What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-06 compared with 2022-02-04 · 433 added, 423 removed, 808 unchanged (51% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Financial Position

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

As of April 3, 2022, and September 30, 2021

(in millions)

January 2, 2022 September 30, 2021

April 3, 2022 September 30, 2021

Cash and cash equivalents $ 193.7 $ 187.9

38 unchanged sentences

Condensed Consolidated Statements of Income

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

Three Month Periods Ended

For the three and six month periods ended April 3, 2022 and April 4, 2021

Three Month Periods Ended Six Month Periods Ended

(in millions, except per share)

January 2, 2022 January 3, 2021

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Net Sales $ 807.8 $ 760.3 $ 1,565.0 $ 1,496.5

10 unchanged sentences

Interest expense 24.7 52.8 46.4 76.0

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

Other non-operating income, net ( 0.9 ) ( 2.2 ) ( 0.3 ) ( 11.1 )

(Loss) income from continuing operations before income taxes ( 31.9 ) ( 5.3 ) ( 78.1 ) 6.3

3 unchanged sentences

Net income 16.0 35.7 24.6 108.6

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

Net (loss) income from continuing operations attributable to non-controlling interest — ( 0.9 ) — 0.1

Net income (loss) from discontinued operations attributable to non-controlling interest 0.1 — 0.5 ( 0.2 )

18 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

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

For the three and six month periods ended April 3, 2022 and April 4, 2021

Three Month Periods Ended

Six Month Periods Ended

(in millions)

January 2, 2022 January 3, 2021

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Net income $ 16.0 $ 35.7 $ 24.6 $ 108.6

Other comprehensive income

Foreign currency translation gain 6.8 19.4

Other comprehensive (loss) income

Foreign currency translation (loss) gain ( 1.6 ) 22.2 5.1 41.6

Deferred tax effect ( 3.1 ) ( 5.0 ) ( 7.6 ) 0.3

Net unrealized gain on foreign currency translation 2.3 24.7

Net unrealized (loss) gain on foreign currency translation ( 4.7 ) 17.2 ( 2.5 ) 41.9

Unrealized gain (loss) on derivative instruments

1 unchanged sentence

Net reclassification for (gain) loss to income from continuing operations ( 1.5 ) 3.1 ( 3.6 ) 5.8

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 )

Net reclassification for gain to income from discontinued operations ( 0.7 ) ( 0.1 ) ( 1.2 ) ( 0.1 )

Unrealized gain (loss) on hedging instruments after reclassification 4.2 8.8 2.8 ( 0.9 )

Deferred tax effect ( 1.0 ) ( 2.4 ) 3.5 0.1

Net unrealized gain (loss) on hedging derivative instruments 3.2 6.4 6.3 ( 0.8 )

Defined benefit pension loss

Defined benefit pension gain

Defined benefit pension gain (loss) before reclassification 1.0 0.9 1.7 ( 1.3 )

Net reclassification for loss to income from continuing operations 1.0 1.1 2.0 2.2

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

Defined benefit pension gain after reclassification 2.0 2.0 3.7 0.9

Deferred tax effect ( 0.6 ) ( 0.6 ) ( 3.5 ) ( 0.4 )

Net defined benefit pension loss ( 1.3 ) ( 0.9 )

Net defined benefit pension gain 1.4 1.4 0.2 0.5

Net change to derive comprehensive income for the period ( 0.1 ) 25.0 4.0 41.6

Comprehensive income 15.9 60.7 28.6 150.2

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

Comprehensive loss from continuing operations attributable to non-controlling interest ( 0.1 ) ( 0.1 ) ( 0.1 ) —

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

2 unchanged sentences

SPECTRUM BRANDS HOLDINGS, INC

Condensed Consolidated Statements of Shareholder’s Equity

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

Three Month Period Ended January 2, 2022 Common Stock Additional

Condensed Consolidated Statements of Shareholders' Equity

For the six month period ended April 3, 2022

Six Month Period Ended April 3, 2022 Common Stock Additional

Capital Accumulated

13 unchanged sentences

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

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

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

Net loss from continuing operations — — — ( 25.1 ) — — ( 25.1 ) — ( 25.1 )

Income from discontinued operations, net of tax — — — 41.0 — — 41.0 0.1 41.1

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

Treasury stock repurchases ( 0.2 ) — — — — ( 24.0 ) ( 24.0 ) — ( 24.0 )

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

Share based compensation — — 7.8 — — — 7.8 — 7.8

Dividends declared — — — ( 17.6 ) — — ( 17.6 ) — ( 17.6 )

Distribution of equity by subsidiary to NCI — — — — — — — ( 1.3 ) ( 1.3 )

Balances at April 3, 2022 40.8 $ 0.5 $ 2,033.2 $ 348.7 $ ( 231.3 ) $ ( 828.8 ) $ 1,322.3 $ 6.3 $ 1,328.6

See accompanying notes to the condensed consolidated financial statements

SPECTRUM BRANDS HOLDINGS, INC

Condensed Consolidated Statements of Shareholders' Equity

For the six month period ended April 4, 2021

Six Month Period Ended April 4, 2021 Common Stock Additional

Capital Accumulated

14 unchanged sentences

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

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 loss from continuing operations — — — ( 3.7 ) — — ( 3.7 ) ( 0.9 ) ( 4.6 )

Income from discontinued operations, net of tax — — — 40.3 — — 40.3 — 40.3

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 )

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

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

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

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

For the six month periods ended April 3, 2022 and April 4, 2021

Six Month Periods Ended

(in millions) April 3, 2022 April 4, 2021

Cash flows from operating activities

7 unchanged sentences

Amortization of debt issuance costs and debt discount 3.1 2.9

Inventory acquisition step-up — 0.8

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

Non-cash purchase accounting adjustments 3.5 3.4

Deferred tax benefit ( 43.7 ) ( 27.1 )

1 unchanged sentence

Net cash used by operating activities from continuing operations ( 212.2 ) ( 107.1 )

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

Net cash provided by operating activities from discontinued operations 5.3 27.3

Net cash used by operating activities ( 206.9 ) ( 79.8 )

4 unchanged sentences

Proceeds from sale of equity investment — 73.1

Other investing activity ( 0.1 ) ( 0.3 )

Net cash used by investing activities from continuing operations ( 338.6 ) ( 73.6 )

4 unchanged sentences

Proceeds from issuance of debt 775.0 899.0

Payment of debt issuance costs ( 6.7 ) ( 12.6 )

Treasury stock purchases ( 134.0 ) ( 42.3 )

21 unchanged sentences

Condensed Consolidated Statements of Financial Position

As of January 2, 2022 and September 30, 2021

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

As of April 3, 2022 and September 30, 2021

(in millions) April 3, 2022 September 30, 2021

Cash and cash equivalents $ 192.1 $ 186.2

11 unchanged sentences

Total assets $ 6,139.9 $ 5,417.7

Liabilities and Shareholder's Equity

Liabilities and Shareholders' Equity

Current portion of long-term debt $ 12.1 $ 12.0

11 unchanged sentences

Commitments and contingencies (Note 17)

Shareholder's equity

Shareholders' equity

Other capital 2,166.1 2,174.8

1 unchanged sentence

Accumulated other comprehensive loss, net of tax ( 231.2 ) ( 235.2 )

Total shareholder's equity 1,201.7 1,324.7

Total shareholders' equity 1,184.3 1,324.7

Non-controlling interest 7.9 8.7

4 unchanged sentences

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

For the three and six month periods ended April 3, 2022 and April 4, 2021

Three Month Periods Ended Six Month Periods Ended

(in millions) April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Net Sales $ 807.8 $ 760.3 $ 1,565.0 $ 1,496.5

10 unchanged sentences

Interest expense 24.8 52.9 46.7 76.1

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

Other non-operating income, net ( 0.9 ) ( 2.2 ) ( 0.4 ) ( 11.1 )

(Loss) income from continuing operations before income taxes ( 31.2 ) ( 4.7 ) ( 77.1 ) 7.6

3 unchanged sentences

Net income 16.5 36.2 25.2 109.6

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

Net (loss) income from continuing operations attributable to non-controlling interest — ( 0.9 ) — 0.1

Net income (loss) from discontinued operations attributable to non-controlling interest 0.1 — 0.5 ( 0.2 )

7 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

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

For the three and six month periods ended April 3, 2022 and April 4, 2021

Three Month Periods Ended

Six Month Periods Ended

(in millions)

January 2, 2022 January 3, 2021

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Net income $ 16.5 $ 36.2 $ 25.2 $ 109.6

Other comprehensive income

Foreign currency translation gain 6.8 19.4

Other comprehensive (loss) income

Foreign currency translation (loss) gain ( 1.6 ) 22.2 5.1 41.6

Deferred tax effect ( 3.1 ) ( 5.0 ) ( 7.6 ) 0.3

Net unrealized gain on foreign currency translation 2.3 24.7

Net unrealized (loss) gain on foreign currency translation ( 4.7 ) 17.2 ( 2.5 ) 41.9

Unrealized gain (loss) on derivative instruments

1 unchanged sentence

Net reclassification for (gain) loss to income from continuing operations ( 1.5 ) 3.1 ( 3.6 ) 5.8

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 )

Net reclassification for gain to income from discontinued operations ( 0.7 ) ( 0.1 ) ( 1.2 ) ( 0.1 )

Unrealized gain (loss) on hedging instruments after reclassification 4.2 8.8 2.8 ( 0.9 )

Deferred tax effect ( 1.0 ) ( 2.4 ) 3.5 0.1

Net unrealized gain (loss) on hedging derivative instruments 3.2 6.4 6.3 ( 0.8 )

Defined benefit pension loss

Defined benefit pension gain

Defined benefit pension gain (loss) before reclassification 1.0 0.9 1.7 ( 1.3 )

Net reclassification for loss to income from continuing operations 1.0 1.1 2.0 2.2

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

Defined benefit pension gain after reclassification 2.0 2.0 3.7 0.9

Deferred tax effect ( 0.6 ) ( 0.6 ) ( 3.5 ) ( 0.4 )

Net defined benefit pension loss ( 1.3 ) ( 0.9 )

Net defined benefit pension gain 1.4 1.4 0.2 0.5

Net change to derive comprehensive income for the period ( 0.1 ) 25.0 4.0 41.6

Comprehensive income 16.4 61.2 29.2 151.2

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

Comprehensive loss from continuing operations attributable to non-controlling interest ( 0.1 ) ( 0.1 ) ( 0.1 ) —

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

2 unchanged sentences

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Shareholder’s Equity

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

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

Condensed Consolidated Statements of Shareholders' Equity

For the six month period ended April 3, 2022

Six Month Period Ended April 3, 2022 (in millions) Other

Capital Accumulated

1 unchanged sentence

Comprehensive

Shareholder's

Shareholders'

Interest Total Equity

6 unchanged sentences

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

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

Balances as of January 2, 2022 2,158.7 ( 725.8 ) ( 231.2 ) 1,201.7 9.2 1,210.9

Net loss from continuing operations — ( 24.6 ) — ( 24.6 ) — ( 24.6 )

Income from discontinued operations, net of tax — 41.0 — 41.0 0.1 41.1

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

Share based compensation 7.4 — — 7.4 — 7.4

Dividends paid to parent — ( 41.2 ) — ( 41.2 ) — ( 41.2 )

Distribution of equity by subsidiary to NCI — — — — ( 1.3 ) ( 1.3 )

Balances at April 3, 2022 $ 2,166.1 $ ( 750.6 ) $ ( 231.2 ) $ 1,184.3 $ 7.9 $ 1,192.2

See accompanying notes to the condensed consolidated financial statements

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Shareholders' Equity

For the six month period ended April 4, 2021

Six Month Period Ended April 4, 2021 (in millions) Other

Capital Accumulated

1 unchanged sentence

Comprehensive

Shareholder's

Shareholders'

Interest Total Equity

7 unchanged sentences

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

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

Net loss from continuing operations — ( 3.3 ) — ( 3.3 ) ( 0.9 ) ( 4.2 )

Income from discontinued operations, net of tax — 40.4 — 40.4 — 40.4

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 )

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

Balances at April 4, 2021 $ 2,162.5 $ ( 580.8 ) $ ( 243.3 ) $ 1,338.4 $ 8.8 $ 1,347.2

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

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

For the six month periods ended April 3, 2022 and April 4, 2021

Six Month Periods Ended

(in millions) April 3, 2022 April 4, 2021

Cash flows from operating activities

7 unchanged sentences

Amortization of debt issuance costs and debt discount 3.1 2.9

Inventory acquisition step-up — 0.8

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

Non-cash purchase accounting adjustments 3.5 3.4

Deferred tax benefit ( 43.3 ) ( 26.8 )

1 unchanged sentence

Net cash used by operating activities from continuing operations ( 244.6 ) ( 113.6 )

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

Net cash provided by operating activities from discontinued operations 5.3 27.4

Net cash used by operating activities ( 239.3 ) ( 86.2 )

4 unchanged sentences

Proceeds from sale of equity investment — 73.1

Other investing activities ( 0.1 ) ( 0.3 )

Net cash used by investing activities from continuing operations ( 338.6 ) ( 73.6 )

4 unchanged sentences

Proceeds from issuance of debt 775.0 899.0

Payment of debt issuance costs ( 6.7 ) ( 12.6 )

Payment of cash dividends to parent ( 160.4 ) ( 76.2 )

29 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 month periods included within this Quarterly Report for the Company are January 2, 2022 and January 3, 2021.

As a result, the fiscal period end date for the three and six month periods included within this Quarterly Report for the Company are April 3, 2022 and April 4, 2021.

Newly Adopted Accounting Standards

16 unchanged sentences

Transaction related charges

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;

Transaction related charges consist of 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;

Qualifying cost types not specified above 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 month periods ended January 2, 2022 and January 3, 2021:

Three Month Periods Ended

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

The following table summarizes transaction related charges incurred by the Company during the three and six month periods ended April 3, 2022 and April 4, 2021:

Three Month Periods Ended Six Month Periods Ended

(in millions) April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Tristar acquisition and integration $ 12.7 $ — $ 14.4 $ —

HHI divestiture and separation 1.2 — 5.5 —

8 unchanged sentences

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 month periods ended January 2, 2022 and January 3, 2021:

Three Month Periods Ended

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

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 six month periods ended April 3, 2022 and April 4, 2021:

Three Month Periods Ended Six Month Periods Ended

(in millions) April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Income from discontinued operations before income taxes – HHI $ 71.0 $ 69.6 $ 130.9 $ 163.7

6 unchanged sentences

Income from discontinued operations, net of tax attributable to controlling interest $ 41.0 $ 40.3 $ 79.4 $ 97.7

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.

Interest from corporate debt allocated to discontinued operations includes interest expense from 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 of the Company 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.

6 unchanged sentences

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 acquisition is subject to certain customary closing 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.

The Company is engaged with antitrust regulators in the ongoing regulatory review of the transaction.

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.

As such, though there can be no assurance when the transaction will close, if at all, the Company does expect the transaction to close before September 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”).

5 unchanged sentences

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:

The following table summarizes the assets and liabilities of the HHI disposal group classified as held for sale as of April 3, 2022 and September 30, 2021:

(in millions)

January 2, 2022 September 30, 2021

April 3, 2022 September 30, 2021

Trade receivables, net $ 152.0 $ 130.2

17 unchanged sentences

Total liabilities of business held for sale $ 475.7 $ 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:

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 and six month periods ended April 3, 2022 and April 4, 2021:

Three Month Periods Ended Six Month Periods Ended

(in millions)

January 2, 2022 January 3, 2021

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Net sales $ 420.8 $ 389.5 $ 795.4 $ 798.2

9 unchanged sentences

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:

The following table presents significant non-cash items and capital expenditures of discontinued operations from the HHI divestiture for the three and six month periods ended April 3, 2022 and April 4, 2021:

Three Month Periods Ended Six Month Periods Ended

(in millions)

January 2, 2022 January 3, 2021

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Depreciation and amortization $ — $ 8.5 $ — $ 17.1

Share and incentive based compensation $ 2.8 $ 1.1

Share based compensation $ 1.2 $ 1.2 $ 4.1 $ 2.4

Purchases of property, plant and equipment $ 7.5 $ 7.3 $ 12.4 $ 11.5

8 unchanged sentences

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.

As of April 3, 2022 and September 30, 2021, the Company recognized $ 26.5 million and $ 36.5 million, respectively, related to indemnification payables in accordance with the acquisition agreements, including $ 9.8 million and $ 17.3 million, respectively, within Other Current Liabilities, primarily attributable to current income tax indemnifications, and $ 16.7 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.

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 marketing, 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.

2 unchanged sentences

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.

During the three month period ended April 4, 2021, the Company recognized net gain of $ 0.1 million, consisting of TSA charges of $ 0.1 million.

During the six month period ended April 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.

The Company 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 $ 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 month periods ended January 2, 2022.

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.

Tristar Business Acquisition

On February 18, 2022, the Company acquired all of the membership interests in HPC Brands, LLC, which consist of the home appliances and cookware business of Tristar Products, Inc.

(the "Tristar Business") for a purchase price of $ 325.0 million, net of customary purchase price adjustments and transaction costs, plus a potential earn-out payment of up to $ 100.0 million if certain gross profit targets are achieved in calendar year 2022, and another earn-out payment of $ 25.0 million if certain other gross profit targets are achieved in calendar year 2023.

The acquisition of the Tristar Business was funded by a combination of cash on hand and incremental borrowings incurred as a new tranche under the Company's existing credit agreement.

See Note 10 - Debt for further detail on the amendment to the credit agreement.

The Tristar Business includes a portfolio of home appliances and cookware products sold under the PowerXL®, Emeril Legasse®, and Copper Chef® brands.

The PowerXL® and Copper Chef® brands were acquired outright by the Company while the Emeril Legasse® brand remains subject to a trademark license agreement with the license holder (the "Emeril License").

Pursuant to the Emeril License, the Company will continue to license the Emeril Lagasse® brands in the US, Canada, Mexico, and the United Kingdom for certain designated product categories of household appliances within the HPC segment, including small kitchen food preparation products, indoor and outdoor grills and grill accessories, and cookbooks.

The Emeril License is set to expire effective December 31, 2022 with options of up to three one-year renewal periods following the initial expiration.

Under the terms of the agreement, we agreed to pay the license holder a percentage of sales, with minimum annual royalty payments of $ 1.5 million, increasing to $ 1.8 million in subsequent renewal periods.

The net assets and operating results of the Tristar Business, since the acquisition date of February 18, 2022, are included in the Company’s Condensed Consolidated Statements of Income and reported within the HPC reporting segment for the three and six month periods ended April 3, 2022.

The excess of the purchase price over the fair value of the net tangible assets and identifiable intangible assets of $ 103.7 million was recorded as goodwill, which is deductible for tax purposes.

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

Goodwill includes value associated with profits earned from market and expansion capabilities including the success of new product launches through direct response television and direct to consumer channels, new brand development and products brought to market by the Company, synergies from integration and streamlining operational activities, and 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 account that are not finalized relate to amounts for purchase price, intangible assets, deferred taxes, goodwill, and components of working capital.

The calculation of preliminary purchase price is as follows:

(in millions) Amount

Cash consideration $ 301.5

(in millions) Purchase Price Allocation

Cash and cash equivalents $ 1.4

Trade receivables, net 10.2

Inventories 15.4

Prepaid expenses and other current assets 0.3

Property, plant and equipment, net 0.4

Goodwill 147.0

Intangible assets, net 128.7

Accounts payable ( 1.7 )

Accrued wages and salaries ( 0.1 )

Other current liabilities ( 0.1 )

Net assets acquired $ 301.5

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

(in millions) Carrying Amount Weighted Average Useful Life (Years)

Tradenames $ 119.0 Indefinite

Customer relationships 8.4 14 years

Technology 1.3 11 years

Total intangibles acquired $ 128.7

Cash paid $ 314.6

Estimated purchase price settlement ( 39.1 )

Contingent consideration 30.0

Total purchase price $ 305.5

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 3 - ACQUISITIONS (continued)

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

The fair value measurements are based on significant inputs not observable in the market, and therefore, represent Level 3 measurements.

The following is a summary of significant inputs to the valuation:

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.

Tradename – The Company valued the tradename, Rejuvenate®, 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 tradename was not owned.

A royalty rate of 12 % for valuation of Rejuvenate® was 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 tradename.

The discount rate applied to the projected cash flow was 10.5 % based on the a weighted-average cost of capital for the overall business.

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

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.

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

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.

Technology – The Company valued technology 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 technology was not owned.

A royalty rate of 3 % was selected based on consideration of several factors, including prior transactions, related licensing agreements and the importance of the technology and profit levels, among other considerations.

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

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

Armitage Acquisition

On October 26, 2020, the Company acquired all of the stock of Armitage Pet Care Ltd ("Armitage") for approximately $ 187.7 million.

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 month periods ended January 2, 2022.

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 foreign tax purposes.

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

(in millions) Amount

Cash paid $ 187.7

Debt assumed 51.0

Cash consideration $ 136.7

The Company recorded a contingent consideration liability of $ 30.0 million as of the date of the acquisition to reflect the estimated fair value of the contingent consideration for the earn-out payments.

The fair value was determined using a Monte Carlo simulation model to value the earn-out based on the likelihood of reaching specific targets.

The fair value measurement is determined based on significant unobservable inputs and thus represents a Level 3 fair value measurement.

The key assumptions considered include the estimated amount and timing of projected gross profits, volatility, estimated discount rates, and risk-free interest rate.

In each reporting period after the acquisition, the Company will reassess the value of the contingent consideration liability and may recognize an increase or decrease in the fair value in its consolidated statements of earnings after the measurement period.

Changes may result from changes in actual results and projected forecasts.

The inputs and assumptions may not be observable in the market, but reflect the assumptions the Company believes would be made by a market participant.

There were no changes in the contingent consideration liability during the three and six month periods ended April 3, 2022 following the acquisition date of February 18, 2022.

As of April 3, 2022, the current portion of the contingent consideration was classified as Other Current Liabilities for the calendar year 2022 payment of $ 25.0 million and the long-term portion as Other Long-Term Liabilities for the calendar year 2023 payment of $ 5.0 million on the Company’s Condensed Consolidated Statements of Financial Position.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the date of acquisition:

(in millions) Purchase Price Allocation

6 unchanged sentences

Operating lease assets 23.3

Deferred charges and other 0.9

Goodwill 103.7

3 unchanged sentences

Other current liabilities ( 19.0 )

Long-term debt, net of current portion ( 51.0 )

Long-term operating lease liabilities ( 11.1 )

Deferred income taxes ( 18.0 )

Other long-term liabilities ( 1.8 )

Net assets acquired $ 305.5

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

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.

Tradename – The Company valued the PowerXL® tradename, 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 a weighted-average cost of capital for the overall business.

Royalty rate of 3 % for valuation of PowerXL® was 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 16 % based on the implied transaction internal rate of return for the overall business, excluding cost synergies.

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

Customer relationships - The Company valued customer relationships using an income and cost approach, the avoided cost and lost profits method.

The underlying premise of the method is that the economic value of the asset can be estimated based on consideration of the total costs that would be avoided by having this asset in place.

These costs primarily consider the costs that would be incurred to re-create the customer relationships in terms of employee salaries and the revenues and associated profits forgone due to the absence of the relationships for a period of time.

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

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

Only expected sales from current retail customers were used, which are estimated using average annual expected growth rate of 2.7 %.

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 12 % based upon a weighted average cost of capital for the overall business and income taxes were estimated at the applicable statutory rate.

The following pro forma financial information summarizes the combined results of operations for the Company and the acquired Tristar Business, as though the companies were combined as of the beginning of the Company’s fiscal 2021.

The unaudited pro forma financial information was as follows:

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 3 - ACQUISITIONS (continued)

Three Month Period Ended Six Month Period Ended

(in millions) April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Proforma net sales $ 853.7 $ 902.8 $ 1,765.1 $ 1,848.0

Proforma net (loss) income from continuing operations ( 26.0 ) 6.1 ( 33.3 ) 21.2

Proforma net income 15.1 45.5 46.1 118.8

Proforma diluted earnings from continuing operations per share $ ( 0.64 ) $ 0.14 $ ( 0.77 ) $ 0.49

Proforma diluted earnings per share 0.37 1.07 1.07 2.77

The pro forma financial information includes, where applicable, adjustments for:

(i) additional amortization expense that would have been recognized related to the acquired intangible assets, (ii) additional operating expense from the excess fair value adjustments on ROU operating lease assets for below market rents (iv) additional cost of sales related to the inventory valuation adjustment, (v) transaction costs and other one-time non-recurring costs and (vi) the estimated income tax effect on the acquired Tristar Business and pro forma adjustments.

Through the acquisition of the Tristar Business, the Company acquired substantially all of the operations, employees and net assets of Tristar Products, Inc.

and entered into a series of TSAs for 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 the excluded product groups that did not convey with the transaction.

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

Charges for TSA services are recognized as a reduction to the respective operating costs as a component of operating expense or cost of goods sold depending upon the functions supported by the acquired Tristar Business.

During the three and six month periods ended April 3, 2022, the Company recognized TSA income of $ 0.5 million.

Additionally, the Company assumed the cash accounts supporting both the acquired Tristar Business and the excluded product groups, and due to the commingled nature of operations, cash would be received and/or paid on behalf of the excluded product groups' operations, resulting in cash flow being commingled with operating cash flow of the Company which would settle on a net basis with TSA charges.

As of April 3, 2022, there was an outstanding payable to Tristar Products, Inc.

of $ 0.7 million included within Other Current Liabilities on the Company’s Condensed Consolidated Statements of Financial Position.

NOTE 4 – RESTRUCTURING AND RELATED CHARGES

6 unchanged sentences

among others.

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.

Total cumulative costs incurred associated with the project were $ 156.3 million as of April 3, 2022, with approximately $ 0.9 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.

GPC Distribution Center Transitions – During the year ended September 30, 2021, the GPC segment entered into an initiative to update its supply chain and distribution operations within the US to optimize and improve fill rates, address capacity needs attributable to recent and projected growth in the business, improve product availability to meet increasing customer demand and improve overall operational effectiveness and throughput.

The initiative includes the transition of its third party logistics (3PL) service provider at its existing Edwardsville, IL distribution center, incorporating new facilities into the distribution footprint by expanding warehouse capacity and securing additional space, and updating engagement and processes with suppliers and its transportation and logistics handlers.

Costs incurred to facilitate the transition of service providers include one-time implementation and start-up costs, 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, and incremental costs for various disruptions in the operations during the transition period, including supplemental transportation and storage costs.

Due to the continued supply chain constraints impacting product availability experienced by the GPC segment, the Company has extended the initiative and expanded the project to include additional long-term capacity to be available later in the 2022 fiscal year.

Total cumulative costs incurred associated with the project were $ 27.4 million as of April 3, 2022, with approximately $ 5.3 million forecasted in the foreseeable future.

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

Other Restructuring Activities – The Company may enter into small, less significant initiatives and restructuring related activities primarily 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).

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

The following summarizes restructuring and related charges for the three and six month periods ended April 3, 2022 and April 4, 2021:

Three Month Periods Ended Six Month Periods Ended

(in millions)

January 2, 2022 January 3, 2021

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Global productivity improvement program $ 2.3 $ 1.9 $ 4.1 $ 10.9

GPC Edwardsville 3PL transition 10.3 —

SAP S/4 HANA ERP transformation 2.9 —

GPC distribution transition 5.6 — 15.9 —

Other restructuring activities 8.5 2.4 13.8 2.4

2 unchanged sentences

Operating expense 15.2 3.0 32.3 11.9

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.

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 is a summary of restructuring and related charges for the three and six month periods ended April 3, 2022 and April 4, 2021, by cost type.

(in millions) Termination

Benefits Other

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 three month period ended January 2, 2022.

For the three month period ended April 3, 2022 $ 1.2 $ 15.2 $ 16.4

For the three month period ended April 4, 2021 0.4 3.9 4.3

For the six month period ended April 3, 2022 1.9 31.9 33.8

For the six month period ended April 4, 2021 3.3 10.0 13.3

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 six month period ended April 3, 2022.

(in millions) Termination

3 unchanged sentences

Cash expenditures ( 1.9 ) ( 0.7 ) ( 2.6 )

Non-cash items ( 1.3 ) 0.6 ( 0.7 )

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:

Foreign currency and other ( 0.8 ) ( 0.1 ) ( 0.9 )

Accrual balance at April 3, 2022 $ 2.0 $ 7.7 $ 9.7

The following summarizes restructuring and related charges by segment for the three and six month periods ended April 3, 2022 and April 4, 2021, 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

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

For the three month period ended April 3, 2022 $ 3.7 $ 8.2 $ — $ 4.5 $ 16.4

For the three month period ended April 4, 2021 1.5 0.6 — 2.2 4.3

For the six month period ended April 3, 2022 4.3 19.6 — 9.9 33.8

For the six month period ended April 4, 2021 4.1 2.1 — 7.1 13.3

NOTE 5 – REVENUE RECOGNITION

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

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

The following table disaggregates our revenue for the three and six month periods ended April 3, 2022 and April 4, 2021, by the Company’s key revenue streams, segments and geographic region (based upon destination):

Three Month Period Ended April 3, 2022 Three Month Period Ended April 4, 2021

(in millions)

8 unchanged sentences

$ 316.1 $ 295.1 $ 196.6 $ 807.8 $ 297.9 $ 293.6 $ 168.8 $ 760.3

Six Month Period Ended April 3, 2022 Six Month Period Ended April 4, 2021

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

Product Sales

NA $ 264.2 $ 369.7 $ 266.9 $ 900.8 $ 257.9 $ 360.5 $ 247.0 $ 865.4

EMEA 268.5 189.7 — 458.2 290.9 175.5 — 466.4

LATAM 120.1 9.2 4.1 133.4 83.0 8.4 3.2 94.6

APAC 37.9 20.2 — 58.1 38.2 17.9 — 56.1

Licensing 4.7 5.1 0.9 10.7 6.4 3.9 0.8 11.1

Other 0.4 3.4 — 3.8 — 2.9 — 2.9

Total Revenue $ 695.8 $ 597.3 $ 271.9 $ 1,565.0 $ 676.4 $ 569.1 $ 251.0 $ 1,496.5

The Company offers standard warranty coverage on certain products that it sells and accounts for this as an assurance warranty.

As such, no transaction price is allocated to the standard warranty, and the Company records a liability for product warranty obligations at the time of sale to a customer based upon historical warranty experience.

See Note 17 - Commitments and Contingencies for further information regarding the Company’s standard warranties.

With the acquisition of the Tristar Business, the Company also sells extended warranty coverage for certain Tristar products that are sold directly to consumers, which it accounts for as service warranties.

In most cases, the extended warranty is sold as a separate contract and separate performance obligation that is distinct from the product.

The extended warranty transaction revenue is initially recognized as deferred revenue and amortized on a straight-line basis to Net Sales over the life of the contracts following the standard warranty period.

Revenue attributable to extended warranties was first recognized with the acquisition of the Tristar

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 5 – REVENUE RECOGNITION (continued)

Business on February 18, 2022.

See Note 3 - Acquisitions for more details.

As of April 3, 2022, the Company had $ 1.3 million service warranty revenue deferred and included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

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

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.

During the three month periods ended April 3, 2022 and April 4, 2021, there were two large retail customers each exceeding 10% of consolidated Net Sales and representing 33.3 % and 32.2 % of consolidated Net Sales, respectively.

During the six month periods ended April 3, 2022 and April 4, 2021, there were two large retail customers each exceeding 10% of consolidated Net Sales and representing 33.1 % and 33.0 % 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.

Net sales from B&D product sales consist of $ 98.0 million and $ 93.7 million for the three month periods ended April 3, 2022 and April 4, 2021, respectively.

Net sales from B&D product sales consist of $ 229.8 million and $ 205.3 million for the six month periods ended April 3, 2022 and April 4, 2021, respectively.

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

1 unchanged sentence

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 January 2, 2022, and September 30, 2021 was $ 13.3 million and $ 11.8 million, respectively.

The allowance for product returns as of April 3, 2022, and September 30, 2021 was $ 21.1 million and $ 11.8 million, respectively.

The increase in allowance for product returns balance is due to the acquisition of the Tristar Business.

See Note 3 - Acquisitions for further discussion on the Tristar Business acquisition.

NOTE 6 – RECEIVABLES AND CONCENTRATION OF CREDIT RISK

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

The allowance for uncollectible receivables as of April 3, 2022 and September 30, 2021 was $ 10.3 million and $ 6.7 million, respectively.

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

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.

As of April 3, 2022 and September 30, 2021 there was one large retail customers exceeding 10% of consolidated Net Trade Receivables and representing 14.4 % and 14.7 %, respectively, of consolidated Net Trade Receivables.

NOTE 7 – INVENTORIES

1 unchanged sentence

(in millions)

January 2, 2022 September 30, 2021

April 3, 2022 September 30, 2021

Raw materials

5 unchanged sentences

Property, plant and equipment consist of the following:

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

(in millions) April 3, 2022 September 30, 2021

Land, buildings and improvements $ 77.3 $ 83.5

5 unchanged sentences

Property, plant and equipment, net $ 256.4 $ 260.2

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)

Depreciation expense from property, plant, and equipment for the three month periods ended April 3, 2022 and April 4, 2021 was $ 12.2 million and $ 13.4 million, respectively;

and for the six month periods ended April 3, 2022 and April 4, 2021 was $ 24.4 million and $ 26.4 million, respectively.

NOTE 9 – GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

As of September 30, 2021 $ — $ 524.6 $ 342.6 $ 867.2

Tristar Business acquisition (Note 3) 103.7 — — 103.7

Foreign currency impact — ( 3.9 ) — ( 3.9 )

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

As of April 3, 2022 $ 103.7 $ 520.7 $ 342.6 $ 967.0

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 9 - GOODWILL AND INTANGIBLE ASSETS (continued)

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

January 2, 2022 September 30, 2021

April 3, 2022 September 30, 2021

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

6 unchanged sentences

Total Intangible Assets $ 1,808.1 $ ( 544.4 ) $ 1,263.7 $ 1,724.1 $ ( 520.0 ) $ 1,204.1

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.

There were no triggering events and no impairments of goodwill and intangible assets identified during the three and six month periods ended April 3, 2022.

Amortization expense from the intangible assets for the three month periods ended April 3, 2022 and April 4, 2021 was $ 13.5 million and $ 16.8 million, respectively;

and for the six month periods ended April 3, 2022 and April 4, 2021 was $ 26.7 million and $ 30.9 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.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 10 – DEBT

Debt consists of the following:

January 2, 2022 September 30, 2021

April 3, 2022 September 30, 2021

(in millions) Amount Rate Amount Rate

19 unchanged sentences

Long-term debt, net of current portion $ 3,236.3 $ 2,494.3

The Revolver Facility is subject to either adjusted LIBOR plus margin ranging from 1.75 % to 2.75 % per annum, or base rate plus margin ranging from 0.75 % to 1.75 % per annum.

The LIBOR borrowings are subject to a 0.75 % LIBOR floor.

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 $ 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.

Borrowings from the initial revolver capacity of $ 600 million under the Revolver Facility are subject to either adjusted London Inter-Bank Offered Rate ("LIBOR") plus margin ranging from 1.75 % to 2.75 % per annum, or base rate plus margin ranging from 0.75 % to 1.75 % per annum;

and borrowings under the incremental revolver capacity of $ 500 million, per the third amendment to the Credit Agreement discussed below, are subject to Secured Overnight Financing Rate ("SOFR") plus margin ranging from 1.75 % to 2.75 % per annum or base rate plus margin ranging from 0.75 % to 1.75 %.

The LIBOR borrowings are subject to a 0.75 % LIBOR floor and the SOFR borrowings are subject to a 0.50 % SOFR floor.

Our Revolver Facility allows for the LIBOR rate to be phased out and replaced with the SOFR 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 $ 308.4 million at April 3, 2022, net of outstanding letters of credit of $ 16.6 million.

The Term Loan Facility is subject to a rate per annum equal to either (1) the LIBO Rate (as defined in the 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 Credit Agreement), plus a margin of 1.00 % per annum.

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.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 11 – LEASES

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 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 January 2, 2022 and September 30, 2021.

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 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

Finance Property, plant and equipment, net 81.9 84.2

Total leased assets $ 138.2 $ 140.7

Operating Other current liabilities $ 19.1 $ 17.4

Finance Current portion of long-term debt 8.1 7.9

Operating Long-term operating lease liabilities 42.6 44.5

Finance Long-term debt, net of current portion 91.9 94.0

Total lease liabilities $ 161.7 $ 163.8

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.

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

Finance lease cost

Amortization of leased assets 2.7 3.1

Interest on lease liability 1.3 1.5

Variable lease cost 2.3 2.3

Total lease cost $ 11.5 $ 10.7

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 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

Operating cash flows from finance leases 1.3 1.5

Financing cash flows from finance leases 2.1 2.7

Supplemental non-cash flow disclosure

Acquisition of operating lease asset through lease obligations 4.8 7.3

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

Operating leases 4.4 years 4.6 years

Finance leases 10.2 years 10.4 years

Weighted average discount rate

Operating leases 4.1 % 4.3 %

Finance leases 5.1 % 4.9 %

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

(in millions) Finance Leases Operating Leases

2022 remaining balance $ 9.5 $ 16.0

2023 13.5 19.9

2024 13.3 10.6

2025 11.9 7.5

2026 11.7 5.2

Thereafter 70.2 8.8

Total lease payments 130.1 68.0

Amount representing interest ( 30.1 ) ( 6.3 )

Total minimum lease payments $ 100.0 $ 61.7

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

The second amendment 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 second amendment, Sterling Overnight Index

SPECTRUM BRANDS HOLDINGS, INC.

2 unchanged sentences

(in millions, unaudited)

NOTE 10 - DEBT (continued)

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.

On February 3, 2022, the Company entered into a third amendment to the Credit Agreement.

The third amendment provides for incremental capacity on the Revolver Facility of $ 500 million that was used to support the acquisition of the Tristar Business and the continuing operations and working capital requirements of the Company.

See Note 3 - Acquisitions for further discussion on the Tristar Business acquisition.

Borrowings under the incremental capacity are subject to the same terms and conditions of the existing Revolver Facility, with a maturity date of June 30, 2025, other than a difference in borrowing rate which is subject to SOFR plus margin ranging from 1.75 % to 2.75 %, or base rate plus margin ranging from 0.75 % to 1.75 % per annum, with an increase by 25 basis points 270 days after the effective date of the third amendment and an additional 25 basis points on each 90 day anniversary of such date.

The SOFR is subject to a 0.50 % floor.

The Company incurred $ 7.1 million in connection with the third amendment, which have been capitalized as debt issuance costs and will be amortized over the remaining term of the Credit Agreement.

NOTE 11 – DERIVATIVES

5 unchanged sentences

Dollars, Euros, Pound Sterling, Canadian Dollars, Australian Dollars, or Japanese Yen.

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 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 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 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

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

Until the purchase or sale 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 purchase price variance in Cost of Goods Sold or Net Sales on the Condensed Consolidated Statements of Income.

At April 3, 2022, the Company had a series of foreign exchange derivative contracts outstanding through September 29, 2023.

The derivative net gain estimated to be reclassified from AOCI into earnings over the next 12 months is $ 5.2 million, net of tax.

At April 3, 2022 and September 30, 2021, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of $ 276.7 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 and six month periods ended April 3, 2022 and April 4, 2021, respectively:

Gain in OCI Reclassified Gain (Loss) to Continuing Operations

For the three month periods ended (in millions) April 3, 2022 April 4, 2021 Line Item April 3, 2022 April 4, 2021

Foreign exchange contracts $ 0.1 $ 0.1 Net sales $ — $ 0.1

Foreign exchange contracts 4.7 5.2 Cost of goods sold 1.5 ( 3.2 )

Total $ 4.8 $ 5.3 $ 1.5 $ ( 3.1 )

Gain (Loss) in OCI Reclassified Gain (Loss) to Continuing Operations

For the six month periods ended (in millions)

April 3, 2022 April 4, 2021 Line Item April 3, 2022 April 4, 2021

Foreign exchange contracts $ 0.1 $ 0.1 Net sales $ — $ —

Foreign exchange contracts 3.9 ( 8.1 ) Cost of goods sold 3.6 ( 5.8 )

Total $ 4.0 $ ( 8.0 ) $ 3.6 $ ( 5.8 )

Derivative Contracts Not Designated as Hedges for Accounting Purposes

4 unchanged sentences

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

At April 3, 2022, the Company had a series of forward exchange contracts outstanding through July 20, 2022.

At April 3, 2022 and September 30, 2021, the Company had $ 109.8 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 and six month periods ended April 3, 2022 and April 4, 2021, pre-tax:

Three Month Periods Ended Six Month Periods Ended

(in millions) Line Item April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Foreign exchange contracts Other non-operating expense (income) $ 0.2 $ ( 4.6 ) $ ( 0.9 ) $ ( 8.5 )

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 11 – DERIVATIVES (continued)

Fair Value of Derivative Instruments

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 January 2, 2022 September 30, 2021

(in millions) Line Item April 3, 2022 September 30, 2021

Derivative Assets

11 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 January 2, 2022.

The Company considers these exposures when measuring its credit reserve on its derivative assets, which were not significant as of April 3, 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 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)

As of April 3, 2022, and September 30, 2021, there was no cash collateral outstanding and no posted standby letters of credit related to such liability positions.

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 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

As of April 3, 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 and six month periods ended April 3, 2022 and April 4, 2021, pre-tax:

Three Month Periods Ended Six Month Periods Ended

Gain (loss) in OCI (in millions) April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Net investment hedge $ 11.9 $ 20.1 $ 22.5 $ ( 1.4 )

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 12 – 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 January 2, 2022 and September 30, 2021 according to the fair value hierarchy are as follows:

January 2, 2022 September 30, 2021

The carrying value and estimated fair value of financial and derivative instruments as of April 3, 2022 and September 30, 2021 according to the fair value hierarchy are as follows:

April 3, 2022 September 30, 2021

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

11 unchanged sentences

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

Three Month Period Ended Six Month Period Ended

(in millions) April 4, 2021 April 4, 2021

Realized gain on equity investments sold $ 0.9 $ 6.9

Gain on equity investments 6.0

Dividend income from equity investments — 0.2

Gain from equity investments $ 0.9 $ 7.1

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 14 - EMPLOYEE BENEFIT PLANS

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) January 2, 2022 January 3, 2021 January 2, 2022 January 3, 2021

Three Month Periods Ended

Service cost $ 0.1 $ 0.1 $ 0.4 $ 0.4

Interest cost 0.5 0.5 0.6 0.5

Expected return on assets ( 0.8 ) ( 0.9 ) ( 1.2 ) ( 1.0 )

Recognized net actuarial loss 0.2 0.3 0.8 0.8

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

Weighted average assumptions

Discount rate 2.70 % 2.46 % 1.00 - 2.00 %

0.70 - 1.75 %

Expected return on plan assets 5.00 % 6.00 % 0.99 - 4.06 %

0.70 - 3.40 %

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

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

NOTE 13 – SHAREHOLDERS' EQUITY

Share Repurchases

2 unchanged sentences

The authorization is effective for 36 months.

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.

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

As part of our 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.

The following summarizes the activity of common stock repurchases for the three and six month periods ended April 3, 2022 and April 4, 2021:

April 3, 2022 April 4, 2021

Three Month Periods Ended

1 unchanged sentence

Open Market Purchases 0.2 $ 96.90 $ 24.0 — $ — $ —

April 3, 2022 April 4, 2021

Six Month Periods Ended

(in millions except per share data)

Repurchased Average

Per Share Amount Number of

Repurchased Average

Per Share Amount

Open Market Purchases 1.3 $ 97.34 $ 134.0 — $ — $ —

Private Purchases — — — 0.6 65.27 42.3

1 unchanged sentence

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.

The Company completed share repurchases of $ 150.0 million under the rule 10b5-1 repurchase plan during the three month period ended April 3, 2022.

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 14 – SHARE BASED COMPENSATION

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 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

The following is a summary of share based compensation expense for the three and six month periods ended April 3, 2022 and April 4, 2021 for SBH and SB/RH, respectively.

Three Month Periods Ended Six Month Periods Ended

(in millions) April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

SBH $ 6.6 $ 7.2 $ 12.2 $ 13.7

SB/RH $ 6.2 $ 6.8 $ 11.8 $ 13.1

The Company recognizes share based compensation expense from the issuance of its Restricted Stock Units (“RSUs”), primarily under its Long-Term Incentive Plan ("LTIP"), based on the fair value of the awards, as determined by the market price of the Company’s shares of common stock on the designated grant date and recognized on a straight-line basis over the requisite service period of the awards.

Certain RSUs are time-based grants that provide for either 3-year cliff vesting or graded vesting depending upon the vesting conditions and forfeitures provided by the grant.

Certain RSUs are performance-based awards that are dependent upon achieving specified financial metrics (adjusted EBITDA, return on adjusted equity, and/or adjusted free cash flow) over a designated period of time.

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

The Company recognizes share based compensation expense from the issuance of Restricted Stock Units (“RSUs”), primarily under its Long-Term Incentive Plan ("LTIP"), based on the fair value of the awards, as determined by the market price of the Company’s shares of common stock on the designated grant date and recognized on a straight-line basis over the requisite service period of the awards.

RSUs granted under the LTIP include time-based grants and performance based grants.

Time-based RSU awards provide for either three year cliff vesting or graded vesting depending upon the vesting conditions and forfeitures provided by the grant.

Performance-based RSU awards that are dependent upon achieving specified financial metrics (adjusted EBITDA, return on adjusted equity, and/or adjusted free cash flow) by the end of the three year vesting period.

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, valued based on the fair value of the awards as determined by the market price of the Company's share of common stock on the designated grant price date and recognized as a component of share-based compensation on a straight-line basis over the requisite service period of the award.

The Company regularly issues annual grants under its LTIP during the first quarter of the fiscal year.

The following is a summary of RSU grants issued during the six month period ended April 3, 2022:

(in millions, except per share data) Units Weighted

7 unchanged sentences

Performance-based grants 0.17 $ 96.95 $ 16.7 0.17 $ 96.95 $ 16.7

Vesting in more than 24 months 0.17 $ 97.01 $ 16.5 0.17 $ 97.01 $ 16.5

Total performance-based grants 0.17 $ 97.01 $ 16.5 0.17 $ 97.01 $ 16.5

Total grants 0.28 $ 96.91 $ 27.5 0.27 $ 96.89 $ 26.4

(in millions, except per share data) Units Weighted

Fair Value Fair

Date Units Weighted

Fair Value Fair

At September 30, 2021 1.46 $ 64.00 $ 93.2 1.43 $ 63.85 $ 91.6

Granted 0.28 97.01 27.0 0.27 97.01 25.9

Forfeited ( 0.01 ) 64.08 ( 0.2 ) ( 0.01 ) 64.08 ( 0.2 )

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

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.

3 unchanged sentences

NOTE 15 – ACCUMULATED OTHER COMPREHENSIVE INCOME

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

The change in the components of accumulated other comprehensive income (loss), net of taxes, for the six month periods ended April 3, 2022 and April 4, 2021 was as follows:

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

9 unchanged sentences

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 )

Balance at January 2, 2022 ( 192.6 ) 9.5 ( 48.2 ) ( 231.3 )

Other comprehensive (loss) income before reclassification ( 1.6 ) 6.4 1.0 5.8

Net reclassification for (gain) loss to income from continuing operations — ( 1.5 ) 1.0 ( 0.5 )

Net reclassification for gain to income from discontinued operations — ( 0.7 ) — ( 0.7 )

Other comprehensive (loss) income before tax ( 1.6 ) 4.2 2.0 4.6

Deferred tax effect ( 3.1 ) ( 1.0 ) ( 0.6 ) ( 4.7 )

Other comprehensive (loss) income, net of tax ( 4.7 ) 3.2 1.4 ( 0.1 )

other comprehensive loss from continuing operations attributable to non-controlling interest ( 0.1 ) — — ( 0.1 )

Other comprehensive (loss) income attributable to controlling interest ( 4.6 ) 3.2 1.4 —

Balance at April 3, 2022 $ ( 197.2 ) $ 12.7 $ ( 46.8 ) $ ( 231.3 )

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

1 unchanged sentence

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

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

Other comprehensive income (loss) income 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

7 unchanged sentences

Balance at January 3, 2021 ( 202.3 ) ( 3.6 ) ( 62.6 ) ( 268.5 )

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

Other comprehensive income before reclassification 22.2 5.8 0.9 28.9

Net reclassification for loss to income from continuing operations — 3.1 1.1 4.2

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

Other comprehensive income before tax 22.2 8.8 2.0 33.0

Deferred tax effect ( 5.0 ) ( 2.4 ) ( 0.6 ) ( 8.0 )

Other comprehensive income, net of tax 17.2 6.4 1.4 25.0

other comprehensive loss from continuing operations attributable to non-controlling interest ( 0.1 ) — — ( 0.1 )

Other comprehensive income attributable to controlling interest 17.3 6.4 1.4 25.1

Balance at April 4, 2021 $ ( 185.0 ) $ 2.8 $ ( 61.2 ) $ ( 243.4 )

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 16 – INCOME TAXES

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

The effective tax rate for the three and six month periods ended April 3, 2022 and April 4, 2021 was as follows:

Three Month Periods Ended Six Month Periods Ended

Effective tax rate April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

SBH 21.3 % 13.3 % 29.2 % ( 75.2 ) %

SB/RH 21.1 % 10.2 % 29.1 % ( 58.7 ) %

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.

The estimated annual effective tax rate applied to the three and six month periods ended April 3, 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 deduction.

net operating loss carryforwards ("NOL"), 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 %.

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.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

During the six month period ended April 3, 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 six month period ending April 3, 2022.

The Company also recorded a $ 2.5 million tax benefit during the six month period ended April 3, 2022 for windfalls associated with the vesting of share compensation during the year.

The Company generated a pretax loss on continuing operations year to date, so additional discrete tax benefits result in an increase to the tax rate.

As of April 3, 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.

NOTE 17 – COMMITMENTS AND CONTINGENCIES

11 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 has been defrayed by third-party insurance.

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.

In August 2021, the Company reached an agreement in principle to settle the claims of the Spectrum Legacy class, the cost of which has been defrayed by third-party insurance.

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

In March 2022, the court granted approval to both settlements with formal opinion and order forthcoming.

Environmental.

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 has provided for an estimated cost of $ 10.5 million and $ 11.3 million as of April 3, 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 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.

As of April 3, 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 $ 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.

The Company recognized $ 0.3 million and $ 0.4 million of warranty accruals as of April 3, 2022 and September 30, 2021, respectively, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 18 – SEGMENT INFORMATION

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

Net sales relating to the segments for the three and six month periods ended April 3, 2022 and April 4, 2021 are as follows:

Three Month Periods Ended Six Month Periods Ended

(in millions) April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

HPC $ 316.1 $ 297.9 695.8 676.4

6 unchanged sentences

• 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.

During the six month period ended April 4, 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 14 – Share Based Compensation for further details;

3 unchanged sentences

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

• Incremental costs towards the SAP S/4 HANA ERP transformation to implement our enterprise-wide operating systems to SAP S/4 HANA on a global basis.

This is a multi-year project that includes various costs, including software configuration and implementation costs that would be recognized as capital expenditures or deferred costs in accordance with applicable accounting policies, with certain costs recognized as operating expense associated with 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 has substantially completed the design phase of the project and is currently moving into the build phase;

• 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.

1 unchanged sentence

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 purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value, and the incremental value in ROU operating lease assets with below market rent, among others;

• 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.

• Gains attributable to the Company's investment in Energizer common stock during the three and six month periods ended April 4, 2021, with such remaining shares sold in January 2021.

See Note 12 – Fair Value of Financial Instruments for further details;

• 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 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 six month period ended April 4, 2021 and the subsequent remeasurement during the six month period ended April 3, 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;

• Other adjustments are primarily attributable to:

(1) incremental trade spend reserves realized from the transition and integration of the Rejuvenate business into the H&G segment and the Company's systems and processes during the three and six month periods ended April 3, 2022, (2) incremental fines and penalties realized for delayed shipments attributable to the GPC distribution transition initiative during the three and six month periods ended April 3, 2022, and (3) costs associated with Salus as they are not considered a component of the continuing commercial products company.

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 18 - 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

Segment Adjusted EBITDA for the reportable segments for SBH for the three and six month periods ended April 3, 2022 and April 4, 2021, are as follows:

Three Month Periods Ended Six Month Periods Ended

SBH (in millions) April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

HPC $ 10.6 $ 25.4 38.0 76.3

8 unchanged sentences

Transaction related charges 20.2 8.2 35.1 27.2

Global ERP Transformation 3.2 — 3.2 —

Unallocated shared costs 6.9 6.7 13.8 13.4

Inventory acquisition step-up — 0.8

Non-cash purchase accounting adjustments 3.5 2.6 3.5 3.4

Gain on Energizer investment — ( 0.9 ) — ( 6.9 )

3 unchanged sentences

(Loss) income from continuing operations before income taxes $ ( 31.9 ) $ ( 5.3 ) $ ( 78.1 ) $ 6.3

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

Segment Adjusted EBITDA for reportable segments for SB/RH for the three and six month periods ended April 3, 2022 and April 4, 2021 are as follows:

Three Month Periods Ended Six Month Periods Ended

SB/RH (in millions)

January 2, 2022 January 3, 2021

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

HPC $ 10.6 $ 25.4 38.0 76.3

8 unchanged sentences

Transaction related charges 20.2 8.2 35.1 27.2

SAP S/4 HANA ERP Transformation 3.2 — 3.2 —

Unallocated shared costs 6.9 6.7 13.8 13.4

Inventory acquisition step-up — 0.8

Non-cash purchase accounting adjustments 3.5 2.6 3.5 3.4

Gain on Energizer investment — ( 0.9 ) — ( 6.9 )

1 unchanged sentence

Coevorden tolling related charges 1.5 1.5 3.0 3.1

Other 2.1 0.1 4.4 0.1

(Loss) income from continuing operations before income taxes $ ( 31.2 ) $ ( 4.7 ) $ ( 77.1 ) $ 7.6

4 unchanged sentences

NOTE 19 – 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 month periods ended January 2, 2022 and January 3, 2021 are as follows:

Three 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 and six month periods ended April 3, 2022 and April 4, 2021 are as follows:

Three Month Periods Ended Six Month Periods Ended

(in millions, except per share amounts)

January 2, 2022 January 3, 2021

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Net (loss) income from continuing operations attributable to controlling interest $ ( 25.1 ) $ ( 3.7 ) $ ( 55.3 ) $ 11.0

12 unchanged sentences

Weighted average number of anti-dilutive shares excluded from denominator 0.2 0.3 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