Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Form 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2017April 4, 2021
OR
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to______ to______
Commission file number: 1-4219
spb-20210404_g1.jpg
Commission File No.
Name of Registrant, State of Incorporation,
Address of Principal Offices, and Telephone No.
IRS Employer Identification No.
1-4219Spectrum Brands Holdings, Inc.74-1339132
hrggrouprgba05.jpg(a Delaware corporation)
HRG Group, Inc.3001 Deming Way
(Exact name of registrant as specified in its charter)Middleton, WI 53562
(608) 275-3340
www.spectrumbrands.com
333-192634-03SB/RH Holdings, LLC27-2812840
(a Delaware limited liability company)
Delaware74-1339132
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
450 Park Avenue, 29th Floor, New York, NY10022
(Address of principal executive offices)(Zip Code)
3001 Deming Way
(212) 906-8555Middleton, WI 53562
(Registrant’s telephone number, including area code)(608) 275-3340
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrantregistrants (1) hashave filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    or    No  ¨.
Spectrum Brands Holdings, Inc.Yes☒No☐
SB/RH Holdings, LLCYes☒No☐
Indicate by check mark whether the registrant hasregistrants have submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x    or    No  ¨.
Spectrum Brands Holdings, Inc.Yes☒No☐
SB/RH Holdings, LLCYes☒No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
(Check one):
RegistrantLarge Accelerated FilerxAccelerated Filer¨
Non-accelerated Filer¨(Do not check if a smaller reporting company)
Smaller reporting company
¨Reporting Company
Emerging growth companySpectrum Brands Holdings, Inc.¨X
SB/RH Holdings, LLCX
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Spectrum Brands Holdings, Inc.Yes☐No☒
SB/RH Holdings, LLCYes☐No☒
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§232.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter
Spectrum Brands Holdings, Inc.Yes☐No☒
SB/RH Holdings, LLCYes☐No☒
If an emerging growth company, indicate by check markcheckmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
Spectrum Brands Holdings, Inc.☐
SB/RH Holdings, LLC☐
Securities registered pursuant to Section 12(b) of the Exchange Act).    Yes  ¨    or    No  x
There were 201,842,876 shares of the registrant’s common stock outstanding as of February 6, 2018.
Act:
RegistrantTitle of Each ClassTrading SymbolName of Exchange On Which Registered
Spectrum Brands Holdings, Inc.Common Stock, $0.01 par valueSPBNew York Stock Exchange

As of May 4, 2021, there were 42,628,769 shares outstanding of Spectrum Brands Holdings, Inc.’s common stock, par value $0.01 per share.
HRG GROUP,SB/RH Holdings, LLC meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this report with a reduced disclosure format as permitted by general instruction H(2).

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Forward-Looking Statements
We have made or implied certain forward-looking statements in this report including without limitation, statements regarding the Company's recently adopted share repurchase program, for which the manner of purchase, the number of shares to be purchased and the timing of purchases will be based on a number of factors including the price of the Company's common stock, general business and market conditions and applicable legal requirements, and is subject to the discretion of the Company's management and may be commenced, suspended or discontinued at any time.All statements, other than statements of historical facts included in this report, including the statements under Management’s Discussion and Analysis of Financial Condition and Results of Operations, or expectations regarding our Global Productivity Improvement Program, our business strategy, future operations, financial condition, estimated revenues, projected costs, projected synergies, prospects, plans and objectives of management, information concerning expected actions of third parties, retention and future compensation of key personnel, our ability to meet environmental, social, and governance goals, the expected impact of the COVID-19 pandemic, economic, social, and political conditions or civil unrest in the U.S. and other countries, and other statements regarding the Company's ability to meet its expectations for its fiscal 2021 are forward-looking statements. When used in this report, the words future, anticipate, pro forma, seeks, intend, plan, envision, estimate, believe, belief, expect, project, forecast, outlook, goal, target, could, would, will, can, should, may and similar expressions are also intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.
Since these forward-looking statements are based upon our current expectations of future events and projections and are subject to a number of risks and uncertainties, many of which are beyond our control and some of which may change rapidly, actual results or outcomes may differ materially from those expressed or implied herein, and you should not place undue reliance on these statements. Important factors that could cause our actual results to differ materially from those expressed or implied herein include, without limitation: 
•the impact of the COVID-19 pandemic on our customers, employees, manufacturing facilities, suppliers, the capital markets, and our financial condition, and results of operations, all of which tend to aggravate the other risks and uncertainties we face;
•the impact of our indebtedness on our business, financial condition, and results of operations;
•the impact of restrictions in our debt instruments on our ability to operate our business, finance our capital needs or pursue or expand business strategies;
•any failure to comply with financial covenants and other provisions and restrictions of our debt instruments;
•the effects of general economic conditions, including the impact of, and changes to tariffs and trade policies, inflation, recession or fears of a recession, depression or fears of a depression, labor costs, and stock market volatility or monetary or fiscal policies in the countries where we do business;
•the impact of fluctuations in transportation and shipment costs, commodity prices, costs or availability of raw materials or terms and conditions available from suppliers, including suppliers’ willingness to advance credit;
•interest rate and exchange rate fluctuations;
•the loss of, significant reduction in, or dependence upon, sales to any significant retail customer(s);
•competitive promotional activity or spending by competitors, or price reductions by competitors;
•the introduction of new product features or technological developments by competitors and/or the development of new competitors or competitive brands;
•the impact of actions taken by significant stockholders;
•changes in consumer spending preferences and demand for our products, particularly in light of the COVID-19 pandemic and economic stress;
•our ability to develop and successfully introduce new products, protect our intellectual property and avoid infringing the intellectual property of third parties;
•our ability to successfully identify, implement, achieve and sustain productivity improvements (including our Global Productivity Improvement Program), cost efficiencies (including at our manufacturing and distribution operations), and cost savings;
•the seasonal nature of sales of certain of our products;
•the effects of climate change and unusual weather activity as well as further natural disasters and pandemics;
•the cost and effect of unanticipated legal, tax or regulatory proceedings or new laws or regulations (including environmental, public health and consumer protection regulations);
•our discretion to conduct, suspend or discontinue our share repurchase program (including our discretion to conduct purchases, if any, in a variety of manners including open-market purchases or privately negotiated transactions);
•public perception regarding the safety of products that we manufacture and sell, including the potential for environmental liabilities, product liability claims, litigation and other claims related to products manufactured by us and third parties;
•the impact of existing, pending or threatened litigation, government regulations or other requirements or operating standards applicable to our business;
•the impact of cybersecurity breaches or our actual or perceived failure to protect company and personal data, including our failure to comply with new and increasingly complex global data privacy regulations;
•changes in accounting policies applicable to our business;
•our ability to utilize net operating loss carry-forwards to offset tax liabilities from future taxable income;
•the impact of expenses resulting from the implementation of new business strategies, divestitures or current and proposed restructuring activities;
•our ability to successfully implement further acquisitions or dispositions and the impact of any such transactions on our financial performance;
•the unanticipated loss of key members of senior management and the transition of new members of our management teams to their new roles;
•the impact of economic, social and political conditions or civil unrest in the U.S. and other countries;
•the effects of political or economic conditions, terrorist attacks, acts of war, natural disasters, public health concerns or other unrest in international markets;
•our ability to achieve our goals regarding environmental, social, and governance practices; and
•our increased reliance on third-party partners, suppliers, and distributors to achieve our business objectives.
Some of the above-mentioned factors are described in further detail in the sections entitled Risk Factors in our annual and quarterly reports (including this report), as applicable. You should assume the information appearing in this report is accurate only as of the end of the period covered by this report, or as otherwise specified, as our business, financial condition, results of operations and prospects may have changed since that date. Except as required by applicable law, including the securities laws of the United States (“U.S.”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”), we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Table of Contents
SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
TABLE OF CONTENTS
This report is a combined report of Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC. The combined notes to the condensed consolidated financial statements include notes representing Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC and certain notes related specifically to SB/RH Holdings, LLC.
Page
2
3
2
43
54
5
6
7
8
9
10
11
712
(3) Divestitures
9
(4) Acquisition and Integration Costs
12
(5) Restructuring and Related Charges
12
(6) Receivables and Concentration of Credit Risk
13
(7) Inventories, net
14
(8) Property, Plant and Equipment, net
14
(9) Goodwill and Intangibles, net
14
(10) Debt
15
(11) Derivative Financial Instruments
16
(12) Fair Value of Financial Instruments
19
(13) Stock-Based Compensation
20
(14) Employee Benefit Obligations
22
(15) Income Taxes
22
(16) Related Party Transactions
24
(17) Commitments and Contingencies
24
(18) Segment Data
25
(19) Earnings Per Share
26
(20) Consolidating Financial Information
27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
3130
4344
4345
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
47
46
46
4946
46
46
50
Item 6. Exhibits
5047

1

Table of Contents
PART I.FINANCIAL INFORMATION
Item 1.1.     Financial Statements
HRG GROUP,
SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETSCondensed Consolidated Statements of Financial Position
(In millions)As of April 4, 2021, andSeptember 30, 2020
(unaudited)
December 31, 2017 September 30, 2017
(Unaudited)  
ASSETS   
Current assets:   
(in millions)(in millions)April 4, 2021September 30, 2020
AssetsAssets
Cash and cash equivalents$1,647.6
 $270.1
Cash and cash equivalents$290.0 $531.6 
Trade receivables, net278.4
 266.0
Trade receivables, net524.9 501.1 
Other receivables, net83.0
 19.7
Inventories, net580.7
 496.3
Other receivablesOther receivables88.5 74.2 
InventoriesInventories812.1 557.7 
Prepaid expenses and other current assets56.6
 54.8
Prepaid expenses and other current assets83.2 63.5 
Current assets of businesses held for sale1,990.6
 28,929.2
Total current assets4,636.9
 30,036.1
Total current assets1,798.7 1,728.1 
Property, plant and equipment, net506.7
 504.4
Property, plant and equipment, net392.6 396.5 
Operating lease assetsOperating lease assets103.0 103.8 
Deferred charges and otherDeferred charges and other49.2 115.2 
Goodwill2,276.4
 2,277.1
Goodwill1,434.6 1,332.0 
Intangibles, net1,598.6
 1,612.0
Deferred charges and other assets61.4
 43.7
Noncurrent assets of businesses held for sale—
 1,376.4
Intangible assets, netIntangible assets, net1,496.4 1,431.7 
Total assets$9,080.0
 $35,849.7
Total assets$5,274.5 $5,107.3 
   
LIABILITIES AND EQUITY   
Current liabilities:   
Liabilities and Shareholders' EquityLiabilities and Shareholders' Equity
Current portion of long-term debt$934.5
 $161.4
Current portion of long-term debt$18.6 $15.3 
Accounts payable321.3
 373.1
Accounts payable548.6 557.5 
Accrued wages and salaries31.5
 56.1
Accrued wages and salaries76.6 95.0 
Accrued interest104.5
 78.0
Accrued interest11.7 38.5 
Other current liabilities120.6
 125.8
Other current liabilities270.9 238.6 
Current liabilities of businesses held for sale608.2
 26,850.6
Total current liabilities2,120.6
 27,645.0
Total current liabilities926.4 944.9 
Long-term debt, net of current portion4,888.4
 5,544.0
Long-term debt, net of current portion2,551.6 2,461.0 
Employee benefit obligations40.0
 38.6
Deferred tax liabilities298.2
 493.2
Long-term operating lease liabilitiesLong-term operating lease liabilities86.2 88.8 
Deferred income taxesDeferred income taxes86.8 65.4 
Other long-term liabilities105.2
 26.2
Other long-term liabilities128.7 131.4 
Noncurrent liabilities of businesses held for sale—
 155.8
Total liabilities7,452.4
 33,902.8
Total liabilities3,779.7 3,691.5 
   
Commitments and contingencies
 
   
HRG Group, Inc. shareholders' equity:   
Commitments and contingencies (Note 19)Commitments and contingencies (Note 19)


0
0Shareholders' equity0Shareholders' equity
Common stock2.0
 2.0
Common stock0.5 0.5 
Additional paid-in capital1,363.7
 1,372.9
Additional paid-in capital2,051.6 2,054.3 
Accumulated deficit(418.5) (925.9)
Accumulated other comprehensive (loss) income(126.8) 309.0
Total HRG Group, Inc. shareholders' equity820.4
 758.0
Noncontrolling interest807.2
 1,188.9
Accumulated earningsAccumulated earnings315.9 243.9 
Accumulated other comprehensive loss, net of taxAccumulated other comprehensive loss, net of tax(243.4)(284.7)
Treasury stockTreasury stock(637.0)(606.5)
Total shareholders' equity1,627.6
 1,946.9
Total shareholders' equity1,487.6 1,407.5 
Non-controlling interestNon-controlling interest7.2 8.3 
Total equityTotal equity1,494.8 1,415.8 
Total liabilities and equity$9,080.0
 $35,849.7
Total liabilities and equity$5,274.5 $5,107.3 
See accompanying notes to the condensed consolidated financial statements.

HRG GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)statements
2
  Three months ended December 31,
  2017 2016
  (Unaudited)
Revenues:    
Net sales $646.5
 $602.3
Operating costs and expenses:    
Cost of goods sold 403.8
 362.1
Selling, acquisition, operating and general expenses 216.1
 198.9
Total operating costs and expenses 619.9
 561.0
Operating income 26.6
 41.3
Interest expense (75.5) (78.7)
Other income, net 1.0
 1.0
Loss from continuing operations before income taxes (47.9) (36.4)
Income tax (benefit) expense (126.0) 5.6
Net income (loss) from continuing operations 78.1
 (42.0)
Income from discontinued operations, net of tax 500.8
 302.8
Net income 578.9
 260.8
Less: Net income attributable to noncontrolling interest 71.5
 48.6
Net income attributable to controlling interest $507.4
 $212.2
     
Amounts attributable to controlling interest:    
Net income (loss) from continuing operations $28.8
 $(47.2)
Net income from discontinued operations 478.6
 259.4
Net income attributable to controlling interest $507.4
 $212.2
     
Net income per common share attributable to controlling interest:    
Basic income (loss) from continuing operations $0.14
 $(0.24)
Basic income from discontinued operations 2.39
 1.30
Basic $2.53
 $1.06
     
Diluted income (loss) from continuing operations $0.14
 $(0.24)
Diluted income from discontinued operations 2.37
 1.30
Diluted $2.51
 $1.06
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SPECTRUM BRANDS HOLDINGS, INC.
Condensed Consolidated Statements of Income
For thethree and six monthperiods ended April 4, 2021 and March 29, 2020
(unaudited)
Three Month Periods EndedSix Month Periods Ended
(in millions, except per share)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net Sales$1,149.8 $937.8 $2,294.7 $1,809.3 
Cost of goods sold744.5 606.0 1,467.0 1,198.5 
Restructuring and related charges1.3 2.9 1.4 12.8 
Gross profit404.0 328.9 826.3 598.0 
Selling173.2 150.0 340.0 296.1 
General and administrative89.0 81.9 180.9 162.2 
Research and development12.5 10.1 22.9 19.9 
Restructuring and related charges2.8 19.0 11.9 36.6 
Transaction related charges9.7 7.2 30.3 11.3 
(Gain) loss on assets held for sale0 (7.0)0 25.7 
Write-off from impairment of intangible assets0 0 0 24.2 
Total operating expenses287.2 261.2 586.0 576.0 
Operating income116.8 67.7 240.3 22.0 
Interest expense65.5 35.5 102.2 70.4 
Other non-operating (income) expense, net(1.2)110.4 (7.4)66.8 
Income (loss) from continuing operations before income taxes52.5 (78.2)145.5 (115.2)
Income tax expense (benefit)15.7 (19.0)35.5 (18.3)
Net income (loss) from continuing operations36.8 (59.2)110.0 (96.9)
(Loss) income from discontinued operations, net of tax(1.1)1.4 (1.4)4.3 
Net income (loss)35.7 (57.8)108.6 (92.6)
Net (loss) income attributable to non-controlling interest(0.9)(0.8)(0.1)0.1 
Net income (loss) attributable to controlling interest$36.6 $(57.0)$108.7 $(92.7)
Amounts attributable to controlling interest
Net income (loss) from continuing operations attributable to controlling interest$37.7 $(58.4)$110.1 $(97.0)
Net (loss) income from discontinued operations attributable to controlling interest(1.1)1.4 (1.4)4.3 
Net income (loss) attributable to controlling interest$36.6 $(57.0)$108.7 $(92.7)
Earnings Per Share
Basic earnings per share from continuing operations$0.88 $(1.29)$2.57 $(2.09)
Basic earnings per share from discontinued operations(0.02)0.03 (0.03)0.09 
Basic earnings per share$0.86 $(1.26)$2.54 $(2.00)
Diluted earnings per share from continuing operations$0.88 $(1.29)$2.56 $(2.09)
Diluted earnings per share from discontinued operations(0.03)0.03 (0.03)0.09 
Diluted earnings per share$0.85 $(1.26)$2.53 $(2.00)
Dividend per share$0.42 $0.42 $0.84 $0.84 
Weighted Average Shares Outstanding
Basic42.6 45.1 42.8 46.4 
Diluted42.9 45.1 43.0 46.4 
See accompanying notes to the condensed consolidated financial statements.



HRG GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)statements
3
  Three months ended December 31,
  2017 2016
  (Unaudited)
Net income $578.9
 $260.8
     
Other comprehensive income (loss):    
Foreign currency translation losses (2.0) (46.1)
Net unrealized gain on derivative instruments    
Changes in derivative instruments before reclassification adjustment (0.8) 43.2
Net reclassification adjustment for losses (gains) included in net income 2.6
 (4.8)
Changes in derivative instruments after reclassification adjustment 1.8
 38.4
Changes in deferred income tax asset/liability —
 (14.2)
Net unrealized gain on hedging derivative instruments 1.8
 24.2
Actuarial adjustments to pension plans    
Changes in actuarial adjustments before reclassification adjustment (0.7) 3.2
Net reclassification adjustment 0.8
 1.3
Changes in actuarial adjustments to pension plans 0.1
 4.5
Changes in deferred income tax asset/liability —
 (1.3)
Deferred tax valuation allowance adjustments —
 0.1
Net actuarial adjustments to pension plans 0.1
 3.3
Unrealized investment gains (losses):    
Changes in unrealized investment gains (losses) before reclassification adjustment 26.0
 (667.0)
Net reclassification adjustment for gains included in net income (6.3) (2.1)
Changes in unrealized investment gains (losses) after reclassification adjustment 19.7
 (669.1)
Adjustments to intangible assets (0.9) 225.3
Changes in deferred income tax asset/liability (6.7) 154.7
Net unrealized gains (losses) on investments 12.1
 (289.1)
Deconsolidation of Insurance Operations (445.9) —
Net change to derive comprehensive income (loss) for the period (433.9) (307.7)
Comprehensive income (loss) 145.0
 (46.9)
Less: Comprehensive income (loss) attributable to the noncontrolling interest:    
Net income 71.5
 48.6
Other comprehensive income (loss) 2.5
 (63.8)
  74.0
 (15.2)
Comprehensive income (loss) attributable to the controlling interest $71.0
 $(31.7)
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SPECTRUM BRANDS HOLDINGS, INC
Condensed Consolidated Statements of Comprehensive Income
For the three and six month periods ended April 4, 2021 and March 29, 2020
(unaudited)
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net income (loss)$35.7 $(57.8)$108.6 $(92.6)
Other comprehensive income (loss)
Foreign currency translation gain (loss)22.2 (47.4)41.6 (20.8)
Deferred tax effect(5.0)0.3 0.3 0.2 
Net unrealized gain (loss) on foreign currency translation17.2 (47.1)41.9 (20.6)
Unrealized gain (loss) on derivative instruments
Unrealized gain (loss) on hedging activity before reclassification5.8 7.8 (6.6)1.6 
Net reclassification for loss (gain) to income from continuing operations3.0 (1.7)5.7 (4.3)
Unrealized gain (loss) on hedging instruments after reclassification8.8 6.1 (0.9)(2.7)
Deferred tax effect(2.4)(1.6)0.1 1.1 
Net unrealized gain (loss) on hedging derivative instruments6.4 4.5 (0.8)(1.6)
Defined benefit pension gain
Defined benefit pension gain (loss) before reclassification0.9 0.9 (1.3)3.7 
Net reclassification for loss to income from continuing operations1.1 1.0 2.2 2.1 
Defined benefit pension gain after reclassification2.0 1.9 0.9 5.8 
Deferred tax effect(0.6)(0.4)(0.4)(0.4)
Net defined benefit pension gain1.4 1.5 0.5 5.4 
Deconsolidation of discontinued operations and assets held for sale0 8.1 0 8.1 
Net change to derive comprehensive income for the periods25.0 (33.0)41.6 (8.7)
Comprehensive income (loss)60.7 (90.8)150.2 (101.3)
Comprehensive (loss) income attributable to non-controlling interest(0.1)(0.1)0.3 0 
Comprehensive income (loss) attributable to controlling interest$60.8 $(90.7)$149.9 $(101.3)
See accompanying notes to the condensed consolidated financial statements.


statements
4
HRG GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

 Three months ended December 31,
 2017 2016
 (Unaudited)
Cash flows from operating activities:   
Net income$578.9
 $260.8
Income from discontinued operations, net of tax500.8
 302.8
Net income (loss) from continuing operations78.1
 (42.0)
Adjustments to reconcile net income (loss) to operating cash flows from continuing operations:   
Depreciation of properties and amortization of intangibles33.1
 30.3
Loan provision and bad debt expense(0.2) 2.9
Stock-based compensation4.2
 9.5
Amortization of debt issuance costs3.9
 3.3
Amortization of debt discount0.3
 0.4
Non-cash restructuring(1.5) 0.7
Write-off of debt discount on retired debt—
 1.9
Deferred income taxes(127.1) 18.5
Purchase accounting inventory adjustment0.8
 —
Pet safety recall inventory write-off1.6
 —
Dividends from subsidiaries classified as discontinued operations3.1
 3.1
Changes in operating assets and liabilities(139.7) (119.9)
Net change in cash due to continuing operating activities(143.4) (91.3)
Net change in cash due to discontinued operating activities82.6
 172.0
Net change in cash due to operating activities(60.8) 80.7
Cash flows from investing activities:   
Proceeds from investments sold, matured or repaid0.6
 —
Net asset-based loan repayments—
 17.1
Capital expenditures(17.9) (21.1)
Proceeds from sales of assets1,490.2
 —
Other investing activities, net—
 (0.8)
Net change in cash due to continuing investing activities1,472.9
 (4.8)
Net change in cash due to discontinued investing activities(181.7) (601.3)
Net change in cash due to investing activities1,291.2
 (606.1)
Cash flows from financing activities:   
Proceeds from issuance of new debt226.1
 168.5
Repayment of debt, including tender and call premiums(122.0) (141.7)
Debt issuance costs(0.1) (0.5)
Purchases of subsidiary stock, net(7.9) (97.6)
Dividend paid by subsidiary to noncontrolling interest(9.8) (9.6)
Share based award tax withholding payments(22.5) (34.9)
Other financing activities, net1.4
 1.0
Net change in cash due to continuing financing activities65.2
 (114.8)
Net change in cash due to discontinued financing activities120.4
 265.9
Net change in cash due to financing activities185.6
 151.1
Effect of exchange rate changes on cash and cash equivalents(0.2) (6.4)
Net change in cash and cash equivalents1,415.8
 (380.7)
Net change in cash and cash equivalents in discontinued operations38.3
 (228.9)
Net change in cash and cash equivalents in continuing operations1,377.5
 (151.8)
Cash and cash equivalents at beginning of period270.1
 465.2
Cash and cash equivalents at end of period$1,647.6
 $313.4
Table of Contents
SPECTRUM BRANDS HOLDINGS, INC
Condensed Consolidated Statements of Shareholder’s Equity
For the six month period ended April 4, 2021
(unaudited)
Six Month Period Ended April 4, 2021Common StockAdditional
Paid-in
Capital		Accumulated
Earnings		Accumulated
Other
Comprehensive
Loss		Treasury
Stock		Total
Shareholders'
Equity		Non-
controlling
Interest		Total
Equity
(in millions)SharesAmount
Balances at September 30, 202043.1 $0.5 $2,054.3 $243.9 $(284.7)$(606.5)$1,407.5 $8.3 $1,415.8 
Net income from continuing operations— — — 72.6 — — 72.6 0.8 73.4 
Loss from discontinued operations, net of tax— — — (0.3)— — (0.3)— (0.3)
Other comprehensive income, net of tax— — — — 16.2 — 16.2 0.4 16.6 
Treasury stock repurchases(0.6)— — — — (42.3)(42.3)— (42.3)
Restricted stock issued and related tax withholdings0.2 — (18.6)— — 11.7 (6.9)— (6.9)
Share based compensation— — 7.5 — — — 7.5 — 7.5 
Dividends declared— — — (18.4)— — (18.4)— (18.4)
Dividend paid by subsidiary to NCI— — — — — — — (1.0)(1.0)
Balances as of January 3, 202142.7 0.5 2,043.2 297.8 (268.5)(637.1)1,435.9 8.5 1,444.4 
Net income (loss) from continuing operations— — — 37.7 — — 37.7 (0.9)36.8 
Loss from discontinued operations, net of tax— — — (1.1)— — (1.1)— (1.1)
Other comprehensive income (loss), net of tax— — — — 25.1 — 25.1 (0.1)25.0 
Restricted stock issued and related tax withholdings— — (0.1)— — 0.1 — — 0 
Share based compensation— — 8.5 — — — 8.5 — 8.5 
Dividends declared— — — (18.5)— — (18.5)— (18.5)
Dividend paid by subsidiary to NCI— — — — — — — (0.3)(0.3)
Balances at April 4, 202142.7 $0.5 $2,051.6 $315.9 $(243.4)$(637.0)$1,487.6 $7.2 $1,494.8 
See accompanying notes to the condensed consolidated financial statements.statements

SPECTRUM BRANDS HOLDINGS, INC
HRG GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in millions, except per share and unit measures or as otherwise specified)
(1) Description of Business and Basis of Presentation
Description of Business
HRG Group, Inc. (“HRG”, and collectively with its respective subsidiaries, the “Company”) is a holding company that conducts its operations principally through its majority owned subsidiary, Spectrum Brands Holdings, Inc., which is a diversified global branded consumer products company (“Spectrum Brands”). HRG’s shares of common stock trade on the New York Stock Exchange (“NYSE”) under the symbol “HRG.”
The Company’s reportable business segments are organized in a manner that reflects how HRG’s management views those business activities. Accordingly, the Company currently presents the results from its business operations in two reportable segments: (i) Consumer Products and (ii) Corporate and Other.
The Company’s Consumer Products segment represents the Company’s 59.3% controlling interest in Spectrum Brands. The Company’s Corporate and Other segment includes the Company’s ownership of Salus Capital Partners, LLC, (“Salus”), which was created for the purpose of serving as an asset-based lender and is in the process of completing the wind-down of its business, 99.5% of NZCH Corporation (“NZCH”), a public shell company, HGI Funding, LLC (“HGI Funding”) and HGI Energy Holdings, LLC (“HGI Energy”), which are subsidiaries that the Company uses to manage a portion of its available cash and engage in other activities.
For the results of operations by segment, and other segment data, see Note 18, Segment Data and Note 20, Consolidating Financial Information.
Consumer Products Segment
The Consumer Products segment represents the Company’s 59.3% controlling interest in Spectrum Brands. Through its operating subsidiaries, Spectrum Brands is a diversified global branded consumer products company with positions in multiple product lines and categories: consumer batteries, small appliances, global pet supplies, home and garden control products, personal care products, hardware and home improvement products and global auto care.
Effective December 29, 2017, Spectrum Brands’ Board of Directors approved a plan to explore strategic alternatives, including the planned sale of Spectrum Brands’ Global Batteries & Appliances (“GBA”) segment. Spectrum Brands expects a sale to be realized by December 31, 2018. See Note 3, Divestitures, regarding Spectrum Brands’ agreement to sell its Global Batteries and Lighting (“GBL”) business and its plans to sell its Home and Personal Care (“HPC”) business. The Company reports a business as held for sale when the criteria of Accounting Standard Codification (“ASC”) Topic 360, Property, Plant and Equipment (“ASC 360”) are met. The Company believes ASC 360’s criteria for the GBA segment have been met as of December 31, 2017. As a result, Spectrum Brands’ assets and liabilities associated with the GBA segment have been classified as held for sale in the accompanying Condensed Consolidated Balance Sheets and the respective operations of the GBA segment have been classified as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and Shareholder’s Equity
For the six month period ended March 29, 2020
(unaudited)
Six Month Period Ended March 29, 2020Common StockAdditional
Paid-in
Capital		Accumulated
Earnings		Accumulated
Other
Comprehensive
Loss		Treasury
Stock		Total
Shareholders'
Equity		Non-
controlling
Interest		Total
Equity
(in millions)SharesAmount
Balances at September 30, 201948.8 $0.5 $2,031.1 $223.8 $(273.6)$(260.9)$1,720.9 $8.0 $1,728.9 
Net (loss) income from continuing operations— — — (38.6)— — (38.6)0.9 (37.7)
Income from discontinued operations, net of tax— — — 2.8 — — 2.8 — 2.8 
Other comprehensive income, net of tax— — — — 24.2 — 24.2 0.1 24.3 
Treasury stock repurchases(1.5)— — — — (90.6)(90.6)— (90.6)
Accelerated share repurchase pending final settlement(1.7)— (18.7)— — (106.3)(125.0)— (125.0)
Restricted stock issued and related tax withholdings0.5 — (13.3)0 — 18.2 4.9 — 4.9 
Share based compensation— — 8.5 — — — 8.5 — 8.5 
Dividends declared— — — (20.2)— — (20.2)— (20.2)
Cumulative adjustment for adoption of new accounting standards— — — (0.3)0.3 — — — 0 
Balances as of December 29, 201946.1 0.5 2,007.6 167.5 (249.1)(439.6)1,486.9 9.0 1,495.9 
Net loss from continuing operations— — — (58.4)— — (58.4)(0.8)(59.2)
Income from discontinued operations, net of tax— — — 1.4 — — 1.4 — 1.4 
Sale and deconsolidation of assets held for sale— — — — 8.1 — 8.1 — 8.1 
Other comprehensive loss, net of tax— — — — (41.0)— (41.0)(0.1)(41.1)
Treasury stock repurchases(2.7)— — — — (149.2)(149.2)— (149.2)
Accelerated share repurchase final settlement(0.3)— 18.5 — — (18.5)— — 0 
Restricted stock issued and related tax withholdings— — (0.7)— — 0.4 (0.3)— (0.3)
Share based compensation— — 8.9 — — — 8.9 — 8.9 
Dividends declared— — — (19.7)— — (19.7)— (19.7)
Balances at March 29, 202043.1 $0.5 $2,034.3 $90.8 $(282.0)$(606.9)$1,236.7 $8.1 $1,244.8 
See accompanying notes to the condensed consolidated financial statements
5
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SPECTRUM BRANDS HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows;
For the six month periods ended April 4, 2021 and reported separately for allMarch 29, 2020
(unaudited)
Six Month Periods Ended
(in millions)April 4, 2021March 29, 2020
Cash flows from operating activities
Net income (loss)$108.6 $(92.6)
(Loss) income from discontinued operations, net of tax(1.4)4.3 
Net income (loss) from continuing operations110.0 (96.9)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization74.4 78.0 
Share based compensation16.0 26.0 
(Gain) loss on equity investments(6.9)68.3 
Loss on assets held for sale0 25.7 
Write-off from impairment of intangible assets0 24.2 
Amortization of debt issuance costs and debt discount2.9 3.2 
Write-off of unamortized discount and debt issuance costs7.9 1.1 
Inventory acquisition step-up3.4 0 
Deferred tax expense3.8 22.0 
Net changes in operating assets and liabilities(275.4)(336.2)
Net cash used by operating activities from continuing operations(63.9)(184.6)
Net cash used by operating activities from discontinued operations(15.9)0 
Net cash used by operating activities(79.8)(184.6)
Cash flows from investing activities
Purchases of property, plant and equipment(28.1)(31.7)
Proceeds from disposal of property, plant and equipment0 0.6 
Business acquisitions, net of cash acquired(129.8)(17.0)
Proceeds from sale of equity investment73.1 28.6 
Other investing activity(0.3)2.5 
Net cash used by investing activities(85.1)(17.0)
Cash flows from financing activities
Payment of debt, including premium on extinguishment(880.3)(130.0)
Proceeds from issuance of debt899.0 780.0 
Payment of debt issuance costs(12.6)(0.8)
Payment of contingent consideration0 (197.0)
Treasury stock purchases(42.3)(239.8)
Accelerated share repurchase0 (125.0)
Dividends paid to shareholders(35.7)(39.1)
Dividends paid by subsidiary to non-controlling interest(1.3)0 
Share based award tax withholding payments, net of proceeds upon vesting(7.2)(12.6)
Other financing activities, net0.3 0 
Net cash (used) provided by financing activities(80.1)35.7 
Effect of exchange rate changes on cash and cash equivalents3.4 (0.5)
Net change in cash, cash equivalents and restricted cash in continuing operations(241.6)(166.4)
Cash, cash equivalents, and restricted cash, beginning of period533.8 627.1 
Cash, cash equivalents, and restricted cash, end of period$292.2 $460.7 
Supplemental disclosure of cash flow information
Cash paid for interest$95.0 $57.5 
Cash paid for taxes$20.1 $30.8 
Non cash investing activities
Acquisition of property, plant and equipment through finance leases$0.6 $3.0 
Non cash financing activities
Issuance of shares through stock compensation plan$16.6 $39.1 
See accompanying notes to the condensed consolidated financial statements
6
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SB/RH HOLDINGS, LLC
Condensed Consolidated Statements of Financial Position
As of April 4, 2021 and September 30, 2020
(unaudited)
(in millions)April 4, 2021September 30, 2020
Assets
Cash and cash equivalents$288.3 $527.6 
Trade receivables, net524.9 501.1 
Other receivables169.1 155.2 
Inventories812.1 557.7 
Prepaid expenses and other current assets83.1 63.5 
Total current assets1,877.5 1,805.1 
Property, plant and equipment, net392.6 396.5 
Operating lease assets103.0 103.8 
Deferred charges and other49.2 115.2 
Goodwill1,434.6 1,332.0 
Intangible assets, net1,496.4 1,431.7 
Total assets$5,353.3 $5,184.3 
Liabilities and Shareholder's Equity
Current portion of long-term debt$18.6 $15.3 
Accounts payable548.8 557.5 
Accrued wages and salaries76.6 95.0 
Accrued interest11.7 38.5 
Other current liabilities282.3 236.0 
Total current liabilities938.0 942.3 
Long-term debt, net of current portion2,551.6 2,461.0 
Long-term operating lease liabilities86.2 88.8 
Deferred income taxes294.3 288.7 
Other long-term liabilities136.0 138.3 
Total liabilities4,006.1 3,919.1 
Commitments and contingencies (Note 19)00
Shareholder's equity
Other capital2,162.5 2,154.1 
Accumulated deficit(580.8)(614.2)
Accumulated other comprehensive loss, net of tax(243.3)(284.6)
Total shareholder's equity1,338.4 1,255.3 
Non-controlling interest8.8 9.9 
Total equity1,347.2 1,265.2 
Total liabilities and equity$5,353.3 $5,184.3 
See accompanying notes to the condensed consolidated financial statements
7
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SB/RH HOLDINGS, LLC
Condensed Consolidated Statements of Income
For thethree and six month periods presented. ended April 4, 2021 and March 29, 2020
(unaudited)
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net Sales$1,149.8 $937.8 $2,294.7 $1,809.3 
Cost of goods sold744.5 606.0 1,467.0 1,198.5 
Restructuring and related charges1.3 2.9 1.4 12.8 
Gross profit404.0 328.9 826.3 598.0 
Selling173.2 150.0 340.0 296.1 
General and administrative88.2 78.0 179.4 157.5 
Research and development12.5 10.1 22.9 19.9 
Restructuring and related charges2.8 19.0 11.9 36.6 
Transaction related charges9.7 7.2 30.3 11.3 
(Gain) loss on assets held for sale0 (7.0)0 25.7 
Write-off from impairment of intangible assets0 0 0 24.2 
Total operating expenses286.4 257.3 584.5 571.3 
Operating income117.6 71.6 241.8 26.7 
Interest expense65.6 35.3 102.4 70.0 
Other non-operating (income) expense, net(1.2)110.4 (7.4)66.8 
Income (loss) from continuing operations before income taxes53.2 (74.1)146.8 (110.1)
Income tax expense (benefit)15.9 (17.5)35.8 (16.6)
Net income (loss) from continuing operations37.3 (56.6)111.0 (93.5)
(Loss) income from discontinued operations, net of tax(1.1)1.4 (1.4)4.3 
Net income (loss)36.2 (55.2)109.6 (89.2)
Net (loss) income attributable to non-controlling interest(0.9)(0.8)(0.1)0.1 
Net income (loss) attributable to controlling interest$37.1 $(54.4)$109.7 $(89.3)
Amounts attributable to controlling interest
Net income (loss) from continuing operations attributable to controlling interest$38.2 $(55.8)$111.1 $(93.6)
Net (loss) income from discontinued operations attributable to controlling interest(1.1)1.4 (1.4)4.3 
Net income (loss) attributable to controlling interest$37.1 $(54.4)$109.7 $(89.3)
See Note 2, Significant Accounting Policiesaccompanying notes to the condensed consolidated financial statements
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SB/RH HOLDINGS, LLC
Condensed Consolidated Statements of Comprehensive Income
For thethree and Recent Accounting Pronouncements- Assets Held for Salesix month periods ended April 4, 2021 and Discontinued Operations. March 29, 2020
(unaudited)
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net income (loss)$36.2 $(55.2)$109.6 $(89.2)
Other comprehensive income (loss)
Foreign currency translation gain (loss)22.2 (47.4)41.6 (20.8)
Deferred tax effect(5.0)0.3 0.3 0.2 
Net unrealized gain (loss) on foreign currency translation17.2 (47.1)41.9 (20.6)
Unrealized gain (loss) on derivative instruments
Unrealized gain (loss) on hedging activity before reclassification5.8 7.8 (6.6)1.6 
Net reclassification for loss (gain) to income from continuing operations3.0 (1.7)5.7 (4.3)
Unrealized gain (loss) on hedging instruments after reclassification8.8 6.1 (0.9)(2.7)
Deferred tax effect(2.4)(1.6)0.1 1.1 
Net unrealized gain (loss) on hedging derivative instruments6.4 4.5 (0.8)(1.6)
Defined benefit pension gain
Defined benefit pension gain (loss) before reclassification0.9 0.9 (1.3)3.7 
Net reclassification for loss to income from continuing operations1.1 1.0 2.2 2.1 
Defined benefit pension gain after reclassification2.0 1.9 0.9 5.8 
Deferred tax effect(0.6)(0.4)(0.4)(0.4)
Net defined benefit pension gain1.4 1.5 0.5 5.4 
Deconsolidation of discontinued operations and assets held for sale0 8.1 0 8.1 
Net change to derive comprehensive income (loss) for the period25.0 (33.0)41.6 (8.7)
Comprehensive income (loss)61.2 (88.2)151.2 (97.9)
Comprehensive (loss) income attributable to non-controlling interest(0.1)(0.1)0.3 0 
Comprehensive income (loss) attributable to controlling interest$61.3 $(88.1)$150.9 $(97.9)
See Note 3, Divestitures for more information onaccompanying notes to the assetscondensed consolidated financial statements
9
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SB/RH HOLDINGS, LLC
Condensed Consolidated Statements of Shareholder’s Equity
For the six month period ended April 4, 2021
(unaudited)
Six Month Period Ended April 4, 2021 (in millions)Other
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Shareholder's
Equity		Non-
controlling
Interest		Total Equity
Balances at September 30, 2020$2,154.1 $(614.2)$(284.6)$1,255.3 $9.9 $1,265.2 
Net income from continuing operations— 72.8 — 72.8 0.8 73.6 
Loss from discontinued operations, net of tax— (0.3)— (0.3)— (0.3)
Other comprehensive income, net of tax— — 16.2 16.2 0.4 16.6 
Restricted stock issued and related tax withholdings(7.1)— — (7.1)— (7.1)
Share based compensation7.5 — — 7.5 — 7.5 
Dividends paid to parent— (60.1)— (60.1)— (60.1)
Dividend paid by subsidiary to NCI— — — — (1.0)(1.0)
Balances as of January 3, 20212,154.5 (601.8)(268.4)1,284.3 10.1 1,294.4 
Net income (loss) from continuing operations— 38.2 — 38.2 (0.9)37.3 
Loss from discontinued operations, net of tax— (1.1)— (1.1)— (1.1)
Other comprehensive income (loss), net of tax— — 25.1 25.1 (0.1)25.0 
Share based compensation8.0 — — 8.0 — 8.0 
Dividends paid to parent— (16.1)— (16.1)— (16.1)
Dividend paid by subsidiary to NCI— — — — (0.3)(0.3)
Balances at April 4, 2021$2,162.5 $(580.8)$(243.3)$1,338.4 $8.8 $1,347.2 
See accompanying notes to the condensed consolidated financial statements
SB/RH HOLDINGS, LLC
Condensed Consolidated Statements of Shareholder’s Equity
For the six month period ended March 29, 2020
(unaudited)
Six Month Period Ended March 29, 2020 (in millions)Other
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Shareholder's
Equity		Non-
controlling
Interest		Total Equity
Balances at September 30, 2019$2,113.3 $(414.7)$(273.5)$1,425.1 $9.6 $1,434.7 
Net (loss) income from continuing operations— (37.7)— (37.7)0.9 (36.8)
Income from discontinued operations, net of tax— 2.8 — 2.8 — 2.8 
Other comprehensive income, net of tax— — 24.2 24.2 0.1 24.3 
Restricted stock issued and related tax withholdings4.9 — — 4.9 — 4.9 
Share based compensation8.5 — — 8.5 — 8.5 
Dividends paid to parent— (36.7)— (36.7)— (36.7)
Cumulative adjustment for adoption of new accounting standards— (0.3)0.3 — — 0 
Balances as of December 29, 20192,126.7 (486.6)(249.0)1,391.1 10.6 1,401.7 
Net loss from continuing operations— (55.8)— (55.8)(0.8)(56.6)
Income from discontinued operations, net of tax— 1.4 — 1.4 — 1.4 
Sale and deconsolidation of assets held for sale— — 8.1 8.1 — 8.1 
Other comprehensive loss, net of tax— — (41.0)(41.0)(0.1)(41.1)
Restricted stock issued and related tax withholdings(0.3)— — (0.3)— (0.3)
Share based compensation8.3 — — 8.3 — 8.3 
Dividends paid to parent— (168.2)— (168.2)— (168.2)
Balances at March 29, 2020$2,134.7 $(709.2)$(281.9)$1,143.6 $9.7 $1,153.3 
See accompanying notes to the condensed consolidated financial statements
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SB/RH HOLDINGS, LLC
Condensed Consolidated Statements of Cash Flows
For the six month periods ended April 4, 2021 and liabilities classified as held for saleMarch 29, 2020
(unaudited)
Six Month Periods Ended
(in millions)April 4, 2021March 29, 2020
Cash flows from operating activities
Net income (loss)$109.6 $(89.2)
(Loss) income from discontinued operations, net of tax(1.4)4.3 
Net income (loss) from continuing operations111.0 (93.5)
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization74.4 78.0 
Share based compensation15.5 25.4 
(Gain) loss on equity investments(6.9)68.3 
Loss on assets held for sale0 25.7 
Write-off from impairment of intangible assets0 24.2 
Amortization of debt issuance costs and debt discount2.9 2.7 
Write-off of unamortized discount and debt issuance costs7.9 1.1 
Inventory acquisition step-up3.4 0 
Deferred tax expense4.0 20.3 
Net changes in operating assets and liabilities(282.5)(547.5)
Net cash used by operating activities from continuing operations(70.3)(395.3)
Net cash used by operating activities from discontinued operations(15.9)0 
Net cash used by operating activities(86.2)(395.3)
Cash flows from investing activities
Purchases of property, plant and equipment(28.1)(31.7)
Proceeds from disposal of property, plant and equipment0 0.6 
Business acquisitions, net of cash acquired(129.8)(17.0)
Proceeds from sale of equity investment73.1 28.6 
Other investing activities(0.3)2.5 
Net cash used by investing activities from continuing operations(85.1)(17.0)
Net cash used by investing activities from discontinued operations0 0 
Net cash used by investing activities(85.1)(17.0)
Cash flows from financing activities
Payment of debt, including premium on extinguishment(880.3)(130.0)
Proceeds from issuance of debt899.0 780.0 
Payment of debt issuance costs(12.6)(0.8)
Payment of contingent consideration0 (197.0)
Payment of cash dividends to parent(76.2)(204.9)
Dividends paid by subsidiary to non-controlling interest(1.3)0 
Net cash (used) provided by financing activities from continuing operations(71.4)247.3 
Net cash used by financing activities from discontinued operations0 0 
Net cash (used) provided by financing activities(71.4)247.3 
Effect of exchange rate changes on cash and cash equivalents3.4 (0.5)
Net change in cash, cash equivalents and restricted cash(239.3)(165.5)
Cash, cash equivalents, and restricted cash, beginning of period529.8 621.9 
Cash, cash equivalents, and restricted cash, end of period$290.5 $456.4 
Supplemental disclosure of cash flow information
Cash paid for interest$95.0 $57.5 
Cash paid for taxes$20.1 $30.8 
Non cash investing activities
Acquisition of property, plant and equipment through finance leases$0.6 $3.0 
See accompanying notes to the condensed consolidated financial statements
11
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
This report is a combined report of Spectrum Brands Holdings, Inc. (“SBH”) and discontinued operations. See Note 18, Segment Data for more information pertaining to segments of continuing operations.
Corporate and Other Segment
On November 30, 2017, Fidelity & Guaranty LifeSB/RH Holdings, LLC (“FGL”SB/RH”), a former majority owned subsidiary of the Company, completed its merger (the “FGL Merger”) with CF Corporation and its related entities (collectively, the “CF Entities”) pursuant to its previously disclosed Agreement and Plan of Merger (the “FGL Merger Agreement”“Company”). PursuantThe notes to the FGL Merger Agreement, except for certain shares specified in the FGL Merger Agreement, each issuedconsolidated financial statements that follow include both consolidated SBH and outstanding shareSB/RH Notes, unless otherwise indicated below.
NOTE 1– BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Principles of common stock of FGL was automatically cancelledConsolidation and converted into the right to receive $31.10 in cash. In addition, pursuant to a share purchase agreement, on November 30, 2017, Front Street Re (Delaware) Ltd., a wholly-owned subsidiary of HRG, sold to the CF Entities (such sale, the “Front Street Sale”) all of the issued and outstanding shares of its former wholly-owned subsidiaries, Front Street Re Cayman Ltd. and Front Street Re Ltd (collectively, “Front Street”, and together with FGL, the “Insurance Operations”). Fiscal Period-End
The purchase price for the Front Street Sale was $65.0, subject to reduction for customary transaction expenses. In addition, $6.5 of the purchase price was deposited in escrow for a period of 15 months to support any indemnification claims that might be made (if any)accompanying unaudited condensed consolidated financial statements have been prepared by the CF Entities. Pursuant to the share purchase agreement, on December 5, 2017, the Company repaid the $92.0 of notes (such notes, the “HGI Energy Notes”) issued by HGI Energy, which were held directly and indirectly by Front Street and FGL. Following the completion of the FGL Merger and the Front Street Sale, HRG no longer has any equity interest in FGL or Front Street and our former Insurance Operations segment is presented as discontinued operations for prior periods. HRG deconsolidated FGL and Front Street as of November 30, 2017.

Finally, as previously disclosed, HRG, FS Holdco II Ltd. (“FS Holdco”) and the CF Entities entered into an agreement (the “338 Agreement”) on May 24, 2017 pursuant to which the CF Entities agreed that FS Holdco may, at its option, cause the relevant CF Entity and FS Holdco to make a joint election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended, with respect to the FGL Merger and the deemed share purchases of FGL’s subsidiaries (the “338 Tax Election”). Pursuant to the 338 Agreement, if FS Holdco elects to make the 338 Tax Election, FS Holdco and/or CF Corporation will be required to make a payment for the election to the other. As of December 31, 2017, HRG expects to receive an estimated $26.6 net payment from CF Corporation, which has been included in the estimated consideration HRG expects to receive from the FGL Merger. Pursuant to the 338 Agreement, FS Holdco may elect to exercise the 338 Tax Election at any time until 10 business days after final calculation of such incremental tax costs or savings, as the case may be, and it currently expects to exercise such election within such period. Nonetheless, there can be no assurance that FS Holdco will make the election and/or that HRG will receive the expected benefits of such election. In addition, the estimated payment described herein is preliminary as of December 31, 2017 and subject to change, and HRG does not undertake any obligation to update such estimate.
Also on December 15, 2017, HRG issued a notice of redemption to redeem all $864.4 outstanding principal amount of its 7.875% Senior Secured Notes due 2019 (the “7.875% Notes”) at a redemption price equal to 100.0% of the principal amount thereof, plus accrued and unpaid interest to the redemption date. The 7.875% Notes were redeemed on January 16, 2018.
In addition, we continued to streamline our business and simplify our holding company structure and also continued to review and evaluate strategic alternatives available to us with a view towards maximizing shareholder value. We believe that HRG is an excellent company that owns great businesses that have generated strong performance over a long period of time. We believe that we are well-positioned to take advantage of the opportunities that may be available to us through the review of strategic alternatives. Strategic alternatives may include, but are not limited to, a merger, sale or other business combination involving the Company and/or its assets. As part of this strategic review process, HRG has made/received, and may in the future make/receive, one or more proposals to/from third parties and/or Spectrum Brands, its management, its board of directors, its stockholders and other persons, including discussions and proposals that may include, but are not limited to, a merger or a sale and/or a business combination of the Company and Spectrum Brands. In connection therewith, the Spectrum Brands board of directors has formed a special committee of independent directors and has hired independent financial and legal advisors. We have not set a definitive schedule to complete our review of strategic alternatives and do not intend to provide any further updates until such time as it determines in its sole discretion or as required by law. The strategic review process may be suspended or terminated at any time without notice. There can be no assurance that any such process will result in a transaction, or if a transaction is undertaken, as to its terms or timing.
Basis of Presentation
The unaudited Condensed Consolidated Financial Statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of such information. All such adjustments are of a normal recurring nature. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and note disclosures, including a description of significant accounting policies normally included in financial statements preparedmajority owned subsidiaries in accordance with accounting principles for interim financial information generally accepted in the United States and with the instructions to Form 10-Q and Article 10 of America (“U.S. GAAP”),Regulation S-X. Accordingly, they do not include all the information and notes necessary for a comprehensive presentation of financial position and results of operations. It is management’s opinion, however, that all material adjustments have been condensed or omitted pursuantmade which are necessary for a fair financial statement presentation. For further information, refer to such rules and regulations.
As of December 31, 2017, the Company changed its method of presenting its financial statements from an unclassified balance sheet in accordance with Article 7, Insurance Companies, and Regulation S-X to a classified balance sheet. The Company believes a classified balance sheet is preferable as a result of the completion of the FGL Merger and Front Street Sale. Certain prior amounts have been reclassified or combined to conform to the current year presentation. These reclassifications and combinations had no effect on previously reported net income attributable to controlling interest or accumulated deficit. These interim financial statements should be read in conjunction with the Company’s annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017, filed with the SEC on November 20, 2017 (the “Form 10-K”). The results of operations for the three months ended December 31, 2017 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending September 30, 2018.2020.
The Company’s fiscal year ends on September 30SBH’s and the quarters end on the last calendar day of the months of December, March and June. Spectrum Brands’SB/RH’s fiscal year ends September 30 and the Company reports its interimresults using fiscal quarters end every thirteenth Sunday, except for itswhereby each three month quarterly reporting period is approximately thirteen weeks in length and ends on a Sunday. The exceptions are the first fiscal quarter, which may endbegins on October 1, and the fourteenth Sunday followingfourth quarter, which ends on September 30. As a result, the fiscal period end date for the three and six month periods included within this Quarterly Report for the Company, are April 4, 2021 and March 29, 2020.
Newly Adopted Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which was further updated and clarified by the FASB through the issuance of additional related ASUs. The ASU introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information, and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models, and methods for estimating expected credit losses. The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. The Company doesadopted ASU 2016-13 on a modified retrospective basis effective October 1, 2020. The adoption of ASU 2016-13 did not adjust for the difference in fiscal periods between Spectrum Brands and itself, as such difference would be less than 93 days, pursuant to Regulation S-X Rule 3A-02.
At December 31, 2017, the non-controlling interest component of total equity primarily represents the 40.7% share of Spectrum Brands not owned by HRG.


(2) Significant Accounting Policies and Recent Accounting Pronouncements
Assets Held for Sale and Discontinued Operations
A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized. Assets and liabilities related to a business classified as held for sale are segregated in the current and prior balance sheets in the period in which the business is classified as held for sale. Transactions between the business held for sale and businesses held for use that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and balances held for sale. If a business is classified as held for sale after the balance sheet date but before the financial statements are issued or are available to be issued, the business continues to be classified as held and used in those financial statements when issued or when available to be issued.
The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the business is sold or classified as held for sale, in accordance with ASC 360 and Accounting Standards Update (“ASU”) No. 2014-08, Presentation of Financial Statements (Topic 2015) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). The results of discontinued operations are reported in “Income from discontinued operations, net of tax” in the accompanying Condensed Consolidated Statements of Operations for current and prior periods commencing in the period in which the business meets the criteria of a discontinued operation, and include any gain or loss recognized on closing or adjustment of the carrying amount to fair value less cost to sell. Transactions between the businesses held for sale and businesses held for use that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and balances held for sale.
Use of Estimates and Assumptions
The preparation of the Company’s Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions used.
Recent Accounting Pronouncements Not Yet Adopted
The Company has implemented all new accounting pronouncements that are in effect and that may impact its Condensed Consolidated Financial Statements and does not believe that there are any other new accounting pronouncements, other than the ones disclosed in the Company’s Form 10-K, that have been issued that might have a material impact on itsthe Company’s condensed consolidated financial condition, resultsstatements. Refer to Note 6 - Receivables and Concentration of operationsCredit Risk for further discussion on the Company's receivables and allowance for uncollectible receivables.
In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard provides guidance on accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or liquidity.

(3) Divestitures
obtain internal-use software and hosting arrangements that include an internal-use software license. ASU 2018-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The following table summarizesCompany adopted ASU 2018-15 prospectively to all implementation costs incurred after October 1, 2020, the componentsdate of “Income from discontinued operations, net of tax” inadoption. Before the accompanying Condensed Consolidated Statements of Operations for the three months ended December 31, 2017 and 2016:
 Three months ended December 31,
 2017 2016
Income from discontinued operations, net of tax attributable to Insurance Operations$459.9
 $250.4
Income from discontinued operations, net of tax attributable to GBA segment40.9
 52.4
Income from discontinued operations, net of tax$500.8
 $302.8
Insurance Operations
On November 30, 2017, FGL completed the FGL Merger pursuant to which, except for certain shares specified in the FGL Merger Agreement, each issued and outstanding share of common stock of FGL was automatically canceled and converted into the right to receive $31.10 in cash, without interest. The total consideration received by the Company as a resultadoption of the completionstandard, the implementation costs in cloud computing arrangements were expensed as incurred. The adoption of ASU 2018-15 did not have a material impact on the Company’s condensed consolidated financial statements.
Recently Issued Accounting Standards
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the FGL Merger was $1,488.3, which includes an estimateEffects of $26.6 relatedReference Rate Reform on Financial Reporting. This ASU provides optional expedient 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 338 Tax Election. See Note 1, Descriptionconcerns about structural risks of Businessinterbank offered rates (“IBORs”) and, Basisparticularly, the risk of Presentation - Corporate and Other Segment for more information on the 338 Tax Election.
Also on November 30, 2017, Front Street Re (Delaware) Ltd. sold to the CF Entities allcessation of the issuedLondon 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 outstanding shares of Front Street for $65.0, which is subjectless susceptible to reduction for customary transaction expenses. In addition, $6.5 ofmanipulation. The ASU provides companies with optional guidance to ease the purchase price was deposited in escrow for a period of 15 months to support any indemnification claimspotential accounting burden associated with transitioning away from reference rates that might be made (if any) by the CF Entities.
The Insurance Operations were classified as held for sale in the accompanying Condensed Consolidated Balance Sheets at September 30, 2017 and as discontinued operations through November 30, 2017 in the accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows.

The following table summarizes the major categories of assets and liabilities of the Insurance Operations classified as held for sale in the accompanying Condensed Consolidated Balance Sheets at September 30, 2017:
 September 30, 2017
Assets 
Investments, including loans and receivables from affiliates$23,211.1
Funds withheld receivables742.7
Cash and cash equivalents914.5
Accrued investment income231.3
Reinsurance recoverable2,358.8
Deferred acquisition costs and value of business acquired, net1,163.6
Other assets125.4
Write-down of assets of businesses held for sale to fair value less cost to sell(421.2)
Total assets of businesses held for sale$28,326.2
Liabilities 
Insurance reserves$24,989.6
Debt405.0
Accounts payable and other current liabilities56.2
Deferred tax liabilities68.0
Other liabilities831.9
Total liabilities of businesses held for sale$26,350.7
In accordance with ASC 360, Property, Plant and Equipment, long-lived assets classified as held for sale are measured at the lower of their carrying value or fair value less cost to sell at the balance sheet date. At September 30, 2017, the carrying value of the Company’s interest in FGL and Front Street exceeded their respective estimated fair value less cost to sell by $402.2 and $19.0, respectively.
The higher carrying value of FGL was primarily due to the increase in unrealized gains, net of offsets in FGL’s investment portfolio, with the effects of the unrealized gains, net of offsets, being recorded in accumulated other comprehensive income (“AOCI”). Upon the completion of the FGL Merger, the Company deconsolidated its ownership interest in FGL, which resulted in the reclassification of $445.9 of AOCI attributable to FGL to income from discontinued operations during the three months ended December 31, 2017.
The following table summarizes the components of “Net income from discontinued operations” in the accompanying Condensed Consolidated Statements of Operations for the two months ended November 30, 2017 and the three months ended December 31, 2016:
  Two months ended November 30, 2017 Three months ended December 31, 2016
   
Revenues:    
Insurance premiums $6.8
 $11.2
Net investment income 181.9
 250.5
Net investment gains 154.8
 22.6
Insurance and investment product fees and other 35.1
 39.0
Total revenues 378.6
 323.3
Operating costs and expenses:    
Benefits and other changes in policy reserves 241.3
 8.3
Selling, acquisition, operating and general expenses 52.8
 30.7
Amortization of intangibles 35.8
 120.0
Total operating costs and expenses 329.9
 159.0
Operating income 48.7
 164.3
Interest expense (3.9) (6.1)
Other expense, net (0.1) —
(Write-down) write-up of assets of businesses held for sale to fair value (14.2) 144.5
Reclassification of accumulated other comprehensive income 445.9
 —
Income from discontinued operations before income taxes 476.4
 302.7
Income tax expense 16.5
 52.3
Net income from discontinued operations 459.9
 250.4
Net income from discontinued operation attributable to noncontrolling interest 5.4
 21.1
Net income from discontinued operations attributable to controlling interest $454.5
 $229.3

Consumer Products Segment - GBA Segment
As previously discussed in Note 1, Description of Business and Basis of Presentation, Spectrum Brands’ GBA segment was classified as held for sale in the accompanying Condensed Consolidated Balance Sheets and as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows. The following table summarizes the assets and liabilities of Spectrum Brands’ GBA segment classified as held for sale as of December 31, 2017 and September 30, 2017:
 December 31, 2017 September 30, 2017
Assets   
Trade receivables, net$282.5
 $260.1
Other receivables, net29.1
 24.1
Inventories, net273.3
 279.1
Prepaid expenses and other current assets40.7
 39.7
Property, plant and equipment, net194.8
 196.4
Deferred charges and other assets17.3
 19.2
Goodwill348.6
 348.9
Intangibles, net804.3
 811.9
Total assets of businesses held for sale$1,990.6
 $1,979.4
Liabilities   
Current portion of long-term debt$23.5
 $17.3
Accounts payable302.3
 355.9
Accrued wages and salaries29.8
 36.9
Other current liabilities98.8
 89.8
Long-term debt, net of current portion51.1
 51.4
Deferred income taxes36.8
 38.2
Other long-term liabilities65.9
 66.2
Total liabilities of businesses held for sale$608.2
 $655.7
The following table summarizes the components of “Net income from discontinued operations” in the accompanying Condensed Consolidated Statements of Operations for the three months ended December 31, 2017 and 2016:
  Three months ended December 31,
  2017 2016
Revenues:    
Net sales $603.3
 $609.5
Operating costs and expenses:    
Cost of goods sold 403.4
 398.6
Selling, acquisition, operating and general expenses 131.7
 121.3
Total operating costs and expenses 535.1
 519.9
Operating income 68.2
 89.6
Interest expense 13.7
 12.8
Other expense, net 0.3
 —
Income from discontinued operations before income taxes 54.2
 76.8
Income tax expense 13.3
 24.4
Net income from discontinued operations 40.9
 52.4
Net income from discontinued operation attributable to noncontrolling interest 16.8
 22.3
Net income from discontinued operations attributable to controlling interest $24.1
 $30.1
Interest expense consists of interest from debt directly held by subsidiaries of the business held for sale, including interest from capital leases, and interest on term loans required to be paid down using proceeds received on disposal on sale of a business within 365 days with the exception for funds used for capital expenditures and acquisitions. There has been no impairment loss recognized as the fair value or expected proceeds from the disposal of the businesses is anticipated to be in excess of the asset carrying values.
Energizer Holdings, Inc.
On January 15, 2018, subsequent to the three months ended December 31, 2017, Spectrum Brands entered into a definitive acquisition agreement (the “GBL Sale Agreement”) with Energizer Holdings, Inc. (“Energizer”) pursuant to which Energizer has agreed to acquire from Spectrum Brands its GBL business for an aggregate purchase price of $2,000.0 in cash, subject to customary purchase price adjustments.

The GBL Sale Agreement provides that Energizer will purchase the equity of certain subsidiaries of Spectrum Brands, and acquire certain assets and assume certain liabilities of other subsidiaries used or held for the purpose of the GBL business.
In the GBL Sale Agreement, Spectrum Brands and Energizer have made customary representations and warranties and have agreed to customary covenants relating to the acquisition. Among other things, prior to the consummation of the acquisition, Spectrum Brands will be subject to certain business conduct restrictions with respect to its operation of the GBL business.
Spectrum Brands and Energizer have agreed to indemnify each other for losses arising from certain breaches of the GBL Sale Agreement and for certain other matters. In particular, Spectrum Brands has agreed to indemnify Energizer for certain liabilities relating to the assets retained by Spectrum Brands, and Energizer has agreed to indemnify Spectrum Brands for certain liabilities assumed by Energizer, in each case as described in the GBL Sale Agreement.
Spectrum Brands and Energizer have agreed to enter into related agreements ancillary to the acquisition that will become effective upon the consummation of the acquisition, including a customary transition services agreement and reverse transition services agreement.
The consummation of the acquisition is subject to certain customary conditions, including, among other things, (i) the absence of a material adverse effect on GBL, (ii) the expiration or termination of required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) the receipt of certain other antitrust approvals in certain specified foreign jurisdictions (the conditions contained in (ii) and (iii) together, the “Antitrust Conditions”), (iv) the accuracy of the representations and warranties of the parties (generally subject to a customary material adverse effect standard (as described in the GBL Sale Agreement) or other customary materiality qualifications), (v) the absence of governmental restrictions on the consummation of the acquisition in certain jurisdictions, and (vi) material compliance by the parties with their respective covenants and agreements under the GBL Sale Agreement. The consummation of the transaction is not subject to any financing condition. The transaction is expected to be consummated priordiscontinued. In January 2021, the FASB issued ASU 2021-01, which adds implementation guidance to clarify certain optional expedients in Topic 848. The ASUs can be adopted no later than December 31, 2018.2022 with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance.
The GBL Sale Agreement also contains certain termination rights, including the rightTransaction related charges
Transaction related charges consist of either party to terminate the GBL Sale Agreement if the consummation of thetransaction costs from (1) qualifying acquisition hastransactions, whether or not occurred on or before July 15, 2019 (the “Termination Date”). Further, if the acquisition has not been consummated, by the Termination Date and all conditions precedent to Energizer’s obligation to consummate the acquisition have otherwise been satisfied except for one or more of the Antitrust Conditions, then Energizer would be required to pay Spectrum Brands a termination fee of $100.0.
The GBL business is part of Spectrum Brands’ GBA business, which also includes shared operations and assets of the remaining components of Spectrum Brands’ HPC business. Spectrum Brands is actively marketing its HPC business with interested parties for a separate transaction(s) expected to be entered into and consummated prior to December 31, 2018.

(4) Acquisition and Integration Costs
The following summarizes acquisition and integration costs for the three months ended December 31, 2017 and 2016:
 Three months ended December 31,
 2017 2016
Hardware & Home Improvement Business$2.7
 $1.9
PetMatrix1.6
 —
GloFish0.4
 —
Armored AutoGroup Parent Inc.0.2
 1.3
Other0.3
 0.1
Total acquisition and integration related charges$5.2
 $3.3
Acquisition and integration costs include costs directly associated with the completion of the purchase of net assets or equity interest of a business such as a business combination, equity investment, joint venture or purchase of non-controlling interest. Includedinterest; (2) subsequent integration related project costs include: transactions costs;directly associated with an acquired business including costs for integration of acquired operations into the Company’s shared service platforms, termination of redundant positions and locations, employee transition costs, integration related professional fees and other post business combination expenses; and (3) divestiture support and separation costs consisting of incremental costs incurred by the continuing operations after completion of the transaction to facilitate separation of shared operations, development of transferred shared service operations, platforms and personnel transferred under the transaction. Divestiture-related charges prior to completion of the transaction qualifying as discontinued operations are recognized as a component of Income from Discontinued Operations, net of tax. Qualifying cost types include, but are not limited to, banking, advisory, legal, accounting, valuation, and other professional fees;fees directly related to the respective transactions. See Note 2 - Divestitures and integrationNote 3 – Acquisitions for further discussion. The following table summarizes transaction related charges incurred by the Company during the three and six month periods ended April 4, 2021 and March 29, 2020:
12
Table of acquired operations onto Spectrum Brands’ shared service platformContents
SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Armitage acquisition and integration$2.0 $0 $6.8 $0 
Coevorden operations divestiture and separation2.0 1.5 4.8 1.7 
GBL divestiture and separation0.9 2.7 2.7 5.1 
Omega Sea acquisition and integration0.1 1.3 0.2 1.3 
Other4.7 1.7 15.8 3.2 
Total transaction-related charges$9.7 $7.2 $30.3 $11.3 
NOTE 2 – DIVESTITURES
The following table summarizes the components of Income from Discontinued Operations, Net of Tax in the accompanying Condensed Consolidated Statements of Income for the three and termination of redundant positionssix month periods ended April 4, 2021 and locations.March 29, 2020:

(5) Restructuring and Related Charges
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
(Loss) income from discontinued operations before income taxes$(1.0)$1.4 $(1.3)$3.8 
Income tax expense (benefit) from discontinued operations0.1 0 0.1 (0.5)
(Loss) income from discontinued operations, net of tax(1.1)1.4 (1.4)4.3 
(Loss) income from discontinued operations attributable to controlling interest, net of tax$(1.1)$1.4 $(1.4)$4.3 
During the fiscalthree and six month periods ended April 4, 2021 the Company recognized incremental pre-tax loss on sale for changes to tax and legal indemnifications and other agreed-upon funding under the acquisition agreement for sale and divestiture of its Global Batteries & Lighting ("GBL") and Global Auto Care ("GAC") divisions to Energizer Holdings, Inc. ("Energizer") during the year ended September 30, 2017, Spectrum Brands implemented2019.
The Company and Energizer agreed to indemnify each other for losses arising from certain breaches of the acquisition agreement and for certain other matters. The Company has agreed to indemnify Energizer for certain liabilities relating to the assets retained by the Company, and Energizer agreed to indemnify the Company for certain liabilities assumed by Energizer, in each case as described in the acquisition agreements. As of April 4, 2021 and September 30, 2020, the Company recognized $36.1 million and $51.6 million, respectively, related to indemnification payables in accordance with the acquisition agreements, including $17.0 million and $33.0 million, respectively, within Other Current Liabilities, primarily attributable to current income tax indemnifications, and $19.1 million and $18.6 million, respectively, within Other Long-Term Liabilities on the Company’s Condensed Consolidated Statements of Financial Position, primarily attributable to income tax indemnifications associated with previously recognized uncertain tax benefits.
Coevorden Operations
On March 29, 2020, the Company completed its sale of the dog and cat food (“DCF”) production facility and distribution center in Coevorden, Netherlands (“Coevorden Operations”) pursuant to an agreement with United Petfood Producers NV (“UPP”) for total cash proceeds of $29.0 million received during the year ended September 30, 2020. The divestiture did not constitute a rightsizing initiativestrategic shift for the Company and therefore was not considered discontinued operations. The divestiture of the Coevorden Operations was defined as a disposal of a business and a component of the GPC segment and reporting unit, resulting in the allocation of $10.6 million of GPC goodwill to the disposal group based upon a relative fair-value allocation. Assets held for sale are recognized at their estimated fair value less cost to sell, which resulted in the recognition of a loss on assets held for sale of $25.7 million during the six month period ended March 29, 2020.
The Company and UPP entered into related agreements ancillary to the acquisition that became effective upon the consummation of the acquisition, including a transaction service arrangement (TSA). The Company has continued to operate its commercial DCF business following the divestiture of the Coevorden Operations and entered into a manufacturing agreement with UPP to supply the continuing DCF business, subject to an incremental tolling charge. Additionally, the Company leases and operates the distribution center on behalf of UPP for up to 18 months following the divestiture under a lease agreement.
NOTE 3 - ACQUISITIONS
Armitage Acquisition
On October 26, 2020, the Company acquired all of the stock of Armitage Pet Care Ltd ("Armitage") for approximately $187.7 million. Armitage is a premium pet treats and toys business in Nottingham, United Kingdom, including a portfolio of brands that include Armitage's dog treats brand, Good Boy®, cat treats brand, Meowee!® and Wildbird®, bird feed products, among others, that are predominantly sold within the United Kingdom. The net assets and operating results of Armitage, since the acquisition date of October 26, 2020, are included in the Company’s Condensed Consolidated Statements of Income and reported within the GPC reporting segment for the three and six month periods ended April 4, 2021.
The Company has recorded an allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the October 26, 2020 acquisition date. The excess of the purchase price over the fair value of the net tangible assets and identifiable intangible assets of $90.7 million was recorded as goodwill, which is not deductible for tax purposes. Goodwill includes value associated with profits earned from market and expansion capabilities, synergies from integration and streamlining operational activities, the going concern of the business and the value of the assembled workforce. The purchase price and purchase price allocation of Armitage were finalized as of April 4, 2021, with no significant changes to preliminary amounts.

13
Table of Contents
SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 3 - ACQUISITIONS (continued)
The calculation of purchase price and purchase price allocation is as follows:
(in millions)Amount
Cash paid$187.7 
Debt assumed51.0 
Cash consideration$136.7 
(in millions)Purchase Price Allocation
Cash and cash equivalents$6.9 
Trade receivables, net16.7 
Other receivables1.9 
Inventories16.3 
Prepaid expenses and other current assets0.2 
Property, plant and equipment, net3.0 
Operating lease assets0.1 
Deferred charges and other0.9 
Goodwill90.7 
Intangible assets, net88.6 
Accounts payable(9.2)
Accrued wages and salaries(1.5)
Other current liabilities(7.0)
Long-term debt, net of current portion(51.0)
Long-term operating lease liabilities(0.1)
Deferred income taxes(18.0)
Other long-term liabilities(1.8)
Net assets acquired$136.7 
The values allocated to intangible assets and the weighted average useful lives are as follows:
(in millions)Carrying AmountWeighted Average Useful Life (Years)
Tradenames$74.3 Indefinite
Customer relationships14.3 12 years
Total intangibles acquired$88.6 
The Company performed a valuation of the acquired inventories, tradenames, and customer relationships. The fair value measurements are based on significant inputs not observable in the market, and therefore, represent Level 3 measurements. The following is a summary of significant inputs to the valuation:
Inventory - Acquired inventory consists of branded finished goods that were valued based on the comparative sales method, which estimates the expected sales price of the finished goods inventory, reduced for all costs expected to be incurred in its global pet supplies product categorycompletion or disposition and a profit on those costs.
Tradenames - The Company valued tradenames, Good Boy® brand portfolio and Wildbird® and Other brand portfolio, using an income approach, the relief-from-royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to streamline certain operationsbe paid if the tradenames were not owned. Royalty rates of 8% for valuation of Good Boy® and 3% for Wildbird® and Other were selected based on consideration of several factors, including prior transactions, related trademarks and tradenames, other similar trademark licensing, and transaction agreements and the relative profitability and perceived contribution of the tradenames. The discount rate applied to the projected cash flow was 11% based on the a weighted-average cost of capital for the overall business. The resulting discounted cash flows were then tax-effected at the applicable statutory rate.
Customer relationships - The Company valued customer relationships using an income and cost approach, the avoided cost and lost profits method. The underlying premise of the method is that the economic value of the asset can be estimated based on consideration of the total costs that would be avoided by having this asset in place. These costs primarily consider the costs that would be incurred to re-create the customer relationships in terms of employee salaries and the revenues and associated profits forgone due to the absence of the relationships for a period of time.
Pro forma results have not been presented as the Armitage acquisition is not considered individually significant to the consolidated results of the Company.
Rejuvenate
On April 20, 2021, the Company entered into an agreement to acquire all ownership interests in For Life Products, LLC as part of the Company's H&G segment, for a purchase price of approximately $300 million. For Life Products, LLC is a leading manufacturer in the household cleaning, maintenance, and restoration products sold under the Rejuvenate® brand. The transaction is expected to close in the second half of the 2021 fiscal year, subject to customary closing conditions, including expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)

NOTE 4 - RESTRUCTURING AND RELATED CHARGES
Global Productivity Improvement Program – During the year ended September 30, 2019, the Company initiated a company-wide, multi-year program, which consists of various restructuring related initiatives to redirect resources and spending to drive growth, identify cost savings and pricing opportunities through standardization and optimization, develop organizational and operating optimization, and reduce operating costs (the “Pet Rightsizing Initiative”).overall operational complexity across the Company. Since the announcement of the project and completion of the Company’s divestitures of GBL and GAC during the year ended September 30, 2019, the project focus includes the transitioning of the Company’s continuing operations in a post-divestiture environment and separation from Energizer TSAs and reverse TSAs. Refer to Note 2 – Divestitures and Note 18 – Related Party Transactions for further discussion of continuing involvement with Energizer.  The initiative includes review of global processes and organization design and structures; headcount reductions and transfers; and rightsizing the rightsizing ofCompany’s shared operations and commercial business strategy in certain facilities.regions and local jurisdictions; among others. Total cumulative costs incurred associated with this initiativethe project were $136.3 million as of April 4, 2021, with approximately $31.6 million forecasted in the foreseeable future. The project costs are expected to be approximately $9.0, of which $8.8 has been incurred to date. The balance is anticipated to be incurred through September 30, 2018.
During the fiscal year endedending September 30, 2017, Spectrum Brands implemented an initiative within its hardware and home improvement product category to consolidate certain operations and reduce operating costs (the “HHI Distribution Center Consolidation”).2022.
Other Restructuring Activities – The initiative includes headcount reductions and the exit of certain facilities. Total costs associated with the

initiative are expected to be approximately $55.0, of which $42.6 has been incurred to date. The balance is anticipated to be incurred through September 30, 2018.
During the fiscal year ended September 30, 2016, Spectrum Brands implemented a series of initiatives in its global auto care product category to consolidate certain operations and reduce operating costs (the “GAC Business Rationalization Initiatives”). These initiatives included headcount reductions and the exit of certain facilities. Total costs associated with these initiatives are expected to be approximately $35.0, of which $33.6 has been incurred to date. The balance is anticipated to be incurred through September 30, 2018.
Spectrum Brands is entering orCompany may enter into small, less significant initiatives and restructuring related activities to reduce costs and improve margins throughout the organization (“Other Restructuring Activities”).organization. Individually these activities are not substantial and occur over a shorter time period (less(generally less than 12 months).
The following table summarizes restructuring and related charges incurred during the three months ended December 31, 2017 and 2016, and where those charges are classified in the accompanying Condensed Consolidated Statements of Operations:
  Three months ended December 31,
Initiatives: 2017 2016
HHI distribution center consolidation $15.2
 $—
GAC business rationalization initiative 4.0
 1.5
Pet rightsizing initiative 0.6
 —
Other restructuring activities 0.6
 0.7
Total restructuring and related charges $20.4
 $2.2
Reported as:    
Cost of goods sold $1.8
 $1.1
Selling, acquisition, operating and general expenses 18.6
 1.1
The following table summarizes restructuring and related charges for the three monthsand six month periods ended December 31, 2017April 4, 2021 and 2016,March 29, 2020:
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Global productivity improvement program$1.7 $21.2 $10.9 $47.9 
Other restructuring activities2.4 0.7 2.4 1.5 
Total restructuring and related charges$4.1 $21.9 $13.3 $49.4 
Reported as:
Cost of goods sold$1.3 $2.9 $1.4 $12.8 
Operating expense2.8 19.0 11.9 36.6 
The following is a summary of restructuring and related charges for the three and six month periods ended April 4, 2021 and March 29, 2020, cumulative costs for current restructuring initiatives, and estimated future costs to be incurred as of December 31, 2017,April 4, 2021, by cost type:type.
(in millions)Termination
Benefits		Other
Costs		Total
For the three month period ended April 4, 2021$0.3 $3.8 $4.1 
For the three month period ended March 29, 20206.2 15.7 21.9 
For the six month period ended April 4, 20213.2 10.1 13.3 
For the six month period ended March 29, 202011.4 38.0 49.4 
Cumulative costs through April 4, 202123.6 112.7 136.3 
Estimated future costs to be incurred2.0 29.6 31.6 
  Three months ended December 31,    
Cost Type: 2017 2016 Cumulative costs through December 31, 2017 Future costs to be incurred
Termination benefits $1.1
 $0.8
 $12.1
 $0.2
Other costs 19.3
 1.4
 73.9
 16.0
Total restructuring and related charges $20.4
 $2.2
 $86.0
 $16.2
Termination benefits consistThe following is a rollforward of involuntary employee termination benefits and severance pursuant to a one-time benefit arrangement recognized as part of a restructuring initiative. Other costs consist of non-termination type coststhe accrual related to all restructuring initiatives such as incrementaland related activities, included within Other Current Liabilities, by cost type for the six month period ended April 4, 2021.
(in millions)Termination
Benefits		Other
Costs		Total
Accrual balance at September 30, 2020$4.1 $6.4 $10.5 
Provisions1.5 6.4 7.9 
Cash expenditures(1.9)(12.1)(14.0)
Non-cash items0 0.1 0.1 
Accrual balance at April 4, 2021$3.7 $0.8 $4.5 
The following summarizes restructuring and related charges by segment for the three and six month periods ended April 4, 2021 and March 29, 2020, cumulative costs incurred through April 4, 2021, and estimated future costs to consolidate or close facilities, relocate employees, cost to retrain employees to use newly deployed assets or systems, lease termination costs,be incurred by the Company’s segments:
(in millions)HHIHPCGPCH&GCorporateTotal
For the three month period ended April 4, 2021$(0.2)$1.5 $0.6 $0 $2.2 $4.1 
For the three month period ended March 29, 20200.2 1.7 6.4 0.2 13.4 21.9 
For the six month period ended April 4, 20210 4.1 2.1 0 7.1 13.3 
For the six month period ended March 29, 20200.7 2.8 16.7 0.4 28.8 49.4 
Cumulative costs through April 4, 20211.5 15.7 22.8 2.2 94.1 136.3 
Estimated future costs to be incurred0.8 2.9 3.5 2.1 22.3 31.6 
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 5 –REVENUE RECOGNITION
The Company generates all of its revenue from contracts with customers. The following table disaggregates our revenue for the three and redundant or incremental transitional operating costssix month periods ended April 4, 2021 and customer finesMarch 29, 2020, by the Company’s key revenue streams, segments and penalties during transition, among others.geographic region (based upon destination):

Three Month Period Ended April 4, 2021
(in millions)HHIHPCGPCH&GTotal
Product Sales
NA$378.6 $115.3 $182.4 $166.8 $843.1 
EMEA0 123.3 94.2 0 217.5 
LATAM10.0 40.6 4.4 1.5 56.5 
APAC0.7 15.9 8.8 0 25.4 
Licensing0.2 2.8 2.1 0.5 5.6 
Other0 0 1.7 0 1.7 
Total Revenue$389.5 $297.9 $293.6 $168.8 $1,149.8 

(6) Receivables and Concentrations of Credit Risk
Three Month Period Ended March 29, 2020
(in millions)HHIHPCGPCH&GTotal
Product Sales
NA$313.6 $98.7 $166.3 $137.8 $716.4 
EMEA0.3 92.2 57.9 0 150.4 
LATAM9.9 28.3 3.3 0.9 42.4 
APAC5.0 12.6 6.2 0 23.8 
Licensing0.3 0.9 2.0 0.4 3.6 
Other0 0 1.2 0 1.2 
Total Revenue$329.1 $232.7 $236.9 $139.1 $937.8 

Six Month Period Ended April 4, 2021
(in millions)HHIHPCGPCH&GTotal
Product Sales
NA$776.1 $257.9 $360.5 $247.0 $1,641.5 
EMEA0 290.9 175.5 0 466.4 
LATAM20.4 83.0 8.4 3.2 115.0 
APAC1.1 38.2 17.9 0 57.2 
Licensing0.6 6.4 3.9 0.8 11.7 
Other0 0 2.9 0 2.9 
Total Revenue$798.2 $676.4 $569.1 $251.0 $2,294.7 

Six Month Period Ended March 29, 2020
(in millions)HHIHPCGPCH&GTotal
Product Sales
NA$595.1 $215.1 $304.8 $182.0 $1,297.0 
EMEA0.4 241.4 111.8 0 353.6 
LATAM20.4 64.2 6.6 2.2 93.4 
APAC10.3 30.1 13.3 0 53.7 
Licensing0.6 4.0 3.8 0.8 9.2 
Other0 0 2.4 0 2.4 
Total Revenue$626.8 $554.8 $442.7 $185.0 $1,809.3 
The allowance for uncollectible receivables as of December 31, 2017 and September 30, 2017 was $29.0 and $23.5, respectively. Spectrum BrandsCompany has a broad range of customers including many large mass retail outlet chains,customers. During the three of which exceedmonth period ended April 4, 2021, there were three large retail customers each exceeding 10% of consolidated “Net sales” and/or “Trade receivables, net”. These threeNet Sales and representing 33.7% of consolidated Net Sales. During the six month period ended April 4, 2021, there were two large retail customers represented 35.1%each exceeding 10% of consolidated Net Sales and 35.5%representing 23.3% of Spectrum Brands’ “Net sales” forconsolidated Net Sales. During the three monthsand six month periods ended December 31, 2017March 29, 2020, there were three large retail customers each exceeding 10% of consolidated Net Sales and 2016, respectively;representing 37.2% and 29.3% and 36.2%34.1% of “Trade receivables, net”consolidated Net Sales, respectively.
In the normal course of business, the Company may allow customers to return product or take credit for product returns per the provisions in a sale agreement. Estimated product returns are recorded as a reduction in reported revenues at the accompanying Condensed Consolidated Balance Sheetstime of sale based upon historical product return experience, adjusted for known trends, to arrive at December 31, 2017the amount of consideration expected to be received. The allowance for product returns as of April 4, 2021, and September 30, 2017,2020 was $22.2 million and $23.1 million, respectively.

16

SPECTRUM BRANDS HOLDINGS, INC.
(7) Inventories, netSB/RH HOLDINGS, LLC
“Inventories, net” NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in the accompanying Condensed Consolidated Balance Sheetsmillions, unaudited)
NOTE 6 - RECEIVABLES AND CONCENTRATION OF CREDIT RISK
The allowance for uncollectible receivables as of April 4, 2021, and September 30, 2020 was $6.6 million and $6.4 million, respectively. The Company has a broad range of customers including many large mass retail customers. As of April 4, 2021, there were two large retail customers each exceeding 10% of consolidated Net Trade Receivables and representing 27.3% of consolidated Net Trade Receivables. As of September 30, 2020, there were two large retail customers each exceeding 10% of consolidated Net Trade Receivables and representing 28.4% of consolidated Net Trade Receivables .
NOTE 7 - INVENTORIES
Inventories consist of the following:
(in millions)April 4, 2021September 30, 2020
Raw materials$102.0 $67.8 
Work-in-process78.1 60.8 
Finished goods632.0 429.1 
$812.1 $557.7 
NOTE 8 – PROPERTY, PLANT AND EQUIPMENT
 December 31,
2017		 September 30,
2017
Raw materials$103.2
 $95.7
Work-in-process51.1
 35.5
Finished goods426.4
 365.1
Total inventories, net$580.7
 $496.3

(8) Property, Plant and Equipment, net
Property, plant and equipment net in the accompanying Condensed Consolidated Balance Sheetsconsist of the following:
 December 31,
2017		 September 30,
2017
Land, buildings and improvements$149.3
 $146.6
Machinery, equipment and other387.5
 380.8
Capitalized leases212.2
 210.8
Construction in progress45.7
 40.4
Properties, plant and equipment at cost794.7
 778.6
Less: Accumulated depreciation288.0
 274.2
Total properties, plant and equipment, net$506.7
 $504.4
(in millions)April 4, 2021September 30, 2020
Land, buildings and improvements$132.0 $134.8 
Machinery, equipment and other554.4 520.0 
Finance leases202.0 200.8 
Construction in progress31.0 29.8 
Property, plant and equipment919.4 885.4 
Accumulated depreciation(526.8)(488.9)
Property, plant and equipment, net$392.6 $396.5 
Depreciation expense from property, plant and equipment for the three monthsmonth periods ended December 31, 2017April 4, 2021 and 2016March 29, 2020 was $18.1$18.9 million and $14.9,$19.4 million, respectively; and for the six month periods ended April 4, 2021 and March 29, 2020 was $37.4 million and $44.0 million, respectively. The decrease in depreciation for the six month period ended April 4, 2021 is attributable to accelerated depreciation realized as part of exiting GPC operating facilities in LATAM in the prior year.

NOTE 9 - GOODWILL AND INTANGIBLE ASSETS
(9) Goodwill and Intangibles, net
A summaryconsists of the changesfollowing:
(in millions)HHIGPCH&GTotal
As of September 30, 2020$704.8 $431.6 $195.6 $1,332.0 
Foreign currency impact6.3 5.6 0 11.9 
Armitage acquisition (Note 3)0 90.7 0 90.7 
As of April 4, 2021$711.1 $527.9 $195.6 $1,434.6 
The Company considered the impact of the COVID-19 pandemic on its future operations and cash flows and concluded that, although the duration and severity of the COVID-19 pandemic could result in future impairment charges not currently considered, no triggering event occurred during the three and six month periods ended April 4, 2021 to indicate an impairment of goodwill.
The carrying amountsvalue of Spectrum Brands’ goodwillindefinite-lived intangibles and intangibledefinite-lived intangibles assets subject to amortization and accumulated amortization are as follows:
April 4, 2021September 30, 2020
(in millions)Gross Carrying AmountAccumulated AmortizationNetGross Carrying AmountAccumulated AmortizationNet
Amortizable Intangible Assets:
Customer relationships$710.2 $(389.4)$320.8 $692.1 $(367.9)$324.2 
Technology assets153.6 (91.7)61.9 175.7 (104.1)71.6 
Tradenames158.1 (136.8)21.3 161.0 (132.6)28.4 
Total Amortizable Intangible Assets1,021.9 (617.9)404.0 1,028.8 (604.6)424.2 
Indefinite-lived Intangible Assets - Tradenames1,092.4 — 1,092.4 1,007.5 — 1,007.5 
Total Intangible Assets$2,114.3 $(617.9)$1,496.4 $2,036.3 $(604.6)$1,431.7 
   Intangible Assets
 Goodwill Indefinite Lived Definite Lived Total
Balance at September 30, 2017$2,277.1
 $1,024.3
 $587.7
 $1,612.0
Periodic amortization—
 —
 (15.0) (15.0)
Effect of translation(0.7) 1.0
 0.6
 1.6
Balance at December 31, 2017$2,276.4
 $1,025.3
 $573.3
 $1,598.6
Goodwill and indefinite lived tradename intangibles are not amortized and are tested for impairment at least annually at the Company’s August financial period end, or more frequently if an event or circumstance indicates that an impairment loss may have been incurred between annual impairment tests.
Definite Lived Intangible Assets
The carrying value and accumulated amortization for intangible assets subject to amortization as of December 31, 2017 and September 30, 2017 are as follows:
 December 31, 2017 September 30, 2017
 Cost Accumulated Amortization Net Cost Accumulated Amortization Net
Customer relationships$672.6
 $(232.4) $440.2
 $671.7
 $(222.3) $449.4
Technology assets231.6
 (101.2) 130.4
 194.6
 (59.7) 134.9
Tradenames5.5
 (2.8) 2.7
 18.5
 (15.1) 3.4
 $909.7
 $(336.4) $573.3
 $884.8
 $(297.1) $587.7

The range and weighted average useful lives for definite-lived intangible assets are as follows:
Asset TypeRangeWeighted Average
Customer relationships2 to 20 years17.9 years
Technology assets6 to 18 years11.4 years
Tradenames5 to 13 years6.2 years

Certain tradename intangible assets have an indefinite life and are not amortized. The balance of tradenames not subject to amortization was $1,025.3 and $1,024.3 as of December 31, 2017 and September 30, 2017, respectively. DuringThere were no impairments identified during the three monthsand six month periods ended December 31, 2017 and 2016, the CompanyApril 4, 2021. While a triggering event did not recognize anoccur during the three and six month periods ended April 4, 2021, a prolonged COVID-19 pandemic negatively impacting net sales growth rate, changes in key assumptions, and other global and regional macroeconomic factors, could result in additional future impairment oncharges for indefinite-lived intangible assets.
Amortization expense from the intangible assets for the three monthsmonth periods ended December 31, 2017April 4, 2021 and 2016March 29, 2020 was $15.0$19.8 million and $15.4,$16.9 million, respectively; and for the six month periods ended April 4, 2021 and March 29, 2020 was $37.0 million and $34.0 million, respectively.
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Table of Contents
SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 9 - GOODWILL AND INTANGIBLE ASSETS (continued)
Excluding the impact of any future acquisitions or changechanges in foreign currency, the Company estimates annual amortization expense of amortizable intangible assets for the next five fiscal years will be as follows:
(in millions)Amortization
2021$76.3 
202256.0 
202345.9 
202445.8 
202543.7 
NOTE 10 - DEBT
Fiscal Year Estimated Amortization Expense
2018 $57.5
2019 57.4
2020 55.0
2021 49.7
2022 48.0

(10) Debt
The Company’s consolidated debt consists of the following:
  December 31, 2017 September 30, 2017  
  Amount Rate Amount Rate Interest Rate
HRG          
7.875% Senior Secured Notes, due July 15, 2019 $864.4
 7.9% $864.4
 7.9% Fixed rate
7.75% Senior Unsecured Notes, due January 15, 2022 890.0
 7.8% 890.0
 7.8% Fixed rate
HGI Funding          
2017 Loan, due July 13, 2018 50.0
 4.0% 50.0
 3.7% Variable rate, see below
HGI Energy          
HGI Energy Notes, due June 30, 2018 —
 —% 92.0
 1.5% Fixed rate
  1,804.4
   1,896.4
    
Spectrum Brands          
USD Term Loan, due June 23, 2022 1,241.1
 3.5% 1,244.2
 3.4% Variable rate, see below
CAD Term Loan, due June 23, 2022 34.3
 5.0% 59.0
 4.9% Variable rate, see below
6.625% Notes, due November 15, 2022 570.0
 6.6% 570.0
 6.6% Fixed rate
6.125% Notes, due December 15, 2024 250.0
 6.1% 250.0
 6.1% Fixed rate
5.75% Notes, due July 15, 2025 1,000.0
 5.8% 1,000.0
 5.8% Fixed rate
4.00% Notes, due October 1, 2026 507.6
 4.0% 500.9
 4.0% Fixed rate
Revolver Facility, expiring March 6, 2022 226.0
 4.1% —
 —% Variable rate, see below
Other notes and obligations 4.0
 8.0% 4.7
 8.0% Variable rate
Obligations under capital leases 200.7
 5.7% 200.0
 5.7% Various
Salus          
Unaffiliated long-term debt of consolidated variable-interest entity 77.0
 —% 28.9
 —% Variable rate, see below
Long-term debt of consolidated variable-interest entity with FGL —
 —% 48.1
 —% Variable rate, see below
Total 5,915.1
   5,802.2
    
Original issuance discounts on debt, net of premiums (19.9)   (20.7)    
Unamortized debt issue costs (72.3)   (76.1)    
Total debt 5,822.9
   5,705.4
    
Less current maturities and short-term debt 934.5
   161.4
    
Non-current portion of debt $4,888.4
   $5,544.0
    

HRG
On December 15, 2017, HRG issued a notice of redemption to redeem all $864.4 outstanding principal amount of its 7.875% Notes at a redemption price equal to 100.0% of the principal amount thereof, plus accrued and unpaid interest to the redemption date. The 7.875% Notes were redeemed on January 16, 2018. The 7.875% Notes were included in the current portion of long-term debt as of December 31, 2017.
HGI Funding
2017 Loan
On January 13, 2017, the Company, through a wholly-owned subsidiary of HGI Funding, entered into a loan agreement, pursuant to which it may borrow up to an aggregate amount of $150.0 (the “2017 Loan”). The 2017 Loan bears interest at an adjusted International Exchange London Interbank Offered Rate (“LIBOR”), plus 2.35% per annum, payable quarterly and a commitment fee of 75 bps. The 2017 Loan matures on July 13, 2018, with an option for early termination by the borrower. At December 31, 2017, the 2017 Loan was secured by 4.2 million shares of Spectrum Brands owned by a subsidiary of HGI Funding.
HGI Energy
On December 5, 2017, the Company paid off the $92.0 aggregate principal amount of the HGI Energy Notes, which were previously held by the Insurance Operations.
Spectrum Brands
Term Loans and Revolver Facility
April 4, 2021September 30, 2020
(in millions)AmountRateAmountRate
Spectrum Brands Inc.
Revolver Facility, variable rate, expiring June 30, 2025$0 0 %$— — %
Term Loan Facility, variable rate, due March 3, 2028400.0 2.5 %— — %
6.125% Notes, due December 15, 2024— — %250.0 6.1 %
5.75% Notes, due July 15, 2025450.0 5.8 %1,000.0 5.8 %
4.00% Notes, due October 1, 2026500.6 4.0 %499.1 4.0 %
5.00% Notes, due October 1, 2029300.0 5.0 %300.0 5.0 %
5.50% Notes, due July 15, 2030300.0 5.5 %300.0 5.5 %
3.875% Notes, due March 15, 2031500.0 3.9 %0 0 %
Other notes and obligations2.6 7.7 %3.2 7.6 %
Obligations under capital leases156.4 5.7 %160.5 5.6 %
Total Spectrum Brands, Inc. debt2,609.6 2,512.8 
Unamortized discount on debt(1.0)0 
Debt issuance costs(38.4)(36.5)
Less current portion(18.6)(15.3)
Long-term debt, net of current portion$2,551.6 $2,461.0 
The term loans and Revolver Facility due June 23, 2020 (“Revolver Facility”) are subject to variable interest rates, (i) the U.S. dollar denominated term loan facility (the “USD Term Loan”) is subject to either adjusted LIBOR, plus margin of 2.00% per annum, or a base rate plus margin of 1.00% per annum; (ii) the CAD term loan due June 23, 2022 (“CAD Term Loan”) is subject to either Canadian Dollar Offered Rate, subject to a 0.75% floor plus 3.50% per annum, or base rate with a 1.75% floor plus plus 2.50% per annum; (iii) the Revolver Facility is subject to either adjusted LIBOR plus margin ranging from 1.75% to 2.25%2.75% per annum, or base rate plus margin ranging from 0.75% to 1.25%1.75% per annum. The LIBOR borrowings are subject to a 0.75% LIBOR floor. Our Revolver Facility allows for the LIBOR rate to be phased out and replaced with the Secured Overnight Financing Rate and therefore we do not anticipate a material impact by the expected upcoming LIBOR transition. As a result of borrowings and payments under the Revolver Facility, at December 31, 2017, Spectrum Brandsthe Company had borrowing availability of $454.4,$576.6 million at April 4, 2021, net of outstanding letters of credit of $18.0 and $1.5 allocated to a foreign$23.4 million.
On March 3, 2021, the Company, through its wholly owned subsidiary, Spectrum Brands, Inc ("SBI"), completed its offering of Spectrum Brands.
Salus
In February 2013, September 2013 and February 2015, Salus completed a collateralized loan obligation (“CLO”) securitization of up to $578.5 notional aggregate principal amount. At December 31, 2017 and September 30, 2017, the outstanding notional$500.0 million aggregate principal amount of $77.0its 3.875% Senior Notes due March 2031, and $28.9, respectively, was taken up by unaffiliated entities and consisted entirely of subordinated debt in both periods, and $48.1 was taken up by FGL and included in “Current assets of businesses held for sale”entered into a new Term Loan Facility (as defined below) in the accompanying aggregate principal amount of $400.0 million, expiring March 2028. Using the proceeds received, the Company redeemed $250.0 million aggregate principal amount of the 6.125% Notes in a cash tender offer and call and $550.0 million aggregate principal amount of the 5.75% Notes in a cash tender offer, with a make whole premium of $23.4 million and a write-off of unamortized debt issuance costs of $7.9 million recognized as interest expense for the three and six month periods ended April 4, 2021.
Spectrum Term Loan Facility
On March 3, 2021, the Company entered into the first amendment (the "Amended Credit Agreement") to the Amended and Restated Credit Agreement (the "Credit Agreement") dated as of June 30, 2020. The Amended Credit Agreement includes certain modified terms from the existing Credit Agreement to provide for a new term loan facility (the “Term Loan Facility”). The Term Loan Facility is in an aggregate principal amount of $400.0 million and will mature on March 3, 2028. The Term Loan Facility is subject to a rate per annum equal to either (1) the LIBO Rate (as defined in the Amended Credit Agreement), subject to a 0.50% floor, adjusted for statutory reserves, plus a margin of 2.00% per annum or (2) the Alternate Base Rate (as defined in the Amended Credit Agreement), plus a margin of 1.00% per annum. The Term Loan Facility allows for the LIBO rate to be phased out and replaced with the Secured Overnight Financing Rate and therefore we do not anticipate a material impact to the expected upcoming LIBOR transition. The Term Loan Facility was issued net of a $1.0 million discount and the Company incurred $5.1 million of debt issuance costs, which is being amortized with a corresponding charge to interest expense over the remaining life of the loan.
Pursuant to a guarantee agreement, SB/RH and the direct and indirect wholly-owned material domestic subsidiaries of SBI have guaranteed SBI’s obligations under the Amended Credit Agreement and related loan documents. Pursuant to the Security Agreement, dated as of June 23, 2015, SBI and such subsidiary guarantors have pledged substantially all of their respective assets to secure such obligations and, in addition, SB/RH has pledged the capital stock of SBI to secure such obligations.
Subject to certain mandatory prepayment events, the Term Loan Facility is subject to repayment according to scheduled amortizations, with the final payment of amount outstanding, plus accrued and unpaid interest, due at maturity. The Amended Credit Agreement contains customary affirmative and negative covenants, including, but not limited to, restrictions on the Company 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 exceptions set forth in the Amended Credit Agreement.
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 10 - DEBT (continued)
3.875% Notes
On March 3, 2021, SBI issued $500.0 million aggregate principal amount of 3.875% Senior Notes due 2031 (the "3.875% Notes") and entered into the indenture governing the 3.875% Notes (the “2031 Indenture”). The 3.875% Notes mature on March 15, 2031 and are unconditionally guaranteed, on a senior unsecured basis, by SB/RH and by SBI’s existing and future domestic subsidiaries that guarantee indebtedness under the Amended Credit Agreement.
SBI may redeem all or part of the 3.875% Notes at any time on or after March 15, 2026 at certain fixed redemption prices as set forth in the 2031 Indenture. In addition, prior to March 15, 2026, SBI may redeem the Notes at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, plus accrued and unpaid interest. Before March 15, 2024, the Company may redeem up to 35% of the aggregate principal notes with cash equal to the net proceeds that SBI raises in equity offerings at specified redemption price as set forth in the 2031 Indenture. Further, the 2031 Indenture requires SBI to make an offer to repurchase all outstanding 3.875% Notes upon the occurrence of a change of control of SBI, as defined in the 2031 Indenture.
The 2031 Indenture contains covenants limiting, among other things, the ability of the Company and its direct and indirect restricted subsidiaries to incur additional indebtedness, create liens, engage in sale-leaseback transactions, pay dividends or make distributions in respect of capital stock, purchase or redeem capital stock, make investments or certain other restricted payments, sell assets, issue or sell stock of restricted subsidiaries, enter in transactions with affiliates, or effect a merger or consolidation.
In addition, the 2031 Indenture provides for customary events of default, including failure to make required payments, failure to comply with certain agreements or covenants, failure to make payments when due or an acceleration of certain other indebtedness, and certain events of bankruptcy and insolvency.
The Company recorded $7.6 million of fees in connection with the offering of the 3.875% Notes, which have been capitalized as debt issuance costs and are being amortized over the remaining life of the 3.875% Notes.
NOTE 11 – LEASES
The Company has leases primarily pertaining to manufacturing facilities, distribution centers, office space, warehouses, automobiles, machinery, computer, and office equipment that expire at various times through February 28, 2047.We have identified embedded operating leases within certain logistic agreements for warehouses and information technology services arrangements and recognized assets identified in the arrangements as part of operating right-of-use ("ROU") assets on the Company’s Condensed Consolidated Balance SheetsStatements of Financial Position as of September 30, 2017. The obligations of the securitization is secured by the assets of the variable interest entity, primarily asset-based loan receivables and carry residual interest subject to maintenance of certain covenants. Due to losses incurred in the CLO, at December 31, 2017April 4, 2021 and September 30, 2017, the CLO was not accruing interest2020. We elected to exclude certain supply agreements that contain embedded leases for manufacturing facilities or dedicated manufacturing lines from our ROU asset and liability calculation based on the subordinated debt.insignificant impact to our financial statements.

The following is a summary of the leases recognized on the Company’s Condensed Consolidated Statements of Financial Position as of April 4, 2021 and September 30, 2020:
(in millions)Line ItemApril 4, 2021September 30, 2020
Assets
OperatingOperating lease assets$103.0 $103.8 
FinanceProperty, plant and equipment, net129.8 136.3 
Total leased assets$232.8 $240.1 
Liabilities
Current
OperatingOther current liabilities$24.9 $22.4 
FinanceCurrent portion of long-term debt12.0 12.1 
Long-term
OperatingLong-term operating lease liabilities86.2 88.8 
FinanceLong-term debt, net of current portion144.4 148.4 
Total lease liabilities$267.5 $271.7 
(11) Derivative Financial InstrumentsAs of April 4, 2021, the Company had $19.7 million of commitments related to leases executed that have not yet commenced.
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 11 – LEASES (continued)
The Company records its operating lease expense and amortization of finance lease ROU assets within Cost of Goods Sold or Operating Expenses in the Condensed Consolidated Statements of Income depending on the nature and use of the underlying asset. The Company records its finance interest cost within interest expense in the Condensed Consolidated Statements of Income.
The components of lease costs recognized in the Condensed Consolidated Statements of Income for the three and six month periods ended April 4, 2021 and March 29, 2020 are as follows:
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Operating lease cost$7.6 $6.1 $15.4 $12.6 
Finance lease cost
Amortization of leased assets3.9 3.4 7.7 7.0 
Interest on lease liability2.3 2.2 4.7 4.5 
Variable lease cost3.2 3.3 5.9 5.8 
Total lease cost$17.0 $15.0 $33.7 $29.9 
During the three month periods ended April 4, 2021 and March 29, 2020, the Company recognized income attributable to leases and sub-leases of $0.6 million and $0.5 million, respectively. During the six month periods ended April 4, 2021 and March 29, 2020, the Company recognized income attributable to leases and sub-leases of $1.1 million and $1.0 million, respectively. Income from leases and sub-leases is recognized as Other Non-Operating Income in the Condensed Consolidated Statements of Income.
The following is a summary of the Company’s cash paid for amounts included in the measurement of lease liabilities recognized in the Condensed Consolidated Statement of Cash Flow, including supplemental non-cash activity related to operating leases, for the three and six month periods ending April 4, 2021 and March 29, 2020:
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Operating cash flow from operating leases$7.8 $5.4 $14.9 $11.8 
Operating cash flows from finance leases2.3 2.3 4.7 4.6 
Financing cash flows from finance leases3.2 3.5 6.3 6.9 
Supplemental non-cash flow disclosure
Acquisition of operating lease asset through lease obligations2.1 1.8 11.0 4.3 
The following is a summary of weighted-average lease term and discount rate at April 4, 2021 and September 30, 2020:
April 4, 2021September 30, 2020
Weighted average remaining lease term
Operating leases6.1 years6.6 years
Finance leases15.4 years15.6 years
Weighted average discount rate
Operating leases4.6 %4.7 %
Finance leases5.7 %5.6 %
At April 4, 2021, future lease payments under operating and finance leases were as follows:
(in millions)Finance LeasesOperating Leases
2021 remaining balance$10.4 $13.9 
202218.5 25.5 
202317.4 23.7 
202417.0 15.1 
202519.9 12.3 
Thereafter162.5 38.5 
Total lease payments245.7 129.0 
Amount representing interest(89.3)(17.9)
Total minimum lease payments$156.4 $111.1 
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 12 - DERIVATIVES
Cash Flow Hedges
Interest RateCommodity Swaps.Spectrum Brands uses interest rate swaps to manage its interest rate risk. The swaps are designated as cash flow hedges with the changes in fair value recorded in AOCI and as a derivative hedge asset or liability, as applicable. The swaps settle periodically in arrears with the related amounts for the current settlement period payable to, or receivable from, the counterparties included in accrued liabilities or receivables, respectively, and recognized in earnings as an adjustment to interest from the underlying debt to which the swap is designated. At December 31, 2017 and September 30, 2017, Spectrum Brands had a series of U.S. dollar denominated interest rate swaps outstanding which effectively fix the interest on floating rate debt, exclusive of lender spreads, at 1.76% for a notional principal amount of $300.0 through May 2020. The derivative net gain estimated to be reclassified from AOCI into earnings over the next 12 months is $0.1, net of tax. Spectrum Brands’ interest rate swaps financial instruments at December 31, 2017 and September 30, 2017 were as follows:
  December 31, 2017 September 30, 2017
  Notional Amount Remaining Years Notional Amount Remaining Years
Interest rate swaps - fixed $300.0
 2.3 $300.0
 2.6

Commodity Swaps. Spectrum BrandsCompany is exposed to risk from fluctuating prices for raw materials, specifically zinc and brass used in its manufacturing processes. Spectrum Brandsprocesses of its HHI segment. The Company hedges a portion of the risk associated with the purchase of these materials through the use ofusing commodity swaps. The hedge contracts are designated as cash flow hedges with the fair value changes recorded in AOCI and as a hedge asset or liability, as applicable. The unrecognized changes in fair value of the hedge contracts are reclassified from AOCI into earnings when the hedged purchase of raw materials also affects earnings. The swaps effectively fix the floating price on a specified quantity of raw materials through a specified date. At December 31, 2017, Spectrum BrandsApril 4, 2021, the Company had a series of brass and zinc swap contracts outstanding through June 2019.August 31, 2022. The derivative net gainsgain estimated to be reclassified from AOCI into earnings over the next 12 months is $0.4,$0.9 million, net of tax. Spectrum Brands
The Company had the following commodity swap contracts outstanding as of December 31, 2017April 4, 2021 and September 30, 2017:2020:
April 4, 2021September 30, 2020
(in millions, except Notional)NotionalContract ValueNotionalContract Value
Brass swap contracts718.7  Metric Tons$4.0 949.0  Metric Tons$4.4 
Zinc swap contracts2,883.0  Metric Tons$7.7 1,552.0  Metric Tons$3.4 
  December 31, 2017 September 30, 2017
  Notional Contract Value Notional Contract Value
Brass swap contracts 1.2 Tons $6.4
 1.3 Tons $6.6
Foreign exchange contracts. Spectrum Brandscontracts. The Company periodically enters into forward foreign exchange contracts to hedge a portion of the risk from forecasted foreign currency denominated third party and intercompany sales or payments. These obligations generally require Spectrum Brandsthe Company to exchange foreign currencies for U.S. Dollars, Euros, Pound Sterling, Canadian Dollars, (“CAD”)Australian Dollars, or Japanese Yen. These foreign exchange contracts are cash flow hedges of fluctuating foreign exchange rates related to sales of product or raw materialinventory purchases. Until the sale or purchase is recognized, the fair value of the related hedge is recorded in AOCI and as a derivative hedge asset or liability, as applicable. At the time the sale or purchase is recognized, the fair value of the related hedge is reclassified as an adjustment to “Net sales”Net Sales or purchase price variance in “CostCost of goods sold”, respectively, inGoods Sold on the accompanying Condensed Consolidated Statements of Operations.Income. At December 31, 2017, Spectrum BrandsApril 4, 2021, the Company had a series of foreign exchange derivative contracts outstanding through August 2019.September 27, 2022. The derivative net gainsloss estimated to be reclassified from AOCI into earnings over the next 12 months is $0.5,$4.6 million, net of tax. At December 31, 2017April 4, 2021 and September 30, 2017, Spectrum Brands2020, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of $53.2$318.4 million and $67.5,$273.4 million, respectively.
Net Investment Hedge
On September 20, 2016, SBI issued €425.0 aggregate principal amountThe following table summarizes the impact of 4.00% Notes due October 1, 2026 (“4.00% Notes”). Spectrum Brands’ 4.00% Notes are denominated in Eurosdesignated cash flow hedges and have been designated as a net investment hedge of the translation of Spectrum Brands’ net investments in Euro denominated subsidiaries at the time of issuance. As a result, the translation of the Euro denominated debt ispre-tax gain (loss) recognized in AOCI with any ineffective portion recognized as foreign currency translation gains or losses in the accompanying Condensed Consolidated Statements of Operations whenIncome for the aggregate principal exceeds the net investment three and six month periods ended April 4, 2021 and March 29, 2020, respectively:
For the three month period ended April 4, 2021
(in millions)
Gain (Loss)
in OCI		Reclassified to Continuing Operations
Line ItemGain (Loss)
Commodity swaps$0.5 Cost of goods sold$0.8 
Foreign exchange contracts0.1 Net sales0 
Foreign exchange contracts5.2 Cost of goods sold(3.8)
Total$5.8 $(3.0)

For the three month period ended March 29, 2020
(in millions)
Gain (Loss)
in OCI		Reclassified to Continuing Operations
Line ItemGain (Loss)
Commodity swaps$(0.9)Cost of goods sold$(0.1)
Foreign exchange contracts(0.1)Net sales0 
Foreign exchange contracts8.8 Cost of goods sold1.8 
Total$7.8 $1.7 

For the six month period ended April 4, 2021
(in millions)
Gain (Loss)
in OCI		Reclassified to Continuing Operations
Line ItemGain (Loss)
Commodity swaps$1.4 Cost of goods sold$1.1 
Foreign exchange contracts0.1 Net sales0 
Foreign exchange contracts(8.1)Cost of goods sold(6.8)
Total$(6.6)$(5.7)

For the six month period ended March 29, 2020
(in millions)
Gain (Loss)
in OCI		Reclassified to Continuing Operations
Line ItemGain (Loss)
Commodity swaps$(0.7)Cost of goods sold$(0.1)
Foreign exchange contracts0 Net sales(0.1)
Foreign exchange contracts2.3 Cost of goods sold4.5 
Total$1.6 $4.3 
21
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in its Euro denominated subsidiaries. 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 December 31, 2017, the hedge was fully effective and no ineffective portion was recognized in earnings.millions, unaudited)
NOTE 12 – DERIVATIVES (continued)
Derivative Contracts Not Designated as Hedges for Accounting Purposes
Foreign exchange contracts.Spectrum Brands The Company periodically enters into forward and swap 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 Spectrum Brandsthe Company to exchange foreign currencies for U.S. Dollars, CAD,Canadian Dollars, Euros, Pounds Sterling, Taiwanese Dollars, Hong KongPhilippine Pesos, Australian Dollars, Polish Zlotys, Mexican Pesos, or Australian Dollars.Japanese Yen, among others. These foreign exchange contracts are fair value hedges of a related liability or asset recorded in the accompanying Condensed Consolidated Balance Sheets.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 December 31, 2017, Spectrum BrandsApril 4, 2021, the Company had a series of forward exchange contracts outstanding through January 2018.June 30, 2021. At December 31, 2017April 4, 2021 and September 30, 2017, Spectrum Brands2020, the Company had $90.5$773.5 million and $62.9,$802.5 million, respectively, of notional value of such foreign exchange derivative contracts outstanding.

The following summarizes the impact of derivative instruments on the accompanying Condensed Consolidated Statements of Income for the three and six month periods ended April 4, 2021 and March 29, 2020, pre-tax:
Three Month Periods EndedSix Month Periods Ended
(in millions)Line ItemApril 4, 2021March 29, 2020April 4, 2021March 29, 2020
Foreign exchange contractsOther non-operating (income) expense$(5.1)$22.9 $(8.4)$(2.2)
Fair Value of Derivative Instruments
The fair value of the Company’s outstanding derivativesderivative contracts recorded in the accompanying Condensed Consolidated Balance Sheets wereStatements of Financial Position is as follows:
Asset Derivatives Classification December 31,
2017		 September 30,
2017
Derivatives designated as hedging instruments:      
Interest rate swaps Deferred charges and other assets $2.1
 $0.4
Commodity swaps Other receivables, net 0.9
 0.6
Foreign exchange contracts Other receivables, net 0.2
 0.2
Interest rate swaps Other receivables, net 0.1
 —
Commodity swaps Deferred charges and other assets 0.1
 —
Total asset derivatives designated as hedging instruments   3.4
 1.2
Derivatives not designated as hedging instruments:      
Foreign exchange contracts Other receivables, net 0.4
 0.3
Total asset derivatives   $3.8
 $1.5
Liability Derivatives Classification December 31,
2017		 September 30,
2017
Derivatives designated as hedging instruments:      
Foreign exchange contracts Accounts payable $1.3
 $2.3
Interest rate swaps Other current liabilities 0.2
 0.5
Foreign exchange contracts Other long-term liabilities —
 0.3
Interest rate swaps Accrued interest —
 0.2
Total liability derivatives   $1.5
 $3.3
(in millions)Line ItemApril 4, 2021September 30, 2020
Derivative Assets
Commodity swaps - designated as hedgeOther receivables$1.3 $0.7 
Commodity swaps - designated as hedgeDeferred charges and other0 0.1 
Foreign exchange contracts - designated as hedgeOther receivables1.3 0 
Foreign exchange contracts - designated as hedgeDeferred charges and other0.4 — 
Foreign exchange contracts - not designated as hedgeOther receivables2.8 0.4 
Total Derivative Assets$5.8 $1.2 
Derivative Liabilities
Commodity swaps - designated as hedgeAccounts payable$0.1 $0 
Foreign exchange contracts - designated as hedgeAccounts payable7.2 3.8 
Foreign exchange contracts - designated as hedgeOther long term liabilities0.1 0.3 
Foreign exchange contracts - not designated as hedgeAccounts payable2.4 10.1 
Total Derivative Liabilities$9.8 $14.2 
Spectrum BrandsThe Company is exposed to the risk of default by the counterparties with which Spectrum Brandsit transacts and generally does not require collateral or other security to support financial instruments subject to credit risk. Spectrum BrandsThe 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. Spectrum BrandsThe Company considers these exposures when measuring its credit reserve on its derivative assets, which was less than $0.1were not significant as of December 31, 2017 and September 30, 2017.April 4, 2021.
Spectrum Brands’The Company’s standard contracts do not contain credit risk related contingent features whereby Spectrum Brandsthe Company would be required to post additional cash collateral as a resultbecause of a credit event. However, Spectrum Brandsthe Company is typically required to post collateral in the normal course of business to offset its liability positions. As of December 31, 2017April 4, 2021, and September 30, 2017,2020, there was no0 cash collateral outstanding. In addition, as of December 31, 2017outstanding and September 30, 2017, Spectrum Brands had no0 posted standby letters of credit related to such liability positions.

Net Investment Hedge
SBI has €425.0 million aggregate principle amount of 4.00% Notes designated as a non-derivative economic hedge, or net investment hedge, of the translation of the Company’s net investments in Euro denominated subsidiaries at the time of issuance. The hedge effectiveness is measured on the beginning balance of the net investment and re-designated every three months. Any gains and losses attributable to the translation of the Euro denominated debt designated as net investment hedge are recognized as a component of foreign currency translation within AOCI, and gains and losses attributable to the translation of the undesignated portion are recognized as foreign currency translation gains or losses within Other Non-Operating Expense (Income). As of April 4, 2021 the full principal amount was designated as a net investment hedge and considered fully effective. The following tables summarizesummarizes the impact of derivative instrumentsgain (loss) from the net investment hedge recognized in the accompanying Condensed Consolidated Statements of OperationsOther Comprehensive Income for the three monthsand six month periods ended December 31, 2017April 4, 2021 and 2016,March 29, 2020, pre-tax:
Three months ended December 31, 2017 Classification Effective Portion
    Gain (Loss) in AOCI Gain (Loss) reclassified to Continuing Operations
Interest rate swaps Interest expense $2.0
 $(0.3)
Commodity swaps Cost of goods sold 1.8
 0.3
Net investment hedge Other income, net (6.6) —
Foreign exchange contracts Net sales —
 0.1
Foreign exchange contracts Cost of goods sold 2.0
 0.2
    $(0.8) $0.3
Three Month Periods EndedSix Month Periods Ended
Gain (loss) in OCI (in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net investment hedge$20.1 $2.2 $(1.4)$(2.8)
Three months ended December 31, 2016 Classification Effective Portion
    Gain (Loss) in AOCI Gain (Loss) reclassified to Continuing Operations
Interest rate swaps Interest expense $0.1
 $(0.3)
Commodity swaps Cost of goods sold 0.1
 —
Net investment hedge Other income, net 32.5
 —
Foreign exchange contracts Net sales 0.2
 —
Foreign exchange contracts Cost of goods sold 10.3
 0.1
    $43.2
 $(0.2)
ForDuring the three monthsand six month periods ended December 31, 2017, Spectrum Brands hadApril 4, 2021, the Company did 0t recognize any pre-tax gain (loss) in earnings related to the translation of the undesignated portion of debt obligation. The pre-tax loss related to the translation of the undesignated portion of the debt obligation recognized in earnings was $0.5 million and $1.2 ofmillion and for the three and six month periods ended March 29, 2020. Net gains from commodity swaps and $4.1 ofor losses from foreign exchange contractsthe net investment hedge are reclassified from AOCI to income from discontinued operations. For the three months ended December 31, 2016, Spectrum Brands had $0.8into earnings upon a liquidation event or deconsolidation of gains from commodity swaps and $4.2Euro denominated subsidiaries.
22
Table of gains from foreign exchange contracts reclassified from AOCI to income from discontinued operations.Contents
The following table summarizes the loss associated with derivative contracts not designated as hedges SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in the accompanying Condensed Consolidated Statements of Operationsfor the three months ended December 31, 2017 and 2016:
millions, unaudited)
    Three months ended December 31,
  Classification 2017 2016
Foreign exchange contracts Other income, net $0.3
 $(2.1)
NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

(12) Fair Value of Financial Instruments
Spectrum Brands utilizes valuation techniques that attempt to maximize the use of observable inputs and minimize the use of unobservable inputs. Spectrum Brands’ derivative assets and liabilities are valued on a recurring basis using internal models, which are based on market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities, which are generally based on quoted or observed market prices and classified as Level 2. The fair value of certain derivatives is estimated using pricing models based on contracts with similar terms and risks. Modeling techniques assume market correlation and volatility, such as using prices of one delivery point to calculate the price of the contract’s different delivery point. The nominal value of interest rate transactions is discounted using applicable forward interest rate curves. In addition, by applying a credit reserve which is calculated based on credit default swaps or published default probabilities for the actual and potential asset value, the fair value of Spectrum Brands’ derivative assets reflects the risk that the counterparties to these contracts may default on the obligations. Likewise, by assessing the requirements of a reserve for non-performance which is calculated based on the probability of default by Spectrum Brands, it adjusts its derivative liabilities to reflect the price at which a potential market participant would be willing to assume Spectrum Brands’ liabilities. Spectrum BrandsCompany has not changed itsthe valuation techniques used in measuring the fair value of any derivativefinancial assets and liabilities during the quarter.

year. The Company’s consolidated assetscarrying value and liabilities measured atestimated fair value are summarizedof financial and derivative instruments as of April 4, 2021 and September 30, 2020 according to the fair value hierarchy previously describedare as follows:follows.
April 4, 2021September 30, 2020
(in millions)Level 1Level 2Level 3Fair ValueCarrying
Amount		Level 1Level 2Level 3Fair ValueCarrying
Amount
Investments$0 $0 $0 $0 $0 $66.9 $0 $0 $66.9 $0 
Derivative Assets0 5.8 0 5.8 0 0 1.2 0 1.2 0 
Derivative Liabilities0 9.8 0 9.8 0 0 14.2 0 14.2 0 
Debt - SBH0 2,665.5 0 2,665.5 2,570.2 0 2,595.4 0 2,595.4 2,476.3 
Debt - SB/RH0 2,665.5 0 2,665.5 2,570.2 0 2,595.4 0 2,595.4 2,476.3 
 December 31, 2017 September 30, 2017
 Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Fair Value
Derivative Assets$—
 $3.8
 $—
 $3.8
 $—
 $1.5
 $—
 $1.5
Derivative Liabilities—
 1.5
 —
 1.5
 —
 3.3
 —
 3.3
Investments consist of our investment in Energizer common stock, which is valued at quoted market prices for identical instruments in an active market.  Unrealized income (loss) from changes in fair value, realized income (loss) from sale of equity investments, plus dividend income from equity investments, are recognized as components of Other Non-Operating Income, Net on the Condensed Consolidated Statements of Income.  During the three and six month periods ended April 4, 2021, the Company sold 0.3 million and 1.7 million shares of Energizer common stock, respectively, for proceeds of $12.6 million and $73.1 million, respectively. During the three and six month periods ended March 29, 2020, the Company sold 1.0 million shares of Energizer common stock for proceeds of $28.6 million. As of April 4, 2021, the company held 0 shares of Energizer common stock. 
The following is a summary of income from equity investments recognized as a component of Other Non-Operating Income in the Company's Condensed Consolidated Statements of Income:
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Unrealized loss on equity investments held$0 $(84.5)$0 $(53.3)
Realized gain (loss) on equity investments sold0.9 (22.3)6.9 (15.0)
Gain (loss) on equity investments0.9 (106.8)6.9 (68.3)
Dividend income from equity investments0 1.6 0.2 3.2 
Gain (loss) from equity investments$0.9 $(105.2)$7.1 $(65.1)
The fair value measurements of the Company’s debt represent non-active market exchanged traded securities which are valued at quoted input prices that are directly observable or indirectly observable through corroboration with observable market data. See Note 11, Derivative Financial Instruments,10 – Debt for additional detail.detail on outstanding debt of SBH and SB/RH. See Note 12 – Derivatives for additional detail on derivative assets and liabilities.
Non-Recurring Fair Value Measurements
The carrying value of cash and cash equivalents, receivables, accounts payable and short term debt approximate fair value based on the short-term nature of these assets and liabilities. Goodwill, intangible assets and other long-lived assets are tested annually or more frequently if an event occurs that indicates an impairment loss may have been incurred using fair value measurements with unobservable inputs (Level 3).
Financial Assets and Liabilities Not Measured at Fair Value
The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial instruments which are not measured at fair value in the accompanying Condensed Consolidated Balance Sheets are summarized as follows:
 December 31, 2017
 Level 1 Level 2 Level 3 Fair Value Carrying Amount
Total debt$—
 $6,015.0
 $—
 $6,015.0
 $5,822.9
 September 30, 2017
 Level 1 Level 2 Level 3 Fair Value Carrying Amount
Total debt$—
 $5,839.3
 $92.0
 $5,931.3
 $5,705.4
NOTE 14 - EMPLOYEE BENEFIT PLANS
The carrying value of cash and cash equivalents, receivables and payables approximate fair value due to their short duration and, accordingly, they are not presented in the tables above. The fair value of debt set forth above is generally based on quoted or observed market prices.

(13) Stock-Based Compensation
The Company recognized consolidated stock-based compensation expense of $4.2 and $9.5 during the three months ended December 31, 2017 and 2016, respectively. Stock-based compensation expense is principally included in “Selling, acquisition, operating and general expenses” in the accompanying Condensed Consolidated Statements of Operations.
A summary of stock option awards outstanding as of December 31, 2017 and related activity during the three months then ended are as follows (option amounts in thousands):
  HRG
Stock Option Awards Options Weighted Average Exercise Price 
Weighted
Average Grant
Date Fair Value
Stock options outstanding at September 30, 2017 3,976
 $9.69
 $3.88
Exercised (113) 12.25
 4.82
Stock options outstanding at December 31, 2017 3,863
 9.61
 3.85
Stock options vested and exercisable at December 31, 2017 3,606
 9.20
 3.70
Stock options outstanding and expected to vest 3,863
 9.61
 3.85
A summary of restricted stock awards, restricted stock units and performance restricted stock units outstanding as of December 31, 2017 and related activity during the three months then ended, under HRG’s and Spectrum Brands’ incentivenet periodic benefit cost for defined benefit plans are as follows (share and unit amounts in thousands):

  HRG
Restricted Stock Awards Shares 
Weighted
Average Grant
Date Fair Value
Nonvested restricted stock outstanding at September 30, 2017 143
 $13.36
Granted 24
 16.85
Exercised / Released (143) 13.36
Nonvested restricted stock outstanding at December 31, 2017 24
 16.85
  HRG Spectrum Brands
Restricted Stock Units Units 
Weighted
Average Grant
Date Fair Value
 Units 
Weighted
Average Grant
Date Fair Value
Restricted stock units outstanding at September 30, 2017 —
 $—
 761
 $114.67
Granted —
 —
 324
 111.06
Vested/Exercised —
 —
 (456) 113.24
Forfeited or Expired —
 —
 (2) 123.78
Restricted stock units outstanding at December 31, 2017 —
 —
 627
 113.82
A summary of warrants outstanding as of December 31, 2017 and related activity during the three months then ended, under HRG’s incentive plan are as follows (unit amounts in thousands):
  HRG
Warrants Units Weighted Average Exercise Price 
Weighted
Average Grant
Date Fair Value
Warrants outstanding at September 30, 2017 600
 $13.13
 $3.22
Warrants outstanding at December 31, 2017 600
 13.13
 3.22
Warrants outstanding and expected to vest 600
 13.13
 3.22
A summary of time-based and performance-based grants as of December 31, 2017 and related activity during the three months then ended, under HRG’s and Spectrum Brands’ incentive plans are as follows (share amounts in thousands):
  HRG Spectrum Brands
Time-based grants Units 
Weighted
Average Grant
Date Fair Value
 Fair Value at Grant Date Units 
Weighted
Average Grant
Date Fair Value
 Fair Value at Grant Date
Stock option awards —
 $—
 $—
 —
 $—
 $—
Restricted stock awards 24
 16.85
 0.4
 —
 —
 —
Restricted stock units —
 —
 —
 92
 113.29
 10.4
Total time-based grants 24
   $0.4
 92
   $10.4
  Spectrum Brands
Performance-based grants Units 
Weighted
Average Grant
Date Fair Value
 Fair Value at Grant Date
Vesting in less than 12 months —
 $—
 $—
Vesting in 12 to 24 months 116
 110.17
 12.8
Vesting in more than 24 months 116
 110.17
 12.8
Total performance-based grants 232
 110.17
 $25.6
Additional Disclosures
During the three months ended December 31, 2017, HRG’s stock option awards and HRG’s restricted stock awards with a total fair value of $2.7 vested. The total intrinsic value of HRG’s share options exercised during the three months ended December 31, 2017 was $0.5, for which HRG received cash of $1.4 in settlement.
Under HRG’s executive compensation plan for the three monthsand six month periods ended December 31, 2017, executives will be paid April 4, 2021 and March 29, 2020 are as follows:
U.S. PlansNon U.S. Plans
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Three Month Periods Ended
Service cost$0.1 $0.2 $0.5 $0.6 
Interest cost0.5 0.5 0.6 0.6 
Expected return on assets(0.9)(1.0)(1.0)(0.9)
Recognized net actuarial loss0.3 0.2 0.8 0.8 
Net periodic benefit cost$0 $(0.1)$0.9 $1.1 
Six Month Periods Ended
Service cost$0.2 $0.3 $1.1 $1.1 
Interest cost0.9 1.1 1.2 1.2 
Expected return on assets(1.8)(2.1)(2.0)(1.8)
Settlement and curtailment0 0.9 0 0 
Recognized net actuarial loss0.7 0.5 1.5 1.6 
Net periodic benefit cost$0 $0.7 $1.8 $2.1 
Weighted average assumptions
Discount rate2.46%3.07%0.50 - 6.90%0.75 - 7.70%
Expected return on plan assets6.00%6.50%0.50 - 3.40%0.75 - 3.40%
Rate of compensation increaseN/AN/A2.25 - 6.00%2.25 - 6.00%
Contributions to our pension and defined benefit plans, including discretionary amounts, for the three month periods ended April 4, 2021 and March 29, 2020 were $0.9 million and $0.7 million, respectively; and for the six month periods ended April 4, 2021 and March 29, 2020, were $3.7 million and $1.5 million, respectively.
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in cash. In addition, at the discretion of the Board, executives maymillions, unaudited)
NOTE 15 – SHAREHOLDER’S EQUITY
Share Repurchases
The Company has a share repurchase program that is executed through purchases made from time to time be grantedeither in the open market or otherwise. On July 24, 2018, the Board of Directors approved a $1 billion common stock repurchase program. The authorization is effective for 36 months. As part of the share repurchase program, the Company purchased treasury shares in open market purchases at market fair value, private purchases from Company employees, significant shareholders or beneficial interest owners at fair value and through an accelerated share repurchase (“ASR”) agreement with a third-party financial institution. On May 4, 2021, subsequent to the balance sheet date, the Board of Directors approved a new $1 billion common stock options,repurchase program and terminated the previously approved repurchase program. The authorization is effective for 36 months.
On November 18, 2019, SBH entered into an ASR to repurchase $125.0 million of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $125.0 million to the financial institution using cash on hand and took delivery of 1.7 million shares which represented approximately 85% of restricted stock.

As of December 31, 2017, HRG had $1.0 ofthe total unrecognized compensation cost related to unvested share-based compensation agreements previously granted, which isshares the Company expected to be recognized over a weighted-average period of 1.18 years.
The fair values of HRG’s restricted stock and restricted stock unit awards are determinedreceive based on the market price at the time of HRG’s common stock on the grant date.initial delivery. The transaction was accounted for as an equity transaction. The fair value of HRG’sshares received initially of $106.3 million was recorded as a treasury stock option awardstransaction, with the remainder of $18.7 million recorded as a reduction to additional paid-in capital. Upon initial receipt of the shares, there was an immediate reduction in the weighted average common shares calculation for basic and warrants are determined usingdiluted earnings per share. On February 24, 2020, the Black-Scholes option pricing model.Company closed and settled the ASR resulting in an additional delivery of 0.3 million shares, with a fair value of $18.5 million. The total number of shares repurchased under the ASR program during the year ended September 30, 2020, was 2.0 million at an average cost per share of $61.59, 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.
The following assumptions were used insummarizes the determinationactivity of these grant date fair valuescommon stock repurchases under the program for HRG’s options awarded using the Black-Scholes option pricing model:
Three months ended December 31, 2016
Risk-free interest rate1.80% to 2.25%
Assumed dividend yield—%
Expected option term5.0 to 6.5 years
Volatility35.1% to 37.5%
There is no comparative in the table above as there were no options granted during the three monthsand six month periods ended December 31, 2017.April 4, 2021 and March 29, 2020:
April 4, 2021March 29, 2020
Three Month Periods Ended
(in millions except per share data)
Number of
Shares
Repurchased
Average
Price
Per Share
Amount
Number of
Shares
Repurchased
Average
Price
Per Share
Amount
Open Market Purchases0 $0 $0 2.7 $54.54 $149.2 
Private Purchases0 0 0 0 0 0 
ASR0 0 0 0.3 59.69 18.5 
Total Purchases0 $0 $0 3.0 $55.06 $167.7 

April 4, 2021March 29, 2020
Six Month Periods Ended
(in millions except per share data)
Number of
Shares
Repurchased		Average
Price
Per Share		AmountNumber of
Shares
Repurchased		Average
Price
Per Share		Amount
Open Market Purchases0 $0 $0 4.0 $56.97 $230.6 
Private Purchases0.6 65.27 42.3 0.2 62.30 9.2 
ASR0 0 0 2.0 61.47 124.8 
Total Purchases0.6 $65.27 $42.3 6.2 $58.57 $364.6 
NOTE 16 - SHARE BASED COMPENSATION
Share based compensation expense is recognized as General and Administrative Expenses on the Condensed Consolidated Statements of Income. The following is a summary of share based compensation expense for the three and six month periods ended April 4, 2021 and March 29, 2020 for SBH and SB/RH, respectively.
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
SBH$8.5 $13.1 $16.0 $26.0 
SB/RH$8.0 $12.6 $15.5 $25.4 
The weighted-average remaining contractual term of HRG’s outstanding stock option awards and warrants at December 31, 2017, was 4.06 years.
Spectrum Brands measures share-basedCompany recognizes share based compensation expense from the issuance of restricted stock unitsits Restricted Stock Units (“RSUs”), primarily under its Long-Term Incentive Plan ("LTIP"), based on the fair value of the awards, as determined by the market price of the Spectrum Brands’Company’s shares of common stock on the designated grant date and recognizes these costsrecognized on a straight-line basis over the requisite service period of the awards. Certain of Spectrum Brands’ restricted stock unitsRSUs are time-based grants that provide for either 3-year cliff vesting or graded vesting depending upon the vesting conditions and forfeitures provided by the grant. Certain RSUs are performance-based awards that are dependent upon achieving specified financial metrics (adjusted EBITDA, return on adjusted equity, and/or adjusted free cash flow) over a designated period of time. Additionally, the Company regularly issues individual RSU awards under its equity plan to its Board members and individual employees for recognition, incentive, or retention purposes, when needed, which are primarily conditional upon time-based service conditions and included as a component of share-based compensation.
In addition to restricted stock units, Spectrum Brands also providesthe prior year, the Company provided for a portion of its annual management incentive compensation plan ("MIP") to be paid in common stock of Spectrum Brands,the Company, in lieu of cash payment,payment. During the fourth quarter of the fiscal year ended September 30, 2020, the Company changed its MIP payout policy that previously provided for the issuance of stock for a designated pool of recipients to be fully funded through cash distribution with no stock issuance. Share based compensation expense associated with the annual MIP for the three and is considered a liability plan.six month periods ended March 29, 2020 was $4.3 million and $8.6 million. There was 0 portion of annual MIP recognized in the share based compensation expense for the three and six month periods ended April 4, 2021.
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 16 - SHARE BASED COMPENSATION (continued)
The total market value Spectrum Brands’ restricted stock units on the datesfollowing is a summary of the grants was approximately $36.0. activity in the Company RSUs during the six month period ended April 4, 2021:
SBHSB/RH
(in millions, except per share data)UnitsWeighted
Average
Grant Date
Fair Value		Fair
Value
at Grant
Date		UnitsWeighted
Average
Grant Date
Fair Value		Fair
Value
at Grant
Date
Time-based grants
Vesting in less than 24 months0.1 $74.43 $7.7 0.1 $74.45 $6.3 
Vesting in more than 24 months0.1 74.37 7.7 0.1 74.37 7.6 
Total time-based grants0.2 $74.40 $15.4 0.2 $74.41 $13.9 
Performance-based grants
Vesting in more than 24 months0.3 $74.36 $22.3 0.3 $74.36 $22.3 
Total performance-based grants0.3 $74.36 $22.3 0.3 $74.36 $22.3 
Total grants0.5 $74.38 $37.7 0.5 $74.38 $36.2 

SBHSB/RH
(in millions, except per share data)SharesWeighted
Average
Grant Date
Fair Value		Fair
Value
at Grant
Date		SharesWeighted
Average
Grant Date
Fair Value		Fair
Value
at Grant
Date
At September 30, 20201.4 $56.41 $79.3 1.4 $56.33 $77.7 
Granted0.5 74.38 37.7 0.5 74.38 36.2 
Forfeited(0.1)61.24 (1.0)(0.1)61.24 (1.0)
Vested(0.3)53.06 (17.1)(0.3)52.35 (15.8)
At April 4, 20211.5 $62.83 $98.9 1.5 $62.73 $97.1 
The remaining unrecognized pre-tax compensation cost related to restricted stock unitsfor SBH and SB/RH at December 31, 2017April 4, 2021 was $43.4.$59.2 million and $58.3 million, respectively.

NOTE 17 - INCOME TAXES
(14) Employee Benefit Obligations
Defined Benefit Plans
HRG
HRG has a noncontributory defined benefit pension plan (the “HRG Pension Plan”) covering certain of its former U.S. employees. During 2006, the HRG Pension Plan was frozen which caused all existing participants to become fully vested in their benefits.
Additionally, HRG has an unfunded supplemental pension plan (the “Supplemental Plan”) which provides supplemental retirement payments to certain former senior executives of HRG. The amounts of such payments equal the difference between the amounts received under the HRG Pension Plan and the amounts that would otherwise be received if HRG Pension Plan payments were not reduced as the result of the limitations upon compensation and benefits imposed by Federal law. Effective December 1994, the Supplemental Plan was frozen.
On November 15, 2017, the Company’s Board of Directors approved the termination of the HRG Pension Plan, which is a legacy plan. As of December 31, 2017 and September 30, 2017, the HRG Pension Plan’s projected benefit obligation was $15.4 and $15.6, respectively and the fair value of plan assets was $11.2 and $11.6, respectively. The HRG Pension Plan’s termination date is February 15, 2018. The Company expects to purchase annuity contracts in the third quarter of Fiscal 2018 to settle the Company’s obligations to the HRG Pension Plan’s participants. The Company accrued a $1.6 liability as of December 31, 2017 for the estimated additional cost to settle the HRG Pension Plan above the $4.2 unfunded benefit obligation amount.

(15) Income Taxes
For the three months ended December 31, 2017, the Company’s effective tax rate of 263.0% differed from the expected U.S. statutory tax rate of 35.0% and was significantly impacted by the Tax Cuts and Jobs Act (the “Tax Reform Act”). The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35.0% to a flat 21.0% rate, effective January 1, 2018. Duringfor the three monthsand six month periods ended December 31, 2017, Spectrum Brands recorded a provisional $206.7 tax benefit for revaluation of U.S. deferred tax assetsApril 4, 2021 and liabilities and a provisional $78.8 of income tax expense for the one-time deemed mandatory repatriation.March 29, 2020 was as follows:
For the three months ended December 31, 2016, the Company’s
Three Month Periods EndedSix Month Periods Ended
Effective tax rateApril 4, 2021March 29, 2020April 4, 2021March 29, 2020
SBH29.9 %24.3 %24.4 %15.9 %
SB/RH29.9 %23.5 %24.4 %15.0 %
The estimated annual effective tax rate of (15.4)% differedapplied to the three and six month periods ended April 4, 2021 differs from the expected U.S.US federal statutory tax rate of 35.0% and was impacted by21% principally due to income earned outside the U.S. pretax losses in the Company’s Corporate and Other segment where the tax benefits are not more-likely-than-not to be realized resulting in the recording of valuation allowance.

HRG
At December 31, 2017 and September 30, 2017, HRG had approximately $1,565.1 and $1,524.3, respectively, of gross U.S. Federal net operating loss (“NOL”) carryforwards (inclusive of $149.1 and $151.1, respectively, attributable to FGL’s non-life subsidiaries), which, if unused, will expire in tax years ending December 31, 2028 through 2037. At December 31, 2017 and September 30, 2017, HRG had approximately $423.1 and $315.9 of gross U.S. Federal capital loss carryforwards (inclusive of $15.0 and $15.0, respectively, attributable to FGL’s non-life subsidiaries), which, if unused, will expire in tax years December 31, 2019 through 2022. Approximately $387.9 of HRG’s gross U.S. Federal NOLthat is subject to limitations under Sections 382 of the Internal Revenue Code. The majority of HRG’s NOL and capital loss carryforwards have historically been subject to valuation allowances, as HRG concluded that all or a portion of the related tax benefits are not more-likely-than-not to be realized.
On December 22, 2017, the Tax Reform Act was signed into law. The legislation significantly changes U.S. tax, law by, among other things, lowering corporate income tax rates, implementing a dividends received deduction for dividends from foreign subsidiaries and imposing a tax on deemed repatriated accumulated earnings of foreign subsidiaries. The Tax Reform Act reducesincluding the U.S. corporate income tax rate from a maximum of 35.0% to a flat 21.0% rate, effective January 1, 2018. HRG is a calendar year taxpayer, therefore HRG will be using the flat 21.0% rate for the January 1 to September 30, 2018 tax period and 35.0% for the October 1 to December 31, 2017 tax period. However, Spectrum Brands files its U.S. tax returns on a September fiscal year basis, its U.S. tax rate for Fiscal 2018 will be a blended rate of 24.53%. In response to the enactment of the Tax Reform Act, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. SAB 118 allows registrants to record provisional amounts during a one year measurement period in a manner similar to accounting for business combinations. The Company has followed the SAB 118 guidance.
As a result of the new corporate tax rate, HRG is required to account for the effects of the change in tax law on its deferred tax balances as of the December 22, 2017 enactment date. HRG revalued its deferred tax balances applying the 21.0% tax rate based on the rate at which the deferred tax balances are expected to reverse in the future. As a result, HRG recognized a $287.2 reduction of tax benefits attributable to its net deferred tax assets. The reduction in tax benefits was fully offset by a reduction in the deferred tax asset valuation allowance. Accordingly, the revaluation of deferred at 21.0% has no impact on the accompanying Condensed Consolidated Statements of Operations for HRG, excluding Spectrum Brands, for the three months ended December 31, 2017. HRG’s valuation allowance at December 31, 2017 and September 30, 2017 totaled $430.8 and $703.2, respectively, (inclusive of $34.4 and $58.1, respectively, attributable to FGL’s non-life subsidiaries). The decrease in HRG’s valuation allowance was primarily due to the reduction of HRG’s deferred tax assets and liabilities as a result of the change in U.S. Federal tax rate, which is discussed further above. 
Spectrum Brands
Spectrum Brands revalued its ending net deferred tax liabilities at December 31, 2017 and recognized a provisional $206.7 tax benefit in its income from continuing operations for the three months ended December 31, 2017. Spectrum Brands determined the impact of the U.S. federal corporate income tax rate change on the U.S. deferred tax assets and liabilities is provisional because certain of the timing differences reversing at Spectrum Brands’ Fiscal 2018 blended rate must be estimated until the Fiscal 2018 reversing timing differences are known.
Spectrum Brands recognized the provisional tax impacts related to deemed repatriated earnings of $78.8 and the revaluation of deferred tax assets and liabilities mentioned above and included these amounts in the Condensed Consolidated Financial Statements for the three months ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions Spectrum Brands has made, additional regulatory guidance that may be issued, and actions Spectrum Brands may take as a result of the Tax Reform Act. The accounting is expected to be complete when the Fiscal 2018 U.S. corporate income tax return is filed in 2019.
As of December 31, 2017, Spectrum Brands recorded $41.4 of valuation allowance against its U.S. state NOLs. It is currently unclear which of the Tax Reform Act provisions will be adopted by U.S. states. State conformity to the provisions of the Tax Reform Act could have a material impact on the valuation allowance recorded on U.S. state NOLs.
The Tax Reform Act provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”). Spectrum Brands had an estimated $623.1 of undistributed foreign E&P subject to the deemed mandatory repatriation and recognized a provisional $78.8 of income tax expense in its net income from continuing operations for the three months ended December 31, 2017. The mandatory repatriation tax is payable over eight years. The repatriation tax liability is classified as “Other long-term liabilities” in the accompanying Condensed Consolidated Balance Sheets as of December 31, 2017. The provisional tax expense for the mandatory repatriation is based on currently available information and additional information needs to be prepared, obtained and analyzed in order to determine the final amount, including further analysis of certain foreign exchange gains or losses, earnings and profits, foreign tax credits, and estimated cash and cash equivalents as of the measurement dates in the Tax Reform Act. Tax effects for changes to these items will be recorded in a subsequent quarter, as discrete adjustments to Spectrum Brands’ income tax provision, once complete.

The Tax Reform Act provides for additional limitations on the deduction of business interest expense, effective with Spectrum Brands’ Fiscal 2019 tax year. Unused interest deductions can be carried forward and may be used in future years to the extent the interest limitation is not exceeded in those periods. It is possible that a portion of Spectrum Brands’ future U.S. interest expense could be nondeductible and impact Spectrum Brands’ effective tax rate.
The Tax Reform Act also contains additional limits on deducting compensation, including performance-based compensation, in excess of $1.0 paid to certain executive officers for any fiscal year, effective with Spectrum Brands’ Fiscal 2019 tax year. Spectrum Brands’ future compensation payments will be subject to these limits, which could impact Spectrum Brands’ effective tax rate.
Spectrum Brands continues to review the anticipated impacts of the global intangible low taxed income (“GILTI”), certain nondeductible expenses, foreign rates that differ from the US federal statutory rate, and base erosion anti-abusestate income taxes. The Company has U.S. net operating loss carryforwards, which do not allow it to take advantage of the foreign-derived intangible income (“FDII”) deduction. The Company’s federal effective tax rate on GILTI is therefore 21%.
On November 20, 2020, the U.S. Treasury and the Internal Revenue Service issued Final Regulations (“BEAT”Regulations”) under Internal Revenue Code Sections 245A and 951A related to the treatment of previously disqualified basis under the GILTI regime. The Regulations are effective for Fiscal 2022, but the Company can elect to apply them to Fiscal 2018 through Fiscal 2021. The Company expects to satisfy the requirements necessary to apply the Regulations retroactively and has therefore estimated and recorded a benefit of $5.3 million for the impact on Spectrum Brands, which are not effective until fiscal year 2019. Spectrum Brands has not recorded any impact associated with either GILTI or BEATyears prior to Fiscal 2021 in the six month period ended April 4, 2021. The Company also expects to apply the Regulations to Fiscal 2021 and has included the impact in the estimated annual effective tax rate forrate.
As of April 4, 2021, and September 30, 2020, there was $16.0 million and $1.8 million of income taxes payable on the three monthsSB/RH Condensed Consolidated Statements of Financial Position, payable to its parent company, calculated as if SB/RH were a separate taxpayer.

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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 18 – RELATED PARTY TRANSACTIONS
Energizer Holdings, Inc.
Effective as of the close of the GBL and GAC divestitures during the year ended December 31, 2018. The FASB allows an accounting policy electionSeptember 30, 2019, the Company and Energizer entered into a series of either recognizing deferred taxes for temporary differences expectedTSAs and reverse TSAs 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 reverse as GILTI in future years or treating such taxes as a current-period expense when incurred. Due tosupport both the complexity of calculating GILTI under the new law, Spectrum Brands has not determined which method they will apply.
Spectrum Brands has recognized the provisional tax impacts related to deemed repatriated earningstransferred GBL operations and the revaluation of deferred tax assets and liabilities and included these amounts in the Condensed Consolidated Financial Statements for the three months ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions Spectrum Brands has made, additional regulatory guidance that may be issued, and actions Spectrum Brands may take as a result of the Tax Reform Act.

(16) Related Party Transactions
On October 16, 2017, the Company entered into an engagement letter with Jefferies LLC (“Jefferies”), a wholly owned subsidiary of Leucadia National Corporation (“Leucadia”) a significant stockholder of HRG. Pursuant to the Jefferies engagement letter (as amended, the “Jefferies Engagement Letter”), Jefferies agreed to act as co-advisor to the Company (with the other co-advisors acting as lead financial advisor to the Company) with respect to the Company’s review of strategic alternatives. Under the Jefferies Engagement Letter, Jefferies is entitled to receive up to a $3.0 transaction fee, which may be increased by another $1.0 at the sole discretioncontinuing operations of the Company, respectively, within the various regions in which they operate. Charges associated with TSAs and reimbursementreverse TSAs are recognized as bundled service costs under a fixed fee structure by the respective service or function and geographic location and one-time pass-through charges, including warehousing, freight, among others, to and from Energizer that settle on a net basis between the two parties. Charges to Energizer for all reasonable outTSA services are recognized as a reduction of pocket expensesthe respective operating costs incurred by Jefferies in connection therewith. In addition, the Company has agreed to indemnify Jefferies for certain liabilities in connection with such engagement.

(17) Commitments and Contingencies
Legal and Environmental Matters
The Company and its subsidiaries are involved in litigation and claims arising out of their prior businesses and arising in the ordinary course out of their current businesses, which include, among other things, indemnification and other claims and litigations involving HRG’s and its subsidiaries’ business practices, transactions, workers compensation matters, environmental matters, and personal injury claims. However, based on currently available information, including legal defenses available to the Company and givenrecognized as a component of operating expense or cost of goods sold depending upon the functions being supported by the Company. Charges from Energizer for reverse TSA services are recognized as operating expenses or cost of goods sold depending upon the functions being supported by Energizer. Effective January 2, 2020, Energizer closed its divestiture of the European based Varta® consumer battery business in the EMEA region to Varta AG, which also transferred TSAs and reverse TSAs associated with the divested entities to be assumed by Varta AG. As a result, a portion of the TSA and reverse TSA charges with Energizer were transferred to Varta AG. The TSAs and reverse TSAs have an overall expected time period of 12 months following the close of the transactions with some variability in expiration dependent upon the completed transition of the respective service or function and its geographic location and provide up to 12 additional months for a total duration of up to 24 months. The Company has exited all outstanding TSAs and reverse TSAs with Energizer and Varta in January 2021.
During the three month period ended April 4, 2021, the Company recognized net gain of $0.1 million, consisting of TSA charges of $0.1 million. During the six month period ended April 4, 2021, the Company recognized net loss of $1.7 million, consisting of TSA charges of $0.9 million and reverse TSA costs of $2.6 million. During the three month period ended March 29, 2020, the Company recognized net loss of $1.5 million, consisting of TSA charges of $2.2 million and reverse TSA costs of $3.7 million. During the six month period ended March 29, 2020, the Company recognized net gain of $0.1 million, consisting of TSA charges of $6.6 million and reverse TSA costs of and $6.5 million.
In addition to the TSAs and reverse TSAs, the Company, Energizer and Varta AG will receive cash and/or 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 Energizer and Varta AG for any outstanding TSA and reverse TSA related services and net working capital attributable to commingled cash flow. As of April 4, 2021 and September 30, 2020, the Company had net receivable of $2.1 million and $5.4 million, respectively, with Energizer included in Other Receivables on the Company’s existing accrualsCondensed Statements of Financial Position. As of April 4, 2021 and related insurance coverage,September 30, 2020, the Company does not believe thathad net payable of $1.1 million and $1.0 million, respectively, with Varta AG included in Other Current Liabilities on the outcomeCompany’s Condensed Consolidated Statements of these legal, environmentalFinancial Position.
The Company’s H&G segment continued to manufacture certain GAC related products at its facilities and regulatory matters will havesell the products to Energizer as a material effectthird-party supplier on its financial position, resultsan ongoing basis, at inventory cost plus contracted markup, as agreed upon in the supply agreement. The supply agreement had a contracted term of operations or cash flows.
HRG
HRG24 months, and expired in January 2021 with no renewal. Material and inventory on hand to support the supply agreement is a defendant in various litigation matters, including litigation arising out of its legacy and/or disposed of businesses. HRG does not believe that anyrecognized as inventory of the matters or proceedings presently pending will haveCompany. During the three and six month periods ended April 4, 2021 the Company recognized $1.9 million and $6.0 million, respectively, of revenue attributable to the Energizer supply agreement as a material adverse effectcomponent of H&G revenue after completion of the GAC divestiture. During the three and six month periods ended March 29, 2020, the Company recognized $5.6 million and $10.9 million of revenue attributable to the Energizer supply agreement. As of April 4, 2021 and September 30, 2020, the Company had outstanding receivables of $0.1 million and $4.4 million, respectively, from Energizer in Trade Receivables, Net on its resultsthe Company’s Condensed Statements of operations, financial condition, liquidity or cash flows. Financial Position associated with the H&G supply agreement.
See Note 13 – Fair value of Financial Instruments for additional discussion above underon the heading “Legal and Environmental Matters”.Company’s investment in Energizer common stock.
Spectrum Brands
Spectrum BrandsNOTE 19 -COMMITMENTS AND CONTINGENCIES
The Company is a defendant in various litigation matters generally arising out of the ordinary course of business. Spectrum BrandsBased on information currently available, the Company does not believe that any of theadditional matters or proceedings presently pending will have a material adverse effect on its results of operations, financial condition, liquidity or cash flows.
EnvironmentalShareholder Litigation. On July 12, 2019, an amended consolidated class action complaint filed earlier in 2018 was filed in the United States District Court for the Western District of Wisconsin (the “Court”) by the Public School Teachers’ Pension & Retirement Fund of Chicago and the Cambridge Retirement against Spectrum Brands’ Legacy, Inc. (“Spectrum Legacy”). Spectrum BrandsThe complaint alleges that the defendants violated the Securities Exchange Act of 1934. The amended complaint added HRG Group, Inc. (“HRG”), the predecessor to the Company, as a defendant and asserted additional claims against the Company on behalf of a purported class of HRG shareholders. The class period of the consolidated amended complaint is from January 26, 2017 to November 19, 2018, and the plaintiffs seek an unspecified amount of compensatory damages, interest, attorneys’ and expert fees and costs. During the year ended September 30, 2020, the Company reached a proposed settlement resulting in an insignificant loss, net of third-party insurance coverage and payment, pending final approval by the Court. In February 2021, the Court declined to approve the proposed settlement without prejudice because the Court determined that as a procedural matter the plaintiff’s counsel had not taken the appropriate actions to be appointed to represent the purported class of HRG shareholders. The parties are discussing appropriate actions that could address the procedural deficiency, but there can be no assurance that it will be addressed or that a settlement on the same terms, or any other terms, will ultimately be reached and approved by the Court. In the event a settlement is not reached and approved, the Company intends to vigorously defend the litigation.
Environmental. The Company has provided for thean estimated costscost of $4.3 and $4.4$11.6 million as of December 31, 2017April 4, 2021 and September 30, 2017, respectively,2020, associated with environmental remediation activities at some of its current and former manufacturing sites. Spectrum Brands believes that any additional liabilitysites, included in excess of the amounts provided that may result from resolution of these matters, will not have a material adverse effectOther Long-Term Liabilities on the financial condition, results of operations or cash flows of Spectrum Brands.

Product Liability. Spectrum Brands may be named as a defendant in lawsuits involving product liability claims. Spectrum Brands 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 December 31, 2017 and September 30, 2017, Spectrum Brands recognized $4.0 and $5.3 in product liability accruals, respectively, included in “Other current liabilities” in the accompanying Condensed Consolidated Balance Sheets. Spectrum BrandsStatements 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 Spectrum Brands.the Company.
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 19 -COMMITMENTS AND CONTINGENCIES (continued)
Product Liability. The Company may be named as a defendant in lawsuits involving product liability claims. 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 April 4, 2021 and September 30, 2020, the Company recognized $4.4 million and $5.1 million in product liability, respectively, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position. The Company believes that any additional liability in excess of the amounts provided that may result from resolution of these matters will not have a material adverse effect on the consolidated financial condition, results of operations or cash flows of the Company.
Product Warranty. Spectrum BrandsThe Company recognizes an estimated liability for standard warranty on certain products when we recognize revenue on the sale of the warranted products is recognized.products. Estimated warranty costs incorporate replacement parts, products and delivery, and are recorded as a cost of goods sold at the time of product shipment based on historical and projected warranty claim rates, claims experience and any additional anticipated future costs on previously sold products. Spectrum BrandsThe Company recognized $5.7$11.4 million and $5.4$10.9 million of warranty accruals as of December 31, 2017April 4, 2021 and September 30, 2017,2020, respectively, included in “Other current liabilities” inOther Current Liabilities on the accompanying Condensed Consolidated Balance Sheets.Statements of Financial Position.
Product Safety Recall. On June 10, 2017, Spectrum Brands initiated a voluntary safety recallOther. During the six month period ended April 4, 2021, the Company recognized legal reserves at our H&G division of various rawhide chew products for dogs sold by Spectrum Brands dueapproximately $6.0 million attributable to possible chemical contamination. As a result, Spectrum Brands recognized a loss relatedsignificant and unusual non-recurring claims with no previous history or precedent, included in Other Current Liabilities on the Condensed Consolidated Statement of Financial Position.
NOTE 20 - SEGMENT INFORMATION
Net sales relating to the recall of $7.3segments for the three monthsand six month periods ended December 31, 2017,April 4, 2021 and March 29, 2020 are as follows:
Three Month Periods EndedSix Month Periods Ended
(in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
HHI$389.5 $329.1 $798.2 $626.8 
HPC297.9 232.7 676.4 554.8 
GPC293.6 236.9 569.1 442.7 
H&G168.8 139.1 251.0 185.0 
Net sales$1,149.8 $937.8 $2,294.7 $1,809.3 
The Chief Operating Decision Maker of the Company uses Adjusted EBITDA as the primary operating metric in evaluating the business and making operating decisions. EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from net income. Adjusted EBITDA further excludes:
•Stock based and other incentive compensation costs that consist of costs associated with long-term compensation arrangements and other equity based compensation based upon achievement of long-term performance metrics; and generally consist of non-cash, stock-based compensation. During the six month period ended April 4, 2021 and three and six month periods ended March 29, 2020, other incentive compensation includes certain incentive bridge awards issued due to changes in the Company’s LTIP that allow for cash based payment upon employee election but do not qualify for shared-based compensation. All bridge awards fully vested in November 2020. See Note 16 - Share Based Compensation in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further details;
•Restructuring and related charges, which comprisedconsist of inventory write-offsproject costs associated with the restructuring initiatives across the Company's segments. See Note 4 - Restructuring and Related Charges in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further details;
•Transaction related charges that consist of $1.6 for inventory at our distribution centers(1) transaction costs from qualifying acquisition transactions during the period, or subsequent integration related project costs directly associated with an acquired business; and production facilities(2) divestiture related transaction costs that were considered obsoleteare recognized in continuing operations and disposed, customer losses of $0.4 for returned or disposed product held by our customers, and $5.3post-divestiture separation costs consisting of incremental costs to facilitate separation of shared operations, including development of transferred shared service operations, platforms and personnel transferred and exiting of transition service arrangements (TSAs) and reverse TSAs. See Note 1 – Basis of Presentation & Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for disposalfurther details;
•Gains and operatinglosses attributable to the Company’s investment in Energizer common stock. During the three month period ended April 4, 2021, the Company sold its remaining shares in Energizer common stock. See Note 13 – Fair Value of Financial Instruments in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further details;
•Non-cash purchase accounting inventory adjustments recognized in earnings from continuing operations subsequent to an acquisition (when applicable);
•Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations (when applicable);
•Other adjustments primarily consisting of costs during a temporary shutdownattributable to (1) proposed settlement on outstanding litigation matters at our H&G division attributable to significant and subsequent start up of production facilities impacted by the recall. Spectrum Brands suspended production at facilities impacted by the product safety recall, completed a comprehensive manufacturing review and subsequently recommenced productionunusual non-recurring claims with no previous history or precedent realized during the fiscal yearsix month period ended September 30, 2017. The impacted production facilitiesApril 4, 2021; (2) legal and litigation costs associated with Salus during the three and six month periods ended April 4, 2021 and March 29, 2020 as they are subject to incremental costs during start-up requiring alternative treatment on affected product SKUs until appropriate regulatory approvals have been received. The amounts for customer losses reflect the costnot considered a component of the affectedcontinuing commercial products returnedcompany; (3) foreign currency attributable to or replaced by Spectrum Brands and the expected cost to reimburse customers for costs incurred by them related to the recall. The incremental costs incurred directly by Spectrum Brands do not include lost earnings associated with interruption of production at Spectrum Brands’ facilities, or the costs to put into place corrective and preventative actions at those facilities. Spectrum Brands’ estimates for losses related to the recall are provisional and were determined based on an assessment of information currently available and may be revised in subsequent periods as Spectrum Brands continues to work with its customers to substantiate claims received to date and any additional claims that may be received. There have been no lawsuits or claims filed against Spectrum Brands related to the recalled product.

(18) Segment Data
The Company follows the accounting guidance which establishes standards for reporting information about operating segments in interim and annual financial statements. The Company’s reportable business segments are organized in a manner that reflects how HRG’s management views those business activities. Accordingly, the Company currently presents the results from its business operations in two reporting segments: (i) Consumer Products and (ii) Corporate and Other. Refer to Note 20, Consolidating Financial Information, for disclosure of total assets for each segment.

The Company’s Corporate and Other segment includes the Company’s ownership of Salus, NZCH, HGI Funding and HGI Energy. The following schedules present the Company’s segment informationmulticurrency loans for the three monthsand six month periods ended December 31, 2017March 29, 2020, that were entered into with foreign subsidiaries in exchange for receipt of divestiture proceeds by the parent company and 2016:the distribution of the respective foreign subsidiaries’ net assets as part of the GBL and GAC divestitures; (4) expenses and cost recovery for flood damage at Company facilities in Middleton, Wisconsin during the three and six month periods ended March 29, 2020 and (5) incremental costs for separation of a key executive during the three and six month periods ended March 29, 2020;

27
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 20 - SEGMENT INFORMATION (continued)
  Three months ended December 31,
  2017 2016
Revenues:    
Consumer Products $646.5
 $602.3
Corporate and Other —
 —
Total revenues $646.5
 $602.3
     
Operating income:    
Consumer Products $34.0
 $61.5
Corporate and Other and eliminations (7.4) (20.2)
Consolidated operating income 26.6
 41.3
Interest expense (75.5) (78.7)
Other income, net 1.0
 1.0
Loss from continuing operations before income taxes (47.9) (36.4)
Income tax (benefit) expense (126.0) 5.6
Net income (loss) from continuing operations 78.1
 (42.0)
Income from discontinued operations, net of tax 500.8
 302.8
Net income 578.9
 260.8
Less: Net income attributable to noncontrolling interest 71.5
 48.6
Net income attributable to controlling interest $507.4
 $212.2
Segment Adjusted EBITDA for the reportable segments for SBH for the three and six month periods ended April 4, 2021 and March 29, 2020, are as follows:

Three Month Periods EndedSix Month Periods Ended
SBH (in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
HHI$73.4 $69.5 $171.6 $112.3 
HPC25.4 8.0 76.3 44.4 
GPC55.6 40.0 109.2 71.5 
H&G34.8 28.4 45.3 25.1 
Total Segment Adjusted EBITDA189.2 145.9 402.4 253.3 
Corporate8.3 5.5 17.5 10.8 
Interest expense65.5 35.5 102.2 70.4 
Depreciation and amortization38.7 36.4 74.4 78.0 
Share and incentive based compensation8.5 14.6 16.7 29.1 
Restructuring and related charges4.1 21.9 13.3 49.4 
Transaction related charges9.7 7.2 30.3 11.3 
(Gain) loss on Energizer investment(0.9)106.8 (6.9)68.3 
(Gain) loss on assets held for sale0 (7.0)0 25.7 
Write-off from impairment of intangible assets0 0 0 24.2 
Inventory acquisition step-up2.6 0 3.4 0 
Other0.2 3.2 6.0 1.3 
Income (loss) from operations before income taxes$52.5 $(78.2)$145.5 $(115.2)
Segment Adjusted EBITDA for reportable segments for SB/RH for the three and six month periods ended April 4, 2021 and March 29, 2020 are as follows:
(19) Earnings Per Share
Three Month Periods EndedSix Month Periods Ended
SB/RH (in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
HHI$73.4 $69.5 $171.6 $112.3 
HPC25.4 8.0 76.3 44.4 
GPC55.6 40.0 109.2 71.5 
H&G34.8 28.4 45.3 25.1 
Total Segment Adjusted EBITDA189.2 145.9 402.4 253.3 
Corporate8.1 2.3 16.7 7.2 
Interest expense65.6 35.3 102.4 70.0 
Depreciation and amortization38.7 36.4 74.4 78.0 
Share and incentive based compensation8.0 14.1 16.1 28.5 
Restructuring and related charges4.1 21.9 13.3 49.4 
Transaction related charges9.7 7.2 30.3 11.3 
(Gain) loss on Energizer investment(0.9)106.8 (6.9)68.3 
(Gain) loss on assets held for sale0 (7.0)0 25.7 
Write-off from impairment of intangible assets0 0 0 24.2 
Inventory acquisition step-up2.6 0 3.4 0 
Other0.1 3.0 5.9 0.8 
Income (loss) from operations before income taxes$53.2 $(74.1)$146.8 $(110.1)
28
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)
NOTE 21 - EARNINGS PER SHARE – SBH
The following table sets forthreconciliation of the computationnumerator and denominator of the basic and diluted earnings per share (“EPS”) (share amounts in thousands):
  Three months ended December 31,
  2017 2016
Net income (loss) from continuing operations attributable to controlling interest $28.8
 $(47.2)
Net income from discontinued operations attributable to controlling interest 478.6
 259.4
Net income attributable to controlling interest $507.4
 $212.2
     
     
Weighted-average common shares outstanding - basic and diluted 200,576
 199,185
Dilutive effect of unvested restricted stock and restricted stock units 89
 —
Dilutive effect of stock options 1,562
 —
Dilutive effect of warrants 101
 —
Weighted-average shares outstanding - diluted 202,328
 199,185
     
Net income per common share attributable to controlling interest:    
Basic income (loss) from continuing operations $0.14
 $(0.24)
Basic income from discontinued operations 2.39
 1.30
Basic $2.53
 $1.06
     
Diluted income (loss) from continuing operations $0.14
 $(0.24)
Diluted income from discontinued operations 2.37
 1.30
Diluted $2.51
 $1.06
The number ofcalculation and the anti-dilutive shares of common stock outstanding used in calculating the weighted average thereof reflects the actual number of HRG common stock outstanding, excluding unvested restricted stock.

The following were excluded from the calculation of “Diluted net income (loss) per common share attributable to controlling interest” because the as-converted effect of the unvested restricted stock and stock units, stock options and warrants would have been anti-dilutive (share amounts in thousands):
 Three months ended December 31,
 2017 2016
Unvested restricted stock and restricted stock units—
 1,326
Stock options—
 1,567
Anti-dilutive warrants—
 104

(20) Consolidating Financial Information
The following schedules present the Company’s accompanying Condensed Consolidated Balance Sheets information at December 31, 2017 and September 30, 2017, and accompanying Condensed Consolidated Statements of Operations information for the three monthsand six month periods ended December 31, 2017April 4, 2021 and 2016. These schedules present the individual segmentsMarch 29, 2020 are as follows:
Three Month Periods EndedSix Month Periods Ended
(in millions, except per share amounts)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Numerator
Net income (loss) from continuing operations attributable to controlling interest$37.7 $(58.4)$110.1 $(97.0)
(Loss) income from discontinued operations attributable to controlling interest(1.1)1.4 (1.4)4.3 
Net income (loss) attributable to controlling interest$36.6 $(57.0)$108.7 $(92.7)
Denominator
Weighted average shares outstanding - basic42.6 45.1 42.8 46.4 
Dilutive shares0.3 0 0.2 0 
Weighted average shares outstanding - diluted42.9 45.1 43.0 46.4 
Earnings per share
Basic earnings per share from continuing operations$0.88 $(1.29)$2.57 $(2.09)
Basic earnings per share from discontinued operations(0.02)0.03 (0.03)0.09 
Basic earnings per share$0.86 $(1.26)$2.54 $(2.00)
Diluted earnings per share from continuing operations$0.88 $(1.29)$2.56 $(2.09)
Diluted earnings per share from discontinued operations(0.03)0.03 (0.03)0.09 
Diluted earnings per share$0.85 $(1.26)$2.53 $(2.00)
Weighted average number of anti-dilutive shares excluded from denominator0 0.1 0 0.1 
29
Table of the Company and their contribution to the Condensed Consolidated Financial Statements. Amounts presented will not necessarily be the same as those in the individual financial statements of the Company’s subsidiaries due to adjustments for purchase accounting, income taxes and noncontrolling interests.
The Corporate and Other and eliminations column primarily reflects the parent company’s investment in its subsidiaries, invested cash portfolio and corporate debt, and the results of Salus and HGI Energy. Reflected in Corporate and Other is also $67.6 of negative book value of HGI Asset Management Holdings LLC as of December 31, 2017, which is primarily attributable to historical loan losses incurred by Salus. The elimination adjustments are for intercompany assets and liabilities, adjustments to align segment accounting policies with the consolidated basis, interest and dividends, the parent company’s investment in capital stocks of subsidiaries, and various reclasses of debit or credit balances to the amounts in consolidation. Purchase accounting adjustments have been pushed down to the appropriate subsidiary.


HRG Group, Inc. - Consolidating Balance Sheets Information
Contents
December 31, 2017 Consumer Products Corporate and Other and Eliminations  Total
Assets:      
Current assets:      
Cash and cash equivalents $137.9
 $1,509.7
 $1,647.6
Trade receivables, net 278.4
 —
 278.4
Other receivables, net 18.8
 64.2
 83.0
Inventories, net 580.7
 —
 580.7
Prepaid expenses and other current assets 56.2
 0.4
 56.6
Current assets of businesses held for sale 1,990.6
 —
 1,990.6
Total current assets 3,062.6
 1,574.3
 4,636.9
Property, plant and equipment, net 506.0
 0.7
 506.7
Goodwill 2,276.4
 —
 2,276.4
Intangibles, net 1,598.6
 —
 1,598.6
Deferred charges and other assets 61.2
 0.2
 61.4
Total assets $7,504.8
 $1,575.2
 $9,080.0
       
Liabilities and Equity:      
Current liabilities:      
Current portion of long-term debt $20.1
 $914.4
 $934.5
Accounts payable 320.7
 0.6
 321.3
Accrued wages and salaries 27.9
 3.6
 31.5
Accrued interest 40.7
 63.8
 104.5
Other current liabilities 118.1
 2.5
 120.6
Current liabilities of businesses held for sale 608.2
 —
 608.2
Total current liabilities 1,135.7
 984.9
 2,120.6
Long-term debt, net of current portion 3,959.2
 929.2
 4,888.4
Employee benefit obligations 34.4
 5.6
 40.0
Deferred tax liabilities 298.2
 —
 298.2
Other long-term liabilities 102.8
 2.4
 105.2
Total liabilities 5,530.3
 1,922.1
 7,452.4
Total shareholders’ equity 1,165.6
 (345.2) 820.4
Noncontrolling interests 808.9
 (1.7) 807.2
Total shareholders’ equity 1,974.5
 (346.9) 1,627.6
Total liabilities and equity $7,504.8
 $1,575.2
 $9,080.0

September 30, 2017 Consumer Products Corporate and Other and Eliminations Insurance Segment Discontinued Operations  Total
Assets:        
Current assets:        
Cash and cash equivalents $168.2
 $101.9
 $—
 $270.1
Trade receivables, net 266.0
 —
 —
 266.0
Other receivables, net 19.4
 0.3
 —
 19.7
Inventories, net 496.3
 —
 —
 496.3
Prepaid expenses and other current assets 54.2
 0.6
 —
 54.8
Current assets of businesses held for sale 603.0
 —
 28,326.2
 28,929.2
Total current assets 1,607.1
 102.8
 28,326.2
 30,036.1
Property, plant and equipment, net 503.6
 0.8
 —
 504.4
Goodwill 2,277.1
 —
 —
 2,277.1
Intangibles, net 1,612.0
 —
 —
 1,612.0
Deferred charges and other assets 43.5
 0.2
 —
 43.7
Noncurrent assets of businesses held for sale 1,376.4
 —
 —
 1,376.4
Total assets $7,419.7
 $103.8
 $28,326.2
 $35,849.7
         
Liabilities and Equity:        
Current liabilities:        
Current portion of long-term debt $19.4
 $142.0
 $—
 $161.4
Accounts payable 371.6
 1.5
 —
 373.1
Accrued wages and salaries 50.6
 5.5
 —
 56.1
Accrued interest 48.5
 29.5
 —
 78.0
Other current liabilities 123.4
 2.4
 —
 125.8
Current liabilities of businesses held for sale 499.9
 —
 26,350.7
 26,850.6
Total current liabilities 1,113.4
 180.9
 26,350.7
 27,645.0
Long-term debt, net of current portion 3,752.6
 1,791.4
 —
 5,544.0
Employee benefit obligations 34.4
 4.2
 —
 38.6
Deferred tax liabilities 493.2
 —
 —
 493.2
Other long-term liabilities 23.6
 2.6
 —
 26.2
Noncurrent liabilities of businesses held for sale 155.8
 —
 —
 155.8
Total liabilities 5,573.0
 1,979.1
 26,350.7
 33,902.8
Total shareholders’ equity 1,095.4
 (1,873.7) 1,536.3
 758.0
Noncontrolling interests 751.3
 (1.6) 439.2
 1,188.9
Total shareholders’ equity 1,846.7
 (1,875.3) 1,975.5
 1,946.9
Total liabilities and equity $7,419.7
 $103.8
 $28,326.2
 $35,849.7

HRG Group, Inc. - Consolidating Statements of Operations Information
Three months ended December 31, 2017 Consumer Products Corporate and Other and eliminations Insurance Segment Discontinued Operations  Total
Revenues:        
Net sales $646.5
 $—
 $—
 $646.5
Operating costs and expenses:        
Cost of goods sold 403.8
 —
 —
 403.8
Selling, acquisition, operating and general expenses 208.7
 7.4
 —
 216.1
Total operating costs and expenses 612.5
 7.4
 —
 619.9
Operating income 34.0
 (7.4) —
 26.6
Interest expense (38.6) (36.9) —
 (75.5)
Other income, net (1.3) 2.3
 —
 1.0
Loss from continuing operations before income taxes (5.9) (42.0) —
 (47.9)
Income tax (benefit) expense (126.0) —
 —
 (126.0)
Net income (loss) from continuing operations 120.1
 (42.0) —
 78.1
Income from discontinued operations, net of tax 40.9
 —
 459.9
 500.8
Net income 161.0
 (42.0) 459.9
 578.9
Less: Net income attributable to noncontrolling interest 66.1
 —
 5.4
 71.5
Net income attributable to controlling interest $94.9
 $(42.0) $454.5
 $507.4
Three months ended December 31, 2016 Consumer Products Corporate and Other and eliminations Insurance Segment Discontinued Operations  Total
Revenues:        
Net sales $602.3
 $—
 $—
 $602.3
Operating costs and expenses:        
Cost of goods sold 362.1
 —
 —
 362.1
Selling, acquisition, operating and general expenses 178.7
 20.2
 —
 198.9
Total operating costs and expenses 540.8
 20.2
 —
 561.0
Operating income 61.5
 (20.2) —
 41.3
Interest expense (43.0) (35.7) —
 (78.7)
Other income, net 1.0
 —
 —
 1.0
Loss from continuing operations before income taxes 19.5
 (55.9) —
 (36.4)
Income tax (benefit) expense 6.7
 (1.1) —
 5.6
Net income (loss) from continuing operations 12.8
 (54.8) —
 (42.0)
Income from discontinued operations, net of tax 52.4
 —
 250.4
 302.8
Net income 65.2
 (54.8) 250.4
 260.8
Less: Net income attributable to noncontrolling interest 27.5
 —
 21.1
 48.6
Net income attributable to controlling interest $37.7
 $(54.8) $229.3
 $212.2


Item 2.Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless otherwise indicated in this report (this “10-Q”) or the context requires otherwise, in this 10-Q, references to the “Company,” “HRG,” “we,” “us” or “our” refer to HRG Group, Inc. and, where applicable, its consolidated subsidiaries; “Fiscal 2018 Quarter” refers to the fiscal quarter ended December 31, 2017; “Fiscal 2017 Quarter” refers to the fiscal quarter ended December 31, 2016; “HGI Energy” refers to HGI Energy Holdings, LLC and, where applicable, its consolidated subsidiaries; “HGI Funding” refers to HGI Funding, LLC and, where applicable, its consolidated subsidiaries; “Salus” refers to Salus Capital Partners, LLC and, where applicable, its consolidated subsidiaries; “SBI” refers to Spectrum Brands, Inc. and, where applicable, its consolidated subsidiaries; and “Spectrum Brands” refers to Spectrum Brands Holdings, Inc. and, where applicable, its consolidated subsidiaries.
Introduction
This “Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations
Introduction
The following is management’s discussion of HRG Group, Inc. (“HRG,” “we,” “us,” “our”the financial results, liquidity and collectively with its subsidiaries, the “Company”)other key items related to our performance and should be read in conjunction with our unauditedthe Condensed Consolidated Financial Statements and related notes included elsewhere in Item 1 of this report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of HRG which was included with our annual reportQuarterly Report on Form 10-K filed with10-Q. Unless the Securities and Exchange Commission (the “SEC”) on November 20, 2017 (the “Form 10-K”). Certain statements we make under this Item 2 constitute “forward-looking statements” undercontext indicates otherwise, the Private Securities Litigation Reform Act of 1995. See “Forward-Looking Statements” in “Part II — Other Information” of this report. You should consider our forward-looking statements in light of our unaudited Condensed Consolidated Financial Statements, related notes, and other financial information appearing elsewhere in this report,term the Form 10-K and our other filings with the SEC.
HRG Overview
We“Company,” “we,” “our,” or “us” are a holding company that conducts our operations principally through our operating subsidiaries. As of December 31, 2017, our principal operations were conducted through our subsidiary that offers branded consumer products and related businesses (Spectrum Brands). In addition, we own 99.5% of NZCH Corporation (“NZCH”), a public shell company, and Salus, which was establishedused to serve as a secured asset-based lender and is in the process of completing the wind-down of its business. From timerefer to time, we may manage a portion of our available cash and engage in other activities through our wholly-owned subsidiaries, HGI Funding and HGI Energy.
We currently present the results of our operations in two reportable segments: (i) Consumer Products, which consists of Spectrum Brands; and (ii) Corporate and Other, which includes Salus, NZCH, HGI Funding and HGI Energy.
Through Spectrum Brands we areHoldings, Inc. and its subsidiaries ("SBH") and SB/RH Holdings, LLC and its subsidiaries (“SB/RH”), collectively.
Business Overview
The Company is a diversified global branded consumer products company with positions in the following major product lines and categories: consumer batteries, small appliances, global pet supplies, home and garden control products, personal care products, hardware and home improvement productsessentials company. We manage the businesses in four vertically integrated, product-focused segments: (i) Hardware & Home Improvement (“HHI”), (ii) Home and global auto care. Spectrum BrandsPersonal Care (“HPC”), (iii) Global Pet Care (“GPC”), and (iv) Home and Garden (“H&G”). The Company manufactures, markets and/or distributes its products in approximately 160 countriesglobally in the North America (“NA”), Europe, Middle East & Africa (“EMEA”), Latin America (“LATAM”) and Asia-Pacific (“APAC”) regions through a variety of trade channels, including retailers, wholesalers and distributors, original equipment manufacturers (“OEMs”), and construction companiescompanies. We enjoy strong name recognition in our regions under our various brands and hearing aid professionals.
Spectrum Brands’ operating performance is influenced by a number of factors including: general economic conditions; foreign exchange fluctuations; trends in consumer markets; consumer confidence and preferences; overallpatented technologies across multiple product line mix, including pricing and gross margin, which vary by product linecategories. Global and geographic region; pricingstrategic initiatives and financial objectives are determined at the corporate level. Each segment is responsible for implementing defined strategic initiatives and achieving certain financial objectives and has a president or general manager responsible for sales and marketing initiatives and the financial results for all product lines within that segment. See Note 20 – Segment Information for more information pertaining to segments of certain raw materials and commodities; energy and fuel prices; and general competitive positioning, especially as impacted by competitors’ advertising and promotional activities and pricing strategies.
Effective December 29, 2017, Spectrum Brands’ Board of Directors approved a plan to explore strategic alternatives, including the planned sale of Spectrum Brands’ Global Batteries & Appliances (“GBA”) segment. On January 15, 2018, subsequent to the endcontinuing operations. The following is an overview of the Fiscal 2018 Quarter, Spectrum Brands entered intoconsolidated business, by segment, summarizing product types and brands:
SegmentProductsBrands
HHI
Security: Residential locksets and door hardware including knobs, levers, deadbolts, handle sets, including electronic and connected locks.
Plumbing & Accessories: Kitchen and bath faucets and accessories.
Builders' Hardware: Hinges, metal shapes, security hardware, track and sliding door hardware, gate hardware.
Security: Kwikset®, Weiser®, Baldwin®, Tell Manufacturing®, and EZSET®
Plumbing & Accessories: Pfister®
Builders' Hardware: National Hardware®, FANAL®
HPC
Home Appliances: Small kitchen appliances including toaster ovens, coffeemakers, slow cookers, blenders, hand mixers, grills, food processors, juicers, toasters, bread makers, and irons.
Personal Care: Hair dryers, flat irons and straighteners, rotary and foil electric shavers, personal groomers, mustache and beard trimmers, body groomers, nose and ear trimmers, women's shavers, haircut kits and intense pulsed light hair removal systems.
Home Appliances: Black & Decker®, Russell Hobbs®, George Foreman®, Toastmaster®, Juiceman®, Farberware®, and Breadman®
Personal Care: Remington®, and LumaBella®
GPC
Companion Animal: Rawhide chews, dog and cat clean-up, training, health and grooming products, small animal food and care products, rawhide-free dog treats, and wet and dry pet food for dogs and cats.
Aquatics: Consumer and commercial aquarium kits, stand-alone tanks; aquatics equipment such as filtration systems, heaters and pumps; and aquatics consumables such as fish food, water management and care
Companion Animal: 8IN1® (8-in-1), Dingo®, Nature's Miracle®, Wild Harvest™, Littermaid®, Jungle®, Excel®, FURminator®, IAMS® (Europe only), Eukanuba® (Europe only), Healthy-Hide®, DreamBone®, SmartBones®, ProSense®, Perfect Coat®, eCOTRITION®, Birdola®, Digest-eeze®, Good Boy®, Meowee!®, Wildbird®, and Wafcol®
Aquatics: Tetra®, Marineland®, Whisper®, Instant Ocean®, GloFish®, OmegaOne® and OmegaSea®
H&G
Household: Household pest control solutions such as spider and scorpion killers; ant and roach killers; flying insect killers; insect foggers; wasp and hornet killers; and bedbug, flea and tick control products.
Controls: Outdoor insect and weed control solutions, and animal repellents such as aerosols, granules, and ready-to-use sprays or hose-end ready-to-sprays.
Repellents: Personal use pesticides and insect repellent products, including aerosols, lotions, pump sprays and wipes, yard sprays and citronella candles.
Household: Hot Shot®, Black Flag®, Real-Kill®, Ultra Kill®, The Ant Trap® (TAT), and Rid-A-Bug®.
Controls: Spectracide®, Garden Safe®, Liquid Fence®, and EcoLogic®.
Repellents: Cutter® and Repel®.
SB/RH is a definitive acquisition agreement with Energizer Holdings, Inc. (“Energizer”) pursuant to which Energizer has agreed to acquire from Spectrum Brands its Global Battery and Lighting (“GBL”) business for an aggregate purchase price of $2.0 billion in cash (the “GBL Purchase Price”), subject to customary purchase price adjustments. The GBL business is part of Spectrum Brands’ GBA business, which also includes shared operations and assets of the remaining components of Spectrum Brands’ Home and Personal Care (“HPC”) business. Spectrum Brands is actively marketing its HPC business with interested parties for a separate transaction(s) expected to be entered into and consummated prior to December 31, 2018. As a result, Spectrum Brands’ assets and liabilities associated with the GBA segment have been classified as held for sale in the accompanying Condensed Consolidated Balance Sheets and the respective operations of the GBA segment have been classified as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Cash Flows; and reported separately for all periods presented as the disposition represents a strategic shift that will have a major effect on Spectrum Brands’ operations and financial results. See Note 3, Divestitures to our Condensed Consolidated Financial Statements included in Part I - Item 1. Financial Statements for additional information.

On November 30, 2017, Fidelity & Guaranty Life (“FGL”), a former majoritywholly owned subsidiary of the Company, completed its merger (the “FGL Merger”SBH. Spectrum Brands, Inc. (“SBI”) with CF Corporation and its related entities (collectively, the “CF Entities”) pursuant to its previously disclosed Agreement and Plan of Merger (the “FGL Merger Agreement”). Pursuant to the FGL Merger Agreement, except for certain shares specified in the FGL Merger Agreement, each issued and outstanding share of common stock of FGL was automatically cancelled and converted into the right to receive $31.10 in cash. In addition, pursuant to a Share Purchase Agreement, on November 30, 2017, Front Street Re (Delaware) Ltd., a wholly-owned subsidiary of HRG, soldSB/RH incurred certain debt guaranteed by SB/RH and domestic subsidiaries of SBI. See Note 10 - Debt for more information pertaining to debt. The reportable segments of SB/RH are consistent with the segments of SBH.

30
Table of Contents
COVID-19
The COVID-19 pandemic and the resulting regulations and other disruptions to both demand and supply may have a substantial impact on the commercial operations of the Company or impairment of the Company’s net assets. Such impacts may include, but are not limited to, volatility of demand for our products, disruptions and cost implications in manufacturing and supply arrangements, inability of third parties to meet obligations under existing arrangements, and significant changes to the CF Entities (such sale, the “Front Street Sale”) allpolitical and economic environments in which we manufacture, sell, and distribute our products.
As of the issueddate of this report, we continue to be classified as an essential business in the jurisdictions that have mandated closures of non-essential businesses, and outstanding shares of its former wholly-owned subsidiaries, Front Street Re Cayman Ltd.therefore have been allowed to remain open and Front Street Re Ltd (such entities together, “Front Street”, and together with FGL, the “Insurance Operations”). The purchase price for the Front Street Sale was $65.0 million, subjectcontinue to reduction for customary transaction expenses. In addition, $6.5 million of the purchase price was deposited in escrow for a period of 15 months to support any indemnification claims that might be made (if any) by the CF Entities. Pursuantoperate to the Share Purchase Agreement, on December 5, 2017,extent possible under existing regulations with any limitation in production output being short-term in nature. Despite the supply implications experienced in the prior year, the Company repaid the $92.0 million of notes (such notes, the “HGI Energy Notes”) issued by HGI Energy, which were held directlycontinues to experience continued customer demand. While demand in general for our products remains strong, our teams continue to monitor demand disruption and indirectly by Front Street and FGL. Following the completion of the FGL Merger and the Front Street Sale, HRG no longer has any equity interest in FGL or Front Street and our former Insurance Operations segment is presented as discontinued operations for prior periods.
Finally, as previously disclosed, on May 24, 2017, HRG, FS Holdco II Ltd. (“FS Holdco”) and the CF Entities entered into an agreement (the “338 Agreement”) pursuant to which the CF Entities agreed that FS Holdco may, at its option, cause the relevant CF Entity and FS Holdco to make a joint election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended, with respect to the FGL Merger and the deemed share purchases of FGL’s subsidiaries (the “338 Tax Election”). Pursuant to the 338 Agreement, if FS Holdco elects to make the 338 Tax Election, FS Holdco and/or CF Corporation will be required to make a payment for the election to the other. As of December 31, 2017, HRG expects to receive an estimated $26.6 million net payment from CF Corporation, which has been included in the estimated consideration HRG expects to receive from the FGL Merger. Pursuant to the 338 Agreement, FS Holdco may elect to exercise the 338 Tax Election at any time until 10 business days after final calculation of such incremental tax costs or savings, as the case may be, and it currently expects to exercise such election within such period. Nonetheless, there can be no assurance as to the level of demand that FS Holdco will makeprevail throughout the election and/fiscal year. A large portion of our customers continue to operate and sell our products, with some customers reducing operations due to closures or that HRGreduced store hours. There have also been changes in consumer needs and spending during the COVID-19 pandemic, which have resulted in a limited number of change orders and reduced spending. Currently, we have not identified, and will receivecontinue to monitor for, any substantive risk attributable to customer credit and have not experienced a significant impact from permanent store closures or retail bankruptcies. We believe the expected benefitsseverity and duration of such election. In addition, the estimated payment described hereinCOVID-19 pandemic to be uncertain and may contribute to retail volatility and consumer purchase behavior changes. The magnitude of the financial impact on our quarterly and annual results is preliminary ashighly dependent on the duration of December 31, 2017the COVID-19 pandemic and subject to change, and HRG does not undertake any obligation to update such estimate.
Tax Reform
On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a dividends received deduction for dividends from foreign subsidiaries and imposing a tax on deemed repatriated accumulated earnings of foreign subsidiaries. The Tax Reform Act reduceshow quickly the U.S. corporate income tax rate fromand global economies resume normal operations.
The COVID-19 pandemic has not had a maximummaterially negative impact on the Company’s liquidity position. The sweeping nature of 35%COVID-19 pandemic makes it extremely difficult to a flat 21% rate, effective January 1, 2018. The Company has recognizedpredict the provisional tax impacts related to deemed repatriated earningslong-term ramifications on our financial condition and results of operations. However, the revaluation of deferred tax assets and liabilities and included these amounts in its Condensed Consolidated Financial Statements for the Fiscal 2018 Quarter. The ultimatelikely overall economic impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Reform Act. See Note 15, Income Taxes to our Condensed Consolidated Financial Statements included in Part I - Item 1. Financial Statements for additional information.

Highlights for the Fiscal 2018 Quarter:
Significant Transactions and Activity
Consumer Products Segment
As disclosed above, effective December 29, 2017, Spectrum Brands approved a plan to explore strategic alternatives, including the planned sale of the GBA segment. As a result, Spectrum Brands’ GBA segment has been classified as held for sale in the accompanying Condensed Consolidated Balance Sheets and as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Cash Flows; and reported separately for all periods presented.
On January 15, 2018, Spectrum Brands entered into a definitive acquisition agreement (the “GBL Sale Agreement”) with Energizer. On the terms and subjectCOVID-19 pandemic to the conditions set forth in the GBL Sale Agreement, Energizer has agreedU.S. and global economies remains uncertain. We continue to acquire from Spectrum Brands its GBL business for the GBL Purchase Price of $2.0 billion, subjectactively monitor our global cash balances and liquidity, and if necessary, could reinitiate mitigating efforts to customary purchase price adjustments.
Corporatemanage non-critical capital spending and Other
On December 5, 2017, the Company paid off the $92.0 million aggregate principal amount of the HGI Energy Notes.
On December 15, 2017, HRG issued a notice of redemptionassess operating spend to redeem all $864.4 million outstanding principal amount of its 7.875% Senior Secured Notes due 2019 (the “7.875% Notes”) at a redemption price equalpreserve cash and liquidity. We continue to 100.00% of the principal amount thereof, plus accruedgenerate operating cash flows to meet our short-term liquidity needs, and unpaid interestwe expect to maintain access to the redemption date. The 7.875% Notes were redeemed on January 16, 2018.
Discontinued Operations
On November 30, 2017, FGL completed the FGL Merger with CF Corporation and the CF Entities pursuant to the FGL Merger Agreement. Pursuant to the FGL Merger Agreement, except for certain shares specified in the FGL Merger Agreement, each issued and outstanding share of common stock of FGL was automatically cancelled and converted into the right to receive $31.10 in cash.
In addition, pursuant to a Share Purchase Agreement, on November 30, 2017, Front Street Re (Delaware) Ltd. sold to the CF Entities all of the issued and outstanding shares of Front Street for $65.0 million, which is subject to reduction for customary transaction expenses. In addition, $6.5 million of the purchase price was deposited in escrow for a period of 15 months to support any indemnification claims that might be made (if any) by the CF Entities.
As previously disclosed, on May 24, 2017, HRG, FS Holdco and the CF Entities entered into the 338 Agreement pursuant to which the CF Entities agreed that FS Holdco may, at its option, cause the relevant CF Entity and FS Holdco to make a joint 338 Tax Election. Pursuant to the 338 Agreement, if FS Holdco elects to make the 338 Tax Election, FS Holdco and/or CF Corporation will be required to make a payment for the election to the other. As of December 31, 2017, HRG expects to receive an estimated $26.6 million net payment from CF Corporation, which has been included in the estimated consideration HRG expects to receive from the FGL Merger. Pursuant to the 338 Agreement, FS Holdco may elect to exercise the 338 Tax Election at any time until 10 business days after final calculation of such incremental tax costs or savings, as the case may be, and it currently expects to exercise such election within such period. Nonetheless,capital markets, although there can be no assurance that FS Holdco will make the election and/or that HRG will receive the expected benefits of such election. In addition, the estimated payment described herein is preliminary as of December 31, 2017 and subjectour ability to change, and HRG doesdo so. We have also not undertakeobserved any obligation to update such estimate.
Key financial highlights
Net income from continuing operations attributable to controlling interest increased $76.0 million to $28.8 million, or $0.14 per basic and diluted common share attributable to controlling interest in the Fiscal 2018 Quarter, compared to net loss from continuing operations attributable to controlling interest of $47.2 million, or $0.24 per basic and diluted common share attributable to controlling interest in the Fiscal 2017 Quarter. The increase in net income per share was primarilymaterial impairments due to the a higher income tax benefit due toCOVID-19 pandemic.
We expect the Tax Cuts and Jobs Act recorded during the Fiscal 2018 Quarter offset by lower operating profit.
Corporate cash and investments were approximately $1.5 billion at December 31, 2017. On January 16, 2018, $864.4 million was used to redeem the 7.875% Notes.
Our Consumer Products segment’s operating income for the Fiscal 2018 Quarter decreased $27.5 million, or 44.7%, to $34.0 million from $61.5 million for the Fiscal 2017 Quarter. The decrease was primarily due to an $18.2 million increase in restructuring and related charges primarily attributable to restructuring initiatives in the hardware and home improvement and global auto care product lines and incremental costs of $7.3 million from the rawhide safety recall.
Our Consumer Products segment’s adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA” see additional discussion included in the “Non-GAAP Measurements” section below) of $105.7 million increased

slightly compared to Adjusted EBITDA of $105.2 million for the Fiscal 2017 Quarter. Adjusted EBITDA margin represented 16.3% of sales as compared to 17.5% in the Fiscal 2017 Quarter.
Our Corporate and Other segment’s operating loss for the Fiscal 2018 Quarter decreased $12.8 million to $7.4 million from $20.2 million for the Fiscal 2017 Quarter primarily due to a decrease in corporate stock-based compensation and payroll and bonus expenses.
During the Fiscal 2018 Quarter, we received cash dividends of approximately $17.5 million from our subsidiaries, including $14.4 million and $3.1 million from Spectrum Brands and FGL, respectively. As a resultultimate significance of the close of the FGL Merger, the Company will not receive any additional dividends from FGL.

Results of Operations
Presented below is a table that summarizesimpact on our financial condition, results of operations, and comparescash flows will be dictated by the amountlength of time that such circumstances continue, which will ultimately depend on the unforeseeable duration and severity of the change betweenCOVID-19 pandemic and any governmental and public actions taken in response.
Acquisitions
On October 26, 2020, the fiscal periods (in millions):
 Fiscal Quarter
 2018 2017 Increase / (Decrease)
Revenues:     
Consumer Products$646.5
 $602.3
 $44.2
Total revenues$646.5
 $602.3
 $44.2
      
Operating income:     
Consumer Products$34.0
 $61.5
 $(27.5)
Corporate and Other and eliminations(7.4) (20.2) 12.8
Consolidated operating income26.6
 41.3
 (14.7)
Interest expense(75.5) (78.7) 3.2
Other income, net1.0
 1.0
 —
Loss from continuing operations before income taxes(47.9) (36.4) (11.5)
Income tax (benefit) expense(126.0) 5.6
 (131.6)
Net income (loss) from continuing operations78.1
 (42.0) 120.1
Income from discontinued operations, net of tax500.8
 302.8
 198.0
Net income578.9
 260.8
 318.1
Less: Net income attributable to noncontrolling interest71.5
 48.6
 22.9
Net income attributable to controlling interest$507.4
 $212.2
 $295.2
Revenues. RevenuesCompany completed the acquisition of Armitage Pet Care Ltd ("Armitage") for the Fiscal 2018 Quarter increased $44.2 million, or 7.3%, to $646.5 million from $602.3 million for the Fiscal 2017 Quarter. The increase was due to higher net sales from our Consumer Products segment.
Consolidated operating income. Consolidated operating income for the Fiscal 2018 Quarter decreased $14.7 million, or 35.6%, to $26.6 million from $41.3 million for the Fiscal 2017 Quarter. The decrease was primarily driven by an $18.2 million increase in restructuring and related charges primarily attributable to restructuring initiatives in the hardware and home improvement and global auto care product lines and incremental costs of $7.3 million from the rawhide safety recall.
Interest expense.Interest expense decreased $3.2 million to $75.5 million for the Fiscal 2018 Quarter from $78.7 million for the Fiscal 2017 Quarter primarily attributable to non-recurring financing costs associated with$187.7 million. Armitage is a premium on redemptionpet treats and toys business in Nottingham, United Kingdom including a portfolio of brands that include Armitage's dog treats brand, Good Boy®, cat treats brand, Meowee!®, and Wildbird® bird feed products, among others, that are predominantly sold within the 6.375% Notes at par value due November 15, 2020 during the Fiscal 2017 Quarter.
Other income, net.Other income was $1.0 million for the Fiscal 2018 Quarter and the Fiscal 2017 Quarter.
Income Taxes.Our tax rates are affected by many factors, including our mix of worldwide earnings related to operations in various taxing jurisdictions, changes in tax legislation and the character of our income.
For the Fiscal 2018 Quarter, our effective tax rate of 263.0% differed from the expected U.S. statutory tax rate of 35.0% and was significantly impacted by the Tax Reform Act.United Kingdom. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35.0% to a flat 21.0% rate, effective January 1, 2018. During the Fiscal 2018 Quarter, the Consumer Products segment recorded a provisional $206.7 million tax benefit for revaluation of U.S. deferred taxnet assets and liabilities and a provisional $78.8 millionresults of income tax expense foroperations of Armitage, since the one-time deemed mandatory repatriation on post-1986 undistributed foreign subsidiary earnings and profits.
For the Fiscal 2017 Quarter, our effective tax rateacquisition date of (15.4)% differed from the expected U.S. statutory tax rate and was primarily impacted by U.S. pretax losses in the Company’s Corporate and Other segment where the tax benefitsOctober 26, 2020, are not more-likely-than-not to be realized resulting in the recording of valuation allowance.
See Note 15, Income Taxes to our Condensed Consolidated Financial Statements included in Part I - Item 1. Financial Statements for additional information.
Income from discontinued operations, net of tax. Income from discontinued operations, net of tax for the Fiscal 2018 Quarter was $500.8 million compared to $302.8 million for the Fiscal 2017 Quarter. The $198.0 million increase was driven by a $209.5 million increase related to the Insurance Operations offset by a $11.5 million decrease related to the Consumer Products segment. The $209.5 million increase related to the Insurance Operations was driven by the reclassification of $445.9 million of accumulated other comprehensive income related to FGL, partially offset by a $158.7 million increase in the write-down of the carrying value of the assets of businesses held for sale to fair value less cost to sell and a $77.7 million decrease in income attributable to the Insurance Operations.

The Company recorded $14.2 million of write-downs on FGL and Front Street during the Fiscal 2018 Quarter. Following the completion of the FGL Merger, the Company recorded a $445.9 million adjustment to reclassify the accumulated other comprehensive income related to FGL that was previously included in the Company’s stockholders equity, which resulted in an increase in net income from discontinued operations. There was no net effect onCondensed Consolidated Statements of Income and reported within the total stockholders equity as a result of this adjustment.
The $11.5 million decrease in income from discontinued operations, net of tax related to the Consumer ProductsGPC reporting segment was primarily driven by lower operating income.
Noncontrolling Interest.The net income attributable to noncontrolling interest reflects the share of the net income of our subsidiaries, which are not wholly-owned, attributable to the noncontrolling interest. Such amount varies in relation to such subsidiary’s net income or loss for the periodthree and six month periods ended April 4, 2021.
On March 10, 2020, the percentage interest not owned by HRG.

Consumer Products Segment
Acquisitions
The following acquisition activity hasCompany entered into an asset purchase agreement with Omega Sea, LLC (“Omega”), a significant impact onmanufacturer and marketer of premium fish foods and consumable goods for the comparability of the financial results of our Consumer Products segment:
•
PetMatrix - On June 1, 2017, Spectrum Brands completed the acquisition of PetMatrix, LLC (“PetMatrix”), a manufacturer and marketer of rawhide-free dog chews consistinghome and commercial aquarium markets, primarily of the DreamBone and SmartBonesbrands. The results of PetMatrix’s operations are included in the Company’s Condensed Consolidated Statements of Operations for the Fiscal 2018 Quarter.
GloFish - On May 12, 2017, Spectrum Brands completed the acquisition of assets consisting of the GloFish operations, including transferOmega brand, for a purchase price of the GloFish brand, related intellectual property and operating agreements (“GloFish”). The GloFish operations consist of the development and licensing of fluorescent fish for sale through retail and online channels.approximately $16.9 million. The results of GloFish’sOmega’s operations are included in the Company’s Condensed Consolidated Statements of OperationsIncome and reported within the GPC reporting segment for the Fiscal 2018 Quarter.
three and six month periods ended April 4, 2021 and for the three and six month periods ended March 29, 2020 since the acquisition date.
Spectrum BrandsOn April 20, 2021, the Company entered into an agreement to acquire all ownership interests in For Life Products, LLC as part of the Company's H&G segment, for a purchase price of approximately $300 million. For Life Products, LLC is a leading manufacturer in the household cleaning, maintenance, and restoration products sold under the Rejuvenate® brand. The transaction is expected to close in the second half of the 2021 fiscal year, subject to customary closing conditions, including expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
See Note 3 – Acquisitions in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for more information.
Divestitures
On March 29, 2020, the Company completed the sale of its DCF production facility and distribution center in Coevorden, Netherlands for cash proceeds of $29.0 million received during the year ended September 30, 2020, resulting in a loss on Coevorden Operations held for sale of $25.7 million and impairment of intangible assets of $24.2 million associated with the commercial DCF business following the divestiture during the six month period ended March 29, 2020. See Note 2 – Divestitures in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for more information on the assets and liabilities classified as held for sale and discontinued operations.
Restructuring Activity
We continually seeksseek to improve itsour operational efficiency, match theour manufacturing capacity, and product costs to market demand and better utilize itsour manufacturing resources. Spectrum Brands hasWe have undertaken various initiatives to reduce manufacturing and operating costs, which may have a significant impact on the comparability of financial results on the accompanying Condensed Consolidated Financial Statements.condensed consolidated financial statements. The most significant of these initiatives are:
GAC Business Rationalization Initiative,is the Global Productivity Improvement Program, which began during the fiscal year ended September 30, 20162019 and has been substantially completed as of December 31, 2017;
PET Rightsizing Initiative, which began duringcontinued through the fiscal yearthree and six month periods ended September 30, 2017 and is anticipated to be incurred through September 30, 2018; and
HHI Distribution Center Consolidation, which began during the fiscal year ended September 30, 2017 and is anticipated to be incurred through September 30, 2018.
April 4, 2021. See Note 5, “Restructuring4 - Restructuring and Related Charges”Charges in the Notes to ourthe Condensed Consolidated Financial Statements, included elsewhere in Part Ithis Quarterly Report for more information.
Refinancing Activity
Refinancing activity has a significant impact on the comparability of financial results of the condensed consolidated financial statements. On March 3, 2021, the Company completed its offering of $500.0 million aggregate principal amount of its 3.875% Notes and entered into a new Term Loan Facility in the aggregate principal amount of $400.0 million, and redeemed $250.0 million of the 6.125% Notes and $550.0 million of the 5.75% Notes, with a make whole premium of $23.4 million and write-off of unamortized debt issuance costs of $7.9 million recognized as interest expense during the three and six month periods ended April 4, 2021. See Note 10 - Item 1.Debt to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further restructuring and related activity.
Presented below is a table that summarizes the results of operations of our Consumer Products segment and compares the amount of the change between the fiscal periods (in millions):more information.
31
 Fiscal Quarter
 2018 2017 Increase / (Decrease)
Net sales$646.5
 $602.3
 $44.2
Cost of goods sold403.8
 362.1
 41.7
Consumer products segment gross profit242.7
 240.2
 2.5
Selling, acquisition, operating and general expenses208.7
 178.7
 30.0
Operating income - Consumer Products segment$34.0
 $61.5
 $(27.5)
Net sales.Net sales for the Fiscal 2018 Quarter increased $44.2 million, or 7.3%, to $646.5 million from $602.3 million for the Fiscal 2017 Quarter mainly due to (i) increases in organic net sales in hardware and home improvement products, (ii) positive effect
Table of acquisitions of PetMatrix and GloFish of $24.8 million, and (iii) positive effect of foreign exchange rates of $7.5 million, which were partially offset by the decreases in the global pet supplies product line. Organic net sales excludes the impact of foreign currency translation and acquisitions, and is considered a non-GAAP measurement (See “Non-GAAP Measures” section below for reconciliation of net sales to organic net sales).

Consolidated net sales by product line for each of those respective periods are as follows (in millions):
Contents
  Fiscal Quarter
Product line net sales 2018 2017 Variance % Variance
Hardware and home improvement products $325.9
 $288.8
 $37.1
 12.8 %
Global pet supplies 202.4
 194.2
 8.2
 4.2 %
Global auto care 68.9
 69.5
 (0.6) (0.9)%
Home and garden control products 49.3
 49.8
 (0.5) (1.0)%
Total net sales to external customers $646.5
 $602.3
 $44.2
 7.3 %
The following table details the principal components of the change in the Consumer Products segment net sales from the Fiscal 2017 Quarter to the Fiscal 2018 Quarter (in millions):
  Net Sales
Fiscal 2017 Quarter Net sales $602.3
Increase due to acquisitions 24.8
Increase in hardware and home improvement products 35.0
Decrease in home and garden control products (0.5)
Decrease in global auto care (1.2)
Decrease in global pet supplies (21.4)
Foreign currency impact, net 7.5
Fiscal 2018 Quarter Net sales $646.5
Net sales in hardware and home improvement products increased $37.1 million, or 12.8%, for the Fiscal 2018 Quarter compared to the Fiscal 2017 Quarter, with an increase in organic net sales of $35.0 million, or 12.1%, mainly attributable to an increase in security and locksets of $32.7 million due to increased market share and promotional volumes with traditional retail, increased volumes through e-commerce channels with Amazon promotions, and expanded distribution through Spectrum Brands’ home builder channel; and plumbing accessories increased $3.1 million due to promotional volumes and new product introductions with significant retail partners.
Net sales and organic sales in home and garden control products decreased $0.5 million, or 1.0%, for the Fiscal 2018 Quarter compared to the Fiscal 2017 Quarter, primarily attributable to decreases in lawn and garden control products of $3.5 million due to timing of distribution for seasonal orders with key retail partners; offset by a $1.5 million increase in repellent products due to inventory replenishment after recent hurricane activity in the U.S. and growth in e-commerce channels; and a $1.5 million increase in household insect control products due to increased volumes for recent hurricane activity in the U.S., partially offset by timing of distribution for seasonal orders with key retail partners.
Net sales in global auto care decreased $0.6 million, or 0.9%, for the Fiscal 2018 Quarter compared to the Fiscal 2017 Quarter, with an organic sales decrease of $1.2 million, or 1.7%, primarily driven by decreased sales in refrigerant products of $1.4 million due to early purchasing by customers in the prior period in anticipation of commodity cost increases; partially offset by increases in auto performance products and other by $0.4 million due to market growth in EMEA.
Net sales in global pet supplies increased $8.2 million, or 4.2%, for the Fiscal 2018 Quarter compared to the Fiscal 2017 Quarter, with an organic net sales decrease of $21.4 million, or 11.0% mainly due to decreases in companion animal sales of $14.1 million, excluding the impact of acquisition sales of $23.0 million from PetMatrix; a decrease in NA of $7.7 million driven by lower volumes after the pet safety recall, reduced listings and retail inventory reductions with specialty pet retailers; and a decrease in EMEA of $5.7 million due to the exit of a pet food tolling agreement. In addition, aquatic organic net sales decreased $7.3 million excluding the impact of acquisition sales of $1.8 million from GloFish, primarily due to product category softness in NA from slower POS and reduction in distribution with retailers.
Cost of goods sold / Consumer products segment gross profit.Consumer products segment gross profit, representing net consumer products sales minus consumer products cost of goods sold, increased $2.5 million from $240.2 million for the Fiscal 2017 Quarter to $242.7 million for the Fiscal 2018 Quarter. The increase in gross profit is due to the increase in sales volume from hardware and home improvement products and acquisition sales in global pet supplies product lines. Gross profit margin for the Fiscal 2018 Quarter decreased to 37.5% from 39.9% in the Fiscal 2017 Quarter primarily attributable to incremental costs and operating inefficiencies in the hardware and home improvement and global auto care product lines along with increased production costs associated with start-up costs on facilities impacted by the product safety recall in the global pet supplies product line.
Selling, acquisition, operating and general expenses. Selling, acquisition, operating and general expenses increased by $30.0 million, or 16.8%, to $208.7 million for the Fiscal 2018 Quarter, from $178.7 million for the Fiscal 2017 Quarter due to an increase in selling and general and administrative expenses of $9.5 million primarily due to the incremental costs from the acquisitions in the prior year and pet safety recall; an increase in restructuring and related charges of $17.5 million related to

the HHI restructuring initiative, and an increase in acquisition and integration related charges of $1.9 million primarily due to integration of PetMatrix and GloFish.
Corporate and Other Segment
Presented below is a table that summarizes the results of operations of our Corporate and Other segment and compares the amount of the change between the fiscal periods (in millions):
 Fiscal Quarter
 2018 2017 Increase / Decrease
Selling, acquisition, operating and general expenses$7.4
 $20.2
 $(12.8)
Operating loss - Corporate and Other segment$(7.4) $(20.2) $12.8
Selling, acquisition, operating and general expenses. Presented below is a table that summarizes the Selling, acquisition, operating and general expenses of our Corporate and Other segment by product line, and compares the amount of the change between the fiscal periods (in millions):
 Fiscal Quarter
Selling, acquisition, operating and general expenses2018 2017 Increase / (Decrease)
Corporate$7.3
 $15.5
 $(8.2)
Asset management0.1
 4.7
 (4.6)
Selling, acquisition, operating and general expenses - Corporate and Other segment$7.4
 $20.2
 $(12.8)
Corporate
Selling, acquisition, operating and general expenses decreased $8.2 million to $7.3 million for the Fiscal 2018 Quarter from $15.5 million for the Fiscal 2017 Quarter. The decrease was primarily due to a decrease in payroll and bonus expenses of $4.6 million due to headcount reduction and a decrease in stock-based compensation expense of $1.9 million.
Asset Management
Selling, acquisition, operating and general expenses decreased $4.6 million to $0.1 million for the Fiscal 2018 Quarter from $4.7 million for the Fiscal 2017 Quarter. The decrease in selling, acquisition, operating and general expenses was primarily due to a decrease in impairments and loan loss provision expenses on the asset-based loan portfolio of $2.9 million. Also contributing to the decrease were the effects of the ongoing wind-down of Salus’ business.

Non-GAAP Measurements
Our Consumer Products segment’sconsolidated and segment results contain non-GAAP metrics such as organic net sales, and Adjusted EBITDA.adjusted EBITDA (“Earnings Before Interest, Taxes, Depreciation, Amortization”). While Spectrum Brands believeswe believe organic net sales and Adjustedadjusted EBITDA are useful supplemental information, such adjusted results are not intended to replace the Company’sour financial results in accordance with generally accepted accounting principlesAccounting Principles Generally Accepted in the United States (“GAAP”) or the GAAP financial results of our Consumer Products segment and should be read in conjunction with those GAAP results.
Organic Net Sales — Consumer Products
OrganicSales. We define organic net sales is defined as net sales excluding the effect of changes in foreign currency exchange rates and impact from acquisitions (when applicable). Spectrum Brands’ management believesWe believe this non-GAAP measure provides useful information to investors because it reflects regional and operating segment performance from Spectrum Brands’our activities without the effect of changes in currency exchange rate and acquisitions. Spectrum Brands usesWe use organic net sales as one measure to monitor and evaluate theirour regional and segment performance. Organic growth is calculated by comparing organic net sales to net sales in the prior year. The effect of changes in currency exchange rates is determined by translating the period’s net sales using the currency exchange rates that were in effect during the prior comparative period. Net sales are attributed to the geographic regions based on the country of destination. Spectrum Brands excludesWe exclude net sales from acquired businesses in the current year for which there are no comparable sales in the prior period.

year. The following is a reconciliation of reported net sales to organic net sales for the Fiscal 2018 Quarterthree and six month periods ended April 4, 2021 compared to net sales for the Fiscal 2017 Quarter:three and six month periods ended March 29, 2020:
Three Month Periods Ended
(in millions, except %)		April 4, 2021
Net SalesEffect of Changes in CurrencyNet Sales Excluding Effect of Changes in CurrencyEffect of Acquisitions
Organic
Net Sales
Net Sales
March 29, 2020
Variance
HHI$389.5 $(3.2)$386.3 $— $386.3 $329.1 $57.2 17.4 %
HPC297.9 (8.7)289.2 — 289.2 232.7 56.5 24.3 %
GPC293.6 (6.1)287.5 (26.8)260.7 236.9 23.8 10.0 %
H&G168.8 — 168.8 — 168.8 139.1 29.7 21.4 %
Total$1,149.8 $(18.0)$1,131.8 $(26.8)$1,105.0 $937.8 167.2 17.8 %

Six Month Periods Ended
(in millions, except %)
April 4, 2021
Net SalesEffect of Changes in CurrencyNet Sales Excluding Effect of Changes in CurrencyEffect of Acquisitions
Organic
Net Sales
Net Sales
March 29, 2020
Variance
HHI$798.2 $(4.7)$793.5 $— $793.5 $626.8 $166.7 26.6 %
HPC676.4 (14.2)662.2 — 662.2 554.8 107.4 19.4 %
GPC569.1 (10.3)558.8 (47.1)511.7 442.7 69.0 15.6 %
H&G251.0 — 251.0 — 251.0 185.0 66.0 35.7 %
Total$2,294.7 $(29.2)$2,265.5 $(47.1)$2,218.4 $1,809.3 409.1 22.6 %

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Table of Contents
Fiscal 2018 Quarter Net Sales Fiscal 2018 Quarter Effect of Changes in Currency Net Sales Excluding Effect of Changes in Currency Effect of Acquisitions Organic Net Sales
Fiscal 2018 Quarter		 Net Sales Fiscal 2017 Quarter Variance % Variance
Hardware and home improvement products $325.9
 $(2.1) $323.8
 $—
 $323.8
 $288.8
 $35.0
 12.1 %
Global pet supplies 202.4
 (4.8) 197.6
 (24.8) 172.8
 194.2
 (21.4) (11.0)%
Global auto care 68.9
 (0.6) 68.3
 —
 68.3
 69.5
 (1.2) (1.7)%
Home and garden control products 49.3
 —
 49.3
 —
 49.3
 49.8
 (0.5) (1.0)%
Total $646.5
 $(7.5) $639.0
 $(24.8) $614.2
 $602.3
 $11.9
 2.0 %
Adjusted EBITDA
Adjusted EBITDA is aand Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metricmeasures used by Spectrum Brands that Spectrum Brands’ management, believes provideswhich we believe provide useful information to investors because it reflectsthey reflect ongoing operating performance and trends of our segments, excluding certain non-cash based expenses and/or non-recurring items during each of the comparable periods. ItThey also facilitatesfacilitate comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA is also used for determining compliance with Spectrum Brands’the Company’s debt covenants. See Note 10, Debt, to our Condensed Consolidated Financial Statements included in Part I - Item 1. Financial Statements for additional details.
EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from our Consumer Products segment’s net income. Adjusted EBITDA further excludes: (1) stock-based
•Stock based and other incentive compensation expense as it is a non-cashcosts that consist of costs associated with long-term compensation arrangements and other equity based compensation cost, see based upon achievement of long-term performance metrics; and generally consist of non-cash, stock-based compensation. During the six month period ended April 4, 2021 and three and six month periods ended March 29, 2020, other incentive compensation includes certain incentive bridge awards issued due to changes in the Company’s LTIP that allow for cash based payment upon employee election but do not qualify for shared-based compensation. All bridge awards fully vested in November 2020. See Note 13, Stock-Based16 - Share Based Compensation in the Notes to ourthe Condensed Consolidated Financial Statements, included elsewhere in Part Ithis Quarterly Report, for further details;
•Restructuring and related charges, which consist of project costs associated with the restructuring initiatives across the Company's segments. See Note 4 - Item 1.Restructuring and Related Charges in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further details; (2) acquisition and integration costs
•Transaction related charges that consist of (1) transaction costs from qualifying acquisition transactions during the period, or subsequent integration related project costs directly associated with an acquired business; and (2) divestiture related transaction costs that are recognized in continuing operations and post-divestiture separation costs consisting of incremental costs to facilitate separation of shared operations, including development of transferred shared service operations, platforms and personnel transferred and exiting of transition service arrangements (TSAs) and reverse TSAs. See Note 1 – Basis of Presentation & Significant Accounting Policies in the acquired business, see Note 4, Acquisition and Integration CostsNotes to ourthe Condensed Consolidated Financial Statements, included elsewhere in Part I - Item 1. Financial Statementsthis Quarterly Report, for further details; (3) restructuring
•Gains and related charges, which consistlosses attributable to the Company’s investment in Energizer common stock. During the three month period ended April 4, 2021, the Company sold its remaining shares in Energizer common stock. See Note 13 – Fair Value of project costs associated with restructuring initiatives, see Note 5, Restructuring and Related Charges,Financial Instruments in the Notes to ourthe Condensed Consolidated Financial Statements, included elsewhere in Part I - Item 1. Financial Statementsthis Quarterly Report, for further details; (4) non-cash
•Non-cash purchase accounting inventory adjustments recognized in earnings from continuing operations subsequent to an acquisition (when applicable); (5) non-cash
•Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations (when applicable);
•Other adjustments primarily consisting of costs attributable to (1) proposed settlement on outstanding litigation matters at our H&G division attributable to significant and (6) other adjustments as further discussed.
Duringunusual non-recurring claims with no previous history or precedent realized during the Fiscal 2018 Quarter, other adjustments consisted of estimated costs for a non-recurring voluntary recall of rawhide products (see Note 17, Commitmentssix month period ended April 4, 2021; (2) legal and Contingencies, to our Condensed Consolidated Financial Statements included in Part I - Item 1. Financial Statements for further details) and professional fees associated with non-acquisition based strategic initiatives of our Consumer Products segment. During the Fiscal 2017 Quarter, other adjustments consisted oflitigation costs associated with Salus during the exitingthree and six month periods ended April 4, 2021 and March 29, 2020 as they are not considered a component of the continuing commercial products company; (3) foreign currency attributable to multicurrency loans for the three and six month periods ended March 29, 2020, that were entered into with foreign subsidiaries in exchange for receipt of divestiture proceeds by the parent company and the distribution of the respective foreign subsidiaries’ net assets as part of the GBL and GAC divestitures; (4) expenses and cost recovery for flood damage at Company facilities in Middleton, Wisconsin during the three and six month periods ended March 29, 2020 and (5) incremental costs for separation of a key executive coupled withduring the onboardingthree and six month periods ended March 29, 2020;
Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of a key executive at Spectrum Brands.reported net sales for the respective period and segment.

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Table of Contents
The table below showsfollowing is a reconciliation of net income to Adjusted EBITDA for the Consumer Products segment (in millions):three month periods ended April 4, 2021 and March 29, 2020 for SBH.
SPECTRUM BRANDS HOLDINGS, INC.
(in millions)		HHIHPCGPCH&GCorporateConsolidated
Three Month Period Ended April 4, 2021
Net income from continuing operations$65.0 $11.0 $38.7 $29.9 $(107.8)$36.8 
Income tax expense— — — — 15.7 15.7 
Interest expense— — — — 65.5 65.5 
Depreciation and amortization8.6 11.8 9.6 4.9 3.8 38.7 
EBITDA73.6 22.8 48.3 34.8 (22.8)156.7 
Share and incentive based compensation— — — — 8.5 8.5 
Restructuring and related charges(0.2)1.5 0.6 — 2.2 4.1 
Transaction related charges— 1.1 4.1 — 4.5 9.7 
Gain on Energizer investment— — — — (0.9)(0.9)
Inventory acquisition step-up— — 2.6 — — 2.6 
Other— — — — 0.2 0.2 
Adjusted EBITDA$73.4 $25.4 $55.6 $34.8 $(8.3)$180.9 
Net Sales$389.5 $297.9 $293.6 $168.8 $— $1,149.8 
Adjusted EBITDA Margin18.8 %8.5 %18.9 %20.6 %— 15.7 %
Three Month Period Ended March 29, 2020
Net income (loss) from continuing operations$60.8 $(6.2)$27.2 $23.0 $(164.0)$(59.2)
Income tax benefit— — — — (19.0)(19.0)
Interest expense— — — — 35.5 35.5 
Depreciation and amortization8.5 9.0 9.8 5.2 3.9 36.4 
EBITDA69.3 2.8 37.0 28.2 (143.6)(6.3)
Share and incentive based compensation— — — — 14.6 14.6 
Restructuring and related charges0.2 1.7 6.4 0.2 13.4 21.9 
Transaction related charges— 2.7 3.6 — 0.9 7.2 
Loss on Energizer investment— — — — 106.8 106.8 
Gain on assets held for sale— — (7.0)— — (7.0)
Other— 0.8 — — 2.4 3.2 
Adjusted EBITDA$69.5 $8.0 $40.0 $28.4 $(5.5)$140.4 
Net Sales$329.1 $232.7 $236.9 $139.1 $— $937.8 
Adjusted EBITDA Margin21.1 %3.4 %16.9 %20.4 %— 15.0 %

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Table of Contents
  Fiscal Quarter
Reconciliation to reported net income: 2018 2017 Increase / (Decrease)
Reported net income - Consumer Products segment $120.1
 $12.8
 $107.3
Interest expense 38.6
 43.0
 (4.4)
Income tax (benefit) expense (126.0) 6.7
 (132.7)
Depreciation of properties 18.0
 14.6
 3.4
Amortization of intangibles 15.0
 15.4
 (0.4)
     EBITDA - Consumer products segment 65.7
 92.5
 (26.8)
Stock-based compensation 3.8
 7.2
 (3.4)
Acquisition and integration costs 5.2
 3.3
 1.9
Restructuring and related charges 20.4
 2.2
 18.2
Pet safety recall 7.3
 —
 7.3
Inventory acquisition step-up 0.8
 —
 0.8
Other 2.5
 —
 2.5
      Adjusted EBITDA - Consumer Products segment $105.7
 $105.2
 $0.5
Our Consumer Products segment’sThe following is a reconciliation of net income to Adjusted EBITDA for the six month periods ended April 4, 2021 and March 29, 2020 for SBH.
SPECTRUM BRANDS HOLDINGS, INC.
(in millions)		HHIHPCGPCH&GCorporateConsolidated
Six Month Period Ended April 4, 2021
Net income from continuing operations$154.5 $49.2 $72.7 $29.4 $(195.8)$110.0 
Income tax expense— — — — 35.5 35.5 
Interest expense— — — — 102.2 102.2 
Depreciation and amortization17.1 20.6 19.3 9.9 7.5 74.4 
EBITDA171.6 69.8 92.0 39.3 (50.6)322.1 
Share and incentive based compensation— — — — 16.7 16.7 
Restructuring and related charges— 4.1 2.1 — 7.1 13.3 
Transaction related charges— 2.4 11.7 — 16.2 30.3 
Gain on Energizer investment— — — — (6.9)(6.9)
Inventory acquisition step-up— — 3.4 — — 3.4 
Other— — — 6.0 — 6.0 
Adjusted EBITDA$171.6 $76.3 $109.2 $45.3 $(17.5)$384.9 
Net Sales$798.2 $676.4 $569.1 $251.0 $— $2,294.7 
Adjusted EBITDA Margin21.5 %11.3 %19.2 %18.0 %— 16.8 %
Six Month Period Ended March 29, 2020
Net income (loss) from continuing operations$95.0 $18.8 $(26.0)$14.4 $(199.1)$(96.9)
Income tax benefit— — — — (18.3)(18.3)
Interest expense— — — — 70.4 70.4 
Depreciation and amortization16.6 17.8 25.9 10.3 7.4 78.0 
EBITDA111.6 36.6 (0.1)24.7 (139.6)33.2 
Share and incentive based compensation— — — — 29.1 29.1 
Restructuring and related charges0.7 2.8 16.7 0.4 28.8 49.4 
Transaction related charges— 4.3 5.0 — 2.0 11.3 
Loss on Energizer investment— — — — 68.3 68.3 
Loss on assets held for sale— — 25.7 — — 25.7 
Write-off from impairment of intangible assets— — 24.2 — — 24.2 
Other— 0.7 — — 0.6 1.3 
Adjusted EBITDA$112.3 $44.4 $71.5 $25.1 $(10.8)$242.5 
Net Sales$626.8 $554.8 $442.7 $185.0 $— $1,809.3 
Adjusted EBITDA Margin17.9 %8.0 %16.2 %13.6 %— 13.4 %


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Table of Contents
The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended April 4, 2021 and March 29, 2020 for SB/RH.
SB/RH HOLDINGS, LLC
(in millions)		HHIHPCGPCH&GCorporateConsolidated
Three Month Period Ended April 4, 2021
Net income from continuing operations$65.0 $11.0 $38.7 $29.9 $(107.3)$37.3 
Income tax expense— — — — 15.9 15.9 
Interest expense— — — — 65.6 65.6 
Depreciation and amortization8.6 11.8 9.6 4.9 3.8 38.7 
EBITDA73.6 22.8 48.3 34.8 (22.0)157.5 
Share and incentive based compensation— — — — 8.0 8.0 
Restructuring and related charges(0.2)1.5 0.6 — 2.2 4.1 
Transaction related charges— 1.1 4.1 — 4.5 9.7 
Gain on Energizer investment— — — — (0.9)(0.9)
Inventory acquisition step-up— — 2.6 — — 2.6 
Other— — — — 0.1 0.1 
Adjusted EBITDA$73.4 $25.4 $55.6 $34.8 $(8.1)$181.1 
Net Sales$389.5 $297.9 $293.6 $168.8 $— $1,149.8 
Adjusted EBITDA Margin18.8 %8.5 %18.9 %20.6 %— 15.8 %
Three Month Period Ended March 29, 2020
Net income (loss) from continuing operations$60.8 $(6.2)$27.2 $23.0 $(161.4)$(56.6)
Income tax benefit— — — — (17.5)(17.5)
Interest expense— — — — 35.3 35.3 
Depreciation and amortization8.5 9.0 9.8 5.2 3.9 36.4 
EBITDA69.3 2.8 37.0 28.2 (139.7)(2.4)
Share and incentive based compensation— — — — 14.1 14.1 
Restructuring and related charges0.2 1.7 6.4 0.2 13.4 21.9 
Transaction related charges— 2.7 3.6 — 0.9 7.2 
Loss on Energizer investment— — — — 106.8 106.8 
Gain on assets held for sale— — (7.0)— — (7.0)
Other— 0.8 — — 2.2 3.0 
Adjusted EBITDA$69.5 $8.0 $40.0 $28.4 $(2.3)$143.6 
Net Sales$329.1 $232.7 $236.9 $139.1 $— $937.8 
Adjusted EBITDA Margin21.1 %3.4 %16.9 %20.4 %— 15.3 %


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Table of Contents
The following is a reconciliation of net income to Adjusted EBITDA for the six month periods ended April 4, 2021 and March 29, 2020 for SB/RH.
SB/RH HOLDINGS, LLC
(in millions)		HHIHPCGPCH&GCorporateConsolidated
Six Month Period Ended April 4, 2021
Net income from continuing operations$154.5 $49.2 $72.7 $29.4 $(194.8)$111.0 
Income tax expense— — — — 35.8 35.8 
Interest expense— — — — 102.4 102.4 
Depreciation and amortization17.1 20.6 19.3 9.9 7.5 74.4 
EBITDA171.6 69.8 92.0 39.3 (49.1)323.6 
Share based compensation— — — — 16.1 16.1 
Restructuring and related charges— 4.1 2.1 — 7.1 13.3 
Transaction related charges— 2.4 11.7 — 16.2 30.3 
Gain on Energizer investment— — — — (6.9)(6.9)
Inventory acquisition step-up— — 3.4 — — 3.4 
Other— — — 6.0 (0.1)5.9 
Adjusted EBITDA$171.6 $76.3 $109.2 $45.3 $(16.7)$385.7 
Net Sales$798.2 $676.4 $569.1 $251.0 $— $2,294.7 
Adjusted EBITDA Margin21.5 %11.3 %19.2 %18.0 %— 16.8 %
Six Month Period Ended March 29, 2020
Net income (loss) from continuing operations$95.0 $18.8 $(26.0)$14.4 $(195.7)$(93.5)
Income tax benefit— — — — (16.6)(16.6)
Interest expense— — — — 70.0 70.0 
Depreciation and amortization16.6 17.8 25.9 10.3 7.4 78.0 
EBITDA111.6 36.6 (0.1)24.7 (134.9)37.9 
Share and incentive based compensation— — — — 28.5 28.5 
Restructuring and related charges0.7 2.8 16.7 0.4 28.8 49.4 
Transaction related charges— 4.3 5.0 — 2.0 11.3 
Loss on Energizer investment— — — — 68.3 68.3 
Loss on assets held for sale— — 25.7 — — 25.7 
Write-off from impairment of intangible assets— — 24.2 — — 24.2 
Other— 0.7 — — 0.1 0.8 
Adjusted EBITDA$112.3 $44.4 $71.5 $25.1 $(7.2)$246.1 
Net Sales$626.8 $554.8 $442.7 $185.0 $— $1,809.3 
Adjusted EBITDA Margin17.9 %8.0 %16.2 %13.6 %— 13.6 %

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Table of Contents
Consolidated Results of Operations
The following is summarized consolidated results of operations for SBH for the three and six month periods ended April 4, 2021 and March 29, 2020.
(in millions, except %)Three Month Periods EndedVarianceSix Month Periods EndedVariance
April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net sales$1,149.8 $937.8 $212.0 22.6 %$2,294.7 $1,809.3 $485.4 26.8 %
Gross profit404.0 328.9 75.1 22.8 %826.3 598.0 228.3 38.2 %
Gross profit margin35.1 %35.1 %— bps36.0 %33.1 %290 bps
Operating expenses287.2 261.2 26.0 10.0 %586.0 576.0 10.0 1.7 %
Interest expense65.5 35.5 30.0 84.5 %102.2 70.4 31.8 45.2 %
Other non-operating (income) expense, net(1.2)110.4 (111.6)n/m(7.4)66.8 (74.2)n/m
Income tax expense (benefit)15.7 (19.0)34.7 n/m35.5 (18.3)53.8 n/m
Net income (loss) from continuing operations36.8 (59.2)96.0 n/m110.0 (96.9)206.9 n/m
(Loss) income from discontinued operations, net of tax(1.1)1.4 (2.5)n/m(1.4)4.3 (5.7)n/m
Net income (loss)35.7 (57.8)93.5 n/m108.6 (92.6)201.2 n/m
n/m = not meaningful
Net Sales. The following is a summary of net sales by segment for the three and six month periods ended April 4, 2021 and March 29, 2020 and the principal components of changes in net sales for the respective periods.
(in millions, except %)Three Month Periods EndedVarianceSix Month Periods EndedVariance
April 4, 2021March 29, 2020April 4, 2021March 29, 2020
HHI$389.5 $329.1 $60.4 18.4 %$798.2 $626.8 $171.4 27.3 %
HPC297.9 232.7 65.2 28.0 %676.4 554.8 121.6 21.9 %
GPC293.6 236.9 56.7 23.9 %569.1 442.7 126.4 28.6 %
H&G168.8 139.1 29.7 21.4 %251.0 185.0 66.0 35.7 %
Net Sales$1,149.8 $937.8 212.0 22.6 %$2,294.7 $1,809.3 485.4 26.8 %

(in millions)Three Month Periods EndedSix Month Periods Ended
Net Sales for the period ended March 29, 2020$937.8 $1,809.3 
Increase in HHI57.2 166.7 
Increase in HPC56.5 107.4 
Increase in GPC23.8 69.0 
Increase in H&G29.7 66.0 
Acquisition sales26.8 47.1 
Foreign currency impact, net18.0 29.2 
Net Sales for the period ended April 4, 2021$1,149.8 $2,294.7 
Gross Profit. Gross profit for the three month period increased $0.5due to higher volumes across all segments, positive productivity and cost improvements, plus favorable product mix with consistent gross profit margin due to increased inflation and shipping costs plus benefits from retrospective tariff exclusions in the prior year. Gross profit and gross profit margin for the six month period increased due to sales volumes across all segments, positive productivity and cost improvements, with lower restructuring and depreciation costs due to the exiting GPC facilities in LATAM in the prior year, partially offset by increased inflation and shipping costs and benefits in the prior year from retrospective tariff exclusions.
Operating Expenses. Operating expenses for the three month period increased due to an increase in selling, general and administrative expenses of $30.3 million or 0.5%,largely attributable to $105.7higher volumes, increased marketing, incentive and distributions costs plus an increase in transaction related costs of $2.5 million with a gain on disposition of the Coevorden operations of $7.0 million in the Fiscal 2018 Quarter as compared to $105.2 million in the Fiscal 2017 Quarter primarily driven by (i) a $3.4 million increase in the global

pet supplies product line due to improved product mix and margin from acquired businesses and (ii) a $0.8 million increase in the hardware and home improvement product line primarily driven by an increase in sales volume from materials inflation, foreign exchange rates, product mix and operational inefficiencies;prior year, partially offset by a decrease in restructuring and related charges of $5.0 million in global auto care$16.2 million. Operating expenses for the six month period increased due to an increase in selling and general and administrative expenses of $62.6 million attributable to higher volumes and increased market and distribution costs and an increase in transaction related costs of $19.0 million; offset by a decrease in restructuring and related charges of $24.7 million and the recognition of a loss on assets held for sale of $25.7 million and a $24.2 million write-off from impairment of intangible assets associated with the Coevorden divestiture in the prior year. See Note 4 – Restructuring and Related Charges in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail on restructuring. See Note 1 - Basis of Presentation and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail on transaction-related charges.
Interest Expense. Interest expense for the three and six month periods increased due to the refinancing activity with a make whole premium of $23.4 million and write-off of unamortized debt issuance costs of $7.9 million recognized as interest expense during the three and six month periods. See Note 10 – Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.
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Other non-operating income, net. Other non-operating for the three and six month periods is due to realized and unrealized gains on our investment in Energizer common stock during the period, which the Company sold its remaining investment in January 2021. See Note 13 – Fair Value of Financial Instruments in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.
Income Taxes. Our estimated annual effective tax rate was impacted for the three and six month periods by income earned outside the U.S. that is subject to U.S. tax, including the U.S. tax on global intangible low taxed income, certain nondeductible expenses, foreign rates that differ from the US federal statutory rate, and state income taxes. During the six month period ended April 4, 2021, the Company also recognized a $5.3 million benefit due to favorable Regulations issued during the year.
(Loss) Income From Discontinued Operations. The income or loss attributable to discontinued operations primarily reflect incremental changes to tax and legal indemnifications associated with the Company's divestitures of its GBL division and GAC divisions to Energizer during the year ended September 30, 2019.
Noncontrolling Interest. The net income attributable to noncontrolling interest reflects the share of the net income of our subsidiaries, which are not wholly-owned, attributable to the accounting interest. Such amount varies in relation to such subsidiary’s net income or loss for the period and the percentage interest not owned by SBH.
SB/RH
The following is summarized consolidated results of operations for SB/RH for the three and six month periods ended April 4, 2021 and March 29, 2020:
(in millions, except %)Three Month Periods EndedVarianceSix Month Periods EndedVariance
April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net sales$1,149.8 $937.8 $212.0 22.6 %$2,294.7 $1,809.3 $485.4 26.8 %
Gross profit404.0 328.9 75.1 22.8 %826.3 598.0 228.3 38.2 %
Gross profit margin35.1 %35.1 %— bps36.0 %33.1 %290 bps
Operating expenses286.4 257.3 29.1 11.3 %584.5 571.3 13.2 2.3 %
Interest expense65.6 35.3 30.3 85.8 %102.4 70.0 32.4 46.3 %
Other non-operating (income) expense, net(1.2)110.4 (111.6)n/m(7.4)66.8 (74.2)n/m
Income tax expense (benefit)15.9 (17.5)33.4 n/m35.8 (16.6)52.4 n/m
Net income (loss) from continuing operations37.3 (56.6)93.9 n/m111.0 (93.5)204.5 n/m
(Loss) income from discontinued operations, net of tax(1.1)1.4 (2.5)n/m(1.4)4.3 (5.7)n/m
Net income (loss)36.2 (55.2)91.4 n/m109.6 (89.2)198.8 n/m
n/m = not meaningful
The changes in SB/RH for the three and six month periods are primarily attributable to the changes in SBH previously discussed.
Segment Financial Data
Hardware & Home Improvement
(in millions, except %)Three Month Periods EndedVarianceSix Month Periods EndedVariance
April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net sales$389.5 $329.1 $60.4 18.4 %$798.2 $626.8 $171.4 27.3 %
Operating income66.0 61.0 5.0 8.2 %158.2 95.5 62.7 65.7 %
Operating income margin16.9 %18.5 %(160)bps19.8 %15.2 %460 bps
Adjusted EBITDA$73.4 $69.5 $3.9 5.6 %$171.6 $112.3 $59.3 52.8 %
Adjusted EBITDA margin18.8 %21.1 %(230)bps21.5 %17.9 %360 bps
n/m = not meaningful
Net sales for the three month period increased by growth across all product categories with strong consumer demand and commercial activity through promotions and new product introductions, with growth across retail, e-commerce and new build channels. Organic net sales increased $57.2 million, or 17.4%, excluding favorable foreign exchange impacts. Net sales for the six month period increased by growth across all product categories with fulfillment of previously disclosed open orders in the prior year, retail inventory rebuild, strong consumer demand, and commercial activity through promotions and new product introductions, with growth across retail, e-commerce and new build channels. Organic net sales increased $166.7 million, or 26.6%, excluding favorable foreign exchange impact.
Operating income and adjusted EBITDA for the three month period increased due to increased volumes and productivity improvements, partially offset by prior year's benefit from retrospective tariff exclusions, higher freight and input cost inflation, distribution, COVID-19 related costs and higher marketing investments reducing margins. Operating income, adjusted EBITDA and margins for the six month period increased due to increased volumes, productivity and cost improvements, favorable pricing programs and product mix, previously discussed. Adjustedpartially offset by prior year's benefits from retrospective tariff exclusion, COVID-19 related costs and higher marketing investments.

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Home and Personal Care
(in millions, except %)Three Month Periods EndedVarianceSix Month Periods EndedVariance
April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net sales$297.9 $232.7 $65.2 28.0 %$676.4 $554.8 $121.6 21.9 %
Operating income (loss)11.5 (3.5)15.0 n/m48.2 20.2 28.0 138.6 %
Operating income (loss) margin3.9 %(1.5 %)540 bps7.1 %3.6 %350 bps
Adjusted EBITDA$25.4 $8.0 $17.4 217.5 %$76.3 $44.4 $31.9 71.8 %
Adjusted EBITDA margin8.5 %3.4 %510 bps11.3 %8.0 %330 bps
n/m = not meaningful
Net sales for the three month period increased driven by continued growth in small appliances and personal care across all regions with significant growth through e-commerce channels. Organic net sales increased $56.5 million, or 24.3%, excluding favorable foreign exchange impact. Net sales for the six month period increased driven by strong growth in small appliances and personal care during the holiday season and consumer demand from stay-at-home activity, with volume growth through e-commerce channels and new product introductions. Organic net sales increased $107.4 million, or 19.4%, excluding favorable foreign currency impact.
Operating income, adjusted EBITDA and improved margins for the three month period increased due to higher volumes and productivity improvements, partially offset by increasing freight and input cost inflation and continued marketing investments. Operating income, adjusted EBITDA and improved margins for the six month period increased due to higher volumes, productivity and cost improvements, positive pricing programs and mix favorability, partially offset by higher inflation and distribution costs with increased marketing investments.

Global Pet Care
(in millions, except %)Three Month Periods EndedVarianceSix Month Periods EndedVariance
April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net sales$293.6 $236.9 $56.7 23.9 %$569.1 $442.7 $126.4 28.6 %
Operating income (loss)39.8 28.2 11.6 41.1 %74.0 (24.7)98.7 n/m
Operating income (loss) margin13.6 %11.9 %170 bps13.0 %(5.6)%1,860 bps
Adjusted EBITDA$55.6 $40.0 $15.6 39.0 %$109.2 $71.5 $37.7 52.7 %
Adjusted EBITDA margin18.9 %16.9 %200 bps19.2 %16.2 %300 bps
n/m = not meaningful
Net sales for the three month period increased due to continued growth in both our aquatic and companion animal categories with broad-based demand across distribution channels led by e-commerce growth and acquisition sales of $26.8 million from the Omega and Armitage acquisitions. Organic net sales increased $23.8 million, or 10.0%, excluding favorable foreign currency exchange impact and acquisition sales. Net sales for the six month period increased due to continued growth in both our aquatic and companion animal categories with broad-based demand across distribution channels led by e-commerce growth and acquisition sales of $47.1 million from the Omega and Armitage acquisitions. Organic net sales increased $69.0 million, or 15.6% excluding favorable foreign exchange impact and acquisition sales.

Operating income, adjusted EBITDA, and margins for the three month period increased due to higher volumes with positive productivity, partially offset by higher inflation and distribution expenses and higher advertising and marketing investments. Operating income, adjusted EBITDA, and margins for the six month period increased due to higher volumes with positive productivity, partially offset higher inflation and distribution expenses and advertising and marketing investments, with increases in operating income and margin represented 16.3%also attributable to the loss on asset held for sale of sales$25.7 million and impairment of intangible assets of $24.2 million in the Fiscal 2018 Quarter as compared to 17.5%prior year associated with the Coevorden divestiture, along with lower restructuring and distribution costs from exiting LATAM operating facilities in the Fiscal 2017 Quarter.prior year and incremental transaction related charges in the prior year.



Home and Garden

(in millions, except %)Three Month Periods EndedVarianceSix Month Periods EndedVariance
April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Net sales$168.8 $139.1 $29.7 21.4 %$251.0 $185.0 $66.0 35.7 %
Operating income29.9 23.0 6.9 30.0 %29.4 14.4 15.0 104.2 %
Operating income margin17.7 %16.5 %120 bps11.7 %7.8 %390 bps
Adjusted EBITDA$34.8 $28.4 $6.4 22.5 %$45.3 $25.1 $20.2 80.5 %
Adjusted EBITDA margin20.6 %20.4 %20 bps18.0 %13.6 %440 bps
n/m = not meaningful
Net sales and organic net sales for the three month period increased by growth in all product categories driven by strong early season orders across channels. Net sales and organic net sales for the six month period increased by growth in all product categories driven by strong early season orders across channels and strong off-season POS with home centers.
Operating income, adjusted EBITDA and margins increased due to higher volumes, favorable mix, and productivity improvements, partially offset by advertising and marketing investments and higher distribution expenses. Operating income, adjusted EBITDA and margins increased for the six month period ended due to higher volumes, favorable product mix and productivity improvements, partially offset by increased advertising and marketing investments and higher distribution expenses. Operating income for the six month period was partially offset by incremental legal reserve attributable to significant and unusual non-recurring claims.
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Liquidity and Capital Resources
HRG
HRGThe following is a holding company and its liquidity needs are primarily for interest payments on the 7.75% Senior Notes due 2022 (the “7.75% Notes”) and the loan agreement entered into on January 13, 2017 (the “2017 Loan”) (in total approximately $71.2 million per year), professional fees (including advisory services, legal and accounting fees), salaries, retention and benefits payments, office rent, pension expense, insurance costs and funding certain requirements of our insurance and other subsidiaries. In addition, HRG’s liquidity needs were used to pay the interest on its 7.875% Notes, which the Company redeemed on January 16, 2018. HRG’s current source of liquidity is its cash, cash equivalents and investments, available borrowings and distributions from Spectrum Brands.
During the Fiscal 2018 Quarter, we received cash dividends of $17.5 million from our subsidiaries, including $14.4 million and $3.1 million from Spectrum Brands and FGL, respectively. During the fiscal year ending September 30, 2018, we expect to receive approximately $60.7 million of dividends from our subsidiaries’ distributable earnings. As a resultsummary of the close of the FGL Merger, HRG will not receive any additional dividends from FGL.
The ability of HRG’s subsidiaries to generate sufficient net incomeSBH and cash flows to make upstream cash distributions is subject to numerous factors, including restrictions contained in such subsidiary’s financing agreements, availability of sufficient funds in such subsidiary, applicable state laws and regulatory restrictions and the approval of such payment by such subsidiary’s Board of Directors, which must consider various factors, including general economic and business conditions, tax considerations, strategic plans, financial results and condition, expansion plans, any contractual, legal or regulatory restrictions on the payment of dividends, and such other relevant factors. In addition, one or more of our subsidiaries may issue, repurchase, retire or refinance, as applicable, their debt and/or equity securities for a variety of purposes, including in order to, in the future, grow their business, pursue acquisition activities and/or manage their liquidity needs. Any such issuance may limit such subsidiary’s ability to make upstream cash distributions.
HRG’s liquidity may also be impacted by the capital needs of HRG’s subsidiaries and the ability of our subsidiaries to remain in compliance with the covenants governing their indebtedness. Such entities may require additional capital to acquire other businesses, maintain or grow their businesses, make payments on, or remain in compliance with the covenants governing their indebtedness, and/or make upstream cash distributions to HRG.
We expect our cash, cash equivalents and investments to continue to be a source of liquidity except to the extent they may be used to fund the capital needs of our subsidiaries. At December 31, 2017, HRG’s corporate cash, cash equivalents and investments were $1.5 billion. However, $864.4 million was used to redeem the 7.875% Notes on January 16, 2018.
We expect that dividends along with our cash, cash equivalents and investments and available borrowings to exceed our expected cash requirements and to satisfy our interest obligations, and general administrative expenses for at least the next twelve months. Depending on a variety of factors, including the general state of capital markets, operating needs or business strategies, HRG and/or one or more of its subsidiaries may or may be required to raise additional capital through the issuance of equity, debt, or both. There is no assurance, however, that such capital will be available at that time, in the amounts necessary or on terms satisfactory to HRG or its subsidiaries. HRG would expect to service any additional debt through increasing the dividends we receive or disposing of certain of our holdings, but there can be no assurance that we will be able to do so. We may also seek to repurchase, retire or refinance, as applicable, all or a portion of, our 7.75% Notes, the 2017 Loan, or common stock through open market purchases, tender offers, negotiated transactions or otherwise.

Spectrum Brands
Spectrum Brands expects to fund its cash requirements, including capital expenditures, dividend, interest and principal payments due during the remainder of Fiscal 2018 through a combination of cash ($137.9 million at December 31, 2017),SB/RH cash flows from continuing operations for the six month periods ended April 4, 2021 and $454.4 million available borrowings under the asset based lending Revolver Facility due June 23,March 29, 2020, (“Revolver Facility”). Spectrum Brands expects its capital expenditures for Fiscal 2018 will be approximately $110.0 million to $120.0 million. Going forward, its ability to satisfy financial and other covenants in its senior credit agreements and senior unsecured indentures and to make scheduled payments or prepayments on its debt and other financial obligations will depend on its future financial and operating performance. There can be no assurances that its business will generate sufficient cash flows from operations or that future borrowings under Spectrum Brands’ debt agreements, including the Revolver Facility, will be available in an amount sufficient to satisfy its debt maturities or to fund its other liquidity needs.respectively.

SBHSB/RH
Six Month Periods Ended (in millions)April 4, 2021March 29, 2020April 4, 2021March 29, 2020
Operating activities$(63.9)$(184.6)$(70.3)$(395.3)
Investing activities$(85.1)$(17.0)$(85.1)$(17.0)
Financing activities$(80.1)$35.7 $(71.4)$247.3 

Discussion of Consolidated Cash Flows
Summary of Consolidated Cash Flows
Presented below is a table that summarizes the cash provided or used in our activities and the amount of the respective increases or decreases in cash provided or used from those continuing activities between the fiscal periods (in millions):
  Fiscal Quarter
Net change in cash due to continuing operating activities: 2018 2017 Increase / (Decrease)
Consumer Products $(137.7) $(59.9) $(77.8)
Corporate and Other (5.7) (31.4) 25.7
Net change in cash due to continuing operating activities (143.4) (91.3) (52.1)
Net change in cash due to continuing investing activities 1,472.9
 (4.8) 1,477.7
Net change in cash due to continuing financing activities 65.2
 (114.8) 180.0
Effect of exchange rate changes on cash and cash equivalents (0.2) (6.4) 6.2
Net change in cash and cash equivalents in continuing operations $1,377.5
 $(151.8) $1,529.3
Operating Activities
Cash used inflows from SBH continuing operations increased $120.7 million due to increased operating activities totaled $143.4 million for the Fiscal 2018 Quarter as compared to $91.3 million for the Fiscal 2017 Quarter. The $52.1 million increase inresults from continuing operations, improved cash used in operating activities was the result of (i) theflow from working capital, coupled with a decrease in cash generated from Spectrum Brands’ continuing operationspaid for restructuring of $62.7$32.8 million including a cash payment to Stanley Black and Decker of $23.2 million in the prior year for a non-recurring settlement of transitional operating costs subsequent to the acquisition of the HHI Business acquired in 2013, in addition to cash invested in working capital of $84.8 million, primarily for payment on accounts payable and accrued expenses in the current period; (ii) increase in cash paid towards restructuring and related chargesfor taxes of $15.3$10.7 million; and (iii)partially offset by increase in cash paid for interest of $1.8$37.5 million by Spectrum Brands, including a non-recurring financing costand transaction related charges of $5.6$4.6 million. Cash flows from operating activities from continuing operations of SB/RH increased $325.0 million associated with a premium on redemption ofprimarily due to the 6.375% Notes due November 15, 2020 and costsitems previously discussed above except for re-pricingan incremental operating cash outflow to its parent company for federal net operating losses under the U.S. dollar denominated term loan facilityCompany’s tax sharing agreement in the prior year.
Cash Flows from Investing Activities
Cash provided byflows from investing activities was $1,472.9 million for the Fiscal 2018 Quarter and was primarily related to (i) $1,490.2 million total consideration received by the Company as a result of the completion of the FGL Merger and Front Street Sale; partially offset by $17.9 million of capital expenditures at Spectrum Brands.
Cash used in investing activities during the Fiscal 2017 Quarter was $4.8SBH continuing operations decreased $68.1 million primarily driven by capital expendituresdue to increase in cash paid for acquisition business of $21.1 million; partially offset by cash proceeds from$112.8 million due to the net repaymentacquisition of asset-based loans of $17.1 million.
Financing Activities
Cash provided by financing activities during the Fiscal 2018 Quarter was $65.2 million and was primarily related to $226.1 million incremental proceeds from debt issuances by Spectrum Brands; partially offset by (i) the $92.0 million aggregate principal amount of the HGI Energy Notes repaid by the Company; (ii) repayment of debt by Spectrum Brands of $31.2 million; (iii) share-based award tax withholding payments of $22.5 million and (iv) dividend paid by Spectrum Brands to noncontrolling interests of $9.8 million.
Cash used in financing activities was $114.8 million for the Fiscal 2017 Quarter and was primarily related to (i) debt repayment by Spectrum Brands of $133.9 million; (ii) purchases of Spectrum Brands stock of $97.6 million; (iii) share-based award tax withholding payments of $34.9 million; (iv) dividend paid by Spectrum Brands to noncontrolling interests of $9.6 million; and (v) debt repayment at Salus of $7.8 million;Armitage, partially offset by net increase in proceeds from the sale of Energizer common stock of $44.5 million. The Company sold its remaining investment in Energizer common stock in January 2021. Capital expenditures decreased $3.6 million predominantly due to timing of capital activities as we expect to make investment in capital projects consistent to prior years. Cash flows from investing activities of SB/RH increased primarily due to the items previously discussed.
Cash Flows from Financing Activities
Cash flows from financing activities for continuing operations decreased $115.8 million primarily due to increased net proceeds from debt due to borrowings from the Revolver Facility in the prior year to support working capital needs, offset by increased stock repurchase activity in the prior year and otherpayment of contingent consideration associated with the GBL divestiture in the prior year. During the six month period ended April 4, 2021, the Company realized $899.0 million of proceeds from new Term Loan Facility and issuance of senior notes, by Spectrum Brandsnet discount, with payment of $168.5 million.

Debt Financing Activities
At December 31, 2017, HRG$800.0 million of outstanding principal on senior notes and its subsidiaries were in compliance with their respective covenants under their respectivemake whole premiums of $23.4 million using proceeds, plus paydown of assumed debt documents. See from the acquisition of Armitage. Refer to Note 10 - Debt in the Notes to ourthe Condensed Consolidated Financial Statements included elsewhere in Part I - Item 1. Financial Statementsthis Quarterly Report for additionalmore information regarding the Company and its subsidiaries’on debt activities during the Fiscal 2018 Quarter.

Contractual Obligations
At December 31, 2017, there haveborrowings. There has been no material changesissuance of common stock, other than through the Company’s share-based compensation plans, with reduced spending on common stock repurchase activity of $322.5 million from the accelerated share repurchase arrangement and open market purchases in the prior year. See Note 15 – Shareholders’ Equity in the Notes to the contractual obligations as set forth in our Form 10-K, except as discussed in Note 10, Debt and Note 15, Income Taxes, to our Condensed Consolidated Financial Statements. Refer to our Condensed Consolidated Financial Statements included elsewhere in Part I - Item 1. Financial Statementsthis Quarterly Report for further detail. During the six month period ended April 4, 2021 and March 29, 2020, SBH made cash dividend payments of $35.7 million and $39.1 million, or $0.42 per share, respectively. Cash flows from financing activity of SB/RH decreased $318.7 million and is highly dependent upon the financing cash flow activities of SBH.
Liquidity Outlook
Our ability to generate significant cash flow from operating activities coupled with our expected ability to access the credit markets, enables us to execute our growth strategies and return value to our shareholders. Our ability to make principal and interest payment on borrowings under our debt agreements and our ability to fund planned capital expenditures will depend on the ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. Based upon our current level of operations, existing cash balances and availability under our credit facility, we expect cash flows from operations to be sufficient to meet our operating and capital expenditure requirements for at least the next 12 months. As of April 4, 2021, the Company had borrowing availability of $576.6 million, net of outstanding letters of credit, under our credit facility. Additionally, we believe the availability under our credit facility and access to capital markets are sufficient to achieve our longer-term strategic plans. Liquidity and capital resources of SB/RH are highly dependent upon the cash flow activities of SBH.
Short-term financing needs primarily consist of working capital requirements, restructuring initiatives, capital spending, and periodic principal and interest payments on our long-term debt. Long-term financing needs depend largely on potential growth opportunities, including acquisition activity and repayment or refinancing of our long-term obligations. We may, from time-to-time, seek to repurchase shares of our common stock. Such repurchases, if any will depend on prevailing market conditions, our liquidity requirements, and other factors. Our long-term liquidity may be influenced by our ability to borrow additional information.funds, renegotiate existing debt, and raise equity under terms that are favorable to us. We also have long-term obligations associated with defined benefit plans with expected minimum required contributions that are not considered significant to the consolidated group.

We maintain a capital structure that we believe provides us with sufficient access to credit markets. When combined with strong levels of cash flow from operations, our capital structure has provided the flexibility necessary to pursue strategic growth opportunities and return value to our shareholders. The Company’s access to capital markets and financing costs may depend on the Company’s credit ratings. None of the Company’s current borrowings are subject to default or acceleration as a result of a downgrading of credit ratings, although a downgrade of the Company’s credit ratings could increase fees and interest charges on future borrowings. At April 4, 2021, we were in compliance with all covenants under the Senior Credit Agreement and the indentures governing the 3.875% Notes, 5.00% Notes, 5.50% Notes, 5.75% Notes, and 4.00% Notes.

A portion of our cash balance is located outside the U.S. given our international operations. We manage our worldwide cash requirements centrally by reviewing available cash balances across our worldwide group and the cost effectiveness with which this cash can be accessed. We generally repatriate cash from non-U.S. subsidiaries, provided the cost of the repatriation is not considered material. The counterparties that hold our deposits consist of major financial institutions.
The majority of our business is not considered seasonal with a year round selling cycle that is overall consistent during the fiscal year with the exception of our H&G segment. H&G sales typically peak during the first six months of the calendar year (the Company's second and third fiscal quarters) due to customer seasonal purchasing patterns and the timing of promotional activity. This seasonality requires the Company to ship large quantities of product ahead of peak consumer buying season that can impact cash flow demands to meet manufacturing and inventory requirements earlier in the fiscal year, as well as extended credit terms and/or promotional discounts throughout the peak season.
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The Company enters into factoring agreements and customers' supply chain financing arrangements to provide for the sale of certain trade receivables to unrelated third-party financial institutions. The factored receivables are accounted for as a sale without recourse, and the balance of the receivables sold are removed from the Condensed Consolidated Balance Sheet at the time of the sales transaction, with the proceeds received recognized as an operating cash flow. Additionally, the Company facilitates a voluntary supply chain financing program to provide certain of its suppliers with the opportunity to sell receivables due from the Company (the Company's trade payables) to an unrelated third-party financial institution under the sole discretion of the supplier and the participating financial institution. There are no guarantees provided by the Company or its subsidiaries and we do not enter into any agreements with the suppliers regarding their participation. The Company's responsibility is limited to payments on the original terms negotiated with its suppliers, regardless of whether the suppliers sell their receivables to the financial institution, and continue to be recognized as accounts payable on the Company's Condensed Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow.
The COVID-19 pandemic has not, as of the date of this report, materially impacted our operations or demand for our products and has not had a materially negative impact on the Company’s liquidity position, although there can be no assurance that it won't have a material negative impact on us in the future. Nonetheless, we continue to actively monitor our global cash balances and liquidity, and if necessary, could reinitiate mitigating efforts to manage non-critical capital spend and assess operating spend to preserve cash and liquidity..  During the prior year, we had temporarily suspended treasury repurchase activity, but given the improved economic situation and the Company's liquidity, we may consider opportunistic share repurchases from time-to-time. We continue to generate operating cash flows to meet our short-term liquidity needs, and we expect to maintain access to the capital markets, although there can be no assurance of our ability to do so. However, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which, depending on future developments, could impact our capital resources and liquidity in the future.
Off-Balance Sheet Arrangements
Throughout our history, we have entered into indemnifications in the ordinary course of business with our customers, suppliers, service providers, business partners and in connection with the purchase and sale of assets, securities and businesses. Additionally, we have indemnified our directors and officers who are, or were, serving at our request in such capacities. Although the specific terms or number of such arrangements is not precisely quantifiable, weWe do not believehave any off-balance sheet arrangements that future costs associated with such arrangements willhave or are reasonably likely to have a material impactcurrent or future effect on our financial position,condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or cash flows. At December 31, 2017, there havecapital resources that are material to investors.
Contractual Obligations & Other Commercial Commitments
There has otherwise been no material changes to the off-balance sheet arrangementsour contractual obligations & other commercial commitments as set forthdiscussed in our Annual Report on Form 10-K.10-K for the year ended September 30, 2020.

CriticalAccountingPolicies and Estimates
The preparation of our financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Actual results could differ materially from those estimates. There have been no material changes to theour critical accounting policies and estimates as discussed in our Annual Report on Form 10-K.10-K for the year ended September 30, 2020.

RecentNew Accounting Pronouncements Not Yet Adopted
See Note 2,1 – Basis of Presentation and Significant Accounting Policies and Recent Accounting Pronouncements of Notes to ourthe Condensed Consolidated Financial Statements elsewhere included in Part I - Item 1. Financial Statementsthis Quarterly Report for information about accounting pronouncements that are newly adopted and recent accounting pronouncements not yet adopted.

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Item 3.Quantitative and Qualitative Disclosures about Market Risk
Guarantor Statements - SB/RH
SBI has issued the 5.00% Notes under the 2029 Indenture, the 5.50% Notes under the 2030 Indenture, the 5.75% Notes under the 2025 Indenture, the 4.00% Notes under the 2026 Indenture, and the 3.875% Notes under 2031 Indenture (collectively, the “Notes”). The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by SB/RH and SBI’s domestic subsidiaries. The Notes and the related guarantees rank equally in right of payment with all of SBI and the guarantors’ existing and future senior indebtedness and rank senior in right of payment to all of SBI and the guarantors’ future indebtedness that expressively provide for its subordination to the Notes and the related guarantees. Non-guarantor subsidiaries primarily consist of SBI’s foreign subsidiaries.
The following financial information consists of summarized financial information of the Obligor, presented on a combined basis. The “Obligor” consists of the financial statements of SBI as the debt issuer, SB/RH as a parent guarantor, and the domestic subsidiaries of SBI as subsidiary guarantors. Intercompany balances and transactions between SBI and the guarantors have been eliminated. Investments in non-guarantor subsidiaries and the earnings or losses from those non-guarantor subsidiaries have been excluded.
Six Month Period EndedYear Ended
(in millions)April 4, 2021September 30, 2020
Statements of Operations Data
Third party net sales$1,565.2 $2,868.5 
Intercompany net sales to non-guarantor subsidiaries41.0 63.5 
Total net sales1,606.2 2,932.0 
Gross profit524.6 938.0 
Operating income114.3 187.4 
Net income (loss) from continuing operations6.2 (46.8)
Net income (loss)4.9 (32.8)
Net income (loss) attributable to controlling interest4.9 (32.8)
Statements of Financial Position Data
Current Assets$1,415.1 $1,342.0 
Noncurrent Assets2,709.4 2,804.6 
Current Liabilities840.0 881.7 
Noncurrent Liabilities3,053.7 3,020.4 
The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of April 4, 2021 and September 30, 2020 are as follows:
(in millions)April 4, 2021September 30, 2020
Statements of Financial Position Data
Current receivables from non-guarantor subsidiaries$325.2 $161.1 
Long-term receivable from non-guarantor subsidiaries13.0 — 
Current payable to non-guarantor subsidiaries327.3 368.4 
Long-term debt with non-guarantor subsidiaries172.8 212.0 
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Item 3.    Quantitative and Qualitative Disclosures About Market Risk
Market Risk FactorsFactors
There has been noNo material changeschange in the Company’s market risk has occurred during the three monthssix month period ended December 31, 2017.April 4, 2021 other than the change in interest rate risk attributable to the issuance of the new Term Loan Facility. For additional information, refer to Note 11, Derivative Financial Instruments, 10 – Debt and Note 12 Fair Value of Financial Instruments and Note 10, Debt– Derivatives to ourthe Condensed Consolidated Financial StatementsStatement included elsewhere in Part I - Item 1. Financial Statements in this reportthe Quarterly Report and to Part II, Items 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
Interest Rate Risk
Our Revolver Facility and and Term Loan Facility have a variable interest rates. If market interest rates increase, the interest rate on our variable rate debt will increase and will create higher debt service requirements, which would adversely affect our cash flow and could adversely impact our results of operations. The general levels of U.S., European Union interest rates and LIBOR affect interest expense. As of April 4, 2021, we had $402.6 million subject to variable interest rates, or 15.4% of total debt. Assuming an increase to market rates of 1% as of April 4, 2021, we would incur an increase to interest expense of $4.1 million. Our Term Loan Facility and Revolver Facility allows for the LIBO rate to be phased out and replaced with the Secured Overnight Financing Rate and therefore we do not anticipate a material impact by the expected upcoming LIBOR transition.
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Item 7A of our Form 10-K.4.    Controls and Procedures


Spectrum Brands Holdings, Inc.
Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation was performed underProcedures. Our management, with the supervision and participation of the Company’s management, including the Principal Executive Officerour principal executive officer and Principal Financial Officer, ofprincipal financial officer, has evaluated the effectiveness of the design and operation of the Company’sour disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) ofunder the SecuritiesExchange Act) pursuant to Rule 13a-15(b) under the Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on thatthis evaluation, the Company’sSBH’s management, including the Principalour Chief Executive Officer and PrincipalChief Financial Officer have concluded that, as of December 31, 2017, the Company’ssuch date, our disclosure controls and procedures wereare effective to ensure that information we are required to disclosebe disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’sapplicable SEC rules and forms, and is accumulated and communicated to the Company’sSBH’s management, including the Company’s PrincipalSBH’s Chief Executive Officer and PrincipalChief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Notwithstanding the foregoing, there can be no assurance that the Company’s disclosure controls and procedures will detect or uncover all failures of persons within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.
Changes in Internal ControlsControl Over Financial Reporting
An evaluation was performed underReporting. During the supervision of the Company’s management, including the Principal Executive Officerthree month period ended April 4, 2021, SBH continued updating certain internal controls and Principal Financial Officer, of whether anysupporting processes to address previously identified material weakness related to ineffective information technology general controls (ITGCs) related to user access and role change reviews over certain information technology systems in the Company’sEMEA region attributable to ineffective risk assessment and communication of control activities related to the transfer of ITGC operations provided TSAs. SBH will continue to develop and update such internal controls and processes during the fiscal year to fully remediate the identified deficiencies. Other than those described above, there were no additional changes to our internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f))that occurred during the Fiscal 2018 Quarter. Based on that evaluation, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, concluded that no significant changes in the Company’s internal controls over financial reporting occurred during the Fiscal 2018 Quarterthree month period ended April 4, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’sour internal control over financial reporting, except for internal controls over the identification, assessment, and reporting of assets and liabilities held for sale and discontinued operations in relation to the planned divestiture of Spectrum Brands’ Global Batteries & Appliances segment.reporting.

Limitations on the Effectiveness of Controls
OurControls. SBH’s management, including our PrincipalChief Executive Officer and PrincipalChief Financial Officer, does not expect that the Company’sSBH’s disclosure controls and procedures or the Company’sSBH’s internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the CompanySBH have been detected.

SB/RH Holdings, LLC

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) pursuant to Rule 13a-15(b) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, SB/RH’s management, including our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable SEC rules and forms, and is accumulated and communicated to SB/RH’s management, including SB/RH’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting. During the three month period ended April 4, 2021, SB/RH continued updating certain internal controls and supporting processes to address previously identified material weakness related to ineffective information technology general controls (ITGCs) related to user access and role change reviews over certain information technology systems in the EMEA region attributable to ineffective risk assessment and communication of control activities related to the transfer of ITGC operations provided TSAs. SB/RH will continue to develop and update such internal controls and processes during the fiscal year to fully remediate the identified deficiencies. Other than those described above, there were no additional changes to our internal control over financial reporting that occurred during the three month period ended April 4, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls. SB/RH’s management, including our Chief Executive Officer and Chief Financial Officer, does not expect that SB/RH’s disclosure controls and procedures or SB/RH’s internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within SB/RH’s have been detected.
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PART II. OTHER INFORMATION
Unless otherwise indicated
Item 1.    Legal Proceedings
Litigation
We are a defendant in various litigation matters generally arising in the ordinary course of business. See risk factors below and Note 19 – Commitments and Contingencies included elsewhere in this report (this “10-Q”)Quarterly Report. Based on information currently available, we do not believe that any matters or the context requires otherwise,proceedings presently pending will have a material adverse effect on our results of operations, financial condition, liquidity or cash flows.
Item 1A.    Risk Factors
Information about our risk factors is contained in this 10-Q, references to the “Company,” “HRG,” “we,” “us” or “our” refer to HRG Group, Inc. and, where applicable, its consolidated subsidiaries; and “Spectrum Brands” refers to Spectrum Brands Holdings, Inc. and, where applicable, its consolidated subsidiaries.

FORWARD-LOOKING STATEMENTS
CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
This document contains, and certain oral statements made byItem 1A of our representatives from time to time may contain, forward-looking statements that are subject to risks and uncertainties that could cause actual results, events and developments to differ materially from those set forth in or implied by such statements. These statements are based on the beliefs and assumptions of HRG’s management and the management of HRG’s subsidiaries and affiliates (including target businesses). Forward-looking statements include information concerning possible or assumed future actions, events, results, strategies and expectations, including plans and expectations regarding future acquisitions, dispositions, distributions, and similar activities, and are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,” “projects,” “may,” “will,” “could,” “might,” or “continues” or similar expressions.
Such forward-looking statements are subject to risks and uncertainties that could cause actual results, events and developments to differ materially from those set forth in or implied by such statements. These forward-looking statements are based on the beliefs and assumptions of HRG’s management and the management of HRG’s subsidiaries. Factors that could cause actual results, events and developments to differ include, without limitation: that the review of strategic alternatives at HRG will result in a transaction, or if a transaction is undertaken, as to its terms or timing; the ability of HRG’s subsidiaries to close previously announced transactions; the ability of HRG’s subsidiaries to generate sufficient net income and cash flows to make upstream cash distributions; the decision of the boards of HRG’s subsidiaries to make upstream cash distributions; HRG’s liquidity, which may be impacted by a variety of factors, including the capital needs of HRG’s subsidiaries; capital market conditions; commodity market conditions; foreign exchange rates; HRG’s and its subsidiaries’ ability to identify, pursue or complete any suitable future acquisition or disposition opportunities, including realizing such transaction’s expected benefits and the timetable for, completing applicable financial reporting requirements; litigation; potential and contingent liabilities; management’s plans; changes in regulations; taxes; and the risks that may affect the performance of the operating subsidiaries of HRG and those factors listed under the caption “Risk Factors” in HRG’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q,for the fiscal year ended September 30, 2020 filed with the Securities and Exchange Commission.
SEC on November 18, 2020. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements. All forward-looking statements described herein are qualified by these cautionary statements and there can be no assurancebelieve that the actual results, events or developments referenced herein will occur or be realized. Neither HRG nor any of its affiliates undertake any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operation results, except as required by law.
In addition, you should understand that the following important factors, in addition to those discussed in Item 1A of this report and those discussed in Part I, Item 1A. “Risk Factors” in our Form 10-K, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. You should also understand that many factors described under one heading below may apply to more than one section in which we have grouped them for the purpose of this presentation. As a result, you should consider all of the following factors, together with all of the other information presented herein, in evaluating the business of the Company and our subsidiaries.

HRG and its Subsidiaries
HRG’s and its subsidiaries’ actual results or other outcomes may differ materially from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following:
our dependence on distributions from our subsidiaries and our ability to access the capital markets to fund our operations and payments on our debt and other obligations;
the decision of our subsidiaries’ boards to make upstream cash distributions, which is subject to numerous factors such as restrictions contained in applicable financing agreements, state and regulatory restrictions and other relevant considerations as determined by the applicable board;
our and our subsidiaries’ liquidity, which may be impacted by a variety of factors, including the capital needs of us and our current and future subsidiaries and our current and future subsidiaries’ ability to access the capital markets;
whether we determine to exercise the 338 Tax Election (as defined herein) and realizes the expected benefits from such election;

the ability to successfully identify or consummate a strategic alternative for HRG and/or its assets;
the need to provide sufficient capital to our operating businesses;
limitations on our ability to successfully identify suitable acquisition, disposition and other strategic opportunities and to compete for these opportunities with others who have greater resources;
our and our subsidiaries’ dependence on certain key personnel;
our and our subsidiaries’ ability to attract and retain key employees;
the impact of covenants in the indenture governing our 7.750% Senior Notes due 2022 and the 2017 Loan (as defined herein), the continuing covenants contained in the certificate of designation governing our Series A Participating Convertible Preferred Stock and future financing or refinancing agreements, on our ability to operate our business and finance our pursuit of our business strategy;
our ability to incur new debt and refinance or extinguish our existing indebtedness;
the impact on our business and financial condition of our substantial indebtedness and the significant additional indebtedness and other financing obligations we and our subsidiaries may incur;
the impact on us and/or our subsidiaries from interruption or other operational failures in telecommunication, information technology and other operational systems, or a failure to maintain the security, integrity, confidentiality or privacy of sensitive data residing on such systems;
the impact on the aggregate value of our assets and our stock price from changes in the market prices of publicly traded equity interests we hold, particularly during times of volatility in security prices;
the impact of decisions by our significant stockholders, whose interest may differ from those of our other stockholders, or any of them ceasing to remain significant stockholders;
the effect any interests of our officers, directors, stockholders and their respective affiliates may have in certain transactions in which we are involved;
the impact of additional material charges associated with our oversight of acquired or target businesses and the integration of our financial reporting;
the impact of restrictive covenants and applicable laws, including securities laws, on our ability to dispose of equity interests we hold;
the impact of potential losses and other risks from changes in the value of our assets;
our ability to effectively manage the size of our organization;
the impact of a determination that we are an investment company or personal holding company;
the impact of claims or litigation arising from operations, agreements and transactions, including litigation arising from or involving former subsidiaries and/or the disposal or winding down of former business;
the impact of expending significant resources in considering acquisition or disposition targets or strategic opportunities that are not consummated;
our and our subsidiaries’ ability to successfully integrate current and future acquired businesses into our existing operations and achieve the expected economic benefits;
tax consequences associated with our acquisition, holding and disposition of target companies and assets;
the impact of recent tax reform on our financial condition;
the impact of delays or difficulty in satisfying the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 or negative reports concerning our internal controls;
the impact of the relatively low market liquidity for shares of our Common Stock (“Common Stock”); 
the impact on the holders of our Common Stock if we issue additional shares of our Common Stock or preferred stock; and
the effect of price fluctuations in our Common Stock caused by general market and economic conditions and a variety of other factors, including factors that affect the volatility of the common stock of any of our publicly-held subsidiaries.
Spectrum Brands
Spectrum Brands’ actual results or outcomes may differ materially from those expressed or implied by the forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following:
the impact of Spectrum Brands’ indebtedness on its business, financial condition and results of operations;
the impact of restrictions in Spectrum Brands’ debt instruments on its ability to operate its business, finance its capital needs or pursue or expand its business strategies;
any failure to comply with financial covenants and other provisions and restrictions of Spectrum Brands’ debt instruments;

the impact of actions taken by significant stockholders;
the impact of fluctuations in commodity prices, costs or availability of raw materials or terms and conditions available from suppliers, including suppliers’ willingness to advance credit;
interest rate and exchange rate fluctuations;
the loss of, significant reduction in, or independence upon, sales to any significant retail customer(s);
competitive promotional activity or spending by competitors, or price reductions by competitors;
the introduction of new product features or technological developments by competitors and/or the development of new competitors or competitive brands;
the effects of general economic conditions, including inflation, recession or fears of a recession, depression or fears of a depression, labor costs and stock market volatility or changes in trade, monetary or fiscal policies in the countries where Spectrum Brands does business;
changes in consumer spending preferences and demand for Spectrum Brands’ products;
Spectrum Brands’ ability to develop and successfully introduce new products, protect its intellectual property and avoid infringing the intellectual property of third parties;
Spectrum Brands’ ability to successfully implement, achieve and sustain manufacturing and distribution cost efficiencies and improvements, and fully realize anticipated cost savings;
the seasonal nature of sales of certain of Spectrum Brands’ products;
the effects of climate change and unusual weather activity;
the cost and effect of unanticipated legal, tax or regulatory proceedings or new laws or regulations (including environmental, public health and consumer protection regulations);
public perception regarding the safety of products, that Spectrum Brands manufactures or sell, including the potential for environmental liabilities, product liability claims, litigation and other claims related to products manufactured by Spectrum Brands and third parties;
the impact of pending or threatened litigation;
the impact of cybersecurity breaches or Spectrum Brands actual or perceived failure to protect company and personal data;
changes in accounting policies applicable to Spectrum Brands’ business;
Spectrum Brands’ ability to utilize their net operating loss carry-forwards to offset tax liabilities from future taxable income;
government regulations;
the impact of expenses resulting from the implementation of new business strategies, divestitures or current and proposed restructuring activities;
Spectrum Brands’ inability to successfully integrate and operate new acquisitions at the level of financial performance anticipated;
the unanticipated loss of key members of senior management;
the effects of political or economic conditions, terrorist attacks, acts of war or other unrest in international markets; and
Spectrum Brands’ special committee’s exploration of strategic alternatives and the terms of any strategic transaction, if any.

Item 1.Legal Proceedings
See Note 17, Commitments and Contingencies, to the Company’s Condensed Consolidated Financial Statements included in Part I - Item 1. Financial Statements.

Item 1A.Risk Factors
When considering an investment in the Company, you should carefully consider the risk factors discussed in our last Form 10-K, as well as the risk factors below. Any of these risk factors could materially and adversely affect our or our subsidiaries’ business, financial condition and results of operations, and these risk factors are not the only risks that we or our subsidiaries may face. Additional risks and uncertainties not presently known to us or our subsidiaries or that are not currently believed to be material also may adversely affect us or our subsidiaries. With the exception of the additions and modifications to previously disclosed risk factors discussed below,April 4, 2021, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K.10-K for the year ended September 30, 2020.

Risks Related to HRGItem 2.    Unregistered Sales of Equity Securities and Use of Proceeds
While, asOn July 24, 2018, the Board of Directors approved a $1 billion common stock repurchase program. The authorization is effective for 36 months. The following table summarizes the date of this report, we expect to exercisecommon stock repurchases under the joint election under Section 338(h)(10) ofprogram for the Internal Revenue Code of 1986 (the “338 Tax Election”) and to receive tax benefits from making such election there can be no assurance that such an election will be made or that we will receive any of the benefits from such an election.six month period ended April 4, 2021:
Total Number
of Shares
Purchased
Average
Price Paid
Per Share
Total Number
of Shares Purchased
as Part of Plan
Approximate Dollar Value
of Shares that may
Yet Be Purchased
As of September 30, 202010,686,937 $56.66 10,686,937 $394,436,227 
October 1, 2020 to November 1, 2020— — — 394,436,227 
November 2, 2020 to November 29, 2020647,498 65.27 647,498 352,176,858 
November 30, 2020 to January 3, 2021— — — 352,176,858 
As of January 3, 202111,334,435 57.16 11,334,435 352,176,858 
January 4, 2021 to January 31, 2021— — — 352,176,858 
February 1, 2021 to February 28, 2021— — — 352,176,858 
March 1, 2021 to April 4, 2021— — — 352,176,858 
As of April 4, 202111,334,435 $57.16 11,334,435 $352,176,858 
On May 24, 2017, HRG, FS Holdco II Ltd. (“FS Holdco”)4, 2021, subsequent to the balance sheet date, the Board of Directors approved a new share repurchase program authorizing the purchase of up to $1 billion of common stock. The new share repurchase program commences immediately and replaces the previous program. The authorization is effective for 36 months. The repurchase permits shares to be repurchased in open market or through privately negotiated transactions, including by direct purchases or purchases pursuant to derivative instruments or other transactions (including pursuant to accelerated share repurchase agreements, the writing and settlement of put options and the CF Corporationpurchase and its related entities (collectively, the “CF Entities”) entered into an agreement (the “338 Agreement”) pursuantexercise of call options). The number of shares to which the CF Entities agreed that FS Holdco may, at its option, cause the relevant CF Entity and FS Holdco to make the 338 Tax Election. Pursuant to the 338 Agreement, if FS Holdco elects to make the 338 Tax Election, it will be required to pay FGL U.S. Holdings Inc., an indirect wholly owned subsidiary of CF Corporation (“CF/FGL US”), $30.0 million, plus additional specified amounts, in excess of $6.0 million, determined by reference to FGL’s incremental current tax costs attributable to the 338 Tax Election, if any, and CF/FGL US will be required to pay FS Holdco additional specified amounts, in excess of $6.0 million, determined by reference to FGL’s incremental current tax savings attributable to the 338 Tax Election, if any. As of the date hereof, the Company expects to exercise the 338 Tax Election. As of December 31, 2017, HRG had approximately $1,565.1 million of gross U.S. net operating loss (“NOL”) and $423.1 million capital loss carryforwards. If the 338 Tax Election is made, HRG expects to retain such federal NOL and capital loss carryforwards following the sale of its stock in Fidelity & Guaranty Life (“FGL”), a former majority owned subsidiary of the Company (the “FGL Merger”). As of December 31, 2017, the Company expects to receive an estimated $26.6 million net payment from CF Corporation, which has been included in the estimated consideration HRG expects to receive from the FGL Merger. Nonetheless, there can be no assurance that the Company will receive the expected benefits of such election. In addition, the estimated payment described herein is preliminary and subject to change, and will not be definitively determined until the FGL Merger is closedrepurchased and the 338 Tax Election is made and the parties to the 338 Agreement complete their review of the election in accordance with the terms of the 338 Agreement.
We and our subsidiaries may be materially affected by changes to fiscal and tax policies that could adversely affect our results of operations and cash flows.
We, through our subsidiary Spectrum Brands, operate globally and changes in tax laws could adversely affect our results. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a dividends received deduction for dividends from foreign subsidiaries, imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries, a minimum tax on foreign earnings, limitations on deduction of business interest expense and limits on deducting compensation to certain executive officers. At this point, it is unclear which of the Tax Reform Act provisions will be adopted by U.S. states and state conformity could have a material impact on the valuation allowance recorded on U.S. state net operating losses. Certain of these changes could have a negative or adverse impact on the operating results and cash flows of the Company and our subsidiaries.
We and our subsidiaries are still evaluating the impact of the Tax Reform Act. During the three month period ended December 31, 2017, the Company made a provisional estimate of the impact of the Tax Reform Act. No material impact is expected to result for HRG given the full valuation allowance position and domestic only operations. During the three month period ended December 31, 2017, Spectrum Brands recognized provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities. The ultimate impact from the Tax Reform Act may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions made by us and our subsidiaries, additional regulatory guidance that may be issued, and actions we and our subsidiaries may take as a result of the Tax Reform Act. Such changes in interpretations, guidance or assumptions could result in significant one-time charges and adversely change our and our subsidiaries’ effective tax rate. See Note 15, Income Taxes to our Condensed Consolidated Financial Statements included in Part I - Item 1. Financial Statements for further discussion on the impact from the Tax Reform Act.
We and our subsidiaries may not be able to fully utilize our U.S. tax attributes.
We and our subsidiaries have accumulated a substantial amount of U.S. federal and state NOLs carryforwards, capital loss carryforwards, and federal and state tax credits that will expire if unused. We have concluded that it is more likely than not that the majority of the federal and state deferred tax assets will create tax benefits in the future. As a consequence of earlier business combinations and issuances of common stock, Spectrum Brands and its subsidiaries have had various changes of ownership that continue to subject a significant amount of Spectrum Brands’ U.S. NOLs and other tax attributes to certain limitations; and therefore a valuation allowance is still recognized on certain federal and state tax asset carryforwards that are expected to expire due to the ownership change limitations or because Spectrum Brands does not believe they will earn enough taxable income to utilize. Further, as a result of the Tax Reform Act being signed into law, it is unclear which provisions of the Tax Reform Act will be adopted by U.S. states. State conformity to the provisions of the Tax Reform Act could have a material impact on the valuation allowance recorded on U.S. state NOLs. If we or our subsidiaries are unable to fully utilize the NOLs to offset taxable income generated in the future, our and our subsidiaries’ future cash taxes could be materially and negatively impacted. See Note 15, Income Taxes to our Condensed Consolidated Financial Statements included in Part I - Item 1. Financial Statements for further discussion on the impact from the Tax Reform Act on valuation allowance against its U.S. state net operating losses.

Risks Related to Spectrum Brands
Spectrum Brands is exploring strategic alternatives for a planned sale in their GBA segment, but there can be no assurance that they will be successful in identifying or completing any strategic alternative or that any such strategic alternative will yield additional value for stockholders.
Spectrum Brands has commenced the process to dispose the GBA segment through a planned sale. There can be no assurance that the exploration of strategic alternatives will result in the identification or consummationtiming of any transaction.repurchases will depend on factors such as the share price, economic and market conditions, and corporate and regulatory requirements. The strategic review processshare repurchase program may be suspended, amended or terminateddiscontinued at any time without notice. In addition, Spectrum Brands may incur substantial expenses associated with identifying and evaluating potential strategic alternatives and transactions. Furthermore, any attractive strategic alternative may be limited or prohibited by applicable regulatory regimes. Any potential transaction would be dependent upon a number of factors that may be beyond Spectrum Brands control. If Spectrum Brands is unable to effectively manage the process, the business, financial condition, and results of operations of Spectrum Brands and its subsidiaries could be adversely affected. Spectrum Brands also cannot assure that any potential transaction or strategic alternative, if identified, evaluated and consummated, will be successful in enhancing Spectrum Brands’ business or financial conditions, or provide greater value to Spectrum Brands’ stockholders than that reflected in the current stock price.time.
Spectrum Brands could consume resources in pursuing strategic alternatives for the potential sale in their GBA segment, which could materially adversely affect their business.
Spectrum Brands anticipates the investigation of strategic alternatives for the potential sale of Spectrum Brands’ GBA segment, and the negotiation, drafting and execution of relevant agreements, disclosure documents, and other instruments, with respect to such transactions, will require substantial management time and attention and substantial costs for financial advisors, accountants, attorneys and other advisors. The process of exploring strategic alternatives may be time consuming and disruptive to the business operations and the management teams of Spectrum Brands and its subsidiaries. If a decision is made not to consummate a specific transaction, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific transaction, Spectrum Brands may fail to consummate the transaction for any number of reasons, including those beyond their control. Any such event could consume significant management time and result in a loss to Spectrum Brands of the related costs incurred, which could adversely affect their financial position and their business.Item 5.    Other Information
The proposed sale of Spectrum Brands’ Global Batteries & Lights division to Energizer Holdings, Inc. is subject to regulatory approval.None
The consummation of the acquisition of the Global Batteries & Lights (“GBL”) division by Energizer Holdings, Inc. is subject to certain customary conditions, including, among other things, (i) the absence of a material adverse effect on GBL, (ii) the expiration or termination of required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) the receipt of certain other antitrust approvals in certain specified foreign jurisdictions (the conditions contained in (ii) and (iii) together, the “Antitrust Conditions”), (iv) the accuracy of the representations and warranties of the parties (generally subject to a customary material adverse effect standard (as described in the Agreement) or other customary materiality qualifications), (v) the absence of governmental restrictions on the consummation of the acquisition in certain jurisdictions, and (vi) material compliance by the parties with their respective covenants and agreements under the Agreement. Spectrum Brands may not receive the required approval and other clearances for the transaction, or they may not be received in a timely manner. If such approvals are received, they may impose terms, conditions or restrictions that may cause a failure of the closing conditions set forth in the Agreement or that could have a detrimental impact on Spectrum Brands following completion of the transaction. A substantial delay in obtaining the required authorizations, approvals or consents or the imposition of unfavorable terms, conditions or restrictions could prevent the completion of the sale. Even if the waiting periods under the Antitrust Conditions expire, government authorities could seek to block or challenge the transaction as they deem necessary or desirable in the public interest.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended December 31, 2017, HRG did not sell any equity securities that were not registered under the Securities Act of 1933, as amended.
On May 29, 2014, HRG’s Board of Directors authorized a program to purchase up to $100.0 million of HRG’s shares of common stock. During the three months ended December 31, 2017, we did not repurchase any of our common stock. At December 31, 2017, there were $12.3 million of shares that may yet be repurchased under the program authorized by HRG’s Board of Directors.

Item 3.Defaults upon Senior Securities
None.


Item 4.Mine Safety Disclosures
Not applicable.

Item 5.Other Information
None.
Item 6.    Exhibits
Please refer to the Exhibit Index.

46
*Filed herewith.
**Furnished herewith.

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 7, 2021
HRG GROUP, INC.
(Registrant)
SPECTRUM BRANDS HOLDINGS, INC.
Dated:February 9, 2018By:/s/ GEORGE C. NICHOLSONJeremy W. Smeltser
Jeremy W. Smeltser
Senior
Executive Vice President Chief Accounting Officer and Chief Financial Officer
(on behalf of the Registrant and as Principal Financial Officer)

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Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 7, 2021
SB/RH HOLDINGS, LLC
By:/s/ Jeremy W. Smeltser
Jeremy W. Smeltser
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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Table of Contents
EXHIBIT INDEX
Exhibit 4.1
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 21.1
Exhibit 31.1
Exhibit 31.2
Exhibit 31.3
Exhibit 31.4
Exhibit 32.1
Exhibit 32.2
Exhibit 32.3
Exhibit 32.4
101.INSXBRL Instance Document**
101.SCHXBRL Taxonomy Extension Schema Document**
101.CALXBRL Taxonomy Extension Calculation Linkbase Document**
101.DEFXBRL Taxonomy Extension Definition Linkbase Document**
101.LABXBRL Taxonomy Extension Label Linkbase Document**
101.PREXBRL Taxonomy Extension Presentation Linkbase Document**
* Filed herewith
** In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be "furnished" and not "filed."
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