Months Ended Six Months Ended

December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Net sales $ 454,208 $ 500,349 $ 893,559 $ 985,544

2 unchanged sentences

The Company's acquisition is described in more detail in Note 4, Acquisitions and Dispositions , in the Notes to the Consolidated Financial Statements in the Form 10-K.

Westbrae Natural ®

On December 15, 2022, the Company completed the divestiture of its Westbrae Natural ® brand ("Westbrae") for total cash consideration of $ 7,498 .

The sale of Westbrae is consistent with the Company’s portfolio simplification process.

Westbrae operated out of the United States and was part of the Company’s North America reportable segment.

During the three months ended December 31, 2022, the Company deconsolidated the net assets of Westbrae, primarily consisting of $ 3,054 of goodwill, and recognized a pre-tax gain on sale of $ 3,359 .

Inventories consisted of the following:

September 30,

2022 June 30,

4 unchanged sentences

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

September 30,

2022 June 30,

9 unchanged sentences

$ 294,635 $ 297,405

Depreciation expense for the three months ended September 30, 2022 and 2021 was $ 8,067 and $ 7,408 , respectively.

A facility in the United States was held for sale as of September 30, 2022 with a net carrying amount of $ 1,840 .

Depreciation expense for the three months ended December 31, 2022 and 2021 was $ 8,195 and $ 7,244 , respectively.

Depreciation expense for the six months ended December 31, 2022 and 2021 was $ 16,262 and $ 14,652 , respectively.

The Company recognized an impairment charge of $ 340 during the three months ended December 31, 2022 relating to a facility in the United States that is held for sale.

The facility had a net carrying value of $ 1,500 and $ 1,840 as of December 31, 2022 and June 30, 2022 respectively.

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

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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, 2022 and 2021 were as follows:

Three Months Ended

September 30, 2022 September 30, 2021

The components of lease expenses for the three and six months ended December 31, 2022 were as follows:

Three Months Ended Six Months Ended

December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Operating lease expenses $ 2,238 $ 3,665 $ 7,213 $ 7,417

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Supplemental balance sheet information related to leases was as follows:

Leases Classification September 30, 2022 June 30, 2022

Leases Classification December 31, 2022 June 30, 2022

Operating lease ROU assets, net Operating lease right-of-use assets, net $ 101,374 $ 114,691

7 unchanged sentences

Additional information related to leases is as follows:

Three Months Ended

September 30, 2022 September 30, 2021

Six Months Ended

December 31, 2022 December 31, 2021

Supplemental cash flow information

5 unchanged sentences

Operating leases (1)

$ ( 4,764 ) $ 3,182

Finance leases $ 60 $ 116

ROU assets obtained in connection with an acquisition:

Operating leases $ — $ 4,098

Weighted average remaining lease term:

4 unchanged sentences

Finance leases 4.6 % 3.9 %

Maturities of lease liabilities as of September 30, 2022 were as follows:

(1) Includes adjustment for modification of an operating lease during the three months ended December 31, 2022 which resulted in a reduction of ROU assets and lease liabilities of $ 13,876 and $ 17,244 respectively, and recognition of a gain of $ 3,368 related to the modification.

Maturities of lease liabilities as of December 31, 2022 were as follows:

Fiscal Year Operating leases Finance leases Total

9 unchanged sentences

GOODWILL AND OTHER INTANGIBLE ASSETS

The following table provides the changes in the carrying value of goodwill by reportable segment:

The following table provides changes in the carrying value of goodwill by reportable segment:

North America International Total

Balance as of June 30, 2022 $ 695,715 $ 238,081 $ 933,796

Acquisition (1)

( 794 ) — ( 794 )

Divestiture (2)

( 3,054 ) — ( 3,054 )

Translation and other adjustments, net 4,252 ( 7,122 ) ( 2,870 )

Balance as of September 30, 2022

Balance as of December 31, 2022

$ 696,119 $ 230,959 $ 927,078

There were no events or circumstances that warranted an interim impairment test for goodwill during the three months ended September 30, 2022 or 2021.

(1) During the second quarter of fiscal year 2023, the Company finalized purchase accounting related to THWR resulting in a $ 794 reduction to goodwill.

(2) During December 2022, the Company completed the divestiture of Westbrae, a component of the United States reporting unit.

Goodwill of $ 3,054 was assigned to the divested businesses on a relative fair value basis.

Other Intangible Assets

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

September 30,

2022 June 30,

6 unchanged sentences

Net other intangible assets $ 470,956 $ 477,533

There were no events or circumstances that warranted an interim impairment test for indefinite-lived intangible assets during the three months ended September 30, 2022 or 2021.

There were no events or circumstances that warranted an interim impairment test for indefinite-lived intangible assets during the three and six months ended December 31, 2022 or 2021.

Amortized intangible assets, which are deemed to have a finite life, primarily consist of customer relationships, trademarks and tradenames and are amortized over their estimated useful lives of 7 to 25 years.

Amortization expense included in the Consolidated Statements of Operations was as follows:

Three Months Ended September 30,

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

2022 2021 2022 2021

Amortization of acquired intangibles $ 2,785 $ 2,050 $ 5,573 $ 4,145

Expected amortization expense over the next five fiscal years is as follows:

Fiscal Year Ending June 30,

2023 (remainder of year) 2024 2025 2026 2027

Estimated amortization expense $ 8,108 $ 8,679 $ 7,812 $ 7,416 $ 7,319

The weighted average remaining amortization period of amortized intangible assets is 14.2 years.

DEBT AND BORROWINGS

Debt and borrowings consisted of the following:

September 30,

2022 June 30,

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Amended and Restated Credit Agreement

On December 22, 2021, the Company refinanced its revolving credit facility by entering into a Fourth Amended and Restated Credit Agreement (the “Credit Agreement”).

On December 22, 2021, the Company refinanced its revolving credit facility by entering into a Fourth Amended and Restated Credit Agreement (as amended by a First Amendment dated December 16, 2022, the “Credit Agreement”).

The Credit Agreement provides for senior secured financing of $ 1,100,000 in the aggregate, consisting of (1) $ 300,000 in aggregate principal amount of term loans (the “Term Loans”) and (2) an $ 800,000 senior secured revolving credit facility (which includes borrowing capacity available for letters of credit and is comprised of a $ 440,000 U.S.

1 unchanged sentence

Both the Revolver and the Term Loans mature on December 22, 2026.

As of September 30, 2022, there were $ 605,000 of loans under the Revolver, $ 294,375 of Term Loans, and $ 6,769 letters of credit outstanding under the Credit Agreement.

The Credit Agreement provides that loans will bear interest at rates based on (a) the Eurodollar Rate plus a rate ranging from 0.875 % to 1.75 % per annum or (b) the Base Rate plus a rate ranging from 0.00 % to 0.75 % per annum, the relevant rate being the Applicable Rate.

The Applicable Rate will be determined in accordance with a leverage-based pricing grid, as set forth in the Credit Agreement.

Swing Line Loans and Global Swing Line Loans denominated in U.S.

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 (a) the Euro Short Term Rate, or €STR, in the case of such loans denominated in Euros plus the Applicable Rate, (b) the Sterling Overnight Index Average Reference Rate, or SONIA, in the case of such loans denominated in Sterling plus the Applicable Rate or (c) the Canadian Prime Rate plus the Applicable Rate.

The weighted average interest rate on outstanding borrowings under the Credit Agreement at September 30, 2022 was 4.38 %.

Additionally, the Credit Agreement contains a Commitment Fee on the amount unused under the Credit Agreement ranging from 0.15 % to 0.25 % per annum, and such Commitment Fee is determined in accordance with a leverage-based pricing grid.

The Credit Agreement includes financial covenants that require compliance with a consolidated interest coverage ratio, a consolidated secured leverage ratio and a consolidated leverage ratio.

The Credit Agreement includes financial covenants that require compliance with a consolidated interest coverage ratio, a consolidated leverage ratio and a consolidated secured leverage ratio.

The minimum consolidated interest coverage ratio is 2.75 :1.00.

The maximum consolidated secured leverage ratio was 5.00 :1.00 through the fiscal quarter ended September 30, 2022;

will be 4.50 :1.00 for the fiscal quarters ending December 31, 2022 and March 31, 2023;

and will be 4.25 :1.00 thereafter commencing with the fiscal quarter ending June 30, 2023.

The maximum consolidated leverage ratio is 6.00 :1.00.

As of September 30, 2022, $ 188,231 was available under the Credit Agreement, subject to compliance with the financial covenants.

As of September 30, 2022, the Company was in compliance with all associated covenants.

In connection with the Credit Agreement, the Company and its material domestic subsidiaries entered into an Amended and Restated Security and Pledge Agreement (the “Security Agreement”), pursuant to which all of the obligations under the Credit Agreement will

be secured by liens on assets of the Company and its material domestic subsidiaries, including the equity interests in each of their direct subsidiaries and intellectual property, subject to agreed-upon exceptions.

Through December 31, 2023 or such earlier date as elected by the Company (the “Amendment Period”), the maximum consolidated secured leverage ratio is 5.00 :1.00.

Following the Amendment Period, the maximum consolidated secured leverage ratio will be 4.25 :1.00, subject to possible temporary increase following certain corporate acquisitions.

During the Amendment Period, loans under the Credit Agreement will bear interest at (a) the Secured Overnight Financing Rate, plus a credit spread adjustment of 0.10 % (as adjusted, “Term SOFR”) plus 2.0 % per annum or (b) the Base Rate (as defined in the Credit Agreement) plus 1.0 % per annum.

Following the Amendment Period, loans will bear interest at rates based on (a) Term SOFR plus a rate ranging from 0.875 % to 1.750 % per annum or (b) the Base Rate plus a rate ranging from 0.00 % to 0.750 % per annum, the relevant rate in each case being the Applicable Rate.

The Applicable Rate following the Amendment Period will be determined in accordance with a leverage-based pricing grid, as set forth in the Credit Agreement.

The weighted average interest rate on outstanding borrowings under the Credit Agreement at December 31, 2022 was 5.59 %.

Additionally, the Credit Agreement contains a Commitment Fee (as defined in the Credit Agreement) on the amount unused under the Credit Agreement ranging from 0.15 % to 0.25 % per annum, and such Commitment Fee is determined in accordance with a leverage-based pricing grid.

As of December 31, 2022, there were $ 587,000 of loans under the Revolver, $ 292,500 of Term Loans, and $ 6,769 of letters of credit outstanding under the Credit Agreement.

As of December 31, 2022, $ 206,231 was available under the Credit Agreement, subject to compliance with the financial covenants.

As of December 31, 2022, the Company was in compliance with all associated covenants.

Credit Agreement Issuance Costs

Based on the Company's evaluation of the borrowing capacity associated with the creditors participating in the previous facility compared to those in the Credit Agreement, $ 1,762 of the $ 2,036 of unamortized deferred financing costs at December 22, 2021 were deferred and the remaining $ 274 were expensed as a component of Interest and other financing expense, net on our Consolidated Statement of Operations.

Additionally, the Company incurred debt issuance costs of approximately $ 2,764 in connection with the Credit Agreement.

Of the total $ 4,526 of deferred debt issuance costs, $ 3,292 were associated with the Revolver and are being amortized on a straight-line basis within Other assets on our Consolidated Balance Sheet, and $ 1,234 are being amortized on a straight-line basis, which approximates the effective interest method, as an adjustment to the carrying amount of the Term Loans as a component of Interest and other financing expense, net on our Consolidated Statement of Operations over the term of the Credit Agreement.

Maturities of all debt instruments at September 30, 2022, are as follows:

In connection with the First Amendment to its Credit Agreement during the second quarter of fiscal year 2023, the Company incurred debt issuance costs of approximately $ 1,987 , of which $ 1,916 was deferred.

Of the total deferred costs, $ 1,396 were associated with the Revolver and are being amortized on a straight-line basis within Other assets on our Consolidated Balance Sheets, and $ 520 are being amortized on a straight-line basis, which approximates the effective interest method, as an adjustment to the carrying amount of the Term Loans as a component of Interest and other financing expense, net over the term of the Credit Agreement.

Maturities of all debt instruments at December 31, 2022, are as follows:

Due in Fiscal Year Amount

4 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 was an expense of 26.5 % and 18.6 % for the three months ended September 30, 2022 and 2021, respectively.

The effective income tax rate for the three months ended September 30, 2022 increased due to tax expense related to stock-based compensation and uncertain tax positions.

The effective income tax rate for the three months ended September 30, 2021

decreased due to the reversal of uncertain tax position accruals based on filing and approval of certain elections by taxing authorities.

The effective income tax rate was an expense of 36.0 % and 18.6 % for the three months ended December 31, 2022 and 2021, respectively.

The effective income tax rate was an expense of 32.6 % and 18.6 % for the six months ended December 31, 2022 and 2021, respectively.

The effective income tax rate for the six months ended December 31, 2022 was impacted by the gain on the sale of Westbrae, an operating lease modification during the second quarter, severance with respect to our former CEO (as part of the limitation on the deductibility of executive compensation), stock-based compensation and uncertain tax positions.

The effective income tax rate for the six months ended December 31, 2021 was impacted by the reversal of uncertain tax position accruals based on filing of certain elections by taxing authorities, deductions related to stock-based compensation, non-deductible transaction costs related to the acquisition of THWR, and the reversal of a valuation allowance due to the utilization of a capital loss carryover.

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

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

Three Months Ended September 30,

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

2022 2021 2022 2021

Foreign currency translation adjustments:

Other comprehensive loss before reclassifications $ ( 67,149 ) $ ( 22,805 )

Deferred gains on cash flow hedging instruments:

Amount of gain recognized in AOCL on derivatives (1)

Amount of gain reclassified from AOCL into income (1)

Other comprehensive income (loss) income before reclassifications $ 59,674 $ ( 2,143 ) $ ( 7,476 ) $ ( 24,948 )

Deferred (losses) gains on cash flow hedging instruments:

Amount of (loss) gain recognized in AOCL on derivatives (1)

( 454 ) 1,002 10,907 1,537

Deferred gains on fair value hedging instruments:

Amount of gain recognized in AOCL on derivatives (1)

Amount of gain reclassified from AOCL into income (1)

Deferred gains on net investment hedging instruments:

Amount of gain recognized in AOCL on derivatives (1)

( 1,411 ) ( 464 ) ( 2,180 ) ( 964 )

Deferred (losses) gains on fair value hedging instruments:

Amount of (loss) gain recognized in AOCL on derivatives (1)

( 1,067 ) — 78 —

Amount of loss reclassified from AOCL into expense (1)

1,588 — 240 —

Deferred (losses) gains on net investment hedging instruments:

Amount of (loss) gain recognized in AOCL on derivatives (1)

( 4,359 ) 1,460 309 3,370

Amount of gain reclassified from AOCL into income (1)

1 unchanged sentence

Net change in AOCL $ 53,598 $ ( 256 ) $ 1,136 $ ( 21,219 )

(1) See Note 15, Derivatives and Hedging Activities, for the amounts reclassified into income for deferred gains (losses) on cash flow and net investment hedging instruments recorded in the Consolidated Statements of Operations in the three months ended September 30, 2022 and 2021.

(1) 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 and six months ended December 31, 2022 and 2021.

STOCK-BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS

The Company has a 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” or "LTIP") that provides for equity awards, including performance and market-based equity awards that can be earned over defined performance periods.

The Company's plans are described in Note 13, Stock-Based Compensation and Incentive Performance Plans , in the Notes to the Consolidated Financial Statements in the Form 10-K.

Under the Company's Amended and Restated 2002 Long-Term Incentive and Stock Award Plan (the "2002 Plan"), the Company historically granted equity-based awards to its officers, senior management, other key employees, consultants, and directors.

The Company currently utilizes a stockholder-approved plan, The Hain Celestial Group, Inc.

2022 Long Term Incentive and Stock Award Plan (the “2022 Plan”) which was approved at the Company’s 2022 Annual Meeting of Stockholders held on November 17, 2022.

The 2022 Plan permits the Company to continue making equity-based and other incentive awards in a manner intended to properly incentivize its employees, directors, consultants and other service providers by aligning their interests with the interests of the Company’s stockholders.

The Company also historically granted 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, the 2022 Plan and the 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” or "LTIP") that provides for equity awards, including performance and market-based equity awards that can be earned over defined performance periods.

The Company's LTIP plans, with the exception of the 2023 - 2025 LTIP described below, are described in Note 13, 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,

2022 2021 2022 2021

Selling, general and administrative expense

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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, 2022 is as follows:

A summary of the restricted stock activity (including all RSAs, RSUs and PSUs) for the six months ended December 31, 2022 is as follows:

Number of Shares

and Units Weighted

Average Grant

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Forfeited ( 335 ) $ 37.28

Non-vested RSAs, RSUs and PSUs outstanding at September 30, 2022 1,636 $ 30.73

The table above includes a total of 365 shares granted during the three months ended September 30, 2022 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 200 % of target.

Non-vested RSAs, RSUs and PSUs outstanding at December 31, 2022 1,292 $ 29.37

The table above includes a total of 299 shares granted during the six months ended December 31, 2022 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 200 % of target.

All such shares relate to the 2023 – 2025 LTIP as further described below.

Vested shares during the three months ended September 30, 2022 include a total of 5 shares related to certain performance-based metrics being met and a total of 19 shares related to service-based RSUs.

Vested shares during the six months ended December 31, 2022 include a total o f 5 shares related to certain performance-based metrics being met and a total of 161 shares related to service-based RSUs .

There are market-based PSU awards outstanding under both the 2023 – 2025 LTIP and the 2022 – 2024 LTIP.

At September 30, 2022, 365 of such shares were outstanding under the 2023 – 2025 LTIP while 158 shares were outstanding under the 2022 – 2024 LTIP.

At December 31, 2022, 299 of such shares were outstanding under the 2023 – 2025 LTIP while 82 shares were outstanding under the 2022 – 2024 LTIP.

The fair value of RSAs, RSUs and PSUs granted and of shares vested, and the tax benefit recognized from restricted shares vesting was as follows:

Three Months Ended September 30,

Six Months Ended December 31,

Fair value of RSAs, RSUs and PSUs granted $ 21,457 $ 34,678

1 unchanged sentence

Tax benefit recognized from restricted shares vesting $ 502 $ 3,532

At September 30, 2022 , there was $ 37,613 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 2.08 years.

At December 31, 2022, there was $ 26,765 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 2.0 years.

2023-2025 LTIP

During the three months ended September 30, 2022, the Company granted market-based PSU awards under the LTI Program with a total target payout of 365 shares of common stock.

Vesting is pursuant to a defined calculation of either relative TSR or absolute TSR (as defined) over the period from September 6, 2022 through the earlier of (i) September 6, 2025;

During the six months ended December 31, 2022, the Company granted market-based PSU awards under the LTI Program with a total target payout of 299 shares of common stock.

Such PSU awards (the "Absolute TSR PSUs") will vest, if at all, pursuant to a defined calculation of either relative TSR or absolute TSR (as defined) over the period from September 6, 2022 through the earlier of (i) September 6, 2025;

(ii) the date the participant’s employment is terminated due to death or Disability (as defined);

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Expected term 3.00 years 3.00 years

CEO Succession

On November 22, 2022, the Board approved a succession plan pursuant to which Mark L.

Schiller transitioned from his position as President and Chief Executive Officer of the Company effective as of December 31, 2022 (the “Transition Date”).

Schiller remains a director on the Board following the Transition Date.

As of the Transition Date, certain of Mr.

Schiller's stock-based compensation awards were modified and others were forfeited.

Additionally, Mr.

Schiller will receive severance totaling $ 4,725 , paid in installments over a two-year period following the Transition Date.

Severance, including payroll taxes and other costs, was recognized during the three months ended December 31, 2022, and is accrued at December 31, 2022.

The Board appointed Wendy P.

Davidson to the role of President and Chief Executive Officer and as a director on the Board, in each case effective as of January 1, 2023 (the “Start Date”).

On the Start Date, Ms.

Davidson received the following awards under the 2023-2025 LTIP:

36 Relative TSR PSUs (at target), 18 Absolute TSR PSUs (at target) and 36 RSUs.

The Relative TSR PSUs and Absolute TSR PSUs have the same TSR Performance Period, performance goals and beginning stock price as those applicable to awards granted to other employees under the 2023-2025 LTIP.

The RSUs will vest in one-third (1/3) installments on each of September 6, 2023, 2024 and 2025.

Additionally, in recognition of the compensation Ms.

Davidson forfeited by leaving her former employer, on the Start Date Ms.

Davidson also received a one-time make-whole RSU award of 95 RSUs that will vest in one-third (1/3) installments on each of the first, second and third anniversaries of the Start Date.

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

2 unchanged sentences

The investment is being accounted for as an equity method investment due to the Company’s representation on the Board of Directors of Founders Table.

At September 30, 2022 and June 30, 2022, the carrying value of the Company’s investment in Founders Table was $ 8,910 and $ 9,491 , respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.

At December 31, 2022 and June 30, 2022, the carrying value of the Company’s investment in Founders Table was $ 8,288 and $ 9,491 , respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.

The Company also holds an investment in Hutchison Hain Organic Holdings Limited, a joint venture with HUTCHMED (China) Limited, accounted for under the equity method of accounting.

The carrying value of the investments were $ 4,917 and $ 4,965 as of September 30, 2022 and June 30, 2022, respectively, and is included in the Consolidated Balance Sheets a s a component of Investments and joint ventures.

The carrying value of the remaining investments were $ 4,972 and $ 4,965 as of December 31, 2022 and June 30, 2022, 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, 2022:

The following table presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2022:

Derivative financial instruments $ 15,101 $ — $ 15,101 $ —

7 unchanged sentences

Total $ 3,184 $ — $ 3,184 $ —

There were no transfers of financial instruments between the three levels of fair value hierarchy during the three months ended September 30, 2022 or 2021.

There were no transfers of financial instruments between the three levels of fair value hierarchy during the six months ended December 31, 2022 or 2021.

Derivative Instruments

8 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, 2022 and June 30, 2022 were classified as Level 2 of the fair value hierarchy.

As a result, all of the derivatives held as of December 31, 2022 and June 30, 2022 were classified as Level 2 of the fair value hierarchy.

DERIVATIVES AND HEDGING ACTIVITIES

7 unchanged sentences

These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency.

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.

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.

4 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, 2022 and 2021, such derivatives were used to hedge the variable cash flows associated with existing variable rate debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt.

During the remaining nine months of fiscal 2023, the Company estimates that an additional $ 5,150 will be reclassified as a decrease to interest expense.

As of September 30, 2022, 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, 2022, 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 debt.

During the remaining six months of fiscal 2023, the Company estimates that an additional $ 3,664 will be rec lassified as a decrease to interest expense.

As of December 31, 2022, 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

3 unchanged sentences

The Company uses foreign currency derivatives including cross-currency swaps to manage its exposure to fluctuations in the USD-EUR exchange rates.

Cross-currency swaps involve exchanging fixed-rate interest payments for fixed-rate interest receipts, both of which will occur at the USD-EUR forward exchange rates in effect upon entering into the instrument.

The Company, 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 risk.

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 2023, the Company estimates that an additional $ 161 relating to the cross-currency swaps will be reclassified as an increase to interest expense.

As of September 30, 2022, the Company had no outstanding foreign currency derivatives that were used to hedge its foreign exchange risk.

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 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 2023, the Company estimates that an additional $ 46 relating to cro ss-currency swaps will be reclassified as an increase to interest expense.

As of December 31, 2022, 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

Foreign currency forward contract 3 £ 2,590 € 3,000

Net Investment Hedges

7 unchanged sentences

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, 2022, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations:

As of December 31, 2022, 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

4 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 and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in unrealized exchange gains/losses.

Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company’s accounting policy election.

The earnings recognition of excluded components is presented in the same income statement line item as the earnings effect of the hedged transaction.

During the remaining nine months of fiscal 2023, the Company estimates that an additional $ 359 relating to cross currency swaps will be reclassified as a decrease to interest expense.

As of September 30, 2022, the Company had the following outstanding foreign currency derivatives that were used to hedge changes in fair value attributable to foreign exchange risk:

During the remaining six months of fiscal 2023, the Company estimates that an additional $ 239 relating to cross currency swaps will be reclassified as a decrease to interest expense.

As of December 31, 2022, the Company had the following outstanding foreign currency derivatives that were used to hedge changes in fair value attributable to foreign exchange risk:

Foreign Currency Derivative Number of Instruments Notional Sold Notional Purchased

Cross-currency swap 1 € 24,700 $ 26,021

As of September 30, 2022 and June 30, 2022, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges:

As of December 31, 2022 and June 30, 2022, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges:

Carrying Amount of the Hedged Asset

Cumulative Amount of Fair Value Hedge Adjustment Included in the Carrying Amount of the Hedged Asset

September 30,

2022 June 30,

2022 September 30,

2022 December 31,

2022 June 30,

1 unchanged sentence

Designated Hedges

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, 2022:

Asset Derivatives Liability Derivatives

Balance Sheet Location Fair Value Balance Sheet Location Fair Value

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, 2022:

Asset Derivatives

Balance Sheet Location Fair Value

Derivatives designated as hedging instruments:

Interest rate swaps Prepaid expenses and other current assets $ 15,161 Accrued expenses and other current liabilities / Other noncurrent liabilities $ —

Cross-currency swaps Prepaid expenses and other current assets 10,435 Other noncurrent liabilities —

Interest rate swaps Prepaid expenses and other current assets $ 7,240

Interest rate swaps Other noncurrent assets 5,250

Cross-currency swaps Prepaid expenses and other current assets 2,365

Cross-currency swaps Other noncurrent assets 246

Total derivatives designated as hedging instruments $ 15,101

3 unchanged sentences

Derivatives designated as hedging instruments:

Interest rate swaps Prepaid expenses and other current assets $ 4,230 Accrued expenses and other current liabilities / Other noncurrent liabilities $ 3,184

Cross-currency swaps Prepaid expenses and other current assets 3,246 Other noncurrent liabilities —

Interest rate swaps Prepaid expenses and other current assets $ 4,230 Accrued expenses and other current liabilities $ —

Interest rate swaps Other noncurrent assets — Other noncurrent liabilities 3,184

Cross-currency swaps Prepaid expenses and other current assets 2,400 Accrued expenses and other current liabilities —

Cross-currency swaps Other noncurrent assets 846 Other noncurrent liabilities —

Total derivatives designated as hedging instruments $ 7,476 $ 3,184

The following table presents the pre-tax effect of cash flow hedge accounting on AOCL for the three months ended September 30, 2022 and 2021:

The following table presents the pre-tax effect of cash flow hedge accounting on AOCL and Consolidated Statements of Operations for the three months ended December 31, 2022 and 2021:

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

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

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

2022 2021 2022 2021

Interest rate swaps $ ( 682 ) $ 772 Interest and other financing expense, net $ 1,988 $ ( 105 )

Cross-currency swaps — 776 Interest and other financing expense, net / Other (income) expense, net ( 115 ) 738

Cross-currency swaps — 593 Interest and other financing expense, net / Other expense (income), net ( 115 ) 664

Foreign currency forward contracts 80 ( 98 ) Cost of sales — 26

Total $ ( 602 ) $ 1,267 $ 1,873 $ 585

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 for the three months ended of September 30, 2022 and 2021:

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

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021

The following table presents the pre-tax effect of cash flow hedge accounting on AOCL and Consolidated Statements of Operations for the six months ended December 31, 2022 and 2021:

Six Months Ended December 31,

2022 2021 2022 2021

Interest rate swaps $ 14,580 $ 655 Interest and other financing expense, net $ 3,135 $ ( 209 )

Cross-currency swaps — 1,369 Interest and other financing expense, net / Other expense (income), net ( 230 ) 1,402

Foreign currency forward contracts 80 ( 79 ) Cost of sales — 26

Total $ 14,660 $ 1,945 $ 2,905 $ 1,219

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

Three Months Ended December 31, 2022 Three Months Ended December 31, 2021

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

5 unchanged sentences

Amount of (loss) gain reclassified from AOCL into income $ — $ ( 115 ) $ — $ — $ 44 $ 620

The following table presents the pre-tax effect of fair value hedge accounting on AOCL for the three months ended September 30, 2022 and 2021:

Derivatives in Fair value Hedging Relationships Amount of Gain Recognized in AOCL on Derivatives Location of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing)

Amount of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing)

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

Foreign currency forward contracts

Amount of gain reclassified from AOCL into income $ — $ — $ — $ 26 $ — $ —

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

Six Months Ended December 31, 2022

Six Months Ended December 31, 2021

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 AOCL into income $ — $ 3,135 $ — $ — $ ( 209 ) $ —

Cross-currency swaps

Amount of (loss) gain reclassified from AOCL into income $ — $ ( 230 ) $ — $ — $ 85 $ 1,317

Foreign currency forward contracts

Amount of gain reclassified from AOCL into income $ — $ — $ — $ 26 $ — $ —

The following table presents the pre-tax effect of fair value hedge accounting on AOCL and Consolidated Statements of Operations as of the three months ended December 31, 2022 and 2021:

Derivatives in Fair Value Hedging Relationships Amount of Loss Recognized in AOCL on Derivatives Location of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing) Amount of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing)

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

2022 2021 2022 2021

Cross-currency swaps $ 1,539 $ — Interest and other financing expense, net $ 123 $ —

Total $ 1,539 $ — $ 123 $ —

The following table presents the pre-tax effect of the Company’s derivative financial instruments electing fair value hedge accounting on the Consolidated Statements of Operations as of September 30, 2022 and 2021:

Location and Amount of Gain Recognized in the Consolidated Statements of Operations on Fair Value Hedging Relationships

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021

Cross-currency swaps $ ( 1,416 ) — Interest and other financing expense, net / Other expense (income), net $ 123 —

The following table presents the pre-tax effect of fair value hedge accounting on AOCL and Consolidated Statements of Operations as of the six months ended December 31, 2022 and 2021:

Derivatives in Fair Value Hedging Relationships Amount of Gain Recognized in AOCL on Derivatives Location of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing) Amount of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing)

Six Months Ended December 31,

2022 2021 2022 2021

Cross-currency swaps $ 122 — Interest and other financing expense, net / Other expense (income), net $ 246 —

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

Three Months Ended December 31, 2022 Three Months Ended December 31, 2021

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 fair value hedging:

Gain on fair value hedging relationships

Gain (loss) on fair value hedging relationships

Cross-currency swaps

Amount of gain reclassified from AOCL into income $ — $ 123 $ 1,688 $ — $ — $ —

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 September 30, 2022 and 2021:

Derivatives in Net Investment Hedging Relationships Amount of Gain Recognized in AOCL on Derivatives Location of (Loss) Gain Recognized in Income (Expense) on Derivatives Amount of (Loss) Gain Recognized in Income (Expense) on Derivatives

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

Amount of loss reclassified from AOCL into income $ — $ ( 2,107 ) $ — $ — $ —

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

Six Months Ended December 31, 2022

Six Months Ended December 31, 2021

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 fair value hedging:

Gain (loss) on fair value hedging relationships

Cross-currency swaps

Amount of loss reclassified from AOCL into income $ — $ ( 296 ) $ — $ — $ — $ —

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, 2022 and 2021:

Derivatives in Net Investment Hedging Relationships Amount of (Loss) Gain Recognized in AOCL on Derivatives Location of (Loss) Gain Recognized in (Expense) Income on Derivatives Amount of Gain (Loss) Recognized in Income (Expense) on Derivatives

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

2022 2021 2022 2021

Cross-currency swaps $ ( 5,790 ) $ 1,849 Interest and other financing expense, net $ 495 $ 140

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, 2022 and 2021:

Derivatives in Net Investment Hedging Relationships Amount of Gain Recognized in AOCL on Derivatives Location of (Loss) Gain Recognized in (Expense) Income on Derivatives Amount of (Loss) Gain Recognized in (Expense) Income on Derivatives

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

2022 2021 2022 2021

Cross-currency swaps $ 479 $ 4,267 Interest and other financing expense, net $ 990 $ 270

Credit-Risk-Related Contingent Features

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In June 2022, the District Court referred Defendants’ Motion to Dismiss the Second Amended Complaint to a United States Magistrate Judge (the “Magistrate Judge”) for a Report and Recommendation.

On November 4, 2022, the Magistrate Judge issued a Report and Recommendation recommending that the District Court grant Defendants’

Motion to Dismiss the Second Amended Complaint with prejudice.

Any objections by the parties to the Report and Recommendation are due by November 18, 2022.

On November 4, 2022, the Magistrate Judge issued a Report and Recommendation recommending that the District Court grant Defendants’ Motion to Dismiss the Second Amended Complaint with prejudice.

Plaintiffs filed Objections to Magistrate Judge’s November 4, 2022 Report and Recommendation on December 7, 2022, and Defendants filed their Opposition to Plaintiffs’ Objections to Magistrate Judge’s November 4, 2022 Report and Recommendation on January 9, 2023.

The Parties await a decision from the District Court on Defendants’ Motion to Dismiss the Second Amended Complaint.

Additional Stockholder Class Action and Derivative Complaints Filed in Federal Court

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The Plaintiffs filed their consolidated amended complaint under seal on October 26, 2017.

On December 20, 2017, the parties agreed to stay Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint through and including 30 days after a decision was rendered on the motion to dismiss the Amended Complaint in the Consolidated Securities Action, described above.

On December 20, 2017, the parties agreed to stay Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint through and including 30 days

after a decision was rendered on the motion to dismiss the Amended Complaint in the Consolidated Securities Action, described above.

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

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The Parties then filed a number of additional joint status reports, requesting that the District Court continue the stay of applicable deadlines through December 30, 2021.

In light of the Second Circuit vacating the District Court’s judgment in the Consolidated Securities Action referenced above and remanding the case for further proceedings, the Parties submitted a joint status report on December 29, 2021 requesting that the District Court continue the temporary stay pending the District Court’s reconsideration of the Defendants’ motion to dismiss the Second Amended Complaint in the Consolidated Securities Action.

The District Court has extended the temporary stay through December 30, 2022.

The District Court has extended the temporary stay through April 30, 2023.

Baby Food Litigation

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The Court appointed interim class counsel for Plaintiffs in the Consolidated Proceeding, and Plaintiffs filed a Consolidated Amended Class Action Complaint on March 18, 2022.

The Company intends to file a motion to dismiss the Consolidated Amended Class Action Complaint, and its motion to dismiss is due on November 7, 2022.

One consumer class action is pending in New York Supreme Court, Nassau County.

The Company has moved to stay or transfer this case to the Consolidated Proceeding and that motion is pending.

The Company filed a motion to dismiss the Consolidated Class Action Complaint on November 7, 2022.

The plaintiffs filed their opposition on December 22, 2022, and the Company filed its reply brief on January 20, 2023.

One consumer class action is pending in New York Supreme Court, Nassau County, which the court has stayed in deference to the Consolidated Proceeding.

The Company denies the allegations in these lawsuits and contends that its baby foods are safe and properly labeled.

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The Company filed its answer to the New Mexico Attorney General’s amended complaint on April 23, 2022.

The Company denies the New Mexico Attorney General’s allegations and maintains that its baby foods are safe, properly labeled, and compliant with New Mexico law.

In addition to the consumer class actions discussed above, the Company is currently named in five lawsuits in state and federal courts alleging some form of personal injury from the ingestion of the Company’s Products, purportedly due to unsafe and undisclosed levels of various naturally occurring heavy metals.

Three of these lawsuits name multiple plaintiffs alleging claims of physical injuries.

The Company denies the New

Mexico Attorney General’s allegations and maintains that its baby foods are safe, properly labeled, and compliant with New Mexico law.

In addition to the consumer class actions discussed above, the Company is currently named in six lawsuits in state and federal courts alleging some form of personal injury from the ingestion of the Company’s Products, purportedly due to unsafe and undisclosed levels of various naturally occurring heavy metals.

These lawsuits generally allege injuries related to neurological development disorders such as autism and attention deficit hyperactivity disorder.

In the matter, Palmquist et al., v.

The Hain Celestial Group, Inc., pending in U.S.

District Court, Southern District of Texas, the Court has set a trial date of February 6, 2023, while the Company awaits decisions on dispositive motions.

• In the matter, Palmquist et al.

The Hain Celestial Group, Inc.

, pending in U.S.

District Court, Southern District of Texas, the trial proceedings commenced on February 6, 2023.

• In the matter, NC v.

The Hain Celestial Group, et al., pending in Superior Court for the State of California, County of Los Angeles, the Court has set a trial date of May 2, 2023.

The Hain Celestial Group, et al.

, pending in Superior Court for the State of California, County of Los Angeles, the Court has set a trial date of October 4, 2023.

The parties are currently engaging in discovery.

Fact discovery is set to close on March 24, 2023, and expert discovery is set to close on May 5, 2023.

• There are currently two Nevada state court cases pending in Clark County District Court.

The cases, Benitez v.

Beech-Nut Nutrition Company, Inc., et al.

and Buenaventura v.

Beech-Nut Nutrition Company, Inc., et al.

, have been consolidated for the purposes of discovery only.

In Benitez , the Court issued a scheduling order in September 2022.

Pursuant to this Order, discovery will close on March 7, 2024 and the case is set the case for trial starting on July 29, 2024.

There has been no further activity in the Buenaventura case.

• In Watkins v.

Plum, PBC, et al.

, currently pending in the United States District Court for the Eastern District of Louisiana, the Court has set the case for trial beginning on August 28, 2023.

The parties have started to engage in discovery.

• On January 9, 2023, Plaintiffs in P.A.

Hain Celestial Group, Inc.

filed their First Amended Complaint in the Circuit Court of the First Circuit, State of Hawai’i.

Defendants have not yet responded to this Complaint.

The Company denies that its Products led to any of the alleged injuries and will defend these cases vigorously.

That said, additional lawsuits may be filed against the Company in the future, asserting similar or different legal theories and seeking similar or different types of damages and relief.

Such lawsuits may be resolved in a manner adverse to us, and we may incur substantial costs or damages not covered by our insurance, which could have a material adverse effect on our financial condition and business.

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.

With respect to all litigation and related matters, the Company records a liability when the Company believes it is probable that a liability has been incurred and the amount can be reasonably estimated.

For the matters disclosed in this note, if the Company determines that a liability is probable and the loss can be reasonably estimated, the Company discloses the liability recorded.

As of the end of the period covered by this report, the Company has not recorded a liability for any of the matters disclosed in this note.

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United Kingdom, Ella’s Kitchen UK, and Europe.

This structure is in line with how our Chief Operating Decision Maker (“CODM”) assesses our performance and allocates resources.

This structure is in line with how our Chief Operating Decision Maker (“CODM”), the Company's Chief Executive Officer, assesses our performance and allocates resources.

We use segment net sales and operating income to evaluate performance and to allocate resources.

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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,

2022 2021 2022 2021

North America $ 282,361 $ 275,014 $ 570,757 $ 540,539

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$ 27,389 $ 32,021 $ 43,212 $ 57,568

(a) In addition to general Corporate and Other expenses as described above, for the three months ended September 30, 2022, Corporate and Other included $ 94 of Productivity and transformation costs.

For the three months ended September 30, 2021, Corporate and Other included $ 2,057 of Productivity and transformation costs.

The Company's net sales by product category (1) are as follows:

Three Months Ended September 30,

Growth 324,478 333,104

Fuel 95,726 97,254

Simplify 19,147 24,545

Total $ 439,351 $ 454,903

(1) The Growth brands consist of our Turbocharge and Targeted Investment categories, which together are comprised of snacks, tea, baby, yogurt, plant-based meat, non-dairy beverages and personal care.

The Fuel brands are pantry brands in categories such as soup, cooking oils and nut butters.

The Simplify brands include all other brands.

(a) In addition to general Corporate and Other expenses as described above, for the three and six months ended December 31, 2022, Corporate and Other included $ 436 and $ 530 of Productivity and transformation costs, respectively.

For the three and six months ended December 31, 2021, Corporate and Other included $ 953 and $ 3,010 of Productivity and transformation costs, respectively.

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,

2022 2021 2022 2021

United States $ 255,056 $ 243,909 $ 514,563 $ 477,396

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

September 30,

2022 June 30,

4 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements