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Item 5. Market for Registrant’s Common Equity

2021-11-23 compared with 2020-11-18 · 11 added, 135 removed, 41 unchanged (78% of the section changed)

11 unchanged sentences

Equity based incentive and performance compensation awards provided to employees, directors, officers and consultants were issued pursuant to the following awards plans:

• HRG Group, Inc.

2011 Omnibus Equity Award Plans as approved and amended by the HRG Legacy stockholders (the "HRG Equity Plan").

• Harbinger Group, Inc.

2014 Warrant Plan, as approved by the HRG Legacy stockholders (the "HRG Warrant Plan").

• Spectrum Brands Holdings, Inc.

4 unchanged sentences

(number of shares, in millions) Authorized Available

HRG Group 2011 Omnibus Equity Award Plans 2.7 0.8

Harbinger Group, Inc.

2014 Warrant Plan 3.0 —

Spectrum Brands Holdings, Inc.

2 unchanged sentences

2020 Omnibus Equity Plan 1.2 1.2

Effective at the close of the Spectrum Merger, each stock option, warrant, and restricted stock award granted under the HRG Equity Plan and HRG Warrant Plan that was outstanding and unvested immediately prior to the closing became fully vested and exercisable.

Each exercisable award that was unexercised was adjusted (including to give effect to the reverse stock split) and remains outstanding, subject to the same terms and conditions as applied in the corresponding awards.

Each restricted stock award became fully vested and treated as a share of HRG common stock for purposes of the reverse stock split and Spectrum Merger.

Further, effective at the close of the Spectrum Merger, each restricted stock award, restricted stock unit and performance stock unit under the Spectrum Equity Plan, whether vested or unvested, were assumed by SBH and automatically converted into a corresponding equity-based award in SBH with the right to hold or acquire shares of common stock equal to the number of shares of Spectrum Legacy common stock previously underlying such award.

Each new award is subject to the same terms and conditions as the corresponding Spectrum Legacy award.

SBH assumed all rights and obligation in respect of each equity-based plan of Spectrum Legacy.

Refer to Note 19 – Share Based Compensation in Notes to our Consolidated Financial Statement included elsewhere in this Annual Report, for additional information.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

On July 24, 2018, the Company’s board of directors authorized a new three-year $1 billion common stock repurchase program.

On May 4, 2021, the Board of Directors approved a new share repurchase program authorizing the purchase of up to $1 billion of our common stock.

The new share repurchase program commenced immediately and replaced the previous share repurchase program.

The authorization is effective for 36 months.

The following summarizes the activity of common stock repurchases under the program for the year ended September 30, 2020:

Purchased Average

Per Share Total Number

The share repurchase program permits shares to be repurchased in the open market or through privately negotiated transactions, including by direct purchases or purchases pursuant to derivative instruments or other transactions (including pursuant to accelerated share repurchase agreements, the writing and settlement of put options and the purchase and exercise of call options).

The number of shares to be repurchased and the timing of any repurchases will depend on factors such as the share price, economic and market conditions, and corporate and regulatory requirements.

The share repurchase program may be suspended, amended or discontinued at any time.

The following summarizes the activity of common stock repurchases under the program in the fourth quarter of the year ended September 30, 2021:

of Shares Purchased

as Part of Plan Approximate Dollar Value

as Part of Plan

Approximate Dollar Value

of Shares that may

1 unchanged sentence

As of July 4, 2021 115,167 $ 88.22 115,167 $ 989,839,967

As of September 30, 2018 — — — 1,000,000,000

Quarter ended December 30, 2018 — — — 1,000,000,000

Quarter ended March 31, 2019 4,610,700 54.22 4,610,700 750,001,219

Quarter ended June 30, 2019 — — — 750,001,219

As of September 30, 2019 4,610,700 54.22 4,610,700 750,001,219

Quarter ended December 29, 2019 3,030,946 61.91 3,030,946 562,368,245

Quarter ended March 29, 2020 3,045,291 55.14 3,045,291 562,368,245

Quarter ended June 28, 2020 — — — 394,436,227

June 29, 2020 to July 26, 2020 — — — 394,436,227

July 5, 2021 to August 1, 2021 — — — 989,839,967

August 2, 2021 to August 29, 2021 — — — 989,839,967

August 30, 2021 to September 30, 2021 747,500 93.88 747,500 919,661,398

As of September 30, 2021 862,667 $ 93.13 862,667 $ 919,661,398

During the year ended September 30, 2020, the Company also repurchased $9.2 million of common stock in private purchases with employees at the fair value, consisting of 0.1 million of common stock repurchases at an average share price of $62.30 per share, which are not included in the common stock repurchase program summarized above.

During the fourth quarter ended September 30, 2021, SBH entered into a $150 million rule 10b5-1 repurchase to facilitate daily market share repurchases through September 16, 2022, until the cap is reached or until the plan is terminated, of which $16.0 million was executed in the fourth quarter and included in the common stock repurchase program summarized above.

During the year ended September 30, 2021, the Company also repurchased $45.5 million of common stock in private purchases with employees and significant shareholders at the fair value, consisting of 0.7 million of common stock repurchases at an average share price of $66.63 per share, which are not included in the common stock repurchase program summarized above.

The repurchase of additional shares in the future will depend upon many factors, including the Company’s financial condition, liquidity and legal requirements, and may use funds received from its divestitures to support the common stock repurchase program.

7 unchanged sentences

The stockholder return shown on the graph below is not necessarily indicative of future performance and will not make or endorse any predictions as to future stockholder returns.

SELECTED FINANCIAL DATA

Spectrum Brands Holdings, Inc.

The following selected historical financial data is derived from SBH’s audited consolidated financial statements as of and for the years ended September 30.

The summary has been derived in part from, and should be read in conjunction with, the Consolidated Financial Statements of the Company included elsewhere in this Annual Report.

As discussed in Note 1 – Description of Business in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report , on January 2, 2019, and January 28, 2019, we completed the sales of our GBL and GAC businesses, respectively, to Energizer.

As a result, the Company’s assets and liabilities associated with GBL and GAC have been classified as held for sale in the accompanying Consolidated Statement of Financial Position for the fiscal years ended September 30, 2018, 2017, and 2016, and the respective operations have been classified as discontinued operations in the accompanying Consolidated Statements of Income and Statements of Cash Flows for the fiscal years ended September 30, 2020, 2019, 2018, 2017, and 2016.

Fidelity & Guaranty Life and Front Street Re (Delaware) Ltd.

(collectively “HRG Insurance Operations”) are classified as discontinued operations for the fiscal year ended September 30, 2018, 2017, and 2016.

Following the completion of the sale of Compass Production Partners, LP (“Compass”) during the year ended September 30, 2016, HRG no longer held, directly or indirectly, any oil and gas properties and as a result, the results of Compass were presented as discontinued operations for the year ended September 30, 2016.

(in millions, except per share data) 2020(1) 2019(2) 2018(3) 2017(4) 2016(5)

Statement of Operations Data

Revenues $ 3,964.2 $ 3,802.1 $ 3,808.7 $ 3,706.5 $ 3,754.2

Gross profit 1,369.9 1,306.9 1,334.3 1,336.4 1,373.0

Operating income 243.4 72.2 224.2 287.5 321.8

Interest expense 144.5 222.1 264.0 310.4 336.9

Income (loss) from operations before income taxes 155.4 (193.8) (35.7) (27.9) (7.9)

Income tax expense (benefit) 70.9 (7.1) (462.7) (11.8) (52.8)

Net income (loss) from continuing operations 84.5 (186.7) 427.0 (16.1) 44.9

Income (loss) from discontinued operations 14.0 682.5 445.0 289.3 (78.8)

Net income (loss) 98.5 495.8 872.0 273.2 (33.9)

Net income (loss) attributable to controlling interest 97.8 494.5 768.3 106.0 (198.8)

Amounts attributable to controlling interest(6)

Net income (loss) from continuing operations attributable to controlling interest $ 83.8 $ (188.0) $ 356.5 $ (90.6) $ (59.1)

Net income (loss) from discontinued operations attributable to controlling interest 14.0 682.5 411.8 196.6 (139.7)

Net income (loss) attributable to controlling interest $ 97.8 $ 494.5 $ 768.3 $ 106.0 $ (198.8)

Earnings (Loss) Per Share of Common Stock

Basic earnings per share from continuing operations $ 1.88 $ (3.71) $ 9.64 $ (2.81) $ (1.85)

Basic earnings per share from discontinued operations 0.31 13.47 11.15 6.10 (4.36)

Basic earnings per share $ 2.19 $ 9.76 $ 20.79 $ 3.29 $ (6.21)

Diluted earnings per share from continuing operations $ 1.87 $ (3.71) $ 9.62 $ (2.81) $ (1.85)

Diluted earnings per share from discontinued operations 0.31 13.47 11.12 6.10 (4.36)

Diluted earnings per share $ 2.18 $ 9.76 $ 20.74 $ 3.29 $ (6.21)

Dividends per share $ 1.68 $ 1.68 $ 0.42 $ — $ —

Weighted Average Shares Outstanding

Basic 44.7 50.7 36.9 32.2 32.0

Diluted 44.9 50.7 37.0 32.2 32.0

Statement of Financial Position Data

Cash and cash equivalents $ 531.6 $ 627.1 $ 552.5 $ 270.1 $ 465.2

Total assets 5,107.3 5,246.0 7,799.0 35,863.3 33,580.1

Total debt 2,476.3 2,351.3 4,651.2 5,692.5 5,487.6

Total equity 1,415.8 1,728.9 1,589.6 1,946.9 1,817.2

(1) For the year ended September 30, 2020, operating income includes recognition of a loss on assets held for sale of $26.8 million associated with the Coevorden Operations divestiture and a $24.2 million write-off from impairment of intangible assets.

Interest expense for the year ended September 30, 2020 was $144.5 million and includes a non-cash charge of $1.1 million attributable to the write-off of deferred financing costs associated with the debt repayment of 6.625% Notes.

The Company recognized a gain from the extinguishment of the Salus CLO debt of $76.2 million, consisting of $77.0 million for the carrying value of the outstanding debt upon discharge, and $0.8 million for the unamortized discount and debt issuance costs.

Income tax expense includes a non-cash expense of $9.9 million for creation of valuation allowance on net deferred tax assets, and a non-cash tax expense of $7.2 million for an increase in state deferred tax rates.

(2) For the year ended September 30, 2019, operating income includes an impairment of indefinite lived intangible assets of $35.4 million and impairment of goodwill of $116.0 million.

Interest expense includes $55.4 million related to refinancing and repayment of debt;

including $26.4 million of cash charges and fees, and $29.0 million of non-cash charges for write-off and acceleration of debt issuance costs and discounts.

Income tax expense includes a non-cash benefit of $29.9 million for release of valuation allowance on net deferred tax assets, a non-cash tax expense of $95.9 million for the use of federal net operating losses from the issuance of new tax regulations, and a $48.0 million income tax benefit adjustment to the deemed mandatory repatriation liability.

(3) For the year ended September 30, 2018, operating income includes an impairment of indefinite lived intangible assets of $20.3 million.

Income tax expense includes a non-cash benefit of $166.7 million for restatement of deferred tax assets and liabilities, a non-cash benefit of $365.3 million for release of valuation allowance on net deferred tax assets and a provisional $73.1 million of income tax expenses for a one-time deemed mandatory repatriation attributable to the Tax Reform Act.

(4) For the year ended September 30, 2017, the operating results include the PetMatrix operations since the acquisition date of June 1, 2017 and GloFish operations since the acquisition date of May 12, 2017.

Operating income includes an impairment of indefinite lived intangible assets of $16.3 million.

Interest expense includes $6.5 million related to the refinancing, prepayment and/or amendment of debt;

including $4.6 million of cash charges and fees, and $1.9 million of non-cash charges for the write off and acceleration of debt issuance costs, discounts, and/or premiums.

Income tax expense includes a non-cash expense of $79.6 million primarily from an increase in the valuation allowance against net deferred tax asset.

(5) For the year ended September 30, 2016, operating income includes an impairment of indefinite lived intangible assets of $4.7 million.

Salus recorded a loan loss provision of $12.8 million for credit losses on Salus’ asset-based loan portfolio and impairments of $10.7 million to goodwill of CorAmerica Capital, LLC.

Interest expense includes $21.4 million related to the refinancing, prepayment and/or amendment of debt;

including $15.6 million of cash charges and fees, and $5.8 million of non-cash charges for the write off and acceleration of debt issuance costs, discounts, and/or premiums.

Income tax expense includes a non-cash benefit of $45.7 million primarily from a decrease in the valuation allowance against net deferred tax asset.

(6) The weighted average shares and earnings per share data were retrospectively adjusted for all periods presented to reflect the effect of the reverse stock split on July 13, 2018 associated with the closing of the Spectrum Merger.

See Note 4 – Acquisitions in the Notes to the Consolidated Financial Statements included elsewhere in the Annual Report for further discussion on the Spectrum Merger.

Using (i) the 20-trading-day volume-weighted average price per share of Spectrum Legacy common stock ending on July 12, 2018, (ii) the number of shares of Spectrum Legacy common stock outstanding, the number of shares of Spectrum Legacy common stock held by HRG and its subsidiaries and the number of shares of Spectrum Legacy common stock outstanding as of July 12, 2018, (iii) $328.2 million of HRG net indebtedness and transaction expenses at closing, and (iv) a $200.0 million upward adjustment contemplated by the Merger Agreement, each HRG stockholder received approximately 0.1613 shares for each share of HRG stock.

For the year ended September 30, 2014, diluted weighted average common shares outstanding did not reflect the conversion effect of HRG’s Series A Participating Convertible Preferred Stock (“Series A Preferred Shares”) and HRG’s Series A-2 Participating Convertible Preferred Stock (“Series A-2 Preferred Shares”) (collectively with the Series A Preferred Shares, the “Preferred Stock”) for the portion of the period that these securities were outstanding, or the exercise of dilutive common stock equivalents as both would be antidilutive.

The conversion effect of the Preferred Stock had no impact on diluted weighted average common shares for periods subsequent to the year ended September 30, 2014 as the Preferred Stock was converted during the year ended September 30, 2014.

SB/RH Holdings, LLC

The following selected historical financial data is derived from SB/RH’s audited consolidated financial statements as of and for the years ended September 30.

The summary has been derived in part from, and should be read in conjunction with, the Consolidated Financial Statements of the Company included elsewhere in this Annual Report.

As discussed in Note 1 – Description of Business in the Notes to the Consolidated Financial Statements included elsewhere in the Annual Report , on January 2, 2019, and January 28, 2019, we completed the sales of our GBL and GAC businesses, respectively, to Energizer (collectively, the “Energizer Dispositions”).

As a result, the Company’s assets and liabilities associated with GBL and GAC have been classified as held for sale in the accompanying Consolidated Statement of Financial Position for the fiscal years ended September 30, 2018, 2017, and 2016, and the respective operations have been have been classified as discontinued operations in the accompanying Consolidated Statements of Income and Statements of Cash Flows for the fiscal years ended September 30, 2020, 2019, 2018, 2017, and 2016.

(in millions, except per share data) 2020(1) 2019(2) 2018(3) 2017(4) 2016(5)

Statement of Operations Data

Revenues $ 3,964.2 $ 3,802.1 $ 3,808.7 $ 3,705.4 $ 3,745.3

Gross profit 1,369.9 1,306.9 1,334.3 1,335.3 1,364.1

Operating income 250.3 77.0 302.3 341.2 410.2

Interest expense 144.0 162.0 167.0 161.8 184.4

Income (loss) from operations before income taxes 86.6 (129.2) 130.1 173.6 219.6

Income tax expense (benefit) 58.1 10.7 (76.8) (8.6) (33.4)

Net income (loss) from continuing operations 28.5 (139.9) 206.9 182.2 253.0

Income (loss) from discontinued operations 14.0 682.5 (24.0) 119.0 99.3

Net income 42.5 542.6 182.9 301.2 352.3

Net income attributable to controlling interest 41.8 541.3 181.5 299.9 351.9

Amounts attributable to controlling interest

Net income (loss) from continuing operations attributable to controlling interest $ 27.8 $ (141.2) $ 205.5 $ 180.9 $ 252.6

Net income (loss) from discontinued operations attributable to controlling interest 14.0 682.5 (24.0) 119.0 99.3

Net income attributable to controlling interest $ 41.8 $ 541.3 $ 181.5 $ 299.9 $ 351.9

Statement of Financial Position Data

Cash and cash equivalents $ 527.6 $ 621.9 $ 505.4 $ 168.2 $ 270.8

Total assets 5,184.3 5,291.2 7,637.4 7,417.5 7,053.5

Total debt 2,476.3 2,276.0 4,233.3 3,759.1 3,620.2

Total equity 1,265.2 1,434.7 1,611.7 1,835.4 1,829.4

(1) For the year ended September 30, 2020, operating income includes recognition of a loss on assets held for sale of $26.8 million associated with the sale of its dog and cat food production facility and distribution center in Coevorden, Netherlands and a $24.2 million write-off from impairment of intangible assets.

Interest expense for the year ended September 30, 2020 was $144.0 million and includes a non-cash charge of $1.1 million attributable to the write-off of deferred financing costs associated with the debt repayment of 6.625% Notes.

Income tax expense includes a non-cash expense of $9.8 million for creation of valuation allowance on net deferred tax assets, and a non-cash tax expense of $7.8 million for an increase in state deferred tax rates.

(2) For the year ended September 30, 2019, the operating results include an impairment of indefinite lived intangible assets of $35.4 million and impairment of goodwill of $116.0 million.

Interest expense includes $14.2 million related to refinancing and repayment of debt;

including $9.2 million of cash charges and fees, and $5.0 million of non-cash charges for write-off and acceleration of debt issuance costs and discounts.

(3) For the year ended September 30, 2018, the operating results include an impairment of indefinite lived intangible assets of $20.3 million.

Income tax expense includes a non-cash benefit of $181.7 million for restatement of deferred tax assets and liabilities and a provisional $73.1 million of income tax expenses for a one-time deemed mandatory repatriation attributable to the Tax Reform Act;

Operating income includes an impairment of indefinite lived intangible assets of $16.3 million.

Interest expense includes $4.6 million of tender premium and a non-cash expense of $1.9 million as a result of the write-off of unamortized debt issuance costs in connection with the redemption of the 6.375% Notes.

(5) For the year ended September 30, 2016, operating income includes an impairment of indefinite lived intangible assets of $4.7 million.

Interest expense includes $15.6 million of tender premium and a non-cash expense of $5.8 million as a result of the write-off of unamortized debt issuance costs in connection with the redemption of the 6.375% Notes.

Income tax expense includes a non-cash benefit of $111.1 million from a decrease in the valuation allowance against net deferred tax asset.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity