What changed in this filing

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Item 1. Financial Statements

2024-02-08 compared with 2023-08-11 · 312 added, 608 removed, 651 unchanged (59% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Financial Position

As of July 2, 2023 and September 30, 2022

As of December 31, 2023 and September 30, 2023

(in millions)

July 2, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Cash and cash equivalents $ 445.4 $ 753.9

Short term investments 950.0 1,103.3

Trade receivables, net 535.1 477.1

2 unchanged sentences

Prepaid expenses and other current assets 52.6 44.3

Current assets of business held for sale — 1,816.7

Total current assets 2,515.7 2,925.9

12 unchanged sentences

Other current liabilities 182.3 178.4

Current liabilities of business held for sale — 463.7

Total current liabilities 749.3 764.8

18 unchanged sentences

Condensed Consolidated Statements of Income

For the three and nine month periods ended July 2, 2023 and July 3, 2022

Three Month Periods Ended Nine Month Periods Ended

For the three month periods ended December 31, 2023 and January 1, 2023

Three Month Periods Ended

(in millions, except per share)

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

December 31, 2023 January 1, 2023

Net sales $ 692.2 $ 713.3

1 unchanged sentence

Gross profit 244.9 201.9

Selling 137.0 161.9 401.4 457.9

General and administrative 81.1 94.3 253.4 289.3

Research and development 5.3 6.1 16.6 22.0

Impairment of goodwill 111.1 — 111.1 —

Impairment of intangible assets 53.7 — 120.7 —

Gain from remeasurement of contingent consideration liability — ( 25.0 ) ( 1.5 ) ( 25.0 )

Total operating expenses 388.2 237.3 901.7 744.2

Operating (loss) income ( 124.7 ) 38.7 ( 221.8 ) 6.7

Selling, general & administrative 219.9 222.1

Operating income (loss) 25.0 ( 20.2 )

Interest expense 19.2 33.4

Interest income ( 23.4 ) ( 0.1 )

Other non-operating expense, net 0.1 7.8 0.1 7.9

(Loss) income from continuing operations before income taxes ( 158.3 ) 5.0 ( 320.2 ) ( 73.1 )

Gain from debt repurchase ( 4.7 ) —

Other non-operating expense (income), net 4.0 ( 1.4 )

Income (loss) from continuing operations before income taxes 29.9 ( 52.1 )

Income tax expense (benefit) 12.4 ( 12.1 )

Net (loss) income from continuing operations ( 172.2 ) 3.0 ( 287.2 ) ( 52.3 )

Net income (loss) from continuing operations 17.5 ( 40.0 )

Income from discontinued operations, net of tax 11.7 19.5

Net income 1,859.6 32.9 1,785.5 57.5

Net income (loss) 29.2 ( 20.5 )

Net income from continuing operations attributable to non-controlling interest 0.1 0.3

Net income from discontinued operations attributable to non-controlling interest 0.2 0.2 0.3 0.7

Net income attributable to controlling interest $ 1,859.2 $ 32.7 $ 1,784.7 $ 56.8

Income from discontinued operations attributable to non-controlling interest, net of tax — 0.1

Net income (loss) attributable to controlling interest $ 29.1 $ ( 20.9 )

Amounts attributable to controlling interest

Net (loss) income from continuing operations attributable to controlling interest $ ( 172.4 ) $ 3.0 $ ( 287.7 ) $ ( 52.3 )

Net income from discontinued operations attributable to controlling interest 2,031.6 29.7 2,072.4 109.1

Net income attributable to controlling interest $ 1,859.2 $ 32.7 $ 1,784.7 $ 56.8

Net income (loss) from continuing operations attributable to controlling interest $ 17.4 $ ( 40.3 )

Income from discontinued operations attributable to controlling interest, net of tax 11.7 19.4

Net income (loss) attributable to controlling interest $ 29.1 $ ( 20.9 )

Earnings Per Share

12 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

For the three and nine month periods ended July 2, 2023 and July 3, 2022

For the three month periods ended December 31, 2023 and January 1, 2023

Three Month Periods Ended

Nine Month Periods Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Net income $ 1,859.6 $ 32.9 $ 1,785.5 $ 57.5

(in millions)

December 31, 2023 January 1, 2023

Net income (loss) $ 29.2 $ ( 20.5 )

Other comprehensive income

Foreign currency translation adjustment

Foreign currency translation gain (loss) 9.8 ( 51.5 ) 97.4 ( 68.8 )

Unrealized gain (loss) from net investment hedge 1.8 24.8 ( 44.6 ) 47.3

Foreign currency translation gain 36.7 60.5

Unrealized loss from net investment hedge ( 21.3 ) ( 33.9 )

Foreign currency translation adjustment before tax 15.4 26.6

1 unchanged sentence

Foreign currency translation adjustment, net 21.0 35.4

Unrealized (loss) gain on derivative instruments

Unrealized (loss) gain on hedging activity before reclassification ( 9.0 ) 4.3 ( 41.4 ) 11.8

Unrealized loss on derivative instruments

Unrealized loss on hedging activity before reclassification ( 10.6 ) ( 25.4 )

Net reclassification for loss (gain) to income from continuing operations 5.1 ( 2.5 )

Net reclassification for loss (gain) to income from discontinued operations 2.4 ( 0.9 ) 2.3 ( 2.1 )

Unrealized (loss) gain on hedging instruments after reclassification ( 3.0 ) ( 1.5 ) ( 33.1 ) 1.2

Unrealized loss on hedging instruments after reclassification ( 5.5 ) ( 27.9 )

Deferred tax effect 1.5 7.2

Net unrealized (loss) gain on hedging derivative instruments ( 2.2 ) ( 0.6 ) ( 24.5 ) 5.5

Defined benefit pension (loss) gain

Defined benefit pension (loss) gain before reclassification ( 1.2 ) 2.3 ( 3.3 ) 4.1

Net unrealized loss on hedging derivative instruments ( 4.0 ) ( 20.7 )

Defined benefit pension loss

Defined benefit pension loss before reclassification ( 1.1 ) ( 2.3 )

Net reclassification for loss to income from continuing operations 0.2 0.9

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

Defined benefit pension (loss) gain after reclassification ( 0.3 ) 3.3 ( 2.2 ) 7.1

Defined benefit pension loss after reclassification ( 0.9 ) ( 1.4 )

Deferred tax effect 0.2 1.2

Net defined benefit pension (loss) gain ( 0.3 ) 2.4 ( 0.9 ) 2.7

Deconsolidation of discontinued operations 26.1 — 26.1 —

Net defined benefit pension loss ( 0.7 ) ( 0.2 )

Net change to derive comprehensive income for the period 16.3 14.5

Comprehensive income 1,894.4 1.4 1,851.1 30.0

Comprehensive (loss) income from continuing operations attributable to non-controlling interest — ( 0.1 ) 0.2 ( 0.2 )

Comprehensive loss from discontinued operations attributable to non-controlling interest ( 0.2 ) ( 0.3 ) — ( 0.2 )

Deconsolidation of discontinued operations attributable to non-controlling interest 0.7 — 0.7 —

Comprehensive income attributable to controlling interest $ 1,893.9 $ 1.8 $ 1,850.2 $ 30.4

Comprehensive income (loss) 45.5 ( 6.0 )

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

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

Comprehensive income (loss) attributable to controlling interest $ 45.4 $ ( 6.3 )

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholders' Equity

For the nine month period ended July 2, 2023

For the three month period ended December 31, 2023

Common Stock Additional

7 unchanged sentences

Balances at September 30, 2023 35.3 $ 0.5 $ 1,920.8 $ 2,096.0 $ ( 249.4 ) $ ( 1,250.3 ) $ 2,517.6 $ 0.7 $ 2,518.3

Net (loss) income from continuing operations — — — ( 40.3 ) — — ( 40.3 ) 0.3 ( 40.0 )

Income from discontinued operations, net of tax — — — 19.4 — — 19.4 0.1 19.5

Other comprehensive income, net of tax — — — — 14.2 — 14.2 0.3 14.5

Restricted stock issued and related tax withholdings 0.2 — ( 25.1 ) — — 14.6 ( 10.5 ) — ( 10.5 )

Share based compensation — — 4.1 — — — 4.1 — 4.1

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

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 as of April 2, 2023 41.0 0.5 2,016.2 252.6 ( 272.9 ) ( 814.2 ) 1,182.2 6.9 1,189.1

Net (loss) income from continuing operations — — — ( 172.4 ) — — ( 172.4 ) 0.2 ( 172.2 )

Net income from continuing operations — — — 17.4 — — 17.4 0.1 17.5

Income from discontinued operations, net of tax — — — 11.7 — — 11.7 — 11.7

Deconsolidation of discontinued operations — — — — 25.4 — 25.4 ( 5.9 ) 19.5

Other comprehensive income, net of tax — — — — 16.2 — 16.2 0.1 16.3

Accelerated share repurchase ( 1.3 ) — 83.2 — — ( 83.2 ) — — —

Treasury stock repurchases ( 3.3 ) — — — — ( 243.0 ) ( 243.0 ) — ( 243.0 )

Excise tax on net share repurchases — — — — — ( 3.1 ) ( 3.1 ) — ( 3.1 )

Restricted stock issued and related tax withholdings 0.1 — ( 14.3 ) — — 8.9 ( 5.4 ) — ( 5.4 )

1 unchanged sentence

Dividends declared — — — ( 14.5 ) — — ( 14.5 ) — ( 14.5 )

Balances at July 2, 2023 35.7 $ 0.5 $ 1,919.7 $ 2,094.3 $ ( 238.6 ) $ ( 1,217.2 ) $ 2,558.7 $ 1.2 $ 2,559.9

Balances as of December 31, 2023 30.8 $ 0.5 $ 1,993.6 $ 2,110.6 $ ( 233.2 ) $ ( 1,570.7 ) $ 2,300.8 $ 0.9 $ 2,301.7

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholders' Equity

For the nine month period ended July 3, 2022

For the three month period ended January 1, 2023

Common Stock Additional

7 unchanged sentences

Balances at September 30, 2022 40.8 $ 0.5 $ 2,032.5 $ 362.1 $ ( 303.1 ) $ ( 828.8 ) $ 1,263.2 $ 5.9 $ 1,269.1

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

Net (loss) income from continuing operations — — — ( 40.3 ) — — ( 40.3 ) 0.3 ( 40.0 )

Income from discontinued operations, net of tax — — — 19.4 — — 19.4 0.1 19.5

Other comprehensive income, net of tax — — — — 14.2 — 14.2 0.3 14.5

Treasury stock repurchases ( 1.1 ) — — — — ( 110.0 ) ( 110.0 ) — ( 110.0 )

Restricted stock issued and related tax withholdings 0.2 — ( 25.1 ) — — 14.6 ( 10.5 ) — ( 10.5 )

2 unchanged sentences

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 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

Net income from continuing operations — — — 3.0 — — 3.0 — 3.0

Income from discontinued operations, net of tax — — — 29.7 — — 29.7 0.2 29.9

Other comprehensive loss, net of tax — — — — ( 31.1 ) — ( 31.1 ) ( 0.4 ) ( 31.5 )

Share based compensation — — ( 0.8 ) — — — ( 0.8 ) — ( 0.8 )

Dividends declared — — — ( 17.0 ) — — ( 17.0 ) — ( 17.0 )

Balances at July 3, 2022 40.8 $ 0.5 $ 2,032.4 $ 364.4 $ ( 262.4 ) $ ( 828.8 ) $ 1,306.1 $ 6.1 $ 1,312.2

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the nine month periods ended July 2, 2023 and July 3, 2022

Nine Month Periods Ended

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

For the three month periods ended December 31, 2023 and January 1, 2023

Three Month Periods Ended

(in millions) December 31, 2023 January 1, 2023

Cash flows from operating activities

Net income $ 1,785.5 $ 57.5

Net income (loss) $ 29.2 $ ( 20.5 )

Income from discontinued operations, net of tax 11.7 19.5

Net loss from continuing operations ( 287.2 ) ( 52.3 )

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

Net income (loss) from continuing operations 17.5 ( 40.0 )

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

Depreciation 14.4 12.2

1 unchanged sentence

Share based compensation 3.9 3.3

Impairment of goodwill 111.1 —

Impairment of intangible assets 4.0 —

Impairment of property, plant and equipment and operating lease assets 8.1 —

Gain on sale of property, plant and equipment ( 2.7 ) —

Gain from debt repurchase ( 4.7 ) —

Non-cash purchase accounting adjustments 0.5 0.5

5 unchanged sentences

Net cash provided (used) by operating activities from continuing operations 18.1 ( 57.0 )

Net cash provided by operating activities from discontinued operations 31.8 42.4

Net cash provided (used) by operating activities 104.3 ( 138.4 )

Net cash used by operating activities from discontinued operations ( 22.4 ) ( 7.2 )

Net cash used by operating activities ( 4.3 ) ( 64.2 )

Cash flows from investing activities

Purchases of property, plant and equipment ( 8.4 ) ( 10.0 )

Proceeds from disposal of property, plant and equipment 3.0 0.1

Proceeds from sale of discontinued operations, net of cash 4,334.7 —

Business acquisitions, net of cash acquired — ( 272.1 )

Other investing activity ( 0.1 ) ( 0.1 )

Purchases of short term investments ( 700.0 ) —

Proceeds from sale of short term investments 842.0 —

Net cash provided (used) by investing activities from continuing operations 133.6 ( 10.0 )

5 unchanged sentences

Payment of debt issuance costs ( 3.2 ) ( 2.3 )

Payment of contingent consideration — ( 1.9 )

Treasury stock purchases ( 243.0 ) —

Accelerated share repurchase ( 500.0 ) —

Dividends paid to shareholders ( 14.1 ) ( 17.1 )

19 unchanged sentences

Condensed Consolidated Statements of Financial Position

As of July 2, 2023 and September 30, 2022

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

As of December 31, 2023 and September 30, 2023

(in millions) December 31, 2023 September 30, 2023

Cash and cash equivalents $ 444.3 $ 752.7

Short term investments 950.0 1,103.3

Trade receivables, net 535.1 477.1

Other receivables 166.5 174.6

Note receivable with parent 500.8 —

Inventories 457.0 462.8

Prepaid expenses and other current assets 52.6 44.3

Current assets of business held for sale — 1,816.7

Total current assets 2,605.5 3,014.8

12 unchanged sentences

Other current liabilities 173.4 172.2

Note payable to parent company 8.1 —

Current liabilities of business held for sale — 463.7

Total current liabilities 651.5 680.9

7 unchanged sentences

Other capital 2,167.3 2,168.9

Accumulated earnings (deficit) 998.9 ( 736.0 )

Accumulated earnings 551.5 767.8

Accumulated other comprehensive loss, net of tax ( 233.1 ) ( 249.3 )

6 unchanged sentences

Condensed Consolidated Statements of Income

For the three and nine month periods ended July 2, 2023 and July 3, 2022

Three Month Periods Ended Nine Month Periods Ended

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

For the three month periods ended December 31, 2023 and January 1, 2023

Three Month Periods Ended

(in millions) December 31, 2023 January 1, 2023

Net sales $ 692.2 $ 713.3

1 unchanged sentence

Gross profit 244.9 201.9

Selling 137.0 161.9 401.4 457.9

General and administrative 80.3 93.5 251.9 287.4

Research and development 5.3 6.1 16.6 22.0

Impairment of goodwill 111.1 — 111.1 —

Impairment of intangible assets 53.7 — 120.7 —

Gain from remeasurement of contingent consideration liability — ( 25.0 ) ( 1.5 ) ( 25.0 )

Total operating expenses 387.4 236.5 900.2 742.3

Operating (loss) income ( 123.9 ) 39.5 ( 220.3 ) 8.6

Selling, general and administrative 219.4 222.0

Operating income (loss) 25.5 ( 20.1 )

Interest expense 19.2 33.4

Interest income ( 23.4 ) ( 0.1 )

Other non-operating expense, net 0.1 7.8 0.1 7.8

(Loss) income from continuing operations before income taxes ( 156.8 ) 5.7 ( 318.1 ) ( 71.4 )

Gain from debt repurchase ( 4.7 ) —

Other non-operating expense (income), net 4.0 ( 1.4 )

Income (loss) from continuing operations before income taxes 30.4 ( 52.0 )

Income tax expense (benefit) 12.2 ( 12.2 )

Net (loss) income from continuing operations ( 173.8 ) 3.7 ( 288.8 ) ( 51.0 )

Net income (loss) from continuing operations 18.2 ( 39.8 )

Income from discontinued operations, net of tax 11.7 19.5

Net income 1,860.9 33.5 1,787.3 58.7

Net income (loss) 29.9 ( 20.3 )

Net income from continuing operations attributable to non-controlling interest 0.1 0.3

Net income from discontinued operations attributable to non-controlling interest 0.2 0.2 0.3 0.7

Net income attributable to controlling interest $ 1,860.5 $ 33.3 $ 1,786.5 $ 58.0

Income from discontinued operations attributable to non-controlling interest, net of tax — 0.1

Net income (loss) attributable to controlling interest $ 29.8 $ ( 20.7 )

Amounts attributable to controlling interest

Net (loss) income from continuing operations attributable to controlling interest $ ( 174.0 ) $ 3.7 $ ( 289.3 ) $ ( 51.0 )

Net income from discontinued operations attributable to controlling interest 2,034.5 29.6 2,075.8 109.0

Net income attributable to controlling interest $ 1,860.5 $ 33.3 $ 1,786.5 $ 58.0

Net income (loss) from continuing operations attributable to controlling interest $ 18.1 $ ( 40.1 )

Income from discontinued operations attributable to controlling interest, net of tax 11.7 19.4

Net income (loss) attributable to controlling interest $ 29.8 $ ( 20.7 )

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Comprehensive Income

For the three and nine month periods ended July 2, 2023 and July 3, 2022

For the three month periods ended December 31, 2023 and January 1, 2023

Three Month Periods Ended

Nine Month Periods Ended

(in millions)

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Net income $ 1,860.9 $ 33.5 $ 1,787.3 $ 58.7

December 31, 2023 January 1, 2023

Net income (loss) $ 29.9 $ ( 20.3 )

Other comprehensive income

Foreign currency translation adjustment

Foreign currency translation gain (loss) 9.8 ( 51.5 ) 97.4 ( 68.8 )

Unrealized gain (loss) from net investment hedge 1.8 24.8 ( 44.6 ) 47.3

Foreign currency translation gain 36.7 60.5

Unrealized loss from net investment hedge ( 21.3 ) ( 33.9 )

Foreign currency translation adjustment before tax 15.4 26.6

1 unchanged sentence

Foreign currency translation adjustment, net 21.0 35.4

Unrealized (loss) gain on derivative instruments

Unrealized (loss) gain on hedging activity before reclassification ( 9.0 ) 4.3 ( 41.4 ) 11.8

Unrealized loss on derivative instruments

Unrealized loss on hedging activity before reclassification ( 10.6 ) ( 25.4 )

Net reclassification for loss (gain) to income from continuing operations 5.1 ( 2.5 )

Net reclassification for loss (gain) to income from discontinued operations 2.4 ( 0.9 ) 2.3 ( 2.1 )

Unrealized (loss) gain on hedging instruments after reclassification ( 3.0 ) ( 1.5 ) ( 33.1 ) 1.2

Unrealized loss on hedging instruments after reclassification ( 5.5 ) ( 27.9 )

Deferred tax effect 1.5 7.2

Net unrealized (loss) gain on hedging derivative instruments ( 2.2 ) ( 0.6 ) ( 24.5 ) 5.5

Defined benefit pension (loss) gain

Defined benefit pension (loss) gain before reclassification ( 1.2 ) 2.3 ( 3.3 ) 4.1

Net unrealized loss on hedging derivative instruments ( 4.0 ) ( 20.7 )

Defined benefit pension loss

Defined benefit pension loss before reclassification ( 1.1 ) ( 2.3 )

Net reclassification for loss to income from continuing operations 0.2 0.9

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

Defined benefit pension (loss) gain after reclassification ( 0.3 ) 3.3 ( 2.2 ) 7.1

Defined benefit pension loss after reclassification ( 0.9 ) ( 1.4 )

Deferred tax effect 0.2 1.2

Net defined benefit pension (loss) gain ( 0.3 ) 2.4 ( 0.9 ) 2.7

Deconsolidation of discontinued operations 26.1 — 26.1 —

Net defined benefit pension loss ( 0.7 ) ( 0.2 )

Net change to derive comprehensive income for the period 16.3 14.5

Comprehensive income 1,895.7 2.0 1,852.9 31.2

Comprehensive (loss) income from continuing operations attributable to non-controlling interest — ( 0.1 ) 0.2 ( 0.2 )

Comprehensive loss from discontinued operations attributable to non-controlling interest ( 0.2 ) ( 0.3 ) — ( 0.2 )

Deconsolidation of discontinued operations attributable to non-controlling interest 0.7 — 0.7 —

Comprehensive income attributable to controlling interest $ 1,895.2 $ 2.4 $ 1,852.0 $ 31.6

Comprehensive income (loss) 46.2 ( 5.8 )

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

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

Comprehensive income (loss) attributable to controlling interest $ 46.1 $ ( 6.1 )

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholder's Equity

For the nine month period ended July 2, 2023

For the three month period ended December 31, 2023

(in millions) Other

Capital Accumulated

Earnings (Deficit) Accumulated

Comprehensive

2 unchanged sentences

Balances at September 30, 2023 $ 2,168.9 $ 767.8 $ ( 249.3 ) $ 2,687.4 $ 2.3 $ 2,689.7

Net (loss) income from continuing operations — ( 40.1 ) — ( 40.1 ) 0.3 ( 39.8 )

Income from discontinued operations, net of tax — 19.4 — 19.4 0.1 19.5

Other comprehensive income, net of tax — — 14.2 14.2 0.3 14.5

Restricted stock issued and related tax withholdings ( 10.5 ) — — ( 10.5 ) — ( 10.5 )

Share based compensation 3.9 — — 3.9 — 3.9

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

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 )

Net income from continuing operations — 18.1 — 18.1 0.1 18.2

Income from discontinued operations, net of tax — 11.7 — 11.7 — 11.7

Other comprehensive income, net of tax — — 16.2 16.2 0.1 16.3

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

Net (loss) income from continuing operations — ( 174.0 ) — ( 174.0 ) 0.2 ( 173.8 )

Income from discontinued operations, net of tax — 2,034.5 — 2,034.5 0.2 2,034.7

Deconsolidation of discontinued operations — — 25.4 25.4 ( 5.9 ) 19.5

Other comprehensive income (loss), net of tax — — 8.9 8.9 ( 0.2 ) 8.7

Restricted stock issued and related tax withholdings ( 5.4 ) — — ( 5.4 ) — ( 5.4 )

1 unchanged sentence

Dividends paid to parent — ( 246.1 ) — ( 246.1 ) — ( 246.1 )

Balances at July 2, 2023 $ 2,166.3 $ 998.9 $ ( 238.5 ) $ 2,926.7 $ 2.8 $ 2,929.5

Balances as of December 31, 2023 $ 2,167.3 $ 551.5 $ ( 233.1 ) $ 2,485.7 $ 2.5 $ 2,488.2

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholder's Equity

For the nine month period ended July 3, 2022

For the three month period ended January 1, 2023

(in millions) Other

5 unchanged sentences

Balances at September 30, 2022 $ 2,164.6 $ ( 736.0 ) $ ( 303.0 ) $ 1,125.6 $ 7.5 $ 1,133.1

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

Net (loss) income from continuing operations — ( 40.1 ) — ( 40.1 ) 0.3 ( 39.8 )

Income from discontinued operations, net of tax — 19.4 — 19.4 0.1 19.5

4 unchanged sentences

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

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

Net income from continuing operations — 3.7 — 3.7 — 3.7

Income from discontinued operations, net of tax — 29.6 — 29.6 0.2 29.8

Other comprehensive loss, net of tax — — ( 31.1 ) ( 31.1 ) ( 0.4 ) ( 31.5 )

Share based compensation ( 1.2 ) — — ( 1.2 ) ( 1.2 )

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

Balances at July 3, 2022 $ 2,164.9 $ ( 734.4 ) $ ( 262.3 ) $ 1,168.2 $ 7.7 $ 1,175.9

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the nine month periods ended July 2, 2023 and July 3, 2022

Nine Month Periods Ended

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

For the three month periods ended December 31, 2023 and January 1, 2023

Three Month Periods Ended

(in millions) December 31, 2023 January 1, 2023

Cash flows from operating activities

Net income $ 1,787.3 $ 58.7

Net income (loss) $ 29.9 $ ( 20.3 )

Income from discontinued operations, net of tax 11.7 19.5

Net loss from continuing operations ( 288.8 ) ( 51.0 )

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

Net income (loss) from continuing operations 18.2 ( 39.8 )

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

Depreciation 14.4 12.2

1 unchanged sentence

Share based compensation 3.8 3.1

Impairment of goodwill 111.1 —

Impairment of intangible assets 4.0 —

Impairment of property, plant and equipment and operating lease assets 8.1 —

Gain on sale of property, plant and equipment ( 2.7 ) —

Non-cash purchase accounting adjustments 0.5 0.5

Gain from debt repurchase ( 4.7 ) —

Amortization of debt issuance costs and debt discount 0.9 2.0

4 unchanged sentences

Net cash provided (used) by operating activities from continuing operations 1.8 ( 67.6 )

Net cash provided by operating activities from discontinued operations 31.8 42.3

Net cash provided (used) by operating activities 93.1 ( 170.8 )

Net cash used by operating activities from discontinued operations ( 22.4 ) ( 7.1 )

Net cash used by operating activities ( 20.6 ) ( 74.7 )

Cash flows from investing activities

Purchases of property, plant and equipment ( 8.4 ) ( 10.0 )

Proceeds from disposal of property, plant and equipment 3.0 0.1

Proceeds from sale of discontinued operations, net of cash 4,334.7 —

Business acquisitions, net of cash acquired — ( 272.1 )

Disbursement from note with Parent Company ( 500.0 ) —

Other investing activities ( 0.1 ) ( 0.1 )

Purchases of short term investments ( 700.0 ) —

Proceeds from sale of short term investments 842.0 —

Net cash provided (used) by investing activities from continuing operations 133.6 ( 10.0 )

5 unchanged sentences

Payment of debt issuance costs ( 3.2 ) ( 2.3 )

Payment of contingent consideration — ( 1.9 )

Payment of cash dividends to parent ( 246.1 ) ( 17.1 )

29 unchanged sentences

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

As a result, the fiscal period end date for the three and nine month periods included within this Quarterly Report for the Company are July 2, 2023 and July 3, 2022, respectively.

As a result, the fiscal period end date for the three month periods included within this Quarterly Report for the Company are December 31, 2023 and January 1, 2023, respectively.

Newly Adopted Accounting Standards

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

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

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

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

The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued.

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

The adoptions did not have a material impact on the consolidated financial statements.

Recently Issued Accounting Standards

In September 2022, the FASB issued ASU 2022-04, Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations to enhance transparency about the use of supplier finance programs.

Under the ASU, the buyer in a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented.

The amendments in ASU 2022-04 are effective for all entities for fiscal years beginning after December 15, 2022, including interim periods within those financial years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

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

Under the ASU, the buyer in a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a roll-forward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented.

The amendments in ASU 2022-04 are effective for all entities for fiscal years beginning after December 15, 2022, including interim periods within those financial years, except for the disclosure of roll-forward information, which is effective for fiscal years beginning after December 15, 2023.

We adopted the ASU in fiscal 2023, except for the disclosure of roll-forward information, which was adopted during the first quarter of fiscal 2024.

The following table summarizes the roll-forward of the supplier finance program for the three month period ended December 31, 2023:

(in millions)

Outstanding payment obligations as of September 30, 2023

Invoices confirmed during the period

Confirmed invoices paid during the period

Outstanding payment obligations as of December 31, 2023

The outstanding payment obligations under the supplier finance program are included in Accounts Payable in the Company's Condensed Statement of Financial Position.

Recently Issued Accounting Standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted, and the amendments should be applied retrospectively.

This ASU will be effective for our Form 10-K for fiscal 2025 and our Form 10-Q for the first quarter of fiscal 2026.

We are currently evaluating the impact this ASU may have on our consolidated financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid.

The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments should be applied prospectively;

however, retrospective application is also permitted.

This ASU will be effective for our Form 10-K for fiscal 2026.

We are currently evaluating the impact this ASU may have on our consolidated financial statement disclosures.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 2 – DIVESTITURES

The following table summarizes the components of Income from Discontinued Operations, Net of Tax in the Condensed Consolidated Statements of Income for the three and nine month periods ended July 2, 2023 and July 3, 2022:

Three Month Periods Ended Nine Month Periods Ended

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

The following table summarizes the components of Income from Discontinued Operations, Net of Tax in the Condensed Consolidated Statements of Income for the three month periods ended December 31, 2023 and January 1, 2023:

Three Month Periods Ended

(in millions) December 31, 2023 January 1, 2023

Income from discontinued operations before income taxes – HHI $ — $ 45.0

Gain on sale of discontinued operations before income taxes – HHI 2,824.9 — 2,824.9 —

Loss from discontinued operations before income taxes – Other ( 0.2 ) ( 0.2 ) ( 2.2 ) ( 3.6 )

Income (loss) from discontinued operations before income taxes – Other 10.3 ( 0.6 )

Interest expense on corporate debt allocated to discontinued operations — 16.3

Income from discontinued operations before income taxes 10.3 28.1

Income tax expense from discontinued operations 810.0 15.9 837.5 42.2

Income tax (benefit) expense from discontinued operations ( 1.4 ) 8.6

Income from discontinued operations, net of tax 11.7 19.5

Net income from discontinued operations attributable to noncontrolling interest 0.2 0.2 0.3 0.7

Net income from discontinued operations attributable to controlling interest $ 2,031.6 $ 29.7 $ 2,072.4 $ 109.1

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.

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

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

Income from discontinued operations attributable to controlling interest, net of tax $ 11.7 $ 19.4

Interest from corporate debt allocated to discontinued operations in the prior year includes interest expense from Term Loans, which was paid down following the close of the HHI divestiture on June 20, 2023, 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.

Hardware and Home Improvement ("HHI")

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.

On June 20, 2023, the Company completed its divestiture of its HHI segment resulting in the recognition of a gain on sale of $ 2,824.9 million included as a component of Income From Discontinued Operations, Net of Tax.

The Company's assets and liabilities associated with the HHI disposal group prior to the transaction close were classified as held for sale and the respective operations were classified as discontinued operations and reported separately during the three and nine month period ended July 2, 2023 and July 3, 2022 through the transaction close.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 2 – DIVESTITURES (continued)

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

On June 20, 2023, the Company completed its divestiture of its HHI segment.

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

1 unchanged sentence

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 Purchase Agreement.

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

The Company and ASSA have agreed to enter into related agreements ancillary to the acquisition that became effective upon the consummation of the acquisition, including a customary transition services agreements ("TSA") and providing for both forward and reverse transition services.

The consummation of the acquisition was not subject to any financing condition.

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

(in millions)

September 30, 2022

Trade Receivables $ 135.5

Other receivables 6.7

Inventories 327.1

Prepaid expenses and other current assets 33.1

Property, plant and equipment, net 166.6

Operating lease assets 63.6

Deferred charges and other 11.7

Goodwill 698.6

Intangible assets, net 373.8

Total assets of business held for sale $ 1,816.7

Current portion of long-term debt $ 1.4

Accounts payable 224.7

Accrued wages and salaries 32.7

Other current liabilities 79.9

Long-term debt, net of current portion 54.6

Long-term operating lease liabilities 46.9

Deferred income taxes 10.1

Other long-term liabilities 13.4

Total liabilities of business held for sale $ 463.7

The following table summarizes the components of income from discontinued operations before income taxes associated with the HHI divestiture for the three and nine month periods ended July 2, 2023 and July 3, 2022, through the transaction close date:

Three Month Periods Ended Nine Month Periods Ended

The following table summarizes the components of income from discontinued operations before income taxes associated with the HHI divestiture for the three month period ended January 1, 2023:

(in millions)

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

January 1, 2023

Net sales $ 362.9

4 unchanged sentences

Interest expense 0.8

Other non-operating expense (income), net 0.2 ( 0.9 ) 2.2 2.0

Other non-operating expense, net 1.2

Income from discontinued operations before income taxes $ 45.0

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

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

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

The following table presents significant non-cash items and capital expenditures of discontinued operations from the HHI divestiture for the three and nine month periods ended July 2, 2023 and July 3, 2022, through the transaction close date:

Three Month Periods Ended Nine Month Periods Ended

The following table presents significant non-cash items and capital expenditures of discontinued operations from the HHI divestiture for the three month period ended January 1, 2023:

(in millions)

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

January 1, 2023

Share based compensation $ 0.9

5 unchanged sentences

NOTE 2 – DIVESTITURES (continued)

The Company and ASSA entered into related agreement that became effective upon the consummation of the transaction including a customary transition services agreement ("TSA") that support various shared back office administrative functions, including finance, sales and marketing, information technology, human resources, real estate and supply chain, customer service and procurement;

to support both the transferred HHI operations and the continuing operations of the Company.

The Company and ASSA entered into customary TSAs that became effective upon the consummation of the transaction.

The TSA supports various shared back office administrative functions, including finance, sales and marketing, information technology, human resources, real estate and supply chain, customer service and procurement;

supporting both the transferred HHI operations and the continuing operations of the Company.

Charges associated with TSAs are recognized as bundled service costs under a fixed fee structure by the respective service or function and also include one time pass-through charges including warehousing, freight, among others.

TSA charges are settled between the Company and ASSA on a net basis.

Charges to ASSA are recognized as a reduction of the respective operating expense incurred by the Company and charges from ASSA are recognized as an operating expense depending upon the function supported by ASSA.

TSA charges are settled periodically between the Company and ASSA on a net basis.

Charges to ASSA are recognized as a reduction of the respective operating expense incurred and charges from ASSA are recognized as an operating expense depending upon the function supported by ASSA.

The TSA has an overall expected time period of 12 months following the close of the transaction with variability in expiration dependent upon the completed transition of the respective service or function, and may provide up to 12 additional months for a total duration of up to 24 months.

During the three and nine month period ended July 2, 2023, the Company recognized a net income of $ 1.0 million associated with TSA charges.

During the three month period ended December 31, 2023 the Company recognized a net income of $ 7.9 million associated with TSA charges.

Additionally, the Company and ASSA will receive cash and make payments on behalf of the respective counterparty's operations as part of the shared administrative functions, resulting in cash flow being commingled with the operating cash flow of the Company.

The Company recognizes a net payable or receivable with ASSA for any outstanding TSA charges and net working capital attributable to commingled cash flow.

As of July 2, 2023, the Company has a net payable of $ 34.3 million included in Accounts Payable on the Company's Condensed Consolidated Statement of Financial Position consisting of amounts due to ASSA for estimated purchase price settlement, cash flow settlement for commingled operations and net TSA charges including amounts subject to repayment by the Company.

Further, the Company has recognized payables to ASSA related to indemnifications in accordance with the purchase agreement, primarily attributable to outstanding settlements with tax authorities and uncertain tax benefit obligations.

As of July 2, 2023, the Company recognized $ 2.6 million, included within Other Long-Term Liabilities, on the Company’s Condensed Consolidated Statements of Financial Position.

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

As of December 31, 2023 and September 30, 2023, the Company had a net receivable of $ 7.0 million and $ 4.0 million, respectively, included in Other Receivables on the Company's Condensed Consolidated Statement of Financial Position consisting of amounts due from ASSA for cash flow settlement from commingled operations and net TSA charges, including amounts subject to repayment by the Company.

Further, the Company has recognized payables to ASSA for outstanding settlements associated with the purchase agreement, including tax indemnifications for outstanding settlements with tax authorities and uncertain tax benefit obligations, among others.

As of December 31, 2023, the Company recognized $ 26.9 million, included within Accounts Payable, and $ 2.6 million, included within Other Long-Term Liabilities, on the Company’s Condensed Consolidated Statements of Financial Position.

As of September 30, 2023, the Company recognized $ 27.3 million, included within Accounts Payable, and $ 2.6 million, included within Other Long-Term Liabilities, on the Company’s Consolidated Statements of Financial Position.

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

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

1 unchanged sentence

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 July 2, 2023 and September 30, 2022, the Company recognized $ 25.9 million and $ 22.3 million, respectively, related to indemnification payables in accordance with the acquisition agreements, primarily attributable to uncertain tax benefit obligations and outstanding settlements with tax authorities that were transferred and indemnified in accordance with the acquisition agreement, including $ 8.9 million and $ 7.0 million within Other Current Liabilities, respectively, and $ 17.0 million and $ 15.3 million, within Other Long-Term Liabilities, respectively, on the Company’s Condensed Consolidated Statements of Financial Position.

NOTE 3 – RESTRUCTURING CHARGES

During the nine month period ended July 2, 2023, the Company entered into an 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 headcount reductions.

Total cumulative exit and disposal costs associated with the initiative were $ 5.3 million, with approximately $ 3 million of additional costs forecasted in the foreseeable future.

The project costs are anticipated to be incurred through the September 30, 2023.

During the year ended September 30, 2022, the Company entered into an 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 exit and disposal costs associated with the initiative were $ 10.5 million.

As of July 2, 2023, 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 nine month periods ended July 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 exit and disposal costs associated with the initiative were $ 1.4 million.

As of July 2, 2023, 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 and nine month periods ended July 2, 2023 and July 3, 2022:

Three Month Periods Ended Nine Month Periods Ended

(in millions)

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Fiscal 2023 restructuring $ 0.9 $ — $ 5.3 $ —

Fiscal 2022 restructuring — 8.1 0.7 8.1

Russia dissolution 0.1 — 0.8 —

GPC distribution center transition — 8.1 — 24.1

Global productivity improvement program — 1.2 — 5.2

Other project costs 0.2 0.1 1.2 14.0

Total restructuring charges $ 1.2 $ 17.5 $ 8.0 $ 51.4

Cost of goods sold $ — $ 0.4 $ 0.7 $ 1.4

Selling expense — 8.1 — 24.1

General and administrative expense 1.2 9.0 7.3 25.9

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 3 - RESTRUCTURING CHARGES (continued)

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

Three Month Periods Ended Nine Month Periods Ended

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

GPC $ 0.7 $ 11.6 $ 3.7 $ 31.1

H&G — 0.6 0.2 0.6

HPC 0.5 4.2 3.7 8.5

Corporate — 1.1 0.4 11.2

Total restructuring charges $ 1.2 $ 17.5 $ 8.0 $ 51.4

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

(in millions)

Benefits Other

For the three month period ended July 2, 2023 $ 1.1 $ 0.1 $ 1.2

For the three month period ended July 3, 2022 8.5 9.0 17.5

For the nine month period ended July 2, 2023 6.7 1.3 8.0

For the nine month period ended July 3, 2022 10.4 41.0 51.4

The following is a roll forward of the accrual for restructuring charges by cost type for the nine month period ended July 2, 2023.

(in millions) Termination

Benefits Other

Accrual balance at September 30, 2022 $ 3.8 $ 0.2 $ 4.0

Provisions 5.7 0.1 5.8

Cash expenditures ( 7.0 ) ( 0.1 ) ( 7.1 )

Foreign currency and other 0.3 ( 0.1 ) 0.2

Accrual balance at July 2, 2023 $ 2.8 $ 0.1 $ 2.9

During the three month period ended December 31, 2023, the Company realized gain within the income from discontinued operations from the reversal of certain tax indemnification liabilities following the receipt of audit results and other tax settlements associated with entities transferred as part of the GBL divestiture and for periods prior to the sale for which the Company has indemnified.

As of December 31, 2023 and September 30, 2023, the Company recognized $ 14.8 million and $ 25.3 million, respectively, related to indemnification payables in accordance with the acquisition agreements, primarily attributable to uncertain tax benefit obligations and outstanding settlements with tax authorities that were transferred and indemnified in accordance with the acquisition agreement, including $ 14.2 million and $ 8.6 million within Other Current Liabilities, respectively, and $ 0.6 million and $ 16.7 million, within Other Long-Term Liabilities, respectively, on the Company’s Condensed Consolidated Statements of Financial Position.

NOTE 3 – REVENUE RECOGNITION

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

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

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

The following table disaggregates our revenue for the three month periods ended December 31, 2023 and January 1, 2023, by the Company’s key revenue streams, segments and geographic region (based upon destination):

Three Month Period Ended December 31, 2023 Three Month Period Ended January 1, 2023

(in millions)

8 unchanged sentences

$ 276.9 $ 72.0 $ 343.3 $ 692.2 $ 277.5 $ 71.4 $ 364.4 $ 713.3

Nine Month Period Ended July 2, 2023 Nine Month Period Ended July 3, 2022

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

Product Sales

NA $ 530.1 $ 404.3 $ 391.6 $ 1,326.0 $ 561.3 $ 462.4 $ 434.3 $ 1,458.0

EMEA 269.0 — 340.7 609.7 270.8 — 361.5 632.3

LATAM 12.4 5.0 128.0 145.4 13.8 6.0 167.4 187.2

APAC 24.3 — 52.6 76.9 29.9 — 53.7 83.6

Licensing 7.8 2.0 6.3 16.1 7.0 1.9 7.4 16.3

Service and other 2.9 — 1.1 4.0 4.7 — 0.9 5.6

Total Revenue $ 846.5 $ 411.3 $ 920.3 $ 2,178.1 $ 887.5 $ 470.3 $ 1,025.2 $ 2,383.0

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

During the three month periods ended July 2, 2023 and July 3, 2022, there were two large retail customers, each exceeding 10% of consolidated Net Sales and representing 33.4 % and 34.3 % of consolidated Net Sales, respectively.

During the nine month periods ended July 2, 2023 and July 3, 2022, there were two large retail customers exceeding 10% of consolidated Net Sales and representing 34.3 % and 33.3 % of consolidated Net Sales, respectively.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 4 – REVENUE RECOGNITION (continued)

During the three month periods ended December 31, 2023 and January 1, 2023, there were two large retail customers, each exceeding 10% of consolidated Net Sales and representing 38.2 % and 36.2 % 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 $ 84.2 million, or 11.4 % of consolidated net sales, and $ 102.4 million, or 12.5 % of consolidated Net Sales, for the three month periods ended July 2, 2023 and July 3, 2022, respectively.

Net sales from B&D product sales consisted of $ 256.0 million, or 11.8 %, and $ 332.4 million, or 13.9 %, of consolidated Net Sales for the nine month periods ended July 2, 2023 and July 3, 2022, respectively.

Net sales from B&D product sales consisted of $ 94.1 million , or 13.6 % of consolidated net sales, and $ 86.7 million, or 12.2 % of consolidated Net Sales, for the three month periods ended December 31, 2023 and January 1, 2023, respectively.

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

1 unchanged sentence

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

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

The allowance for product returns as of December 31, 2023 and September 30, 2023 was $ 16.3 million and $ 12.8 million, respectively.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 4 – RECEIVABLES AND CONCENTRATION OF CREDIT RISK

The allowance for credit losses on the Company's trade receivables as of July 2, 2023 and September 30, 2022 was $ 6.9 million and $ 7.3 million, respectively.

The allowance for credit losses on the Company's trade receivables as of December 31, 2023 and September 30, 2023 was $ 7.8 million and $ 7.7 million, respectively.

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

As of July 2, 2023 and September 30, 2022, there was two large retail customers exceeding 10% of consolidated Net Trade Receivables and representing 36.1 % and 21.9 % of consolidated Net Trade Receivables.

respectively.

As of July 2, 2023, SB/RH had an outstanding note receivable from its Parent in the amount of $ 500.8 million, including cumulative interest, with a stated interest rate of 5.14 %, due July 22, 2023.

The funds were used by the Parent to repurchase common shares of SBH through the accelerated share repurchase agreement further discussed in Note 12 - Shareholder's Equity.

As of December 31, 2023 and September 30, 2023, there were two large retail customers exceeding 10% of consolidated Net Trade Receivables and representing 47.9 % and 39.8 % of the Company's consolidated Net Trade Receivables, respectively.

NOTE 5 – INVENTORIES

1 unchanged sentence

(in millions)

July 2, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Raw materials

5 unchanged sentences

Property, plant and equipment consist of the following:

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

(in millions) December 31, 2023 September 30, 2023

Land, buildings and improvements $ 84.9 $ 83.4

Machinery, equipment and other 334.5 330.1

Computer software 140.8 136.2

Finance leases 137.9 136.9

3 unchanged sentences

Property, plant and equipment, net $ 271.2 $ 275.1

Depreciation expense from property, plant, and equipment for the three month periods ended July 2, 2023 and July 3, 2022, was $ 12.1 million and $ 12.3 million, respectively;

and for the nine month periods ended July 2, 2023 and July 3, 2022 was $ 36.2 million and $ 36.6 million, respectively.

During the three month period ended July 2, 2023, the Company completed the sale of two facilities in its EMEA region, primarily consisting of office space supporting the GPC segment, with total proceeds of $ 5.2 million and resulting in a gain on sale of $ 2.7 million, included as General and Administrative Expense on the Condensed Consolidated Statements of Income for the three and nine month period ended July 2, 2023.

During the nine month period ended July 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 for the nine month period ended July 2, 2023.

Additionally, during the three month period ended July 2, 2023, the Company recognized a $ 5.2 million impairment charge on a right of use operating lease asset for a GPC warehouse having a maturity date of December 2029, due to the exit of the GPC operations from the facility and the intention to sub-lease to a third-party, included as Selling Expense on the Condensed Consolidated Statements of Income for the three and nine month periods ended July 2, 2023.

The partial impairment was measured using projected discounted cash flow for the facility, including an assumed sub-lease tenant, yet to be identified, at rental rates that are comparable to current market conditions.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

Depreciation expense from property, plant, and equipment for the three month periods ended December 31, 2023 and January 1, 2023, was $ 14.4 million and $ 12.2 million, respectively.

NOTE 7 – GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

As of September 30, 2023 $ 512.1 $ 342.6 $ 854.7

Tristar Business acquisition adjustment — — 3.0 3.0

Impairment — — ( 111.1 ) ( 111.1 )

Foreign currency impact 5.4 — 5.4

As of July 2, 2023 $ 516.0 $ 342.6 $ — $ 858.6

During the three month period ended July 2, 2023, the Company recognized an impairment of the HPC goodwill that was attributable to a declining trend in operating performance results, challenging retail environment with increased competition, lower distribution, and excess retail inventory levels impacting pricing and promotional spending, resulting in a reduction in actual and projected sales and margin realization within its current and forecasted cash flows and a full impairment of the identified goodwill for the HPC reporting unit and segment.

As of December 31, 2023 $ 517.5 $ 342.6 $ 860.1

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

July 2, 2023 September 30, 2022

December 31, 2023 September 30, 2023

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

6 unchanged sentences

Total Intangible Assets $ 1,527.1 $ ( 470.8 ) $ 1,056.3 $ 1,516.3 $ ( 456.2 ) $ 1,060.1

During the three month period ended July 2, 2023, the Company and H&G segment identified a triggering event for our Rejuvenate tradename attributable to a significant shift in consumer purchasing activity and retail inventory management efforts with certain retail customers within the quarter that make up a significant concentration of revenue for the brand and further reducing the anticipated near-term sales for the brand, resulting in the recognition of a $ 8.0 million impairment on the intangible asset.

During the prior fiscal quarter, we had identified triggering events associated with the Rejuvenate tradename due to a shift in the projected timing and realization of long-term projected revenues and changes in strategic distribution opportunities, as well as a change in the amount and timing of product innovations being introduced to customers.

As a result, the Company and H&G segment recognized a cumulative impairment loss of $ 56.0 million for the nine month period ended July 2, 2023 associated with the Rejuvenate tradename.

During the three month period ended July 2, 2023, the Company and HPC segment identified a triggering event for our PowerXL tradename intangible asset driven by the reduction in the sales from a decrease in distribution with retail customers, significant pricing adjustments and required incremental promotional spending activity resulting in a substantial shift in actual and projected future revenues for the brand, resulting in the recognition of an impairment on the intangible asset of $ 26.0 million.

During the prior fiscal quarter, we had identified a triggering event associated with the PowerXL tradename driven by a decrease in realized sales due to the continuation of retail inventory reduction efforts, lowered consumer demand, increased competition, and adverse macro-economic factors.

As a result, during the nine month period ended July 2, 2023, we recognized a cumulative impairment loss of $ 45.0 million associated with the PowerXL tradename.

Additionally, during the three and nine month periods ended July 2, 2023, the Company and HPC segment recognized a triggering event for our George Foreman tradename due to shifts in market demand for related product categories as well as a change in the Company's brand portfolio strategy and projected utilization of the tradename going forward, resulting in the recognition of an impairment on the intangible asset of $ 19.7 million.

Amortization expense from the intangible assets for the three month periods ended July 2, 2023 and July 3, 2022 was $ 10.5 million and $ 13.1 million, respectively;

and for the nine month periods ended July 2, 2023 and July 3, 2022 was $ 31.4 million and $ 39.9 million, respectively.

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

(in millions) Amortization

During the three month period ended December 31, 2023, the Company identified a triggering event attributable to a change in brand strategy shifting actual and projected future revenues resulting in recognition of a $ 4.0 million impairment on intangible assets.

Amortization expense from the intangible assets for the three month periods ended December 31, 2023 and January 1, 2023 was $ 11.1 million and $ 10.4 million, respectively.

SPECTRUM BRANDS HOLDINGS, INC.

2 unchanged sentences

(in millions, unaudited)

NOTE 7 - GOODWILL AND INTANGIBLE ASSETS (continued)

(in millions) Amortization

NOTE 8 – DEBT

Debt with external lenders consists of the following:

July 2, 2023 September 30, 2022

December 31, 2023 September 30, 2023

(in millions) Amount Rate Amount Rate

Revolver Facility, variable rate, expiring June 30, 2025 $ — 8.3 % $ 740.0 5.7 %

Term Loan Facility, variable rate, due March 3, 2028 — 7.3 % 394.0 5.2 %

5.75 % Notes, due July 15, 2025

450.0 5.8 % 450.0 5.8 %

Spectrum Brands Inc.

4.00 % Notes, due October 1, 2026

9 unchanged sentences

debt 1,414.5 1,573.9

Unamortized discount on debt — ( 0.8 )

Debt issuance costs ( 17.9 ) ( 18.4 )

2 unchanged sentences

Credit Agreement

On June 20, 2023, following the close of the HHI divestiture, the Company repaid the $ 392.0 million outstanding balance on its term loans, which constitutes the repayment of all outstanding term loans under the Credit Agreement, (ii) repaid $ 470.0 million of revolving loans that were drawn under the $ 600.0 million initial tranche of the Revolver Facility established under the Credit Agreement (the "Initial Revolving Credit Facility Tranche"), which constitutes the repayment of all outstanding revolving loans under such tranche and (iii) repayment of $ 245.0 million of revolving loans that are drawn under the $ 500.0 million incremental tranche of the Revolver Facility established under the Credit Agreement (the "Incremental Revolving Credit Facility Tranche"), which constitutes the repayment of all outstanding revolving loans under such tranche.

