What changed in this filing

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Item 1A. Risk Factors

2023-11-21 compared with 2022-11-22 · 67 added, 98 removed, 658 unchanged (20% of the section changed)

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• Risks related to our indebtedness and financing abilities:

Our substantial indebtedness may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our substantial indebtedness.

Our indebtedness may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our substantial indebtedness.

• Risks related to our international operations:

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Risks Related to our Business Operations

The COVID-19 pandemic is a serious threat to the health and economic well-being affecting our customers, employees, sources of supply and our financial condition and results of operations.

In March 2020, the World Health Organization announced that COVID-19 had become a pandemic and a National Emergency relating to COVID-19 was announced in the U.S.

With the possibility of continued widespread infection in the U.S.

and abroad, there exists the potential for substantial commercial impact.

National, state, and local authorities recommended social distancing and imposed, or considered imposing quarantine and isolation measures, on large portions of the population, including mandatory business closures.

These measures had serious adverse impacts on domestic and foreign economies of uncertain severity and duration, and the uncertainty remains due to the potential for these measures to be re-implemented in the event of increased COVID-19 cases.

The effectiveness of economic stabilization efforts, including potential government payments to affected citizens and industries, remains uncertain.

The sweeping nature of COVID-19 has made it extremely difficult to predict the long-term ramifications on our financial condition and results of operations and as conditions evolve, we cannot predict how quickly the marketplaces in which we operate will react and return to normal.

These impacts may include, but are not limited to:

• significant reductions in, or volatility of, demand for our products, which may be caused by changes in consumer spending and shopping habits from (i) the inability or unwillingness of consumers to purchase our products due to illness, quarantine, travel restrictions, store closures, general financial hardship, decreased consumer confidence or changes (ii) the reduction in the number of COVID-19 cases or the lifting or easing of health and safety restrictions such as travel, social gatherings or any other activities by consumers that divert and reduce their demand for, or time spend on, our products;

• inability to meet customers’ needs or achieve cost targets due to disruptions in our manufacturing and supply arrangements caused by the loss or disruption of essential manufacturing or availability or cost of key product components, transportation, workforce, or other manufacturing and distribution capability;

• failure of third parties on which we rely, including our suppliers, contract manufacturers, distributors, contractors, commercial banks, and other business partners, to meet their obligations to us, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties and may adversely impact our operations;

• significant change in the political conditions in markets in which we manufacture, sell or distribute our products, including governmental or regulatory actions such as quarantines, closures or other restrictions, that limit or close our operating and manufacturing facilities, restrict our employees’ ability to travel or perform necessary business functions, or otherwise prevent our third-party partners, suppliers, or customers from sufficiently staffing operations, including operations necessary for the production, distribution, sale and support of our products, which could adversely impact our results or impairment of the Company’s net assets;

• disruptions and stress in capital markets that could impact the cost and availability of capital for us and for our customers, suppliers and other business partners;

• quarantines, stay-at-home orders and other limitations can disrupt our product development, branding, research and administrative functions, regardless of whether we are actually forced to close our own facilities and similar disruptions that may also effect other organizations and persons that we collaborate with or whose services we are dependent on;

• the need for our employees and business partners to work remotely in these circumstances also creates greater potential for risks related to cybersecurity, confidentiality and data privacy.

Despite our efforts to manage and remedy the impact of COVID-19 on our financial condition and results of operations, the ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic, potential future waves of COVID-19 cases in the locations where we operate, and actions taken by governmental authorities to contain its spread and mitigate its public health effects.

Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially increase our costs, negatively impact our sales and damage our results of operations and liquidity position.

The duration of any such impacts cannot be predicted.

See further discussion in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations .

Table of Conten t s

Reliance on third-party relationships and outsourcing arrangements could adversely affect our business.

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Outsourcing these functions involves the risk that third-party service providers may not perform to our standards or legal requirements, may not produce reliable results, may not perform in a timely manner, may not maintain the confidentiality of our proprietary information, or may fail to perform at all.

Additionally, any disruption, such as a government shutdown, war, natural disaster or global pandemic (including the current COVID-19 pandemic), could affect the ability of our third-party service providers to meet their contractual obligations to us.

Additionally, any disruption, such as a government shutdown, war, natural disaster or global pandemic, could affect the ability of our third-party service providers to meet their contractual obligations to us.

Failure of these third parties to meet their contractual, regulatory, confidentiality or other obligations to us could result in material financial loss, higher costs, regulatory actions, and reputational harm.

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Our ability to meet our customers’ needs and achieve cost targets depends on our ability to maintain key manufacturing and supply arrangements, including execution of supply chain optimizations and certain sole supplier or sole manufacturing plant arrangements.

The loss or disruption of such manufacturing and supply arrangements, including for issues such as labor disputes, labor shortages, loss or impairment of key manufacturing sites, discontinuity in our internal information and data systems, inability to procure sufficient raw or input materials, significant changes in trade policy, natural disasters, increasing severity or frequency of extreme weather events due to climate change or otherwise, acts of war or terrorism, the COVID-19 pandemic or other disease outbreaks or other external factors over which we have no control, including inflation, have interrupted product supply and, if not effectively managed and remedied, could have an adverse impact on our business, financial condition or results of operations.

The loss or disruption of such manufacturing and supply arrangements, including for issues such as labor disputes, labor shortages, loss or impairment of key manufacturing sites, discontinuity in our internal information and data systems, inability to procure sufficient raw or input materials, significant changes in trade policy, natural disasters, increasing severity or frequency of extreme weather events due to climate change or otherwise, acts of war or terrorism, or disease outbreaks or other external factors over which we have no control, including inflation, have interrupted product supply and, if not effectively managed and remedied, could have an adverse impact on our business, financial condition or results of operations.

We participate in very competitive markets and we may not be able to compete successfully, causing us to lose market share and sales.

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Further consolidation, store closures and bankruptcies could have a material adverse effect on our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities.

Table of Conten t s

Consolidation of retailers and our dependence on a small number of key customers for a significant percentage of our sales may negatively affect our business, financial condition and results of operations.

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Our success is dependent on our ability to manage our retailer relationships, including offering mutually acceptable trade terms.

Concentration of sales are further discussed in Item 1 - Business and Note 6 - Revenue Recognition to the Consolidated Financial Statements included elsewhere in this Annual Report.

Concentration of sales are further discussed in Item 1 - Business above and Note 6 - Revenue Recognition in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.

Although we have long-established relationships with many of our retail customers, we generally do not have long-term agreements with them and purchases are normally made through the use of individual purchase orders.

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Any failure to timely obtain suitable supplies at competitive prices could materially adversely affect our business, financial condition and results of operations.

Table of Conten t s

Our dependence on a few suppliers for certain of our products makes us vulnerable to a disruption in the supply of our products.

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The Company’s insurance policies have coverage in case of significant damage to its manufacturing facilities but may not fully compensate for the cost of replacement for any such damage and any loss from business interruption.

As a result, we may not be adequately insured to cover losses resulting from significant damage to its manufacturing facility.

Any damage to its facility or interruption in manufacturing could result in production delays and delays in meeting contractual obligations which could have a material adverse effect on relationships with customers and on its results of operations, financial condition or cash flows in any given period.

As a result, we may not be adequately insured to cover losses resulting from significant damage to our manufacturing facility.

Any damage to this facility or interruption in manufacturing could result in production delays and delays in meeting contractual obligations which could have a material adverse effect on relationships with customers and on its results of operations, financial condition or cash flows in any given period.

We face risks related to our sales of products obtained from third-party suppliers.

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the deterioration of economic relations between countries or regions;

actions taken by governmental authorities to contain the spread of COVID-19 and mitigate its public health effects;and the escalation or continuation of armed conflict, hostilities or economic sanctions between countries or regions, all of which can negatively impact our ability to manufacture, supply or sell our products and otherwise conduct our day-to-day operations.

actions taken by governmental authorities to contain the spread of COVID-19 and mitigate its public health effects;

and the escalation or continuation of armed conflict, hostilities or economic sanctions between countries or regions, all of which can negatively impact our ability to manufacture, supply or sell our products and otherwise conduct our day-to-day operations.

For instance, the conflict between Russia and Ukraine has led us to terminate, reduce or significantly change our business activities in these regions and certain surrounding regions.

We have initiated the closure of our HPC operations within Russia and in the future, we may have to further reduce or cease doing business within the certain surrounding regions, which could have a negative impact on our ability to collect outstanding accounts receivables, or impose additional costs, further negatively impacting our business performance.

In addition, the economic sanctions and hostilities in Russia and Ukraine may negatively impact our and our customers’ financial viability, which may negatively impact us or the demands or economic viability of our customers in Russia and in other parts of the world.

Table of Conten t s

In addition, the economic sanctions and hostilities in Russia and Ukraine and the Israel-Hamas war may negatively impact our and our customers’ financial viability, which may negatively impact us or the demands or economic viability of our customers in other parts of the world.

Additionally, global economic conditions or restrictions from armed conflicts or the COVID-19 pandemic may cause our suppliers, distributors, contractors, or other third-party partners to suffer financial or operating difficulties that they cannot overcome, resulting in their inability to provide us with the materials and services we need, in which case our business and results of operations could be adversely affected.

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While we have taken certain remediating actions in response to the ongoing global supply chain challenges, these measures may not be sufficient and other supply chain challenges may continue to arise that are beyond our control and could negatively affect our business and financial performance.

Moreover, we have transitioned our third-party logistics service provider at our existing Edwardsville, IL distribution center and increased our warehouse capacity nearby.

These efforts require incorporating a new service provider into our distribution capabilities and adding another distribution center into our operations.

These efforts are complicated and require coordination among a number of our stakeholder, including our suppliers and transportation and logistics handlers.

Moreover, we have transitioned our third-party logistics service provider at our existing Edwardsville, IL distribution center.

These efforts require incorporating a new service provider into our distribution capabilities and are complicated and require coordination among a number of our stakeholders, including our suppliers and transportation and logistics handlers.

These changes and updates are inherently difficult and may be exacerbated by the other uncertainties and potential disruptions our business faces.

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Although pension expense and pension funding contributions are not directly related, key economic factors that affect pension expense would also likely affect the amount of cash we would contribute to pension plans as required under the Employee Retirement Income Security Act of 1974, as amended.

Refer to Note - 15 Employee Benefit Plans in the Notes to the Consolidated Financial Statements for additional information and disclosure over defined benefit plans.

Our business may be materially affected by changes to fiscal and tax policies that could adversely affect our results of operations and cash flows.

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federal and state net operating loss (“NOLs”) carryforwards, and federal and state tax credits that will expire if unused.

We have concluded that it is more likely than not that the majority of the federal and state deferred tax assets will create tax benefits in the future.

We have concluded that it is more likely than not that the majority of the federal and state deferred tax assets related to loss and credit carryforwards will not create tax benefits in the future.

As a consequence of earlier business combinations and issuances of common stock, the Company and its subsidiaries have had various changes of ownership that continue to subject a significant amount of the Company’s U.S.

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state net operating losses.

If we are unable to fully utilize our NOLs to offset taxable income generated in the future, our future cash taxes could be materially and negatively impacted.

For further discussion on the Company’s federal and state NOLs, credits, and applicable valuation allowance as of September 30, 2022, see Note 16 – Income Taxes to the Consolidated Financial Statements included elsewhere in this Annual Report.

Table of Conten t s

For further discussion on the Company’s federal and state NOLs, credits, and applicable valuation allowance as of September 30, 2023, see Note 16 – Income Taxes in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.

Our strategic initiatives including acquisitions and divestitures may not be successful and may divert our management’s attention away from operations and could create general customer uncertainty.

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We may issue additional equity, incur long-term or short-term indebtedness, spend cash or use a combination of these for all or part of the consideration paid in future acquisitions or expansion of our operations.

Consideration received in a divestiture could be used to pay down indebtedness, repurchase shares, invest in future acquisitions or expansions, including capital investments, operating development and efficiency.

In addition, subject to any requirements in the agreements governing our outstanding indebtedness, we may have significant discretion in how we employ the consideration received in a divestiture and our management may not apply such consideration in a way that is ultimately accretive to our business.

The execution of our strategic initiatives could entail repositioning or similar actions that in turn require us to record impairments, restructuring and other charges.

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On February 18, 2022 we completed the acquisition of the Tristar Business.

Our ability to realize the anticipated benefits of the acquisition of the Tristar Business depend, to a large extent, on our ability to integrate the acquired business into our current HPC segment in a manner that facilitates growth opportunities and achieves projected growth trends without adversely affecting revenue and investments in future growth.

Our ability to realize the anticipated benefits of the acquisition of the Tristar Business is dependent, to a large extent, on our ability to integrate the acquired business into our current HPC segment in a manner that facilitates growth opportunities and achieves projected growth trends without adversely affecting revenue and investments in future growth.

The failure to meet the challenges involved in combining the Tristar Business with our current HPC segment and to realize the anticipated benefits from such combination, including expected synergies, could adversely affect our results of operations.

The overall combination of our businesses may also result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer and other business relationships.

As of September 30, 2023, the Company and its HPC segment have been detrimentally impacted by aspects of the integration of the Tristar Business’ operations and products, which have negatively impacted subsequent operating performance and partner relationships of the Tristar Business’ brands and the HPC segment.

Since the acquisition, the Tristar Business realized, among other things, significant distribution challenges, increased levels of retail inventory, reduced sales, increased promotional spending and deductions, higher level of returns, and overall increased amount of costs.

Additionally, the segment has subsequently realized unusual losses attributable to the recognition of product recalls for products associated with the brands, increased risks over the realizability of receivables and inventory, and recognized an impairment on assets including the acquired goodwill and tradename intangible assets.

Most recently, the Company disposed of certain inventory and products associated with the Tristar Business’ brand after assessing, among other things, performance and quality standards.

The overall combination of our businesses has, and may continue to, result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer and other business relationships.

The difficulties of combining the operations of the companies include, among others:

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and potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the acquisition of the Tristar Business.

Even if our combined operations are integrated successfully, the full benefits of the acquisition of the Tristar Business, including anticipated synergies, cost savings or sales or growth opportunities, may not be realized, and these benefits may not be achieved within our anticipated time frame or at all.

Further, additional unanticipated costs may be incurred in the integration of our businesses.

Additionally, the full benefits of the acquisition of the Tristar Business, including anticipated synergies, cost savings or sales or growth opportunities, may not be realized, and these benefits may not be achieved within our anticipated time frame or at all.

Further, additional unanticipated costs may be incurred in the continued integration of our businesses.

Many of these factors are outside of our control, and any one of them could result in lower revenues, higher costs and diversion of management time and energy, which could materially impact our business, financial condition, and results of operations.

As of September 30, 2023, the Company believes it has assessed appropriate risks and recognized applicable losses and reserves reflecting the net assets of the Company, however there may be additional risks posed to the Company from the acquisition of the Tristar Business and its integration with the Company and the HPC segment.

The Company is pursuing avenues to remediate and recover such damages and losses realized since the acquisition, but it is not guaranteed that the Company will be able to remediate or recover such damages and losses in whole or in part.

See “Management’s Discussion & Analysis –Business Overview—Tristar Business Acquisition.”

Significant costs have been incurred and are expected to be incurred in connection with the consummation of recent and future strategic initiatives including the integration or separation of acquired or divested businesses within the Company.

We expect to incur one-time costs in connection with integrating our operations, products and personnel and those of the businesses we acquire or divest, in addition to costs related directly to completing such transactions.

We expect to incur one-time costs in connection with integrating our operations, products and personnel and those of the businesses we acquire or divest, including our purchase of the Tristar Business, in addition to costs related directly to completing such transactions.

We would expect similar costs to be incurred with any future acquisition or divestiture.

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Difficulties associated with the integration of acquired businesses could have a material adverse effect on our business.

Table of Conten t s

We may also acquire partial or full ownership in businesses or may acquire rights to market and distribute particular products or lines of products.

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In addition, we currently do not maintain “key person” insurance covering any member of our management team.

The proposed sale of our HHI division to ASSA ABLOY AB ("ASSA") is subject to regulatory approval and is subject to a complaint filed by the U.S.

Department of Justice ("DOJ") to enjoin the transaction.

The consummation of the acquisition of the HHI division by ASSA is subject to certain customary conditions, including, among other things, (i) the absence of a material adverse effect on HHI, (ii) the receipt of certain antitrust and other approvals in certain specified foreign jurisdictions, (iii) the accuracy of the representations and warranties of the parties (generally subject to a customary material adverse effect standard (as described in the Purchase Agreement) or other customary materiality qualifications), (iv) the absence of governmental restrictions on the consummation of the acquisition in certain jurisdictions, and (v) material compliance by the parties with their respective covenants and agreements under the Purchase Agreement.

The Company may not receive the required approval and other clearances for the transaction, or they may not be received in a timely manner.

If such approvals are received, they may impose terms, conditions or restrictions that may cause a failure of the closing conditions set forth in the Purchase Agreement or that could have a detrimental impact on the Company following completion of the transaction.

A substantial delay in obtaining the required authorizations, approvals or consents or the imposition of unfavorable terms, conditions or restrictions could prevent the completion of the sale, and government authorities could seek to block or challenge the transaction as they deem necessary or desirable in the public interest.

On June 14, 2022, the Company and ASSA agreed to extend the outside date of the consummation of the acquisition to June 30, 2023 to provide additional time to secure necessary governmental approval.

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

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

Both the Company and ASSA have stated their disagreement with the DOJ'a concerns and are committed to completing the transaction and are confident that they will prevail in litigation.

ASSA has also announced that, to resolve all the alleged competitive concerns surrounding the acquisition of HHI, it has initiated a process to sell its Emtek and its smart residential business in the U.S.

Despite our intentions and confidence that the court will agree with us and permit the consummation of the transaction, we cannot provide any assurance or guarantee that the resolution will be in our favor to.

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

See Note 3 - Divestitures to the Consolidated Financial Statements included elsewhere in our Annual Report.

Increased focus by governmental and non-governmental organizations, customers, consumers and investors on sustainability issues, including those related to climate change, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.

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Any such matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business.

Table of Conten t s

The COVID-19 and future pandemics are a serious threat to the health and economic well-being affecting our customers, employees, sources of supply and our financial condition and results of operations.

In March 2020, the World Health Organization announced that COVID-19 had become a pandemic and a National Emergency relating to COVID-19 was announced in the U.S.

With the possibility of continued widespread infection in the U.S.

and abroad, there exists the potential for substantial commercial impact.

As a result of the COVID-19 pandemic, we have experienced varying degrees of business disruptions and periods of closure of our distribution centers, and corporate facilities, as have our wholesale customers, licensing partners, suppliers and vendors, and despite our efforts to manage and remedy the impact of COVID-19 on our financial condition and results of operations, the ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic, potential future waves of COVID-19 cases in the locations where we operate, and actions taken by governmental authorities to contain its spread and mitigate its public health effects.

Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic, or future pandemics, that are not currently foreseeable, could materially increase our costs, negatively impact our sales and damage our results of operations and liquidity position.

The duration of any such impacts cannot be predicted.

Risks Related to our Indebtedness and Financing Activities

Our substantial indebtedness may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our substantial indebtedness.

We have, and we expect to continue to have, a significant amount of indebtedness.

See Note 12 - Debt to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail .

Our substantial indebtedness has had, and could continue to have, material adverse consequences for our business, and may:

Our substantial indebtedness may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our indebtedness.

We have, and we expect to continue to have, substantial indebtedness.

See Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail .

Our indebtedness has had, and could continue to have, adverse consequences for our business, and may:

• require us to dedicate a large portion of our cash flow to pay principal and interest on our indebtedness, which will reduce the availability of our cash flow to fund working capital, capital expenditures, research and development expenditures and other business activities;

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If new debt is added to our existing debt levels, the related risks that we now face would increase.

Furthermore, a portion of our debt bears interest at variable rates.

Furthermore, our credit agreement and borrowings under the Revolver Facility are subject to variable interest rates.

Increases in market interest rates may raise the interest rate on our variable rate debt and create higher debt service requirements, which would adversely affect our cash flow and could adversely impact our results of operations.

While we may enter into agreements limiting our exposure to higher debt service requirements, any such agreements may not offer complete protection from this risk.

Upon completion of a divestiture, we may be required to pay down debt using proceeds from the sale.

Moreover, upon completion of a divestiture, we may be required to pay down debt using proceeds from the sale pursuant to the terms of the Company's outstanding indebtedness.

Restrictive covenants in our debt agreements may restrict our ability to pursue our business strategies.

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In addition, our debt agreements may require us to dedicate a portion of cash flow from operations to payments on debt and also contain borrowing restrictions based on, among other things, our fixed charge coverage ratio.

Furthermore, the credit agreement governing our senior secured facilities contains a financial covenant relating to maximum leverage.

Furthermore, the credit agreement governing our senior secured facilities contains a financial covenant relating to maximum net leverage.

Such requirements and covenants could limit the flexibility of our restricted entities in planning for, or reacting to, changes in the industries in which they operate.

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If our obligations under the senior secured facilities are accelerated, we cannot assure you that our assets would be sufficient to repay in full such indebtedness.

Table of Conten t s

Future financing activities may adversely affect our leverage and financial condition.

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A significant portion of our net sales are to customers outside of the U.S.

See Note 6 - Revenue Recognition and Note 21 – Segment Information to the Consolidated Financial Statements included elsewhere in the Annual Report, for sales by geographic region.

See Note 6 - Revenue Recognition and Note 21 – Segment Information in the Notes to the Consolidated Financial Statements included elsewhere in the Annual Report, for sales by geographic region.

Our pursuit of international growth opportunities may require significant investments for an extended period before returns on these investments, if any, are realized.

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Moreover, it is possible that in the future Chinese authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.

Table of Conten t s

Additionally, many products in our international operations are sourced through USD denominated transactions and sold within their respective markets using local currencies.

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While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure to currency fluctuations.

See Note 14 - Derivatives to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail on related hedging activity.

See Note 14 - Derivatives in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail on related hedging activity.

Our international operations expose us to risks related to compliance with the laws and regulations of foreign countries.

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For instance, a large percentage of our products that we sell in the United States are manufactured or sourced in China.

While it is too early to predict the full extent of the impact of these actions on our business, the imposition of tariffs on products imported by us from China have in some cases required us to increase prices to our customers or and/or resulted in lowering our gross margin on products sold.

We face risks relating to the United Kingdom’s exit from the European Union.

Following the 2016 referendum in the United Kingdom (“UK”), the UK left the EU on January 1, 2020, but remained in the EU single market and customers union during a transition period that ended on December 31, 2020.

As a result, there is significant uncertainty on a range of issues from the value of the pound, the impact on financial markets, to the impact on trade in goods and services between the UK and the EU.

There is also significant uncertainty as to whether, and to what extent, laws, regulations, data privacy rules, and product and other standards in the UK will remain aligned with the EU or will diverge.

There could be increased costs from re-imposition of tariffs on trade between the UK and EU, shipping delays due to the need for customs inspections and procedures, temporary shortages of certain goods or materials and other adverse impacts on supply chains.

There could also be changes in tax rules that could affect us.

Macro-economic trends could also be adversely affected.

Increased costs for goods and services, as well as other effects of dislocations caused by the UK withdrawal, could adversely affect consumer confidence and business sentiment.

Any of the foregoing could affect us, but due to the level of uncertainty, we are unable to predict the potential impact on our business, results of operations, financial condition, liquidity or cash flows, which could be material.

Table of Conten t s

The imposition of tariffs on products imported by us from China have in some cases required us to increase prices to our customers or and/or resulted in lowering our gross margin on products sold.

We are subject to risks associated with importing goods and materials from foreign countries.

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The disclosure of our trade secrets would impair our competitive position, thereby weakening demand for our products or services and harming our ability to maintain or increase our customer base.

Table of Conten t s

Claims by third parties that we are infringing their intellectual property and other litigation could adversely affect our business.

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We currently are the subject of such claims and it is possible that third parties will assert infringement claims against us in the future.

An adverse finding against us in these or similar trademark or other intellectual property litigations may have a material adverse effect on our business, financial condition and results of operations.

An adverse finding against us in these or similar trademark or other intellectual property litigation may have a material adverse effect on our business, financial condition and results of operations.

Any such claims, with or without merit, could be time consuming and expensive, and may require us to incur substantial costs, including the diversion of the resources of management and technical personnel, cause product delays or require us to enter into licensing or other agreements in order to secure continued access to necessary or desirable intellectual property.

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In addition, we must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the U.S., Europe and elsewhere.

For example, the European Union adopted the General Data Protection Regulation (the “GDPR”), which became effective on May 25, 2018, and California passed the California Consumer Privacy Act (the "CCPA"), which became effective on January 1, 2020, and is being amended by the California Privacy Rights Act ("CPRA"), which will become effective on January 1, 2023.

These laws impose additional obligations on companies such as ours regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored.

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Regardless of their subject matter or merits, class action lawsuits and other government investigations may result in significant cost to us, which may not be covered by insurance, may divert the attention of management or may otherwise have an adverse effect on our business, financial condition and results of operations.

Table of Conten t s

We are subject to a number of claims and litigation and may be subject to future claims and litigation, any of which may adversely affect our business.

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But, regardless of their merits, lawsuits (including class action lawsuits) may result in significant cost to the Company that may not be covered by insurance and may divert attention of management or may otherwise have an adverse effect on our business, financial condition, and results of operation.

See Note 20 - Commitments and Contingencies to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion over material claims and litigation.

See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion over material claims and litigation.

The Company may be subject to product liability claims and product recalls, which could negatively impact its profitability.

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We may not be able to maintain such insurance on acceptable terms, if at all, in the future.

See Note 20 - Commitments and Contingencies to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion on product liability.

See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion on product liability.

Agreements, transactions and litigation involving or resulting from the activities of our predecessor and its former subsidiaries may subject us to future claims or litigation that could materially adversely impact our capital resources.

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To the extent we have not identified such environmental liabilities or to the extent the indemnifications obtained from our counterparties are insufficient to cover such environmental liabilities, these environmental liabilities could have a material adverse effect on our business.

Table of Conten t s

We are also subject to proceedings related to our disposal of industrial and hazardous material at off-site disposal locations or similar disposals made by other parties for which we are responsible as a result of our relationship with such other parties.

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It is difficult to quantify with certainty the potential financial impact of actions regarding expenditures for environmental matters, particularly remediation, and future capital expenditures for environmental control equipment.

See Note 20 - Commitments and Contingencies to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion on estimated liabilities arising from such environmental matters.

See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion on estimated liabilities arising from such environmental matters.

Nevertheless, based upon the information currently available, we believe that our ultimate liability arising from such environmental matters should not be material to our business or financial condition.

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Environmental law requirements and the enforcement thereof, change frequently, have tended to become more stringent over time and could require us to incur significant expenses.

Table of Conten t s

Most federal, state and local authorities require certification by Underwriters Laboratory, Inc.

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A determination that any of our products are not in compliance with these rules and regulations could result in the imposition of fines or an award of damages to private litigants.

We may be unable to achieve the goals and aspirations set forth in our sustainability report, particularly with respect to the reduction of greenhouse gas (GHG) emissions, or otherwise meet the expectations of our stakeholders with respect to ESG matters.

Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report.

We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas.

A failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support.

We have announced certain aspirations and goals related to ESG matters, such as plans to reduce certain GHG emissions over time.

Achievement of these aspirations, targets, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control.

These risks and uncertainties include, but are not limited to:

our ability to successfully identify and implement relevant strategies on a timely and cost-effective basis; our ability to achieve the anticipated benefits and cost savings of such strategies and actions; and the availability and cost of existing and future technologies, such as alternative fuel vehicles, off-site renewable energy, and other materials and components.

It is possible that we may be unsuccessful in the achievement of our ESG goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive.

Furthermore, our stakeholders may not be satisfied with our efforts or the speed at which we are progressing towards any such aspirations and goals.

A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, or we may lose shareholder support.

Certain challenges we face in the achievement of our ESG objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not for many part of this report.

Public perceptions that some of the products we produce and market are not safe could adversely affect us.

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Any such impairment charges could have a material adverse effect on our business, financial condition and operating results.

See Note 11 – Goodwill and Intangible Assets to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail.

See Note 11 – Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail.

The successful execution of our operational efficiency and multi-year restructuring initiatives are important to the long-term growth of our business.

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If these estimates and assumptions are incorrect, experience delays, or if other unforeseen events occur, our business and results of operation could be adversely affected.

Refer to Note 5 - Restructuring Charges to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail over restructuring related activity.

Refer to Note 5 - Restructuring Charges in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail over restructuring related activity.

Risks Related to Investment in our Common Stock

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Alternatively, if a court were to find the choice of forum provision contained in our restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

Table of Conten t s

Certain provisions of our charter, bylaws, and of the Delaware General Corporation Law (the “DGCL”) have anti-takeover effects and could delay, discourage, defer or prevent a tender offer or takeover attempt that a stockholder might consider to be in the stockholder’s best interests.

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Under our 2011 equity incentive plan adopted by the shareholders in 2011, called the Spectrum Brands Holdings, Inc.

2011 Omnibus Equity Award Plan (the “2011 Equity Plan”), a total of 7.1 million shares of common stock of the Company, net of cancellations, have been authorized to be issued through the original authorization of 4.6 million shares during the 2011 shareholders meeting, an additional authorization of 1.0 million during the 2014 shareholders meeting, and a subsequent authorization of 1.5 million during the 2016 shareholders meeting.

2011 Omnibus Equity Award Plan (the “2011 Equity Plan”), a total of 7.1 million shares of common stock of the Company, net of cancellations, have been authorized to be issued.

As of September 30, 2023, we have issued 6.9 million restricted stock units (or the equivalent number of shares of common stock upon the lapsing of the applicable restrictions) under the 2011 Equity Plan and have a remaining authorization to issue up to a total of 0.2 million shares of our common stock, or options or restricted stock units exercisable for shares of common stock.

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2020 Omnibus Equity Plan (the "2020 Equity Plan") pursuant to which 2.6 million shares of common stock were authorized to be issued.

As of September 30, 2022, we have not issued restricted stock units (or the equivalent number of shares of common stock upon the lapsing of the applicable restrictions) under the 2020 Equity Plan and have a remaining authorization to issue up to a total of 1.2 million shares of our common stock or options or restricted stock units exercisable for shares of common stock.

As of September 30, 2023, we have issued 0.5 million stock units (or the equivalent number of shares of common stock upon lapsing of the applicable restrictions under the 2020 Equipment Plan and have a remaining authorization to issue up to a total of 2.1 million shares of our common stock or options or restricted stock units exercisable for shares of common stock.

In addition, the Company’s board of directors has the authority to issue additional shares of capital stock to provide additional financing or for other purposes in the future.

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As a result of such dilution, the proportionate ownership interest and voting power of a holder of shares of common stock could be decreased.

Table of Conten t s

UNRESOLVED STAFF COMMENTS

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 1A. Risk Factors