What changed in this filing

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Item 1. Financial Statements

2023-05-12 compared with 2023-02-10 · 310 added, 203 removed, 834 unchanged (38% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Financial Position

As of January 1, 2023 and September 30, 2022

As of April 2, 2023 and September 30, 2022

(in millions)

January 1, 2023 September 30, 2022

April 2, 2023 September 30, 2022

Cash and cash equivalents $ 327.8 $ 243.7

38 unchanged sentences

Condensed Consolidated Statements of Income

For the three month periods ended January 1, 2023 and January 2, 2022

Three Month Periods Ended

For the three and six month periods ended April 2, 2023 and April 3, 2022

Three Month Periods Ended Six Month Periods Ended

(in millions, except per share)

January 1, 2023 January 2, 2022

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Net sales $ 729.2 $ 807.8 $ 1,442.5 $ 1,565.0

4 unchanged sentences

Research and development 5.2 8.2 11.4 15.8

Impairment of intangible assets 67.0 — 67.0 —

Total operating expenses 291.5 263.7 513.6 506.9

1 unchanged sentence

Interest expense 31.6 24.7 65.0 46.4

Other non-operating (income) expense, net ( 1.5 ) 0.6

Other non-operating expense (income), net 1.2 ( 0.9 ) ( 0.3 ) ( 0.3 )

Loss from continuing operations before income taxes ( 109.8 ) ( 31.9 ) ( 161.9 ) ( 78.1 )

24 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

For the three month periods ended January 1, 2023 and January 2, 2022

For the three and six month periods ended April 2, 2023 and April 3, 2022

Three Month Periods Ended

Six Month Periods Ended

(in millions)

January 1, 2023 January 2, 2022

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Net (loss) income $ ( 53.6 ) $ 16.0 $ ( 74.1 ) $ 24.6

8 unchanged sentences

Unrealized (loss) gain on hedging activity before reclassification ( 7.1 ) 6.4 ( 32.5 ) 7.6

Net reclassification for gain to income from continuing operations ( 2.5 ) ( 2.1 )

Net reclassification for loss (gain) to income from continuing operations 4.9 ( 1.5 ) 2.4 ( 3.6 )

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

Unrealized loss on hedging instruments after reclassification ( 27.9 ) ( 1.4 )

Unrealized (loss) gain on hedging instruments after reclassification ( 2.3 ) 4.2 ( 30.2 ) 2.8

Deferred tax effect 0.7 ( 1.0 ) 7.8 3.5

Net unrealized (loss) gain on hedging derivative instruments ( 1.6 ) 3.2 ( 22.4 ) 6.3

Defined benefit pension loss

Defined benefit pension (loss) gain before reclassification ( 2.3 ) 0.6

Net reclassification for loss to income from continuing operations 0.9 1.0

Defined benefit pension (loss) gain

Defined benefit pension gain (loss) before reclassification 0.1 1.0 ( 2.1 ) 1.7

Net reclassification for (gain) loss to income from continuing operations ( 0.7 ) 1.0 0.2 2.0

Defined benefit pension (loss) gain after reclassification ( 0.6 ) 2.0 ( 1.9 ) 3.7

Deferred tax effect 0.1 ( 0.6 ) 1.3 ( 3.5 )

Net defined benefit pension loss ( 0.2 ) ( 1.3 )

Net defined benefit pension (loss) gain ( 0.5 ) 1.4 ( 0.6 ) 0.2

Net change to derive comprehensive income for the period 16.2 ( 0.1 ) 30.7 4.0

Comprehensive (loss) income ( 37.4 ) 15.9 ( 43.4 ) 28.6

Comprehensive income from continuing operations attributable to non-controlling interest 0.2 —

Comprehensive income (loss) from continuing operations attributable to non-controlling interest 0.1 ( 0.1 ) 0.3 ( 0.1 )

Comprehensive income from discontinuing operations attributable to non-controlling interest 0.1 — 0.2 0.1

3 unchanged sentences

Condensed Consolidated Statements of Shareholders' Equity

For the three month period ended January 1, 2023

For the six month period ended April 2, 2023

Common Stock Additional

13 unchanged sentences

Dividends declared — — — ( 17.3 ) — — ( 17.3 ) — ( 17.3 )

Balances at January 1, 2023 41.0 $ 0.5 $ 2,011.5 $ 323.9 $ ( 288.9 ) $ ( 814.2 ) $ 1,232.8 $ 6.6 $ 1,239.4

Balances as of January 1, 2023 41.0 0.5 2,011.5 323.9 ( 288.9 ) ( 814.2 ) 1,232.8 6.6 1,239.4

Net (loss) income from continuing operations — — — ( 75.1 ) — — ( 75.1 ) 0.1 ( 75.0 )

Income from discontinued operations, net of tax — — — 21.4 — — 21.4 — 21.4

Other comprehensive income, net of tax — — — — 16.0 — 16.0 0.2 16.2

Share based compensation — — 4.7 — — — 4.7 — 4.7

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

Balances at April 2, 2023 41.0 $ 0.5 $ 2,016.2 $ 252.6 $ ( 272.9 ) $ ( 814.2 ) $ 1,182.2 $ 6.9 $ 1,189.1

SPECTRUM BRANDS HOLDINGS, INC

Condensed Consolidated Statements of Shareholders' Equity

For the three month period ended January 2, 2022

For the six month period ended April 3, 2022

Common Stock Additional

7 unchanged sentences

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

Loss from continuing operations — — — ( 30.2 ) — — ( 30.2 ) — ( 30.2 )

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

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

5 unchanged sentences

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 )

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

Balances as of 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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the three month periods ended January 1, 2023 and January 2, 2022

Three Month Periods Ended

(in millions) January 1, 2023 January 2, 2022

For the six month periods ended April 2, 2023 and April 3, 2022

Six Month Periods Ended

(in millions) April 2, 2023 April 3, 2022

Cash flows from operating activities

6 unchanged sentences

Share based compensation 7.7 12.2

Impairment of intangible assets 67.0 —

Impairment of equipment and leases 4.5 —

Amortization of debt issuance costs and debt discount 4.0 3.1

3 unchanged sentences

Net changes in operating assets and liabilities 198.0 ( 183.1 )

Net cash used by operating activities from continuing operations ( 57.0 ) ( 255.8 )

Net cash used by operating activities from discontinued operations ( 7.2 ) ( 15.3 )

Net cash used by operating activities ( 64.2 ) ( 271.1 )

Net cash provided (used) by operating activities from continuing operations 148.6 ( 212.2 )

Net cash provided by operating activities from discontinued operations 29.0 5.3

Net cash provided (used) by operating activities 177.6 ( 206.9 )

Cash flows from investing activities

1 unchanged sentence

Proceeds from disposal of property, plant and equipment — 0.1

Business acquisitions, net of cash acquired — ( 314.3 )

Other investing activity — ( 0.1 )

Net cash used by investing activities from continuing operations ( 25.9 ) ( 338.6 )

8 unchanged sentences

Share based award tax withholding payments, net of proceeds upon vesting ( 10.5 ) ( 24.5 )

Net cash provided by financing activities from continuing operations 56.8 310.0

Net cash (used) provided by financing activities from continuing operations ( 68.9 ) 568.9

Net cash used by financing activities from discontinued operations ( 0.7 ) ( 2.2 )

Net cash provided by financing activities 56.4 309.6

Net cash (used) provided by financing activities ( 69.6 ) 566.7

Effect of exchange rate changes on cash and cash equivalents 9.7 ( 3.0 )

14 unchanged sentences

Condensed Consolidated Statements of Financial Position

As of January 1, 2023 and September 30, 2022

(in millions) January 1, 2023 September 30, 2022

As of April 2, 2023 and September 30, 2022

(in millions) April 2, 2023 September 30, 2022

Cash and cash equivalents $ 326.6 $ 242.4

36 unchanged sentences

Condensed Consolidated Statements of Income

For the three month periods ended January 1, 2023 and January 2, 2022

Three Month Periods Ended

(in millions) January 1, 2023 January 2, 2022

For the three and six month periods ended April 2, 2023 and April 3, 2022

Three Month Periods Ended Six Month Periods Ended

(in millions) April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Net sales $ 729.2 $ 807.8 $ 1,442.5 $ 1,565.0

4 unchanged sentences

Research and development 5.2 8.2 11.4 15.8

Impairment of intangible assets 67.0 — 67.0 —

Total operating expenses 290.8 262.9 512.9 505.7

1 unchanged sentence

Interest expense 31.7 24.8 65.1 46.7

Other non-operating (income) expense, net ( 1.5 ) 0.6

Other non-operating expense (income), net 1.2 ( 0.9 ) ( 0.3 ) ( 0.4 )

Loss from continuing operations before income taxes ( 109.2 ) ( 31.2 ) ( 161.3 ) ( 77.1 )

13 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

For the three month periods ended January 1, 2023 and January 2, 2022

For the three and six month periods ended April 2, 2023 and April 3, 2022

Three Month Periods Ended

Six Month Periods Ended

(in millions)

January 1, 2023 January 2, 2022

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Net (loss) income $ ( 53.3 ) $ 16.5 $ ( 73.6 ) $ 25.2

2 unchanged sentences

Foreign currency translation gain (loss) 27.1 ( 13.5 ) 87.6 ( 17.4 )

Unrealized gain (loss) from net investment hedge ( 33.9 ) 10.6

Unrealized (loss) gain from net investment hedge ( 12.5 ) 11.9 ( 46.4 ) 22.5

Foreign currency translation adjustment before tax 14.6 ( 1.6 ) 41.2 5.1

3 unchanged sentences

Unrealized (loss) gain on hedging activity before reclassification ( 7.1 ) 6.4 ( 32.5 ) 7.6

Net reclassification for gain to income from continuing operations ( 2.5 ) ( 2.1 )

Net reclassification for loss (gain) to income from continuing operations 4.9 ( 1.5 ) 2.4 ( 3.6 )

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

Unrealized loss on hedging instruments after reclassification ( 27.9 ) ( 1.4 )

Unrealized (loss) gain on hedging instruments after reclassification ( 2.3 ) 4.2 ( 30.2 ) 2.8

Deferred tax effect 0.7 ( 1.0 ) 7.8 3.5

Net unrealized (loss) gain on hedging derivative instruments ( 1.6 ) 3.2 ( 22.4 ) 6.3

Defined benefit pension loss

Defined benefit pension (loss) gain before reclassification ( 2.3 ) 0.6

Net reclassification for loss to income from continuing operations 0.9 1.0

Defined benefit pension (loss) gain

Defined benefit pension gain (loss) before reclassification 0.1 1.0 ( 2.1 ) 1.7

Net reclassification for (gain) loss to income from continuing operations ( 0.7 ) 1.0 0.2 2.0

Defined benefit pension (loss) gain after reclassification ( 0.6 ) 2.0 ( 1.9 ) 3.7

Deferred tax effect 0.1 ( 0.6 ) 1.3 ( 3.5 )

Net defined benefit pension loss ( 0.2 ) ( 1.3 )

Net defined benefit pension (loss) gain ( 0.5 ) 1.4 ( 0.6 ) 0.2

Net change to derive comprehensive income for the period 16.2 ( 0.1 ) 30.7 4.0

Comprehensive (loss) income ( 37.1 ) 16.4 ( 42.9 ) 29.2

Comprehensive income from continuing operations attributable to non-controlling interest 0.2 —

Comprehensive income (loss) from continuing operations attributable to non-controlling interest 0.1 ( 0.1 ) 0.3 ( 0.1 )

Comprehensive income from discontinuing operations attributable to non-controlling interest 0.1 — 0.2 0.1

3 unchanged sentences

Condensed Consolidated Statements of Shareholder's Equity

For the three month period ended January 1, 2023

For the six month period ended April 2, 2023

(in millions) Other

2 unchanged sentences

Comprehensive

Shareholders'

Shareholder's

Interest Total Equity

6 unchanged sentences

Dividends paid to parent — ( 17.1 ) — ( 17.1 ) — ( 17.1 )

Balances at January 1, 2023 $ 2,158.0 $ ( 773.8 ) $ ( 288.8 ) $ 1,095.4 $ 8.2 $ 1,103.6

Balances as of January 1, 2023 2,158.0 ( 773.8 ) ( 288.8 ) 1,095.4 8.2 1,103.6

Net (loss) income from continuing operations — ( 75.3 ) — ( 75.3 ) 0.1 ( 75.2 )

Income from discontinued operations, net of tax — 21.9 — 21.9 — 21.9

Other comprehensive income, net of tax — — 16.0 16.0 0.2 16.2

Share based compensation 4.4 — — 4.4 — 4.4

Dividends paid to parent — ( 17.2 ) — ( 17.2 ) — ( 17.2 )

Balances as of April 2, 2023 $ 2,162.4 $ ( 844.4 ) $ ( 272.8 ) $ 1,045.2 $ 8.5 $ 1,053.7

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Shareholder's Equity

For the three month period ended January 2, 2022

For the six month period ended April 3, 2022

(in millions) Other

5 unchanged sentences

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

Loss from continuing operations — ( 30.1 ) — ( 30.1 ) — ( 30.1 )

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

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

4 unchanged sentences

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 )

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

Balances as of 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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the three month periods ended January 1, 2023 and January 2, 2022

Three Month Periods Ended

(in millions) January 1, 2023 January 2, 2022

For the six month periods ended April 2, 2023 and April 3, 2022

Six Month Periods Ended

(in millions) April 2, 2023 April 3, 2022

Cash flows from operating activities

6 unchanged sentences

Share based compensation 7.1 11.8

Impairment of equipment and leases 4.5 —

Impairment of intangible assets 67.0 —

Amortization of debt issuance costs and debt discount 4.0 3.1

3 unchanged sentences

Net changes in operating assets and liabilities 187.5 ( 216.1 )