Further, on June 23, 2023, the Company terminated all revolving loan commitments under the Incremental Revolving Credit Facility Tranche while the revolving loan commitments under the Initial Revolving Credit Facility Tranche were not terminated.

The Company recognized $ 8.6 million as interest expense for the three and nine month periods ended July 2, 2023 from the write-down of deferred financing costs and original issuance discount associated with the extinguishment of the Term Loan and termination of the Incremental Revolving Credit Facility Tranche.

As of July 2, 2023, our Revolver Facility has a total capacity of $ 600 million with a borrowing availability of $ 586.9 million, net of outstanding letters of credit of $ 13.1 million.

On June 20, 2023, the Company entered into the fifth amendment to the Credit Agreement to transition from London Inter-Bank Offered Rate ("LIBOR") to Secured Overnight Financing Rate ("SOFR") borrowing rates used on borrowings from the Revolver Facility.

Borrowings from the Revolver Facility are subject to adjusted SOFR plus margin ranging from 1.75 % to 2.75 % per annum, or base rate plus margin ranging from 0.75 % to 1.75 % per annum.

The SOFR borrowings are subject to a 0.1 % adjustment rate and a 0.75 % SOFR floor.

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 nine month period ended July 2, 2023.

The waiver remained in effect as of July 2, 2023 and expired 10 business days after the close of the HHI divestiture, subsequent to July 2, 2023.

The maximum permitted consolidated total net leverage in subsequent periods will be 6.0 to 1.0.

On June 20, 2023, the Company called the remaining $ 450.0 million aggregate principal amount of 5.750 % Senior Notes due 2025 (the "Notes") in full at the redemption price, calculated in accordance with the indenture governing the Notes, plus accrued and unpaid interest.

Subsequently, on July 20, 2023, the Company redeemed the Notes.

As of July 2, 2023, the $ 450.0 million aggregate principal amount of the Notes were included as Current Portion of Long-Term Debt on the Condensed Consolidated Statement of Financial Position.

In addition to debt with external lenders, SB/RH has an outstanding loan with its Parent in the amount of $ 8.1 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 July 2, 2023.

On October 19, 2023, SBI and SB/RH entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”), by and among the Company, SB/RH Holdings, Royal Bank of Canada, as the administrative agent, and the lenders party thereto from time to time.

The proceeds of the Credit Agreement will be used for working capital needs and other general corporate purposes.

The Credit Agreement refinanced the Company’s previous credit agreement and includes certain modified terms from the previous Credit Agreement, including extending the maturity to October 19, 2028, and the reduction of the Revolver Facility to $ 500.0 million (with a U.S.

dollar tranche and a multicurrency tranche).

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

The aggregate commitment amount with respect to (a) the U.S.

dollar tranche of the Revolving Facility is $ 400 million and (b) the multi-currency tranche of the Revolving Facility is $ 100 million.

The commitment fee rate is equal to 0.20 % of the unused commitments under the Revolving Facility (which may be increased to a maximum rate equal to 0.40 % based on certain total net leverage ratios specified in the Credit Agreement).

All outstanding amounts under the U.S.

dollar tranche (if funded in U.S.

dollars) will bear interest, at the option of the Company, at a rate per annum equal to (x) Term SOFR, plus a margin ranging between 1.00 % to 2.00 % per annum (based on certain total net leverage ratios specified in the Credit Agreement) or (y) the Alternate Base Rate (as defined in the Credit Agreement), plus a margin ranging between 0.00 % to 1.00 % per annum (based on certain total net leverage ratios specified in the Credit Agreement).

The multi-currency tranche (if funded in Euros) will bear interest at a rate per annum equal to the EURIBOR Rate, plus a margin ranging between 1.00 % to 2.00 % per annum (based on certain total net leverage ratios specified in the Credit Agreement).

The multi-currency tranche (if funded in Canadian dollars) will bear interest, at the option of the Company, at a rate per annum equal to (x) Term CORRA (Canadian Overnight Repo Rate Average), plus a margin ranging between 1.00 % to 2.00 % per annum (based on certain total net leverage ratios specified in the Credit Agreement) or (y) the Canadian Prime Rate, plus a margin ranging between 0.00 % to 1.00 % per annum (based on certain total net leverage ratios specified in the Credit Agreement).

The multi-currency tranche (if funded in Pounds Sterling) will bear interest at a rate per annum equal to the SONIA, plus a margin ranging between 1.00 % to 2.00 % per annum (based on certain total net leverage ratios specified in the Credit Agreement).

During the three month period ended December 31, 2023, the Company incurred $ 4.0 million in fees in connection with the closing of the Credit Agreement, with $ 3.2 million in fees capitalized and amortized as debt issuance costs over the term of the Credit Agreement.

As of December 31, 2023, the Company's Revolver Facility has a borrowing availability of $ 486.9 million, net of outstanding letters of credit of $ 13.1 million.

Debt Repurchase

During the three month period ended December 31, 2023, the Company repurchased Senior Notes on the open market, at a discount, which are ultimately retired upon receipt.

The repurchase of the Company's debt obligations are treated as an extinguishment, with any realized discount recognized as a gain from debt repurchase on the Company's Condensed Consolidated Statements of Income, net any write-off of related deferred financing costs.

For the three month period ended December 31, 2023, the Company repurchased $ 179.0 million of outstanding Senior Notes, consisting of $ 8.1 million of the 5.00 % Senior Notes due October 1, 2029, $ 132.8 million of the 5.50 % Senior Notes due July 15, 2030, and $ 38.1 million of the 3.875 % Senior Notes, due March 15, 2031.

As a result of repurchasing outstanding debt notes during the three month period ended December 31, 2023, there was a gain of $ 4.7 million related to realized gain on the settlement of the obligations recorded, net write-off from associated deferred issuance costs.

SPECTRUM BRANDS HOLDINGS, INC.

11 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 July 2, 2023, the Company had a series of foreign exchange derivative contracts outstanding through December 2024.

At December 31, 2023, the Company had a series of foreign exchange derivative contracts outstanding through June 2025.

The derivative net loss estimated to be reclassified from AOCI into earnings over the next 12 months is $ 8.4 million, net of tax.

At July 2, 2023 and September 30, 2022, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of $ 331.6 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 nine month periods ended July 2, 2023 and July 3, 2022, respectively:

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

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

Foreign exchange contracts $ 0.2 $ 0.1 Net sales $ 0.1 $ 0.1

Foreign exchange contracts ( 7.7 ) 7.9 Cost of goods sold ( 3.7 ) 4.8

Total $ ( 7.5 ) $ 8.0 $ ( 3.6 ) $ 4.9

At December 31, 2023 and September 30, 2023, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of $ 329.3 million and $ 320.2 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 December 31, 2023 and January 1, 2023, respectively:

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

For the nine month periods ended (in millions)

July 2, 2023 July 3, 2022 Line Item July 2, 2023 July 3, 2022

For the three month periods ended (in millions)

December 31, 2023 January 1, 2023 Line Item December 31, 2023 January 1, 2023

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

3 unchanged sentences

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, Colombian Peso, Euros, Japanese Yen, Mexican Pesos, Polish Zloty, Pounds Sterling, Singapore Dollar, Swiss Franc, Turkish Lira, 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, Pounds Sterling, Singapore Dollar, Swiss Franc, 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 July 2, 2023, the Company had a series of forward exchange contracts outstanding through March 2024.

At July 2, 2023 and September 30, 2022, the Company had $ 583.6 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 nine month periods ended July 2, 2023 and July 3, 2022, pre-tax:

Three Month Periods Ended Nine Month Periods Ended

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

Foreign exchange contracts Other non-operating expense (income) $ ( 7.8 ) $ 6.2 $ ( 30.2 ) $ 5.3

At December 31, 2023, the Company had a series of forward exchange contracts outstanding through April 2024.

At December 31, 2023 and September 30, 2023, the Company had $ 709.5 million and $ 671.5 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 month periods ended December 31, 2023 and January 1, 2023, pre-tax:

(in millions) Line Item December 31, 2023 January 1, 2023

Foreign exchange contracts Other non-operating expense (income), net $ ( 13.1 ) $ ( 22.3 )

Fair Value of Derivative Instruments

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

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

(in millions) Line Item December 31, 2023 September 30, 2023

Derivative Assets

8 unchanged sentences

Total Derivative Liabilities $ 14.5 $ 9.0

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.

The Company monitors counterparty credit risk on an individual basis by periodically assessing each counterparty’s credit rating exposure.

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 December 31, 2023.

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 9 – DERIVATIVES (continued)

The Company monitors counterparty credit risk on an individual basis by periodically assessing each counterparty’s credit rating exposure.

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

The Company considers these exposures when measuring its credit reserve on its derivative assets, which were not significant as of July 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 July 2, 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 December 31, 2023 and September 30, 2023, there was no cash collateral outstanding and no posted standby letters of credit related to such liability positions.

Net Investment Hedge

4 unchanged sentences

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 July 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 nine month periods ended July 2, 2023 and July 3, 2022, pre-tax:

Three Month Periods Ended Nine Month Periods Ended

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

As of December 31, 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 December 31, 2023 and January 1, 2023, pre-tax:

Unrealized Gain (Loss) in OCI (in millions) December 31, 2023 January 1, 2023

Net investment hedge $ ( 21.3 ) $ ( 33.9 )

1 unchanged sentence

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 July 2, 2023 and September 30, 2022 according to the fair value hierarchy are as follows:

July 2, 2023 September 30, 2022

The carrying value and estimated fair value of financial instruments as of December 31, 2023 and September 30, 2023 according to the fair value hierarchy are as follows:

December 31, 2023 September 30, 2023

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

3 unchanged sentences

Debt — 1,355.0 — 1,355.0 1,396.6 — 1,418.6 — 1,418.6 1,555.5

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

The Company's derivative instruments are valued on a recurring basis using internal models, which are based on market observable inputs, including both forward and spot prices for currencies, which are generally based on quoted or observed market prices (Level 2).

See Note 8 – Debt for additional detail on outstanding debt.

See Note 9 – Derivatives for additional detail on derivative assets and liabilities.

The carrying value of cash and cash equivalents, receivables, accounts payable and short term debt approximate fair value based on the short-term nature of these assets and liabilities.

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

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

See Note 7 - Goodwill and Intangible Assets for additional detail.

The carrying values of cash and cash equivalents, short term investments, receivables, accounts payable and short term debt approximate fair value based on the short-term nature of these assets and liabilities.

NOTE 11 – SHAREHOLDERS' EQUITY

Share Repurchases

On June 17, 2023, the Company’s Board of Directors approved the termination of the Company’s existing share repurchase program and the authorization of a new share repurchase program for up to $ 1.0 billion of Common Stock (the “Maximum Amount”).

The new share repurchase program will be in effect from June 17, 2023 until the earlier of the Maximum Amount being repurchased thereunder or the suspension, termination or replacement of the program by the Company’s Board of Directors.

As part of the share repurchase program, 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 December 31, 2023 and January 1, 2023:

December 31, 2023 January 1, 2023

Three Month Periods Ended

(in millions except per share data)

Open Market Purchases 3.3 $ 73.51 $ 243.0 — $ — $ —

ASR 1.3 $ 65.84 $ 83.2 — $ — $ —

Total Purchases 4.6 $ 71.39 $ 326.2 — $ — $ —

During the three month period ended December 31, 2023, SBH entered into a $ 200.0 million rule 10b5-1 repurchase plan to facilitate daily market share repurchases through November 15, 2024, until the cap is reached or until the plan is terminated.

As of December 31, 2023, there has been $ 11.1 million repurchased pursuant to the 10b5-1 repurchase plan.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 11 – SHAREHOLDER’S EQUITY (continued)

On June 20, 2023, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a third-party financial institution to repurchase an aggregate of $ 500.0 million of the Company’s common stock, par value $ 0.01 per share.

4 unchanged sentences

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

Upon settlement of the ASR agreement, the financial institution may deliver additional shares, or the Company may deliver shares, with the final number of shares delivered determined with reference to the volume weighted average price per share of our common stock over the term of the agreement, less a negotiated discount.

The final settlement of the transaction under the agreement is expected to occur no later than December 20, 2023.

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 12 – SHAREHOLDER’S EQUITY (continued)

The following summarizes the activity of common stock repurchases for the three and nine month periods ended July 2, 2023 and July 3, 2022, excluding the recognition of a 1% excise tax on annual net share repurchases recognized as a component of Treasury Stock on the Company's Condensed Consolidated Statement of Financial Position:

July 2, 2023 July 3, 2022

Three Month Periods Ended

(in millions except per share data)

ASR 5.3 $ 74.86 $ 400.0 — $ — $ —

July 2, 2023 July 3, 2022

Nine Month Periods Ended

(in millions except per share data)

Repurchased Average

Per Share Amount Number of

Repurchased Average

Per Share Amount

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

ASR 5.3 74.86 400.0 — — —

Total Purchases 5.3 $ 74.86 $ 400.0 1.3 $ 97.34 $ 134.0

On November 21, 2023, the Company closed and settled the ASR resulting in an additional delivery of 1.3 million shares, with a fair value of $ 83.2 million.

The total number of shares repurchased under the ASR program was 6.6 million at an average cost per share of $ 75.67 , based on the volume-weighted average share price of the Company’s common stock during the calculation period of the ASR program, less the applicable contractual discount.

NOTE 12 – SHARE BASED COMPENSATION

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

Three Month Periods Ended Nine Month Periods Ended

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

The following is a summary of share based compensation expense included in net loss from continuing operations for the three month periods ended December 31, 2023 and January 1, 2023 for SBH and SB/RH, respectively.

(in millions) December 31, 2023 January 1, 2023

SBH $ 3.9 $ 3.3

11 unchanged sentences

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

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

The following is a summary of RSU grants issued during the three month period ended December 31, 2023:

(in millions, except per share data) Units Weighted

13 unchanged sentences

NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE INCOME

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

The change in the components of AOCI for the three month period ended December 31, 2023, was as follows:

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

2 unchanged sentences

Other comprehensive income (loss) before reclassification 15.4 ( 10.6 ) ( 1.1 ) 3.7

Net reclassification for (gain) loss to income from continuing operations — ( 2.5 ) 0.9 ( 1.6 )

Other comprehensive income (loss) before tax 26.6 ( 27.9 ) ( 1.4 ) ( 2.7 )

Deferred tax effect 8.8 7.2 1.2 17.2

Other comprehensive income (loss), net of tax 35.4 ( 20.7 ) ( 0.2 ) 14.5

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

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

Other comprehensive income (loss) attributable to controlling interest 35.1 ( 20.7 ) ( 0.2 ) 14.2

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

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

Other comprehensive income (loss) before reclassification 11.6 ( 9.0 ) ( 1.2 ) 1.4

Net reclassification for loss to income from continuing operations — 5.1 0.2 5.3

Net reclassification for loss (gain) to income from discontinued operations — 2.4 ( 0.1 ) 2.3

Other comprehensive income (loss) before tax 15.4 ( 5.5 ) ( 0.9 ) 9.0

1 unchanged sentence

Other comprehensive income (loss), net of tax 21.0 ( 4.0 ) ( 0.7 ) 16.3

Deconsolidation of discontinued operations 26.6 — ( 0.5 ) $ 26.1

Net change to determine comprehensive income for the period 37.8 ( 2.2 ) ( 0.8 ) 34.8

other comprehensive loss from discontinued operations attributable to non-controlling interest ( 0.2 ) — — ( 0.2 )

Deconsolidation of discontinued operations 0.7 — — 0.7

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

Other comprehensive income (loss) attributable to controlling interest 20.9 ( 4.0 ) ( 0.7 ) 16.2

Balance at July 2, 2023 $ ( 195.4 ) $ ( 7.7 ) $ ( 35.5 ) $ ( 238.6 )

Balance at December 31, 2023 $ ( 195.2 ) $ ( 2.6 ) $ ( 35.4 ) $ ( 233.2 )

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 July 2, 2023 Nine Month Period Ended July 2, 2023

Foreign Currency Translation Derivative Instruments Defined Benefit Pension Total Foreign Currency Translation Derivative Instruments Defined Benefit Pension Total

(in millions) Derivative Instruments Defined Benefit Pension Total

Net Sales $ 0.1 $ — $ 0.1

1 unchanged sentence

Other non-operating expense (income), net — ( 0.2 ) ( 0.2 )

Income from discontinued operations, net of tax ( 26.6 ) ( 2.4 ) 0.6 ( 28.4 ) ( 26.6 ) ( 2.3 ) 0.6 ( 28.3 )

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 14 – ACCUMULATED OTHER COMPREHENSIVE INCOME (continued)

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

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

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

1 unchanged sentence

$ ( 285.9 ) $ 16.8 $ ( 34.0 ) $ ( 303.1 )

Other comprehensive income before reclassification 6.8 1.2 0.6 8.6

Other comprehensive income (loss) before reclassification 26.6 ( 25.4 ) ( 2.3 ) ( 1.1 )

Net reclassification for (gain) loss to income from continuing operations — ( 2.5 ) 0.9 ( 1.6 )

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

Other comprehensive income (loss) before tax 26.6 ( 27.9 ) ( 1.4 ) ( 2.7 )

2 unchanged sentences

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

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

Other comprehensive income (loss) attributable to controlling interest 35.1 ( 20.7 ) ( 0.2 ) 14.2

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

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 )

Other comprehensive (loss) income before reclassification ( 26.7 ) 4.3 2.3 ( 20.1 )

Net reclassification for (gain) loss to income from continuing operations — ( 4.9 ) 1.1 ( 3.8 )

Net reclassification for gain to income from discontinued operations — ( 0.9 ) ( 0.1 ) ( 1.0 )

Other comprehensive (loss) income before tax ( 26.7 ) ( 1.5 ) 3.3 ( 24.9 )

Deferred tax effect ( 6.6 ) 0.9 ( 0.9 ) ( 6.6 )

Other comprehensive loss, net of tax ( 33.3 ) ( 0.6 ) 2.4 ( 31.5 )

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

other comprehensive loss from discontinued operations attributable to non-controlling interest ( 0.3 ) — — ( 0.3 )

Other comprehensive (loss) income attributable to controlling interest ( 32.9 ) ( 0.6 ) 2.4 ( 31.1 )

Balance at July 3, 2022 $ ( 230.1 ) $ 12.1 $ ( 44.4 ) $ ( 262.4 )

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 July 3, 2022 Nine Month Period Ended July 3, 2022

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

(in millions) Derivative Instruments Defined Benefit Pension Total

Net Sales $ 0.1 $ — $ 0.1

1 unchanged sentence

Other non-operating expense (income), net — ( 0.9 ) ( 0.9 )

Income from discontinued operations, net of tax 0.9 0.1 1.0 2.1 0.1 2.2

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 14 – INCOME TAXES

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

Three Month Periods Ended Nine Month Periods Ended

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

The effective tax rate for the three month periods ended December 31, 2023 and January 1, 2023, was as follows:

Effective tax rate December 31, 2023 January 1, 2023

SBH 41.6 % 23.3 %

SB/RH 40.2 % 23.5 %

The estimated annual effective tax rate applied to the three and nine month periods ended July 2, 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 month periods ended December 31, 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, foreign currency impacts, state income taxes and foreign rates that differ from the U.S.

federal statutory rate.

During Fiscal 2023, the Company had U.S.

net operating loss carryforwards ("NOL"), which did not allow it to take advantage of the foreign-derived intangible income deduction.

tax on global intangible low taxed income (“GILTI”), and certain nondeductible expenses.

The Company is projecting a U.S.

net operating loss ("NOL") for Fiscal 2024, which does not allow it to take advantage of the foreign-derived intangible income deduction or foreign tax credits on its GILTI income.

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

During the nine month period ended July 2, 2023, the Company recorded a discrete $ 56.1 million tax benefit related to the impairment of goodwill and certain intangible assets.

The Company realized a U.S.

taxable gain on the HHI divestiture entered into during the three month period ended July 2, 2023, which resulted in the utilization of all available U.S.

federal and substantially all available U.S.

state NOLs and credits.

Certain NOLs could not be used due to limitations related to prior ownership changes under Section 382 of the Internal Revenue Code.

As a result of the HHI divestiture, the Company may be able to claim foreign tax credits and foreign-derived intangible income deductions in continuing operations in future periods.

As of July 2, 2023 and September 30, 2022, there was $ 505.7 million of U.S.

federal income taxes payables and $ 2.7 million of U.S.

federal income taxes receivable, respectively, with its parent company on the SB/RH Condensed Consolidated Statements of Financial Position, calculated as if SB/RH were a separate taxpayer.

As of December 31, 2023 and September 30, 2023, there was $ 88.7 million and $ 77.8 million of U.S.

federal 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.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

5 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 July 2, 2023, there was an environmental remediation liability of $ 5.9 million, with $ 1.5 million included in Other Current Liabilities and $ 4.4 million included in Other Long-Term Liabilities on the Condensed Consolidated Statements of Financial Position.

As of December 31, 2023, there was an environmental remediation liability of $ 5.3 million, with $ 1.4 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 September 30, 2023, there was an environmental remediation liability of $ 5.4 million, with $ 1.5 million included in Other Current Liabilities and $ 3.9 million included in Other Long-Term Liabilities on the Condensed Consolidated Statements of Financial Position.

3 unchanged sentences

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

As of July 2, 2023 and September 30, 2022, the Company recognized $ 3.4 million in product liability, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

As of December 31, 2023 and September 30, 2023, the Company recognized $ 2.8 million and $ 3.0 million, respectively, in product liability, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

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

2 unchanged sentences

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

The Company recognized $ 0.3 million and $ 0.4 million of warranty accruals as of July 2, 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 of warranty accruals as of December 31, 2023 and September 30, 2023, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

Product Safety Recall.

2 unchanged sentences

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 $ 6.2 million and $ 7.5 million as of July 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 $ 7.1 million and $ 4.7 million as of July 2, 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 $ 3.8 million and $ 6.0 million as of December 31, 2023 and September 30, 2023, 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 $ 6.1 million and $ 7.1 million as of December 31, 2023 and September 30, 2023, respectively, in Other Receivables on the Condensed Consolidated Statement of Financial Position related to recovery from such indemnification provisions.

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 16 – SEGMENT INFORMATION

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

Three Month Periods Ended Nine Month Periods Ended

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

Net sales relating to the segments for the three month periods ended December 31, 2023 and January 1, 2023, are as follows:

(in millions) December 31, 2023 January 1, 2023

GPC $ 276.9 $ 277.5

H&G 186.6 198.5 411.3 470.3

HPC 343.3 364.4

5 unchanged sentences

See Note 12 – Share Based Compensation for further details;

• Incremental amounts attributable to strategic transactions and business development initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business.

These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards business development activities, incremental costs attributable to such transactions and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;

• Incremental amounts realized towards restructuring and optimization projects including, but not limited to, costs towards the development and implementation of strategies to optimize operations and improve efficiency, reduce costs, increase revenues, increase or maintain our current profit margins, including recognition of one-time exit or disposal costs.

These amounts are excluded from our ongoing performance metrics as they are reflective of incremental investment by the Company towards significant initiatives controlled by management, incremental costs directly attributable to such initiatives, indirect impact or disruption to operating performance during implementation, and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;

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

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

See Note 2 – Divestitures for further details;

• Incremental amounts attributable to strategic transactions, restructuring and optimization initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business, development and implementation of strategies to optimize operations, reduce costs, increase revenues, improve profit margins, including recognition of one-time exit or disposal costs.

These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards strategic initiatives and business development activities, incremental costs directly attributable to such initiatives and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;

• 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 associated with the Tristar Business acquisition in the prior year;

• 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.

See Note 7 - Property Plant and Equipment and Note 8 - Goodwill and Intangible Assets for further details;

• 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;

• Non-cash gain from the reduction in the contingent consideration liability associated with the Tristar Business acquisition;

• Incremental costs recognized by the HPC segment attributable to the realization of product recalls initiated in the prior year.

See Note 15 - 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 and HPC segments attributable to significant and unusual nonrecurring matters with no previous history or precedent and any subsequent changes in estimate or remeasurement realized upon settlement;

• Other adjustments are primarily attributable to:

(1) costs associated with Salus as they are not considered a component of the continuing commercial products company;

(2) key executive severance related costs;

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

• Incremental reserves for non-recurring litigation or environmental remediation activity attributable to significant and unusual nonrecurring matters with no previous history or precedent;

• Unallocated shared costs associated with discontinued operations from certain shared and center-led administrative functions, through the close of the HHI divestiture on June 20, 2023;

excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations.

Subsequent to the close of the HHI divestiture, amounts attributable to unallocated shared costs would be mitigated through income from TSAs, subsequent strategic or restructuring initiatives, elimination of extraneous costs, or re-allocations or absorption of existing continuing operations.

See Note 2 – Divestitures for further details;

• Impact from the early settlement of foreign currency cash flow hedges, resulting in assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early 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 excluded gains intended to mitigate costs during the year ending September 30, 2023;

• Other adjustments primarily attributable to:

(1) key executive severance and other one-time compensatory costs;

and (2) non-recurring unusual insurable losses.

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 16 - SEGMENT INFORMATION (continued)

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

Three Month Periods Ended Nine Month Periods Ended

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

Segment Adjusted EBITDA for the reportable segments for SBH for the three month periods ended December 31, 2023 and January 1, 2023, are as follows:

(in millions)

December 31, 2023 January 1, 2023

GPC $ 52.7 $ 37.2

6 unchanged sentences

Amortization 11.1 10.4

Share and incentive based compensation 4.8 ( 0.7 ) 12.5 11.4

Tristar acquisition and integration 1.0 5.6 10.7 20.0

HHI divestiture 4.0 0.6 6.9 6.1

Share based compensation 3.9 3.3

Tristar integration — 5.7

HHI separation costs 1.3 1.5

HPC separation initiatives 0.3 2.4

Coevorden operations separation — 1.9 2.7 7.3

Rejuvenate integration — — — 7.0

Armitage integration — 0.1 — 1.4

Omega integration — 0.1 — 1.5

Fiscal 2023 restructuring 0.5 —

2 unchanged sentences

Global ERP transformation 3.0 1.6

HPC brand portfolio transitions 0.7 0.3 2.1 0.3

GPC distribution center transition — 8.4 — 28.3

Global productivity improvement program — 1.2 — 5.2

Other project costs — 5.4

1 unchanged sentence

Non-cash purchase accounting adjustments 0.5 0.5

Gain from debt repurchase ( 4.7 ) —

Gain from remeasurement of contingent consideration liability — ( 1.5 )

Impairment of equipment and operating lease assets 3.6 — 8.1 —

Impairment of goodwill 111.1 — 111.1 —

Impairment of intangible assets 4.0 —

2 unchanged sentences

HPC product recall ( 0.7 ) 0.3

Salus and other — 1.4 5.0 1.7

(Loss) income from continuing operations before income taxes $ ( 158.3 ) $ 5.0 $ ( 320.2 ) $ ( 73.1 )

Other 0.4 4.3

Income (loss) from continuing operations before income taxes $ 29.9 $ ( 52.1 )

SPECTRUM BRANDS HOLDINGS, INC.

3 unchanged sentences

NOTE 16 - SEGMENT INFORMATION (continued)

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

Three Month Periods Ended Nine Month Periods Ended

SB/RH (in millions)

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Segment Adjusted EBITDA for reportable segments for SB/RH for the three month periods ended December 31, 2023 and January 1, 2023, are as follows:

(in millions)

December 31, 2023 January 1, 2023

GPC $ 52.7 $ 37.2

6 unchanged sentences

Amortization 11.1 10.4

Share and incentive based compensation 4.3 ( 1.1 ) 11.4 10.7

Tristar acquisition and integration 1.0 5.6 10.7 20.0

HHI divestiture 4.0 0.6 6.9 6.1

Share based compensation 3.8 3.1

Tristar integration — 5.7

HHI divestiture and separation costs 1.3 1.5

HPC separation initiatives 0.3 2.4

Coevorden operations separation — 1.9 2.7 7.3

Rejuvenate integration — — — 7.0

Armitage integration — 0.1 — 1.4

Omega integration — 0.1 — 1.5

Fiscal 2023 restructuring 0.5 —

2 unchanged sentences

Global ERP transformation 3.0 1.6

HPC brand portfolio transitions 0.7 0.3 2.1 0.3

GPC distribution center transition — 8.4 — 28.3

Global productivity improvement program — 1.2 — 5.2

Other project costs — 5.4

1 unchanged sentence

Non-cash purchase accounting adjustments 0.5 0.5

Gain from debt repurchase ( 4.7 ) —

Gain from remeasurement of contingent consideration liability — ( 1.5 )

Impairment of equipment and operating lease assets 3.6 — 8.1 —

Impairment of goodwill 111.1 — 111.1 —

Impairment of intangible assets 4.0 —

3 unchanged sentences

Other 0.3 4.3

(Loss) income from continuing operations before income taxes $ ( 156.8 ) $ 5.7 $ ( 318.1 ) $ ( 71.4 )

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

Income (loss) from continuing operations before income taxes $ 30.4 $ ( 52.0 )

NOTE 17 – EARNINGS PER SHARE – SBH

The reconciliation of the numerator and denominator of the basic and diluted earnings per share calculation and the anti-dilutive shares for the three and nine month periods ended July 2, 2023 and July 3, 2022, are as follows:

Three Month Periods Ended Nine Month Periods Ended

The reconciliation of the numerator and denominator of the basic and diluted earnings per share calculation and the anti-dilutive shares for the three month periods ended December 31, 2023 and January 1, 2023, are as follows:

(in millions, except per share amounts)

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Net (loss) income from continuing operations attributable to controlling interest $ ( 172.4 ) $ 3.0 $ ( 287.7 ) $ ( 52.3 )

Net income from discontinued operations attributable to controlling interest 2,031.6 29.7 2,072.4 109.1

Net income attributable to controlling interest $ 1,859.2 $ 32.7 $ 1,784.7 $ 56.8

December 31, 2023 January 1, 2023

Net income (loss) from continuing operations attributable to controlling interest $ 17.4 $ ( 40.3 )

Income from discontinued operations attributable to controlling interest, net of tax 11.7 19.4

Net income (loss) attributable to controlling interest $ 29.1 $ ( 20.9 )

Weighted average shares outstanding – basic 34.0 40.9

10 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