What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-02-04 compared with 2021-08-06 · 505 added, 665 removed, 726 unchanged (62% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Financial Position

As of July 4, 2021, and September 30, 2020

As of January 2, 2022, and September 30, 2021

(in millions)

July 4, 2021 September 30, 2020

January 2, 2022 September 30, 2021

Cash and cash equivalents $ 204.9 $ 187.9

3 unchanged sentences

Prepaid expenses and other current assets 62.6 40.8

Current assets of business held for sale 1,842.6 1,810.0

Total current assets 3,121.3 2,913.6

11 unchanged sentences

Other current liabilities 208.0 211.9

Current liabilities of business held for sale 431.3 454.3

Total current liabilities 1,068.2 1,164.1

18 unchanged sentences

Condensed Consolidated Statements of Income

For the three and nine month periods ended July 4, 2021 and June 28, 2020

Three Month Periods Ended Nine Month Periods Ended

For the three month periods ended January 2, 2022 and January 3, 2021

Three Month Periods Ended

(in millions, except per share)

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

January 2, 2022 January 3, 2021

Net Sales $ 757.2 $ 736.2

7 unchanged sentences

Transaction related charges 14.9 19.0

Loss on assets held for sale — 1.1 — 26.8

Write-off from impairment of intangible assets — — — 24.2

Total operating expenses 243.1 227.0

Operating income 98.0 94.6 338.3 116.6

Operating (loss) income ( 23.8 ) 25.8

Interest expense 21.8 23.1

Gain from extinguishment of Salus CLO debt — ( 76.2 ) — ( 76.2 )

Other non-operating expense (income), net 0.6 ( 8.9 )

Income from continuing operations before income taxes 63.6 191.2 209.2 76.1

Income tax expense 27.7 53.6 63.3 35.3

Net income from continuing operations 35.9 137.6 145.9 40.8

(Loss) income from discontinued operations, net of tax ( 5.2 ) 8.0 ( 6.6 ) 12.2

(Loss) income from continuing operations before income taxes ( 46.2 ) 11.6

Income tax benefit ( 16.0 ) ( 4.1 )

Net (loss) income from continuing operations ( 30.2 ) 15.7

Income from discontinued operations, net of tax 38.8 57.2

Net income 8.6 72.9

Net income (loss) attributable to non-controlling interest — 0.5 ( 0.1 ) 0.6

Net income from continuing operations attributable to non-controlling interest — 1.0

Net income (loss) from discontinued operations attributable to non-controlling interest 0.4 ( 0.2 )

Net income attributable to controlling interest $ 8.2 $ 72.1

Amounts attributable to controlling interest

Net income from continuing operations attributable to controlling interest $ 35.9 $ 137.1 $ 146.0 $ 40.2

Net (loss) income from discontinued operations attributable to controlling interest ( 5.2 ) 8.0 ( 6.6 ) 12.2

Net (loss) income from continuing operations attributable to controlling interest $ ( 30.2 ) $ 14.7

Net income from discontinued operations attributable to controlling interest 38.4 57.4

Net income attributable to controlling interest $ 8.2 $ 72.1

13 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

For the three and nine month periods ended July 4, 2021 and June 28, 2020

For the three month periods ended January 2, 2022 and January 3, 2021

Three Month Periods Ended

Nine Month Periods Ended

(in millions)

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

January 2, 2022 January 3, 2021

Net income $ 8.6 $ 72.9

Other comprehensive income

Foreign currency translation gain (loss) 0.9 7.5 42.6 ( 13.3 )

Foreign currency translation gain 6.8 19.4

Deferred tax effect ( 4.5 ) 5.3

Net unrealized gain (loss) on foreign currency translation 1.8 7.4 43.8 ( 13.3 )

Net unrealized gain on foreign currency translation 2.3 24.7

Unrealized gain (loss) on derivative instruments

Unrealized loss on hedging activity before reclassification ( 1.0 ) ( 2.1 ) ( 7.6 ) ( 0.5 )

Net reclassification for loss (gain) to income from continuing operations 2.8 ( 2.0 ) 8.4 ( 6.3 )

Unrealized gain (loss) on hedging instruments after reclassification 1.8 ( 4.1 ) 0.8 ( 6.8 )

Unrealized gain (loss) on hedging activity before reclassification 1.2 ( 12.4 )

Net reclassification for (gain) loss to income from continuing operations ( 2.1 ) 2.6

Net reclassification for (gain) loss to income from discontinued operations ( 0.5 ) 0.1

Unrealized loss on hedging instruments after reclassification ( 1.4 ) ( 9.7 )

Deferred tax effect 4.5 2.5

Net unrealized gain (loss) on hedging derivative instruments 3.1 ( 7.2 )

Defined benefit pension gain

Defined benefit pension (loss) gain before reclassification ( 0.2 ) ( 0.8 ) ( 1.5 ) 3.0

Defined benefit pension loss

Defined benefit pension gain (loss) before reclassification 0.6 ( 2.2 )

Net reclassification for loss to income from continuing operations 1.0 1.1

Defined benefit pension gain after reclassification 0.9 0.2 1.8 6.1

Defined benefit pension gain (loss) after reclassification 1.6 ( 1.1 )

Deferred tax effect ( 2.9 ) 0.2

Net defined benefit pension gain 0.7 0.2 1.2 5.7

Deconsolidation of discontinued operations and assets held for sale — — — 8.1

Net change to derive comprehensive income (loss) for the periods 3.9 5.2 45.5 ( 3.5 )

Net defined benefit pension loss ( 1.3 ) ( 0.9 )

Net change to derive comprehensive income for the period 4.1 16.6

Comprehensive income 12.7 89.5

Comprehensive income attributable to non-controlling interest 0.1 — 0.4 —

Comprehensive income from continuing operations attributable to non-controlling interest — 0.1

Comprehensive income from discontinuing operations attributable to non-controlling interest 0.1 0.3

Comprehensive income attributable to controlling interest $ 12.6 $ 89.1

2 unchanged sentences

Condensed Consolidated Statements of Shareholder’s Equity

For the nine month period ended July 4, 2021

Nine Month Period Ended July 4, 2021 Common Stock Additional

For the three month periods ended January 2, 2022 and January 3, 2021

Three Month Period Ended January 2, 2022 Common Stock Additional

Capital Accumulated

6 unchanged sentences

Balances at September 30, 2021 41.8 $ 0.5 $ 2,063.8 $ 359.9 $ ( 235.3 ) $ ( 717.0 ) $ 1,471.9 $ 7.1 $ 1,479.0

Net income from continuing operations — — — 72.4 — — 72.4 0.8 73.2

Loss from discontinued operations, net of tax — — — ( 0.3 ) — — ( 0.3 ) — ( 0.3 )

Net loss from continuing operations — — — ( 30.2 ) — — ( 30.2 ) — ( 30.2 )

Income from discontinued operations, net of tax — — — 38.4 — — 38.4 0.4 38.8

Other comprehensive income, net of tax — — — — 4.0 — 4.0 0.1 4.1

3 unchanged sentences

Dividends declared — — — ( 17.7 ) — — ( 17.7 ) — ( 17.7 )

Dividend paid by subsidiary to NCI — — — — — — — ( 1.0 ) ( 1.0 )

Balances as of January 3, 2021 42.7 0.5 2,043.2 297.6 ( 268.5 ) ( 637.1 ) 1,435.7 8.5 1,444.2

Net income (loss) from continuing operations — — — 37.7 — — 37.7 ( 0.9 ) 36.8

Loss from discontinued operations, net of tax — — — ( 1.1 ) — — ( 1.1 ) — ( 1.1 )

Sale and deconsolidation of assets held for sale — — — — — — — — —

Other comprehensive income (loss), net of tax — — — — 25.1 — 25.1 ( 0.1 ) 25.0

Restricted stock issued and related tax withholdings — — ( 0.1 ) — — 0.1 — — —

Share based compensation — — 8.5 — — — 8.5 — 8.5

Dividends declared — — — ( 18.5 ) — — ( 18.5 ) — ( 18.5 )

Dividend paid by subsidiary to NCI — — — — — — — ( 0.3 ) ( 0.3 )

Balances as of April 4, 2021 42.7 0.5 2,051.6 315.7 ( 243.4 ) ( 637.0 ) 1,487.4 7.2 1,494.6

Net income from continuing operations — — — 35.9 — — 35.9 — 35.9

Loss from discontinued operations, net of tax — — — ( 5.2 ) — — ( 5.2 ) — ( 5.2 )

Other comprehensive income, net of tax — — — — 3.8 — 3.8 0.1 3.9

Restricted stock issued and related tax withholdings — — ( 1.1 ) — — 1.1 — — —

Treasury stock repurchases ( 0.1 ) — — — — ( 10.2 ) ( 10.2 ) — ( 10.2 )

Share based compensation — — 7.5 — — — 7.5 — 7.5

Dividends declared — — — ( 18.3 ) — — ( 18.3 ) — ( 18.3 )

Balances at July 4, 2021 42.6 $ 0.5 $ 2,058.0 $ 328.1 $ ( 239.6 ) $ ( 646.1 ) $ 1,500.9 $ 7.3 $ 1,508.2

See accompanying notes to the condensed consolidated financial statements

SPECTRUM BRANDS HOLDINGS, INC

Condensed Consolidated Statements of Shareholder’s Equity

For the nine month period ended June 28, 2020

Nine Month Period Ended June 28, 2020 Common Stock Additional

Balances at January 2, 2022 41.0 $ 0.5 $ 2,025.5 $ 350.4 $ ( 231.3 ) $ ( 804.8 ) $ 1,340.3 $ 7.6 $ 1,347.9

Three Month Period Ended January 3, 2021 Common Stock Additional

Capital Accumulated

6 unchanged sentences

Balances at September 30, 2020 43.1 $ 0.5 $ 2,054.3 $ 243.9 $ ( 284.7 ) $ ( 606.5 ) $ 1,407.5 $ 8.3 $ 1,415.8

Net (loss) income from continuing operations — — — ( 38.6 ) — — ( 38.6 ) 0.9 ( 37.7 )

Income from discontinued operations, net of tax — — — 2.8 — — 2.8 — 2.8

Other comprehensive income, net of tax — — — — 24.2 — 24.2 0.1 24.3

Treasury stock repurchases ( 1.5 ) — — — — ( 90.6 ) ( 90.6 ) — ( 90.6 )

Accelerated share repurchase pending final settlement ( 1.7 ) — ( 18.7 ) — — ( 106.3 ) ( 125.0 ) — ( 125.0 )

Restricted stock issued and related tax withholdings 0.5 — ( 13.3 ) — — 18.2 4.9 — 4.9

Share based compensation — — 8.5 — — — 8.5 — 8.5

Dividends declared — — — ( 20.2 ) — — ( 20.2 ) — ( 20.2 )

Cumulative adjustment for adoption of new accounting standards — — — ( 0.3 ) 0.3 — — — —

Balances as of December 29, 2019 46.1 0.5 2,007.6 167.5 ( 249.1 ) ( 439.6 ) 1,486.9 9.0 1,495.9

Net loss from continuing operations — — — ( 58.4 ) — — ( 58.4 ) ( 0.8 ) ( 59.2 )

Income from discontinued operations, net of tax — — — 1.4 — — 1.4 — 1.4

Sale and deconsolidation of assets held for sale — — — — 8.1 — 8.1 — 8.1

Other comprehensive loss, net of tax — — — — ( 41.0 ) — ( 41.0 ) ( 0.1 ) ( 41.1 )

Treasury stock repurchases ( 2.7 ) — — — — ( 149.2 ) ( 149.2 ) — ( 149.2 )

Accelerated share repurchase final settlement ( 0.3 ) — 18.5 — — ( 18.5 ) — — —

Restricted stock issued and related tax withholdings — — ( 0.7 ) — — 0.4 ( 0.3 ) — ( 0.3 )

Share based compensation — — 8.9 — — — 8.9 — 8.9

Dividends declared — — — ( 19.7 ) — — ( 19.7 ) — ( 19.7 )

Balances as of March 29, 2020 43.1 0.5 2,034.3 90.8 ( 282.0 ) ( 606.9 ) 1,236.7 8.1 1,244.8

Net income from continuing operations — — — 14.7 — — 14.7 1.0 15.7

Income from discontinued operations, net of tax — — — 8.0 — — 8.0 — 8.0

Income (loss) from discontinued operations, net of tax — — — 57.4 — — 57.4 ( 0.2 ) 57.2

Other comprehensive income, net of tax — — — — 16.2 — 16.2 0.4 16.6

Treasury stock repurchases ( 0.6 ) — — — — ( 42.3 ) ( 42.3 ) — ( 42.3 )

Restricted stock issued and related tax withholdings 0.2 — ( 18.6 ) — — 11.7 ( 6.9 ) — ( 6.9 )

1 unchanged sentence

Dividends declared — — — ( 18.4 ) — — ( 18.4 ) — ( 18.4 )

Balances at June 28, 2020 43.1 $ 0.5 $ 2,042.8 $ 217.3 $ ( 276.8 ) $ ( 606.9 ) $ 1,376.9 $ 8.6 $ 1,385.5

Dividends paid by subsidiary to NCI — — — — — — — ( 1.0 ) ( 1.0 )

Balances at January 3, 2021 42.7 $ 0.5 $ 2,043.2 $ 297.6 $ ( 268.5 ) $ ( 637.1 ) $ 1,435.7 $ 8.5 $ 1,444.2

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the nine month periods ended July 4, 2021 and June 28, 2020

Nine Month Periods Ended

(in millions) July 4, 2021 June 28, 2020

For the three month periods ended January 2, 2022 and January 3, 2021

Three Month Periods Ended

(in millions) January 2, 2022 January 3, 2021

Cash flows from operating activities

Net income $ 8.6 $ 72.9

(Loss) income from discontinued operations, net of tax ( 6.6 ) 12.2

Net income from continuing operations 145.9 40.8

Adjustments to reconcile net income to net cash from operating activities:

Income from discontinued operations, net of tax 38.8 57.2

Net (loss) income from continuing operations ( 30.2 ) 15.7

Adjustments to reconcile net (loss) income to net cash from operating activities:

Depreciation and amortization 25.4 27.1

Share based compensation 5.6 6.4

(Gain) loss on equity investments ( 6.9 ) 8.2

Loss on assets held for sale — 26.8

Write-off from impairment of intangible assets — 24.2

Gain on equity investment — ( 6.0 )

Amortization of debt issuance costs and debt discount 1.4 1.4

Write-off of unamortized discount and debt issuance costs 7.9 1.1

Gain from extinguishment of Salus CLO debt — ( 76.2 )

Inventory acquisition step-up — 0.8

Deferred tax expense 20.3 5.3

Deferred tax benefit ( 27.3 ) ( 13.2 )

Net changes in operating assets and liabilities ( 230.7 ) ( 142.9 )

Net cash provided by operating activities from continuing operations 24.8 35.4

Net cash used by operating activities from discontinued operations ( 15.9 ) —

Net cash provided by operating activities 8.9 35.4

Net cash used by operating activities from continuing operations ( 255.8 ) ( 110.7 )

Net cash (used) provided by operating activities from discontinued operations ( 15.3 ) 0.6

Net cash used by operating activities ( 271.1 ) ( 110.1 )

Cash flows from investing activities

1 unchanged sentence

Proceeds from disposal of property, plant and equipment 0.1 0.1

Proceeds from sale of assets held for sale — 30.1

Proceeds from sale of discontinued operations, net of cash — 3.6

Business acquisitions, net of cash acquired — ( 129.8 )

Proceeds from sale of equity investment — 60.5

Other investing activity ( 0.4 ) 2.5

Net cash (used) provided by investing activities ( 400.1 ) 43.4

Net cash used by investing activities from continuing operations ( 14.0 ) ( 76.8 )

Net cash used by investing activities from discontinued operations ( 5.0 ) ( 4.2 )

Net cash used by investing activities ( 19.0 ) ( 81.0 )

Cash flows from financing activities

Payment of debt, including premium on extinguishment ( 885.3 ) ( 132.7 )

Payment of debt ( 3.2 ) ( 53.6 )

Proceeds from issuance of debt 465.0 0.1

Payment of debt issuance costs ( 12.6 ) ( 0.8 )

Payment of contingent consideration — ( 197.0 )

Treasury stock purchases ( 110.0 ) ( 42.3 )

Accelerated share repurchase — ( 125.0 )

Dividends paid to shareholders ( 17.3 ) ( 17.8 )

Dividends paid by subsidiary to non-controlling interest ( 1.3 ) —

Share based award tax withholding payments, net of proceeds upon vesting ( 24.5 ) ( 7.1 )

Other financing activity — 0.3

Net cash used by financing activities ( 15.2 ) ( 237.1 )

Net cash provided (used) by financing activities from continuing operations 310.0 ( 120.4 )

Net cash used by financing activities from discontinued operations ( 0.4 ) ( 1.4 )

Net cash provided (used) by financing activities 309.6 ( 121.8 )

Effect of exchange rate changes on cash and cash equivalents ( 2.5 ) 5.8

3 unchanged sentences

Supplemental disclosure of cash flow information

Cash paid for interest $ 100.8 $ 92.1

Cash paid for taxes $ 28.7 $ 34.7

Cash paid for interest associated with continued operations $ 14.7 $ 16.9

Cash paid for interest associated with discontinued operations $ 12.1 $ 11.4

Cash paid for taxes associated with continued operations $ 6.6 $ 6.2

Cash paid for taxes associated with discontinued operations $ 6.4 $ 2.0

Non cash investing activities

5 unchanged sentences

Condensed Consolidated Statements of Financial Position

As of July 4, 2021 and September 30, 2020

(in millions) July 4, 2021 September 30, 2020

As of January 2, 2022 and September 30, 2021

(in millions) January 2, 2022 September 30, 2021

Cash and cash equivalents $ 203.3 $ 186.2

3 unchanged sentences

Prepaid expenses and other current assets 62.6 40.8

Current assets of business held for sale 1,842.6 1,810.0

Total current assets 3,205.9 2,994.6

11 unchanged sentences

Other current liabilities 203.3 214.4

Current liabilities of business held for sale 431.3 454.3

Total current liabilities 1,063.7 1,166.8

16 unchanged sentences

Condensed Consolidated Statements of Income

For the three and nine month periods ended July 4, 2021 and June 28, 2020

Three Month Periods Ended Nine Month Periods Ended

(in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

For the three month periods ended January 2, 2022 and January 3, 2021

Three Month Periods Ended

(in millions) January 2, 2022 January 3, 2021

Net Sales $ 757.2 $ 736.2

7 unchanged sentences

Transaction related charges 14.9 19.0

Loss on assets held for sale — 1.1 — 26.8

Write-off from impairment of intangible assets — — — 24.2

Total operating expenses 242.8 226.4

Operating income 99.5 96.2 341.1 122.8

Operating (loss) income ( 23.5 ) 26.4

Interest expense 21.8 23.2

Other non-operating expense (income), net 0.6 ( 8.9 )

Income from continuing operations before income taxes 65.1 116.7 211.8 6.6

Income tax expense 28.2 35.4 63.9 18.8

Net income (loss) from continuing operations 36.9 81.3 147.9 ( 12.2 )

(Loss) income from discontinued operations, net of tax ( 5.2 ) 8.0 ( 6.6 ) 12.2

(Loss) income from continuing operations before income taxes ( 45.9 ) 12.1

Income tax benefit ( 15.8 ) ( 4.0 )

Net (loss) income from continuing operations ( 30.1 ) 16.1

Income from discontinued operations, net of tax 38.8 57.2

Net income 8.7 73.3

Net income (loss) attributable to non-controlling interest — 0.5 ( 0.1 ) 0.6

Net income (loss) attributable to controlling interest $ 31.7 $ 88.8 $ 141.4 $ ( 0.6 )

Net income from continuing operations attributable to non-controlling interest — 1.0

Net income (loss) from discontinued operations attributable to non-controlling interest 0.4 ( 0.2 )

Net income attributable to controlling interest $ 8.3 $ 72.5

Amounts attributable to controlling interest

Net income (loss) from continuing operations attributable to controlling interest $ 36.9 $ 80.8 $ 148.0 $ ( 12.8 )

Net (loss) income from discontinued operations attributable to controlling interest ( 5.2 ) 8.0 ( 6.6 ) 12.2

Net income (loss) attributable to controlling interest $ 31.7 $ 88.8 $ 141.4 $ ( 0.6 )

Net (loss) income from continuing operations attributable to controlling interest $ ( 30.1 ) $ 15.1

Net income from discontinued operations attributable to controlling interest 38.4 57.4

Net income attributable to controlling interest $ 8.3 $ 72.5

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Comprehensive Income

For the three and nine month periods ended July 4, 2021 and June 28, 2020

For the three month periods ended January 2, 2022 and January 3, 2021

Three Month Periods Ended

Nine Month Periods Ended

(in millions)

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

January 2, 2022 January 3, 2021

Net income $ 8.7 $ 73.3

Other comprehensive income (loss)

Foreign currency translation gain (loss) 0.9 7.5 42.6 ( 13.3 )

Other comprehensive income

Foreign currency translation gain 6.8 19.4

Deferred tax effect ( 4.5 ) 5.3

Net unrealized gain (loss) on foreign currency translation 1.8 7.4 43.8 ( 13.3 )

Net unrealized gain on foreign currency translation 2.3 24.7

Unrealized gain (loss) on derivative instruments

Unrealized loss on hedging activity before reclassification ( 1.0 ) ( 2.1 ) ( 7.6 ) ( 0.5 )

Net reclassification for loss (gain) to income from continuing operations 2.8 ( 2.0 ) 8.4 ( 6.3 )

Unrealized gain (loss) on hedging instruments after reclassification 1.8 ( 4.1 ) 0.8 ( 6.8 )

Unrealized gain (loss) on hedging activity before reclassification 1.2 ( 12.4 )

Net reclassification for (gain) loss to income from continuing operations ( 2.1 ) 2.6

Net reclassification for (gain) loss to income from discontinued operations ( 0.5 ) 0.1

Unrealized loss on hedging instruments after reclassification ( 1.4 ) ( 9.7 )

Deferred tax effect 4.5 2.5

Net unrealized gain (loss) on hedging derivative instruments 3.1 ( 7.2 )

Defined benefit pension gain

Defined benefit pension (loss) gain before reclassification ( 0.2 ) ( 0.8 ) ( 1.5 ) 3.0

Defined benefit pension loss

Defined benefit pension gain (loss) before reclassification 0.6 ( 2.2 )

Net reclassification for loss to income from continuing operations 1.0 1.1

Defined benefit pension gain after reclassification 0.9 0.2 1.8 6.1

Defined benefit pension gain (loss) after reclassification 1.6 ( 1.1 )

Deferred tax effect ( 2.9 ) 0.2

Net defined benefit pension gain 0.7 0.2 1.2 5.7

Deconsolidation of discontinued operations and assets held for sale — — — 8.1

Net change to derive comprehensive income (loss) for the period 3.9 5.2 45.5 ( 3.5 )

Comprehensive income (loss) 35.6 94.5 186.8 ( 3.5 )

Comprehensive income attributable to non-controlling interest 0.1 — 0.4 —

Comprehensive income (loss) attributable to controlling interest $ 35.5 $ 94.5 $ 186.4 $ ( 3.5 )

Net defined benefit pension loss ( 1.3 ) ( 0.9 )

Net change to derive comprehensive income for the period 4.1 16.6

Comprehensive income 12.8 89.9

Comprehensive income from continuing operations attributable to non-controlling interest — 0.1

Comprehensive income from discontinuing operations attributable to non-controlling interest 0.1 0.3

Comprehensive income attributable to controlling interest $ 12.7 $ 89.5

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholder’s Equity

For the nine month period ended July 4, 2021

Nine Month Period Ended July 4, 2021 (in millions) Other

For the three month periods ended January 2, 2022 and January 3, 2021

Three Month Period Ended January 2, 2022 (in millions) Other

Capital Accumulated

4 unchanged sentences

Balances at September 30, 2021 $ 2,174.8 $ ( 614.9 ) $ ( 235.2 ) $ 1,324.7 $ 8.7 $ 1,333.4

Net income from continuing operations — 72.8 — 72.8 0.8 73.6

Loss from discontinued operations, net of tax — ( 0.3 ) — ( 0.3 ) — ( 0.3 )

Net loss from continuing operations — ( 30.1 ) — ( 30.1 ) — ( 30.1 )

Income from discontinued operations, net of tax — 38.4 — 38.4 0.4 38.8

Other comprehensive income, net of tax — — 4.0 4.0 0.1 4.1

2 unchanged sentences

Dividends paid to parent — ( 119.2 ) — ( 119.2 ) — ( 119.2 )

Dividend paid by subsidiary to NCI — — — — ( 1.0 ) ( 1.0 )

Balances as of January 3, 2021 2,154.5 ( 601.8 ) ( 268.4 ) 1,284.3 10.1 1,294.4

Net income (loss) from continuing operations — 38.2 — 38.2 ( 0.9 ) 37.3

Loss from discontinued operations, net of tax — ( 1.1 ) — ( 1.1 ) — ( 1.1 )

Other comprehensive income (loss), net of tax — — 25.1 25.1 ( 0.1 ) 25.0

Share based compensation 8.0 — — 8.0 — 8.0

Dividends paid to parent — ( 16.1 ) — ( 16.1 ) — ( 16.1 )

Dividend paid by subsidiary to NCI — — — — ( 0.3 ) ( 0.3 )

Balances as of April 4, 2021 2,162.5 ( 580.8 ) ( 243.3 ) 1,338.4 8.8 1,347.2

Net income from continuing operations — 36.9 — 36.9 — 36.9

Loss from discontinued operations, net of tax — ( 5.2 ) — ( 5.2 ) — ( 5.2 )

Other comprehensive income, net of tax — — 3.8 3.8 0.1 3.9

Share based compensation 6.9 — — 6.9 — 6.9

Dividends paid to parent — ( 28.1 ) — ( 28.1 ) — ( 28.1 )

Balances at July 4, 2021 $ 2,169.4 $ ( 577.2 ) $ ( 239.5 ) $ 1,352.7 $ 8.9 $ 1,361.6

See accompanying notes to the condensed consolidated financial statements

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Shareholder’s Equity

For the nine month period ended June 28, 2020

Nine Month Period Ended June 28, 2020 (in millions) Other

Balances at January 2, 2022 $ 2,158.7 $ ( 725.8 ) $ ( 231.2 ) $ 1,201.7 $ 9.2 $ 1,210.9

Three Month Period Ended January 3, 2021 (in millions) Other

Capital Accumulated

4 unchanged sentences

Balances at September 30, 2020 $ 2,154.1 $ ( 614.2 ) $ ( 284.6 ) $ 1,255.3 $ 9.9 $ 1,265.2

Net (loss) income from continuing operations — ( 37.7 ) — ( 37.7 ) 0.9 ( 36.8 )

Income from discontinued operations, net of tax — 2.8 — 2.8 — 2.8

Other comprehensive income, net of tax — — 24.2 24.2 0.1 24.3

Restricted stock issued and related tax withholdings 4.9 — — 4.9 — 4.9

Share based compensation 8.5 — — 8.5 — 8.5

Dividends paid to parent — ( 36.7 ) — ( 36.7 ) — ( 36.7 )

Cumulative adjustment for adoption of new accounting standards — ( 0.3 ) 0.3 — — —

Balances as of December 29, 2019 2,126.7 ( 486.6 ) ( 249.0 ) 1,391.1 10.6 1,401.7

Net loss from continuing operations — ( 55.8 ) — ( 55.8 ) ( 0.8 ) ( 56.6 )

Income from discontinued operations, net of tax — 1.4 — 1.4 — 1.4

Sale and deconsolidation of assets held for sale — — 8.1 8.1 — 8.1

Other comprehensive loss, net of tax — — ( 41.0 ) ( 41.0 ) ( 0.1 ) ( 41.1 )

Restricted stock issued and related tax withholdings ( 0.3 ) — — ( 0.3 ) — ( 0.3 )

Share based compensation 8.3 — — 8.3 — 8.3

Dividends paid to parent — ( 168.2 ) — ( 168.2 ) — ( 168.2 )

Balances as of March 29, 2020 2,134.7 ( 709.2 ) ( 281.9 ) 1,143.6 9.7 1,153.3

Net income from continuing operations — 15.1 — 15.1 1.0 16.1

Income from discontinued operations, net of tax — 8.0 — 8.0 — 8.0

Income (loss) from discontinued operations, net of tax — 57.4 — 57.4 ( 0.2 ) 57.2

Other comprehensive income, net of tax — — 16.2 16.2 0.4 16.6

Restricted stock issued and related tax withholdings ( 7.1 ) — — ( 7.1 ) — ( 7.1 )

Share based compensation 7.5 — — 7.5 — 7.5

Dividends paid to parent — ( 60.1 ) — ( 60.1 ) — ( 60.1 )

Balances at June 28, 2020 $ 2,142.9 $ ( 638.5 ) $ ( 276.7 ) $ 1,227.7 $ 10.2 $ 1,237.9

Dividends paid by subsidiary to NCI — — — — ( 1.0 ) ( 1.0 )

Balances at January 3, 2021 $ 2,154.5 $ ( 601.8 ) $ ( 268.4 ) $ 1,284.3 $ 10.1 $ 1,294.4

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the nine month periods ended July 4, 2021 and June 28, 2020

Nine Month Periods Ended

(in millions) July 4, 2021 June 28, 2020

For the three month periods ended January 2, 2022 and January 3, 2021

Three Month Periods Ended

(in millions) January 2, 2022 January 3, 2021

Cash flows from operating activities

Net income $ 8.7 $ 73.3

(Loss) income from discontinued operations, net of tax ( 6.6 ) 12.2

Net income (loss) from continuing operations 147.9 ( 12.2 )

Adjustments to reconcile net income to net cash from operating activities:

Income from discontinued operations, net of tax 38.8 57.2

Net (loss) income from continuing operations ( 30.1 ) 16.1

Adjustments to reconcile net (loss) income to net cash from operating activities:

Depreciation and amortization 25.4 27.1

Share based compensation 5.6 6.4

(Gain) loss on equity investments ( 6.9 ) 8.2

Loss on assets held for sale — 26.8

Write-off from impairment of intangible assets — 24.2

Gain on equity investment — ( 6.0 )

Amortization of debt issuance costs and debt discount 1.4 1.4

Write-off of unamortized discount and debt issuance costs 7.9 1.1

Inventory acquisition step-up — 0.8

Deferred tax expense 20.9 21.8

Deferred tax benefit ( 27.1 ) ( 13.1 )

Net changes in operating assets and liabilities ( 263.5 ) ( 148.0 )

Net cash provided (used) by operating activities from continuing operations 18.4 ( 175.0 )

Net cash used by operating activities from discontinued operations ( 15.9 ) —

Net cash provided (used) by operating activities 2.5 ( 175.0 )

Net cash used by operating activities from continuing operations ( 288.3 ) ( 115.3 )

Net cash (used) provided by operating activities from discontinued operations ( 15.3 ) 0.7

Net cash used by operating activities ( 303.6 ) ( 114.6 )

Cash flows from investing activities

1 unchanged sentence

Proceeds from disposal of property, plant and equipment 0.1 0.1

Proceeds from sale of assets held for sale — 30.1

Proceeds from sale of discontinued operations, net of cash — 3.6

Business acquisitions, net of cash acquired — ( 129.8 )

Proceeds from sale of equity investment — 60.5

Other investing activities ( 0.4 ) 2.5

Net cash (used) provided by investing activities ( 400.1 ) 43.4

Net cash used by investing activities from continuing operations ( 14.0 ) ( 76.8 )

Net cash used by investing activities from discontinued operations ( 5.0 ) ( 4.2 )

Net cash used by investing activities ( 19.0 ) ( 81.0 )

Cash flows from financing activities

Payment of debt, including premium on extinguishment ( 885.3 ) ( 132.7 )

Payment of debt ( 3.2 ) ( 53.6 )

Proceeds from issuance of debt 465.0 0.1

Payment of debt issuance costs ( 12.6 ) ( 0.8 )

Payment of contingent consideration — ( 197.0 )

Payment of cash dividends to parent ( 119.2 ) ( 60.1 )

Dividends paid by subsidiary to non-controlling interest ( 1.3 ) —

Net cash used by financing activities ( 6.5 ) ( 25.5 )

Net cash provided (used) by financing activities from continuing operations 342.6 ( 113.6 )

Net cash used by financing activities from discontinued operations ( 0.4 ) ( 1.4 )

Net cash provided (used) by financing activities 342.2 ( 115.0 )

Effect of exchange rate changes on cash and cash equivalents ( 2.5 ) 5.8

3 unchanged sentences

Supplemental disclosure of cash flow information

Cash paid for interest $ 100.8 $ 92.1

Cash paid for taxes $ 28.7 $ 34.7

Cash paid for interest associated with continued operations $ 14.7 $ 16.9

Cash paid for interest associated with discontinued operations $ 12.1 $ 11.4

Cash paid for taxes associated with continued operations $ 6.6 $ 6.2

Cash paid for taxes associated with discontinued operations $ 6.4 $ 2.0

Non cash investing activities

7 unchanged sentences

(“SBH”) and SB/RH Holdings, LLC (“SB/RH”) (collectively, the “Company”).

The notes to the consolidated financial statements that follow include both consolidated SBH and SB/RH Notes, unless otherwise indicated below.

The notes to the condensed consolidated financial statements that follow include both consolidated SBH and SB/RH Notes, unless otherwise indicated below.

NOTE 1– BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

The exceptions are the first quarter, which begins on October 1, and the fourth quarter, which ends on September 30.

As a result, the fiscal period end date for the three and nine month periods included within this Quarterly Report for the Company are July 4, 2021 and June 28, 2020.

As a result, the fiscal period end date for the three month periods included within this Quarterly Report for the Company are January 2, 2022 and January 3, 2021.

Newly Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments , which was further updated and clarified by the FASB through the issuance of additional related ASUs.

The ASU introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables.

The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information, and reasonable and supportable forecasts.

This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models, and methods for estimating expected credit losses.

The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019.

The Company adopted ASU 2016-13 on a modified retrospective basis effective October 1, 2020.

The adoption of ASU 2016-13 did not have a material impact on the Company’s condensed consolidated financial statements.

Refer to Note 6 - Receivables and Concentration of Credit Risk for further discussion on the Company's receivables and allowance for uncollectible receivables.

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract .

This standard provides guidance on accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract.

ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license.

ASU 2018-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019.

The Company adopted ASU 2018-15 prospectively to all implementation costs incurred after October 1, 2020, the date of adoption.

Before the adoption of the standard, the implementation costs in cloud computing arrangements were expensed as incurred.

The adoption of ASU 2018-15 did not have a material impact on the Company’s condensed consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

The new standard simplifies the accounting for income taxes by removing certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods.

The new standard also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

The ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years and was adopted by the Company on October 1, 2021.

The adoption did not have a material impact on the Company's condensed consolidated financial statements.

Recently Issued Accounting Standards

1 unchanged sentence

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

This ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation.

1 unchanged sentence

In January 2021, the FASB issued ASU 2021-01, which adds implementation guidance to clarify certain optional expedients in Topic 848.

The ASUs can be adopted no later than December 31, 2022 with early adoption permitted.

The ASU can be adopted no later than December 31, 2022 with early adoption permitted.

The Company is evaluating the effect of adopting this new accounting guidance.

Transaction related charges

Transaction related charges consist of transaction costs from (1) qualifying acquisition transactions, whether or not consummated, associated with the purchase of net assets or equity interest of a business such as a business combination, equity investment, joint venture or purchase of non-controlling interest;

(2) subsequent integration related project costs directly associated with an acquired business including costs for integration of acquired operations into the Company’s shared service platforms, termination of redundant positions and locations, employee transition costs, integration related professional fees and other post business combination expenses;

and (3) divestiture support and separation costs consisting of incremental costs incurred by the continuing operations after completion of the transaction to facilitate separation of shared operations, development of transferred shared service operations, platforms and personnel transferred under the transaction.

Divestiture-related charges prior to completion of the transaction qualifying as discontinued operations are recognized as a component of Income from Discontinued Operations, net of tax.

Qualifying cost types include, but are not limited to, banking, advisory, legal, accounting, valuation, and other professional fees directly related to the respective transactions.

Transaction related charges consist of transaction costs from (1) a qualifying strategic transaction or business development opportunity, including an acquisition or divestiture, whether or not consummated, associated with the purchase or sale of net assets or equity interest of a business such as a business combination, equity investment, joint venture or purchase or sale of non-controlling interest;

(2) subsequent integration related project costs directly associated with an acquisition including realized costs for the integration of acquired operations into the Company’s shared service platforms, termination of redundant or duplicative positions and locations, operations and/or products, employee transition costs, professional fees, and other post business combination expenses;

and (3) divestiture support and separation costs consisting of incremental costs incurred to facilitate separation of a divested business or operation, including the development of shared service operations impacted by a separation, including impacts to shared platforms and personnel impacted by the transaction.

Qualifying cost types include, but are not limited to, banking, advisory, legal, accounting, valuation, or other professional fees;

and including impairment loss on existing assets considered duplicative or redundant and directly attributable to the respective transactions.

See Note 2 - Divestitures and Note 3 – Acquisitions for further discussion.

The following table summarizes transaction related charges incurred by the Company during the three and nine month periods ended July 4, 2021 and June 28, 2020:

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Three Month Periods Ended Nine Month Periods Ended

(in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

The following table summarizes transaction related charges incurred by the Company during the three month periods ended January 2, 2022 and January 3, 2021:

Three Month Periods Ended

(in millions) January 2, 2022 January 3, 2021

HHI divestiture and separation $ 4.3 $ —

Rejuvenate acquisition and integration 4.3 —

Armitage acquisition and integration 0.7 4.8

Coevorden operations divestiture and separation 2.9 1.7 7.7 3.4

GBL divestiture and separation 0.3 2.5 3.0 7.6

Omega Sea acquisition and integration — 0.1 0.2 1.5

Other 5.6 14.2

Total transaction related charges $ 14.9 $ 19.0

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 2 – DIVESTITURES

The following table summarizes the components of Income from Discontinued Operations, Net of Tax in the accompanying Condensed Consolidated Statements of Income for the three and nine month periods ended July 4, 2021 and June 28, 2020:

Three Month Periods Ended Nine Month Periods Ended

(in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

(Loss) income from discontinued operations before income taxes $ ( 5.2 ) $ ( 0.2 ) $ ( 6.5 ) $ 3.6

Income tax benefit (expense) from discontinued operations — ( 8.2 ) 0.1 ( 8.6 )

(Loss) income from discontinued operations, net of tax ( 5.2 ) 8.0 ( 6.6 ) 12.2

(Loss) income from discontinued operations attributable to controlling interest, net of tax $ ( 5.2 ) $ 8.0 $ ( 6.6 ) $ 12.2

During the three and nine month periods ended July 4, 2021 the Company recognized incremental pre-tax loss on sale for changes to tax and legal indemnifications and other agreed-upon funding under the acquisition agreement for sale and divestiture of its Global Batteries & Lighting ("GBL") and Global Auto Care ("GAC") divisions to Energizer Holdings, Inc.

The following table summarizes the components of Income from Discontinued Operations, Net of Tax in the accompanying Condensed Consolidated Statements of Income for the three month periods ended January 2, 2022 and January 3, 2021:

Three Month Periods Ended

(in millions) January 2, 2022 January 3, 2021

Income from discontinued operations before income taxes - HHI $ 60.0 $ 94.1

Loss from discontinued operations before income taxes - Other ( 0.3 ) ( 0.3 )

Interest on corporate debt allocated to discontinued operations 10.4 12.7

Income from discontinued operations before income taxes 49.3 81.1

Income tax expense from discontinued operations 10.5 23.9

Income from discontinued operations, net of tax 38.8 57.2

Income (loss) from discontinued operations, net of tax attributable to noncontrolling interest 0.4 ( 0.2 )

Income from discontinued operations, net of tax attributable to controlling interest $ 38.4 $ 57.4

Interest from corporate debt allocated to discontinued operations includes interest on Term Loans required to be paid down using proceeds received on disposal on sale of a business, and interest expense from corporate debt not directly attributable to or related to other operations based on the ratio of net assets of the disposal group held for sale to the consolidated net assets plus consolidated debt, excluding debt assumed in transaction, required to be repaid, or directly attributable to other operations of the Company.

Corporate debt, including Term Loans required to be paid down, are not classified as held for sale as they are not directly attributable to the identified disposal group.

On September 8, 2021, the Company entered into a definitive Asset and Stock Purchase Agreement (the "ASPA") with ASSA ABLOY AB ("ASSA") to sell its HHI segment for cash proceeds of $ 4.3 billion, subject to customary purchase price adjustments.

The Company's assets and liabilities associated with the HHI disposal group have been classified as held for sale and the respective operations have been classified as discontinued operations and reported separately for all periods presented.

The ASPA provides that ASSA will purchase the equity of certain subsidiaries of the Company, and acquire certain assets and assume certain liabilities of other subsidiaries used or held for the purpose of the HHI business.

The Company and ASSA have made customary representations and warranties and have agreed to customary covenants relating to the acquisition.

Among other things, prior to the consummation of the acquisition, the Company will be subject to certain business conduct restrictions with respect to its operation of the HHI business.

The Company and ASSA have agreed to indemnify each other for losses arising from certain breaches of the ASPA and for certain other matters.

In particular, the Company has agreed to indemnify ASSA for certain liabilities relating to the assets retained by the Company, and ASSA has agreed to indemnify the Company for certain liabilities assumed by ASSA, in each case as described in the ASPA.

The Company and ASSA have agreed to enter into related agreements ancillary to the acquisition that will become effective upon the consummation of the acquisition, including a customary transition services agreement and reverse transition services agreement.

The consummation of the acquisition is subject to certain customary conditions, including, among other things, (i) the absence of a material adverse effect on HHI, (ii) the expiration or termination of required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) the receipt of certain other antitrust approvals in certain specified foreign jurisdictions (the conditions contained in (ii) and (iii) together, the “Antitrust Conditions”), (iv) the accuracy of the representations and warranties of the parties generally subject to a customary material adverse effect standard (as described in the ASPA) or other customary materiality qualifications), (v) the absence of governmental restrictions on the consummation of the acquisition in certain jurisdictions, and (vi) material compliance by the parties with their respective covenants and agreements under the ASPA.

The consummation of the transaction is not subject to any financing condition.

The Company is engaged with antitrust regulators in the ongoing regulatory review of the transaction and the Company is currently working to respond to such regulators' requests for additional information.

Although the timing and outcome of the regulatory process cannot be predicted, the Company currently expects the merger review process to last for several months.

As such, though there can be no assurance when the transaction will close, if at all, the Company does not expect the transaction to close before June 2022.

The ASPA also contains certain termination rights, including the right of either party to terminate the ASPA if the consummation of the acquisition has not occurred on or before December 8, 2022 (the “Termination Date”).

Further, if the acquisition has not been consummated by the Termination Date and all conditions precedent to ASSA's obligation to consummate the acquisition have otherwise been satisfied except for one or more of the Antitrust Conditions, then ASSA would be required to pay the Company a termination fee of $ 350 million.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 2 – DIVESTITURES (continued)

The following table summarizes the assets and liabilities of the HHI disposal group classified as held for sale as of January 2, 2022 and September 30, 2021:

(in millions)

January 2, 2022 September 30, 2021

Trade receivables, net $ 84.7 $ 130.2

Other receivables 9.3 12.1

Inventories 399.5 332.2

Prepaid expenses and other current assets 38.2 39.1

Property, plant and equipment, net 150.1 143.5

Operating lease assets 66.1 55.5

Deferred charges and other 8.7 11.7

Goodwill 711.1 710.9

Intangible assets, net 374.9 374.8

Total assets of business held for sale $ 1,842.6 $ 1,810.0

Current portion of long-term debt $ 1.4 $ 1.5

Accounts payable 203.2 206.6

Accrued wages and salaries 24.0 41.7

Other current liabilities 70.3 75.9

Long-term debt, net of current portion 54.3 54.4

Long-term operating lease liabilities 54.8 48.6

Deferred income taxes 7.9 7.8

Other long-term liabilities 15.4 17.8

Total liabilities of business held for sale $ 431.3 $ 454.3

The following table summarizes the components of income from discontinued operations before income taxes associated with the HHI divestiture in the accompanying Condensed Consolidated Statements of Operations for the three month periods ended January 2, 2022 and January 3, 2021:

(in millions)

January 2, 2022 January 3, 2021

Net sales $ 374.7 $ 408.7

Cost of goods sold 245.0 240.8

Gross profit 129.7 167.9

Operating expenses 67.2 70.2

Operating income 62.5 97.7

Interest expense 0.9 0.8

Other non-operating expense, net 1.6 2.8

Income from discontinued operations before income taxes $ 60.0 $ 94.1

Beginning in September 2021, the Company ceased the recognition of depreciation and amortization of long-lived assets associated with the HHI disposal group classified as held for sale.

Interest expense consists of interest from debt directly attributable to HHI operations that primarily consist of interest from finance leases.

No impairment loss was recognized on the assets held for sale as the purchase price of the business less estimated cost to sell is more than its carrying value.

The following table presents significant non-cash items and capital expenditures of discontinued operations from the HHI divestiture:

(in millions)

January 2, 2022 January 3, 2021

Depreciation and amortization $ — $ 8.6

Share and incentive based compensation $ 2.8 $ 1.1

Purchases of property, plant and equipment $ 5.0 $ 4.2

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 2 – DIVESTITURES (continued)

Income from discontinued operations before income taxes - Other includes incremental pre-tax loss on sale for changes to tax and legal indemnifications and other agreed-upon funding under the acquisition agreement for sale and divestiture of its Global Batteries & Lighting ("GBL") and Global Auto Care ("GAC") divisions to Energizer Holdings, Inc.

("Energizer") during the year ended September 30, 2019.

The Company and Energizer agreed to indemnify each other for losses arising from certain breaches of the acquisition agreement and for certain other matters.

The Company has agreed to indemnify Energizer for certain liabilities relating to the assets retained by the Company, and Energizer agreed to indemnify the Company for certain liabilities assumed by Energizer, in each case as described in the acquisition agreements.

As of July 4, 2021 and September 30, 2020, the Company recognized $ 36.8 million and $ 51.6 million, respectively, related to indemnification payables in accordance with the acquisition agreements, including $ 17.4 million and $ 33.0 million, respectively, within Other Current Liabilities, primarily attributable to current income tax indemnifications, and $ 19.4 million and $ 18.6 million, respectively, within Other Long-Term Liabilities on the Company’s Condensed Consolidated Statements of Financial Position, primarily attributable to income tax indemnifications associated with previously recognized uncertain tax benefits.

Coevorden Operations

On March 29, 2020, the Company completed its sale of the dog and cat food (“DCF”) production facility and distribution center in Coevorden, Netherlands (“Coevorden Operations”) pursuant to an agreement with United Petfood Producers NV (“UPP”) for total cash proceeds of $ 29.0 million received during the year ended September 30, 2020.

The divestiture did not constitute a strategic shift for the Company and therefore was not considered discontinued operations.

The divestiture of the Coevorden Operations was defined as a disposal of a business and a component of the GPC segment and reporting unit, resulting in the allocation of $ 10.6 million of GPC goodwill to the disposal group based upon a relative fair-value allocation.

Assets held for sale are recognized at their estimated fair value less cost to sell, which resulted in the recognition of a loss on assets held for sale of $ 26.8 million during the nine month period ended June 28, 2020.

The Company and UPP entered into related agreements ancillary to the acquisition that became effective upon the consummation of the acquisition, including a transaction service arrangement (TSA).

The Company has continued to operate its commercial DCF business following the divestiture of the Coevorden Operations and entered into a manufacturing agreement with UPP to supply the continuing DCF business, subject to an incremental tolling charge.

Additionally, the Company leases and operates the distribution center on behalf of UPP for up to 18 months following the divestiture under a lease agreement.

The Company has agreed to indemnify for certain liabilities relating to the assets retained, and Energizer agreed to indemnify the Company for certain liabilities assumed, in each case as described in the acquisition agreements.

As of January 2, 2022 and September 30, 2021, the Company recognized $ 28.4 million and $ 36.5 million, respectively, related to indemnification payables in accordance with the acquisition agreements, including $ 10.8 million and $ 17.3 million, respectively, within Other Current Liabilities, primarily attributable to current income tax indemnifications, and $ 17.6 million and $ 19.2 million, respectively, within Other Long-Term Liabilities on the Company’s Condensed Consolidated Statements of Financial Position, primarily attributable to income tax indemnifications associated with previously recognized uncertain tax benefits.

Subsequently, effective January 2, 2020, Energizer closed its divestitures of the European based Varta® consumer battery business in the EMEA region to Varta AG and transferred all respective rights and indemnifications attributable to the Varta® consumer battery business provided by the GBL sale to Varta AG.

The Company entered into a series of transaction service agreements ("TSA") and reverse TSAs with Energizer to support various shared back office administrative functions including finance, sales and market, information technology, human resources, real estate and supply chain, customer service and procurement.

TSAs associated with the Varta® consumer battery business were transferred to Varta AG as part of the subsequent divestiture by Energizer.

Charges associated with TSAs are recognized as bundled service costs under a fixed fee structure by the respective service or function and geographic location, including one-time pass-through charges for warehousing, freight, amongst others, with variable expiration dates up 24 months.

Charges associated with TSAs and reverse TSAs are recognized as a reduction to or increase in the respective operating costs as a component of operating expense or cost of goods sold depending upon the functions supported by or provided to the Company.

Additionally, due to the commingled nature of the shared administrative functions, cash would be received and/or paid on behalf of the respective counterparty's operations, resulting in cash flow being commingled with operating cash flow of the Company which would settle on a net basis with TSA charges.

During the three month period ended January 3, 2021, the Company recognized net loss of $ 1.8 million, consisting of TSA charges of $ 0.8 million and reverse TSA costs of $ 2.6 million.

The Company had exited all outstanding TSAs and reverse TSAs in January 2021.

NOTE 3 - ACQUISITIONS

Rejuvenate Acquisition

On May 28, 2021, the Company acquired all ownership interests in For Life Products, LLC ("FLP") for a purchase price of approximately $ 301.5 million.

On May 28, 2021, the Company acquired all ownership interests in For Life Products, LLC ("FLP") for a purchase price of $ 301.5 million.

FLP is a leading manufacturer of household cleaning, maintenance, and restoration products sold under the Rejuvenate® brand.

The net assets and operating results of FLP, since the acquisition date of May 28, 2021, are included in the Company’s Condensed Consolidated Statements of Income and reported within the H&G reporting segment for the three and nine month periods ended July 4, 2021.

The Company has recorded an allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the May 28, 2021 acquisition date.

1 unchanged sentence

Goodwill includes value associated with profits earned from market and expansion capabilities, synergies from integration and streamlining operational activities, the going concern of the business and the value of the assembled workforce.

The preliminary fair values recorded were determined based upon a valuation with estimates and assumptions used in such valuation that are subject to change within the measurement period (up to one year from the acquisition date).

The primary areas of acquisition accounting that are not yet finalized relate to amounts for intangible assets, deferred taxes, and residual goodwill.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 3 - ACQUISITIONS (continued)

The calculation of purchase price and purchase price allocation is as follows:

1 unchanged sentence

Cash consideration $ 301.5

Estimated working capital settlement 0.4

Total consideration $ 301.5

(in millions) Purchase Price Allocation

16 unchanged sentences

Total intangibles acquired $ 128.7

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 3 - ACQUISITIONS (continued)

The Company performed a valuation of the acquired inventories, tradenames, technology, and customer relationships.

7 unchanged sentences

The resulting discounted cash flows were then tax-effected at the applicable statutory rate.

Customer relationships – The Company valued customer relationships using an income approach, the multi-period excess earnings method.

Customer relationships – The Company valued customer relationships using the multi-period excess earnings method under market participant distributor method of the income approach.

In determining the fair value of the customer relationships, the multi-period excess earnings approach values the intangible asset at the present value of the incremental after-tax cash flows attributable only to the customer relationship after deducting contributory asset charges.

The incremental after-tax cash flows attributable to the subject intangible asset are then discounted to their present value.

Only expected sales from current customers were used, which are estimated using average annual expected growth rate of 4 %.

The Company assumed a customer retention rate of up to 98 %, which is supported by historical retention rates.

The Company assumed a customer attrition rate of 5 %, which is supported by historical attrition rates.

The discount rate applied to the projected cash flow was 10.5 % and income taxes were estimated at the applicable statutory rate.

7 unchanged sentences

Armitage is a premium pet treats and toys business headquartered in Nottingham, United Kingdom, including a portfolio of brands that include Armitage's dog treats brand, Good Boy®, cat treats brand, Meowee!® and Wildbird®, bird feed products, among others, that are predominantly sold within the United Kingdom.

The net assets and operating results of Armitage, since the acquisition date of October 26, 2020, are included in the Company’s Condensed Consolidated Statements of Income and reported within the GPC reporting segment for the three and nine month periods ended July 4, 2021.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 3 - ACQUISITIONS (continued)

The excess of the purchase price over the fair value of the net tangible assets and identifiable intangible assets of $ 90.7 million was recorded as goodwill, which is not deductible for tax purposes.

23 unchanged sentences

Net assets acquired $ 136.7

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 3 - ACQUISITIONS (continued)

The values allocated to intangible assets and the weighted average useful lives are as follows:

7 unchanged sentences

Inventory - Acquired inventory consists of branded finished goods that were valued based on the comparative sales method, which estimates the expected sales price of the finished goods inventory, reduced for all costs expected to be incurred in its completion or disposition and a profit on those costs.

Tradenames - The Company valued the tradenames, Good Boy® brand portfolio and Wildbird® and Other brand portfolio, using an income approach, the relief-from-royalty method.

Tradenames - The Company valued the tradenames, the Good Boy® brand and the Wildbird® and Other brand portfolio, using an income approach, the relief-from-royalty method.

Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the tradenames were not owned.

Royalty rates of 8 % for valuation of Good Boy® and 3 % for Wildbird® and Other were selected based on consideration of several factors, including prior transactions, related trademarks and tradenames, other similar trademark licensing, and transaction agreements and the relative profitability and perceived contribution of the tradenames.

The discount rate applied to the projected cash flow was 11 % based on the a weighted-average cost of capital for the overall business.

The discount rate applied to the projected cash flow was 11 % based on a weighted-average cost of capital for the overall business.

The resulting discounted cash flows were then tax-effected at the applicable statutory rate.

3 unchanged sentences

Pro forma results have not been presented as the Armitage acquisition is not considered individually significant to the consolidated results of the Company.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 4 - RESTRUCTURING AND RELATED CHARGES

1 unchanged sentence

Since the announcement of the project and completion of the Company’s divestitures of GBL and GAC during the year ended September 30, 2019, the project focus includes the transitioning of the Company’s continuing operations in a post-divestiture environment and separation from Energizer TSAs and reverse TSAs.

Refer to Note 2 – Divestitures and Note 18 – Related Party Transactions for further discussion of continuing involvement with Energizer.

Refer to Note 2 – Divestitures for further discussion of continuing involvement with Energizer.

The initiative includes review of global processes and organization design and structures;

2 unchanged sentences

among others.

Total cumulative costs incurred associated with the project were $ 141.1 million as of July 4, 2021, with approximately $ 27.3 million forecasted in the foreseeable future.

Total cumulative costs incurred associated with the project were $ 154.0 million as of January 2, 2022, with approximately $ 1.7 million forecasted in the foreseeable future.

The project costs are anticipated to be incurred through the fiscal year ending September 30, 2022.

GPC Edwardsville 3PL Transition - During the year ended September 30, 2021, the GPC segment entered into an initiative to transition its third party logistics (3PL) service provider at its Edwardsville, IL distribution center to optimize its operations and improve fill rates to meet customer requirements and handle projected growth.

Costs incurred to facilitate the transition of service providers include one-time implementation and start-up costs with the new service provider, including the integration of the provider systems and technology, incremental compensation and incentive-based compensation to maintain performance during the transition period, duplicative and redundant costs between providers, and incremental costs for various disruptions in the operations during the transition period, including supplemental transportation and storage costs as the new 3PL operations are fully integrated and transitioned.

Total cumulative costs incurred associated with the project were $ 21.8 million as of January 2, 2022, with approximately $ 3.7 million forecasted in the foreseeable future.

The project costs are anticipated to be incurred through the first half of the fiscal year ending September 30, 2022.

SAP S/4 HANA ERP Transformation - During the year ended September 30, 2021, the Company began an initiative to transform its enterprise-wide operating system to SAP S/4 HANA.

The initiative is a multi-year project that will include various project costs, including software configuration and implementation costs that would be recognized as a capital expenditure or deferred cost in accordance with applicable accounting policies.

Certain restructuring related costs associated with the initiative include project development and management costs, and professional services with business partners engaged towards planning, design and business process review that would not qualify as software implementation costs.

The Company is currently in the planning and design stage of the project.

Total cumulative costs incurred associated with the project were $ 6.7 million as of January 2, 2022 with approximately $ 10.1 million forecasted in the foreseeable future.

The project is a multi-year implementation with various phases that will be realized throughout the project timeline, depending upon business unit and/or jurisdiction, and is anticipated to be incurred through September 30, 2024.

Other Restructuring Activities – The Company may enter into small, less significant initiatives and restructuring related activities to reduce costs and improve margins throughout the organization.

Individually these activities are not substantial and occur over a shorter time period (generally less than 12 months).

The following summarizes restructuring and related charges for the three and nine month periods ended July 4, 2021 and June 28, 2020:

Three Month Periods Ended Nine Month Periods Ended

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 4 - RESTRUCTURING AND RELATED CHARGES (continued)

The following summarizes restructuring and related charges for the three month periods ended January 2, 2022 and January 3, 2021:

Three Month Periods Ended

(in millions)

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

January 2, 2022 January 3, 2021

Global productivity improvement program $ 1.8 $ 9.0

GPC Edwardsville 3PL transition 10.3 —

SAP S/4 HANA ERP transformation 2.9 —

Other restructuring activities 2.4 —

2 unchanged sentences

Operating expense 17.1 8.9

The following is a summary of restructuring and related charges for the three and nine month periods ended July 4, 2021 and June 28, 2020, cumulative costs for current restructuring initiatives, and estimated future costs to be incurred as of July 4, 2021, by cost type.

The following is a summary of restructuring and related charges for the three month periods ended January 2, 2022 and January 3, 2021, cumulative costs for current restructuring initiatives, and estimated future costs to be incurred as of January 2, 2022, by cost type.

(in millions) Termination

Benefits Other

For the three month period ended July 4, 2021 $ 5.0 $ 5.1 $ 10.1

For the three month period ended June 28, 2020 0.5 11.7 12.2

For the nine month period ended July 4, 2021 8.3 15.1 23.4

For the nine month period ended June 28, 2020 11.9 49.7 61.6

Cumulative costs through July 4, 2021 25.0 116.1 141.1

For the three month period ended January 2, 2022 $ 0.6 $ 16.8 $ 17.4

For the three month period ended January 3, 2021 2.9 6.1 9.0

Cumulative costs through January 2, 2022 29.7 152.8 182.5

Estimated future costs to be incurred — 15.5 15.5

The following is a rollforward of the accrual related to all restructuring and related activities, included within Other Current Liabilities, by cost type for the nine month period ended July 4, 2021.

The following is a rollforward of the accrual related to all restructuring and related activities, included within Other Current Liabilities, by cost type for the three month period ended January 2, 2022.

(in millions) Termination

4 unchanged sentences

Non-cash items ( 1.3 ) 0.6 ( 0.7 )

Accrual balance at July 4, 2021 $ 4.7 $ 2.2 $ 6.9

The following summarizes restructuring and related charges by segment for the three and nine month periods ended July 4, 2021 and June 28, 2020, cumulative costs incurred through July 4, 2021, and estimated future costs to be incurred by the Company’s segments:

(in millions) HHI HPC GPC H&G Corporate Total

For the three month period ended July 4, 2021 $ — $ 2.1 $ 3.9 $ — $ 4.1 $ 10.1

For the three month period ended June 28, 2020 0.3 0.7 2.1 — 9.1 12.2

For the nine month period ended July 4, 2021 — 6.2 6.0 — 11.2 23.4

For the nine month period ended June 28, 2020 0.9 3.6 18.8 0.3 38.0 61.6

Cumulative costs through July 4, 2021 1.4 17.8 22.8 2.2 96.9 141.1

Accrual balance at January 2, 2022 $ 3.1 $ 11.5 $ 14.6

The following summarizes restructuring and related charges by segment for the three month periods ended January 2, 2022 and January 3, 2021, cumulative costs incurred through January 2, 2022, and estimated future costs to be incurred by the Company’s segments:

(in millions) HPC GPC H&G Corporate Total

For the three month period ended January 2, 2022 $ 0.6 $ 11.4 $ — $ 5.4 $ 17.4

For the three month period ended January 3, 2021 2.6 1.5 — 4.9 9.0

Cumulative costs through January 2, 2022 21.1 52.4 2.7 106.3 182.5

Estimated future costs to be incurred 0.7 4.2 — 10.6 15.5

5 unchanged sentences

The Company generates all of its revenue from contracts with customers.

The following table disaggregates our revenue for the three and nine month periods ended July 4, 2021 and June 28, 2020, by the Company’s key revenue streams, segments and geographic region (based upon destination):

Three Month Period Ended July 4, 2021

(in millions)

Product Sales

$ 405.6 $ 111.3 $ 147.8 $ 209.3 $ 874.0

— 101.9 91.2 — 193.1

11.7 43.9 3.5 1.8 60.9

1.4 15.0 10.5 — 26.9

0.3 2.3 2.9 1.0 6.5

— — 1.4 — 1.4

Total Revenue

$ 419.0 $ 274.4 $ 257.3 $ 212.1 $ 1,162.8

Three Month Period Ended June 28, 2020

The following table disaggregates our revenue for the three month periods ended January 2, 2022 and January 3, 2021, by the Company’s key revenue streams, segments and geographic region (based upon destination):

Three Month Period Ended January 2, 2022 Three Month Period Ended January 3, 2021

(in millions)

8 unchanged sentences

$ 379.7 $ 302.2 $ 75.3 $ 757.2 $ 378.5 $ 275.4 $ 82.3 $ 736.2

Nine Month Period Ended July 4, 2021

(in millions) HHI HPC GPC H&G Total

Product Sales

NA $ 1,181.7 $ 369.3 $ 508.4 $ 456.4 $ 2,515.8

EMEA — 392.7 266.6 — 659.3

LATAM 32.1 126.9 11.9 5.0 175.9

APAC 2.5 53.2 28.3 — 84.0

Licensing 0.9 8.7 6.8 1.8 18.2

Other — — 4.3 — 4.3

Total Revenue $ 1,217.2 $ 950.8 $ 826.3 $ 463.2 $ 3,457.5

Nine Month Period Ended June 28, 2020

(in millions) HHI HPC GPC H&G Total

Product Sales

NA $ 867.9 $ 323.8 $ 474.9 $ 389.7 $ 2,056.3

EMEA 0.4 337.7 167.0 — 505.1

LATAM 25.5 92.6 10.2 4.3 132.6

APAC 13.8 45.3 23.3 — 82.4

Licensing 0.8 6.0 5.9 1.6 14.3

Other — — 2.9 — 2.9

Total Revenue $ 908.4 $ 805.4 $ 684.2 $ 395.6 $ 2,793.6

The Company has a broad range of customers including many large mass retail customers.

During the three month period ended July 4, 2021, there were three large retail customers each exceeding 10% of consolidated Net Sales and representing 34.3 % of consolidated Net Sales.

During the nine month period ended July 4, 2021, there was one large retail customer exceeding 10% of consolidated Net Sales and representing 12.5 % of consolidated Net Sales.

During the three and nine month periods ended June 28, 2020, there were two large retail customers each exceeding 10% of consolidated Net Sales and representing 26.9 % and 25.2 % of consolidated Net Sales, respectively.

During the three month period ended January 2, 2022 and January 3, 2021, there were two large retail customers each exceeding 10% of consolidated Net Sales and representing 33.0 % and 33.8 % of consolidated Net Sales, respectively.

A significant portion of our product sales from our HPC segment, primarily in the NA and LATAM regions, are subject to the continued use and access to the Black and Decker® brand (B&D) through a license agreement with Stanley Black and Decker.

The license agreement was recently renewed through June 30, 2025, including a sell-off period from April 1, 2025 to June 30, 2025 whereby the Company can continue to sell and distribute but no longer produce products subject to the License Agreement.

Net sales from B&D product sales consist of $ 129.4 million and $ 111.6 million for the three month periods ended January 2, 2022 and January 3, 2021, respectively.

All other significant brands and tradenames used in the Company’s commercial operations are directly owned and not subject to further restrictions.

In the normal course of business, the Company may allow customers to return product or take credit for product returns per the provisions in a sale agreement.

Estimated product returns are recorded as a reduction in reported revenues at the time of sale based upon historical product return experience, adjusted for known trends, to arrive at the amount of consideration expected to be received.

The allowance for product returns as of July 4, 2021, and September 30, 2020 was $ 22.0 million and $ 23.1 million, respectively.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

The allowance for product returns as of January 2, 2022, and September 30, 2021 was $ 13.3 million and $ 11.8 million, respectively.

NOTE 6 - RECEIVABLES AND CONCENTRATION OF CREDIT RISK

The allowance for uncollectible receivables as of July 4, 2021 and September 30, 2020 was $ 6.4 million.

The allowance for uncollectible receivables as of January 2, 2022 and September 30, 2021 was $ 6.1 million and $ 6.7 million, respectively.

The Company has a broad range of customers including many large mass retail customers.

As of July 4, 2021, there were two large retail customers each exceeding 10% of consolidated Net Trade Receivables and representing 26.0 % of consolidated Net Trade Receivables.

As of September 30, 2020, there were two large retail customers each exceeding 10% of consolidated Net Trade Receivables and representing 28.4 % of consolidated Net Trade Receivables .

As of January 2, 2022 there were no large retail customers exceeding 10% of consolidated Net Trade Receivables.

As of September 30, 2021, there was one large retail customer exceeding 10% of consolidated Net Trade Receivables and representing 14.7 % of consolidated Net Trade Receivables.

NOTE 7 - INVENTORIES

1 unchanged sentence

(in millions)

July 4, 2021 September 30, 2020

January 2, 2022 September 30, 2021

Raw materials

5 unchanged sentences

Property, plant and equipment consist of the following:

(in millions) July 4, 2021 September 30, 2020

(in millions) January 2, 2022 September 30, 2021

Land, buildings and improvements $ 83.3 $ 83.5

5 unchanged sentences

Property, plant and equipment, net $ 260.4 $ 260.2

Depreciation expense from property, plant and equipment for the three month periods ended July 4, 2021 and June 28, 2020 was $ 18.2 million and $ 18.1 million, respectively;

and for the nine month periods ended July 4, 2021 and June 28, 2020 was $ 55.6 million and $ 62.1 million, respectively.

The decrease in depreciation for the nine month period ended July 4, 2021 is attributable to accelerated depreciation realized as part of exiting GPC operating facilities in LATAM in the prior year.

Depreciation expense from property, plant and equipment for the three month periods ended January 2, 2022 and January 3, 2021 was $ 12.2 million and $ 13.0 million, respectively.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 9 - GOODWILL AND INTANGIBLE ASSETS

3 unchanged sentences

Foreign currency impact ( 0.4 ) — ( 0.4 )

Armitage acquisition (Note 3) — 90.7 — 90.7

Rejuvenate acquisition (Note 3) — — 147.0 147.0

As of July 4, 2021 $ 713.2 $ 528.1 $ 342.6 $ 1,583.9

The Company considered the impact of the COVID-19 pandemic on its future operations and cash flows and concluded that, although the duration and severity of the COVID-19 pandemic could result in future impairment charges not currently considered, no triggering event occurred during the three and nine month periods ended July 4, 2021 to indicate an impairment of goodwill.

As of January 2, 2022 $ 524.2 $ 342.6 $ 866.8

The carrying value of indefinite-lived intangibles and definite-lived intangibles assets subject to amortization and accumulated amortization are as follows:

July 4, 2021 September 30, 2020

January 2, 2022 September 30, 2021

(in millions) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net

6 unchanged sentences

Total Intangible Assets $ 1,721.4 $ ( 532.2 ) $ 1,189.2 $ 1,724.1 $ ( 520.0 ) $ 1,204.1

There were no impairments identified during the three and nine month periods ended July 4, 2021.

While a triggering event did not occur during the three and nine month periods ended July 4, 2021, a prolonged COVID-19 pandemic negatively impacting net sales growth rate, changes in key assumptions, and other global and regional macroeconomic factors, could result in additional future impairment charges for indefinite-lived intangible assets.

There were no triggering events and no impairments of goodwill and intangible assets identified during the three month period ended January 2, 2022.

Amortization expense from the intangible assets for the three month periods ended January 2, 2022 and January 3, 2021 was $ 13.3 million and $ 14.1 million, respectively.

Excluding the impact of any future acquisitions, dispositions or changes in foreign currency, the Company estimates annual amortization expense of intangible assets for the next five fiscal years will be as follows:

(in millions) Amortization

SPECTRUM BRANDS HOLDINGS, INC.

2 unchanged sentences

(in millions, unaudited)

NOTE 9 - GOODWILL AND INTANGIBLE ASSETS (continued)

Amortization expense from the intangible assets for the three month periods ended July 4, 2021 and June 28, 2020 was $ 20.3 million and $ 16.9 million, respectively;

and for the nine month periods ended July 4, 2021 and June 28, 2020 was $ 57.4 million and $ 50.9 million, respectively.

Excluding the impact of any future acquisitions or changes in foreign currency, the Company estimates annual amortization expense of intangible assets for the next five fiscal years will be as follows:

(in millions) Amortization

NOTE 10 - DEBT

Debt consists of the following:

July 4, 2021 September 30, 2020

January 2, 2022 September 30, 2021

(in millions) Amount Rate Amount Rate

2 unchanged sentences

Term Loan Facility, variable rate, due March 3, 2028 397.0 2.5 % 398.0 2.5 %

6.125 % Notes, due December 15, 2024

— — % 250.0 6.1 %

5.75 % Notes, due July 15, 2025

8 unchanged sentences

500.0 3.9 % 500.0 3.9 %

Other notes and obligations 2.1 8.5 % 3.2 7.6 %

Obligations under finance leases 100.0 5.1 % 101.9 4.9 %

8 unchanged sentences

Our Revolver Facility allows for the LIBOR rate to be phased out and replaced with the Secured Overnight Financing Rate and therefore we do not anticipate a material impact by the expected upcoming LIBOR transition.

As a result of borrowings and payments under the Revolver Facility, the Company had borrowing availability of $ 478.0 million at July 4, 2021, net of outstanding letters of credit of $ 24.0 million.

On March 3, 2021, the Company, through its wholly owned subsidiary, Spectrum Brands, Inc ("SBI"), completed its offering of $ 500.0 million aggregate principal amount of its 3.875 % Senior Notes due March 2031, and entered into a new Term Loan Facility (as defined below) in the aggregate principal amount of $ 400.0 million, expiring March 2028.

Using the proceeds received, the Company redeemed $ 250.0 million aggregate principal amount of the 6.125 % Notes in a cash tender offer and call and $ 550.0 million aggregate principal amount of the 5.75 % Notes in a cash tender offer, with a make whole premium of $ 23.4 million and a write-off of unamortized debt issuance costs of $ 7.9 million recognized as interest expense for the nine month period ended July 4, 2021.

Spectrum Term Loan Facility

On March 3, 2021, the Company entered into the first amendment (the "Amended Credit Agreement") to the Amended and Restated Credit Agreement (the "Credit Agreement") dated as of June 30, 2020.

The Amended Credit Agreement includes certain modified terms from the existing Credit Agreement to provide for a new term loan facility (the “Term Loan Facility”).

The Term Loan Facility is in an aggregate principal amount of $ 400.0 million and will mature on March 3, 2028.

As a result of borrowings and payments under the Revolver Facility, the Company had borrowing availability of $ 116.0 million at January 2, 2022, net of outstanding letters of credit of $ 19.0 million.

The Term Loan Facility is subject to a rate per annum equal to either (1) the LIBO Rate (as defined in the Amended Credit Agreement), subject to a 0.50 % floor, adjusted for statutory reserves, plus a margin of 2.00 % per annum or (2) the Alternate Base Rate (As defined in the Amended Credit Agreement), plus a margin of 1.00 % per annum.

The Term Loan Facility allows for the LIBO rate to be phased out and replaced with the Secured Overnight Financing Rate and therefore we do not anticipate a material impact to the expected upcoming LIBOR transition.

The Term Loan Facility was issued net of a $ 1.0 million discount and the Company incurred $ 5.1 million of debt issuance costs, which is being amortized with a corresponding charge to interest expense over the remaining life of the loan.

Pursuant to a guarantee agreement, SB/RH and the direct and indirect wholly-owned material domestic subsidiaries of SBI have guaranteed SBI’s obligations under the Amended Credit Agreement and related loan documents.

Pursuant to the Security Agreement, dated as of June 23, 2015, SBI and such subsidiary guarantors have pledged substantially all of their respective assets to secure such obligations and, in addition, SB/RH has pledged the capital stock of SBI to secure such obligations.

Credit Agreement

On December 10, 2021, the Company entered into the second amendment (the "Amended Credit Agreement") to the Amended and Restated Credit Agreement (the "Credit Agreement") dated as of June 30, 2020.

The Amended Credit Agreement includes certain modified terms from the existing Credit Agreement to provide for an alternate rate of interest to the Eurocurrency Rate applicable to Revolving Loans and Letters of Credit in Euro and Pounds Sterling.

Pursuant to the Amended Credit Agreement, Sterling Overnight Index Average ("SONIA") replaced LIBO Rate as a reference rate for Revolving Loans and Letters of Credit denominated in Pounds Sterling and Euro Interbank Offered Rate ("EURIBOR") replaced LIBO Rate as a reference rate for Revolving Loans and Letters of Credit denominated in Euro.

The Company currently has no borrowing under the Revolver Facility denominated in Euro or Pounds Sterling.

SPECTRUM BRANDS HOLDINGS, INC.

2 unchanged sentences

(in millions, unaudited)

NOTE 10 - DEBT (continued)

Subject to certain mandatory prepayment events, the Term Loan Facility is subject to repayment according to scheduled amortizations, with the final payment of amount outstanding, plus accrued and unpaid interest, due at maturity.

The Amended Credit Agreement contains customary affirmative and negative covenants, including, but not limited to, restrictions on the Company and its restricted subsidiaries’ ability to incur indebtedness, create liens, make investments, pay dividends or make certain other distributions, and merge or consolidate or sell assets, in each case subject to certain exceptions set forth in the Amended Credit Agreement.

3.875 % Notes

On March 3, 2021, SBI issued $ 500.0 million aggregate principal amount of 3.875 % Senior Notes due 2031 (the " 3.875 % Notes") and entered into the indenture governing the 3.875 % Notes (the “2031 Indenture”).

The 3.875 % Notes mature on March 15, 2031 and are unconditionally guaranteed, on a senior unsecured basis, by SB/RH and by SBI’s existing and future domestic subsidiaries that guarantee indebtedness under the Amended Credit Agreement.

SBI may redeem all or part of the 3.875 % Notes at any time on or after March 15, 2026 at certain fixed redemption prices as set forth in the 2031 Indenture.

In addition, prior to March 15, 2026, SBI may redeem the Notes at a redemption price equal to 100 % of the principal amount plus a “make-whole” premium, plus accrued and unpaid interest.

Before March 15, 2024, the Company may redeem up to 35 % of the aggregate principal notes with cash equal to the net proceeds that SBI raises in equity offerings at specified redemption price as set forth in the 2031 Indenture.

Further, the 2031 Indenture requires SBI to make an offer to repurchase all outstanding 3.875 % Notes upon the occurrence of a change of control of SBI, as defined in the 2031 Indenture.

The 2031 Indenture contains covenants limiting, among other things, the ability of the Company and its direct and indirect restricted subsidiaries to incur additional indebtedness, create liens, engage in sale-leaseback transactions, pay dividends or make distributions in respect of capital stock, purchase or redeem capital stock, make investments or certain other restricted payments, sell assets, issue or sell stock of restricted subsidiaries, enter in transactions with affiliates, or effect a merger or consolidation.

In addition, the 2031 Indenture provides for customary events of default, including failure to make required payments, failure to comply with certain agreements or covenants, failure to make payments when due or an acceleration of certain other indebtedness, and certain events of bankruptcy and insolvency.

The Company recorded $ 7.6 million of fees in connection with the offering of the 3.875 % Notes, which have been capitalized as debt issuance costs and are being amortized over the remaining life of the 3.875 % Notes.

NOTE 11 – LEASES

The Company has leases primarily pertaining to manufacturing facilities, distribution centers, office space, warehouses, automobiles, machinery, computer, and office equipment that expire at various times through February 28, 2047 .

We have identified embedded operating leases within certain logistic agreements for warehouses and information technology services arrangements and recognized assets identified in the arrangements as part of operating right-of-use ("ROU") assets on the Company’s Condensed Consolidated Statements of Financial Position as of July 4, 2021 and September 30, 2020.

The Company has leases primarily pertaining to manufacturing facilities, distribution centers, office space, warehouses, automobiles, machinery, computers, and office equipment that expire at various times through June 30, 2035 .

We elected to exclude certain supply agreements that contain embedded leases for manufacturing facilities or dedicated manufacturing lines from our ROU asset and liability calculation based on the insignificant impact to our financial statements.

The following is a summary of the leases recognized on the Company’s Condensed Consolidated Statements of Financial Position as of July 4, 2021 and September 30, 2020:

(in millions) Line Item July 4, 2021 September 30, 2020

The following is a summary of the leases recognized on the Company’s Condensed Consolidated Statements of Financial Position as of January 2, 2022 and September 30, 2021:

(in millions) Line Item January 2, 2022 September 30, 2021

Operating Operating lease assets $ 56.3 $ 56.5

6 unchanged sentences

Total lease liabilities $ 161.7 $ 163.8

As of July 4, 2021, the Company had $ 12.1 million of commitments related to leases executed that have not yet commenced.

As of January 2, 2022, the Company had no commitments related to leases executed that have not yet commenced.

The Company records its operating lease expense and amortization of finance lease ROU assets within Cost of Goods Sold or Operating Expenses in the Condensed Consolidated Statements of Income depending on the nature and use of the underlying asset.

The Company records its finance interest cost within Interest Expense in the Condensed Consolidated Statements of Income.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 11 – LEASES (continued)

The components of lease costs recognized in the Condensed Consolidated Statements of Income for the three and nine month periods ended July 4, 2021 and June 28, 2020 are as follows:

Three Month Periods Ended Nine Month Periods Ended

(in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

The components of lease costs recognized in the Condensed Consolidated Statements of Income for the three month periods ended January 2, 2022 and January 3, 2021 are as follows:

Three Month Periods Ended

(in millions) January 2, 2022 January 3, 2021

Operating lease cost $ 5.2 $ 3.8

4 unchanged sentences

Total lease cost $ 11.5 $ 10.7

During the three month periods ended July 4, 2021 and June 28, 2020, the Company recognized income attributable to leases and sub-leases of $ 0.6 million.

During the nine month periods ended July 4, 2021 and June 28, 2020, the Company recognized income attributable to leases and sub-leases of $ 1.7 million and $ 1.6 million, respectively.

During the three month periods ended January 2, 2022 and January 3, 2021, the Company recognized income attributable to leases and sub-leases of $ 0.5 million and $ 0.6 million, respectively.

Income from leases and sub-leases is recognized as Other Non-Operating Income in the Condensed Consolidated Statements of Income.

The following is a summary of the Company’s cash paid for amounts included in the measurement of lease liabilities recognized in the Condensed Consolidated Statement of Cash Flow, including supplemental non-cash activity related to operating leases, for the three and nine month periods ending July 4, 2021 and June 28, 2020:

Three Month Periods Ended Nine Month Periods Ended

(in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

The following is a summary of the Company’s cash paid for amounts included in the measurement of lease liabilities recognized in the Condensed Consolidated Statement of Cash Flow, including supplemental non-cash activity related to operating leases, for the three month periods ending January 2, 2022 and January 3, 2021:

Three Month Periods Ended

(in millions) January 2, 2022 January 3, 2021

Operating cash flow from operating leases $ 5.4 $ 3.4

3 unchanged sentences

Acquisition of operating lease asset through lease obligations 4.8 7.3

The following is a summary of weighted-average lease term and discount rate at July 4, 2021 and September 30, 2020:

July 4, 2021 September 30, 2020

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 11 – LEASES (continued)

The following is a summary of weighted-average lease term and discount rate at January 2, 2022 and September 30, 2021:

January 2, 2022 September 30, 2021

Weighted average remaining lease term

4 unchanged sentences

Finance leases 5.1 % 4.9 %

At July 4, 2021, future lease payments under operating and finance leases were as follows:

At January 2, 2022, future lease payments under operating and finance leases were as follows:

(in millions) Finance Leases Operating Leases

13 unchanged sentences

NOTE 12 - DERIVATIVES

Derivative financial instruments are used by the Company principally in the management of its foreign currency exchange rates.

The Company does not hold or issue derivative financial instruments for trading purposes.

Cash Flow Hedges

Commodity Swaps.

The Company is exposed to risk from fluctuating prices for raw materials, specifically zinc and brass used in its manufacturing processes of its HHI segment.

The Company hedges a portion of the risk associated with the purchase of these materials using commodity swaps.

The hedge contracts are designated as cash flow hedges with the fair value changes recorded in AOCI and as a hedge asset or liability, as applicable.

The unrecognized changes in fair value of the hedge contracts are reclassified from AOCI into earnings when the hedged purchase of raw materials also affects earnings.

The swaps effectively fix the floating price on a specified quantity of raw materials through a specified date.

At July 4, 2021, the Company had a series of brass and zinc swap contracts outstanding through November 30, 2022.

The derivative net gain estimated to be reclassified from AOCI into earnings over the next 12 months is $ 0.8 million, net of tax.

The Company had the following commodity swap contracts outstanding as of July 4, 2021 and September 30, 2020:

July 4, 2021 September 30, 2020

(in millions, except Notional) Notional Contract Value Notional Contract Value

Brass swap contracts 795.4 Metric Tons $ 5.1 949.0 Metric Tons $ 4.4

Zinc swap contracts 2,947.5 Metric Tons $ 8.2 1,552.0 Metric Tons $ 3.4

Foreign exchange contracts.

The Company periodically enters into forward foreign exchange contracts to hedge a portion of the risk from forecasted foreign currency denominated third party and intercompany sales or payments.

2 unchanged sentences

These foreign exchange contracts are cash flow hedges of fluctuating foreign exchange related to sales of product or inventory purchases.

Until the sale or purchase is recognized, the fair value of the related hedge is recorded in AOCI and as a derivative hedge asset or liability, as applicable.

Until the sale or purchase is recognized, the fair value of the related hedge is recorded in Accumulated Other Comprehensive Income ("AOCI") and as a derivative hedge asset or liability, as applicable.

At the time the sale or purchase is recognized, the fair value of the related hedge is reclassified as an adjustment to Net Sales or purchase price variance in Cost of Goods Sold on the Condensed Consolidated Statements of Income.

At July 4, 2021, the Company had a series of foreign exchange derivative contracts outstanding through December 29, 2022.

At January 2, 2022, the Company had a series of foreign exchange derivative contracts outstanding through June 30, 2023.

The derivative net loss estimated to be reclassified from AOCI into earnings over the next 12 months is $ 2.5 million, net of tax.

At July 4, 2021 and September 30, 2020, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of $ 322.2 million and $ 273.4 million, respectively.

The following table summarizes the impact of designated cash flow hedges and the pre-tax gain (loss) recognized in the Condensed Consolidated Statements of Income for the three and nine month periods ended July 4, 2021 and June 28, 2020, respectively:

For the three month period ended July 4, 2021

(in millions)

in OCI Reclassified to Continuing Operations

Line Item Gain (Loss)

Commodity swaps $ 0.5 Cost of goods sold $ 0.7

Foreign exchange contracts — Net sales 0.1

Foreign exchange contracts ( 1.5 ) Cost of goods sold ( 3.6 )

Total $ ( 1.0 ) $ ( 2.8 )

For the three month period ended June 28, 2020

(in millions)

in OCI Reclassified to Continuing Operations

Line Item Gain (Loss)

Commodity swaps $ 0.7 Cost of goods sold $ ( 0.2 )

Foreign exchange contracts — Net sales ( 0.1 )

Foreign exchange contracts ( 2.8 ) Cost of goods sold 2.3

Total $ ( 2.1 ) $ 2.0

For the nine month period ended July 4, 2021

(in millions)

in OCI Reclassified to Continuing Operations

Line Item Gain (Loss)

Commodity swaps $ 1.9 Cost of goods sold $ 1.8

Foreign exchange contracts 0.1 Net sales 0.1

Foreign exchange contracts ( 9.6 ) Cost of goods sold ( 10.3 )

Total $ ( 7.6 ) $ ( 8.4 )

For the nine month period ended June 28, 2020

(in millions)

in OCI Reclassified to Continuing Operations

Line Item Gain (Loss)

Commodity swaps $ — Cost of goods sold $ ( 0.3 )

Foreign exchange contracts ( 0.1 ) Net sales ( 0.1 )

At January 2, 2022 and September 30, 2021, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of $ 299.6 million and $ 279.9 million, respectively.

The following table summarizes the impact of designated cash flow hedges and the pre-tax gain (loss) recognized in the Condensed Consolidated Statements of Income for the three month periods ended January 2, 2022 and January 3, 2021, respectively:

Loss in OCI Reclassified Gain (Loss) to Continuing Operations

For the three month periods ended (in millions) January 2, 2022 January 3, 2021 Line Item January 2, 2022 January 3, 2021

Foreign exchange contracts $ ( 0.8 ) $ ( 13.3 ) Cost of goods sold $ 2.1 $ ( 2.6 )

Total $ ( 0.5 ) $ 6.3

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 12 – DERIVATIVES (continued)

Derivative Contracts Not Designated as Hedges for Accounting Purposes

Foreign exchange contracts.

The Company periodically enters into foreign exchange forward contracts to economically hedge a portion of the risk from third party and intercompany payments resulting from existing obligations.

These obligations generally require the Company to exchange foreign currencies for U.S.

Dollars, Canadian Dollars, Euros, Pounds Sterling, Taiwanese Dollars, Philippine Pesos, Australian Dollars, Polish Zlotys, Mexican Pesos, or Japanese Yen, among others.

Dollars, Canadian Dollars, Euros, Pounds Sterling, Australian Dollars, Polish Zlotys, Mexican Pesos, or Japanese Yen, among others.

These foreign exchange contracts are fair value hedges of a related liability or asset recorded in the accompanying Condensed Consolidated Statements of Financial Position.

The gain or loss on the derivative hedge contracts is recorded in earnings as an offset to the change in value of the related liability or asset at each period end.

At July 4, 2021, the Company had a series of forward exchange contracts outstanding through September 30, 2021.

At July 4, 2021 and September 30, 2020, the Company had $ 314.5 million and $ 802.5 million, respectively, of notional value of such foreign exchange derivative contracts outstanding.

The following summarizes the impact of derivative instruments on the accompanying Condensed Consolidated Statements of Income for the three and nine month periods ended July 4, 2021 and June 28, 2020, pre-tax:

Three Month Periods Ended Nine Month Periods Ended

(in millions) Line Item July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

The gain or gain on the derivative hedge contracts is recorded in earnings as an offset to the change in value of the related liability or asset at each period end.

At January 2, 2022, the Company had a series of forward exchange contracts outstanding through July 20, 2022.

At January 2, 2022 and September 30, 2021, the Company had $ 178.4 million and $ 198.4 million, respectively, of notional value of such foreign exchange derivative contracts outstanding.

The following summarizes the impact of derivative instruments on the accompanying Condensed Consolidated Statements of Income for the three month periods ended January 2, 2022 and January 3, 2021, pre-tax:

Three month Periods Ended (in millions) Line Item January 2, 2022 January 3, 2021

Foreign exchange contracts Other non-operating expense (income) $ ( 1.2 ) $ ( 3.9 )

1 unchanged sentence

The fair value of the Company’s outstanding derivative contracts recorded in the Condensed Consolidated Statements of Financial Position is as follows:

(in millions) Line Item July 4, 2021 September 30, 2020

(in millions) Line Item January 2, 2022 September 30, 2021

Derivative Assets

Commodity swaps - designated as hedge Other receivables $ 1.3 $ 0.7

Commodity swaps - designated as hedge Deferred charges and other — 0.1

Foreign exchange contracts - designated as hedge Other receivables $ 3.6 $ 5.2

3 unchanged sentences

Derivative Liabilities

Commodity swaps - designated as hedge Accounts payable $ 0.2 $ —

Commodity swaps - designated as hedge Other long term liabilities 0.1 —

Foreign exchange contracts - designated as hedge Accounts payable $ 0.1 $ 0.1

5 unchanged sentences

The maximum loss due to credit risk equals the fair value of the gross asset derivatives that are concentrated with certain domestic and foreign financial institution counterparties.

The Company considers these exposures when measuring its credit reserve on its derivative assets, which were not significant as of July 4, 2021.

The Company considers these exposures when measuring its credit reserve on its derivative assets, which were not significant as of January 2, 2022.

The Company’s standard contracts do not contain credit risk related contingent features whereby the Company would be required to post additional cash collateral because of a credit event.

However, the Company is typically required to post collateral in the normal course of business to offset its liability positions.

As of July 4, 2021, and September 30, 2020, there was no cash collateral outstanding and no posted standby letters of credit related to such liability positions.

As of January 2, 2022, and September 30, 2021, there was no cash collateral outstanding and no posted standby letters of credit related to such liability positions.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 12 – DERIVATIVES (continued)

Net Investment Hedge

2 unchanged sentences

Any gains and losses attributable to the translation of the Euro denominated debt designated as net investment hedge are recognized as a component of foreign currency translation within AOCI, and gains and losses attributable to the translation of the undesignated portion are recognized as foreign currency translation gains or losses within Other Non-Operating Expense (Income).

As of July 4, 2021, the full principal amount was designated as a net investment hedge and considered fully effective.

The following summarizes the gain (loss) from the net investment hedge recognized in Other Comprehensive Income for the three and nine month periods ended July 4, 2021 and June 28, 2020, pre-tax:

Three Month Periods Ended Nine Month Periods Ended

Gain (loss) in OCI (in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

As of January 2, 2022, the full principal amount was designated as a net investment hedge and considered fully effective.

The following summarizes the gain (loss) from the net investment hedge recognized in Other Comprehensive Income for the three month periods ended January 2, 2022 and January 3, 2021, pre-tax:

Three Month Periods Ended (in millions) January 2, 2022 January 3, 2021

Net investment hedge $ 10.6 $ ( 21.5 )

During the three and nine month periods ended July 4, 2021, the Company did no t recognize any pre-tax gain (loss) in earnings related to the translation of the undesignated portion of debt obligation.

During the three month period ended June 28, 2020, the Company did no t recognize any pre-tax gain (loss) in earnings related to the translation of the undesignated portion of debt obligation.

The pre-tax loss related to the translation of the undesignated portion of the debt obligation recognized in earnings was $ 1.2 million for the nine month period ended June 28, 2020.

Net gains or losses from the net investment hedge are reclassified from AOCI into earnings upon a liquidation event or deconsolidation of Euro denominated subsidiaries.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has not changed the valuation techniques used in measuring the fair value of any financial assets and liabilities during the year.

The carrying value and estimated fair value of financial and derivative instruments as of July 4, 2021 and September 30, 2020 according to the fair value hierarchy are as follows.

July 4, 2021 September 30, 2020

The carrying value and estimated fair value of financial and derivative instruments as of January 2, 2022 and September 30, 2021 according to the fair value hierarchy are as follows:

January 2, 2022 September 30, 2021

(in millions) Level 1 Level 2 Level 3 Fair Value Carrying

Amount Level 1 Level 2 Level 3 Fair Value Carrying

Investments $ — $ — $ — $ — $ — $ 66.9 $ — $ — $ 66.9 $ —

Derivative Assets $ — $ 4.1 $ — $ 4.1 $ 4.1 $ — $ 6.8 $ — $ 6.8 $ 6.8

Derivative Liabilities — 1.2 — 1.2 1.2 — 2.5 — 2.5 2.5

Debt - SBH — 2,767.1 — 2,767.1 2,668.8 — 2,595.4 — 2,595.4 2,476.3

Debt - SB/RH — 2,767.1 — 2,767.1 2,668.8 — 2,595.4 — 2,595.4 2,476.3

Investments consist of our investment in Energizer common stock, which is valued at quoted market prices for identical instruments in an active market.

Unrealized income (loss) from changes in fair value, realized income (loss) from sale of equity investments, plus dividend income from equity investments, are recognized as components of Other Non-Operating Income, Net on the Condensed Consolidated Statements of Income.

The Company sold its remaining investment in Energizer common stock in January 2021.

During the nine month period ended July 4, 2021, the Company sold 1.7 million shares of Energizer common stock for proceeds of $ 73.1 million.

During the three and nine month periods ended June 28, 2020, the Company sold 1.1 million and 2.1 million shares of Energizer common stock for proceeds of $ 51.1 million and $ 79.7 million, respectively.

As of July 4, 2021, the company held no shares of Energizer common stock.

The following is a summary of income from equity investments recognized as a component of Other Non-Operating Income in the Company's Condensed Consolidated Statements of Income:

Three Month Periods Ended Nine Month Periods Ended

(in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Unrealized gain on equity investments held $ — $ 44.5 $ — $ 5.3

Realized gain (loss) on equity investments sold — 15.6 6.9 ( 13.5 )

Gain (loss) on equity investments — 60.1 6.9 ( 8.2 )

Dividend income from equity investments — 1.2 0.2 4.4

Gain (loss) from equity investments $ — $ 61.3 $ 7.1 $ ( 3.8 )

Debt — 3,040.7 — 3,040.7 2,959.0 — 2,628.2 — 2,628.2 2,506.3

The fair value measurements of the Company’s debt represent non-active market exchanged traded securities which are valued at quoted input prices that are directly observable or indirectly observable through corroboration with observable market data.

3 unchanged sentences

Goodwill, intangible assets and other long-lived assets are tested annually or more frequently if an event occurs that indicates an impairment loss may have been incurred using fair value measurements with unobservable inputs (Level 3).

During the three month period ended January 3, 2021, the Company held equity investments in Energizer common stock valued at quoted market prices, recognizing unrealized income from changes in fair value and realized income from the sale of its investment, plus dividend income on the Condensed Consolidated Statements of Income.

The Company sold its remaining investment in Energizer common stock in January 2021.

The following is a summary of income recognized as a component of Other Non-Operating Income in the Company's Condensed Consolidated Statements of Income:

Three Month Period Ended

(in millions) January 3, 2021

Unrealized gain on equity investments held $ 0.8

Realized gain on equity investments sold 5.2

Gain on equity investments 6.0

Dividend income from equity investments 0.2

Gain from equity investments $ 6.2

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 14 - EMPLOYEE BENEFIT PLANS

The net periodic benefit cost for defined benefit plans for the three and nine month periods ended July 4, 2021 and June 28, 2020 are as follows:

The net periodic benefit cost for defined benefit plans for the three month periods ended January 2, 2022 and January 3, 2021 are as follows:

Plans Non U.S.

(in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

(in millions) January 2, 2022 January 3, 2021 January 2, 2022 January 3, 2021

Three Month Periods Ended

4 unchanged sentences

Net periodic benefit cost $ — $ — $ 0.6 $ 0.7

Nine Month Periods Ended

Service cost $ 0.4 $ 0.5 $ 1.6 $ 1.7

Interest cost 1.3 1.6 1.8 1.7

Expected return on assets ( 2.8 ) ( 3.1 ) ( 2.9 ) ( 2.8 )

Settlement and curtailment — 0.9 — —

Recognized net actuarial loss 1.1 0.7 2.2 2.4

Net periodic benefit cost $ — $ 0.6 $ 2.7 $ 3.0

Weighted average assumptions

4 unchanged sentences

Rate of compensation increase N/A N/A 2.50 %

2.25 - 6.00 %

Contributions to our pension and defined benefit plans, including discretionary amounts, for the three month periods ended July 4, 2021 and June 28, 2020 were $ 1.7 million and $ 0.8 million, respectively;

and for the nine month periods ended July 4, 2021 and June 28, 2020, were $ 6.5 million and $ 2.3 million, respectively.

Contributions to our pension and defined benefit plans, including discretionary amounts, for the three month periods ended January 2, 2022 and January 3, 2021 were $ 1.0 million and $ 2.7 million, respectively .

NOTE 15 – SHAREHOLDER’S EQUITY

4 unchanged sentences

As part of the share repurchase programs, the Company purchased treasury shares in open market purchases at market fair value, private purchases from Company employees, significant shareholders or beneficial interest owners at fair value and through an accelerated share repurchase (“ASR”) agreement with a third-party financial institution.

On November 18, 2019, SBH entered into an ASR to repurchase $ 125.0 million of the Company’s common stock.

At inception, pursuant to the agreement, the Company paid $ 125.0 million to the financial institution using cash on hand and took delivery of 1.7 million shares which represented approximately 85 % of the total shares the Company expected to receive based on the market price at the time of the initial delivery.

The transaction was accounted for as an equity transaction.

The fair value of shares received initially of $ 106.3 million was recorded as a treasury stock transaction, with the remainder of $ 18.7 million recorded as a reduction to additional paid-in capital.

Upon initial receipt of the shares, there was an immediate reduction in the weighted average common shares calculation for basic and diluted earnings per share.

On February 24, 2020, the Company closed and settled the ASR resulting in an additional delivery of 0.3 million shares, with a fair value of $ 18.5 million.

The total number of shares repurchased under the ASR program during the year ended September 30, 2020, was 2.0 million at an average cost per share of $ 61.59 , based on the volume-weighted average share price of the Company’s common stock during the calculation period of the ASR program, less the applicable contractual discount.

The following summarizes the activity of common stock repurchases under the program for the three and nine month periods ended July 4, 2021 and June 28, 2020:

July 4, 2021 June 28, 2020

The following summarizes the activity of common stock repurchases under the programs for the three month periods ended January 2, 2022 and January 3, 2021:

January 2, 2022 January 3, 2021

Three Month Periods Ended

1 unchanged sentence

Open Market Purchases 1.1 $ 97.44 $ 110.0 — $ — $ —

Total Purchases 0.1 $ 88.22 $ 10.2 — $ — $ —

July 4, 2021 June 28, 2020

Nine Month Periods Ended

(in millions except per share data)

Repurchased Average

Per Share Amount Number of

Repurchased Average

Per Share Amount

Open Market Purchases 0.1 $ 88.22 $ 10.2 4.0 $ 56.97 $ 230.6

Private Purchases — — — 0.6 65.27 42.3

ASR — — — 2.0 61.47 124.8

Total Purchases 1.1 $ 97.44 $ 110.0 0.6 $ — $ 42.3

During the fourth quarter ended September 30, 2021, SBH entered into a $ 150.0 million rule 10b5-1 repurchase plan to facilitate daily market share repurchases through September 16, 2022, until the cap is reached or until the plan is terminated.

As of January 2, 2022 $ 125.9 million had been repurchased pursuant to the 10b5-1 repurchase plan.

SPECTRUM BRANDS HOLDINGS, INC.

4 unchanged sentences

Share based compensation expense is recognized as General and Administrative Expenses on the Condensed Consolidated Statements of Income.

The following is a summary of share based compensation expense for the three and nine month periods ended July 4, 2021 and June 28, 2020 for SBH and SB/RH, respectively.

Three Month Periods Ended Nine Month Periods Ended

(in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

The following is a summary of share based compensation expense for the three month periods ended January 2, 2022 and January 3, 2021 for SBH and SB/RH, respectively.

Three Month Periods Ended

(in millions) January 2, 2022 January 3, 2021

SBH $ 5.6 $ 6.4

4 unchanged sentences

Additionally, the Company regularly issues individual RSU awards under its equity plan to its Board members and individual employees for recognition, incentive, or retention purposes, when needed, which are primarily conditional upon time-based service conditions and included as a component of share-based compensation.

In the prior year, the Company provided for a portion of its annual management incentive compensation plan ("MIP") to be paid in common stock of the Company, in lieu of cash payment.

During the fourth quarter of the fiscal year ended September 30, 2020, the Company changed its MIP payout policy that previously provided for the issuance of stock for a designated pool of recipients to be fully funded through cash distribution with no stock issuance.

Share based compensation expense associated with the annual MIP for the three and nine month periods ended June 28, 2020 was $ 4.3 million and $ 12.9 million, respectively.

There was no portion of annual MIP recognized in the share based compensation expense for the three and nine month periods ended July 4, 2021.

The following is a summary of the activity in the Company RSUs during the nine month period ended July 4, 2021:

The following is a summary of the activity in the Company RSUs during the three month period ended January 2, 2022:

(in millions, except per share data) Units Weighted

10 unchanged sentences

Total grants 0.28 $ 97.01 $ 27.0 0.27 $ 97.01 $ 25.9

(in millions, except per share data) Shares Weighted

(in millions, except per share data) Units Weighted

Fair Value Fair

Date Shares Weighted

Date Units Weighted

Fair Value Fair

3 unchanged sentences

Vested ( 0.60 ) 55.10 ( 33.4 ) ( 0.58 ) 54.36 ( 31.7 )

At July 4, 2021 1.5 $ 63.09 $ 96.8 1.5 $ 62.93 $ 95.2

The remaining unrecognized pre-tax compensation cost for SBH and SB/RH at July 4, 2021 was $ 50.3 million and $ 49.8 million, respectively.

At January 2, 2022 1.13 $ 76.95 $ 86.6 1.11 $ 76.78 $ 85.6

The remaining unrecognized pre-tax compensation cost for SBH and SB/RH at January 2, 2022 was $ 55.8 million and $ 54.8 million, respectively.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 17 - ACCUMULATED OTHER COMPREHENSIVE INCOME

The changes in the components of accumulated other comprehensive income (loss), net of taxes, was as follows:

(in millions) Foreign Currency Translation Derivative Instruments Defined Benefit Pension Total

Balance at September 30, 2021

$ ( 194.8 ) $ 6.4 $ ( 46.9 ) $ ( 235.3 )

Other comprehensive income before reclassification 6.8 1.2 0.6 8.6

Net reclassification for (gain) loss to income from continuing operations — ( 2.1 ) 1.0 ( 1.1 )

Net reclassification for gain to income from discontinued operations — ( 0.5 ) — ( 0.5 )

Other comprehensive income (loss) before tax 6.8 ( 1.4 ) 1.6 7.0

Deferred tax effect ( 4.5 ) 4.5 ( 2.9 ) ( 2.9 )

Other comprehensive income (loss), net of tax 2.3 3.1 ( 1.3 ) 4.1

other comprehensive income from discontinued operations attributable to non-controlling interest 0.1 — — 0.1

Other comprehensive income (loss) attributable to controlling interest 2.2 3.1 ( 1.3 ) 4.0

Balance as of January 2, 2022

$ ( 192.6 ) $ 9.5 $ ( 48.2 ) $ ( 231.3 )

(in millions) Foreign Currency Translation Derivative Instruments Defined Benefit Pension Total

Balance at September 30, 2020

$ ( 226.6 ) $ 3.6 $ ( 61.7 ) $ ( 284.7 )

Other comprehensive income (loss) before reclassification 19.4 ( 12.4 ) ( 2.2 ) 4.8

Net reclassification for loss to income from continuing operations — 2.6 1.1 3.7

Net reclassification for loss to income from discontinued operations — 0.1 — 0.1

Other comprehensive income (loss) before tax 19.4 ( 9.7 ) ( 1.1 ) 8.6

Deferred tax effect 5.3 2.5 0.2 8.0

Other comprehensive income (loss), net of tax 24.7 ( 7.2 ) ( 0.9 ) 16.6

other comprehensive income from continuing operations attributable to non-controlling interest 0.1 — — 0.1

other comprehensive income from discontinued operations attributable to non-controlling interest 0.3 — — 0.3

Other comprehensive income (loss) attributable to controlling interest 24.3 ( 7.2 ) ( 0.9 ) 16.2

Balance at January 3, 2021

$ ( 202.3 ) $ ( 3.6 ) $ ( 62.6 ) $ ( 268.5 )

NOTE 18 - INCOME TAXES

The effective tax rate for the three and nine month periods ended July 4, 2021 and June 28, 2020 was as follows:

Three Month Periods Ended Nine Month Periods Ended

Effective tax rate July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

The effective tax rate for the three month periods ended January 2, 2022 and January 3, 2021 was as follows:

Three Month Periods Ended

Effective tax rate January 2, 2022 January 3, 2021

SBH 34.7 % ( 34.9 ) %

SB/RH 34.5 % ( 32.6 ) %

The estimated annual effective tax rate applied to the three and nine month periods ended July 4, 2021 differs from the US federal statutory rate of 21 % principally due to income earned outside the U.S.

The estimated annual effective tax rate applied to the three month period ended January 2, 2022 differs from the US federal statutory rate of 21 % principally due to income earned outside the U.S.

that is subject to U.S.

2 unchanged sentences

The Company has U.S.

net operating loss carryforwards, which do not allow it to take advantage of the foreign-derived intangible income (“FDII”) deduction.

net operating loss carryforwards, which do not allow it to take advantage of the foreign-derived intangible income deduction.

The Company’s federal effective tax rate on GILTI is therefore 21 %.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

During the three month period ended July 4, 2021, the Company recorded $ 7.6 million of deferred tax expense for the impact on net United Kingdom deferred tax liabilities from an increase in the United Kingdom’s future tax rate.

On November 20, 2020, the U.S.

Treasury and the Internal Revenue Service issued Final Regulations (“Regulations”) under Internal Revenue Code Sections 245A and 951A related to the treatment of previously disqualified basis under the GILTI regime.

The Regulations are effective for Fiscal 2022, but the Company can elect to apply them to Fiscal 2018 through Fiscal 2021.

The Company expects to satisfy the requirements necessary to apply the Regulations retroactively and has therefore estimated and recorded a benefit of $ 5.3 million for the impact on years prior to Fiscal 2021 in the nine month period ended July 4, 2021.

The Company also expects to apply the Regulations to Fiscal 2021 and has included the impact in the estimated annual effective tax rate.

As of July 4, 2021, and September 30, 2020, there was $ 32.4 million and $ 1.8 million of income taxes payable on the SB/RH Condensed Consolidated Statements of Financial Position, payable to its parent company, calculated as if SB/RH were a separate taxpayer.

NOTE 18 – RELATED PARTY TRANSACTIONS

Energizer Holdings, Inc.

Effective as of the close of the GBL and GAC divestitures during the year ended September 30, 2019, the Company and Energizer entered into a series of TSAs and reverse TSAs that support various shared back office administrative functions including finance, sales and marketing, information technology, human resources, real estate and supply chain, customer service and procurement;

to support both the transferred GBL operations and the continuing operations of the Company, respectively, within the various regions in which they operate.

Charges associated with TSAs and reverse TSAs are recognized as bundled service costs under a fixed fee structure by the respective service or function and geographic location and one-time pass-through charges, including warehousing, freight, among others, to and from Energizer that settle on a net basis between the two parties.

Charges to Energizer for TSA services are recognized as a reduction of the respective operating costs incurred by the Company and recognized as a component of operating expense or cost of goods sold depending upon the functions being supported by the Company.

Charges from Energizer for reverse TSA services are recognized as operating expenses or cost of goods sold depending upon the functions being supported by Energizer.

Effective January 2, 2020, Energizer closed its divestiture of the European based Varta® consumer battery business in the EMEA region to Varta AG, which also transferred TSAs and reverse TSAs associated with the divested entities to be assumed by Varta AG.

As a result, a portion of the TSA and reverse TSA charges with Energizer were transferred to Varta AG.

The TSAs and reverse TSAs have an overall expected time period of 12 months following the close of the transactions with some variability in expiration dependent upon the completed transition of the respective service or function and its geographic location and provide up to 12 additional months for a total duration of up to 24 months.

The Company has exited all outstanding TSAs and reverse TSAs with Energizer and Varta in January 2021.

During the nine month period ended July 4, 2021, the Company recognized net loss of $ 1.7 million, consisting of TSA charges of $ 0.9 million and reverse TSA costs of $ 2.6 million.

During the three month period ended June 28, 2020, the Company recognized net loss of $ 1.6 million, consisting of TSA charges of $ 2.1 million and reverse TSA costs of $ 3.7 million.

During the nine month period ended June 28, 2020, the Company recognized net gain of $ 1.6 million, consisting of TSA charges of $ 8.6 million and reverse TSA costs of $ 10.2 million.

In addition to the TSAs and reverse TSAs, the Company, Energizer and Varta AG receive cash and/or make payments on behalf of the respective counterparty’s operations as part of the shared administrative functions, resulting in cash flow being commingled with the operating cash flow of the Company.

The Company recognizes a net payable or receivable with Energizer and Varta AG for any outstanding TSA and reverse TSA related services and net working capital attributable to commingled cash flow.

As of July 4, 2021 and September 30, 2020, the Company had net payable with Energizer of $ 2.1 million included in Other Current Liabilities and net receivable of $ 5.4 million included in Other Receivables on the Company’s Condensed Statements of Financial Position.

As of July 4, 2021 and September 30, 2020, the Company had net payable of $ 0.7 million and $ 1.0 million, respectively, with Varta AG included in Other Current Liabilities on the Company’s Condensed Consolidated Statements of Financial Position.

The Company’s H&G segment continued to manufacture certain GAC related products at its facilities and sell the products to Energizer as a third-party supplier on an ongoing basis, at inventory cost plus contracted markup, as agreed upon in the supply agreement.

The supply agreement had a contracted term of 24 months, and expired in January 2021 with no renewal.

Material and inventory on hand to support the supply agreement is recognized as inventory of the Company.

During the nine month period ended July 4, 2021, the Company recognized $ 5.9 million of revenue attributable to the Energizer supply agreement as a component of H&G revenue after completion of the GAC divestiture.

During the three and nine month periods ended June 28, 2020, the Company recognized $ 2.1 million and $ 13.0 million of revenue attributable to the Energizer supply agreement.

As of July 4, 2021, the Company had no outstanding receivables from Energizer associated with the H&G supply agreement.

As of September 30, 2020, the Company had outstanding receivable of $ 4.4 million from Energizer in Trade Receivables, Net on the Company’s Condensed Statements of Financial Position associated with the H&G supply agreement.

See Note 13 – Fair value of Financial Instruments for additional discussion on the Company’s investment in Energizer common stock.

During the three month period ended January 2, 2022, the Company recorded a $ 3.2 million tax benefit as an adjustment to the estimated benefit recorded in Fiscal 2021 for the Final Regulations issued under Internal Revenue Code Section 951A relating to the treatment of income that is subject to a high rate of tax under the GILTI regime.

The Company completed and filed the amended return implementing these Regulations during the three month period ending January 2, 2022.

The Company also recorded a $ 2.5 million tax benefit during the three month period ended January 2, 2022 for windfalls associated with the vesting of share compensation during the quarter.

The Company generated a pretax loss on continuing operations in the fiscal quarter, so additional discrete tax benefits result in an increase to the quarter’s tax rate.

As of January 2, 2022, and September 30, 2021, there was $ 1.8 million of income tax receivable and $ 8.0 million of income taxes payable, respectively, with its parent company, on the SB/RH Condensed Consolidated Statements of Financial Position, calculated as if SB/RH were a separate taxpayer.

SPECTRUM BRANDS HOLDINGS, INC.

15 unchanged sentences

The court subsequently appointed separate counsel to represent the HRG shareholder class.

In August 2021, the Company reached an agreement in principle, subject to final documentation and approval of the Court, to settle the claims of the Spectrum Legacy class, the cost of which will be defrayed by third-party insurance.

The Company has not reached a settlement with the HRG shareholder class and the Company intends to vigorously defend the HRG litigation.

In October 2021, the Company reached an agreement in principle, subject to final documentation and approval of the Court, to settle the claims of the HRG class, the cost of which has been defrayed by third-party insurance.

Environmental.

The Company has provided for an estimated cost of $ 11.2 million and $ 11.6 million as of July 4, 2021 and September 30, 2020, respectively, associated with environmental remediation activities at some of its current and former manufacturing sites, included in Other Long-Term Liabilities on the Condensed Consolidated Statements of Financial Position.

The Company has provided for an estimated cost of $ 10.7 million and $ 11.3 million as of January 2, 2022 and September 30, 2021, respectively, associated with environmental remediation activities at some of its current and former manufacturing sites, included in Other Long-Term Liabilities on the Condensed Consolidated Statements of Financial Position.

The Company believes that any additional liability in excess of the amounts provided that may result from resolution of these matters, will not have a material adverse effect on the consolidated financial condition, results of operations, or cash flows of the Company.

2 unchanged sentences

The Company has recorded and maintains an estimated liability in the amount of management’s estimate for aggregate exposure for such liabilities based upon probable loss from loss reports, individual cases, and losses incurred but not reported.

As of July 4, 2021 and September 30, 2020, the Company recognized $ 4.1 million and $ 5.1 million in product liability, respectively, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

As of January 2, 2022 and September 30, 2021, the Company recognized $ 3.3 million and $ 3.0 million in product liability, respectively, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

The Company believes that any additional liability in excess of the amounts provided that may result from resolution of these matters will not have a material adverse effect on the consolidated financial condition, results of operations or cash flows of the Company.

2 unchanged sentences

Estimated warranty costs incorporate replacement parts, products and delivery, and are recorded as a cost of goods sold at the time of product shipment based on historical and projected warranty claim rates, claims experience and any additional anticipated future costs on previously sold products.

The Company recognized $ 11.6 million and $ 10.9 million of warranty accruals as of July 4, 2021 and September 30, 2020, respectively, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

During the nine month period ended July 4, 2021, the Company recognized legal reserves at our H&G division of approximately $ 3.2 million attributable to significant and unusual non-recurring claims with no previous history or precedent, included in Other Current Liabilities on the Condensed Consolidated Statement of Financial Position.

The Company recognized $ 0.4 million of warranty accruals as of January 2, 2022 and September 30, 2021, respectively, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 20 - SEGMENT INFORMATION

Net sales relating to the segments for the three and nine month periods ended July 4, 2021 and June 28, 2020 are as follows:

Three Month Periods Ended Nine Month Periods Ended

(in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

HHI $ 419.0 $ 281.6 $ 1,217.2 $ 908.4

Net sales relating to the segments for the three month periods ended January 2, 2022 and January 3, 2021 are as follows:

Three Month Periods Ended

(in millions) January 2, 2022 January 3, 2021

HPC $ 379.7 $ 378.5

2 unchanged sentences

Net sales $ 757.2 $ 736.2

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 20 - SEGMENT INFORMATION (continued)

The Chief Operating Decision Maker of the Company uses Adjusted EBITDA as the primary operating metric in evaluating the business and making operating decisions.

1 unchanged sentence

Adjusted EBITDA further excludes:

• Stock based and other incentive compensation costs that consist of costs associated with long-term compensation arrangements and other equity based compensation based upon achievement of long-term performance metrics;

and generally consist of non-cash, stock-based compensation.

During the nine month period ended July 4, 2021 and three and nine month periods ended June 28, 2020, other incentive compensation includes certain incentive bridge awards issued due to changes in the Company’s LTIP that allow for cash based payment upon employee election but do not qualify for shared-based compensation.

All bridge awards fully vested in November 2020.

• Stock based compensation costs consist of costs associated with long-term incentive compensation arrangements that generally consist of non-cash, stock-based compensation.

During the three month period ended January 3, 2021, compensation costs included incentive bridge awards previously issued due to changes in the Company’s LTIP that allowed for cash based payment upon employee election but do not qualify for shared-based compensation, which were fully vested in November 2020.

See Note 16 - Share Based Compensation for further details;

• Restructuring and related charges, which consist of project costs associated with the restructuring initiatives across the Company's segments.

• Restructuring and related charges consist of project costs associated with the restructuring initiatives across the Company's segments.

See Note 4 - Restructuring and Related Charges for further details;

• Transaction related charges that consist of (1) transaction costs from qualifying acquisition transactions during the period, or subsequent integration related project costs directly associated with an acquired business;

and (2) divestiture related transaction costs that are recognized in continuing operations and post-divestiture separation costs consisting of incremental costs to facilitate separation of shared operations, including development of transferred shared service operations, platforms and personnel transferred, and exiting of transition service arrangements (TSAs) and reverse TSAs.

• Transaction related charges are attributable to costs from qualifying strategic transaction or business opportunities, including an acquisition or divestiture, whether or not consummated, subsequent integration related project costs, divestiture support and incremental separation costs.

See Note 1 – Basis of Presentation & Significant Accounting Policies for further details;

• Gains and losses attributable to the Company’s investment in Energizer common stock.

During the three month period ended April 4, 2021, the Company sold its remaining shares in Energizer common stock.

• Unallocated shared costs associated with discontinued operations from certain shared and center-led administrative functions the Company's business units excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations.

Amounts attributable to unallocated shared costs would be mitigated through subsequent strategic or restructuring initiatives, TSAs, elimination of extraneous costs, or re-allocations or absorption of existing continuing operations following the completed sale of the discontinued operations.

See Note 2 - Divestitures for further details;

• Non-cash purchase accounting inventory adjustments recognized in earnings from continuing operations subsequent to an acquisition;

• Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations;

• Gains attributable to the Company investment in Energizer common stock during the three month period ended January 3, 2021, which the Company subsequently sold its remaining shares in January 2021.

See Note 13 – Fair Value of Financial Instruments for further details;

• Non-cash purchase accounting inventory adjustments recognized in earnings from continuing operations subsequent to an acquisition (when applicable);

• Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations (when applicable);

• Gain on extinguishment of the Salus CLO debt due to the discharge of the obligation during the three and nine month periods ended June 28, 2020.

• Other adjustments primarily consisting of costs attributable to (1) incremental fines and penalties realized for delayed shipments following the transition of third-party logistics service provider in GPC during the three and nine month period ended July 4, 2021;

(2) proposed settlement on outstanding litigation matters at our H&G division attributable to significant and unusual non-recurring claims with no previous history or precedent realized during the nine month period ended July 4, 2021;

(3) legal and litigation costs associated with Salus during the three and nine month periods ended July 4, 2021 and June 28, 2020 as they are not considered a component of the continuing commercial products company;

(4) foreign currency attributable to multicurrency loans for the three and nine month periods ended June 28, 2020, that were entered into with foreign subsidiaries in exchange for receipt of divestiture proceeds by the parent company and the distribution of the respective foreign subsidiaries’ net assets as part of the GBL and GAC divestitures;

(5) expenses and cost recovery for flood damage at Company facilities in Middleton, Wisconsin during the three and nine month periods ended June 28, 2020 and (6) incremental costs for separation of a key executive during the three and nine month periods ended June 28, 2020;

Segment Adjusted EBITDA for the reportable segments for SBH for the three and nine month periods ended July 4, 2021 and June 28, 2020, are as follows:

Three Month Periods Ended Nine Month Periods Ended

SBH (in millions) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

HHI $ 68.0 $ 43.6 $ 239.6 $ 156.0

• Incremental reserves for non-recurring litigation or environmental remediation activity including the proposed settlement on outstanding litigation matters at our H&G division attributable to significant and unusual nonrecurring claims with no previous history or precedent recognized during the three month period ended January 3, 2021 and the subsequent remeasurement during the three month period ended January 2, 2022;

• Incremental costs realized under a three-year tolling agreement entered into with the buyer in consideration with the divestiture of the Coevorden Operations on March 29, 2020, for the continued production of dog and cat food products purchased to support the GPC commercial operations and distribution in Europe;

• Other adjustments are primarily attributable to (1) incremental fines and penalties realized for delayed shipments following the transition of third-party logistics service provider in GPC during the three month period ended January 2, 2022;

and (2) costs associated with Salus as they are not considered a component of the continuing commercial products company;

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 20 - SEGMENT INFORMATION (continued)

Segment Adjusted EBITDA for the reportable segments for SBH for the three month periods ended January 2, 2022 and January 3, 2021, are as follows:

Three Month Periods Ended

SBH (in millions) January 2, 2022 January 3, 2021

HPC $ 27.4 $ 50.9

8 unchanged sentences

Transaction related charges 14.9 19.0

(Gain) loss on Energizer investment — ( 60.1 ) ( 6.9 ) 8.2

Loss on assets held for sale — 1.1 — 26.8

Write-off from impairment of intangible assets — — — 24.2

Unallocated shared costs 6.8 6.7

Inventory acquisition step-up — 0.8

Salus CLO debt extinguishment — ( 76.2 ) — ( 76.2 )

Gain on Energizer investment — ( 6.0 )

Legal and environmental remediation reserves ( 0.5 ) 6.0

Coevorden tolling related charges 1.5 1.6

Other 2.6 0.1

Income from continuing operations before income taxes $ 63.6 $ 191.2 $ 209.2 $ 76.1

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 20 - SEGMENT INFORMATION (continued)

Segment Adjusted EBITDA for reportable segments for SB/RH for the three and nine month periods ended July 4, 2021 and June 28, 2020 are as follows:

Three Month Periods Ended Nine Month Periods Ended

(Loss) income from continuing operations before income taxes $ ( 46.2 ) $ 11.6

Segment Adjusted EBITDA for reportable segments for SB/RH for the three month periods ended January 2, 2022 and January 3, 2021 are as follows:

Three Month Periods Ended

SB/RH (in millions)

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

HHI $ 68.0 $ 43.6 $ 239.6 $ 156.0

January 2, 2022 January 3, 2021

HPC $ 27.4 $ 50.9

8 unchanged sentences

Transaction related charges 14.9 19.0

(Gain) loss on Energizer investment — ( 60.1 ) ( 6.9 ) 8.2

Loss on assets held for sale — 1.1 — 26.8

Write-off from impairment of intangible assets — — — 24.2

Unallocated shared costs 6.8 6.7

Inventory acquisition step-up — 0.8

Other 3.7 4.6 9.7 5.3

Income from continuing operations before income taxes $ 65.1 $ 116.7 $ 211.8 $ 6.6

Gain on Energizer investment — ( 6.0 )

Legal and environmental remediation reserves ( 0.5 ) 6.0

Coevorden tolling related charges 1.5 1.6

(Loss) income from continuing operations before income taxes $ ( 45.9 ) $ 12.1

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 21 - EARNINGS PER SHARE – SBH

The reconciliation of the numerator and denominator of the basic and diluted earnings per share calculation and the anti-dilutive shares for the three and nine month periods ended July 4, 2021 and June 28, 2020 are as follows:

Three Month Periods Ended Nine Month Periods Ended

The reconciliation of the numerator and denominator of the basic and diluted earnings per share calculation and the anti-dilutive shares for the three month periods ended January 2, 2022 and January 3, 2021 are as follows:

Three Month Periods Ended

(in millions, except per share amounts)

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Net income from continuing operations attributable to controlling interest $ 35.9 $ 137.1 $ 146.0 $ 40.2

(Loss) income from discontinued operations attributable to controlling interest ( 5.2 ) 8.0 ( 6.6 ) 12.2

January 2, 2022 January 3, 2021

Net (loss) income from continuing operations attributable to controlling interest $ ( 30.2 ) $ 14.7

Income from discontinued operations attributable to controlling interest 38.4 57.4

Net income attributable to controlling interest $ 8.2 $ 72.1

10 unchanged sentences

Weighted average number of anti-dilutive shares excluded from denominator 0.2 —

NOTE 22 - SUBSEQUENT EVENT

On February 3, 2022, the Company entered into a definitive agreement to acquire the home appliances and cookware categories of Tristar Products, Inc.

(the "Tristar Business") for a purchase price of $ 325 million, in cash, at closing, up to $ 100 million if certain gross profit targets are achieved in calendar year 2022, and another $ 25 million if certain other gross profit targets are achieved in calendar year 2023.

The transaction is expected to close within the next 90 days.

The acquisition of the Tristar Business will be funded by a combination of cash on hand and a $ 500 million incremental loan incurred as a new tranche under the Company's existing credit agreement.

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