Net cash used by operating activities from continuing operations ( 67.6 ) ( 288.3 )

Net cash used by operating activities from discontinued operations ( 7.1 ) ( 15.3 )

Net cash used by operating activities ( 74.7 ) ( 303.6 )

Net cash provided (used) by operating activities from continuing operations 138.2 ( 244.6 )

Net cash provided by operating activities from discontinued operations 29.0 5.3

Net cash provided (used) by operating activities 167.2 ( 239.3 )

Cash flows from investing activities

1 unchanged sentence

Proceeds from disposal of property, plant and equipment — 0.1

Business acquisitions, net of cash acquired — ( 314.3 )

Other investing activities — ( 0.1 )

Net cash used by investing activities from continuing operations ( 25.9 ) ( 338.6 )

6 unchanged sentences

Payment of cash dividends to parent ( 34.4 ) ( 160.4 )

Net cash provided by financing activities from continuing operations 67.3 342.6

Net cash (used) provided by financing activities from continuing operations ( 58.4 ) 601.4

Net cash used by financing activities from discontinued operations ( 0.7 ) ( 2.2 )

Net cash provided by financing activities 66.9 342.2

Net cash (used) provided by financing activities ( 59.1 ) 599.2

Effect of exchange rate changes on cash and cash equivalents 9.7 ( 3.0 )

25 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 1, 2023 and January 2, 2022.

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 2, 2023 and April 3, 2022, respectively.

Newly Adopted Accounting Standards

14 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 1, 2023 and January 2, 2022:

Three Month Periods Ended

(in millions) January 1, 2023 January 2, 2022

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 2, 2023 and April 3, 2022:

Three Month Periods Ended Six Month Periods Ended

(in millions) April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Income from discontinued operations before income taxes – HHI $ 59.5 $ 71.0 $ 104.4 $ 130.9

4 unchanged sentences

Income from discontinued operations, net of tax 21.4 41.1 40.9 79.9

Income from discontinued operations, net of tax attributable to noncontrolling interest 0.1 0.4

Income from discontinued operations, net of tax attributable to controlling interest $ 19.4 $ 38.4

Net income from discontinued operations attributable to noncontrolling interest — 0.1 0.2 0.5

Net income from discontinued operations attributable to controlling interest $ 21.4 $ 41.0 $ 40.7 $ 79.4

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 the transaction, required to be repaid, or directly attributable to other operations of the Company.

13 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.

4 unchanged sentences

Except for the foregoing amendment to the Termination Date, the ASPA remains in full force and effect as written, including with respect to the termination fee of $ 350 million.

The Company continues to engage with antitrust regulators in the regulatory review of the HHI transaction, and the extension is intended to provide the parties with additional time (to the extent needed) to satisfy the conditions related to receipt of governmental clearances.

On September 15, 2022, the Department of Justice ("DOJ") filed a complaint seeking to enjoin the transaction and block the acquisition of the HHI division by ASSA.

Both the Company and ASSA have stated their disagreement with the DOJ's concerns.

On December 2, 2022, ASSA announced an agreement to sell its Emtek and the Smart Residential Business in the U.S.

and Canada to Fortune Brands in response to competitive concerns raised by the DOJ in their complaint.

The Company expects that the trial will occur in April 2023.

The Company and ASSA will jointly defend the transaction in the litigation.

On May 5, 2023, the Company agreed to a stipulation with the DOJ to settle the DOJ's challenge of the HHI transaction, pursuant to which ASSA will proceed with the divestment of Emtek and its Smart Residential business in the U.S.and Canada to Fortune Brands.

Approval of the Mexican competition authority is the only outstanding regulatory approval.

The Company continues to recognize the HHI division as held for sale and as a component of our discontinued operations.

The parties are committed to closing the HHI transaction, and the Company and ASSA both continue to expect that they will obtain all the required governmental clearances and will close the HHI transaction.

The following table summarizes the assets and liabilities of the HHI disposal group classified as held for sale as of January 1, 2023 and September 30, 2022:

The parties are committed to closing the HHI transaction, and the Company and ASSA both continue to expect that the HHI transaction will close on or prior to June 30, 2023.

The following table summarizes the assets and liabilities of the HHI disposal group classified as held for sale as of April 2, 2023 and September 30, 2022:

(in millions)

January 1, 2023 September 30, 2022

April 2, 2023 September 30, 2022

Trade receivables, net $ 143.4 $ 135.5

22 unchanged sentences

NOTE 2 – DIVESTITURES (continued)

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 1, 2023 and January 2, 2022:

Three Month Periods Ended

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 2, 2023 and April 3, 2022:

Three Month Periods Ended Six Month Periods Ended

(in millions)

January 1, 2023 January 2, 2022

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Net sales $ 383.3 $ 420.8 $ 746.1 $ 795.4

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 for the three month periods ended January 1, 2023 and January 2, 2022:

Three Month Periods Ended

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 2, 2023 and April 3, 2022:

Three Month Periods Ended Six Month Periods Ended

(in millions)

January 1, 2023 January 2, 2022

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Share based compensation $ 0.3 $ 1.2 $ 1.1 $ 4.1

4 unchanged sentences

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.

As of January 1, 2023 and September 30, 2022, the Company recognized $ 23.7 million and $ 22.3 million, respectively, related to indemnification payables in accordance with the acquisition agreements, primarily attributable with uncertain tax benefit obligations and outstanding settlements with tax authorities that were transferred and indemnified in accordance with the acquisition agreement, including $ 7.1 million and $ 7.0 million within Other Current Liabilities, respectively, and $ 16.6 million and $ 15.3 million, within Other Long-Term Liabilities, respectively, on the Company’s Condensed Consolidated Statements of Financial Position.

As of April 2, 2023 and September 30, 2022, the Company recognized $ 24.6 million and $ 22.3 million, respectively, related to indemnification payables in accordance with the acquisition agreements, primarily attributable with uncertain tax benefit obligations and outstanding settlements with tax authorities that were transferred and indemnified in accordance with the acquisition agreement, including $ 9.0 million and $ 7.0 million within Other Current Liabilities, respectively, and $ 15.6 million and $ 15.3 million, within Other Long-Term Liabilities, respectively, on the Company’s Condensed Consolidated Statements of Financial Position.

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 3 – RESTRUCTURING CHARGES

During the three and six month periods ended April 2, 2023, the Company entered into a new initiative in response to the continuing pressures within the consumer products and retail markets and adjusted strategic initiatives within certain segments, resulting in the realization of another round of headcount reductions.

Total cumulative exit and disposal costs associated with the initiative were $ 4.5 million.

Substantially all exit and disposal charges associated with the initiative have been recognized.

During the year ended September 30, 2022, the Company entered into a new initiative in response to changes observed within consumer products and retail markets, continued inflationary cost pressures and headwinds, and to facilitate changes in the management structure for enabling functions of the consolidated group, resulting in the realization of headcount reductions.

Total cumulative costs associated with the new restructuring initiative were $ 10.4 million.

Substantially all costs associated with the initiative have been recognized in the prior year with incremental costs realized during the three month period ended January 1, 2023, which were attributable to changes in timing and accruals previously recognized since the initiative was established.

Total cumulative exit and disposal costs associated with the initiative were $ 10.5 million.

Substantially all exit and disposal costs associated, with the initiative have been recognized in the prior year with incremental costs realized during the three and six month periods ended April 2, 2023, which were attributable to changes in timing and accruals previously recognized since the initiative was established.

During the year ended September 30, 2022, the Company initiated the exit of its in-country commercial operations in Russia, predominantly supporting the HPC segment, including costs for severance and other exit and disposal activity to close the operations.

Total cumulative costs associated with the initiative were $ 1.2 million.

Substantially all costs, excluding lease termination or asset impairment costs associated with the initiative has been recognized.

Total cumulative exit and disposal costs associated with the initiative were $ 1.3 million.

Substantially all exit and disposal costs associated with the initiative have been recognized.

The Company may enter into small, less significant initiatives to reduce costs and improve margins throughout the organization.

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

The following summarizes restructuring charges for the three month periods ended January 1, 2023 and January 2, 2022:

Three Month Periods Ended

The following summarizes restructuring charges for the three and six month periods ended April 2, 2023 and April 3, 2022:

Three Month Periods Ended Six Month Periods Ended

(in millions)

January 1, 2023 January 2, 2022

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Fiscal 2023 restructuring $ 4.5 $ — $ 4.5 $ —

Fiscal 2022 restructuring 0.1 — 0.6 —

Russia dissolution 0.1 — 0.7 —

6 unchanged sentences

General and administrative expense 4.5 9.6 6.1 16.4

The following is a summary of restructuring charges by segment for the three month periods ended January 1, 2023 and January 2, 2022.

Three Month Periods Ended

(in millions) January 1, 2023 January 2, 2022

The following is a summary of restructuring charges by segment for the three and six month periods ended April 2, 2023 and April 3, 2022.

Three Month Periods Ended Six Month Periods Ended

(in millions) April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

HPC $ 2.5 $ 3.7 $ 3.2 $ 4.3

GPC 2.2 8.2 3.0 19.6

H&G — — 0.2 —

Corporate 0.1 4.5 0.4 9.9

Total restructuring charges $ 4.8 $ 16.4 $ 6.8 $ 33.8

The following is a summary of restructuring charges by cost type for the three month periods ended January 1, 2023 and January 2, 2022.

The following is a summary of restructuring charges by cost type for the three and six month periods ended April 2, 2023 and April 3, 2022.

(in millions)

Benefits Other

For the three month period ended January 1, 2023 $ 1.3 $ 0.7 $ 2.0

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

The following is a rollforward of the accrual for restructuring charges by cost type for the three month period ended January 1, 2023.

For the three month period ended April 2, 2023 $ 4.4 $ 0.4 $ 4.8

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

For the six month period ended April 2, 2023 5.7 1.1 6.8

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

The following is a rollforward of the accrual for restructuring charges by cost type for the six month period ended April 2, 2023.

(in millions) Termination

4 unchanged sentences

Foreign currency and other 0.3 ( 0.1 ) 0.2

Accrual balance at January 1, 2023 $ 2.5 $ 0.3 $ 2.8

Accrual balance at April 2, 2023 $ 4.2 $ 0.1 $ 4.3

SPECTRUM BRANDS HOLDINGS, INC.

4 unchanged sentences

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

The following table disaggregates our revenue for the three month periods ended January 1, 2023 and January 2, 2022, by the Company’s key revenue streams, segments and geographic region (based upon destination):

Three Month Period Ended January 1, 2023 Three Month Period Ended January 2, 2022

The following table disaggregates our revenue for the three and six month periods ended April 2, 2023 and April 3, 2022, by the Company’s key revenue streams, segments and geographic region (based upon destination):

Three Month Period Ended April 2, 2023 Three Month Period Ended April 3, 2022

(in millions)

8 unchanged sentences

$ 279.2 $ 296.7 $ 153.3 $ 729.2 $ 316.1 $ 295.1 $ 196.6 $ 807.8

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 16 - Commitments and Contingencies for further information regarding the Company’s standard warranties.

Six Month Period Ended April 2, 2023 Six Month Period Ended April 3, 2022

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

Product Sales

NA $ 286.1 $ 360.8 $ 220.2 $ 867.1 $ 264.2 $ 369.7 $ 266.9 $ 900.8

EMEA 236.5 181.0 — 417.5 268.5 189.7 — 458.2

LATAM 80.6 7.7 3.5 91.8 120.1 9.2 4.1 133.4

APAC 35.2 16.9 — 52.1 37.9 20.2 — 58.1

Licensing 4.3 5.0 0.9 10.2 4.7 5.1 0.9 10.7

Service and other 0.9 2.9 — 3.8 0.4 3.4 — 3.8

Total Revenue $ 643.6 $ 574.3 $ 224.6 $ 1,442.5 $ 695.8 $ 597.3 $ 271.9 $ 1,565.0

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

During the three month period ended January 1, 2023 and January 2, 2022, there were two large retail customers each exceeding 10% of consolidated Net Sales and representing 36.2 % and 33.0 %, respectively, of consolidated Net Sales.

During the three month periods ended April 2, 2023 and April 3, 2022, there were two large retail customers, each exceeding 10% of consolidated Net Sales and representing 33.5 % and 33.3 % of consolidated Net Sales, respectively.

During the six month periods ended April 2, 2023 and April 3, 2022, there were two large retail customers exceeding 10% of consolidated Net Sales and representing 34.8 % and 33.1 % of consolidated Net Sales, respectively.

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

The license agreement was 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 consisted of $ 86.7 million, or 12.2 % of consolidated net sales, and $ 129.4 million, or 17.1 % of consolidated net sales, for the three month periods ended January 1, 2023 and January 2, 2022, respectively.

Net sales from B&D product sales consisted of $ 85.1 million, or 11.7 % of consolidated net sales, and $ 98.0 million, or 12.1 % of consolidated Net Sales, for the three month periods ended April 2, 2023 and April 3, 2022, respectively.

Net sales from B&D product sales consisted of $ 171.9 million, or 11.9 %, and $ 229.8 million, or 14.7 %, of consolidated Net Sales for the six month periods ended April 2, 2023 and April 3, 2022, respectively.

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

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

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

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

The allowance for product returns as of January 1, 2023 and September 30, 2022 was $ 15.7 million and $ 15.5 million, respectively.

The allowance for product returns as of April 2, 2023 and September 30, 2022 was $ 14.0 million and $ 15.5 million, respectively.

NOTE 5 – RECEIVABLES AND CONCENTRATION OF CREDIT RISK

The allowance for credit losses on the Company's trade receivables as of January 1, 2023 and September 30, 2022 was $ 9.4 million and $ 7.3 million, respectively.

The allowance for credit losses on the Company's trade receivables as of April 2, 2023 and September 30, 2022 was $ 6.1 million and $ 7.3 million, respectively.

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

As of January 1, 2023, there was one large retail customer exceeding 10% of consolidated Net Trade Receivables and representing 16.3 % of consolidated Net Trade Receivables.

As of September 30, 2022 there were two large retail customers exceeding 10% of consolidated Net Trade Receivables and representing and 21.9 % of consolidated Net Trade Receivables.

As of April 2, 2023, there was one large retail customer exceeding 10% of consolidated Net Trade Receivables and representing 19.7 % of consolidated Net Trade Receivables.

As of September 30, 2022 there were two large retail customers exceeding 10% of consolidated Net Trade Receivables and representing 21.9 % of consolidated Net Trade Receivables.

NOTE 6 – INVENTORIES

1 unchanged sentence

(in millions)

January 1, 2023 September 30, 2022

April 2, 2023 September 30, 2022

Raw materials

2 unchanged sentences

Finished goods

$ 702.3 $ 780.6

Inventories $ 585.6 $ 780.6

SPECTRUM BRANDS HOLDINGS, INC.

4 unchanged sentences

Property, plant and equipment consist of the following:

(in millions) January 1, 2023 September 30, 2022

(in millions) April 2, 2023 September 30, 2022

Land, buildings and improvements $ 78.7 $ 75.7

5 unchanged sentences

Property, plant and equipment, net $ 268.7 $ 263.8

Depreciation expense from property, plant, and equipment for the three month periods ended January 1, 2023 and January 2, 2022, was $ 12.2 million .

Depreciation expense from property, plant, and equipment for the three month periods ended April 2, 2023 and April 3, 2022, was $ 11.9 million and $ 12.2 million, respectively;

and for the six month periods ended April 2, 2023 and April 3, 2022 was $ 24.1 million and $ 24.4 million, respectively.

During the three and six month periods ended April 2, 2023, the Company recognized a $ 2.7 million impairment charge on idle equipment associated with the early exit of a GPC warehouse lease, included as Selling Expense on the Condensed Consolidated Statements of Income.

NOTE 8 – GOODWILL AND INTANGIBLE ASSETS

4 unchanged sentences

Foreign currency impact — 12.4 — 12.4

As of January 1, 2023 $ 111.1 $ 511.3 $ 342.6 $ 965.0

As of April 2, 2023 $ 111.1 $ 514.8 $ 342.6 $ 968.5

During the three month period ended January 1, 2023, the Company recognized incremental adjustments to HPC goodwill attributable to changes to the preliminary valuation of net assets acquired associated with the acquisition of the Tristar Business, previously acquired on February 18, 2022, primarily associated with the valuation of reserves on trade receivables and deferred tax assets as of the acquisition date.

The preliminary 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).

There are no further adjustments anticipated on the valuation of acquired net assets.

The one year measurement period has closed and there are no further adjustments on the valuation of acquired net assets.

See Note 4 - Acquisitions in the Notes to the Consolidated Financial Statements within the Company's Annual Report on Form 10-K, released on November 22, 2022, for further discussion on the Tristar Business acquisition.

The carrying value and accumulated amortization of intangible assets are as follows:

January 1, 2023 September 30, 2022

April 2, 2023 September 30, 2022

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

6 unchanged sentences

Total Intangible Assets $ 1,577.8 $ ( 437.1 ) $ 1,140.7 $ 1,612.0 $ ( 409.8 ) $ 1,202.2

There were no triggering events or impairments of goodwill and intangible assets identified during the three month period ended January 1, 2023.

Amortization expense from the intangible assets for the three month periods ended January 1, 2023 and January 2, 2022 was $ 10.4 million and $ 13.3 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

During the three and six month periods ended April 2, 2023, we identified triggering events for our Rejuvenate and PowerXL tradename intangible assets resulting in recognition of a $ 67.0 million impairment loss on intangible assets.

The loss associated with the Rejuvenate tradename is primarily attributable to a shift in the projected timing and realization of future revenues associated with the acquired brand due to changes in strategic distribution opportunities as well as a change in the amount and timing of product innovations being introduced to customers by the H&G segment.

The loss associated with the PowerXL tradename was primarily attributable to a decrease in projected future revenues associated with the brand driven by decrease in realized sales with expected continuation of retail inventory reduction, lower consumer demand, increased competition in product categories, and adverse macro-economic factors.

Amortization expense from the intangible assets for the three month periods ended April 2, 2023 and April 3, 2022 was $ 10.5 million and $ 13.5 million, respectively;

and for the six month periods ended April 2, 2023 and April 3, 2022 was $ 20.9 million and $ 26.7 million, respectively.

SPECTRUM BRANDS HOLDINGS, INC.

2 unchanged sentences

(in millions, unaudited)

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS (continued)

(in millions) Amortization

NOTE 9 – DEBT

Debt consists of the following:

January 1, 2023 September 30, 2022

Debt with external lenders consists of the following:

April 2, 2023 September 30, 2022

(in millions) Amount Rate Amount Rate

24 unchanged sentences

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.

We expect the transition from the LIBOR rate to SOFR will be effective no later than the end of June 2023 As a result of borrowings and payments under the Revolver Facility, the Company had borrowing availability of $ 252.5 million at January 1, 2023, net of outstanding letters of credit of $ 17.5 million.

We expect the transition from the LIBOR rate to SOFR will be effective no later than the end of June 2023.

As a result of borrowings and payments under the Revolver Facility, the Company had borrowing availability of $ 362.1 million at April 2, 2023, net of outstanding letters of credit of $ 12.9 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.

On November 17, 2022, the Company entered into the fourth amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio permitted to be no greater than 7.0 to 1.0 before returning to 6.0 to 1.0 at the earliest of (i) September 29, 2023, or (ii) 10 business days after the closing of the HHI divestiture or receipt of the related termination fee.

The Company incurred $ 2.3 million in connection with the fourth amendment, which has been recognized as interest expense for the three month period ended January 1, 2023.

The Company incurred $ 2.3 million in connection with the fourth amendment, which has been recognized as interest expense for the six month period ended April 2, 2023.

In addition to debt with external lenders, SB/RH has an outstanding loan with a subsidiary of its Parent in the amount of $ 8.0 million, including cumulative interest, with a stated interest rate of 4.01 %, due March 15, 2024.

The outstanding loan with the Parent is subject to termination or acceleration by the Parent and is included as Current Portion of Long-Term Debt on the SB/RH Condensed Consolidated Statement of Financial Position as of April 2, 2023.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 10 – DERIVATIVES

7 unchanged sentences

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 January 1, 2023, the Company had a series of foreign exchange derivative contracts outstanding through June 2024.

At April 2, 2023, the Company had a series of foreign exchange derivative contracts outstanding through September 2024.

The derivative net loss estimated to be reclassified from AOCI into earnings over the next 12 months is $ 10.6 million, net of tax.

At January 1, 2023 and September 30, 2022, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of $ 320.1 million and $ 289.5 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 1, 2023 and January 2, 2022, respectively:

At April 2, 2023 and September 30, 2022, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of $ 302.8 million and $ 289.5 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 2, 2023 and April 3, 2022, respectively:

Unrealized Gain (Loss) in OCI Before Reclassification Reclassified Gain (Loss) to Continuing Operations

For the three month periods ended (in millions) January 1, 2023 January 2, 2022 Line Item January 1, 2023 January 2, 2022

For the three month periods ended (in millions) April 2, 2023 April 3, 2022 Line Item April 2, 2023 April 3, 2022

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

1 unchanged sentence

Total $ ( 7.4 ) $ 4.8 $ ( 4.9 ) $ 1.5

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 10 – DERIVATIVES (continued)

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

For the six month periods ended (in millions)

April 2, 2023 April 3, 2022 Line Item April 2, 2023 April 3, 2022

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

Foreign exchange contracts ( 33.2 ) 3.9 Cost of goods sold ( 2.5 ) 3.6

Total $ ( 33.1 ) $ 4.0 $ ( 2.4 ) $ 3.6

Derivative Contracts Not Designated as Hedges for Accounting Purposes

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

These obligations generally require the Company to exchange foreign currencies for, among others, Australian Dollars, Canadian Dollars, Euros, Japanese Yen, Mexican Pesos, Colombian Peso, Philippine Pesos, Hungarian Forint, Turkish Lira, Pounds Sterling, Taiwanese Dollars or U.S.

These obligations generally require the Company to exchange foreign currencies for, among others, Australian Dollars, Canadian Dollars, Colombian Peso, Euros, Hungarian Forint, Japanese Yen, Mexican Pesos, Philippine Pesos, Polish Zloty, Pounds Sterling, Swiss Franc, Taiwanese Dollars, Turkish Lira, or U.S.

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

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

At January 1, 2023, the Company had a series of forward exchange contracts outstanding through July 2023.

At January 1, 2023 and September 30, 2022, the Company had $ 511.8 million and $ 513.7 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 1, 2023 and January 2, 2022, pre-tax:

Three Month Periods Ended

(in millions) Line Item January 1, 2023 January 2, 2022

At April 2, 2023, the Company had a series of forward exchange contracts outstanding through March 2024.

At April 2, 2023 and September 30, 2022, the Company had $ 596.7 million and $ 513.7 million, respectively, of notional value of such foreign exchange derivative contracts outstanding.

The following summarizes the impact of derivative instruments not designated as hedges for accounting purposes on the accompanying Condensed Consolidated Statements of Income for the three and six month periods ended April 2, 2023 and April 3, 2022, pre-tax:

Three Month Periods Ended Six Month Periods Ended

(in millions) Line Item April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Foreign exchange contracts Other non-operating expense (income) $ ( 0.1 ) $ 0.2 $ ( 22.3 ) $ ( 0.9 )

1 unchanged sentence

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

(in millions) Line Item January 1, 2023 September 30, 2022

(in millions) Line Item April 2, 2023 September 30, 2022

Derivative Assets

8 unchanged sentences

Total Derivative Liabilities $ 26.8 $ 6.0

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 10 – DERIVATIVES (continued)

The Company is exposed to the risk of default by the counterparties with which it transacts and generally does not require collateral or other security to support financial instruments subject to credit risk.

1 unchanged sentence

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 1, 2023.

The Company considers these exposures when measuring its credit reserve on its derivative assets, which were not significant as of April 2, 2023.

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 1, 2023 and September 30, 2022, there was no cash collateral outstanding and no posted standby letters of credit related to such liability positions.

As of April 2, 2023 and September 30, 2022, there was no cash collateral outstanding and no posted standby letters of credit related to such liability positions.

Net Investment Hedge

Spectrum Brands, Inc.

has € 425.0 million aggregate principle amount of 4.00 % Notes designated as a non-derivative economic hedge, or net investment hedge, of the translation of the Company’s net investments in Euro denominated subsidiaries at the time of issuance.

has € 425.0 million aggregate principal amount of 4.00 % Notes designated as a non-derivative economic hedge, or net investment hedge, of the translation of the Company’s net investments in Euro denominated subsidiaries at the time of issuance.

The hedge effectiveness is measured on the beginning balance of the net investment and re-designated every three months.

1 unchanged sentence

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.

As of January 1, 2023, the full principal amount was designated as a net investment hedge and considered fully effective.

The following summarizes the unrealized gain (loss) from the net investment hedge recognized in Other Comprehensive Income for the three month periods ended January 1, 2023 and January 2, 2022, pre-tax:

Three Month Periods Ended

Unrealized Gain (Loss) in OCI (in millions) January 1, 2023 January 2, 2022

As of April 2, 2023, the full principal amount was designated as a net investment hedge and considered fully effective.

The following summarizes the unrealized gain (loss) from the net investment hedge recognized in Other Comprehensive Income for the three and six month periods ended April 2, 2023 and April 3, 2022, pre-tax:

Three Month Periods Ended Six Month Periods Ended

Unrealized Gain (Loss) in OCI (in millions) April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Net investment hedge $ ( 12.5 ) $ 11.9 $ ( 46.4 ) $ 22.5

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 11 – 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 instruments as of January 1, 2023 and September 30, 2022 according to the fair value hierarchy are as follows:

January 1, 2023 September 30, 2022

The carrying value and estimated fair value of financial instruments as of April 2, 2023 and September 30, 2022 according to the fair value hierarchy are as follows:

April 2, 2023 September 30, 2022

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

14 unchanged sentences

As part of our share repurchase programs, the Company has purchased treasury shares in open market purchases at market fair value along with participating in private purchases from Company employees, significant shareholders and beneficial interest owners at fair value.

The following summarizes the activity of common stock repurchases for the three month periods ended January 1, 2023 and January 2, 2022:

January 1, 2023 January 2, 2022

The following summarizes the activity of common stock repurchases for the three and six month periods ended April 2, 2023 and April 3, 2022:

April 2, 2023 April 3, 2022

Three Month Periods Ended

1 unchanged sentence

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

April 2, 2023 April 3, 2022

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

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 13 – SHARE BASED COMPENSATION

The following is a summary of share based compensation expense for the three month periods ended January 1, 2023 and January 2, 2022 for SBH and SB/RH, respectively.

Three Month Periods Ended

(in millions) January 1, 2023 January 2, 2022

The following is a summary of share based compensation expense included in net loss from continuing operations for the three and six month periods ended April 2, 2023 and April 3, 2022 for SBH and SB/RH, respectively.

