What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-11-21 compared with 2022-11-22 · 90 added, 94 removed, 125 unchanged (60% of the section changed)

14 unchanged sentences

We manage the business in three vertically integrated, product focused segments:

(i) Home and Personal Care (“HPC”), (ii) Global Pet Care (“GPC”), and (iii) Home and Garden (“H&G”).

(i) Global Pet Care (“GPC”), (ii) Home and Garden (“H&G”) and (iii) Home and Personal Care (“HPC”).

The Company manufactures, markets and distributes its products globally in the North America (“NA”), Europe, Middle East & Africa (“EMEA”), Latin America (“LATAM”) and Asia-Pacific (“APAC”) regions through a variety of trade channels, including retailers, wholesalers and distributors.

14 unchanged sentences

See Management’s Discussion and Analysis of Financial Condition and Results of Operations , included in Item 7 to this Annual Report, for further discussion of the consolidated operating results and segment operating results.

Table of Conten t s

Home and Personal Care (HPC)

The following is an overview of net sales by product category and geographic region sold by destination for the year ended September 30, 2022.

Product Category

Home Appliances

Small kitchen appliances including toaster ovens, coffeemakers, slow cookers, air fryers, blenders, hand mixers, grills, food processors, juicers, toasters, irons, kettles, and bread makers, cookware, and cookbooks.

Black & Decker®, Russell Hobbs®, George Foreman®, PowerXL®, Emeril Legasse®, Copper Chef ®, Toastmaster®, Juiceman®, Farberware®, and Breadman®

Personal Care

Hair dryers, flat irons and straighteners, rotary and foil electric shavers, personal groomers, mustache and beard trimmers, body groomers, nose and ear trimmers, women's shavers, and haircut kits.

We have a trademark license agreement (the "License Agreement") with Stanley Black & Decker ("SBD") pursuant to which we license the Black & Decker® brand ("B&D") in North America, Latin America (excluding Brazil) and the Caribbean for four core categories of household appliances:

beverage products, food preparation products, garment care products and cooking products.

The License Agreement has a term ending 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.

Under the terms of the License Agreement, we agree to pay SBD royalties based on a percentage of sales, with minimum annual royalty payments of $15.0 million, with the exception that the minimum annual royalty will no longer be applied effective January 1, 2024 through the expiration of the License Agreement.

The License Agreement also requires us to comply with maximum annual return rates for products.

Subsequent to the completion of the License Agreement, there are no continuing obligations or restrictions on the business activities of either party.

See Note 6 – Revenue Recognition included in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail on revenue concentration from B&D products.

We own the right to use the Remington® trademark for electric shavers, shaver accessories, grooming products and personal care products;

and Remington Arms Company, Inc.

(“Remington Arms”) owns the rights to use the trademark for firearms, sporting goods and products for industrial use, including industrial hand tools.

The terms of a 1986 agreement between Remington Products, LLC and Remington Arms provides for the shared rights to use the trademark on products which are not considered “principal products of interest” for either company.

We retain the trademark for nearly all products which we believe can benefit from the use of the brand name in our distribution channels.

On February 18, 2022, the Company acquired the home appliances and cookware products sold under the PowerXL®, Emeril Legasse®, and Copper Chef® brands from Tristar Products, Inc.

(the "Tristar Business").

The net assets and operations of the Tristar Business are integrated within the HPC segment.

As part of the acquisition, 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 HPC segment will continue to license the Emeril brands within the US, Canada, Mexico, and the United Kingdom for certain designated product categories of household appliances, 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 are obligated 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.

See Note 4 – Acquisitions included in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail.

HPC products are sold primarily to large retailers, online retailers, wholesalers, distributors, warehouse clubs, food and drug chains and specialty trade or retail outlets such as consumer electronics stores, department stores, discounters and other specialty stores.

International distribution varies by region and is often executed on a country-by-country basis.

Our sales generally are made through the use of individual purchase orders.

A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represent approximately 35% of segment sales for the year ended September 30, 2022.

With the acquisition of the Tristar Business, we have expanded our distribution channels with more direct-to-consumer capabilities which we anticipate will be utilized more frequently with our legacy HPC business and products.

Primary competitors for home appliances include Newell Brands (Sunbeam, Mr.

Coffee, Crockpot, Oster), De’Longhi America (DeLonghi, Kenwood, Braun), SharkNinja (Shark, Ninja), Hamilton Beach Holding Co.

(Hamilton Beach, Proctor Silex), Sensio, Inc.

SEB S.A.(T-fal, Krups, Rowenta), Whirlpool Corporation (Kitchen Aid), Conair Corporation (Cuisinart, Waring), Koninklijke Philips N.V.

(Philips), Glen Dimplex (Morphy Richards), Gourmia, and private label brands for major retailers.

Primary competitors in personal care include Koninklijke Philips Electronics N.V.

(Norelco), The Procter & Gamble Company (Braun), Conair Corporation, Wahl Clipper Corporation, and Helen of Troy Limited.

Sales from electric personal care product categories tend to increase during the December holiday season (the Company's fiscal first quarter), while small appliances sales typically increase from July through December primarily due to the increased demand by customers in the late summer for “back-to-school” sales (the Company's fiscal fourth quarter) and in December for the holiday season.

Table of Conten t s

Our sales by quarter as a percentage of annual net sales during the years ended September 30, 2022 and 2021 are as follows (excluding acquisition sales attributable to the Tristar Business):

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Substantially all of our home appliances and personal care products are manufactured by third-party suppliers that are primarily located in the APAC region, the prices of which may be susceptible to changes in transportation costs, government regulations and tariffs, and changes in currency exchange rates.

We maintain ownership of most of the tooling and molds used by our suppliers.

We continuously monitor and evaluate our supplier network for quality, cost, and manufacturing capacity.

Our research and development strategy is focused on new product development and performance enhancements of our existing products.

We plan to continue to use our brand names, customer relationships and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality.

Global Pet Care (GPC)

2 unchanged sentences

Companion Animal

Rawhide chews, dog and cat clean-up, training, health and grooming products, small animal food and care products, rawhide-free dog treats, and wet and dry pet food for dogs and cats

8IN1® (8-in-1), Dingo®, Nature's Miracle®, Wild Harvest™, Littermaid®, Jungle®, Excel®, FURminator®, IAMS® (Europe only), Eukanuba® (Europe only), Healthy-Hide®, DreamBone®, SmartBones®, ProSense®, Perfect Coat®, eCOTRITION®, Birdola®, Good Boy®, Meowee!®, Wildbird®, and Wafcol®.

Dog and cat chews, treats, wet and dry foods;

Dog and cat clean-up, behavioral training aides, health and grooming products;

Indoor bird and other small animal food and care products.

Good'n'Fun®, DreamBone®, GOOD BOY®, SmartBones®, IAMS® (Europe only), EUKANUBA® (Europe only), Nature's Miracle®, FURminator®, Dingo®, 8IN1® (8-in-1), Meowee!®, and Wild Harvest™.

Consumer and commercial aquarium kits, stand-alone tanks;

1 unchanged sentence

and aquatics consumables such as fish food, water management and care

Tetra®, Marineland®, Whisper®, Instant Ocean®, GloFish®, OmegaOne® and OmegaSea®.

Tetra®, Marineland®, Instant Ocean®, GloFish®, and OmegaSea®.

We sell primarily to large retailers, pet superstores, online retailers, food and drug chains, warehouse clubs and other specialty retail outlets.

1 unchanged sentence

Our sales generally are made through the use of individual purchase orders.

In addition to product sales, we also perform installation and maintenance services on commercial aquariums.

Live fish under our GloFish® brand are produced, marketed, and sold by independent third-party breeders through a supply and licensing agreement with the Company.

A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represent approximately 34% of segment sales for the fiscal year ended September 30, 2022.

Primary competitors are Mars Corporation, the Hartz Mountain Corporation, and Central Garden & Pet Company all of which sell a comprehensive line of pet supplies that compete across our product categories.

The pet supplies product category is highly fragmented with no competitor holding a substantial market share and consists of small companies with limited product lines, including private label products and suppliers.

Sales remain fairly consistent throughout the year with little variation.

Our sales by quarter as a percentage of annual net sales during the years ended September 30, 2022, and 2021 are as follows:

In addition to product sales within the United States, we also perform installation and maintenance services on commercial aquariums.

Live fish under our GloFish® brand are produced, marketed, and sold by an independent third-party breeder through a supply and licensing agreement with the Company.

A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represented approximately 33.4% of segment sales for the fiscal year ended September 30, 2023.

Primary competitors are Mars Corporation, Nestle Purina, and the Central Garden & Pet Company all of which sell a comprehensive line of pet products that compete across our product categories.

The pet supplies (non-food) product category is highly fragmented with no competitor holding a substantial market share and consists of small companies with limited product lines, including private label products and suppliers.

Sales remain mostly consistent throughout the year with slight variations during holiday periods.

Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2023 are as follows:

First Quarter

2 unchanged sentences

Fourth Quarter

Table of Conten t s

Rawhide products are produced at third-party suppliers in the APAC region and Mexico.

Chews products are produced at third-party suppliers in the APAC region and Mexico.

Certain other aquatics equipment and companion animal hard goods are also produced at third-party suppliers in the APAC region.

We maintain ownership of most of the tooling and molds used by third-party suppliers.

Product purchased from third-party suppliers, especially those from the APAC regions, are susceptible to fluctuations in transportation costs, government regulations and tariffs, and changes in currency exchange rates.

Product purchased from third-party suppliers are susceptible to fluctuations in transportation costs, government regulations and tariffs, and foreign currency exchange rates.

We continuously monitor and evaluate our supplier network for quality, cost, and manufacturing capacity.

Aquatics and certain other companion animal products are produced in various manufacturing plants located in the U.S.

and Germany, including the production of glass aquariums in in our Noblesville, Indiana facility, shampoos and aquarium salt in our Blacksburg, Virginia facility, OmegaSea® salt with bird and other small animal products manufactured in our Bridgeton, Missouri facility, and aquatics nutrition and care products manufactured in Melle, Germany.

and Germany, including the production of glass aquariums in in our Noblesville, Indiana facility, shampoos and aquarium salt in our Blacksburg, Virginia facility, OmegaSea® fish food with bird and other small animal products manufactured in our Bridgeton, Missouri facility, and aquatics nutrition and care products manufactured in Melle, Germany.

We continually evaluate capacity at our manufacturing facilities and related utilization.

In general, we believe our existing facilities are adequate for our present and foreseeable operating needs.

In general, we believe our existing facilities are adequate for our present and foreseeable future operating needs.

Our research and development strategy is focused on new product development and performance enhancements of our existing products.

17 unchanged sentences

We sell primarily in the U.S.

with some distribution in LATAM and the Caribbean.

On May 28, 2021, the Company acquired 100% of the membership interest in For Life Products, LLC ("FLP");

a leading manufacturer of household cleaning, maintenance, and restoration sold under the Rejuvenate® brand, expanding the product categories provided by the H&G segment.

Our sales generally are made through the use of individual purchase orders.

with some distribution in LATAM.Our sales generally are made through the use of individual purchase orders.

A significant percentage of our sales are attributable to a limited group of retailer customers, including Lowe’s, Home Depot, and Walmart, which represent approximately 63.1% segment sales for the year ended September 30, 2023.

2 unchanged sentences

(Raid, OFF!), Central Garden & Pet (AMDRO, Sevin), SBM Company (BioAdvanced), Henkel AG & Co.

KGaA (Combat), Bona AB (Bona), and Procter & Gamble (Swiffer).

KgaA (Combat), Bona AB (Bona), and Procter & Gamble (Swiffer, Zevo).

Sales typically peak during the first six months of the calendar year (the Company’s second and third fiscal quarters) and are lowest in the last three months of the calendar year (the Company's first quarter) due to customer purchasing patterns, and timing of promotional activities.

Seasonal sales may also be impacted by changes in weather conditions during the peak season.

Our sales by quarter as a percentage of annual net sales during the years ended September 30, 2022, and 2021 are as follows:

Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2023 are as follows:

First Quarter

2 unchanged sentences

Fourth Quarter

Table of Conten t s

H&G currently produces the majority of its products in one facility in St.

Louis, Missouri, with production primarily consisting of liquids and aerosols, and the remaining portion of products being produced by various third-party manufacturers, consisting of granulates, candles, baits & traps, and wipes.

Products produced for the Rejuvenate® business are primarily provided by third-party manufacturers.

H&G produces the majority of its products in one facility in St.

The main raw materials purchased are plastic bottles, steel aerosol cans, corrugate, active ingredients, and bulk chemicals.

3 unchanged sentences

We plan to continue to use our brand names, customer relationships, and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality.

Home and Personal Care (HPC)

The following is an overview of net sales by product category and geographic region sold by destination for the year ended September 30, 2023.

Product Category

Home Appliances

Black+Decker®, Russell Hobbs®, George Foreman®, PowerXL®, Emeril Legasse®, Copper Chef ®, Toastmaster®, Juiceman®, Farberware®, and Breadman®

Personal Care

Hair dryers, flat irons and straighteners, rotary and foil electric shavers, personal groomers, mustache and beard trimmers, body groomers, nose and ear trimmers, women's shavers, and haircut kits.

We have a trademark license agreement (the "License Agreement") with Stanley Black+Decker ("SBD") pursuant to which we license the Black + Decker® brand ("B&D") in North America, Latin America (excluding Brazil) and the Caribbean for four core categories of household appliances:

beverage products, food preparation products, garment care products and cooking products.

The License Agreement also requires us to comply with maximum annual return rates for products.

Subsequent to the completion of the License Agreement, there are no continuing obligations or restrictions on the business activities of either party.

The Emeril License is set to expire effective December 31, 2023, with options of up to two additional one-year renewal periods following the initial expiration.

Under the terms of the agreement, we are obligated to pay the license holder a percentage of sales, with minimum annual royalty payments of $1.6 million, increasing to $1.8 million in subsequent renewal periods.

We own the right to use the Remington® trademark for electric shavers, shaver accessories, grooming products and personal care products;

and Remington Arms Company, Inc.

(“Remington Arms”) owns the rights to use the trademark for firearms, sporting goods and products for industrial use, including industrial hand tools.

We retain the trademark for nearly all products which we believe can benefit from the use of the brand name in our distribution channels.

HPC products are also sold direct-to-consumer through direct response television, brand websites, and other online marketplaces.

International distribution varies by region and is often executed on a country-by-country basis.

Our sales generally are made through the use of individual purchase orders.

A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represent approximately 37.1% of segment sales for the year ended September 30, 2023.

Primary competitors for home appliances include Newell Brands (Sunbeam, Mr.

Coffee, Crockpot, Oster), De’Longhi America (DeLonghi, Kenwood, Braun), SharkNinja (Shark, Ninja), Hamilton Beach Holding Co.

(Hamilton Beach, Proctor Silex), Sensio, Inc.

SEB S.A.(T-fal, Krups, Rowenta), Whirlpool Corporation (Kitchen Aid), Conair Corporation (Cuisinart, Waring), Versuni (Philips), Donlim (Morphy Richards), Gourmia, and private label brands for major retailers.

Primary competitors in personal care include Koninklijke Philips Electronics N.V.

(Norelco), The Procter & Gamble Company (Braun), Conair Corporation, Wahl Clipper Corporation, Helen of Troy Limited, SharkNinja (Shark), and Dyson Limited (Dyson).

Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2023 are as follows:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

We maintain ownership of most of the tooling and molds used by our suppliers.

We continuously monitor and evaluate our supplier network for quality, cost, and manufacturing capacity.

Our research and development strategy is focused on new product development and performance enhancements of our existing products.

Discontinued Operations

1 unchanged sentence

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

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

HHI consists of residential locksets and door hardware, including knobs, levers, deadbolts, handle sets, and electronic and connected locks under the Kwikset®, Weiser®, Baldwin®, Tell Manufacturing®, and EZSET® brands;

1 unchanged sentence

and builders' hardware consisting of hinges, metal shapes, security hardware, rack and sliding door hardware, and gate hardware under the National Hardware® and FANAL® brands.

On June 20, 2023, the Company completed its divestiture of its HHI segment resulting in the recognition of a gain on sale of $2.8 billion included as a component of Income From Discontinued Operations, Net of Tax.

Refer to Note 3 - Divestitures to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further discussion pertaining the HHI divestiture.

5 unchanged sentences

Our workplace culture is centered around practices that support our communities and promote sustainable practices and a diverse, equitable, and inclusive workforce.

As of September 30, 2022, we have approximately 11,000 full-time employees worldwide with approximately 3,300 employees associated with our continuing operations.

Approximately 17% of our total labor force is covered by collective bargaining agreements, of which 67% is subject to arrangements under negotiations or expiring within 12 months.

Approximately 21% of our labor force associated with our continued operations is subject to collective bargaining agreements, none of which expire within 12 months.

As of September 30, 2023, we have approximately 3,100 full-time employees worldwide.

Approximately 25% of our total labor force is covered by collective bargaining agreements, of which approximately 25% is subject to arrangements under negotiations or expiring within 12 months.

We believe that our overall relationship with our employees is good.

8 unchanged sentences

The team hosts regular meetings to share information and discuss best practices across plants.

Environmental, Social and Governance

Spectrum Brands is committed to further enhancing our environmental, social and governance (“ESG”) efforts and recognizes the impact our business has on our communities and the world.

We believe in making a positive difference in the communities in which we live and work and strive to discharge our corporate social responsibilities from a global perspective and throughout every aspect of our operations, consistent with our focus on creating value for all of our stakeholders over the long term.

Our decisions regarding business strategy, operations and resource allocation are guided by this purpose and are rooted in our core values.

Our Board recognizes the negative effect that poor environmental practices and human capital management may have on us and our returns.

Accordingly, our Board considers and balances the impact on the environment, people and the communities of which we are a part in deciding how to operate our business.

Our Board receives periodic reports regarding our risk exposure and risk mitigation efforts in these areas.

We are committed to operating our business with all stakeholders in mind and with a view toward long-term sustainability and value creation, even as our business and society face a variety of existing and emerging challenges.

We leverage our expertise, along with external partners, to help address these challenges.

While our corporate social responsibility commitments address many areas, we focus on five key priorities:

product and content safety, environmental sustainability, human rights and ethical sourcing, employee safety and well-being and diversity and inclusion.

Talent Development

7 unchanged sentences

We solicit and receive questions and feedback from our employees through this process.

Diversity, Equity and Inclusion

Spectrum Brands is committed to fostering a diverse, equitable, and inclusive workplace for employees of every race, color, gender identity, sexual orientation, age, physical or mental ability and background.

At Spectrum Brands, we strive to make our employees feel valued and respected and given the opportunity to thrive as their authentic selves.

To further that objective we have:

• Engaged the services of a third-party consultant with expertise in diversity, equity and inclusion (“DEI”) to help us create long-lasting change;

• Implemented a DEI program;

• Created a U.S.

DEI Advisory Counsel made up of our employees of diverse backgrounds to help design and develop DEI-related priorities and goals, advise on ways to advance the DEI dialogue and drive meaningful cultural change at the Company ;

• Created affinity groups for our diverse employees and developing trainings, communications and programs to further facilitate and encourage open and transparent DEI discussions among our employee populations;

• Developed educational content and trainings to help leaders foster a more inclusive environment.

COVID-19 Response

7 unchanged sentences

• Suspension of travel restrictions for all unnecessary travel.

Our Company also began producing and selling Cutter® Hand Sanitizer during the initial peak of the pandemic, which were eventually sent to employee homes for personal use and donated to health facilities.

Table of Conten t s

Diversity, Equity and Inclusion

At Spectrum Brands, we strive to make our employees feel valued and respected and given the opportunity to thrive as their authentic selves.

To further that objective we have:

• Engaged the services of a third-party consultant with expertise in diversity, equity and inclusion ("DEI") to help us create long-lasting change;

• Implemented a DEI program;

• Created a U.S.

DEI Advisory Counsel made up of our employees of diverse backgrounds to help design and develop DEI-related priorities and goals;

• Developed educational content and trainings to help leaders foster a more inclusive environment.

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

What changed 10-K

Item 1. Business