Three Month Periods Ended Six Month Periods Ended

(in millions) April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

SBH $ 4.5 $ 6.6 $ 7.7 $ 12.2

11 unchanged sentences

Shares issued upon exercise of RSUs are sourced from treasury shares when available.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 13 – SHARE BASED COMPENSATION (continued)

The following is a summary of RSU grants issued during the three month period ended January 1, 2023:

The following is a summary of RSU grants issued during the six month period ended April 2, 2023:

(in millions, except per share data) Units Weighted

8 unchanged sentences

Total grants 0.54 $ 51.98 $ 28.1 0.51 $ 52.08 $ 26.6

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 14 – ACCUMULATED OTHER COMPREHENSIVE INCOME

The change in the components of AOCI for the three month period ended January 1, 2023, was as follows:

The change in the components of AOCI for the six month period ended April 2, 2023, was as follows:

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

10 unchanged sentences

Balance at January 1, 2023 ( 250.8 ) ( 3.9 ) ( 34.2 ) ( 288.9 )

Other comprehensive income (loss) before reclassification 14.6 ( 7.1 ) 0.1 7.6

Net reclassification for loss (gain) to income from continuing operations — 4.9 ( 0.7 ) 4.2

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

Other comprehensive income (loss) before tax 14.6 ( 2.3 ) ( 0.6 ) 11.7

Deferred tax effect 3.7 0.7 0.1 4.5

Other comprehensive income (loss), net of tax 18.3 ( 1.6 ) ( 0.5 ) 16.2

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

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

Other comprehensive income (loss) attributable to controlling interest 18.1 ( 1.6 ) ( 0.5 ) 16.0

Balance at April 2, 2023 $ ( 232.7 ) $ ( 5.5 ) $ ( 34.7 ) $ ( 272.9 )

The following table presents reclassifications of the gain (loss) on the Condensed Consolidated Statements of Income from AOCI for the periods indicated:

(in millions) Three Month Period Ended January 1, 2023

Derivative Instruments Defined Benefit Pension Total

(in millions) Three Month Period Ended April 2, 2023 Six Month Period Ended April 2, 2023

Derivative Instruments Defined Benefit Pension Total Derivative Instruments Defined Benefit Pension Total

Net Sales $ — $ — $ — $ 0.1 $ — $ 0.1

6 unchanged sentences

NOTE 14 – ACCUMULATED OTHER COMPREHENSIVE INCOME (continued)

The change in the components of AOCI for the three month period ended January 2, 2022, was as follows:

The change in the components of AOCI for the six month period ended April 3, 2022, was as follows:

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

10 unchanged sentences

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 )

The following table presents reclassifications of the gain (loss) on the Condensed Consolidated Statements of Income from AOCI for the periods indicated:

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

Derivative Instruments Defined Benefit Pension Total

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

Derivative Instruments Defined Benefit Pension Total Derivative Instruments Defined Benefit Pension Total

Cost of goods sold $ 1.5 $ — $ 1.5 $ 3.6 $ — $ 3.6

Other non-operating expense (income), net — ( 1.0 ) ( 1.0 )

Other non-operating income, net — ( 1.0 ) ( 1.0 ) — ( 3.1 ) ( 3.1 )

Income from discontinued operations, net of tax 0.7 — 0.7 1.2 — 1.2

NOTE 15 – INCOME TAXES

The effective tax rate for the three month periods ended January 1, 2023 and January 2, 2022, was as follows:

Three Month Periods Ended

Effective tax rate January 1, 2023 January 2, 2022

The effective tax rate for the three and six month periods ended April 2, 2023 and April 3, 2022, was as follows:

Three Month Periods Ended Six Month Periods Ended

Effective tax rate April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

SBH 31.7 % 21.3 % 29.0 % 29.2 %

SB/RH 31.2 % 21.1 % 28.7 % 29.1 %

The estimated annual effective tax rate applied to the three month periods ended January 1, 2023, 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 2, 2023, differs from the US federal statutory rate of 21 % principally due to income earned outside the U.S.

that is subject to U.S.

tax, including the U.S.

tax on global intangible low taxed income (“GILTI”), certain nondeductible expenses, and foreign rates that differ from the U.S.

tax on global intangible low taxed income (“GILTI”), certain nondeductible expenses, foreign currency impacts, and foreign rates that differ from the U.S.

federal statutory rate.

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

As of January 1, 2023 and September 30, 2022, there was $ 1.0 million and $ 2.7 million of income taxes receivable from its parent company on the SB/RH Condensed Consolidated Statements of Financial Position, calculated as if SB/RH were a separate taxpayer.

During the six month period ended April 2, 2023, the Company recorded a discrete $ 16.8 million tax benefit related to the impairment of certain intangible assets.

The Company generated a pretax loss on continuing operations for the three and six month periods ended April 2, 2023, so additional discrete tax benefits result in an increase to the tax rate.

As of April 2, 2023 and September 30, 2022, there was $ 1.0 million and $ 2.7 million of income taxes receivable from 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.

9 unchanged sentences

We have not conducted invasive testing at all sites and locations and have identified an environmental remediation liability to the extent such remediation requirements have been identified and are considered estimable.

As of January 1, 2023, there was an environmental remediation liability of $ 7.5 million with $ 3.6 million included in Other Current Liabilities and $ 3.9 million included in Other Long-Term Liabilities on the Condensed Consolidated Statements of Financial Position.

As of April 2, 2023, there was an environmental remediation liability of $ 6.3 million, with $ 2.2 million included in Other Current Liabilities and $ 4.1 million included in Other Long-Term Liabilities on the Condensed Consolidated Statements of Financial Position.

As of September 30, 2022, there was an environmental remediation liability of $ 8.8 million, with $ 4.7 million included in Other Current Liabilities and $ 4.1 million included in Other Long-Term Liabilities on the Condensed Consolidated Statements of Financial Position.

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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 1, 2023 and September 30, 2022, the Company recognized $ 3.1 million and $ 3.4 million in product liability, respectively, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

As of April 2, 2023 and September 30, 2022, the Company recognized $ 3.2 million and $ 3.4 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.

Product Warranty .

The Company recognizes an estimated liability for standard warranty on certain products when we recognize revenue on the sale of the warranted products.

The Company recognizes an estimated liability for standard warranties on certain products when we recognize revenue on the sale of the warranted products.

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 $ 0.3 million and $ 0.4 million of warranty accruals as of January 1, 2023 and September 30, 2022, 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 2, 2023 and September 30, 2022, respectively, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

Product Safety Recall.

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The Company has assessed the incremental costs attributable to the recall, including the anticipated returns from customers for existing retail inventory, write-off of inventory on hand, and other costs to facilitate the recall such as notification, shipping and handling, rework and destruction of affected products, as needed, and evaluated the probability of redemption.

As a result, the Company recognized $ 8.8 million and $ 7.5 million as of January 1, 2023 and September 30, 2022, respectively, in Other Current Liabilities on the Consolidated Statement of Financial Position associated with the costs for the recalls.

Additionally, the Company has indemnification provisions that are contractually provided by third parties for the affected products and as a result the Company has also recognized $ 7.4 million and $ 4.7 million as of January 1, 2023 and September 30, 2022, respectively, in Other Receivables on the Consolidated Statement of Financial Position related to recovery from such indemnification provisions.

As a result, the Company recognized $ 8.4 million and $ 7.5 million as of April 2, 2023 and September 30, 2022, respectively, in Other Current Liabilities on the Consolidated Statement of Financial Position associated with the costs for the recalls.

Additionally, the Company has indemnification provisions that are contractually provided by third parties for the affected products and as a result the Company has also recognized $ 8.2 million and $ 4.7 million as of April 2, 2023 and September 30, 2022, respectively, in Other Receivables on the Consolidated Statement of Financial Position related to recovery from such indemnification provisions.

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 17 – SEGMENT INFORMATION

Net sales relating to the segments for the three month periods ended January 1, 2023 and January 2, 2022, are as follows:

Three Month Periods Ended

(in millions) January 1, 2023 January 2, 2022

Net sales relating to the segments for the three and six month periods ended April 2, 2023 and April 3, 2022, are as follows:

Three Month Periods Ended Six Month Periods Ended

(in millions) April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

HPC $ 279.2 $ 316.1 $ 643.6 $ 695.8

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Adjusted EBITDA further excludes:

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

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

See Note 13 – Share Based Compensation for further details;

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• 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 operating lease assets with below market rent, among others;

• Non-cash gain from the reduction in the contingent consideration liability recognized during the three month period ended January 1, 2023 associated with the Tristar Business acquisition in the prior year on February 18, 2022;

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

• Non-cash gain from the reduction in the contingent consideration liability recognized during the six month period ended April 2, 2023, associated with the Tristar Business acquisition in the prior year on February 18, 2022;

• Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets;

• Impact from the early settlement of foreign currency cash flow hedges in the prior year, resulting in subsequent assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early in the prior year due to changes in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region, resulting in the recognition of excluded gains in the prior year intended to mitigate costs through the year ending September 30, 2023;

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See Note 16 - Commitments and Contingencies 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 with remeasurements during the three month period ended January 2, 2022;

• Other adjustments are primarily attributable to:

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(2) key executive severance related costs;

(3) impairment charges from the exit of certain operating leases at our HPC segment;

and (4) insurable losses and cost recovery associated with hurricane damages at a key supplier of our Glofish business and loss realized from misapplied funds during the three month period ended January 1, 2023.

and (3) insurable losses associated with hurricane damages at a key supplier of our Glofish business and loss realized from misapplied funds during the six month period ended April 2, 2023.

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 17 - SEGMENT INFORMATION (continued)

Segment Adjusted EBITDA for the reportable segments for SBH for the three month periods ended January 1, 2023 and January 2, 2022, are as follows:

Three Month Periods Ended

SBH (in millions) January 1, 2023 January 2, 2022

Segment Adjusted EBITDA for the reportable segments for SBH for the three and six month periods ended April 2, 2023 and April 3, 2022, are as follows:

Three Month Periods Ended Six Month Periods Ended

SBH (in millions) April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

HPC $ ( 1.9 ) $ 10.6 $ 11.3 $ 38.0

8 unchanged sentences

Tristar acquisition and integration 4.0 12.7 9.7 14.4

HPC separation initiatives 2.4 1.7

HHI divestiture 1.4 1.2 2.9 5.5

HPC separation initiatives 1.1 3.0 3.5 4.7

Coevorden operations separation 1.4 2.1 2.7 5.3

3 unchanged sentences

Fiscal 2023 restructuring 4.5 — 4.5 —

Fiscal 2022 restructuring 0.1 — 0.6 —

Russia closing initiatives ( 0.1 ) — 2.8 —

Global ERP transformation 3.3 3.2 4.9 6.0

HPC brand portfolio transitions 0.5 — 1.4 —

Russia closing initiatives 2.9 —

GPC distribution center transition — 7.1 — 19.9

4 unchanged sentences

Gain from remeasurement of contingent consideration liability — — ( 1.5 ) —

Impairment of equipment and operating leases 4.2 — 4.5 —

Impairment of intangible assets 67.0 — 67.0 —

Early settlement of foreign currency cash flow hedges 1.3 — 3.9 —

HPC product recall 1.6 — 1.9 —

Legal and environmental remediation reserves — ( 0.5 )

Legal and environmental — — — ( 0.5 )

Salus and other 0.6 0.1 5.0 0.2

5 unchanged sentences

NOTE 17 - SEGMENT INFORMATION (continued)

Segment Adjusted EBITDA for reportable segments for SB/RH for the three month periods ended January 1, 2023 and January 2, 2022, 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 2, 2023 and April 3, 2022, are as follows:

Three Month Periods Ended Six Month Periods Ended

SB/RH (in millions)

January 1, 2023 January 2, 2022

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

HPC $ ( 1.9 ) $ 10.6 $ 11.3 $ 38.0

8 unchanged sentences

Tristar acquisition and integration 4.0 12.7 9.7 14.4

HPC separation initiatives 2.4 1.7

HHI divestiture 1.4 1.2 2.9 5.5

HPC separation initiatives 1.1 3.0 3.5 4.7

Coevorden operations separation 1.4 2.1 2.7 5.3

3 unchanged sentences

Fiscal 2023 restructuring 4.5 — 4.5 —

Fiscal 2022 restructuring 0.1 — 0.6 —

Russia closing initiatives ( 0.1 ) — 2.8 —

Global ERP transformation 3.3 3.2 4.9 6.0

HPC brand portfolio transitions 0.5 — 1.4 —

Russia in-country closing initiatives 2.9 —

GPC distribution center transition — 7.1 — 19.9

4 unchanged sentences

Gain from remeasurement of contingent consideration liability — — ( 1.5 ) —

Impairment of equipment and operating leases 4.2 — 4.5 —

Impairment of intangible assets 67.0 — 67.0 —

Early settlement of foreign currency cash flow hedges 1.3 — 3.9 —

HPC product recall 1.6 — 1.9 —

Legal and environmental remediation reserves — ( 0.5 )

Legal and environmental — — — ( 0.5 )

Other 0.6 — 5.0 ( 0.2 )

5 unchanged sentences

NOTE 18 – 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 1, 2023 and January 2, 2022, 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 2, 2023 and April 3, 2022, are as follows:

Three Month Periods Ended Six Month Periods Ended

(in millions, except per share amounts)

January 1, 2023 January 2, 2022

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Net loss from continuing operations attributable to controlling interest $ ( 75.1 ) $ ( 25.1 ) $ ( 115.3 ) $ ( 55.3 )

Income from discontinued operations attributable to controlling interest 19.4 38.4

Net income from discontinued operations attributable to controlling interest 21.4 41.0 40.7 79.4

Net (loss) income attributable to controlling interest $ ( 53.7 ) $ 15.9 $ ( 74.6 ) $ 24.1

11 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements