Forward-Looking Statements

We have made or implied certain forward-looking statements in this ~~report.~~ 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 ~~statements regarding~~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 ~~Plan)~~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 ~~regulation~~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;~~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.

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 c~~ertain~~certain notes related specifically to SB/RH Holdings, LLC.


PART I	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements	2
Spectrum Brands Holdings, Inc. Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Financial Position as of ~~March 29, 2020~~April 4 , 2021 and September 30, ~~2019~~2020	2
	Condensed Consolidated Statements of Income for the three and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~	3
	Condensed Consolidated Statements of Comprehensive Income for the three and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~	4
	Condensed Consolidated Statement of Shareholders’ Equity for the six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~	5
	Condensed Consolidated Statements of Cash Flows for the six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~	6
SB/RH Holdings, LLC Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Financial Position as of ~~March 29, 2020~~April 4, 2021 and September 30, ~~2019~~2020	7
	Condensed Consolidated Statements of Income for the three and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~	8
	Condensed Consolidated Statements of Comprehensive Income for the three and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~	9
	Condensed Consolidated Statement of Shareholder’s Equity for the six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~	10
	Condensed Consolidated Statements of Cash Flows for the six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~	11
Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC Combined (Unaudited)
	~~Combined~~ Notes to the Condensed Consolidated Financial Statements	1312
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3130
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	4445
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	4546
Item 1A.	Risk Factors	4546
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 5.	Other Information	46
Item 6.	Exhibits	46
Signatures		4847

PART I.FINANCIAL INFORMATION

Item 1. Financial Statements

SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Financial Position

As of ~~March 29, 2020,~~April 4, 2021, and September 30, ~~2019~~2020

~~(unaudited)~~

(in millions)
March 29, 2020
September 30, 2019
Assets
Cash and cash equivalents
$
457.8
$
627.1
Trade receivables, net
465.9
356.7
Other receivables
99.5
74.2
Inventories
607.9
548.4
Prepaid expenses and other current assets
60.1
53.5
Total current assets
1,691.2
1,659.9
Property, plant and equipment, net
396.2
452.9
Operating lease assets
93.6
—
Investments
134.0
230.8
Deferred charges and other
102.8
51.7
Goodwill
1,324.1
1,328.1
Intangible assets, net
1,453.3
1,507.1
Total assets
$
5,195.2
$
5,230.5
Liabilities and Shareholders' Equity
Current portion of long-term debt
$
13.3
$
136.9
Accounts payable
387.4
456.8
Accrued wages and salaries
47.7
72.1
Accrued interest
36.7
29.3
Indemnification payable to Energizer
31.7
230.8
Other current liabilities
190.1
216.0
Total current liabilities
706.9
1,141.9
Long-term debt, net of current portion
2,999.1
2,214.4
Long-term operating lease liabilities
79.7
—
Deferred income taxes
77.2
55.9
Other long-term liabilities
110.1
112.0
Total liabilities
3,973.0
3,524.2
Commitments and contingencies (Note 19)

Shareholders' equity
Common stock
0.5
0.5
Additional paid-in capital
2,034.3
2,031.1
Accumulated earnings
68.2
201.2
Accumulated other comprehensive loss, net of tax
(282.0)
(273.6)
Treasury stock
(606.9)
(260.9)
Total shareholders' equity
1,214.1
1,698.3
Non-controlling interest
8.1
8.0
Total equity
1,222.2
1,706.3
Total liabilities and equity
$
5,195.2
$
5,230.5
(unaudited)


(in millions)	April 4, 2021		September 30, 2020
Assets
Cash and cash equivalents	$	290.0	$	531.6
Trade receivables, net	524.9		501.1
Other receivables	88.5		74.2
Inventories	812.1		557.7
Prepaid expenses and other current assets	83.2		63.5
Total current assets	1,798.7		1,728.1
Property, plant and equipment, net	392.6		396.5
Operating lease assets	103.0		103.8
Deferred charges and other	49.2		115.2
Goodwill	1,434.6		1,332.0
Intangible assets, net	1,496.4		1,431.7
Total assets	$	5,274.5	$	5,107.3
Liabilities and Shareholders' Equity
Current portion of long-term debt	$	18.6	$	15.3
Accounts payable	548.6		557.5
Accrued wages and salaries	76.6		95.0
Accrued interest	11.7		38.5
Other current liabilities	270.9		238.6
Total current liabilities	926.4		944.9
Long-term debt, net of current portion	2,551.6		2,461.0
Long-term operating lease liabilities	86.2		88.8
Deferred income taxes	86.8		65.4
Other long-term liabilities	128.7		131.4
Total liabilities	3,779.7		3,691.5
Commitments and contingencies (Note 19)			0
0Shareholders' equity
Common stock	0.5		0.5
Additional paid-in capital	2,051.6		2,054.3
Accumulated earnings	315.9		243.9
Accumulated other comprehensive loss, net of tax	(243.4)		(284.7)
Treasury stock	(637.0)		(606.5)
Total shareholders' equity	1,487.6		1,407.5
Non-controlling interest	7.2		8.3
Total equity	1,494.8		1,415.8
Total liabilities and equity	$	5,274.5	$	5,107.3

See accompanying notes to the condensed consolidated financial statements

‎

SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Income

For the three and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~

(unaudited)


	Three Month Periods Ended				Six Month Periods Ended					Three Month Periods Ended				Six Month Periods Ended
(in millions, except per share)	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019		(in millions, except per share)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Net Sales	$	937.8	$	906.7	$	1,809.3	$	1,787.0	Net Sales	$	1,149.8	$	937.8	$	2,294.7	$	1,809.3
Cost of goods sold		606.0		601.0		1,198.5		1,174.7	Cost of goods sold	744.5		606.0		1,467.0		1,198.5
Restructuring and related charges		2.9		0.2		12.8		1.0	Restructuring and related charges	1.3		2.9		1.4		12.8
Gross profit		328.9		305.5		598.0		611.3	Gross profit	404.0		328.9		826.3		598.0
Selling		150.0		151.4		296.1		306.9	Selling	173.2		150.0		340.0		296.1
General and administrative		81.9		83.6		162.2		183.0	General and administrative	89.0		81.9		180.9		162.2
Research and development		10.1		11.2		19.9		22.3	Research and development	12.5		10.1		22.9		19.9
Restructuring and related charges		19.0		12.4		36.6		20.5	Restructuring and related charges	2.8		19.0		11.9		36.6
Transaction related charges		7.2		5.3		11.3		11.6	Transaction related charges	9.7		7.2		30.3		11.3
(Gain) loss on assets held for sale		(7.0)		—		25.7		—	(Gain) loss on assets held for sale	0		(7.0)		0		25.7
Write-off from impairment of intangible assets		—		—		24.2		—	Write-off from impairment of intangible assets	0		0		0		24.2
Total operating expenses		261.2		263.9		576.0		544.3	Total operating expenses	287.2		261.2		586.0		576.0
Operating income		67.7		41.6		22.0		67.0	Operating income	116.8		67.7		240.3		22.0
Interest expense		35.5		94.2		70.4		151.2	Interest expense	65.5		35.5		102.2		70.4
Other non-operating expense, net		110.4		24.1		66.8		24.8
Loss from continuing operations before income taxes		(78.2)		(76.7)		(115.2)		(109.0)
Income tax benefit		(19.0)		(22.7)		(18.3)		(26.0)
Net loss from continuing operations		(59.2)		(54.0)		(96.9)		(83.0)
Income from discontinued operations, net of tax		1.4		783.6		4.3		700.4
Net (loss) income		(57.8)		729.6		(92.6)		617.4
Other non-operating (income) expense, net									Other non-operating (income) expense, net	(1.2)		110.4		(7.4)		66.8
Income (loss) from continuing operations before income taxes									Income (loss) from continuing operations before income taxes	52.5		(78.2)		145.5		(115.2)
Income tax expense (benefit)									Income tax expense (benefit)	15.7		(19.0)		35.5		(18.3)
Net income (loss) from continuing operations									Net income (loss) from continuing operations	36.8		(59.2)		110.0		(96.9)
(Loss) income from discontinued operations, net of tax									(Loss) income from discontinued operations, net of tax	(1.1)		1.4		(1.4)		4.3
Net income (loss)									Net income (loss)	35.7		(57.8)		108.6		(92.6)
Net (loss) income attributable to non-controlling interest		(0.8)		1.0		0.1		1.2	Net (loss) income attributable to non-controlling interest	(0.9)		(0.8)		(0.1)		0.1
Net (loss) income attributable to controlling interest	$	(57.0)	$	728.6	$	(92.7)	$	616.2
Net income (loss) attributable to controlling interest									Net income (loss) attributable to controlling interest	$	36.6	$	(57.0)	$	108.7	$	(92.7)
Amounts attributable to controlling interest									Amounts attributable to controlling interest
Net loss from continuing operations attributable to controlling interest	$	(58.4)	$	(55.0)	$	(97.0)	$	(84.2)
Net income from discontinued operations attributable to controlling interest		1.4		783.6		4.3		700.4
Net (loss) income attributable to controlling interest	$	(57.0)	$	728.6	$	(92.7)	$	616.2
Net income (loss) from continuing operations 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									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									Net income (loss) attributable to controlling interest	$	36.6	$	(57.0)	$	108.7	$	(92.7)
Earnings Per Share									Earnings Per Share
Basic earnings per share from continuing operations	$	(1.29)	$	(1.06)	$	(2.09)	$	(1.60)	Basic earnings per share from continuing operations	$	0.88	$	(1.29)	$	2.57	$	(2.09)
Basic earnings per share from discontinued operations		0.03		15.13		0.09		13.32	Basic earnings per share from discontinued operations	(0.02)		0.03		(0.03)		0.09
Basic earnings per share	$	(1.26)	$	14.07	$	(2.00)	$	11.72	Basic earnings per share	$	0.86	$	(1.26)	$	2.54	$	(2.00)
Diluted earnings per share from continuing operations	$	(1.29)	$	(1.06)	$	(2.09)	$	(1.60)	Diluted earnings per share from continuing operations	$	0.88	$	(1.29)	$	2.56	$	(2.09)
Diluted earnings per share from discontinued operations		0.03		15.13		0.09		13.32	Diluted earnings per share from discontinued operations	(0.03)		0.03		(0.03)		0.09
Diluted earnings per share	$	(1.26)	$	14.07	$	(2.00)	$	11.72	Diluted earnings per share	$	0.85	$	(1.26)	$	2.53	$	(2.00)
Dividend per share	$	0.42	$	0.42	$	0.84	$	0.84	Dividend per share	$	0.42	$	0.42	$	0.84	$	0.84
Weighted Average Shares Outstanding									Weighted Average Shares Outstanding
Basic		45.1		51.8		46.4		52.6	Basic	42.6		45.1		42.8		46.4
Diluted		45.1		51.8		46.4		52.6	Diluted	42.9		45.1		43.0		46.4

See accompanying notes to the condensed consolidated financial statements

‎

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 ~~and March 31, 2019~~

(unaudited)


	Three Month Periods Ended				Six Month Periods Ended					Three Month Periods Ended				Six Month Periods Ended
(in millions)	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019		(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Net (loss) income	$	(57.8)	$	729.6	$	(92.6)	$	617.4
Other comprehensive (loss) income
Foreign currency translation (loss) gain		(47.4)		9.1		(20.8)		(0.5)
Net income (loss)									Net income (loss)	$	35.7	$	(57.8)	$	108.6	$	(92.6)
Other comprehensive income (loss)									Other comprehensive income (loss)
Foreign currency translation gain (loss)									Foreign currency translation gain (loss)	22.2		(47.4)		41.6		(20.8)
Deferred tax effect		0.3		(2.6)		0.2		(4.9)	Deferred tax effect	(5.0)		0.3		0.3		0.2
Deferred tax valuation allowance		—		—		—		0.1
Net unrealized (loss) gain on foreign currency translation		(47.1)		6.5		(20.6)		(5.3)
Net unrealized gain (loss) on foreign currency translation									Net unrealized gain (loss) on foreign currency translation	17.2		(47.1)		41.9		(20.6)
Unrealized gain (loss) on derivative instruments									Unrealized gain (loss) on derivative instruments
Unrealized gain on hedging activity before reclassification		7.8		0.3		1.6		5.7
Net reclassification for gain to income from continuing operations		(1.7)		(2.9)		(4.3)		(5.7)
Net reclassification for loss to income from discontinued operations		—		0.6		—		0.5
Unrealized gain (loss) on hedging activity before reclassification									Unrealized gain (loss) on hedging activity before reclassification	5.8		7.8		(6.6)		1.6
Net reclassification for loss (gain) to income from continuing operations									Net reclassification for loss (gain) to income from continuing operations	3.0		(1.7)		5.7		(4.3)
Unrealized gain (loss) on hedging instruments after reclassification		6.1		(2.0)		(2.7)		0.5	Unrealized gain (loss) on hedging instruments after reclassification	8.8		6.1		(0.9)		(2.7)
Deferred tax effect		(1.6)		(1.9)		1.1		(5.0)	Deferred tax effect	(2.4)		(1.6)		0.1		1.1
Net unrealized gain (loss) on hedging derivative instruments		4.5		(3.9)		(1.6)		(4.5)	Net unrealized gain (loss) on hedging derivative instruments	6.4		4.5		(0.8)		(1.6)
Defined benefit pension gain									Defined benefit pension gain
Defined benefit pension gain (loss) before reclassification		0.9		(0.3)		3.7		0.8	Defined benefit pension gain (loss) before reclassification	0.9		0.9		(1.3)		3.7
Net reclassification for loss to income from continuing operations		1.0		0.5		2.1		1.0	Net reclassification for loss to income from continuing operations	1.1		1.0		2.2		2.1
Net reclassification for loss to income from discontinued operations		—		—		—		0.2
Defined benefit pension gain after reclassification		1.9		0.2		5.8		2.0	Defined benefit pension gain after reclassification	2.0		1.9		0.9		5.8
Deferred tax effect		(0.4)		(0.2)		(0.4)		(0.5)	Deferred tax effect	(0.6)		(0.4)		(0.4)		(0.4)
Net defined benefit pension gain		1.5		—		5.4		1.5	Net defined benefit pension gain	1.4		1.5		0.5		5.4
Deconsolidation of discontinued operations and assets held for sale		8.1		21.9		8.1		21.9	Deconsolidation of discontinued operations and assets held for sale	0		8.1		0		8.1
Net change to derive comprehensive (loss) income for the periods		(33.0)		24.5		(8.7)		13.6
Comprehensive (loss) income		(90.8)		754.1		(101.3)		631.0
Comprehensive loss attributable to non-controlling interest		(0.1)		—		—		—
Comprehensive (loss) income attributable to controlling interest	$	(90.7)	$	754.1	$	(101.3)	$	631.0
Net change to derive comprehensive income for the periods									Net change to derive comprehensive income for the periods	25.0		(33.0)		41.6		(8.7)
Comprehensive income (loss)									Comprehensive income (loss)	60.7		(90.8)		150.2		(101.3)
Comprehensive (loss) income attributable to non-controlling interest									Comprehensive (loss) income attributable to non-controlling interest	(0.1)		(0.1)		0.3		0
Comprehensive income (loss) attributable to controlling interest									Comprehensive income (loss) attributable to controlling interest	$	60.8	$	(90.7)	$	149.9	$	(101.3)

See accompanying notes to the condensed consolidated financial statements
‎

‎
‎

SPECTRUM BRANDS HOLDINGS, INC

Condensed Consolidated Statements of Shareholder’s Equity

For the six month ~~periods~~period ended ~~March 29, 2020 and March 31, 2019~~

April 4, 2021

(unaudited)

Accumulated
Additional
Other
Total
Non-
Six Month Period Ended March 29, 2020
Common Stock
Paid-in
Accumulated
Comprehensive
Treasury
Shareholders'
controlling
Total
(in millions)
Shares
Amount
Capital
Earnings
Loss
Stock
Equity
Interest
Equity
Balances at September 30, 2019
48.8
$
0.5
$
2,031.1
$
201.2
$
(273.6)
$
(260.9)
$
1,698.3
$
8.0
$
1,706.3
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 withholdings
0.5
—
(13.3)
—
—
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 (Note 1)
—
—
—
(0.3)
0.3
—
—
—
—
Balances as of December 29, 2019
46.1
0.5
2,007.6
144.9
(249.1)
(439.6)
1,464.3
9.0
1,473.3
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)
—
—
—
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 as of March 29, 2020
43.1
$
0.5
$
2,034.3
$
68.2
$
(282.0)
$
(606.9)
$
1,214.1
$
8.1
$
1,222.2


Six Month Period Ended April 4, 2021	Common Stock			Additional Paid-in Capital		Accumulated Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity		Non- controlling Interest		Total Equity
(in millions)	Shares	Amount
Balances at September 30, 2020	43.1	$	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 withholdings	0.2	—		(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, 2021	42.7	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, 2021	42.7	$	0.5	$	2,051.6	$	315.9	$	(243.4)	$	(637.0)	$	1,487.6	$	7.2	$	1,494.8

Accumulated
Additional
Other
Total
Non-
Six Month Period Ended March 31, 2019
Common Stock
Paid-in
Accumulated
Comprehensive
Treasury
Shareholders'
controlling
Total
(in millions)
Shares
Amount
Capital
Deficit/Earnings
Loss
Stock
Equity
Interest
Equity
Balances as of September 30, 2018
53.4
$
0.5
$
1,996.7
$
(180.1)
$
(235.8)
$
—
$
1,581.3
$
8.3
$
1,589.6
Net (loss) income from continuing operations
—
—
—
(29.2)
—
—
(29.2)
0.2
(29.0)
Loss from discontinued operations, net of tax
—
—
—
(83.2)
—
—
(83.2)
—
(83.2)
Other comprehensive loss, net of tax
—
—
—
—
(11.0)
—
(11.0)
—
(11.0)
Treasury stock repurchases
(0.3)
—
—
—
—
(18.5)
(18.5)
—
(18.5)
Restricted stock issued and related tax withholdings
0.3
—
7.5
(0.2)
—
3.9
11.2
—
11.2
Share based compensation
—
—
3.2
—
—
—
3.2
—
3.2
Dividends declared
—
—
—
(22.5)
—
—
(22.5)
—
(22.5)
Cumulative adjustment for adoption of new accounting standards
—
—
—
(3.2)
—
—
(3.2)
—
(3.2)
Balances as of December 30, 2018
53.4
0.5
2,007.4
(318.4)
(246.8)
(14.6)
1,428.1
8.5
1,436.6
Net (loss) income from continuing operations
—
—
—
(55.0)
—
—
(55.0)
1.0
(54.0)
Income from discontinued operations, net of tax
—
—
—
783.6
—
—
783.6
—
783.6
Sale and deconsolidation of discontinued operations
—
—
—
—
21.9
—
21.9
—
21.9
Other comprehensive income, net of tax
—
—
—
—
2.6
—
2.6
—
2.6
Treasury stock repurchases
(4.6)
—
—
—
—
(250.0)
(250.0)
—
(250.0)
Restricted stock issued and related tax withholdings
—
—
(0.2)
—
—
0.4
0.2
—
0.2
Share based compensation
—
—
10.3
—
—
—
10.3
—
10.3
Dividends declared
—
—
—
(22.6)
—
—
(22.6)
—
(22.6)
Balances as of March 31, 2019
48.8
$
0.5
$
2,017.5
$
387.6
$
(222.3)
$
(264.2)
$
1,919.1
$
9.5
$
1,928.6

See accompanying notes to the condensed consolidated financial statements

SPECTRUM BRANDS HOLDINGS, ~~INC.~~

INC

Condensed Consolidated Statements of ~~Cash Flows~~

Shareholder’s Equity

For the six month ~~periods~~period ended March 29, 2020 ~~and March 31, 2019~~

(unaudited)

Six Month Period Ended
(in millions)
March 29, 2020
March 31, 2019
Cash flows from operating activities
Net (loss) income
$
(92.6)
$
617.4
Income from discontinued operations, net of tax
4.3
700.4
Net loss from continuing operations
(96.9)
(83.0)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization
78.0
102.6
Share based compensation
26.0
21.8
Unrealized loss on equity investments held
53.3
5.0
Realized loss on equity investments sold
15.0
—
Loss on assets held for sale
25.7
—
Write-off from impairment of intangible assets
24.2
—
Amortization of debt issuance costs and debt discount
3.2
6.6
Write-off of unamortized discount and debt issuance costs
1.1
36.6
Deferred tax expense (benefit)
22.0
(61.8)
Net changes in operating assets and liabilities
(336.2)
(307.5)
Net cash used by operating activities from continuing operations
(184.6)
(279.7)
Net cash used by operating activities from discontinued operations
—
(254.0)
Net cash used by operating activities
(184.6)
(533.7)
Cash flows from investing activities
Purchases of property, plant and equipment
(31.7)
(27.1)
Proceeds from disposal of property, plant and equipment
0.6
0.1
Proceeds from sale of discontinued operations, net of cash
—
2,854.4
Business acquisitions, net of cash acquired
(17.0)
—
Proceeds from sale of equity investment
28.6
—
Other investing activity
2.5
—
Net cash (used) provided by investing activities from continuing operations
(17.0)
2,827.4
Net cash used by investing activities from discontinued operations
—
(5.3)
Net cash (used) provided by investing activities
(17.0)
2,822.1
Cash flows from financing activities
Payment of debt, including premium on extinguishment
(130.0)
(2,479.9)
Proceeds from issuance of debt
780.0
136.3
Payment of debt issuance costs
(0.8)
(0.1)
Payment of contingent consideration
(197.0)
—
Treasury stock purchases
(239.8)
(268.5)
Accelerated share repurchase
(125.0)
—
Dividends paid to shareholders
(39.1)
(44.6)
Share based award tax withholding payments, net of proceeds upon vesting
(12.6)
(2.5)
Net cash provided (used) by financing activities from continuing operations
35.7
(2,659.3)
Net cash used by financing activities from discontinued operations
—
(2.3)
Net cash provided (used) provided by financing activities
35.7
(2,661.6)
Effect of exchange rate changes on cash and cash equivalents
(0.5)
(3.1)
Net change in cash, cash equivalents and restricted cash in continuing operations
(166.4)
(376.3)
Cash, cash equivalents, and restricted cash, beginning of period
627.1
561.4
Cash, cash equivalents, and restricted cash, end of period
$
460.7
$
185.1
Supplemental disclosure of cash flow information
Cash paid for interest
$
57.5
$
140.9
Cash paid for taxes
$
30.8
$
36.3
Non cash investing activities
Acquisition of property, plant and equipment through finance leases
$
3.0
$
1.6
Non cash financing activities
Issuance of shares through stock compensation plan
$
39.1
$
23.3


Six Month Period Ended March 29, 2020	Common Stock			Additional Paid-in Capital		Accumulated Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity		Non- controlling Interest		Total Equity
(in millions)	Shares	Amount
Balances at September 30, 2019	48.8	$	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 withholdings	0.5	—		(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, 2019	46.1	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, 2020	43.1	$	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

SB~~/RH~~SPECTRUM BRANDS HOLDINGS, ~~LLC~~

INC.

Condensed Consolidated Statements of ~~Financial Position~~

~~As of~~Cash Flows

For the six month periods ended April 4, 2021 and March 29, 2020 ~~and September 30, 2019~~

(unaudited)

(in millions)
March 29, 2020
September 30, 2019
Assets
Cash and cash equivalents
$
453.5
$
621.9
Trade receivables, net
465.9
356.7
Other receivables
177.6
140.1
Inventories
607.9
548.4
Prepaid expenses and other current assets
60.1
53.5
Total current assets
1,765.0
1,720.6
Property, plant and equipment, net
396.2
452.9
Operating lease assets
93.6
—
Investments
134.0
230.8
Deferred charges and other
58.0
51.7
Goodwill
1,324.1
1,328.1
Intangible assets, net
1,453.3
1,507.1
Total assets
$
5,224.2
$
5,291.2
Liabilities and Shareholder's Equity
Current portion of long-term debt
$
13.3
$
136.9
Accounts payable
394.6
463.8
Accrued wages and salaries
47.7
72.0
Accrued interest
36.7
29.3
Indemnification payable to Energizer
31.7
230.8
Income tax payable
7.6
240.5
Other current liabilities
178.2
182.7
Total current liabilities
709.8
1,356.0
Long-term debt, net of current portion
2,923.1
2,139.1
Long-term operating lease liabilities
79.7
—
Deferred income taxes
271.1
272.2
Other long-term liabilities
109.8
111.8
Total liabilities
4,093.5
3,879.1
Commitments and contingencies (Note 19)

Shareholder's equity
Other capital
2,134.7
2,113.3
Accumulated deficit
(731.8)
(437.3)
Accumulated other comprehensive loss, net of tax
(281.9)
(273.5)
Total shareholder's equity
1,121.0
1,402.5
Non-controlling interest
9.7
9.6
Total equity
1,130.7
1,412.1
Total liabilities and equity
$
5,224.2
$
5,291.2


	Six Month Periods Ended
(in millions)	April 4, 2021		March 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 operations	110.0		(96.9)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization	74.4		78.0
Share based compensation	16.0		26.0
(Gain) loss on equity investments	(6.9)		68.3
Loss on assets held for sale	0		25.7
Write-off from impairment of intangible assets	0		24.2
Amortization of debt issuance costs and debt discount	2.9		3.2
Write-off of unamortized discount and debt issuance costs	7.9		1.1
Inventory acquisition step-up	3.4		0
Deferred tax expense	3.8		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 equipment	0		0.6


Business acquisitions, net of cash acquired	(129.8)		(17.0)
Proceeds from sale of equity investment	73.1		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 debt	899.0		780.0
Payment of debt issuance costs	(12.6)		(0.8)
Payment of contingent consideration	0		(197.0)
Treasury stock purchases	(42.3)		(239.8)
Accelerated share repurchase	0		(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, net	0.3		0


Net cash (used) provided by financing activities	(80.1)		35.7
Effect of exchange rate changes on cash and cash equivalents	3.4		(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 period	533.8		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

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of ~~Income~~

~~For the~~ ~~three~~Financial Position

As of April 4, 2021 and ~~six~~ ~~month periods ended March 29,~~September 30, 2020 ~~and March 31, 2019~~

(unaudited)

Three Month Periods Ended
Six Month Periods Ended
(in millions)
March 29, 2020
March 31, 2019
March 29, 2020
March 31, 2019
Net Sales
$
937.8
$
906.7
$
1,809.3
$
1,787.0
Cost of goods sold
606.0
601.0
1,198.5
1,174.7
Restructuring and related charges
2.9
0.2
12.8
1.0
Gross profit
328.9
305.5
598.0
611.3
Selling
150.0
151.4
296.1
306.9
General and administrative
78.0
82.4
157.5
180.6
Research and development
10.1
11.2
19.9
22.3
Restructuring and related charges
19.0
12.4
36.6
20.5
Transaction related charges
7.2
5.3
11.3
11.6
(Gain) loss on assets held for sale
(7.0)
—
25.7
—
Write-off from impairment of intangible assets
—
—
24.2
—
Total operating expenses
257.3
262.7
571.3
541.9
Operating income
71.6
42.8
26.7
69.4
Interest expense
35.3
48.3
70.0
91.5
Other non-operating expense, net
110.4
24.2
66.8
25.0
Loss from continuing operations before income taxes
(74.1)
(29.7)
(110.1)
(47.1)
Income tax benefit
(17.5)
(17.3)
(16.6)
(15.8)
Net loss from continuing operations
(56.6)
(12.4)
(93.5)
(31.3)
Income from discontinued operations, net of tax
1.4
783.6
4.3
700.4
Net (loss) income
(55.2)
771.2
(89.2)
669.1
Net (loss) income attributable to non-controlling interest
(0.8)
1.0
0.1
1.2
Net (loss) income attributable to controlling interest
$
(54.4)
$
770.2
$
(89.3)
$
667.9
Amounts attributable to controlling interest
Net loss from continuing operations attributable to controlling interest
$
(55.8)
$
(13.4)
$
(93.6)
$
(32.5)
Net income from discontinued operations attributable to controlling interest
1.4
783.6
4.3
700.4
Net (loss) income attributable to controlling interest
$
(54.4)
$
770.2
$
(89.3)
$
667.9


(in millions)	April 4, 2021		September 30, 2020
Assets
Cash and cash equivalents	$	288.3	$	527.6
Trade receivables, net	524.9		501.1
Other receivables	169.1		155.2
Inventories	812.1		557.7
Prepaid expenses and other current assets	83.1		63.5
Total current assets	1,877.5		1,805.1
Property, plant and equipment, net	392.6		396.5
Operating lease assets	103.0		103.8
Deferred charges and other	49.2		115.2
Goodwill	1,434.6		1,332.0
Intangible assets, net	1,496.4		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 payable	548.8		557.5
Accrued wages and salaries	76.6		95.0
Accrued interest	11.7		38.5
Other current liabilities	282.3		236.0
Total current liabilities	938.0		942.3
Long-term debt, net of current portion	2,551.6		2,461.0
Long-term operating lease liabilities	86.2		88.8
Deferred income taxes	294.3		288.7
Other long-term liabilities	136.0		138.3
Total liabilities	4,006.1		3,919.1
Commitments and contingencies (Note 19)	0		0
Shareholder's equity
Other capital	2,162.5		2,154.1
Accumulated deficit	(580.8)		(614.2)
Accumulated other comprehensive loss, net of tax	(243.3)		(284.6)
Total shareholder's equity	1,338.4		1,255.3
Non-controlling interest	8.8		9.9
Total equity	1,347.2		1,265.2
Total liabilities and equity	$	5,353.3	$	5,184.3

See accompanying notes to the condensed consolidated financial statements

‎

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of ~~Comprehensive~~ Income

For thethree and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~

(unaudited)

Three Month Periods Ended
Six Month Periods Ended
(in millions)
March 29, 2020
March 31, 2019
March 29, 2020
March 31, 2019
Net (loss) income
$
(55.2)
$
771.2
$
(89.2)
$
669.1
Other comprehensive (loss) income
Foreign currency translation (loss) gain
(47.4)
9.1
(20.8)
(0.5)
Deferred tax effect
0.3
(2.6)
0.2
(4.9)
Deferred tax valuation allowance
—
—
—
0.1
Net unrealized (loss) gain on foreign currency translation
(47.1)
6.5
(20.6)
(5.3)
Unrealized gain (loss) on derivative instruments
Unrealized gain on hedging activity before reclassification
7.8
0.3
1.6
5.7
Net reclassification for gain to income from continuing operations
(1.7)
(2.9)
(4.3)
(5.7)
Net reclassification for loss to income from discontinued operations
—
0.6
—
0.5
Unrealized gain (loss) on hedging instruments after reclassification
6.1
(2.0)
(2.7)
0.5
Deferred tax effect
(1.6)
(1.9)
1.1
(5.0)
Net unrealized gain (loss) on hedging derivative instruments
4.5
(3.9)
(1.6)
(4.5)
Defined benefit pension gain
Defined benefit pension gain (loss) before reclassification
0.9
(0.3)
3.7
0.8
Net reclassification for loss to income from continuing operations
1.0
0.5
2.1
1.0
Net reclassification for loss to income from discontinued operations
—
—
—
0.2
Defined benefit pension gain after reclassification
1.9
0.2
5.8
2.0
Deferred tax effect
(0.4)
(0.2)
(0.4)
(0.5)
Net defined benefit pension gain
1.5
—
5.4
1.5
Deconsolidation of discontinued operations and assets held for sale
8.1
21.9
8.1
21.9
Net change to derive comprehensive (loss) income for the period
(33.0)
24.5
(8.7)
13.6
Comprehensive (loss) income
(88.2)
795.7
(97.9)
682.7
Comprehensive loss attributable to non-controlling interest
(0.1)
—
—
—
Comprehensive (loss) income attributable to controlling interest
$
(88.1)
$
795.7
$
(97.9)
$
682.7


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Net Sales	$	1,149.8	$	937.8	$	2,294.7	$	1,809.3
Cost of goods sold	744.5		606.0		1,467.0		1,198.5
Restructuring and related charges	1.3		2.9		1.4		12.8
Gross profit	404.0		328.9		826.3		598.0
Selling	173.2		150.0		340.0		296.1
General and administrative	88.2		78.0		179.4		157.5
Research and development	12.5		10.1		22.9		19.9
Restructuring and related charges	2.8		19.0		11.9		36.6
Transaction related charges	9.7		7.2		30.3		11.3
(Gain) loss on assets held for sale	0		(7.0)		0		25.7
Write-off from impairment of intangible assets	0		0		0		24.2
Total operating expenses	286.4		257.3		584.5		571.3
Operating income	117.6		71.6		241.8		26.7
Interest expense	65.6		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 taxes	53.2		(74.1)		146.8		(110.1)
Income tax expense (benefit)	15.9		(17.5)		35.8		(16.6)
Net income (loss) from continuing operations	37.3		(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 accompanying notes to the condensed consolidated financial statements

‎

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of ~~Shareholder’s Equity~~

Comprehensive Income

For thethree and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~

(unaudited)

Accumulated
Other
Total
Non-
Six Month Period Ended March 29, 2020
Other
Accumulated
Comprehensive
Shareholder's
controlling
(in millions)
Capital
Deficit
Loss
Equity
Interest
Total Equity
Balances at September 30, 2019
$
2,113.3
$
(437.3)
$
(273.5)
$
1,402.5
$
9.6
$
1,412.1
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 withholdings
4.9
—
—
4.9
—
4.9
Share based compensation
8.5
—
—
8.5
—
8.5
Dividends paid to parent
—
(36.7)
—
(36.7)
—
(36.7)
Cumulative adjustment for adoption of new accounting standards (Note 1)
—
(0.3)
0.3
—
—
—
Balances at December 29, 2019
2,126.7
(509.2)
(249.0)
1,368.5
10.6
1,379.1
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 compensation
8.3
—
—
8.3
—
8.3
Dividends paid to parent
—
(168.2)
—
(168.2)
—
(168.2)
Balances as of March 29, 2020
$
2,134.7
$
(731.8)
$
(281.9)
$
1,121.0
$
9.7
$
1,130.7


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 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 translation	17.2		(47.1)		41.9		(20.6)
Unrealized gain (loss) on derivative instruments
Unrealized gain (loss) on hedging activity before reclassification	5.8		7.8		(6.6)		1.6
Net reclassification for loss (gain) to income from continuing operations	3.0		(1.7)		5.7		(4.3)
Unrealized gain (loss) on hedging instruments after reclassification	8.8		6.1		(0.9)		(2.7)
Deferred tax effect	(2.4)		(1.6)		0.1		1.1
Net unrealized gain (loss) on hedging derivative instruments	6.4		4.5		(0.8)		(1.6)
Defined benefit pension gain
Defined benefit pension gain (loss) before reclassification	0.9		0.9		(1.3)		3.7
Net reclassification for loss to income from continuing operations	1.1		1.0		2.2		2.1
Defined benefit pension gain after reclassification	2.0		1.9		0.9		5.8
Deferred tax effect	(0.6)		(0.4)		(0.4)		(0.4)
Net defined benefit pension gain	1.4		1.5		0.5		5.4
Deconsolidation of discontinued operations and assets held for sale	0		8.1		0		8.1
Net change to derive comprehensive income (loss) for the period	25.0		(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)

Accumulated
Other
Total
Non-
Six Month Period Ended March 31, 2019
Other
Accumulated
Comprehensive
Shareholder's
controlling
(in millions)
Capital
Deficit
Loss
Equity
Interest
Total Equity
Balances as of September 30, 2018
$
2,073.0
$
(235.5)
$
(235.7)
$
1,601.8
$
9.9
$
1,611.7
Net (loss) income from continuing operations
—
(19.1)
—
(19.1)
0.2
(18.9)
Loss from discontinued operations, net of tax
—
(83.2)
—
(83.2)
—
(83.2)
Other comprehensive loss, net of tax
—
—
(11.1)
(11.1)
—
(11.1)
Restricted stock issued and related tax withholdings
11.3
—
—
11.3
—
11.3
Share based compensation
2.8
—
—
2.8
—
2.8
Dividends paid to parent
—
(30.4)
—
(30.4)
—
(30.4)
Cumulative adjustment for adoption of new accounting standards
—
(3.2)
—
(3.2)
—
(3.2)
Balances as of December 30, 2018
2,087.1
(371.4)
(246.8)
1,468.9
10.1
1,479.0
Net (loss) income from continuing operations
—
(13.4)
—
(13.4)
1.0
(12.4)
Income from discontinued operations, net of tax
—
783.6
—
783.6
—
783.6
Sale and deconsolidation of discontinued operations
—
—
21.9
21.9
—
21.9
Other comprehensive income, net of tax
—
—
2.6
2.6
—
2.6
Restricted stock issued and related tax withholdings
0.2
—
—
0.2
—
0.2
Share based compensation
9.9
—
—
9.9
—
9.9
Dividends paid to parent
—
(646.0)
—
(646.0)
—
(646.0)
Balances as of March 31, 2019
$
2,097.2
$
(247.2)
$
(222.3)
$
1,627.7
$
11.1
$
1,638.8

See accompanying notes to the condensed consolidated financial statements

SB/RH HOLDINGS, LLC

~~Condens~~ed

Condensed Consolidated Statements of ~~Cash Flows~~

Shareholder’s Equity

For the six month ~~periods~~period ended ~~March 29, 2020 and March 31, 2019~~

April 4, 2021

(unaudited)

Six Month Period Ended
(in millions)
March 29, 2020
March 31, 2019
Cash flows from operating activities
Net (loss) income
$
(89.2)
$
669.1
Income from discontinued operations, net of tax
4.3
700.4
Net loss from continuing operations
(93.5)
(31.3)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization
78.0
102.6
Share based compensation
25.4
21.1
Unrealized loss on equity investments held
53.3
5.0
Realized loss on equity investments sold
15.0
Loss on assets held for sale
25.7
—
Write-off from impairment of intangible assets
24.2
—
Amortization of debt issuance costs and debt discount
2.7
3.7
Write-off of unamortized discount and debt issuance costs
1.1
12.7
Deferred tax expense (benefit)
20.3
(51.6)
Net changes in operating assets and liabilities
(547.5)
(329.5)
Net cash used by operating activities from continuing operations
(395.3)
(267.3)
Net cash used by operating activities from discontinued operations
—
(254.0)
Net cash used by operating activities
(395.3)
(521.3)
Cash flows from investing activities
Purchases of property, plant and equipment
(31.7)
(27.1)
Proceeds from sales of property, plant and equipment
0.6
0.1
Proceeds from sale of discontinued operations, net of cash
—
2,854.4
Business acquisitions, net of cash acquired
(17.0)
—
Proceeds from sale of equity investment
28.6
—
Other investing activities
2.5
—
Net cash (used) provided by investing activities from continuing operations
(17.0)
2,827.4
Net cash used by investing activities from discontinued operations
—
(5.3)
Net cash (used) provided by investing activities
(17.0)
2,822.1
Cash flows from financing activities
Payment of debt, including premium on extinguishment
(130.0)
(2,092.6)
Proceeds from issuance of debt
780.0
136.3
Payment of debt issuance costs
(0.8)
(0.1)
Payment of contingent consideration
(197.0)
—
Payment of cash dividends to parent
(204.9)
(676.4)
Net cash provided (used) by financing activities from continuing operations
247.3
(2,632.8)
Net cash used by financing activities from discontinued operations
—
(2.3)
Net cash provided (used) by financing activities
247.3
(2,635.1)
Effect of exchange rate changes on cash and cash equivalents
(0.5)
(3.1)
Net change in cash, cash equivalents and restricted cash
(165.5)
(337.4)
Cash, cash equivalents, and restricted cash, beginning of period
621.9
514.3
Cash, cash equivalents, and restricted cash, end of period
$
456.4
$
176.9
Supplemental disclosure of cash flow information
Cash paid for interest
$
57.5
$
109.8
Cash paid for taxes
$
30.8
$
36.3
Non cash investing activities
Acquisition of property, plant and equipment through finance leases
$
3.0
$
1.6


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 compensation	7.5		—		—		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, 2021	2,154.5		(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 compensation	8.0		—		—		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 withholdings	4.9		—		—		4.9		—		4.9
Share based compensation	8.5		—		—		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, 2019	2,126.7		(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 compensation	8.3		—		—		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

Table of Content s

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Cash Flows

For the six month periods ended April 4, 2021 and March 29, 2020

(unaudited)


	Six Month Periods Ended
(in millions)	April 4, 2021		March 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 operations	111.0		(93.5)
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	74.4		78.0
Share based compensation	15.5		25.4
(Gain) loss on equity investments	(6.9)		68.3
Loss on assets held for sale	0		25.7
Write-off from impairment of intangible assets	0		24.2
Amortization of debt issuance costs and debt discount	2.9		2.7
Write-off of unamortized discount and debt issuance costs	7.9		1.1
Inventory acquisition step-up	3.4		0
Deferred tax expense	4.0		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 equipment	0		0.6


Business acquisitions, net of cash acquired	(129.8)		(17.0)
Proceeds from sale of equity investment	73.1		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 operations	0		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 debt	899.0		780.0
Payment of debt issuance costs	(12.6)		(0.8)
Payment of contingent consideration	0		(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 operations	0		0
Net cash (used) provided by financing activities	(71.4)		247.3
Effect of exchange rate changes on cash and cash equivalents	3.4		(0.5)
Net change in cash, cash equivalents and restricted cash	(239.3)		(165.5)
Cash, cash equivalents, and restricted cash, beginning of period	529.8		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

SPECTRUM BRANDS HOLDINGS, ~~INC.SB/~~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 SB/RH Holdings, LLC (“SB/RH”) (collectively, the “Company”). The notes to the consolidated financial statements that follow include both consolidated SBH and SB/RH Notes, unless otherwise indicated below.

NOTE ~~1 –~~1– BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Fiscal Period-End

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company and its majority 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 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 made which are necessary for a fair financial statement presentation. For further information, refer to the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~

2020.

SBH’s and SB/RH’s fiscal year ends September 30 and the Company reports its results using fiscal quarters whereby each three month quarterly reporting period is approximately thirteen weeks in length and ends on a Sunday. The exceptions are the first quarter, which begins on October 1, and the fourth quarter, which ends on September 30. As a result, the fiscal period end date for the three and six month periods included within this Quarterly Report for the Company, are April 4, 2021 and March 29, ~~2020 and March 31, 2019.~~

2020.

Newly Adopted Accounting Standards

In ~~February~~June 2016, the FASB issued ASU ~~No. 2016-02,~~2016-13, ~~Leases (Topic 842)~~Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which ~~superseded~~was further updated and clarified by the ~~lease requirements in ASC 840, Leases.~~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 ~~requires lessees~~also expands the disclosure requirements to ~~recognize lease assets~~enable users of financial statements to understand the entity’s assumptions, models, and ~~liabilities on the balance sheet, as well as to disclose key information about leasing arrangements. Although the new ASU requires both operating~~methods for estimating expected credit losses. The guidance is effective for fiscal years and ~~finance leases to be disclosed on the balance sheet, a distinction between the two types still exists as the economics of leases can vary. In July 2018, the FASB issued ASU No.~~ ~~2018-11,~~ ~~“Leases (Topic 842): Targeted Improvements”, which provided entities with an alternative modified transition method, for which, comparative~~interim periods ~~including the disclosures related to~~within those ~~periods, are not restated.~~fiscal years beginning after December 15, 2019. The Company adopted ASU ~~No. 2016-02 and ASU 2018-11 as of October 1, 2019, using~~2016-13 on a modified retrospective approach, which allowed for the recognition of a cumulative effect of applying the new standard as an adjustment to the opening balance sheet of retained earnings, while continuing to present all prior periods under previous lease accounting guidance. The Company’s adoption of the new standard resulted in the recognition of additional right-of-use (“ROU”) lease assets of $107.5 million and additional lease liabilities of $113.0 million, with no material cumulative effect adjustment to equity as of the date of adoption. The difference between ROU assets and lease liabilities was driven primarily by prepaid lease payments, deferred and accrued lease incentives, and restructuring related accruals that were reclassified to the ROU asset balance as ofbasis effective October 1, ~~2019. The income tax accounting impact of ASC 842 adoption resulted in recording of deferred tax assets and tax liabilities of $29.7 million as of October 1, 2019.~~2020. The adoption of ~~the new standard did not have a material impact on the Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flows.~~

As allowed under the new accounting standard, the Company elected to apply the package of practical expedients to carry forward the original lease determinations, lease classifications, and accounting of initial direct costs for all asset classes at the time of adoption. The Company elected to apply the practical expedient for all of its leases to account for the lease and non-lease components as a single, combined lease component. Therefore, all fixed payments associated with the lease, including non-lease components, are included in the ROU asset and the lease liability. Any variable payments related to the lease are recognized as lease expense when and as incurred. The Company also elected not to apply the recognition requirements to leases of twelve months or less. These leases are expensed on a straight-line basis and no operating lease liability is recorded.

In accordance with Topic 842, the Company determines if an arrangement is a lease at inception, considering whether the contract conveys a right to control the use of the identified asset for a period of time in exchange for consideration. Leases are classified as operating or finance leases at the commencement date of the lease. ROU assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. Lease liabilities are classified between current and long-term liabilities based on their payment terms. The operating lease ROU asset includes prepaid rent and reflects the unamortized balance of lease incentives. Our leases may include renewal options, and we include the renewal option in the lease term if we conclude that it is reasonably certain that we will exercise that option. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease payments that do not depend on an index or a rate, such as the Company’s proportionate share of actual costs for utilities, common area maintenance, insurance, and property taxes, are excluded from the measurement of the lease liability, unless subject to fixed minimum requirements and are recognized as variable lease cost when the obligation for that payment is incurred.

As most of the Company’s leases do not provide the lease implicit rates, the Company uses its incremental borrowing rates as the discount rate, adjusted as applicable, based on the information available at the lease commencement dates to determine the present value of lease payments. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow, on a collateralized basis and in a similar economic environment, over the term of a lease. The Company may use the lease implicit rate, if readily determinable, as the discount rate to determine the present value of lease payments. As of October 1, 2019, the Company used an average discount rate of approximately 4.6%, based on an estimate of the Company’s incremental borrowing rate. See ~~Note 11 – Leases~~ ~~for additional information.~~

We review the impairment of our ROU assets consistent with the approach applied for our other long-lived assets. Long-lived fixed assets held and used are reviewed for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Circumstances such as the discontinuation of a product or product line, a sudden or consistent decline in the sales forecast for a product, changes in technology or in the way an asset is being used, a history of operating or cash flow losses or an adverse change in legal factors or in the business climate, among others, may trigger an impairment review. If such indicators are present, the Company performs an undiscounted cash flow analysis to determine if impairment exists. The asset value would be deemed impaired if the undiscounted cash flows generated did not exceed the carrying value of the respective asset group. If impairment is determined to exist, any related impairment loss is calculated based on fair value.

~~In February 2018, the FASB issued~~ ASU ~~No. 2018-02,~~ ~~Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”),~~ which allows for an optional reclassification from AOCI to retained earnings for stranded tax effects as a result of the Tax Cuts and Jobs Act (the “Tax Reform Act”). Effective October 1, 2019, we adopted ASU No. 2018-02 and elected to reclassify the income tax effects of the Tax Reform Act from AOCI to Retained Earnings, which resulted in reclassification of $0.3 million from AOCI to Retained Earnings.

‎

~~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)~~

~~In August 2017, the FASB issued~~ ~~ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~. This guidance amends certain rules for hedging relationships, expands the types of strategies that are eligible for hedge accounting treatment to more closely align the results of hedge accounting with risk management activities and amends disclosure requirements related to fair value and net investment hedges. The Company adopted this guidance effective October 1, 2019. The adoption of the guidance2016-13 did not have a material impact on the Company’s condensed consolidated financial ~~statements~~statements. Refer to Note 6 - Receivables and ~~related disclosures.~~Concentration of Credit 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 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 Company adopted ASU 2018-15 prospectively to all implementation costs incurred after October 1, 2020, the date of adoption. Before the adoption of the standard, 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 Effects of Reference 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 concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, which adds implementation guidance to clarify certain optional expedients in Topic 848. The ASUs can be adopted no later than December 31, 2022 with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance.

Transaction related charges

Transaction related charges consist of transaction costs from (1) qualifying acquisition transactions, whether or not consummated, 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; (2) subsequent integration related project 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. ~~Transaction costs~~Qualifying cost types include, but are not limited to, banking, advisory, legal, accounting, valuation, and other professional fees directly related to the respective transactions. See Note 2 - Divestituresand Note 3 – Acquisitions~~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 and March 31, 2019:~~2020:

Three Month Periods Ended
Six Month Periods Ended
(in millions)
March 29, 2020
March 31, 2019
March 29, 2020
March 31, 2019
Coevorden operations divestiture
$
1.5
$
—
$
1.7
$
—
GBL divestiture
2.7
2.5
5.1
2.5
Omega Sea acquisition
1.3
—
1.3
—
Other
1.7
2.8
3.2
9.1
Total transaction-related charges
$
7.2
$
5.3
$
11.3
$
11.6
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 Ended				Six Month Periods Ended
(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Armitage acquisition and integration	$	2.0	$	0	$	6.8	$	0
Coevorden operations divestiture and separation	2.0		1.5		4.8		1.7
GBL divestiture and separation	0.9		2.7		2.7		5.1
Omega Sea acquisition and integration	0.1		1.3		0.2		1.3
Other	4.7		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 ~~Statement~~Statements of Income for the three and six month periods ended April 4, 2021 and March 29, ~~2020~~2020:


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
(Loss) income from discontinued operations before income taxes	$	(1.0)	$	1.4	$	(1.3)	$	3.8
Income tax expense (benefit) from discontinued operations	0.1		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 three and ~~March 31, 2019:~~

Three Month Periods Ended
Six Month Periods Ended
(in millions)
March 29, 2020
March 31, 2019
March 29, 2020
March 31, 2019
Income from discontinued operations before income taxes - GBL
$
1.4
$
965.5
$
3.8
$
981.4
Loss from discontinued operations before income taxes - GAC
—
(6.2)
—
(115.5)
Income from discontinued operations before income taxes
1.4
959.3
3.8
865.9
Income tax expense (benefit) from discontinued operations
—
175.7
(0.5)
165.5
Income from discontinued operations, net of tax
1.4
783.6
4.3
700.4
Income from discontinued operations attributable to controlling interest, net of tax
$
1.4
$
783.6
$
4.3
$
700.4

~~GBL~~

~~On January 2, 2019,~~six month periods ended April 4, 2021 the Company ~~completed~~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 ~~GBL business pursuant~~Global Batteries & Lighting ("GBL") and Global Auto Care ("GAC") divisions to ~~the GBL acquisition agreement with~~ Energizer Holdings, Inc. ~~(“Energizer”~~("Energizer") ~~for cash proceeds of $1,956.2 million, resulting in a pre-tax gain on sale of $989.8 million~~ during the year ended September 30, 2019, including the settlement of customary purchase price adjustments for working capital and assumed indebtedness, recognition of tax and legal indemnifications under the acquisition agreement and an estimated contingent purchase price adjustment for the settlement of the planned divestiture of the Varta® consumer batteries business by Energizer. The results of operations and gain on sale for disposal of the GBL business were recognized as a component of discontinued operations during the year ended September 30, 2019.

The GBL acquisition agreement provided for a purchase price adjustment that was contingent upon the completion of the divestiture of the Varta® consumer battery, chargers, portable power and portable lighting business in the EMEA region by Energizer, including manufacturing and distribution facilities in Germany. The purchase price adjustment included a downward adjustment equal to 75% of the difference between the divestiture sale price and the target sale price of $600 million, not to exceed $200 million, or a potential upward adjustment equal to 25% of the excess purchase price. Effective January 2, 2020, Energizer closed its divestiture of the Varta® consumer batteries business to Varta Aktiengesellschaft (“Varta AG”) with an aggregate purchase price of €180 million and, in accordance with the terms and conditions of the GBL acquisition agreement, the Company was obligated to contribute up to $200.0 million to Energizer in connection with the sale. The Company settled the outstanding balance with Energizer for $197.0 million during the three month period ended March 29, 2020.

The Company and Energizer ~~have~~ agreed to indemnify each other for losses arising from certain breaches of the ~~GBL~~ 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 ~~has~~ agreed to indemnify the Company for certain liabilities assumed by Energizer, in each case as described in the acquisition ~~agreement.~~agreements. As of ~~March 29,~~April 4, 2021 and September 30, 2020, the Company recognized ~~$47.6~~$36.1 million and $51.6 million, respectively, related to ~~indemnifications~~indemnification payables in accordance with the acquisition ~~agreement,~~agreements, including ~~$31.7~~$17.0 million and $33.0 million, respectively, within ~~Indemnification Payable to Energizer on the Company’s Consolidated Condensed Statement of Financial Position~~Other Current Liabilities, primarily attributable to current income tax indemnifications, and ~~$15.9~~$19.1 million and $18.6 million, respectively, within Other Long-Term Liabilities on the Company’s Condensed Consolidated ~~Condensed Statement~~Statements of Financial Position, primarily attributable to income tax indemnifications associated with previously recognized uncertain tax benefits.

The Company and Energizer entered into related agreements that became effective upon the consummation of the acquisition including a customary transition services agreement (“TSA”) and reverse TSA. The TSA and reverse TSA are recognized as a component of continuing operations for periods following the completion of the GBL sale. See ~~Note 18 – Related Party Transactions~~ ~~for additional discussion.~~

~~SPECTRUM BRANDS HOLDINGS, INC.SB/RH HOLDINGS, LLC~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in millions, unaudited)~~

~~NOTE 2 – DIVESTITURES (continued)~~

The following table summarizes the components of Income from Discontinued Operations, Net of Tax associated with the GBL divestiture in the accompanying Condensed Consolidated Statements of Operations for the three and six month period ended March 31, 2019:

Three Month Period Ended
Six Month Period Ended
(in millions)
March 31, 2019
March 31, 2019
Net sales
$
—
$
249.0
Cost of goods sold
—
164.6
Gross profit
—
84.4
Operating expenses
2.3
57.0
Operating (loss) income
(2.3)
27.4
Interest expense
10.0
23.3
Other non-operating expense, net
—
0.5
Gain on sale
(996.3)
(996.3)
Reclassification of accumulated other comprehensive income
18.5
18.5
Income from discontinued operations before income taxes
$
965.5
$
981.4

During the three and six month periods ended March 29, 2020, the Company recognized incremental pre-tax gain on sale of $1.4 million and $3.8 million, respectively, for changes to tax and legal indemnifications and other agreed-upon funding under the acquisition agreement.

Beginning in January 2018, the Company ceased the recognition of depreciation and amortization of long-lived assets associated with GBL, therefore 0 depreciation and amortization was recognized during the three and six month periods ended March 31, 2019. 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. The Company paid down the Term Loans after the completion of the GBL divestiture. NaN impairment loss was recognized as the proceeds from the disposal of the business were more than the carrying value.

During the three and six month periods ended March 31, 2019, the Company incurred transaction costs of $2.3 million and $12.9 million, respectively, associated with the divestiture, which were recognized as a component of income from discontinued operations. Transaction costs were expensed as incurred and included fees for investment banking services, legal, accounting, due diligence, tax, valuation and various other services necessary to complete the transaction. After the completion of the divestiture, the Company incurred incremental costs to facilitate separation of shared operations, development of transferred shared service operations, platforms and personnel transferred under the transaction which have been recognized as Transaction Related Charges as part of continuing operations on the Company’s Condensed Consolidated Statement of Income. See ~~Note 1 – Basis of Presentation and Significant Accounting Policies~~ ~~for further detail.~~

~~GAC~~

On January 28, 2019, the Company completed the sale of its GAC business pursuant to the GAC acquisition agreement with Energizer for $938.7 million in cash proceeds and $242.1 million in stock consideration of common stock of Energizer, resulting in the write-down of net assets held for sale of $111.0 million during the year ended September 30, 2019, including the settlement of customary purchase price adjustments for working capital and assumed indebtedness, and recognition of tax and legal indemnifications in accordance with the GAC acquisition agreement. The results of operations and write-down of net assets held for sale for the disposal of the GAC business were recognized as a component of discontinued operations during the year ended September 30, 2019.

The Company and Energizer have agreed to indemnify each other for losses arising from certain breaches of the GAC 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 has agreed to indemnify the Company for certain liabilities assumed by Energizer, in each case as described in the acquisition agreement. As of March 29, 2020, the Company has recognized $1.4 million related to indemnifications in accordance with the acquisition agreement within Other Long-Term Liabilities on the Company’s Condensed Consolidated Statement of Financial Position primarily attributable to income tax indemnifications associated with previously recognized uncertain tax benefits.

The Company and Energizer entered into related agreements ancillary to the GAC acquisition that became effective upon the consummation of the acquisition, including a TSA and reverse TSA, a supply agreement with the Company’s H&G business, as well as a shareholder agreement. The TSA and reverse TSA are recognized as a component of continuing operations for periods following the completion of the GAC sale. The supply agreement with the Company’s H&G business is recognized as a component of net sales and continuing operations. Sales from the Company’s H&G segment to GAC discontinued operations prior to the divestiture have been recognized as a component of net sales and continuing operations for all comparable periods. See ~~Note 18 – Related Party Transactions~~ ~~for additional discussion.~~

The following table summarizes the components of income from discontinued operations before income taxes associated with the GAC divestiture in the accompanying Consolidated Statements of Operations for the three and six month periods ended March 31, 2019:

Three Month Period Ended
Six Month Period Ended
(in millions)
March 31, 2019
March 31, 2019
Net sales
$
22.1
$
87.7
Cost of goods sold
13.2
52.5
Gross profit
8.9
35.2
Operating expenses
8.0
35.7
Operating income (loss)
0.9
(0.5)
Interest expense
0.2
0.7
Other non-operating expense, net
0.1
0.2
Write-down of assets of business held for sale to fair value less cost to sell
3.5
110.8
Reclassification of accumulated other comprehensive income
3.3
3.3
Loss from discontinued operations before income taxes
$
(6.2)
$
(115.5)

~~SPECTRUM BRANDS HOLDINGS, INC.SB/RH HOLDINGS, LLC~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in millions, unaudited)~~

~~NOTE 2 – DIVESTITURES (continued)~~

Beginning in November 2018, the Company ceased the recognition of depreciation and amortization of long-lived assets associated with GAC, resulting in $1.4 million of depreciation and amortization recognized during the six month period ended March 31, 2019. Interest expense consists of interest from debt directly held by subsidiaries of the business held for sale, including interest from capital leases. During the six month period ended March 31, 2019, the Company recognized a $110.8 million write-down on net assets held for sale associated with the GAC divestiture attributable to the expected fair value to be realized from the sale, net of transaction costs. ~~The impairment was primarily driven by the change in value of stock consideration to be received as a component of the purchase price from Energizer.~~

During the three and six month periods ended March 31, 2019, the Company incurred transaction costs of $3.0 million and $8.8 million, respectively, associated with the divestiture which have been recognized as a component of income from discontinued operations on the Consolidated Statements of Income. Transaction costs are expensed as incurred and include fees for investment banking services, legal, accounting, due diligence, tax, valuation and various other services necessary to complete the transactions. After the completion of the divestiture, the Company incurred incremental costs to facilitate separation of shared operations, development of transferred shared service operations, platforms and personnel transferred under the transaction which have been recognized as Transaction Related Charges as part of continuing operations on the Company’s Condensed Consolidated Statement of Income. See ~~Note 1 – Basis of Presentation and Significant Accounting Policies~~ ~~for further detail.~~

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 ~~$30.1 million. As of March 29, 2019,~~$29.0 million received during the net assets of the Coevorden Operations were legally transferred to UPP, with the recognition of a receivable for the cash proceeds included within Other Non-Trade Receivables on the Company’s Condensed Consolidated Statement of Financial Position. Cash proceeds were subsequently received on Marchyear ended September 30, ~~2019.~~2020. The divestiture ~~does~~did not constitute a strategic shift for the Company and therefore iswas not considered discontinued operations. The divestiture of the Coevorden Operations iswas 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. ~~The Company realized~~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 ~~TSA.~~transaction service arrangement (TSA). The Company ~~will continue~~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 ~~will lease~~leases and ~~operate~~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 ~~March 10,~~October 26, 2020, the Company entered into an asset purchase agreement with Omega Sea, LLC (“Omega”), a manufacturer and marketer of premium fish foods and consumable goods for the home and commercial aquarium markets, primarily consistingacquired all of the ~~Omega~~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, ~~for a purchase price of approximately $17.0 million.~~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 ~~Omega’s operations~~Armitage, since ~~March 10,~~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 ~~March 29, 2020.~~

April 4, 2021.

The Company has recorded an allocation of the purchase price to ~~the Company’s~~ tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of ~~March 10,~~the October 26, 2020 ~~the~~ 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, ~~resulting in the recognition of $4.4 million for the indefinite lived intangible asset Omega trade name and the allocation of goodwill of $8.6 million, allocated to the GPC segment and~~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.

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 assumed	51.0
Cash consideration	$	136.7


(in millions)	Purchase Price Allocation
Cash and cash equivalents	$	6.9
Trade receivables, net	16.7
Other receivables	1.9
Inventories	16.3
Prepaid expenses and other current assets	0.2
Property, plant and equipment, net	3.0
Operating lease assets	0.1
Deferred charges and other	0.9
Goodwill	90.7
Intangible assets, net	88.6
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 Amount

Weighted Average Useful Life (Years)

Tradenames

74.3

Indefinite

Customer relationships

14.3

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 completion 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 be 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 ~~Omega~~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.

SPECTRUM BRANDS HOLDINGS, ~~INC.SB/~~INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 4 - RESTRUCTURING AND RELATED CHARGES

Global Productivity Improvement ~~Plan~~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 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 ~~with~~from Energizer TSAs and reverse TSAs. Refer to Note 2 – Divestitures and Note 18 – Related Party Transactionsfor 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 Company’s shared operations and commercial business strategy in certain regions and local jurisdictions; among others. Total cumulative costs incurred associated with the project were ~~$101.7~~$136.3 million as of ~~March 29, 2020,~~April 4, 2021, with approximately ~~$89.4~~$31.6 million forecasted in the foreseeable future. The project costs are anticipated to be incurred through the fiscal year ending September 30, 2022.

Other Restructuring Activities– The Company may enter into small, less significant initiatives and restructuring related activities to reduce costs and improve margins throughout the organization. Individually these activities are not substantial and occur over a shorter time period (generally less than 12 months).

The following summarizes restructuring and related charges for the three and six month periods ended April 4, 2021 and March 29, ~~2020 and March 31, 2019:~~

2020:


	Three Month Periods Ended				Six Month Periods Ended					Three Month Periods Ended				Six Month Periods Ended
(in millions)	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019		(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Global productivity improvement plan	$	21.2	$	12.7	$	47.9	$	18.5
Global productivity improvement program									Global productivity improvement program	$	1.7	$	21.2	$	10.9	$	47.9
Other restructuring activities		0.7		(0.1)		1.5		3.0	Other restructuring activities	2.4		0.7		2.4		1.5
Total restructuring and related charges	$	21.9	$	12.6	$	49.4	$	21.5	Total restructuring and related charges	$	4.1	$	21.9	$	13.3	$	49.4
Reported as:									Reported as:
Cost of goods sold	$	2.9	$	0.2	$	12.8	$	1.0	Cost of goods sold	$	1.3	$	2.9	$	1.4	$	12.8
Operating expense		19.0		12.4		36.6		20.5	Operating expense	2.8		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, ~~and March 31, 2019~~ ~~and~~ cumulative costs for current restructuring initiatives, and estimated future costs to be incurred as of ~~March 29, 2020~~, April 4, 2021, by cost type.

Termination
Other
(in millions)
Benefits
Costs
Total
For the three month period ended March 29, 2020
$
6.2
$
15.7
$
21.9
For the three month period ended March 31, 2019
2.1
10.5
12.6
For the six month period ended March 29, 2020
11.4
38.0
49.4
For the six month period ended March 31, 2019
3.6
17.9
21.5
Cumulative costs through March 29, 2020
18.6
83.1
101.7
Future costs to be incurred
3.8
85.6
89.4


(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, 2020	6.2		15.7		21.9
For the six month period ended April 4, 2021	3.2		10.1		13.3
For the six month period ended March 29, 2020	11.4		38.0		49.4
Cumulative costs through April 4, 2021	23.6		112.7		136.3
Estimated future costs to be incurred	2.0		29.6		31.6

The following is a rollforward of the accrual related to all restructuring and related activities, included within Other Current Liabilities, by cost type for the six month period ended ~~March 29, 2020.~~

April 4, 2021.


	Termination		Other
(in millions)	Benefits		Costs		Total		(in millions)	Termination Benefits		Other Costs		Total
Accrual balance at September 30, 2019	$	6.6	$	27.0	$	33.6
Adoption of ASU 842 (Note 1)		—		(4.3)		(4.3)
Accrual balance at September 30, 2020							Accrual balance at September 30, 2020	$	4.1	$	6.4	$	10.5
Provisions		3.3		31.0		34.3	Provisions	1.5		6.4		7.9
Cash expenditures		(3.5)		(35.2)		(38.7)	Cash expenditures	(1.9)		(12.1)		(14.0)
Non-cash items		—		(1.2)		(1.2)	Non-cash items	0		0.1		0.1
Accrual balance at March 29, 2020	$	6.4	$	17.3	$	23.7
Accrual balance at April 4, 2021							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, ~~and March 31, 2019,~~ cumulative costs incurred through ~~March 29, 2020,~~April 4, 2021, and estimated future ~~expected~~ costs to be incurred by ~~Spectrum’s segments of continuing operations:~~

the Company’s segments:

(in millions)
HHI
HPC
GPC
H&G
Corporate
Total
For the three month period ended March 29, 2020
$
0.2
$
1.7
$
6.4
$
0.2
$
13.4
$
21.9
For the three month period ended March 31, 2019
0.4
1.3
2.3
0.3
8.3
12.6
For the six month period ended March 29, 2020
0.7
2.8
16.7
0.4
28.8
49.4
For the six month period ended March 31, 2019
3.2
1.5
4.9
1.0
10.9
21.5
Cumulative costs through March 29, 2020
1.1
10.9
16.5
2.1
71.1
101.7
Future costs to be incurred
1.8
7.1
3.3
4.6
72.6
89.4

‎


(in millions)	HHI		HPC		GPC		H&G		Corporate		Total
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, 2020	0.2		1.7		6.4		0.2		13.4		21.9
For the six month period ended April 4, 2021	0		4.1		2.1		0		7.1		13.3
For the six month period ended March 29, 2020	0.7		2.8		16.7		0.4		28.8		49.4
Cumulative costs through April 4, 2021	1.5		15.7		22.8		2.2		94.1		136.3
Estimated future costs to be incurred	0.8		2.9		3.5		2.1		22.3		31.6

SPECTRUM BRANDS HOLDINGS, ~~INC.SB/~~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 six month periods ended April 4, 2021 and March 29, 2020, ~~and March 31, 2019,~~ by the Company’s key revenue streams, segments and geographic region (based upon destination):


	Three Month Period Ended April 4, 2021
(in millions)	HHI		HPC		GPC		H&G		Total
Product Sales
NA	$	378.6	$	115.3	$	182.4	$	166.8	$	843.1
EMEA	0		123.3		94.2		0		217.5
LATAM	10.0		40.6		4.4		1.5		56.5
APAC	0.7		15.9		8.8		0		25.4
Licensing	0.2		2.8		2.1		0.5		5.6
Other	0		0		1.7		0		1.7
Total Revenue	$	389.5	$	297.9	$	293.6	$	168.8	$	1,149.8


	Three Month Period Ended March 29, 2020
(in millions)	HHI		HPC		GPC		H&G		Total
Product Sales
NA	$	313.6	$	98.7	$	166.3	$	137.8	$	716.4
EMEA	0.3		92.2		57.9		0		150.4
LATAM	9.9		28.3		3.3		0.9		42.4
APAC	5.0		12.6		6.2		0		23.8
Licensing	0.3		0.9		2.0		0.4		3.6
Other	0		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)	HHI		HPC		GPC		H&G		Total
Product Sales
NA	$	776.1	$	257.9	$	360.5	$	247.0	$	1,641.5
EMEA	0		290.9		175.5		0		466.4
LATAM	20.4		83.0		8.4		3.2		115.0
APAC	1.1		38.2		17.9		0		57.2
Licensing	0.6		6.4		3.9		0.8		11.7
Other	0		0		2.9		0		2.9
Total Revenue	$	798.2	$	676.4	$	569.1	$	251.0	$	2,294.7


		Three Month Period Ended March 29, 2020											Six Month Period Ended March 29, 2020
(in millions)		HHI		HPC		GPC		H&G		Total		(in millions)	HHI		HPC		GPC		H&G		Total
Product Sales	Product Sales											Product Sales
NA		$	313.6	$	98.7	$	166.3	$	137.8	$	716.4	NA	$	595.1	$	215.1	$	304.8	$	182.0	$	1,297.0
EMEA			0.3		92.2		57.9		—		150.4	EMEA	0.4		241.4		111.8		0		353.6
LATAM			9.9		28.3		3.3		0.9		42.4	LATAM	20.4		64.2		6.6		2.2		93.4
APAC			5.0		12.6		6.2		—		23.8	APAC	10.3		30.1		13.3		0		53.7
Licensing			0.3		0.9		2.0		0.4		3.6	Licensing	0.6		4.0		3.8		0.8		9.2
Other			—		—		1.2		—		1.2	Other	0		0		2.4		0		2.4
Total Revenue		$	329.1	$	232.7	$	236.9	$	139.1	$	937.8	Total Revenue	$	626.8	$	554.8	$	442.7	$	185.0	$	1,809.3

Three Month Period Ended March 31, 2019
(in millions)
HHI
HPC
GPC
H&G
Total
Product Sales
NA
$
313.1
$
91.4
$
140.9
$
137.5
$
682.9
EMEA
0.1
87.8
60.2
—
148.1
LATAM
11.7
28.5
3.3
0.9
44.4
APAC
5.8
11.8
7.6
—
25.2
Licensing
0.4
2.2
1.7
0.6
4.9
Other
—
—
1.2
—
1.2
Total Revenue
$
331.1
$
221.7
$
214.9
$
139.0
$
906.7
The Company has a broad range of customers including many large mass retail customers. During the three month period ended April 4, 2021, there were three large retail customers each exceeding 10% of consolidated Net Sales and representing 33.7% of consolidated Net Sales. During the six month period ended April 4, 2021, there were two large retail customers each exceeding 10% of consolidated Net Sales and representing 23.3% of consolidated Net Sales. During the three and six month periods ended March 29, 2020, there were three large retail customers each exceeding 10% of consolidated Net Sales and representing 37.2% and 34.1% of consolidated Net Sales, respectively.

Six Month Period Ended March 29, 2020
(in millions)
HHI
HPC
GPC
H&G
Total
Product Sales
NA
$
595.1
$
215.1
$
304.8
$
182.0
$
1,297.0
EMEA
0.4
241.4
111.8
—
353.6
LATAM
20.4
64.2
6.6
2.2
93.4
APAC
10.3
30.1
13.3
—
53.7
Licensing
0.6
4.0
3.8
0.8
9.2
Other
—
—
2.4
—
2.4
Total Revenue
$
626.8
$
554.8
$
442.7
$
185.0
$
1,809.3

Six Month Period Ended March 31, 2019
(in millions)
HHI
HPC
GPC
H&G
Total
Product Sales
NA
$
602.3
$
208.3
$
279.2
$
189.5
$
1,279.3
EMEA
0.2
227.6
112.5
—
340.3
LATAM
22.0
66.7
6.4
2.2
97.3
APAC
11.0
30.2
15.7
—
56.9
Licensing
0.7
6.1
3.4
0.6
10.8
Other
—
—
2.4
—
2.4
Total Revenue
$
636.2
$
538.9
$
419.6
$
192.3
$
1,787.0

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 time of sale based upon historical product return experience, adjusted for known trends, to arrive at the amount of consideration expected to ~~receive.~~be received. The allowance for product returns as of ~~March 29, 2020,~~April 4, 2021, and September 30, ~~2019~~2020 was ~~$20.9~~$22.2 million and ~~$19.2~~$23.1 million, respectively.

‎

SPECTRUM BRANDS HOLDINGS, ~~INC.SB/~~INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 6 - RECEIVABLES AND CONCENTRATION OF CREDIT RISK

The allowance for uncollectible receivables as of ~~March 29, 2020,~~April 4, 2021, and September 30, ~~2019~~2020 was ~~$5.3~~$6.6 million and ~~$4.9~~$6.4 million, respectively. The Company has a broad range of customers including many large mass retail ~~outlet chains, 3~~customers. As of ~~which have historically exceeded~~April 4, 2021, there were two large retail customers each exceeding 10% of consolidated Net ~~Sales and/or~~Trade Receivables and representing 27.3% of consolidated Net Trade Receivables. ~~These three~~As of September 30, 2020, there were two large retail customers ~~represented 37.2% and 37.7%~~each exceeding 10% of consolidated Net Sales for the three month periods ended March 29, 2020 and March 31, 2019, respectively, and 34.1% and 33.9% of Net Sales for the six month periods ended March 29, 2020 and March 31, 2019, respectively. These 3 customers also represented 28.0% and 29.9% of Trade Receivables ~~at March 29, 2020~~ and ~~September 30, 2019, respectively.~~

representing 28.4% of consolidated Net Trade Receivables .

NOTE 7 - INVENTORIES

Inventories consist of the following:


(in millions)	March 29, 2020		September 30, 2019		(in millions)	April 4, 2021		September 30, 2020
Raw materials	$	80.4	$	66.2	Raw materials	$	102.0	$	67.8
Work-in-process		56.7		46.4	Work-in-process	78.1		60.8
Finished goods		470.8		435.8	Finished goods	632.0		429.1
	$	607.9	$	548.4		$	812.1	$	557.7

NOTE 8 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:


(in millions)	March 29, 2020		September 30, 2019		(in millions)	April 4, 2021		September 30, 2020
Land, buildings and improvements	$	130.2	$	161.4	Land, buildings and improvements	$	132.0	$	134.8
Machinery, equipment and other		501.6		523.6	Machinery, equipment and other	554.4		520.0
Finance leases		198.6		197.2	Finance leases	202.0		200.8
Construction in progress		27.0		31.7	Construction in progress	31.0		29.8
Property, plant and equipment	$	857.4	$	913.9	Property, plant and equipment	919.4		885.4
Accumulated depreciation		(461.2)		(461.0)	Accumulated depreciation	(526.8)		(488.9)
Property, plant and equipment, net	$	396.2	$	452.9	Property, plant and equipment, net	$	392.6	$	396.5

Depreciation expense from property, plant and equipment for the three month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ was ~~$19.4~~$18.9 million and ~~$19.3~~$19.4 million, respectively; and for the six month periods ended April 4, 2021 and March 29, 2020 was $37.4 million and ~~March 31, 2019 was~~ $44.0 million, ~~and $52.5 million,~~ respectively. ~~During~~The decrease in depreciation for the six month period ended ~~March 31, 2019, the Company recognized incremental depreciation of $13.5 million~~April 4, 2021 is attributable to accelerated depreciation ~~on property plant and equipment~~realized as part of ~~HPC assets that were previously held for sale.~~

‎

exiting GPC operating facilities in LATAM in the prior year.

Table of ~~$15.5 million attributable to amortization expense on intangible assets of HPC that were previously held for sale.~~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

Goodwill consists of the following:

(in millions)
HHI
GPC
H&G
Total
As of September 30, 2019
$
702.1
$
430.4
$
195.6
$
1,328.1
Foreign currency impact
(3.0)
1.0
—
(2.0)
Omega Sea acquisition (Note 3)
—
8.6
—
8.6
Allocated to Assets Held for Sale - Coevorden Operations (Note 2)
—
(10.6)
—
(10.6)
As of March 29, 2020
$
699.1
$
429.4
$
195.6
$
1,324.1


(in millions)	HHI		GPC		H&G		Total
As of September 30, 2020	$	704.8	$	431.6	$	195.6	$	1,332.0
Foreign currency impact	6.3		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

~~Following~~

The Company considered the ~~recognition~~impact of the ~~Coevorden Operations as held for sale~~COVID-19 pandemic on its future operations and ~~allocation of goodwill,~~cash flows and concluded that, although the Company remeasured the fair value of its GPC reporting unit goodwill. The fair value of the remaining GPC reporting unit exceeded its carrying value by 17% and the Company did not recognize an impairment. The GPC reporting unit goodwill of $429.4 million as of March 29, 2020 is still deemed ‘at risk’ of impairment in the near term if operating performance does not continue to improve in line with management expectations, or a negative long-term outlook for the business, or another change in factors and assumptions such as discount rate. The duration and severity of the COVID-19 pandemic could result in ~~additional~~ future impairment charges ~~for the GPC reporting unit goodwill, and potentially other reporting unit goodwill~~ not currently considered, ~~‘at risk’. While we have concluded that a~~no triggering event ~~did not occur~~occurred during the three and six month ~~period~~periods ended ~~March 29, 2020, a prolonged pandemic could negatively impact the results~~April 4, 2021 to indicate an impairment of ~~operations, net sales and earnings growth rates, changes in key assumptions and other global and regional macroeconomic factors.~~

goodwill.

The carrying value of indefinite-lived intangibles and definite-lived intangibles assets subject to amortization and accumulated amortization are as follows:



	March 29, 2020						September 30, 2019							April 4, 2021						September 30, 2020
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net		(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Amortizable Intangible Assets:													Amortizable Intangible Assets:
Customer relationships	$	684.8	$	(344.8)	$	340.0	$	694.9	$	(329.7)	$	365.2	Customer relationships	$	710.2	$	(389.4)	$	320.8	$	692.1	$	(367.9)	$	324.2
Technology assets		175.7		(96.4)		79.3		179.4		(90.9)		88.5	Technology assets	153.6		(91.7)		61.9		175.7		(104.1)		71.6
Tradenames		160.8		(125.3)		35.5		160.4		(118.1)		42.3	Tradenames	158.1		(136.8)		21.3		161.0		(132.6)		28.4
Total Amortizable Intangible Assets		1,021.3		(566.5)		454.8		1,034.7		(538.7)		496.0	Total Amortizable Intangible Assets	1,021.9		(617.9)		404.0		1,028.8		(604.6)		424.2
Indefinite-lived Intangible Assets - Tradenames		998.5		—		998.5		1,011.1		—		1,011.1	Indefinite-lived Intangible Assets - Tradenames	1,092.4		—		1,092.4		1,007.5		—		1,007.5
Total Intangible Assets	$	2,019.8	$	(566.5)	$	1,453.3	$	2,045.8	$	(538.7)	$	1,507.1	Total Intangible Assets	$	2,114.3	$	(617.9)	$	1,496.4	$	2,036.3	$	(604.6)	$	1,431.7

The Company assessed the indefinite-lived intangible assets and definite-lived intangible assets associated with the continuing commercial DCF business following recognition of the Coevorden Operations as held for sale. During the six month period ended March 29, 2020, the Company recognized an impairment of $16.6 million on indefinite-lived intangible assets of tradenames associated with the commercial DCF business due to the reduced value of the associated tradenames, leaving no excess fair value as of the measurement date and risk of future impairment. For the remaining tradenames associated with the DCF business, there were $3.3 million of indefinite lived intangible assets that could be deemed at risk of future impairment due to the limited excess fair value. For definite lived intangible assets, the Company recognized an impairment of $7.6 million due to the incremental cash flow risk associated with the commercial DCF business following the planned divestiture of the Coevorden Operations, which consisted of the remaining carrying cost of the definite lived intangibles assets associated with the commercial DCF business.

There were no ~~additional~~ impairments identified during the three and six month periods ended ~~March 29, 2020.~~April 4, 2021. While a triggering event did not occur during the three and six month ~~period~~periods ended ~~March 29, 2020,~~April 4, 2021, a prolonged COVID-19 pandemic ~~could~~ negatively ~~impact~~impacting net sales growth rate, ~~change~~changes in key assumptions, and other global and regional macroeconomic factors, ~~that~~ could result in additional future impairment charges for indefinite-lived intangible assets.

Amortization expense from the intangible assets for the three month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ was ~~$16.9~~$19.8 million and ~~$17.4~~$16.9 million, respectively; and for the six month periods ended April 4, 2021 and March 29, 2020 was $37.0 million and ~~March 31, 2019 was~~ $34.0 million, ~~and $50.2 million,~~ respectively. ~~During the six month period ended March 31, 2019, there was an incremental amortization expense~~

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 changes in foreign currency, the Company estimates annual amortization expense of intangible assets for the next five fiscal years will be as follows:

(in millions)
Amortization
2020
$
77.2
2021
60.6
2022
46.6
2023
44.0
2024
43.3

‎

~~SPECTRUM BRANDS HOLDINGS, INC.SB/RH HOLDINGS, LLC~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in millions, unaudited)~~


(in millions)	Amortization
2021	$	76.3
2022	56.0
2023	45.9
2024	45.8
2025	43.7

NOTE 10 - DEBT

Debt consists of the following:


	SBH								SB/RH
	March 29, 2020				September 30, 2019				March 29, 2020				September 30, 2019					April 4, 2021				September 30, 2020
(in millions)	Amount		Rate		Amount		Rate		Amount		Rate		Amount		Rate		(in millions)	Amount		Rate		Amount		Rate
Spectrum Brands Inc.																	Spectrum Brands Inc.
Revolver Facility, variable rate, expiring March 6, 2022	$	780.0	3.3	%	$	—	—	%	$	780.0	3.3	%	$	—	—	%
6.625% Notes, due November 15, 2022		—	—	%		117.4	6.6	%		—	—	%		117.4	6.6	%
Revolver Facility, variable rate, expiring June 30, 2025																	Revolver Facility, variable rate, expiring June 30, 2025	$	0	0	%	$	—	—	%
Term Loan Facility, variable rate, due March 3, 2028																	Term Loan Facility, variable rate, due March 3, 2028	400.0		2.5	%	—		—	%

6.125% Notes, due December 15, 2024		250.0	6.1	%		250.0	6.1	%		250.0	6.1	%		250.0	6.1	%	6.125% Notes, due December 15, 2024	—		—	%	250.0		6.1	%
5.00% Notes, due October 1, 2029		300.0	5.0	%		300.0	5.0	%		300.0	5.0	%		300.0	5.0	%
5.75% Notes, due July 15, 2025		1,000.0	5.8	%		1,000.0	5.8	%		1,000.0	5.8	%		1,000.0	5.8	%	5.75% Notes, due July 15, 2025	450.0		5.8	%	1,000.0		5.8	%
4.00% Notes, due October 1, 2026		468.9	4.0	%		465.0	4.0	%		468.9	4.0	%		465.0	4.0	%	4.00% Notes, due October 1, 2026	500.6		4.0	%	499.1		4.0	%
5.00% Notes, due October 1, 2029																	5.00% Notes, due October 1, 2029	300.0		5.0	%	300.0		5.0	%
5.50% Notes, due July 15, 2030																	5.50% Notes, due July 15, 2030	300.0		5.5	%	300.0		5.5	%
3.875% Notes, due March 15, 2031																	3.875% Notes, due March 15, 2031	500.0		3.9	%	0		0	%
Other notes and obligations		3.3	10.4	%		9.5	10.4	%		3.3	10.4	%		9.5	10.4	%	Other notes and obligations	2.6		7.7	%	3.2		7.6	%
Obligations under capital leases		163.0	5.6	%		165.6	5.6	%		163.0	5.6	%		165.6	5.6	%	Obligations under capital leases	156.4		5.7	%	160.5		5.6	%
Total Spectrum Brands, Inc. debt		2,965.2				2,307.5				2,965.2				2,307.5			Total Spectrum Brands, Inc. debt	2,609.6				2,512.8
Spectrum Brands Holdings, Inc.
Salus - unaffiliated long-term debt of consolidated VIE		77.0	—	%		77.0	—	%		—	—	%		—	—	%
Total SBH debt		3,042.2				2,384.5				2,965.2				2,307.5
Unamortized discount on debt		(0.1)				(0.2)				—				—			Unamortized discount on debt	(1.0)				0
Debt issuance costs		(29.7)				(33.0)				(28.8)				(31.5)			Debt issuance costs	(38.4)				(36.5)
Less current portion		(13.3)				(136.9)				(13.3)				(136.9)			Less current portion	(18.6)				(15.3)
Long-term debt, net of current portion	$	2,999.1			$	2,214.4			$	2,923.1			$	2,139.1			Long-term debt, net of current portion	$	2,551.6			$	2,461.0

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, the Company had borrowing availability of ~~$1.4~~$576.6 million at ~~March 29, 2020,~~April 4, 2021, net of outstanding letters of credit of ~~$18.6~~$23.4 million. ~~Subsequent to~~

On March ~~29, 2020,~~3, 2021, the Company, ~~increased~~through its ~~overall capacity~~wholly owned subsidiary, Spectrum Brands, Inc ("SBI"), completed its offering of $500.0 million aggregate principal amount of its 3.875% Senior Notes due March 2031, and entered into a new Term Loan Facility (as defined below) in the 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 ~~Revolver Facility by $90.0 million, resulting~~6.125% Notes in a ~~total capacity~~cash tender offer and call and $550.0 million aggregate principal amount of ~~$890 million. All amounts under~~ the ~~additional capacity~~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 bemature on March 3, 2028. The Term Loan Facility is subject to a rate per annum equal to either ~~LIBOR~~(1) the LIBO Rate (as defined in the Amended Credit Agreement), subject to a 0.50% floor, adjusted for statutory reserves, plus a margin ~~ranging between~~of 2.00% ~~to 2.50%~~ per annum or ~~base~~(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 ~~plus margin ranging from 1.00%~~ to ~~1.50%.~~

~~Effective November 15, 2019,~~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 ~~completed~~incurred $5.1 million of debt issuance costs, which is being amortized with a corresponding charge to interest expense over the ~~tender and call of its 6.625% Senior Unsecured Notes with an outstanding principal of $117.4 million, recognizing a loss on extinguishment~~remaining life of the ~~debt~~loan.

Pursuant to a guarantee agreement, SB/RH and the direct and indirect wholly-owned material domestic subsidiaries of ~~$2.6 million including a non-cash charge of $1.1 million attributable~~SBI have guaranteed SBI’s obligations under the Amended Credit Agreement and related loan documents. Pursuant to the ~~write-off~~Security Agreement, dated as of ~~deferred financing costs associated~~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 ~~debt.~~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.

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 ITinformation technology services arrangements and recognized assets identified in the arrangements as part of operating ~~ROU~~right-of-use ("ROU") assets on the Company’s Condensed Consolidated ~~Statement~~Statements of Financial Position as of ~~March 29,~~April 4, 2021 and September 30, 2020. We elected to exclude certain supply ~~chain contracts~~agreements that contain embedded leases for manufacturing facilities or dedicated manufacturing lines from our ROU asset and liability calculation based on the insignificant impact to our financial statements.

The following is a summary of the ~~Company’s~~ leases recognized on the Company’s Condensed Consolidated ~~Statement~~Statements of Financial Position as of ~~March 29,~~April 4, 2021 and September 30, 2020:


~~(in millions)~~	~~Line Item~~	~~March 29, 2020~~
~~Assets~~
~~Operating~~	~~Operating lease assets~~	$	~~93.6~~
~~Finance~~	~~Property, plant and equipment, net~~		~~139.0~~
~~Total leased assets~~		$	~~232.6~~
~~Liabilities~~
~~Current~~
~~Operating~~	~~Other current liabilities~~	$	~~19.6~~
~~Finance~~	~~Current portion of long-term debt~~		~~10.0~~
~~Long-term~~
~~Operating~~	~~Long-term operating lease liabilities~~		~~79.7~~
~~Finance~~	~~Long-term debt, net of current portion~~		~~153.0~~
~~Total lease liabilities~~		$	~~262.3~~


(in millions)	Line Item	April 4, 2021		September 30, 2020
Assets
Operating	Operating lease assets	$	103.0	$	103.8
Finance	Property, plant and equipment, net	129.8		136.3
Total leased assets		$	232.8	$	240.1
Liabilities
Current
Operating	Other current liabilities	$	24.9	$	22.4
Finance	Current portion of long-term debt	12.0		12.1
Long-term
Operating	Long-term operating lease liabilities	86.2		88.8
Finance	Long-term debt, net of current portion	144.4		148.4
Total lease liabilities		$	267.5	$	271.7

‎

As of April 4, 2021, the Company had $19.7 million of commitments related to leases executed that have not yet commenced.

SPECTRUM BRANDS HOLDINGS, ~~INC.SB/~~INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 11 – LEASES (continued)

~~As of March 29, 2020, we have~~ ~~operating~~ ~~leases with an obligation and corresponding ROU assets of $1.7 million that was not recognized and will commence in April, 2020.~~

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 ~~Statement~~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 ~~Statement~~Statements of Income.

The components of lease costs recognized in the Condensed Consolidated ~~Statement~~Statements of Income for the three and six month periods ~~ending~~ended April 4, 2021 and March 29, 2020 are as follows:


	Three Month Period Ended		Six Month Period Ended			Three Month Periods Ended				Six Month Periods Ended
(in millions)	March 29, 2020		March 29, 2020		(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Operating lease cost	$	6.1	$	12.6	Operating lease cost	$	7.6	$	6.1	$	15.4	$	12.6
Finance lease cost					Finance lease cost
Amortization of leased assets		3.4		7.0	Amortization of leased assets	3.9		3.4		7.7		7.0
Interest on lease liability		2.2		4.5	Interest on lease liability	2.3		2.2		4.7		4.5
Variable lease cost		3.3		5.8	Variable lease cost	3.2		3.3		5.9		5.8
Total lease cost	$	15.0	$	29.9	Total lease cost	$	17.0	$	15.0	$	33.7	$	29.9

During the three month ~~and six 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, including $0.3 million and $0.6 million, respectively, from the sublease of the Company’s Corporate Headquarters in Middleton, Wisconsin with a related party, Energizer.~~respectively. Income from leases and sub-leases is recognized as Other Non-Operating Income onin the Condensed Consolidated ~~Statement~~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 Period Ended		Six Month Period Ended			Three Month Periods Ended				Six Month Periods Ended
(in millions)	March 29, 2020		March 29, 2020		(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Operating cash flow from operating leases	$	5.4	$	11.8	Operating cash flow from operating leases	$	7.8	$	5.4	$	14.9	$	11.8
Operating cash flows from finance leases		2.3		4.6	Operating cash flows from finance leases	2.3		2.3		4.7		4.6
Financing cash flows from finance leases		3.5		6.9	Financing cash flows from finance leases	3.2		3.5		6.3		6.9
Supplemental non-cash flow disclosure					Supplemental non-cash flow disclosure
Acquisition of operating lease asset through lease obligations		1.8		4.3	Acquisition of operating lease asset through lease obligations	2.1		1.8		11.0		4.3

The following is a summary of weighted-average lease term and discount rate at ~~March 29,~~April 4, 2021 and September 30, 2020:



~~Weighted average remaining lease term~~
~~Operating leases~~	~~6.4~~	~~years~~
~~Finance leases~~	~~15.7~~	~~years~~
~~Weighted average discount rate~~
~~Operating leases~~	~~4.57~~	%
~~Finance leases~~	~~5.59~~	%


	April 4, 2021		September 30, 2020
Weighted average remaining lease term
Operating leases	6.1 years		6.6 years
Finance leases	15.4 years		15.6 years
Weighted average discount rate
Operating leases	4.6	%	4.7	%
Finance leases	5.7	%	5.6	%

At ~~March 29, 2020,~~April 4, 2021, future lease payments under operating and finance leases were as follows:

(in millions)
Finance Leases
Operating Leases
2020 remaining balance
$
8.8
$
11.9
2021
20.8
23.2
2022
17.6
18.8
2023
16.5
16.9
2024
16.2
10.6
Thereafter
180.6
35.0
Total lease payments
260.5
116.4
Amount representing interest
(97.5)
(17.1)
Total minimum lease payments
$
163.0
$
99.3

~~As of September 30, 2019, minimum commitments under the Company’s leases, as required under prior lease guidance, were as follows:~~

(in millions)
Finance Leases
Operating Leases
2020
$
17.5
$
25.0
2021
19.7
23.2
2022
16.5
20.6
2023
15.5
17.8
2024
15.4
10.8
Thereafter
179.9
37.5
Total lease payments
264.5
134.9
Amount representing interest
(98.9)
—
Total minimum lease payments
$
165.6
$
134.9


(in millions)	Finance Leases		Operating Leases
2021 remaining balance	$	10.4	$	13.9
2022	18.5		25.5
2023	17.4		23.7
2024	17.0		15.1
2025	19.9		12.3
Thereafter	162.5		38.5
Total lease payments	245.7		129.0
Amount representing interest	(89.3)		(17.9)
Total minimum lease payments	$	156.4	$	111.1

SPECTRUM BRANDS HOLDINGS, ~~INC.SB/~~INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 12 - DERIVATIVES

Cash Flow Hedges

Commodity Swaps.The Company is exposed to risk from fluctuating prices for raw materials, specifically zinc and brass used in its manufacturing ~~processes. Brass consists~~processes of ~~zinc and copper.~~its HHI segment. The Company hedges a portion of the risk associated with the purchase of these materials using 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 ~~March 29, 2020,~~April 4, 2021, the Company had a series of brass and zinc swap contracts outstanding through August 31, ~~2021.~~2022. The derivative net ~~loss~~gain estimated to be reclassified from AOCI into earnings over the next 12 months is ~~$0.5~~$0.9 million, net of tax.

The Company had the following commodity swap contracts outstanding as of ~~March 29, 2020~~April 4, 2021 and September 30, ~~2019.~~

2020:

March 29, 2020

September 30, 2019

April 4, 2021

September 30, 2020

(in millions)

Notional

Contract Value

Notional

Contract Value

(in millions, except Notional)

Notional

Contract Value

Notional

Contract Value

Brass swap contracts

0.9 Tons

4.1

0.9 Tons

4.4

Brass swap contracts

718.7

Metric Tons

4.0

949.0

Metric Tons

4.4

Zinc swap contracts

2,883.0

Metric Tons

7.7

1,552.0

Metric Tons

3.4

Foreign exchange contracts.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 the Company to exchange foreign currencies for U.S. Dollars, Euros,Pound Sterling, Canadian Dollars, Australian Dollars, or Japanese Yen. These foreign exchange contracts are cash flow hedges of fluctuating foreign exchange related to sales of product or ~~raw material~~inventory 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 or purchase price variance in Cost of Goods Sold on the Condensed Consolidated Statements of Income. At ~~March 29, 2020,~~April 4, 2021, the Company had a series of foreign exchange derivative contracts outstanding through September ~~29, 2021.~~27, 2022. The derivative net loss estimated to be reclassified from AOCI into earnings over the next 12 months is ~~$4.0~~$4.6 million, net of tax. At ~~March 29, 2020~~April 4, 2021 and September 30, ~~2019,~~2020, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of ~~$201.4~~$318.4 million and ~~$235.6~~$273.4 million, respectively.

~~Interest Rate Swaps.~~ The Company had a series of U.S. dollar denominated interest rate swaps outstanding which effectively fixed the interest on floating rate debt related to the 2022 Term Loan, exclusive of lender spreads, at 1.76% for a notional principal amount of $300.0 million through May 8, 2020. On January 4,2019, the underlying debt and related hedge were settled. As a result, the Company recognized a gain of $3.6 million during the six months ended March 31, 2019, recognized as a component of discontinued operations as interest expense from the Term Loans per ~~Note 2 – Divestitures.~~ ~~As of March 29, 2020, there are 0 outstanding interest rate swaps hedges.~~

The following table summarizes the impact of designated cash flow hedges and the pre-tax gain (loss) recognized in the Condensed Consolidated ~~Statement~~Statements of Income for the three and six month periods ended April 4, 2021 and March 29, 2020, ~~and March 31, 2019,~~ respectively:


For the three month period ended April 4, 2021 (in millions)	Gain (Loss) in OCI		Reclassified to Continuing Operations
			Line Item	Gain (Loss)
Commodity swaps	$	0.5	Cost of goods sold	$	0.8
Foreign exchange contracts	0.1		Net sales	0
Foreign exchange contracts	5.2		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 Item	Gain (Loss)
Commodity swaps	$	(0.9)	Cost of goods sold	$	(0.1)
Foreign exchange contracts	(0.1)		Net sales	0
Foreign exchange contracts	8.8		Cost of goods sold	1.8
Total	$	7.8		$	1.7


For the three month periods						Reclassified to
ended March 29, 2020	Gain (Loss)		Reclassified to Continuing Operations			Discontinued
(in millions)	in OCI		Line Item	Gain (Loss)		Operations
For the six month period ended April 4, 2021 (in millions)								For the six month period ended April 4, 2021 (in millions)	Gain (Loss) in OCI				Reclassified to Continuing Operations
											Line Item			Gain (Loss)
Commodity swaps	$	(0.9)	Cost of goods sold	$	(0.1)	$	—	Commodity swaps			$	1.4		Cost of goods sold			$	1.1
Foreign exchange contracts		(0.1)	Net sales		—		—	Foreign exchange contracts	0.1				Net sales		0
Foreign exchange contracts		8.8	Cost of goods sold		1.8		—	Foreign exchange contracts	(8.1)				Cost of goods sold		(6.8)
Total	$	7.8		$	1.7	$	—	Total	$	(6.6)					$	(5.7)

For the three month periods						Reclassified to
ended March 31, 2019	Gain (Loss)		Reclassified to Continuing Operations			Discontinued
(in millions)	in OCI		Line Item	Gain (Loss)		Operations
Commodity swaps	$	0.5	Cost of goods sold	$	(0.1)	$	(1.9)
Foreign exchange contracts		(0.1)	Net sales		(0.1)		—
Foreign exchange contracts		(0.1)	Cost of goods sold		3.1		—
Total	$	0.3		$	2.9	$	(1.9)

For the six month periods
Reclassified to
ended March 29, 2020
Gain (Loss)
Reclassified to Continuing Operations
Discontinued
(in millions)
in OCI
Line Item
Gain (Loss)
Operations
Commodity swaps
$
(0.7)
Cost of goods sold
$
(0.1)
$
—
Foreign exchange contracts
—
Net sales
(0.1)
—
Foreign exchange contracts
2.3
Cost of goods sold
4.5
—
Total
$
1.6
$
4.3
$
—


For the six month periods						Reclassified to
ended March 31, 2019	Gain (Loss)		Reclassified to Continuing Operations			Discontinued
(in millions)	in OCI		Line Item	Gain (Loss)		Operations
Interest rate swaps	$	(0.6)	Interest expense	$	—	$	2.2
For the six month period ended March 29, 2020 (in millions)								For the six month period ended March 29, 2020 (in millions)	Gain (Loss) in OCI				Reclassified to Continuing Operations
											Line Item			Gain (Loss)

Commodity swaps		(0.6)	Cost of goods sold		(0.2)		(4.4)	Commodity swaps			$	(0.7)		Cost of goods sold			$	(0.1)
Foreign exchange contracts		(0.2)	Net sales		(0.1)		—	Foreign exchange contracts	0				Net sales		(0.1)
Foreign exchange contracts		7.2	Cost of goods sold		6.0		0.5	Foreign exchange contracts	2.3				Cost of goods sold		4.5
Total	$	5.8		$	5.7	$	(1.7)	Total	$	1.6					$	4.3

SPECTRUM BRANDS HOLDINGS, ~~INC.SB/~~INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 12 – DERIVATIVES (continued)

Derivative Contracts Not Designated as Hedges for Accounting Purposes

Foreign exchange contracts.The Company periodically enters into ~~forward~~ foreign exchange forward contracts to economically hedge a portion of the risk from third party and intercompany payments resulting from existing obligations. These obligations generally require the Company to exchange foreign currencies for U.S. Dollars, Canadian Dollars, Euros, Pounds Sterling, Taiwanese Dollars,Philippine ~~Peso,~~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 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 ~~March 29, 2020,~~April 4, 2021, the Company had a series of forward exchange contracts outstanding through June 30, 2021. At April ~~24, 2020. At March 29, 2020~~4, 2021 and September 30, ~~2019,~~2020, the Company had ~~$531.8~~$773.5 million and ~~$977.5~~$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, ~~and March 31, 2019,~~ pre-tax:


		Three Month Periods Ended				Six Month Periods Ended						Three Month Periods Ended				Six Month Periods Ended
(in millions)	Line Item	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019		(in millions)	Line Item	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Foreign exchange contracts	Other non-operating expense (income)	$	22.9	$	17.4	$	(2.2)	$	13.1	Foreign exchange contracts	Other 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 derivative contracts recorded in the Condensed Consolidated Statements of Financial Position is as follows:



(in millions)	Line Item	March 29, 2020		September 30, 2019		(in millions)	Line Item	April 4, 2021		September 30, 2020
Derivative Assets						Derivative Assets
Commodity swaps - designated as hedge						Commodity swaps - designated as hedge	Other receivables	$	1.3	$	0.7
Commodity swaps - designated as hedge						Commodity swaps - designated as hedge	Deferred charges and other	0		0.1
Foreign exchange contracts - designated as hedge	Other receivables	$	5.6	$	7.8	Foreign exchange contracts - designated as hedge	Other receivables	1.3		0
Foreign exchange contracts - designated as hedge	Deferred charges and other		0.4		0.5	Foreign exchange contracts - designated as hedge	Deferred charges and other	0.4		—
Foreign exchange contracts - not designated as hedge	Other receivables		7.7		1.2	Foreign exchange contracts - not designated as hedge	Other receivables	2.8		0.4
Total Derivative Assets		$	13.7	$	9.5	Total Derivative Assets		$	5.8	$	1.2
Derivative Liabilities						Derivative Liabilities
Commodity swaps - designated as hedge	Accounts payable	$	0.7	$	0.2	Commodity swaps - designated as hedge	Accounts payable	$	0.1	$	0
Commodity swaps - designated as hedge	Other long term liabilities		0.1		—
Foreign exchange contracts - designated as hedge						Foreign exchange contracts - designated as hedge	Accounts payable	7.2		3.8
Foreign exchange contracts - designated as hedge	Accounts payable		0.1		0.2	Foreign exchange contracts - designated as hedge	Other long term liabilities	0.1		0.3
Foreign exchange contracts - not designated as hedge	Accounts payable		0.5		1.9	Foreign exchange contracts - not designated as hedge	Accounts payable	2.4		10.1
Total Derivative Liabilities		$	1.4	$	2.3	Total Derivative Liabilities		$	9.8	$	14.2

The Company is exposed to the risk of default by the counterparties with which it transacts and generally does not require collateral or other security to support financial instruments subject to credit risk. The Company monitors counterparty credit risk on an individual basis by periodically assessing each counterparty’s credit rating exposure. The maximum loss due to credit risk equals the fair value of the gross asset derivatives that are concentrated with certain domestic and foreign financial institution counterparties. The Company considers these exposures when measuring its credit reserve on its derivative assets, which were not significant as of ~~March 29, 2020.~~

April 4, 2021.

The Company’s standard contracts do not contain credit risk related contingent features whereby the Company would be required to post additional cash collateral because of a credit event. However, the Company is typically required to post collateral in the normal course of business to offset its liability positions. As of ~~March 29, 2020,~~April 4, 2021, and September 30, ~~2019,~~2020, there was 0 cash collateral outstanding and 0 posted standby letters of credit related to such liability positions.

Net Investment Hedge

~~Spectrum Brands, Inc. (“SBI”),~~

SBI has ~~€425~~€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. Due to changes in the net investments in Euro denominated subsidiaries, €345.6 million of the original principal amount was designated as a net investment hedge as of March 29, 2020. As a result, anyAny gains and losses attributable to the translation of the Euro denominated debt designated as net investment hedge ~~were~~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 ~~Income (Expense)~~Expense (Income). ~~For the three and six month period ended March 31, 2019,~~As of April 4, 2021 the full principal amount was designated as a net investment hedge and considered fully effective.

The following summarizes the gain (loss) from the net investment hedge recognized in Other Comprehensive Income for the three and six month periods ended April 4, 2021 and March 29, 2020, pre-tax:



	Three Month Periods Ended				Six Month Periods Ended					Three Month Periods Ended				Six Month Periods Ended
Gain (loss) in OCI (in millions)	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019		Gain (loss) in OCI (in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Net investment hedge	$	2.2	$	8.8	$	(2.8)	$	17.8	Net investment hedge	$	20.1	$	2.2	$	(1.4)	$	(2.8)

During the three and six month ~~period~~periods ended ~~March 29, 2020,~~April 4, 2021, the Company ~~recognized a~~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 ofrecognized in earnings was $0.5 ~~million. During~~million and $1.2 million and for the three and six month ~~period~~periods ended March 29, ~~2020, the Company recognized a pre-tax loss in earnings of $1.2 million.~~2020. 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.

‎

SPECTRUM BRANDS HOLDINGS, ~~INC.SB/~~INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has not changed the valuation techniques used in measuring the fair value of any financial assets and liabilities during the year. The carrying value and estimated fair value of financial and derivative instruments as of ~~March 29, 2020~~April 4, 2021 and September 30, ~~2019~~2020 according to the fair value hierarchy are as follows.


	March 29, 2020										September 30, 2019
									Carrying										Carrying			April 4, 2021										September 30, 2020
(in millions)	Level 1		Level 2		Level 3		Fair Value		Amount		Level 1		Level 2		Level 3		Fair Value		Amount		(in millions)	Level 1		Level 2		Level 3		Fair Value		Carrying Amount		Level 1		Level 2		Level 3		Fair Value		Carrying Amount
Investments	$	134.0	$	—	$	—	$	134.0	$	134.0	$	230.8	$	—	$	—	$	230.8	$	230.8	Investments	$	0	$	0	$	0	$	0	$	0	$	66.9	$	0	$	0	$	66.9	$	0
Derivative Assets		—		13.7		—		13.7		13.7		—		9.5		—		9.5		9.5	Derivative Assets	0		5.8		0		5.8		0		0		1.2		0		1.2		0
Derivative Liabilities		—		1.4		—		1.4		1.4		—		2.3		—		2.3		2.3	Derivative Liabilities	0		9.8		0		9.8		0		0		14.2		0		14.2		0
Debt - SBH		—		2,864.1		—		2,864.1		3,012.4		—		2,468.8		—		2,468.8		2,351.3	Debt - SBH	0		2,665.5		0		2,665.5		2,570.2		0		2,595.4		0		2,595.4		2,476.3
Debt - SB/RH		—		2,787.0		—		2,787.0		2,936.4		—		2,391.8		—		2,391.8		2,276.0	Debt - SB/RH	0		2,665.5		0		2,665.5		2,570.2		0		2,595.4		0		2,595.4		2,476.3

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 ~~Expense,~~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 ~~March 29, 2020,~~April 4, 2021, the company ~~holds 4.3 million~~held 0 shares of Energizer common stock.

The following is a summary of income ~~recognized~~ from equity ~~investments:~~

investments recognized as a component of Other Non-Operating Income in the Company's Condensed Consolidated Statements of Income:


	Three month period ended				Six month period ended					Three Month Periods Ended				Six Month Periods Ended
(in millions)	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019		(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Unrealized loss on equity investments held	$	(84.5)	$	(5.0)	$	(53.3)	$	(5.0)	Unrealized loss on equity investments held	$	0	$	(84.5)	$	0	$	(53.3)
Realized loss on equity investments sold		(22.3)		—		(15.0)		—
Loss on equity investments		(106.8)		(5.0)		(68.3)		(5.0)
Realized gain (loss) on equity investments sold									Realized gain (loss) on equity investments sold	0.9		(22.3)		6.9		(15.0)
Gain (loss) on equity investments									Gain (loss) on equity investments	0.9		(106.8)		6.9		(68.3)
Dividend income from equity investments		1.6		1.6		3.2		1.6	Dividend income from equity investments	0		1.6		0.2		3.2
Loss from equity investments	$	(105.2)	$	(3.4)	$	(65.1)	$	(3.4)
Gain (loss) from equity investments									Gain (loss) from equity investments	$	0.9	$	(105.2)	$	7.1	$	(65.1)

~~See~~ ~~Note 12 – Derivatives~~ ~~for additional detail on derivative assets and liabilities.~~

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 10 – Debt for additional detail on outstanding debt of SBH and SB/RH. See

Note 12 – Derivatives

for additional detail on derivative assets and liabilities.

The carrying value of cash and cash equivalents, receivables, accounts payable and short term debt approximate fair value based on the short-term nature of these assets and liabilities. Goodwill, intangible assets and other long-lived assets are tested annually or more frequently if an event occurs that indicates an impairment loss may have been incurred using fair value measurements with unobservable inputs (Level 3).

NOTE 14 - EMPLOYEE BENEFIT PLANS

The net periodic benefit cost for defined benefit plans for the three and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ are as follows:


	U.S. Plans				Non U.S. Plans					U.S. Plans				Non U.S. Plans
(in millions)	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019		(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Three Month Period Ended
Three Month Periods Ended									Three Month Periods Ended
Service cost	$	0.2	$	0.1	$	0.6	$	0.5	Service cost	$	0.1	$	0.2	$	0.5	$	0.6
Interest cost		0.5		0.7		0.6		0.9	Interest cost	0.5		0.5		0.6		0.6
Expected return on assets		(1.0)		(1.1)		(0.9)		(1.1)	Expected return on assets	(0.9)		(1.0)		(1.0)		(0.9)

Recognized net actuarial loss		0.2		0.1		0.8		0.5	Recognized net actuarial loss	0.3		0.2		0.8		0.8
Net periodic benefit cost	$	(0.1)	$	(0.2)	$	1.1	$	0.8	Net periodic benefit cost	$	0	$	(0.1)	$	0.9	$	1.1
Six Month Period Ended
Six Month Periods Ended									Six Month Periods Ended
Service cost	$	0.3	$	0.2	$	1.1	$	1.0	Service cost	$	0.2	$	0.3	$	1.1	$	1.1
Interest cost		1.1		1.4		1.2		1.8	Interest cost	0.9		1.1		1.2		1.2
Expected return on assets		(2.1)		(2.2)		(1.8)		(2.2)	Expected return on assets	(1.8)		(2.1)		(2.0)		(1.8)
Settlement and curtailment		0.9		—		—		—	Settlement and curtailment	0		0.9		0		0
Recognized net actuarial loss		0.5		0.1		1.6		1.0	Recognized net actuarial loss	0.7		0.5		1.5		1.6
Net periodic benefit cost	$	0.7	$	(0.5)	$	2.1	$	1.6	Net periodic benefit cost	$	0	$	0.7	$	1.8	$	2.1
Weighted average assumptions									Weighted average assumptions
Discount rate	3.07%		4.10%		0.75 - 7.70%		1.00 - 8.15%		Discount rate	2.46%		3.07%		0.50 - 6.90%		0.75 - 7.70%
Expected return on plan assets	6.50%		6.50%		0.75 - 3.40%		1.00 - 4.01%		Expected return on plan assets	6.00%		6.50%		0.50 - 3.40%		0.75 - 3.40%
Rate of compensation increase	N/A		N/A		2.25 - 6.00%		2.05 - 4.85%		Rate of compensation increase	N/A		N/A		2.25 - 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 ~~March 31, 2019 were~~ $0.7 ~~and $0.5~~ million, ~~respectively. Contributions to our pension~~respectively; and ~~defined benefit plans, including discretionary amounts,~~ for the six month periods ended April 4, 2021 and March 29, 2020, were $3.7 million and ~~March 31, 2019, were~~ $1.5 million, ~~and $0.9 million,~~ respectively.

‎

SPECTRUM BRANDS HOLDINGS, ~~INC.SB/~~INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, 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 either 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, in 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 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~~$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 the total shares the Company expected to receive based on the market price at the time of the initial delivery. The transaction was accounted for as an equity transaction. The fair value of shares received initially of $106.3 million was recorded as a treasury stock transaction, 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 diluted earnings per share. On February 24, 2020, the 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 summarizes the activity of common stock repurchases under the program for the three and six month periods ended April 4, 2021 and March 29, ~~2020 and March 31, 2019:~~2020:


	April 4, 2021					March 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 Purchases	0	$	0	$	0	2.7	$	54.54	$	149.2
Private Purchases	0	0		0		0	0		0
ASR	0	0		0		0.3	59.69		18.5
Total Purchases	0	$	0	$	0	3.0	$	55.06	$	167.7


	March 29, 2020					March 31, 2019						April 4, 2021					March 29, 2020
	Number of	Average				Number of	Average
	Shares	Price				Shares	Price
Three Month Periods Ended (in millions except per share data)	Repurchased	Per Share		Amount		Repurchased	Per Share		Amount
Six Month Periods Ended (in millions except per share data)											Six 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 Purchases	2.7	$	54.54	$	149.2	4.6	$	54.22	$	250.0	Open Market Purchases	0	$	0	$	0	4.0	$	56.97	$	230.6
Private Purchases											Private Purchases	0.6	65.27		42.3		0.2	62.30		9.2
ASR	0.3		59.69		18.5	—		—		—	ASR	0	0		0		2.0	61.47		124.8
Total Purchases	3.0	$	55.06	$	167.7	4.6	$	54.22	$	250.0	Total Purchases	0.6	$	65.27	$	42.3	6.2	$	58.57	$	364.6

March 29, 2020
March 31, 2019
Number of
Average
Number of
Average
Shares
Price
Shares
Price
Six Month Periods Ended (in millions except per share data)
Repurchased
Per Share
Amount
Repurchased
Per Share
Amount
Open Market Purchases
4.0
$
56.97
$
230.6
4.6
$
54.22
$
250.0
Private Purchases
0.2
62.30
9.2
0.3
56.02
18.5
ASR
2.0
61.47
124.7
—
—
—
Total Purchases
6.2
$
58.57
$
364.5
4.9
$
54.34
$
268.5

NOTE 16 - SHARE BASED COMPENSATION

Share based compensation expense is recognized as General and Administrative Expenses on the Condensed Consolidated Statements of ~~Income and consists of costs from the Spectrum equity plan.~~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 ~~and March 31, 2019~~ for SBH and SB/RH, respectively.


	Three Month Periods Ended				Six Month Periods Ended					Three Month Periods Ended				Six Month Periods Ended
(in millions)	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019		(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
SBH	$	13.1	$	15.9	$	26.0	$	21.8	SBH	$	8.5	$	13.1	$	16.0	$	26.0
SB/RH	$	12.6	$	15.5	$	25.4	$	21.1	SB/RH	$	8.0	$	12.6	$	15.5	$	25.4

The Company recognizes share based compensation expense ~~primarily~~ from the issuance of its 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 Company’s shares of common stock on the designated grant date and recognized on a straight-line basis over the requisite service period of the awards. Certain RSUs 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.

~~Beginning in the fiscal year ended September 30, 2019, the Company provided to certain employees~~ RSU grants issued under a Long-Term Incentive Plan (“LTIP”), with a 3-year, cliff vesting schedule and having both performance conditions dependent upon achieving specified financial targets (adjusted EBITDA, return on equity, and adjusted free cash flow) and time-based service. The Company also provided for bridge awards that are special awards to certain employees for transitioning to the LTIP from previous equity incentive compensation plans. Bridge awards vest annually, on November 21, 2019 and November 21, 2020, and have both performance conditions dependent upon achieving specified financial targets in fiscal year 2019 and 2020, respectively, (adjusted EBITDA and adjusted free cash flow) and time-based service conditions (60% performance/40% service). Bridge awards are payable in either RSUs or cash, or both, based upon an employee election. Bridge awards elected to be payable in RSU are recognized as equity awards and included as a component of share-based compensation expense. 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.

‎

~~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 following summary of~~In the ~~activity in Spectrum RSUs during the six month periods ended March 29, 2020:~~

SBH
SB/RH
Weighted
Fair
Weighted
Fair
Average
Value
Average
Value
Grant Date
at Grant
Grant Date
at Grant
(in millions, except per share data)
Units
Fair Value
Date
Units
Fair Value
Date
Time-based grants
Vesting in less than 24 months
0.3
$
62.37
$
18.5
0.3
$
62.29
$
17.2
Vesting in more than 24 months
0.1
63.38
8.1
0.1
63.38
8.1
Total time-based grants
0.4
$
62.67
$
26.6
0.4
$
62.63
$
25.3
Performance-based grants
Vesting in more than 24 months
0.3
63.37
19.0
0.3
63.37
19.0
Total performance-based grants
0.3
$
63.37
$
19.0
0.3
$
63.38
$
19.0
Total grants
0.7
$
62.96
$
45.6
0.7
$
62.95
$
44.3

SBH
SB/RH
Weighted
Fair
Weighted
Fair
Average
Value
Average
Value
Grant Date
at Grant
Grant Date
at Grant
(in millions, except per share data)
Shares
Fair Value
Date
Shares
Fair Value
Date
At September 30, 2019
1.2
$
53.57
$
67.0
1.2
$
53.23
$
65.1
Granted
0.7
62.96
45.6
0.7
62.95
44.3
Forfeited
(0.1)
65.19
(1.4)
(0.1)
65.19
(1.4)
Vested
(0.6)
57.76
(39.1)
(0.6)
57.24
(37.6)
At March 29, 2020
1.2
$
56.49
$
72.1
1.2
$
56.39
$
70.4

~~In addition to RSU awards,~~prior year, the Company ~~also provides~~provided for a portion of its annual management incentive compensation plan ~~(“MIP”~~("MIP") to be paid in common stock of the Company, in lieu of cash ~~payment, and is recognized as~~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 ~~liability plan.~~designated pool of recipients to be fully funded through cash distribution with no stock issuance. Share based compensation expense associated with the annual MIP ~~was $4.3 million and $8.6 million~~ for the three and six month periods ended March 29, 2020 ~~respectively, and $5.6~~was $4.3 million and ~~$8.4 million~~$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 ~~March 31, 2019, respectively.~~ April 4, 2021.

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 following is a summary of the activity in the Company RSUs during the six month period ended April 4, 2021:


	SBH					SB/RH
(in millions, except per share data)	Units	Weighted Average Grant Date Fair Value		Fair Value at Grant Date		Units	Weighted Average Grant Date Fair Value		Fair Value at Grant Date
Time-based grants
Vesting in less than 24 months	0.1	$	74.43	$	7.7	0.1	$	74.45	$	6.3
Vesting in more than 24 months	0.1	74.37		7.7		0.1	74.37		7.6
Total time-based grants	0.2	$	74.40	$	15.4	0.2	$	74.41	$	13.9
Performance-based grants
Vesting in more than 24 months	0.3	$	74.36	$	22.3	0.3	$	74.36	$	22.3
Total performance-based grants	0.3	$	74.36	$	22.3	0.3	$	74.36	$	22.3
Total grants	0.5	$	74.38	$	37.7	0.5	$	74.38	$	36.2


	SBH					SB/RH
(in millions, except per share data)	Shares	Weighted Average Grant Date Fair Value		Fair Value at Grant Date		Shares	Weighted Average Grant Date Fair Value		Fair Value at Grant Date
At September 30, 2020	1.4	$	56.41	$	79.3	1.4	$	56.33	$	77.7
Granted	0.5	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, 2021	1.5	$	62.83	$	98.9	1.5	$	62.73	$	97.1

The remaining unrecognized pre-tax compensation cost for SBH and SB/RH at ~~March 29, 2020~~April 4, 2021 was ~~$51.3~~$59.2 million and ~~$50.7~~$58.3 million, respectively.

NOTE 17 - INCOME TAXES

The effective tax rate for the three and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ was as follows:


	Three Month Periods Ended		Six Month Periods Ended			Three Month Periods Ended				Six Month Periods Ended
Effective tax rate	March 29, 2020	March 31, 2019	March 29, 2020	March 31, 2019	Effective tax rate	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
SBH	24.3%	29.6%	15.9%	23.9%	SBH	29.9	%	24.3	%	24.4	%	15.9	%
SB/RH	23.5%	58.2%	15.0%	33.5%	SB/RH	29.9	%	23.5	%	24.4	%	15.0	%

The estimated annual effective tax rate applied to the three and six month periods ended ~~March 29, 2020~~April 4, 2021 differs from the US federal statutory rate of 21% principally due to income earned outside the U.S. that is subject to U.S. tax, including the U.S. tax on global intangible low taxed income (“GILTI”), ~~net operating losses outside the U.S. that are not more likely than not to result in a tax benefit,~~ certain nondeductible expenses, ~~and~~ foreign rates that differ from the US federal statutory ~~rate.~~rate, and state 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%. ~~During~~

On November 20, 2020, the U.S. Treasury and the Internal Revenue Service issued Final Regulations (“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 years prior to Fiscal 2021 in the six month period ended ~~March 29, 2020, the~~April 4, 2021. The Company also ~~recognized a $5.3 million~~expects to apply the Regulations to Fiscal 2021 and has included the impact in the estimated annual effective tax ~~benefit from the favorable settlement of an income tax examination.~~

rate.

As of ~~March 29,~~April 4, 2021, and September 30, 2020, there ~~is $0.8~~was $16.0 million and $1.8 million of income taxes payable on the SB/RH Condensed Consolidated ~~Statement~~Statements of Financial Position, payable to its parent company, calculated as if SB/RH were a separate taxpayer.

‎

SPECTRUM BRANDS HOLDINGS, ~~INC.SB/~~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 ~~divestiture on January 2, 2019,~~ and GAC ~~divestiture on January 28,~~divestitures during the year ended September 30, 2019, the Company and Energizer entered into a series of TSAs 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 support both the transferred GBL operations and the continuing operations of ~~Spectrum,~~the Company, respectively, within the various regions in which they operate. Charges associated with TSAs and reverse 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. ~~The TSAs and reverse TSAs were further expanded to incorporate the activity and operations attributable to the close of the GAC divestiture.~~ Charges to Energizer for TSA services are recognized as a reduction of the respective operating costs incurred by ~~Spectrum~~the Company and recognized as a component of operating expense or cost of goods sold depending upon the functions being supported by ~~Spectrum.~~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. The TSAs and reverse TSAs have an overall expected time period of 12 months following the close of the transaction 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. 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 $1.5million, 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. ~~During the three and six month periods ended March 31, 2019, the Company recognized net gain of $2.5 million, consisting of TSA charges of $6.6 million and reverse TSA costs of $4.1 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 ~~March 29, 2020~~April 4, 2021 and September 30, ~~2019,~~2020, the Company had net ~~payable~~receivable of ~~$3.0~~$2.1 million and ~~net receivable of $12.8~~$5.4 million, respectively, with Energizer included in Other ~~Current Liabilities~~Receivables on the Company’s Condensed ~~Statement~~Statements of Financial Position. As of ~~March 29,~~April 4, 2021 and September 30, 2020, the Company had net payable of ~~$0.7~~$1.1 million and $1.0 million, respectively, with Varta AG included in Other Current Liabilities on the Company’s Condensed Consolidated ~~Statement~~Statements of Financial Position.

The Company’s H&G segment ~~continues~~continued to manufacture certain GAC related products at its facilities and sell the products to Energizer as a third-party supplier on an ongoing basis, at inventory cost plus contracted markup, as agreed upon in the supply agreement. The supply agreement ~~has~~had a contracted term of 24 months, and ~~may be subject to early termination by either party at any time~~expired in January 2021 with ~~written notice.~~no renewal. Material and inventory on hand to support the supply agreement is recognized as inventory of the Company. During the three and six month periods ended ~~March 29, 2020,~~April 4, 2021 the Company recognized ~~$5.6~~$1.9 million and ~~$10.9~~$6.0 million, respectively, of revenue attributable to the Energizer supply agreement as a component of H&G revenue after completion of the GAC divestiture. During the three and six month periods ended March ~~31, 2019,~~29, 2020, the Company recognized ~~$3.7~~$5.6 million and $10.9 million of revenue attributable to the Energizer supply agreement. As of ~~March 29, 2020~~April 4, 2021 and September 30, ~~2019,~~2020, the Company had outstanding ~~receivable~~receivables of ~~$4.2~~$0.1 million and ~~$4.9~~$4.4 million, respectively, from Energizer in Trade Receivables, Net on the Company’s Condensed ~~Statement~~Statements of Financial Position associated with the H&G supply agreement.

As a condition to the consummation of the GAC acquisition and receipt of 5.3 million shares of Energizer common stock as consideration, the Company entered into the Energizer Shareholder Agreement which contains a 24-month standstill provision that prohibits the Company from engaging in certain transactions involving Energizer to control or influence management, board of directors or policies of Energizer. Additionally, for a period of 18 months following the closing of the GAC acquisition, the Company is required to vote in favor of Energizer’s board of director nominees and in accordance with the Energizer board’s recommendations on all other matters at any meeting of Energizer’s shareholders. Additionally, pursuant to the Energizer Shareholder Agreement, the Company has agreed not to transfer any of its Shares or other equity securities in Energizer, or engage in certain hedging transactions from the closing of the GAC acquisition until the day that is twelve months after the GAC closing date and, following such period, subject to certain limitations, not to transfer any such Energizer shares or other equity securities to any person or entity who would thereafter beneficially own more than 4.9% of Energizer’s outstanding shares of equity securities after giving effect to such transaction. Following the 18 month anniversary of the closing of the GAC acquisition, Energizer will have the right to repurchase any or all of the shares held by the Company for a purchase price per share equal to the greater of the volume-weighted average sales price per share for the ten consecutive trading days beginning on the 12^th trading day immediately preceding notice of the repurchase from Energizer and 100% of the volume-weighted average sale price per share of the common stock for the 10 consecutive trading days immediately preceding the date of the GAC agreement. The Company’s investment in Energizer common stock is recognized at its fair value in Investments on the Company’s Condensed Consolidated Statement of Financial Position, with any unrealized gains or losses attributable to changes in the market price and dividend income received from Energizer being recognized as Other Non-Operating Income on the Company’s Condensed Consolidated Statements of Income. See Note 13 – Fair value of Financial Instruments for additional discussion on the Company’s investment in Energizer common stock.

‎

~~SPECTRUM BRANDS HOLDINGS, INC.SB/RH HOLDINGS, LLC~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in millions, unaudited)~~

NOTE 19 - COMMITMENTS AND CONTINGENCIES

The Company is a defendant in various litigation matters generally arising out of the ordinary course of business. Based on information currently available, the Company does not believe that any ~~of the~~additional matters or proceedings presently pending will have a material adverse effect on its results of operations, financial condition, liquidity or cash flows.

Shareholder Litigation. The Company has provided an estimated cost of $1.1 million, net anticipated third party insurance recoveries, for a proposed settlement related to the state court class action complaint filed on August 16, 2019 in the Circuit Court of Dane County, Wisconsin against the Company and certain of the Company’s current and former directors and officers, included in Other Current Liabilities on the Condensed Consolidated Statement of Financial Position. The complaint alleged that certain financial statements incorporated into the registration statement contained misstatements in violation of the Securities Act of 1933.

~~Separately, on~~On July 12, 2019, an amended consolidated class action complaint filed earlier in 2018 was filed in the United ~~State~~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”). The complaint alleges that the defendants violated the Securities Exchange Act of ~~1934 by making misrepresentations and omissions in Spectrum Legacy’s financial statements.~~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 ~~Company believes~~parties are discussing appropriate actions that could address the ~~suit~~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 ~~without merit~~not reached and approved, the Company intends to vigorously defend ~~it vigorously. Based on information currently available,~~ the ~~Company does not believe that any other matters related to this complaint will have a material adverse effect on its business or financial condition.~~litigation.

Environmental.The Company has provided for an estimated cost of ~~$11.5 million and $12.2~~$11.6 million as of ~~March 29, 2020~~April 4, 2021 and September 30, ~~2019, respectively,~~2020, associated with environmental remediation activities at some of its current and former manufacturing sites, included in Other Long-Term Liabilities on the Condensed Consolidated ~~Statement~~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.

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 ~~March 29, 2020~~April 4, 2021 and September 30, ~~2019,~~2020, the Company recognized ~~$6.0~~$4.4 million and ~~$5.9~~$5.1 million in product liability, respectively, included in Other Current Liabilities on the Condensed Consolidated ~~Statement~~Statements of Financial Position. The Company believes that any additional liability in excess of the amounts provided that may result from resolution of these matters will not have a material adverse effect on the consolidated financial condition, results of operations or cash flows of the Company.

Product Warranty. The Company recognizes an estimated liability for standard warranty on certain products when we recognize revenue on the sale of the warranted products. Estimated warranty costs incorporate replacement parts, products and delivery, and are recorded as a cost of goods sold at the time of product shipment based on historical and projected warranty claim rates, claims experience and any additional anticipated future costs on previously sold products. The Company recognized ~~$7.0~~$11.4 million and ~~$7.2~~$10.9 million of warranty accruals as of ~~March 29, 2020~~April 4, 2021 and September 30, ~~2019,~~2020, respectively, included in Other Current Liabilities on the Condensed Consolidated Statements of Financial Position.

Other. During the six month period ended April 4, 2021, the Company recognized legal reserves at our H&G division of approximately $6.0 million attributable to significant and unusual non-recurring claims with no previous history or precedent, included in Other Current Liabilities on the Condensed Consolidated Statement of Financial Position.

‎

~~SPECTRUM BRANDS HOLDINGS, INC.SB/RH HOLDINGS, LLC~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in millions, unaudited)~~

NOTE 20 - SEGMENT INFORMATION

Net sales relating to the segments for the three and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ are as follows:


	Three Month Periods Ended				Six Month Periods Ended					Three Month Periods Ended				Six Month Periods Ended
(in millions)	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019		(in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
HHI	$	329.1	$	331.1	$	626.8	$	636.2	HHI	$	389.5	$	329.1	$	798.2	$	626.8
HPC		232.7		221.7		554.8		538.9	HPC	297.9		232.7		676.4		554.8
GPC		236.9		214.9		442.7		419.6	GPC	293.6		236.9		569.1		442.7
H&G		139.1		139.0		185.0		192.3	H&G	168.8		139.1		251.0		185.0
Net sales	$	937.8	$	906.7	$	1,809.3	$	1,787.0	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 ~~year ending September 30, 2019, the Company issued~~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 ~~long-term compensation plans~~LTIP that allow for cash based payment upon employee election ~~which have been included in the adjustment~~ 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 ~~discussion;~~details;

•Restructuring and related charges, which consist of project 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) 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 ~~as part of the divestitures~~ 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 ~~additional~~further details;

•Gains and losses attributable to the Company’s investment in Energizer common ~~stock, acquired as part of consideration received from~~stock. During the ~~Company’s sale and divestiture of GAC.~~three month period ended April 4, 2021, the Company sold its remaining shares in Energizer common stock. See~~Note 2 – Divestitures~~ ~~and~~ Note 13 – Fair Value of Financial Instruments in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further ~~discussion;~~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);

•~~Foreign~~Other adjustments primarily consisting of costs attributable to (1) proposed settlement on outstanding litigation matters at our H&G division attributable to significant and unusual non-recurring claims with no previous history or precedent realized during the six month period ended April 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 not considered a component of the continuing commercial products company; (3) foreign currency ~~gains and losses~~ attributable to multicurrency loans for the three and six month periods ended March 29, 2020, ~~and March 31, 2019,~~ 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 ~~divestures during the year ended September 30, 2019. The Company has entered into various hedging arrangements to mitigate the volatility of foreign exchange risk associated with such loans;~~

Legal and litigation costs associated with Salus during the three and six month periods ended March 29, 2020 and March 31, 2019 as they are not considered a component of the continuing commercial products company, but continue to be consolidated by the Company until the Salus operations can be wholly dissolved and/or deconsolidated; and

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in GPC during the three and six month periods ended March 31, 2019; (4) operating margin on H&G sales to GAC discontinued operations during the three and six month period ended March 31, 2019; and (5) certain fines and penalties for delayed shipments following the completion of a GPC distribution center consolidation in EMEA during the three and six month period ended March 31, 2019.

millions, unaudited)

NOTE 20 - SEGMENT INFORMATION (continued)

Segment Adjusted EBITDA for the reportable segments for SBH for the three and six month periods ended April 4, 2021 and March 29, 2020, ~~and March 31, 2019,~~ are as follows:

Three Month Periods Ended
Six Month Periods Ended
SBH (in millions)
March 29, 2020
March 31, 2019
March 29, 2020
March 31, 2019
HHI
$
69.5
$
52.7
$
112.3
$
108.2
HPC
8.0
4.5
44.4
39.5
GPC
40.0
32.8
71.5
61.9
H&G
28.4
29.6
25.1
32.7
Total Segment Adjusted EBITDA
145.9
119.6
253.3
242.3
Corporate
5.5
4.0
10.8
11.5
Interest expense
35.5
94.2
70.4
151.2
Depreciation and amortization
36.4
36.6
78.0
102.6
Share and incentive based compensation
14.6
17.3
29.1
23.2
Restructuring and related charges
21.9
12.6
49.4
21.5
Transaction related charges
7.2
5.3
11.3
11.6
(Gain) loss on assets held for sale
(7.0)
—
25.7
—
Write-off from impairment of intangible assets
—
—
24.2
—
Loss on Energizer investment
106.8
5.0
68.3
5.0
Foreign currency translation on multicurrency divestiture loans
3.1
21.8
0.4
21.8
GPC safety recall
—
—
—
0.6
Salus
0.1
—
0.4
—
Other
—
(0.5)
0.5
2.3
Loss from operations before income taxes
$
(78.2)
$
(76.7)
$
(115.2)
$
(109.0)

~~SPECTRUM BRANDS HOLDINGS, INC.SB/RH HOLDINGS, LLC~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in millions, unaudited)~~


	Three Month Periods Ended				Six Month Periods Ended
SBH (in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
HHI	$	73.4	$	69.5	$	171.6	$	112.3
HPC	25.4		8.0		76.3		44.4
GPC	55.6		40.0		109.2		71.5
H&G	34.8		28.4		45.3		25.1
Total Segment Adjusted EBITDA	189.2		145.9		402.4		253.3
Corporate	8.3		5.5		17.5		10.8
Interest expense	65.5		35.5		102.2		70.4
Depreciation and amortization	38.7		36.4		74.4		78.0
Share and incentive based compensation	8.5		14.6		16.7		29.1
Restructuring and related charges	4.1		21.9		13.3		49.4
Transaction related charges	9.7		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 sale	0		(7.0)		0		25.7
Write-off from impairment of intangible assets	0		0		0		24.2
Inventory acquisition step-up	2.6		0		3.4		0



Other	0.2		3.2		6.0		1.3
Income (loss) from operations before income taxes	$	52.5	$	(78.2)	$	145.5	$	(115.2)

~~NOTE 20 - SEGMENT INFORMATION (continued)~~

Segment Adjusted EBITDA for reportable segments for SB/RH for the three and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ are as follows:


	Three Month Periods Ended				Six Month Periods Ended
SB/RH (in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
HHI	$	73.4	$	69.5	$	171.6	$	112.3
HPC	25.4		8.0		76.3		44.4
GPC	55.6		40.0		109.2		71.5
H&G	34.8		28.4		45.3		25.1
Total Segment Adjusted EBITDA	189.2		145.9		402.4		253.3
Corporate	8.1		2.3		16.7		7.2
Interest expense	65.6		35.3		102.4		70.0
Depreciation and amortization	38.7		36.4		74.4		78.0
Share and incentive based compensation	8.0		14.1		16.1		28.5
Restructuring and related charges	4.1		21.9		13.3		49.4
Transaction related charges	9.7		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 sale	0		(7.0)		0		25.7
Write-off from impairment of intangible assets	0		0		0		24.2
Inventory acquisition step-up	2.6		0		3.4		0


Other	0.1		3.0		5.9		0.8
Income (loss) from operations before income taxes	$	53.2	$	(74.1)	$	146.8	$	(110.1)

Three Month Periods Ended
Six Month Periods Ended
SB/RH (in millions)
March 29, 2020
March 31, 2019
March 29, 2020
March 31, 2019
HHI
$
69.5
$
52.7
$
112.3
$
108.2
HPC
8.0
4.5
44.4
39.5
GPC
40.0
32.8
71.5
61.9
H&G
28.4
29.6
25.1
32.7
Total Segment Adjusted EBITDA
145.9
119.6
253.3
242.3
Corporate
2.3
3.3
7.2
9.9
Interest expense
35.3
48.3
70.0
91.5
Depreciation and amortization
36.4
36.6
78.0
102.6
Share and incentive based compensation
14.1
16.9
28.5
22.5
Restructuring and related charges
21.9
12.6
49.4
21.5
Transaction related charges
7.2
5.3
11.3
11.6
(Gain) loss on assets held for sale
(7.0)
—
25.7
—
Write-off from impairment of intangible assets
—
—
24.2
—
Loss on Energizer investment
106.8
5.0
68.3
5.0
Foreign currency translation on multicurrency divestiture loans
3.0
21.8
0.4
21.8
GPC safety recall
—
—
—
0.6
Other
—
(0.5)
0.4
2.4
Loss from operations before income taxes
$
(74.1)
$
(29.7)
$
(110.1)
$
(47.1)
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 reconciliation of the numerator and denominator of the basic and diluted earnings per share calculation and the anti-dilutive shares for the three and six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ are as follows:

Three Month Periods Ended
Six Month Periods Ended
(in millions, except per share amounts)
March 29, 2020
March 31, 2019
March 29, 2020
March 31, 2019
Numerator
Net loss from continuing operations attributable to controlling interest
$
(58.4)
$
(55.0)
$
(97.0)
$
(84.2)
Income from discontinued operations attributable to controlling interest
1.4
783.6
4.3
700.4
Net (loss) income attributable to controlling interest
$
(57.0)
$
728.6
$
(92.7)
$
616.2
Denominator
Weighted average shares outstanding - basic
45.1
51.8
46.4
52.6
Dilutive shares
—
—
—
—
Weighted average shares outstanding - diluted
45.1
51.8
46.4
52.6
Earnings per share
Basic earnings per share from continuing operations
$
(1.29)
$
(1.06)
$
(2.09)
$
(1.60)
Basic earnings per share from discontinued operations
0.03
15.13
0.09
13.32
Basic earnings per share
$
(1.26)
$
14.07
$
(2.00)
$
11.72
Diluted earnings per share from continuing operations
$
(1.29)
$
(1.06)
$
(2.09)
$
(1.60)
Diluted earnings per share from discontinued operations
0.03
15.13
0.09
13.32
Diluted earnings per share
$
(1.26)
$
14.07
$
(2.00)
$
11.72
Weighted average number of anti-dilutive shares excluded from denominator
0.1
0.1
0.1
0.1


	Three Month Periods Ended				Six Month Periods Ended
(in millions, except per share amounts)	April 4, 2021		March 29, 2020		April 4, 2021		March 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 - basic	42.6		45.1		42.8		46.4
Dilutive shares	0.3		0		0.2		0
Weighted average shares outstanding - diluted	42.9		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 denominator	0		0.1		0		0.1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following is management’s discussion of the financial results, liquidity and other key items related to our performance and should be read in conjunction with the Condensed Consolidated Financial Statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q. Unless the context indicates otherwise, the term the “Company,” “we,” “our,” or “us” are used to refer to Spectrum Brands Holdings, 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 and home essentials company. We manage the businesses in four vertically integrated, product-focused segments: (i) Hardware & Home Improvement (“HHI”), (ii) Home and Personal Care (“HPC”), (iii) Global Pet Care (“GPC”), and (iv) Home and Garden (“H&G”). The Company manufactures, markets and/or distributes its products globally in the North America (“NA”), Europe, Middle East & Africa (“EMEA”), Latin America (“LATAM”) and Asia-Pacific (“APAC”) regions through a variety of trade channels, including retailers, wholesalers and distributors, original equipment manufacturers (“OEMs”), and construction companies. We enjoy strong name recognition in our regions under our various brands and patented technologies across multiple product categories. Global and geographic strategic 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 continuing operations. The following is an overview of the consolidated business, by segment, summarizing product types and brands:

Segment

Products

Brands

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:~~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 ~~Digest-eeze®.~~Wafcol®

Aquatics:
‎~~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:~~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:~~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:~~Controls:~~ Spectracide®, Garden Safe®, Liquid Fence®, and EcoLogic®.

‎Repellents:~~Repellents:~~ Cutter® and Repel®.

SB/RH is a wholly owned subsidiary of SBH. Spectrum Brands, Inc. (“SBI”), a wholly-owned subsidiary of SB/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~~SBH.

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 political and economic environments in which we manufacture, sell, and distribute our products.

As of the date of this report, we ~~have been~~continue to be classified as an essential business in the jurisdictions that have mandated ~~closure~~closures of non-essential businesses, and therefore have been allowed to remain ~~open. During the three month period ended March 29, 2020, there were certain HHI operating facilities, primarily within China~~open and Philippines, that experienced a temporary limit on production in response to the COVID-19 outbreak, but such facilities were operating at or near full capacity by the end of the quarter. Additionally, subsequent to the March 29, 2020, additional governmental operating restrictions were announced Mexico temporarily suspending or limiting production for our HHI operating facilities. Moreover, our H&G facility in St. Louis was temporarily closed in April 2020 to provide for additional cleaning and implementation of preventative measures in response to confirmed cases of COVID-19. These facilities continue to operate to the extent possible under existing regulations ~~which have limited~~with any limitation in production output ~~for HHI and our H&G production.~~

being short-term in nature. Despite the supply implications experienced in the prior year, the Company continues to experience continued customer ~~demand both during the three month period ended March 29, 2020 and during the subsequent period.~~demand. While demand in general for our products remains strong, our teams continue to monitor demand disruption and there can be no assurance as to the level of demand that will prevail ~~through~~throughout the ~~remainder of~~ fiscal ~~2020.~~year. A large portion of our customers continue to operate and sell our products, with some customers reducing operations due to closures or reduced 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 continue to monitor for, any substantive risk attributable to customer ~~credit.~~credit and have not experienced a significant impact from permanent store closures or retail bankruptcies. We believe the severity and duration of the COVID-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 highly dependent on the duration of the COVID-19 pandemic and how quickly the U.S. and global economies resume normal operations.

‎

~~Because the~~The COVID-19 pandemic ~~has not, as of the date of this report, materially impacted our operations or demand for our products, it~~ has not had a materially negative impact on the Company’s liquidity position. For the three and six month periods ended March 29, 2020, the Company estimates that net sales were negatively impacted by $7.5 million and operating income and adjusted EBITDA were negatively impacted by $3.6 million. The sweeping nature of COVID-19 pandemic makes it extremely difficult to predict the long-term ramifications on our financial condition and results of operations. However, the likely overall economic impact of the COVID-19 pandemic ~~is viewed as highly negative~~ to the U.S. and global ~~economies.~~economies remains uncertain. We ~~have initiated~~continue to actively monitor our global cash balances and liquidity, and if necessary, could reinitiate mitigating efforts to manage non-critical capital spending and assess operating spend to preserve cash and ~~increase capacity under our Revolver Facility.~~liquidity. 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. We have also not observed any material impairments ~~of our assets~~ due to the COVID-19 pandemic.

We expect the ultimate significance of the impact on our financial condition, results of operations, and cash flows will be dictated by the length of time that such circumstances continue, which will ultimately depend on the unforeseeable duration and severity of the COVID-19 pandemic and any governmental and public actions taken in response.

~~Divestitures~~

~~Global Batteries & Lights –~~

Acquisitions

On ~~January 2, 2019,~~October 26, 2020, the Company completed the ~~sale~~acquisition of ~~its GBL~~Armitage Pet Care Ltd ("Armitage") for $187.7 million. Armitage is a premium pet treats and toys business ~~pursuant to~~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 GBL acquisition agreement with Energizer for cash proceeds of $1,956.2 million, resulting in the recognition of a pre-tax gain on sale of $989.8 million during the year ended September 30, 2019, including the settlement of customary purchase price adjustments for working capitalUnited Kingdom. The net assets and assumed indebtedness, recognition of tax and legal indemnifications under the acquisition agreement, and contingent purchase price adjustment for the settlement with the divestiture of the Varta® consumer batteries business by Energizer. The results of operations of Armitage, since the acquisition date of October 26, 2020, are included in the Company’s Condensed Consolidated Statements of Income and ~~gain on sale~~reported within the GPC reporting segment for ~~disposal of the GBL business are recognized as a component of discontinued operations during~~ the three and six month periods ended ~~March 31, 2019.~~

~~Global Auto Care~~ – On January 28, 2019, the Company completed the sale of its GAC business pursuant to the GAC acquisition agreement with Energizer for $1.2 billion, consisting of $938.7 million in cash proceeds and $242.1 million in stock consideration of common stock of Energizer, resulting in the write-down of net assets held for sale of $111.0 million during the year ended September 30, 2019, including the settlement of customary purchase price adjustments for working capital and assumed indebtedness, recognition of tax and legal indemnifications in accordance with the GAC acquisition agreement. The results of operations and write-down of net assets held for sale for the disposal of the GAC business are recognized as a component of discontinued operations during the three and six month periods ended March 31, 2019.

~~Coevorden Operations~~ - On March 29, 2020, the Company completed the sale of its DCF production facility and distribution center in Coevorden, Netherlands for cash proceeds of $30.1 million subject to working capital and other typical closing adjustments, resulting in a loss on assets held for sale of $25.7 million during the six month period ended March 29, 2020.

~~See~~ ~~Note 2 – Divestitures~~ in 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.

~~Acquisitions~~

April 4, 2021.

On March 10, 2020, the Company entered into an asset purchase agreement with Omega Sea, LLC (“Omega”), a manufacturer and marketer of premium fish foods and consumable goods for the home and commercial aquarium markets, primarily consisting of the Omega brand, for a purchase price of approximately ~~$17.0~~$16.9 million. The results of Omega’s operations ~~since March 10, 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 and for the three and six month periods ended March 29, ~~2020.~~ 2020 since the acquisition date.

See Note 3 – Acquisitions in the Notes to the Condensed Consolidated Financial ~~statements,~~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 seek to improve our operational efficiency, match our manufacturing capacity, and product costs to market demand and better utilize our manufacturing resources. We have undertaken various initiatives to reduce manufacturing and operating costs, which may have a significant impact on the comparability of financial results on the condensed consolidated financial statements. The most significant of these initiatives is the Global Productivity Improvement ~~Plan~~Program, which began during the year ended September 30, ~~2019.~~2019 and has continued through the three and six month periods ended April 4, 2021. See Note 4 - Restructuring and Related Charges in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for more information.

Refinancing Activity

Refinancing activity has a significant impact on the comparability of financial results onof the condensed consolidated financial statements. ~~Effective November 15, 2019,~~On March 3, 2021, the Company completed ~~a tender and call~~its offering of $500.0 million aggregate principal amount of its ~~6.625% Senior Unsecured~~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 ~~an outstanding principal~~a make whole premium of ~~$117.4~~$23.4 million ~~recognizing a loss on extinguishment of the debt of $2.6 million including a non-cash charge of $1.1 million attributable to the~~and write-off of ~~deferred financing~~unamortized debt issuance costs ~~associated with~~of $7.9 million recognized as interest expense during the ~~debt.~~three and six month periods ended April 4, 2021. See Note 10 –- Debt~~in Notes~~ to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for more information.

~~Adoption of New Lease Accounting Standard~~

~~On October 1, 2019, the Company adopted ASU No. 2016-02,~~ ~~Leases (Topic 842)~~, and all the related amendments using the modified retrospective transition method, which resulted in the recognition of additional right-of-use (“ROU”) lease assets of $107.5 million and additional lease liabilities of $113.0 million, with no material cumulative effect adjustment to equity as of the date of adoption. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. See ~~Note 1 – Basis of Presentation and Significant Accounting Policies~~ ~~and~~ ~~Note 11 – Leases~~ ~~in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for more information.~~

‎

Non-GAAP Measurements

Our consolidated and segment results contain non-GAAP metrics such as organic net sales, and adjusted EBITDA (“Earnings Before Interest, Taxes, Depreciation, Amortization”). While we believe organic net sales and adjusted EBITDA are useful supplemental information, such adjusted results are not intended to replace our financial results in accordance with Accounting Principles Generally Accepted in the United States (“GAAP”) and should be read in conjunction with those GAAP results.

Organic Net Sales.We define organic net sales as net sales excluding the effect of changes in foreign currency exchange rates and impact from acquisitions (when applicable). We believe this non-GAAP measure provides useful information to investors because it reflects regional and operating segment performance from our activities without the effect of changes in currency exchange rate and acquisitions. We use organic net sales as one measure to monitor and evaluate our 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. We 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 three and six month periods ended ~~March 29, 2020~~April 4, 2021 compared to net sales for the three and six month periods ended March ~~31, 2019:~~29, 2020:


	March 29, 2020
Three Month Periods Ended ‎(in millions, except %)	Net Sales		Effect of Changes in Currency		Net Sales Excluding Effect of Changes in Currency		Effect of Acquisitions		Organic ‎Net Sales		Net Sales ‎March 31, 2019		Variance
Three Month Periods Ended (in millions, except %)																Three Month Periods Ended (in millions, except %)	April 4, 2021
																	Net Sales		Effect of Changes in Currency		Net Sales Excluding Effect of Changes in Currency		Effect of Acquisitions		Organic Net Sales		Net Sales March 29, 2020		Variance
HHI	$	329.1	$	0.1	$	329.2	$	—	$	329.2	$	331.1	$	(1.9)	(0.6%)	HHI	$	389.5	$	(3.2)	$	386.3	$	—	$	386.3	$	329.1	$	57.2	17.4	%
HPC		232.7		5.6		238.3		—		238.3		221.7		16.6	7.5%	HPC	297.9		(8.7)		289.2		—		289.2		232.7		56.5		24.3	%
GPC		236.9		1.6		238.5		(0.8)		237.7		214.9		22.8	10.6%	GPC	293.6		(6.1)		287.5		(26.8)		260.7		236.9		23.8		10.0	%
H&G		139.1		—		139.1		—		139.1		139.0		0.1	0.1%	H&G	168.8		—		168.8		—		168.8		139.1		29.7		21.4	%
Total	$	937.8	$	7.3	$	945.1	$	(0.8)	$	944.3	$	906.7		37.6	4.1%	Total	$	1,149.8	$	(18.0)	$	1,131.8	$	(26.8)	$	1,105.0	$	937.8	167.2		17.8	%

	March 29, 2020
Six Month Periods Ended ‎(in millions, except %)	Net Sales		Effect of Changes in Currency		Net Sales Excluding Effect of Changes in Currency		Effect of Acquisitions		Organic ‎Net Sales		Net Sales ‎March 31, 2019		Variance
HHI	$	626.8	$	—	$	626.8	$	—	$	626.8	$	636.2	$	(9.4)	(1.5%)
HPC		554.8		10.8		565.6		—		565.6		538.9		26.7	5.0%
GPC		442.7		2.8		445.5		(0.8)		444.7		419.6		25.1	6.0%
H&G		185.0		—		185.0		—		185.0		192.3		(7.3)	(3.8%)
Total	$	1,809.3	$	13.6	$	1,822.9	$	(0.8)	$	1,822.1	$	1,787.0		35.1	2.0%

‎


Six Month Periods Ended (in millions, except %)	April 4, 2021
	Net Sales		Effect of Changes in Currency		Net Sales Excluding Effect of Changes in Currency		Effect 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	%
HPC	676.4		(14.2)		662.2		—		662.2		554.8		107.4		19.4	%
GPC	569.1		(10.3)		558.8		(47.1)		511.7		442.7		69.0		15.6	%
H&G	251.0		—		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	%

Adjusted EBITDA and Adjusted EBITDA Margin.Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures used by management, which we believe provide useful information to investors because they 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. They also facilitate 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 the Company’s debt covenants. 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:

•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 attributable to (1)~~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 ~~March 31, 2019; (2)~~(5) incremental costs for separation of a key executive during the three and six month periods ended March 29, 2020 and March 31, 2019; (3) incremental costs associated with a safety recall in GPC during the three and six month periods ended March 31, 2019; (4) operating margin on H&G sales to GAC discontinued operations during the three and six month period ended March 31, 2019; and (5) certain fines and penalties for delayed shipments following the completion of a GPC distribution center consolidation in EMEA during the three and six month period ended March 31, 2019.2020;

Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of reported net sales for the respective period and segment.

‎

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ for SBH.


SPECTRUM BRANDS HOLDINGS, INC. (in millions)	HHI			HPC			GPC			H&G			Corporate		Consolidated
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 amortization	8.6			11.8			9.6			4.9			3.8		38.7
EBITDA	73.6			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 Margin	18.8		%	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 amortization	8.5			9.0			9.8			5.2			3.9		36.4
EBITDA	69.3			2.8			37.0			28.2			(143.6)		(6.3)
Share and incentive based compensation	—			—			—			—			14.6		14.6
Restructuring and related charges	0.2			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 Margin	21.1		%	3.4		%	16.9		%	20.4		%	—		15.0		%

SPECTRUM BRANDS HOLDINGS, INC. (in millions)
HHI
HPC
GPC
H&G
Corporate
Consolidated
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 amortization
8.5
9.0
9.8
5.2
3.9
36.4
EBITDA
69.3
2.8
37.0
28.2
(143.6)
(6.3)
Share and incentive based compensation
—
—
—
—
14.6
14.6
Restructuring and related charges
0.2
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)
Foreign currency translation on multicurrency divestiture loans
—
0.8
—
—
2.3
3.1
Salus
—
—
—
—
0.1
0.1
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 Margin
21.1%
3.4%
16.9%
20.4%
—
15.0%
Three Month Period Ended March 31, 2019
Net income (loss) from continuing operations
$
43.6
$
(6.6)
$
19.6
$
24.7
$
(135.3)
$
(54.0)
Income tax benefit
—
—
—
—
(22.7)
(22.7)
Interest expense
—
—
—
—
94.2
94.2
Depreciation and amortization
8.3
9.2
10.6
4.8
3.7
36.6
EBITDA
51.9
2.6
30.2
29.5
(60.1)
54.1
Share and incentive based compensation
—
—
—
—
17.3
17.3
Restructuring and related charges
0.4
1.3
2.3
0.3
8.3
12.6
Transaction related charges
0.4
0.9
0.3
—
3.7
5.3
Unrealized loss on Energizer investment
—
—
—
—
5.0
5.0
Foreign currency loss on multicurrency divestiture loans
—
—
—
—
21.8
21.8
Other
—
(0.3)
—
(0.2)
—
(0.5)
Adjusted EBITDA
$
52.7
$
4.5
$
32.8
$
29.6
$
(4.0)
$
115.6
Net Sales
$
331.1
$
221.7
$
214.9
$
139.0
$
—
$
906.7
Adjusted EBITDA Margin
15.9%
2.0%
15.3%
21.3%
—
12.7%

The following is a reconciliation of net income to Adjusted EBITDA for the six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ for SBH.


SPECTRUM BRANDS HOLDINGS, INC. (in millions)	HHI		HPC		GPC		H&G		Corporate		Consolidated		SPECTRUM BRANDS HOLDINGS, INC. (in millions)	HHI			HPC			GPC			H&G			Corporate		Consolidated
Six Month Period Ended April 4, 2021													Six Month Period Ended April 4, 2021
Net income from continuing operations													Net income from continuing operations	$	154.5		$	49.2		$	72.7		$	29.4		$	(195.8)	$	110.0
Income tax expense													Income tax expense	—			—			—			—			35.5		35.5
Interest expense													Interest expense	—			—			—			—			102.2		102.2
Depreciation and amortization													Depreciation and amortization	17.1			20.6			19.3			9.9			7.5		74.4
EBITDA													EBITDA	171.6			69.8			92.0			39.3			(50.6)		322.1
Share and incentive based compensation													Share and incentive based compensation	—			—			—			—			16.7		16.7
Restructuring and related charges													Restructuring and related charges	—			4.1			2.1			—			7.1		13.3
Transaction related charges													Transaction related charges	—			2.4			11.7			—			16.2		30.3
Gain on Energizer investment													Gain on Energizer investment	—			—			—			—			(6.9)		(6.9)
Inventory acquisition step-up													Inventory acquisition step-up	—			—			3.4			—			—		3.4

Other													Other	—			—			—			6.0			—		6.0
Adjusted EBITDA													Adjusted EBITDA	$	171.6		$	76.3		$	109.2		$	45.3		$	(17.5)	$	384.9
Net Sales													Net Sales	$	798.2		$	676.4		$	569.1		$	251.0		$	—	$	2,294.7
Adjusted EBITDA Margin													Adjusted EBITDA Margin	21.5		%	11.3		%	19.2		%	18.0		%	—		16.8		%
Six Month Period Ended March 29, 2020													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)	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)	Income tax benefit	—			—			—			—			(18.3)		(18.3)
Interest expense		—		—		—		—		70.4		70.4	Interest expense	—			—			—			—			70.4		70.4
Depreciation and amortization		16.6		17.8		25.9		10.3		7.4		78.0	Depreciation and amortization	16.6			17.8			25.9			10.3			7.4		78.0
EBITDA		111.6		36.6		(0.1)		24.7		(139.6)		33.2	EBITDA	111.6			36.6			(0.1)			24.7			(139.6)		33.2
Share and incentive based compensation		—		—		—		—		29.1		29.1	Share and incentive based compensation	—			—			—			—			29.1		29.1
Restructuring and related charges		0.7		2.8		16.7		0.4		28.8		49.4	Restructuring and related charges	0.7			2.8			16.7			0.4			28.8		49.4
Transaction related charges		—		4.3		5.0		—		2.0		11.3	Transaction related charges	—			4.3			5.0			—			2.0		11.3
Loss on Energizer investment		—		—		—		—		68.3		68.3	Loss on Energizer investment	—			—			—			—			68.3		68.3
Loss on assets held for sale		—		—		25.7		—		—		25.7	Loss on assets held for sale	—			—			25.7			—			—		25.7
Write-off from impairment of intangible assets		—		—		24.2		—		—		24.2	Write-off from impairment of intangible assets	—			—			24.2			—			—		24.2
Foreign currency loss on multicurrency divestiture loans		—		0.7		—		—		(0.3)		0.4
Salus		—		—		—		—		0.4		0.4

Other		—		—		—		—		0.5		0.5	Other	—			0.7			—			—			0.6		1.3
Adjusted EBITDA	$	112.3	$	44.4	$	71.5	$	25.1	$	(10.8)	$	242.5	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	Net Sales	$	626.8		$	554.8		$	442.7		$	185.0		$	—	$	1,809.3
Adjusted EBITDA Margin		17.9%		8.0%		16.2%		13.6%		—		13.4%	Adjusted EBITDA Margin	17.9		%	8.0		%	16.2		%	13.6		%	—		13.4		%
Six Month Period Ended March 31, 2019
Net income from continuing operations	$	87.3	$	(14.7)	$	31.4	$	22.8	$	(209.8)	$	(83.0)
Income tax benefit		—		—		—		—		(26.0)		(26.0)
Interest expense		—		—		—		—		151.2		151.2
Depreciation and amortization		16.8		47.3		21.3		9.6		7.6		102.6
EBITDA		104.1		32.6		52.7		32.4		(77.0)		144.8
Share based compensation		—		—		—		—		23.2		23.2
Restructuring and related charges		3.2		1.5		4.9		1.0		10.9		21.5
Transaction related charges		0.9		5.5		0.9		—		4.3		11.6
GPC safety recall		—		—		0.6		—		—		0.6
Loss on Energizer investment		—		—		—		—		5.0		5.0
Foreign currency loss on multicurrency divestiture loans		—		—		—		—		21.8		21.8
Other		—		(0.1)		2.8		(0.7)		0.3		2.3
Adjusted EBITDA	$	108.2	$	39.5	$	61.9	$	32.7	$	(11.5)	$	230.8
Net Sales	$	636.2	$	538.9	$	419.6	$	192.3	$	—	$	1,787.0
Adjusted EBITDA Margin		17.0%		7.3%		14.8%		17.0%		—		12.9%

‎

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ for SB/RH.


SB/RH HOLDINGS, LLC (in millions)	HHI			HPC			GPC			H&G			Corporate		Consolidated
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 amortization	8.6			11.8			9.6			4.9			3.8		38.7
EBITDA	73.6			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 Margin	18.8		%	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 amortization	8.5			9.0			9.8			5.2			3.9		36.4
EBITDA	69.3			2.8			37.0			28.2			(139.7)		(2.4)
Share and incentive based compensation	—			—			—			—			14.1		14.1
Restructuring and related charges	0.2			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 Margin	21.1		%	3.4		%	16.9		%	20.4		%	—		15.3		%

SB/RH HOLDINGS, LLC (in millions)
HHI
HPC
GPC
H&G
Corporate
Consolidated
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 amortization
8.5
9.0
9.8
5.2
3.9
36.4
EBITDA
69.3
2.8
37.0
28.2
(139.7)
(2.4)
Share and incentive based compensation
—
—
—
—
14.1
14.1
Restructuring and related charges
0.2
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)
Foreign currency translation on multicurrency divestiture loans
—
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 Margin
21.1%
3.4%
16.9%
20.4%
—
15.3%
Three Month Period Ended March 31, 2019
Net income (loss) from continuing operations
$
43.6
$
(6.6)
$
19.6
$
24.7
$
(93.7)
$
(12.4)
Income tax benefit
—
—
—
—
(17.3)
(17.3)
Interest expense
—
—
—
—
48.3
48.3
Depreciation and amortization
8.3
9.2
10.6
4.8
3.7
36.6
EBITDA
51.9
2.6
30.2
29.5
(59.0)
55.2
Share and incentive based compensation
—
—
—
—
16.9
16.9
Restructuring and related charges
0.4
1.3
2.3
0.3
8.3
12.6
Transaction related charges
0.4
0.9
0.3
—
3.7
5.3
Loss on Energizer investment
—
—
—
—
5.0
5.0
Foreign currency loss on multicurrency divestiture loans
—
—
—
—
21.8
21.8
Other
—
(0.3)
—
(0.2)
—
(0.5)
Adjusted EBITDA
$
52.7
$
4.5
$
32.8
$
29.6
$
(3.3)
$
116.3
Net Sales
$
331.1
$
221.7
$
214.9
$
139.0
$
—
$
906.7
Adjusted EBITDA Margin
15.9%
2.0%
15.3%
21.3%
—
12.8%

The following is a reconciliation of net income to Adjusted EBITDA for the six month periods ended April 4, 2021 and March 29, 2020 ~~and March 31, 2019~~ for SB/RH.


SB/RH HOLDINGS, LLC (in millions)	HHI		HPC		GPC		H&G		Corporate		Consolidated		SB/RH HOLDINGS, LLC (in millions)	HHI			HPC			GPC			H&G			Corporate		Consolidated
Six Month Period Ended April 4, 2021													Six Month Period Ended April 4, 2021
Net income from continuing operations													Net income from continuing operations	$	154.5		$	49.2		$	72.7		$	29.4		$	(194.8)	$	111.0
Income tax expense													Income tax expense	—			—			—			—			35.8		35.8
Interest expense													Interest expense	—			—			—			—			102.4		102.4
Depreciation and amortization													Depreciation and amortization	17.1			20.6			19.3			9.9			7.5		74.4
EBITDA													EBITDA	171.6			69.8			92.0			39.3			(49.1)		323.6
Share based compensation													Share based compensation	—			—			—			—			16.1		16.1
Restructuring and related charges													Restructuring and related charges	—			4.1			2.1			—			7.1		13.3
Transaction related charges													Transaction related charges	—			2.4			11.7			—			16.2		30.3
Gain on Energizer investment													Gain on Energizer investment	—			—			—			—			(6.9)		(6.9)
Inventory acquisition step-up													Inventory acquisition step-up	—			—			3.4			—			—		3.4

Other													Other	—			—			—			6.0			(0.1)		5.9
Adjusted EBITDA													Adjusted EBITDA	$	171.6		$	76.3		$	109.2		$	45.3		$	(16.7)	$	385.7
Net Sales													Net Sales	$	798.2		$	676.4		$	569.1		$	251.0		$	—	$	2,294.7
Adjusted EBITDA Margin													Adjusted EBITDA Margin	21.5		%	11.3		%	19.2		%	18.0		%	—		16.8		%
Six Month Period Ended March 29, 2020													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)	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)	Income tax benefit	—			—			—			—			(16.6)		(16.6)
Interest expense		—		—		—		—		70.0		70.0	Interest expense	—			—			—			—			70.0		70.0
Depreciation and amortization		16.6		17.8		25.9		10.3		7.4		78.0	Depreciation and amortization	16.6			17.8			25.9			10.3			7.4		78.0
EBITDA		111.6		36.6		(0.1)		24.7		(134.9)		37.9	EBITDA	111.6			36.6			(0.1)			24.7			(134.9)		37.9
Share and incentive based compensation		—		—		—		—		28.5		28.5	Share and incentive based compensation	—			—			—			—			28.5		28.5
Restructuring and related charges		0.7		2.8		16.7		0.4		28.8		49.4	Restructuring and related charges	0.7			2.8			16.7			0.4			28.8		49.4
Transaction related charges		—		4.3		5.0		—		2.0		11.3	Transaction related charges	—			4.3			5.0			—			2.0		11.3
Loss on Energizer investment		—		—		—		—		68.3		68.3	Loss on Energizer investment	—			—			—			—			68.3		68.3
Loss on assets held for sale		—		—		25.7		—		—		25.7	Loss on assets held for sale	—			—			25.7			—			—		25.7
Write-off from impairment of intangible assets		—		—		24.2		—		—		24.2	Write-off from impairment of intangible assets	—			—			24.2			—			—		24.2
Foreign currency translation on multicurrency divestiture loans		—		0.7		—		—		(0.3)		0.4

Other		—		—		—		—		0.4		0.4	Other	—			0.7			—			—			0.1		0.8
Adjusted EBITDA	$	112.3	$	44.4	$	71.5	$	25.1	$	(7.2)	$	246.1	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	Net Sales	$	626.8		$	554.8		$	442.7		$	185.0		$	—	$	1,809.3
Adjusted EBITDA Margin		17.9%		8.0%		16.2%		13.6%		—		13.6%	Adjusted EBITDA Margin	17.9		%	8.0		%	16.2		%	13.6		%	—		13.6		%
Six Month Period Ended March 31, 2019
Net income from continuing operations	$	87.3	$	(14.7)	$	31.4	$	22.8	$	(158.1)	$	(31.3)
Income tax benefit		—		—		—		—		(15.8)		(15.8)
Interest expense		—		—		—		—		91.5		91.5
Depreciation and amortization		16.8		47.3		21.3		9.6		7.6		102.6
EBITDA		104.1		32.6		52.7		32.4		(74.8)		147.0
Share and incentive based compensation		—		—		—		—		22.5		22.5
Restructuring and related charges		3.2		1.5		4.9		1.0		10.9		21.5
Transaction related charges		0.9		5.5		0.9		—		4.3		11.6
Loss on Energizer investment		—		—		—		—		5.0		5.0
Foreign currency loss on multicurrency divestiture loans		—		—		—		—		21.8		21.8
GPC safety recall		—		—		0.6		—		—		0.6
Other		—		(0.1)		2.8		(0.7)		0.4		2.4
Adjusted EBITDA	$	108.2	$	39.5	$	61.9	$	32.7	$	(9.9)	$	232.4
Net Sales	$	636.2	$	538.9	$	419.6	$	192.3	$	—	$	1,787.0
Adjusted EBITDA Margin		17.0%		7.3%		14.8%		17.0%		—		13.0%

‎

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 and March 31, 2019, respectively.~~

2020.


	Three Month Periods Ended							Six Month Periods Ended
(in millions, except %)															(in millions, except %)	Three Month Periods Ended						Variance								Six Month Periods Ended								Variance
	March 29, 2020		March 31, 2019		Variance			March 29, 2020		March 31, 2019		Variance				April 4, 2021			March 29, 2020									April 4, 2021				March 29, 2020
Net sales	$	937.8	$	906.7	$	31.1	3.4%	$	1,809.3	$	1,787.0	$	22.3	1.2%	Net sales	$	1,149.8		$	937.8				$	212.0			22.6	%			$	2,294.7			$	1,809.3			$	485.4			26.8	%
Gross profit		328.9		305.5		23.4	7.7%		598.0		611.3		(13.3)	(2.2%)	Gross profit	404.0			328.9			75.1				22.8	%			826.3				598.0				228.3				38.2	%
Gross profit margin															Gross profit margin	35.1		%	35.1		%	—	bps							36.0	%			33.1	%			290	bps
Operating expenses		261.2		263.9		(2.7)	(1.0%)		576.0		544.3		31.7	5.8%	Operating expenses	287.2			261.2			26.0				10.0	%			586.0				576.0				10.0				1.7	%
Interest expense		35.5		94.2		(58.7)	(62.3%)		70.4		151.2		(80.8)	(53.4%)	Interest expense	65.5			35.5			30.0				84.5	%			102.2				70.4				31.8				45.2	%
Other non-operating expense, net		110.4		24.1		86.3	358.1%		66.8		24.8		42.0	169.4%
Income tax benefit		(19.0)		(22.7)		3.7	(16.3%)		(18.3)		(26.0)		7.7	(29.6%)
Net loss from continuing operations		(59.2)		(54.0)		(5.2)	(9.6%)		(96.9)		(83.0)		(13.9)	16.7%
Income from discontinued operations, net of tax		1.4		783.6		(782.2)	99.8%		4.3		700.4		(696.1)	(99.4%)
Net (loss) income		(57.8)		729.6		(787.4)	107.9%		(92.6)		617.4		(710.0)	(115.0%)
Other non-operating (income) expense, net															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)															Income tax expense (benefit)	15.7			(19.0)			34.7				n/m				35.5				(18.3)				53.8				n/m
Net income (loss) from continuing operations															Net income (loss) from continuing operations	36.8			(59.2)			96.0				n/m				110.0				(96.9)				206.9				n/m
(Loss) income from discontinued operations, net of tax															(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)															Net income (loss)	35.7			(57.8)			93.5				n/m				108.6				(92.6)				201.2				n/m
n/m = not meaningful															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 ~~March 31, 2019, respectively.~~

Three Month Periods Ended
Six Month Periods Ended
(in millions, except %)
March 29, 2020
March 31, 2019
Variance
March 29, 2020
March 31, 2019
Variance
HHI
$
329.1
$
331.1
$
(2.0)
(0.6%)
$
626.8
$
636.2
$
(9.4)
(1.5%)
HPC
232.7
221.7
11.0
5.0%
554.8
538.9
15.9
3.0%
GPC
236.9
214.9
22.0
10.2%
442.7
419.6
23.1
5.5%
H&G
139.1
139.0
0.1
0.1%
185.0
192.3
(7.3)
(3.8%)
Net Sales
$
937.8
$
906.7
31.1
3.4%
$
1,809.3
$
1,787.0
22.3
1.2%

~~The following sets forth~~ the principal components of ~~change~~changes in net sales ~~from the three and six month periods~~ ~~ended March 31, 2019~~ ~~to the three and six month periods~~ ~~ended March 29, 2020.~~

(in millions)
Three Month Periods Ended
Six Month Periods Ended
Net Sales for the periods ended March 31, 2019
$
906.7
$
1,787.0
Increase in HPC
16.6
26.7
Increase in GPC
22.8
25.1
Increase (Decrease) in H&G
0.1
(7.3)
Decrease in HHI
(1.9)
(9.4)
Acquisition sales
0.8
0.8
Foreign currency impact, net
(7.3)
(13.6)
Net Sales for the periods ended March 29, 2020
$
937.8
$
1,809.3

~~The Company recognized an increase in organic net sales of $37.6 million, or 4.1%, and $35.1 million, or 2.1%~~ for the ~~three and six month periods ended March 29, 2020.~~respective periods.


(in millions, except %)	Three Month Periods Ended				Variance				Six Month Periods Ended				Variance
	April 4, 2021		March 29, 2020						April 4, 2021		March 29, 2020
HHI	$	389.5	$	329.1	$	60.4	18.4	%	$	798.2	$	626.8	$	171.4	27.3	%
HPC	297.9		232.7		65.2		28.0	%	676.4		554.8		121.6		21.9	%
GPC	293.6		236.9		56.7		23.9	%	569.1		442.7		126.4		28.6	%
H&G	168.8		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 Ended		Six Month Periods Ended
Net Sales for the period ended March 29, 2020	$	937.8	$	1,809.3
Increase in HHI	57.2		166.7
Increase in HPC	56.5		107.4
Increase in GPC	23.8		69.0
Increase in H&G	29.7		66.0
Acquisition sales	26.8		47.1
Foreign currency impact, net	18.0		29.2
Net Sales for the period ended April 4, 2021	$	1,149.8	$	2,294.7

Gross Profit.~~For~~ Gross profit for the three month period ~~ended March 29, 2020, gross profit~~ increased ~~$23.4 million,~~due to higher volumes across all segments, positive productivity and cost improvements, plus favorable product mix with ~~an increase in~~consistent gross profit margin ~~from 33.7%~~due to ~~35.1% primarily due~~ increased ~~sale volumes, increased productivity improvements,~~inflation and ~~benefit~~shipping costs plus benefits from retrospective tariff exclusions ~~partially offset by incremental material input costs including tariffs. For~~in the prior year. Gross profit and gross profit margin for the six month period ~~ended March 29, 2020, gross profit decreased $13.3 million, with a decrease in gross profit margin from 34.2% to 33.1% primarily~~increased due to ~~incremental material~~sales volumes across all segments, positive productivity and ~~input~~cost improvements, with lower restructuring and depreciation costs ~~including tariffs, unfavorable transaction foreign currency loss, incremental restructuring costs and accelerated depreciation expense as part of~~due to the ~~Global Productivity Improvement Plan,~~exiting GPC facilities in LATAM in the prior year, partially offset by increased ~~sales volumes~~inflation and shipping costs and benefits in the prior year from retrospective tariff exclusions.

Operating Expenses.Operating expenses for the three month period ~~ended March 29, 2020 decreased $2.7 million, or 1.0%,~~increased due to ~~a decrease~~an increase in selling, general and administrative expenses of ~~$3.1~~$30.3 million largely attributable to higher 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~~operations of $7.0 million in the prior year, partially offset by ~~an increase~~a decrease in restructuring and related charges of ~~$6.6 million and transaction related charges of $1.9~~$16.2 million. Operating expenses for the six month period ~~ended March 29, 2020~~ increased ~~$31.7 million, or 5.8%,~~ 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 ~~associated with the Coevorden Operations divestiture,~~and a $24.2 million write-off from impairment of intangible assets an increase in restructuring and related charges of $16.1 million; offset by a reduction in selling and general and administrative expenses of $31.6 million primarily from incremental depreciation and amortizationassociated with the Coevorden divestiture in the prior ~~year associated with HPC business being de-recognized from held for sale.~~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 ~~month~~ and six month periods ~~ended March 29, 2020 decreased $58.7 million, or 62.3%, and $80.8 million, or 53.4%, respectively,~~increased due to the ~~lower~~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 ~~average interest rate.~~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.

Other non-operating ~~expense,~~income, net.Other non-operating ~~expense increased $86.3 million and $42.0 million~~ for the three and six month periods ~~ended March 29, 2020~~is due to ~~the loss~~realized and unrealized gains on our investment in Energizer common ~~stock.~~stock during the period, which the Company sold its remaining investment in January 2021. See Note 13 – Fair Value of FinancialInstruments 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 ~~significantly~~ impacted for the three ~~month~~ and six month periods ~~ended March 29, 2020~~ 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, ~~losses earned outside the U.S. that more likely than not will not result in a tax benefits,~~ certain nondeductible expenses, ~~and~~ foreign rates that differ from the US federal statutory ~~rate.~~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.Discontinued operations include our divestitures of GBL and GAC divisions that were sold on January 2, 2019 and January 28, 2019, respectively. Results of operations, financial position and cash flows for these businesses are separately reported as The income or loss attributable to discontinued operations ~~for all periods presented. During the three and six month periods ended March 29, 2020, the Company recognized~~primarily reflect incremental ~~income for~~ changes to tax and legal indemnifications associated with the Company's divestitures of its GBL division and ~~other agreed-upon funding under~~GAC divisions to Energizer during the ~~acquisition agreement.~~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 and March 31, 2019, respectively:~~

2020:


	Three Month Periods Ended							Six Month Periods Ended
(in millions, except %)															(in millions, except %)	Three Month Periods Ended						Variance								Six Month Periods Ended								Variance
	March 29, 2020		March 31, 2019		Variance			March 29, 2020		March 31, 2019		Variance				April 4, 2021			March 29, 2020									April 4, 2021				March 29, 2020
Net sales	$	937.8	$	906.7	$	31.1	3.4%	$	1,809.3	$	1,787.0	$	22.3	1.2%	Net sales	$	1,149.8		$	937.8				$	212.0			22.6	%			$	2,294.7			$	1,809.3			$	485.4			26.8	%
Gross profit		328.9		305.5		23.4	7.7%		598.0		611.3		(13.3)	(2.2%)	Gross profit	404.0			328.9			75.1				22.8	%			826.3				598.0				228.3				38.2	%
Gross profit margin															Gross profit margin	35.1		%	35.1		%	—	bps							36.0	%			33.1	%			290	bps
Operating expenses		257.3		262.7		(5.4)	(2.1%)		571.3		541.9		29.4	5.4%	Operating expenses	286.4			257.3			29.1				11.3	%			584.5				571.3				13.2				2.3	%
Interest expense		35.3		48.3		(13.0)	(26.9%)		70.0		91.5		(21.5)	(23.5%)	Interest expense	65.6			35.3			30.3				85.8	%			102.4				70.0				32.4				46.3	%
Other non-operating expense, net		110.4		24.2		86.2	356.2%		66.8		25.0		41.8	167.2%
Income tax benefit		(17.5)		(17.3)		(0.2)	1.2%		(16.6)		(15.8)		(0.8)	5.1%
Net loss from continuing operations		(56.6)		(12.4)		(44.2)	356.5%		(93.5)		(31.3)		(62.2)	198.7%
Income from discontinued operations, net of tax		1.4		783.6		(782.2)	(99.8%)		4.3		700.4		(696.1)	(99.4%)
Net (loss) income		(55.2)		771.2		(826.4)	(107.2%)		(89.2)		669.1		(758.3)	(113.3%)
Other non-operating (income) expense, net															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)															Income tax expense (benefit)	15.9			(17.5)			33.4				n/m				35.8				(16.6)				52.4				n/m
Net income (loss) from continuing operations															Net income (loss) from continuing operations	37.3			(56.6)			93.9				n/m				111.0				(93.5)				204.5				n/m
(Loss) income from discontinued operations, net of tax															(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)															Net income (loss)	36.2			(55.2)			91.4				n/m				109.6				(89.2)				198.8				n/m
n/m = not meaningful															n/m = not meaningful

~~For~~

The changes in SB/RH for the three and six month periods ~~ended March 29, 2020, the changes in net sales, gross profit, operating expenses and other non-operating expenses~~ are primarily attributable to the changes in SBH previously discussed.

Segment Financial Data

Hardware & Home Improvement

Three Month Periods Ended
Six Month Periods Ended
(in millions, except %)
March 29, 2020
March 31, 2019
Variance
March 29, 2020
March 31, 2019
Variance
Net sales
$
329.1
$
331.1
$
(2.0)
(0.6%)
$
626.8
$
636.2
$
(9.4)
(1.5%)
Operating income
61.0
44.4
16.6
37.4%
95.5
87.7
7.8
8.9%
Operating income margin
18.5%
13.4%
510
bps
15.2%
13.8%
140
bps
Adjusted EBITDA
$
69.5
$
52.7
$
16.8
31.9%
$
112.3
$
108.2
$
4.1
3.8%
Adjusted EBITDA margin
21.1%
15.9%
520
bps
17.9%
17.0%
90
bps
n/m = not meaningful

~~Net sales for the three month period decreased $2.0 million, or 0.6%, with a decrease in organic net sales of $1.9 million, or 0.6%.~~

~~Security decreased $3.6 million due to a slight decline in volume partially offset with pricing increases.~~

~~Plumbing increased $0.2 million due to market share gains in the multifamily development channel and pricing increases.~~

~~Hardware increased $1.6 million due to new product introduction in the home center channel and pricing increases.~~

Operating income for the three month period increased $16.6 million with a margin increase of 510 bps due to a benefit of $8.4 million from retrospective tariff exclusions, productivity improvements and favorable mix, offset by material and input costs including tariffs. Adjusted EBITDA for the three month period increased $16.8 million with a margin increase of 520 bps due to tariff refunds realized during the period due to a benefit from retrospective tariff exclusions and productivity improvements, offset by incremental material and input costs including tariffs.

~~Net sales for the six month period decreased $9.4 million, or 1.5%, with a decrease in organic net sales of $9.4 million, or 1.5%.~~

~~Security decreased $13.1 million due to reduced volumes in the builder’s channel plus volume reduction from customer loss partially offset with pricing increase.~~

~~Plumbing increased $4.0 million due to promotional pricing related volume in retail channel and market share gains in the multifamily development channel and pricing increase.~~

~~Hardware marginally decreased $0.2 million due to reduced volumes in the builder’s channel offset by new product and pricing increase.~~

Operating income for the six month period increased $7.8 million with a margin increase of 140 bps due to a benefit of $7.9 million from retrospective tariff exclusions and productivity improvements, offset by reduced sales volumes and incremental material and input costs, including tariffs. Adjusted EBITDA for the six month period increased $4.1 million with a margin increase of 90 bps due to a benefit from retrospective tariff exclusions, offset by reduced sales volumes and incremental material and input costs, including tariffs.

‎


(in millions, except %)	Three Month Periods Ended						Variance					Six Month Periods Ended						Variance
	April 4, 2021			March 29, 2020								April 4, 2021			March 29, 2020
Net sales	$	389.5		$	329.1		$	60.4		18.4	%	$	798.2		$	626.8		$	171.4		27.3	%
Operating income	66.0			61.0			5.0			8.2	%	158.2			95.5			62.7			65.7	%
Operating income margin	16.9		%	18.5		%	(160)		bps			19.8		%	15.2		%	460		bps
Adjusted EBITDA	$	73.4		$	69.5		$	3.9		5.6	%	$	171.6		$	112.3		$	59.3		52.8	%
Adjusted EBITDA margin	18.8		%	21.1		%	(230)		bps			21.5		%	17.9		%	360		bps
n/m = not meaningful

~~Home and Personal Care~~

Three Month Periods Ended
Six Month Periods Ended
(in millions, except %)
March 29, 2020
March 31, 2019
Variance
March 29, 2020
March 31, 2019
Variance
Net sales
$
232.7
$
221.7
$
11.0
5.0%
$
554.8
$
538.9
$
15.9
3.0%
Operating (loss) income
(3.5)
(6.8)
3.3
(48.5%)
20.2
(14.7)
34.9
n/m
Operating (loss) income margin
(1.5%)
(3.1%)
160
bps
3.6%
(2.7%)
630
bps
Adjusted EBITDA
$
8.0
$
4.5
$
3.5
77.8%
$
44.4
$
39.5
$
4.9
12.4%
Adjusted EBITDA margin
3.4%
2.0%
140
bps
8.0%
7.3%
70
bps
n/m = not meaningful

Net sales for the three month period increased ~~$11.0~~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 ~~5.0%~~17.4%, ~~with an increase in organic net sales of $16.6 million, or 7.5%.~~

Personal care increased $9.3 million, including an increase in NA sales of $3.4 million due to new product placement and distribution in the mass retail channel, increased volume through e-commerce channels, coupled with increased demand in response to the COVID-19 pandemic partially offset by supply constraints; an increase in EMEA sales of $4.8 million due to increased growth in e-commerce channel coupled with demand in response to the COVID-19 pandemic partially offset by supply constraints; and with relatively flat sales in LATAM and an increase in APAC sales of $1.1 million.

Home and kitchen increased $7.3 million, including an increase in NA of $3.6 million due to new product placement and distribution in mass retail and grocery channels, increased volume through e-commerce channels, coupled with increased demand in response to the COVID-19 pandemic partially offset by supply constraints; an increase in EMEA sales of $1.2 million from promotional volumes; an increase in LATAM sales of $1.9 million from new product distribution; and increase in APAC sales of $0.5 million.

Operating income for the three month period increased $3.3 million with a margin increase of 160 bps due to higher sales volumes, partially offset by promotional pricing and incremental restructuring costs, tariff costs, and negativeexcluding favorable foreign currency transaction loss. Adjusted EBITDA for the three month period increased $3.5 million with a margin increase of 140 bps due to higher sales volumes, partially offset by tariff costs, and negative foreign currency transaction loss.

exchange impacts. Net sales for the six month period increased ~~$15.9~~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 ~~3.0%~~26.6%, ~~with an increase in organic net sales of $26.7 million, or 5.0%.~~

~~Personal care appliances~~excluding favorable foreign exchange impact.

Operating income and adjusted EBITDA for the three month period increased ~~$15.0 million, including an increase in NA sales of $1.8 million~~ due to ~~new product placement~~increased volumes and ~~distribution in the mass retail channel, increased volume through online retail channels, coupled with increased demand in response to the COVID-19 pandemic~~productivity improvements, partially offset by ~~supply constraint; an increase in EMEA sales of $12.8 million driven by promotion volumes with traditional~~prior year's benefit from retrospective tariff exclusions, higher freight and ~~online retailers during holiday season, increased growth in e-commerce channels coupled with increased demand in response to the~~input cost inflation, distribution, COVID-19 ~~pandemic partially offset by supply constraints;~~related costs and ~~an increase in APAC sales of $1.2 million offset by decrease in LATAM sales $0.7 million.~~

~~Home~~higher marketing investments reducing margins. Operating income, adjusted EBITDA and kitchen appliances increased $11.7 million, including an increase in NA sales of $4.1 million due to new product placement and distribution in mass retail and grocery channels, increased volume through online retail channels, coupled with increased demand in response to the COVID-19 pandemic partially offset by supply constraints; an increase in EMEA sales of $5.4 million from promotional volumes with traditional and online retailers during holiday season; an increase in LATAM sales of $1.9 million from new product distribution; and an increase in APAC sales of $0.3 million.

~~Operating income~~margins for the six month period increased ~~$34.9 million with a margin increase of 630 bps~~ due to ~~higher sales~~increased volumes, ~~offset by incremental depreciation~~productivity and ~~amortization in the prior year associated with HPC business being de-recognized from held for sale, incremental tariff costs,~~cost improvements, favorable pricing programs and ~~negative foreign currency transaction loss. Adjusted EBITDA for the six month period increased $4.9 million with a margin increase of 70 bps due to higher sales volume,~~product mix, partially offset by ~~unfavorable product mix~~prior year's benefits from ~~promotional volume, incremental~~retrospective tariff exclusion, COVID-19 related costs and ~~negative foreign currency transaction loss.~~

higher marketing investments.

‎

~~Global Pet~~Home and Personal Care


	Three Month Periods Ended								Six Month Periods Ended
(in millions, except %)																	(in millions, except %)	Three Month Periods Ended						Variance									Six Month Periods Ended										Variance
	March 29, 2020		March 31, 2019		Variance				March 29, 2020		March 31, 2019		Variance					April 4, 2021			March 29, 2020										April 4, 2021					March 29, 2020
Net sales	$	236.9	$	214.9	$	22.0		10.2%	$	442.7	$	419.6	$	23.1		5.5%	Net sales	$	297.9		$	232.7					$	65.2			28.0	%				$	676.4				$	554.8				$	121.6			21.9	%
Operating income (loss)		28.2		19.7		8.5		43.1%		(24.7)		32.2		(56.9)		n/m	Operating income (loss)	11.5			(3.5)			15.0					n/m				48.2					20.2					28.0					138.6	%
Operating income (loss) margin		11.9%		9.2%		270	bps			(5.6%)		7.7%		(1,330)	bps		Operating income (loss) margin	3.9		%	(1.5		%)	540		bps							7.1		%			3.6		%			350		bps
Adjusted EBITDA	$	40.0	$	32.8	$	7.2		22.0%	$	71.5	$	61.9	$	9.6		15.5%	Adjusted EBITDA	$	25.4		$	8.0		$	17.4				217.5	%			$	76.3				$	44.4				$	31.9				71.8	%
Adjusted EBITDA margin		16.9%		15.3%		160	bps			16.2%		14.8%		140	bps		Adjusted EBITDA margin	8.5		%	3.4		%	510		bps							11.3		%			8.0		%			330		bps
n/m = not meaningful																	n/m = not meaningful

Net sales for the three month period increased ~~$22.0~~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 ~~10.2%~~24.3%, ~~with an increase in organic net sales of $22.8 million, or 10.6%.~~

Companion animal increased $21.5 million, including an increase in NA sales of $21.6 million from increased demand and customer conversion through online retail channels coupled with an increase in mass retail POS and demand in response to the COVID-19 pandemic; with a moderate increase in EMEA sales offset by a moderate decrease in APAC and LATAM sales.

Aquatics increased $2.1 million, including an increase in NA sales of $4.1 million from increased demand and customer conversion through online retail channels and pet specialty channels, and acquisition sales of $0.8 million; a decrease in EMEA sales of $2.1 million from slower seasonal distribution; and a marginal increase in APAC and LATAM sales.

Operating income for the three month period increased $8.5 million with a margin improvement of 270 bps due to an increase in sales volume and positive pricing, product cost improvements, and an incremental gain recognized for the final disposition of the Coevorden Operations, partially offset by incremental restructuring costs and transaction costs associated with the Omega acquisition and Coevorden Operations divestiture. Adjusted EBITDA for the three month period increased $7.2 million with a margin increase of 160 bps due to an increase in sales volume and positive pricing and product cost improvements.

excluding favorable foreign exchange impact. Net sales for the six month period increased ~~$23.1~~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 ~~5.5%~~19.4%, ~~with an increase in organic net sales of $25.1 million, or 6.0%.~~

~~Companion animal~~excluding favorable foreign currency impact.

Operating income, adjusted EBITDA and improved margins for the three month period increased ~~$25.8 million, including an increase in NA sales of $24.3 million from increased demand~~due to higher volumes and customer conversion through online retail channels coupled with an increase in mass retail POS and retail inventory demand in response to the COVID-19 pandemic; an increase in EMEA sales of $3.4 million;productivity improvements, partially offset by ~~decreases in APAC sales of $1.9 million~~increasing freight and ~~relatively flat sales in LATAM.~~

~~Aquatics increased $0.1 million, including an increase in NA sales of $1.6 million from increased demand~~input cost inflation and ~~customer conversion through online retail channels,~~continued marketing investments. Operating income, adjusted EBITDA and pet specialty channels, and acquisition sales of $0.8 million; offset by a decrease in EMEA sales of $1.3 million from slower seasonal distribution; with a moderate increase in LATAM sales offset by a moderate decrease in APAC sales.

~~Operating income~~improved margins for the six month period ~~decreased $56.9 million~~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 Ended						Variance					Six Month Periods Ended						Variance
	April 4, 2021			March 29, 2020								April 4, 2021			March 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) margin	13.6		%	11.9		%	170		bps			13.0		%	(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 margin	18.9		%	16.9		%	200		bps			19.2		%	16.2		%	300		bps
n/m = not meaningful

Net sales for the ~~recognition~~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 a$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 also attributable to the loss on ~~assets~~asset held for sale of $25.7 million and impairment of intangible assets of $24.2 million in the prior year associated with the Coevorden ~~Operations~~ divestiture, along with lower restructuring and ~~a $24.2 million write-off~~distribution costs from ~~impairment of intangible assets;~~exiting LATAM operating facilities in the prior year and incremental transaction ~~costs associated with~~related charges in the Omega acquisition and Coevorden Operations divestiture, plus additional restructuring costs and accelerated depreciation expense as part of the Global Productivity Improvement Plan, offset by increased sales volume, productivity, and positive pricing. Adjusted EBITDA for the six month period increased $9.6 million with a margin increase of 140 bps due to increased sales volume, productivity, and positive pricing.prior year.

Home and Garden


	Three Month Periods Ended								Six Month Periods Ended
(in millions, except %)																	(in millions, except %)	Three Month Periods Ended						Variance									Six Month Periods Ended										Variance
	March 29, 2020		March 31, 2019		Variance				March 29, 2020		March 31, 2019		Variance					April 4, 2021			March 29, 2020										April 4, 2021					March 29, 2020
Net sales	$	139.1	$	139.0	$	0.1		0.1%	$	185.0	$	192.3	$	(7.3)		(3.8%)	Net sales	$	168.8		$	139.1					$	29.7			21.4	%				$	251.0				$	185.0				$	66.0			35.7	%
Operating income		23.0		24.6		(1.6)		(6.5%)		14.4		22.3		(7.9)		(35.4%)	Operating income	29.9			23.0			6.9					30.0	%			29.4					14.4					15.0					104.2	%
Operating income margin		16.5%		17.7%		(120)	bps			7.8%		11.6%		(380)	bps		Operating income margin	17.7		%	16.5		%	120		bps							11.7		%			7.8		%			390		bps
Adjusted EBITDA	$	28.4	$	29.6	$	(1.2)		(4.1%)	$	25.1	$	32.7	$	(7.6)		(23.2%)	Adjusted EBITDA	$	34.8		$	28.4		$	6.4				22.5	%			$	45.3				$	25.1				$	20.2				80.5	%
Adjusted EBITDA margin		20.4%		21.3%		(90)	bps			13.6%		17.0%		(340)	bps		Adjusted EBITDA margin	20.6		%	20.4		%	20		bps							18.0		%			13.6		%			440		bps
n/m = not meaningful																	n/m = not meaningful

Net sales and organic net sales for the three month period increased ~~$0.1 million, or 0.1%.~~

~~Lawn & garden controls decreased $1.9 million due to slower retail POS on private label~~by growth in all product ~~from increased retail pricing.~~

~~Repellents marginally increased $0.1 million.~~

~~Household insect control increased $1.0 million due to volume increase in home center channel.~~

~~Other net sales under the GAC supply agreement were $5.6 million and $4.7 million for the respective three month periods~~

~~Operating income decreased $1.6 million with margin decrease of 120 bps due to supplier rebates in prior year and tariff costs, higher marketing and advertising investment spending, partially offset~~categories driven by productivity improvements and mix favorability. Adjusted EBITDA decreased $1.2 million due to higher material and input costs, higher marketing and advertising investment spending, partially offset by productivity improvements.

strong early season orders across channels. Net sales and organic net sales for the six month period ~~decreased $7.3 million, or 3.8%.~~

~~Lawn & garden control decreased $0.4 million~~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 ~~slower retail POS from increased retail pricing~~higher volumes, favorable mix, and ~~greater competition;~~productivity improvements, partially offset by ~~earlier seasonal distribution.~~

~~Repellents decreased $4.9 million~~advertising and marketing investments and higher distribution expenses. Operating income, adjusted EBITDA and margins increased for the six month period ended due to ~~retail inventory levels, earlier seasonal~~higher volumes, favorable product mix and productivity improvements, partially offset by increased advertising and marketing investments and higher distribution ~~in the prior year and slower POS during the period.~~

~~Household insect controls decreased $2.5 million due to retail inventory levels and slower POS in the period.~~

~~Other net sales under the GAC supply agreement were $10.9 million and $10.4 million for the respective six month periods~~

expenses. Operating income for the six month period ~~decreased $7.9 million with reduction in margin of 380 bps due to lower sales volumes, higher material and input costs including tariffs, higher marketing and advertising investment spending,~~was partially offset by ~~productivity. Adjusted EBITDA for the six month period decreased $7.6 million with reduction in margin of 340 bps due~~incremental legal reserve attributable to ~~lower sales volumes, higher material~~significant and ~~input costs including tariffs, higher marketing and advertising investment spending, partially offset by productivity.~~

‎

unusual non-recurring claims.

Liquidity and Capital Resources

The following is a summary of the SBH and SB/RH cash flows from continuing operations for the six month periods ended April 4, 2021 and March 29, 2020, ~~and March 31, 2019,~~ respectively.


	SBH				SB/RH					SBH				SB/RH
Six Month Periods Ended (in millions)	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019		Six Month Periods Ended (in millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Operating activities	$	(184.6)	$	(279.7)	$	(395.3)	$	(267.3)	Operating activities	$	(63.9)	$	(184.6)	$	(70.3)	$	(395.3)
Investing activities	$	(17.0)	$	2,827.4	$	(17.0)	$	2,827.4	Investing activities	$	(85.1)	$	(17.0)	$	(85.1)	$	(17.0)
Financing activities	$	35.7	$	(2,659.3)	$	247.3	$	(2,632.8)	Financing activities	$	(80.1)	$	35.7	$	(71.4)	$	247.3

Cash Flows from Operating Activities

Cash flows from SBH continuing operations increased ~~$95.1~~$120.7 million ~~primarily~~ due ~~to:~~

~~Decrease in cash used by~~to increased operating results from continuing operations, ~~of $37.9 million, including~~improved cash flow from working capital, coupled with a decrease in cash ~~used~~paid for ~~working capital~~restructuring of ~~approximately $26.9~~$32.8 million and cash paid for taxes of $10.7 million;

~~Decrease~~ partially offset by increase in cash paid for interest of ~~$80.2 million;~~

~~Decrease in cash paid for taxes of $5.5~~$37.5 million

~~Decrease in net corporate expenditures of $0.7 million; offset by~~

~~Increase in cash paid for restructuring~~ and ~~integration~~transaction related charges of ~~$29.2~~$4.6 million.

Cash flows from operating activities from continuing operations of SB/RH ~~decreased $128.0~~increased $325.0 million primarily due to the items previously discussed above except for an incremental operating cash outflow to its parent company for federal net operating losses under the Company’s tax sharing ~~agreement.~~

~~Depreciation and Amortization~~

Depreciation and amortization for the Company was $78.0 million and $102.6 million for the six month periods ended March 29, 2020 and March 31, 2019, respectively. The decrease in depreciation and amortization is primarily attributable to the cumulative adjustment to depreciation and amortization from the change in plan to sell the HPC divisionagreement in the prior year.

Cash Flows from Investing Activities

Cash flows from investing activities for SBH continuing operations decreased ~~$2,844.4~~$68.1 million primarily due to increase in cash paid for acquisition business of $112.8 million due to the acquisition of Armitage, partially offset by net increase in proceeds ~~of $2,854.4 million~~ from the sale of ~~the GBL and GAC businesses in the prior year, plus cash paid for Omega acquisition of $17.0 million; partially offset by $28.6 million in proceeds for the sale of shares of~~ Energizer common stock of $44.5 million. The Company sold ~~during the current period.~~

~~Capital Expenditures~~

its remaining investment in Energizer common stock in January 2021. Capital expenditures ~~for the Company were $31.7~~decreased $3.6 million ~~and $27.1 million for the six month periods ended March 29, 2020 and March 31, 2019, respectively. We~~predominantly due to timing of capital activities as we expect to make ~~incremental investments~~investment in capital projects ~~as part~~consistent to prior years. Cash flows from investing activities of ~~our Global Productivity Improvement Plan.~~

SB/RH increased primarily due to the items previously discussed.

Cash Flows from Financing Activities

Cash flows from financing activities for continuing operations ~~increased $2,695.0~~decreased $115.8 million ~~for the six month period ended~~ ~~March 29, 2020~~ primarily due to increased net proceeds from debt due to borrowings from the ~~paydown of debt~~Revolver Facility in the prior year ~~partially~~to support working capital needs, offset by ~~proceeds withdrawn from the Revolver~~increased stock repurchase activity in the ~~current period.~~

~~Debt~~

prior year and payment 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, net discount, with payment of $800.0 million of outstanding principal on senior notes and make whole premiums of $23.4 million using proceeds, plus paydown of assumed debt from the acquisition of Armitage. Refer to Note 10 - Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information on debt borrowings. There has been no issuance 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 Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail. During the six month period ended April 4, 2021 and March 29, 2020, SBH ~~recognized net proceeds~~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 ~~Revolver Facility~~financing cash flow activities of ~~$780.0 million primarily~~SBH.

Liquidity Outlook

Our ability to ~~support working capital needs,~~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 ~~made $130.0 million of~~return value to our shareholders. Our ability to make principal and interest payment on ~~debts for~~borrowings under our debt agreements and our ability to fund planned capital expenditures will depend on the ~~outstanding balance of 6.625% Notes of $117.4 million with premium of early extinguishment of $1.3 million,~~ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other ~~debt payments~~conditions. Based upon our current level of ~~$11.3 million.~~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 ~~March 29, 2020,~~April 4, 2021, the Company had borrowing availability of ~~$1.4~~$576.6 million, net of outstanding letters of ~~credit. Subsequent~~credit, under our credit facility. Additionally, we believe the availability under our credit facility and access to ~~March 29, 2020,~~capital markets are sufficient to achieve our longer-term strategic plans. Liquidity and capital resources of SB/RH are highly dependent upon the ~~Company increased its overall capacity~~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 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 ~~Revolver Facility by $90.0 million, resulting in~~consolidated group.

We maintain a ~~total capacity~~capital structure that we believe provides us with sufficient access to credit markets. When combined with strong levels of ~~$890 million.~~

~~At March 29, 2020, we were in compliance with all covenants under~~cash flow from operations, our capital structure has provided the ~~Senior Credit Agreement~~flexibility necessary to pursue strategic growth opportunities and ~~the indentures governing the 5.00% Notes, 5.75% Notes, 6.125% Notes, and 4.00% Notes.~~

return value to our shareholders. The Company’s access to capital markets and financing costs may depend on the Company’s credit ratings. On March 26, 2020, S&P downgraded the Company’s corporate credit rating to ‘B’ from ‘B+’, senior secured debt ratings from ‘BB’ to ‘BB-‘ and senior unsecured debt from ‘B+’ to ‘B’, with a negative outlook in response to the changing economic environment and risks attributable to COVID-19. 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.

~~Refer~~ 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 ~~Note 10 - Debt~~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 ~~Notes~~the fiscal year, as well as extended credit terms and/or promotional discounts throughout the peak season.

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 ~~Financial Statements included elsewhere in this Quarterly Report for more information.~~

~~Equity~~

~~There has been no issuance~~Balance Sheet at the time of ~~common stock, other than through~~ the ~~Company’s share-based compensation plans, during~~sales transaction, with the ~~six month periods ended March 29, 2020 and March 31, 2019.~~

~~During the six month periods ended March 29, 2020 and March 31, 2019, SBH made~~proceeds received recognized as an operating cash ~~dividend payments of $39.1 million and $44.6 million, or $0.42 per share, respectively.~~

~~During the six month period ended March 29, 2020,~~flow. Additionally, the Company ~~paid $364.8 million for~~facilitates a voluntary supply chain financing program to provide certain of its suppliers with the repurchase of common stock, consisting of 6.2 million treasury shares received, including $125 million through an accelerated share repurchase arrangement that was settled February 24, 2020. During the six month period ended March 31, 2019,opportunity to sell receivables due from the Company ~~paid $268.5 million for~~(the Company's trade payables) to an unrelated third-party financial institution under the ~~repurchase~~sole discretion of ~~common stock, consisting~~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 ~~4.9 million treasury shares received. See~~ ~~Note 15 – Shareholders’ Equity~~ ~~included elsewhere in this Quarterly Report for additional discussion.~~

~~Liquidity~~whether the suppliers sell their receivables to the financial institution, and ~~capital resources of SB/RH are highly dependent upon~~continue to be recognized as accounts payable on the ~~financing~~Company's Condensed Consolidated Balance Sheet with cash flow ~~activities of SBH.~~

activity recognized as an operating cash flow.

~~Liquidity Outlook~~

The Company’s ability to make principal and interest payment on borrowings under its debt agreements and its ability to fund planned capital expenditures will depend on its ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. Based on its current level of operations, the Company believes that its existing cash balances and expected cash flows from operations will be sufficient to meet its operating requirements for at least the next 12 months. However, the Company may request borrowings under its credit facilities and seek alternative forms of financing or additional investments to achieve its longer-term strategic plans.

~~Because the~~ COVID-19 pandemic has not, as of the date of this report, materially impacted our operations or demand for our products itand has not had a materially negative impact on the Company’s liquidity ~~position. We~~position, although there can be no assurance that it won't have ~~initiated~~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 ~~spending,~~spend and assess operating spend to preserve cash and ~~increase capacity under our Revolver Facility.~~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

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Contractual Obligations & Other Commercial Commitments

~~As noted in~~ ~~Note 2 – Divestitures~~ included elsewhere within this Quarterly Report, the Company settled its outstanding balance for the Varta indemnification payable with Energizer for $197.0 million during the six month ended March 29, 2020. Additionally, the Company repaid certain of its long-term indebtedness during the six month ended March 29, 2020, as described under ~~Note 10 - Debt~~.

There has otherwise been no material changes to our contractual obligations & other commercial commitments as discussed in our Annual Report on Form 10-K for the year ended September 30, ~~2019.~~

2020.

CriticalAccountingPolicies and Estimates

Our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States of America and fairly present our financial position and results of operations.

There ~~have been no material changes to our critical accounting policies other than the adoption of ASU No. 2016-02,~~ ~~Leases (Topic 842), which provides for a single comprehensive model for entities to use to account for leases. Refer to~~ ~~Note 1 – Basis of Presentation and Significant Accounting Policies~~ ~~of Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for information about the adoption of Topic 842.~~

During the six month period ended March 29, 2020, the Company measured the fair value of its GPC reporting unit goodwill following the recognition of the Coevorden Operations as held for sale. The Company allocated $10.6 million of GPC goodwill to the Coevorden Operations disposal group recognized as held for sale based upon a fair value allocation. The estimated fair value represents the amount at which a reporting unit could be bought or sold in a current transaction between willing parties on an arms-length basis. In estimating the fair value of the GPC reporting unit, we used a discounted cash flow methodology, which requires us to estimate future revenues, expenses, and capital expenditures and make assumptions about our weighted average cost of capital and perpetuity growth rate, among other variable. The fair value of the remaining GPC reporting unit exceeded its carrying value by 17% and did not recognize an impairment. The GPC reporting unit goodwill of $429.4 million as of March 29, 2020 is still deemed ‘at risk’ of impairment. The duration and severity of the COVID-19 pandemic could result in additional future impairment charges for the GPC reporting unit goodwill, and potentially other reporting unit goodwill not considered ‘at risk’. While we have concluded that a triggering event did not occur during the three month period ended March 29, 2020, a prolonged pandemic could negatively impact the results of operations, net sales and earnings growth rates, changes in key assumptions and other global and regional macroeconomic factors.

Additionally, the Company assessed the indefinite-lived intangible assets and definite lived intangible assets associated with the continuing commercial DCF business following recognition of the Coevorden Operations as held for sale. For indefinite-lived assets, the Company compares the estimated fair value of the identified trade names to the carrying value to determine if potential impairment exists. If the fair value is less than its carrying value, an impairment loss is recorded for the excess. The fair value of indefinite-lived intangible assets is determined using an income approach, the relief-from-royalty methodology, which requires us to make estimates and assumptions about future revenues, royalty rates, and the discount rate, among others. During the six month period ended March 29, 2020, the Company recognized $16.6 million impairment on indefinite lived intangible assets due to the reduced value of the associated tradenames, leaving no excess fair value as of the measurement date or risk of future impairment. For the remaining tradenames associated with the DCF business, there were $3.3 million of indefinite lived intangible assets that could be deemed at risk of future impairment due to the limited excess fair value. For definite lived intangible assets, the Company recognized $7.6 million impairment due to the incremental cash flow risk associated with the commercial DCF business following the planned divestiture of the Coevorden Operations, which consisted of the remaining carrying cost of the definite lived intangible assets associated with the commercial DCF business. While a triggering event did not occur during the three month period ended March 29, 2020, a prolonged COVID-19 pandemic could negatively impact net sales growth rate, change in key assumptions and other global and regional macroeconomic factors that could result in additional future impairment charges for indefinite-lived intangible assets.

~~Other than those discussed above, there~~ have been no material changes to our critical accounting estimates as discussed in our Annual Report on Form 10-K for the year ended September 30, ~~2019.~~

2020.

New Accounting Pronouncements

See Note 1 – Basis of Presentation and Significant Accounting Policiesof Notes to the Condensed Consolidated Financial Statements elsewhere included in this Quarterly Report for information about accounting pronouncements that are newly adopted and recent accounting pronouncements not yet adopted.

‎

Guarantor Statements - SB/RH

SBI has issued the 5.00% Notes under the 2029 Indenture, ~~6.125%~~the 5.50% Notes under the ~~2024~~2030 Indenture, the 5.75% Notes under the 2025 Indenture, ~~and~~ 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, ~~guaranteed,~~ 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 Ended		Year Ended			Six Month Period Ended		Year Ended
(in millions)	March 29, 2020		September 30, 2019		(in millions)	April 4, 2021		September 30, 2020
Statement of Operations Data
Statements of Operations Data					Statements of Operations Data
Third party net sales	$	1,254.6	$	2,711.6	Third party net sales	$	1,565.2	$	2,868.5
Intercompany net sales to non-guarantor subsidiaries		31.5		67.3	Intercompany net sales to non-guarantor subsidiaries	41.0		63.5
Total net sales		1,286.1		2,778.9	Total net sales	1,606.2		2,932.0
Gross profit		390.7		858.1	Gross profit	524.6		938.0
Operating income (loss)		34.1		(23.1)
Net loss from continuing operations		(111.1)		(719.0)
Net loss		(106.8)		(52.8)
Net loss attributable to controlling interest		(106.8)		(52.8)
Statement of Financial Position Data
Operating income					Operating income	114.3		187.4
Net income (loss) from continuing operations					Net income (loss) from continuing operations	6.2		(46.8)
Net income (loss)					Net income (loss)	4.9		(32.8)
Net income (loss) attributable to controlling interest					Net income (loss) attributable to controlling interest	4.9		(32.8)
Statements of Financial Position Data					Statements of Financial Position Data
Current Assets	$	1,214.7	$	1,101.0	Current Assets	$	1,415.1	$	1,342.0
Noncurrent Assets		2,959.7		3,013.1	Noncurrent Assets	2,709.4		2,804.6
Current Liabilities		814.1		1,407.7	Current Liabilities	840.0		881.7
Noncurrent Liabilities		3,242.2		2,403.8	Noncurrent Liabilities	3,053.7		3,020.4

The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of ~~March 29, 2020~~April 4, 2021 and September 30, ~~2019~~2020 are as follows:

(in millions)
March 29, 2020
September 30, 2020
Statement of Financial Position Data
Current receivables from non-guarantor subsidiaries
$
8.2
$
—
Long-term receivable from non-guarantor subsidiaries
52.0
87.1
Current payable to non-guarantor subsidiaries
411.0
649.3
Long-term debt with non-guarantor subsidiaries
9.9
10.2

‎


(in millions)	April 4, 2021		September 30, 2020
Statements of Financial Position Data
Current receivables from non-guarantor subsidiaries	$	325.2	$	161.1
Long-term receivable from non-guarantor subsidiaries	13.0		—
Current payable to non-guarantor subsidiaries	327.3		368.4
Long-term debt with non-guarantor subsidiaries	172.8		212.0

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk Factors

No material change in the Company’s market risk has occurred during the six month period ended ~~March 29, 2020.~~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 10 – Debt and Note 12 – Derivatives to the Condensed Consolidated Financial Statement included elsewhere in the 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, ~~2019.~~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.

Item 4. Controls and Procedures

Spectrum Brands Holdings, Inc.

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, SBH’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 SBH’s management, including SBH’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 ~~six~~three month period ended ~~March 29, 2020,~~April 4, 2021, SBH ~~began~~continued updating certain internal controls and supporting processes ~~and systems~~to address previously identified material weakness related to ~~leases~~ineffective information technology general controls (ITGCs) related to user access and role change reviews over certain information technology systems in ~~connection with our adoption~~the EMEA region attributable to ineffective risk assessment and communication of ~~ASU No. 2016-02, Leases (Topic 842), further discussed in~~ ~~Note 1 – Basis~~control activities related to the transfer of ~~Presentation and Significant Accounting Policies, which~~ITGC operations provided TSAs. SBH will continue to develop and update such internal controls and processes during ~~the year of adoption for~~ the fiscal year ~~ending September 30, 2020.~~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 ~~six~~three month period ended ~~March 29, 2020~~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.SBH’s management, including our Chief Executive Officer and Chief Financial Officer, does not expect that SBH’s disclosure controls and procedures or SBH’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 SBH 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 ~~six~~three month period ended ~~March 29, 2020,~~April 4, 2021, SB/RH ~~began~~continued updating certain internal controls and supporting processes ~~and systems~~to address previously identified material weakness related to ~~leases~~ineffective information technology general controls (ITGCs) related to user access and role change reviews over certain information technology systems in ~~connection with our adoption~~the EMEA region attributable to ineffective risk assessment and communication of ~~ASU No. 2016-02, Leases (Topic 842), further discussed in~~ ~~Note 1 – Basis~~control activities related to the transfer of ~~Presentation and Significant Accounting Policies, which~~ITGC operations provided TSAs. SB/RH will continue to develop and update such internal controls and processes during ~~the year of adoption for~~ the fiscal year ~~ending September 30, 2020.~~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 ~~six~~three month period ended ~~March 29, 2020~~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.

‎

PART II. OTHER INFORMATION

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 Quarterly Report.Based on information currently available, we do not believe that any matters or 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 Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019~~2020 filed with the SEC on November ~~15, 2019.~~18, 2020. We believe that at ~~March 29, 2020, with the exception of changes in the risk factors discussed below,~~April 4, 2021, there ~~are~~have been no material changes in our risk factors from those disclosed in Item 1A of our Annual Report on Form 10-K for the year ended September 30, ~~2019.~~

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

In March 2020, the World Health Organization announced that COVID-19 has become a pandemic and a National Emergency relating to COVID-19 was announced in the U.S.. There is a possibility of widespread infection in the U.S. and abroad, with the potential for substantial commercial impact. National, state, and local authorities have recommended social distancing and imposed, or are considering imposing, quarantine and isolation measures, on large portions of the population, including mandatory business closures. These measures are expected to have serious adverse impacts on domestic and foreign economies of uncertain severity and duration. The effectiveness of economic stabilization efforts, including potential government payments to affected citizens and industries, is uncertain.

The sweeping nature of COVID-19 makes it extremely difficult to predict the long-term ramifications on our financial condition and results of operations. However, the likely overall economic impact of COVID-19 is viewed as highly negative to the general economy. These impacts may include, but are not limited to:

significant reductions in, or volatility of, demand for our products, which may be caused by the inability of consumers to purchase our products due to illness, quarantine, travel restrictions, store closures, general financial hardship or changes in consumer spending habits;

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

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

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

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

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

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

As of the date of this report, we have been classified as an essential business in the jurisdictions that have mandated closure of non-essential businesses, and therefore have generally been allowed to remain open. However, we can give no assurance that this will not change in the future. Despite our efforts to manage and remedy the impact of COVID-19 on our financial condition and results of operations, the ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic and actions taken by governmental authorities to contain its spread and mitigate its public health effects. Additionally, as the COVID-19 pandemic conditions wane, we cannot predict how quickly the marketplaces in which we operate will return to normal. Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially increase our costs, negatively impact our sales and damage our results of operations and liquidity position. The duration of any such impacts cannot be predicted. See further discussion in ~~Item 2 - Management Discussion and Analysis of Financial Condition and Results of Operations~~.

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

We rely on third parties, including suppliers, distributors, alliances with other companies, and third-party service providers, for selected aspects of product development, manufacture, commercialization, support for information technology systems, product distribution, and certain financial transactional processes. Additionally, we have outsourced certain functions to third-party service providers to leverage leading specialized capabilities and achieve cost efficiencies. Outsourcing these functions involves the risk that third-party service providers may not perform to our standards or legal requirements, may not produce reliable results, may not perform in a timely manner, may not maintain the confidentiality of our proprietary information, or may fail to perform at all. Additionally, any disruption, such as a government shutdown, war, natural disaster or global pandemic (including the current COVID-19 pandemic), could affect the ability of our third-party service providers to meet their contractual obligations to us. Failure of these third parties to meet their contractual, regulatory, confidentiality or other obligations to us could result in material financial loss, higher costs, regulatory actions, and reputational harm.

‎

2020.

Uncertain global economic conditions may adversely impact demand for our products or cause our customers and other business partners to suffer financial hardship, which could adversely impact our business.

Our business could be negatively impacted by reduced demand for our products related to one or more significant local, regional or global economic disruptions, the risk of which are aggravated by the COVID-19 pandemic, such as: a slow-down in the general economy; reduced market growth rates; tighter credit markets for our suppliers, vendors or customers; a significant shift in government policies; the deterioration of economic relations between countries or regions, including potential negative consumer sentiment toward non-local products or sources; or the inability to conduct day-to-day transactions through our financial intermediaries to pay funds to, or collect funds from, our customers, vendors and suppliers. Additionally, economic conditions may cause our suppliers, distributors, contractors or other third-party partners to suffer financial difficulties that they cannot overcome, resulting in their inability to provide us with the materials and services we need, in which case our business and results of operations could be adversely affected. Customers may also suffer financial hardships due to economic conditions such that their accounts become uncollectible or are subject to longer collection cycles. In addition, if we are unable to~~generate sufficient income and cash flow, it could affect the Company’s ability to achieve expected share repurchase and dividend payments.~~

~~Disruption in our global supply chain may negatively impact our business results.~~

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

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

Certain provisions of our charter and bylaws and the DGCL may have the effect of delaying or preventing changes in control if our board of directors determines that such changes in control are not in the best interests of the Company and its stockholders. Such provisions include, among other things, those that:

~~provide for a classified board of directors with staggered three-year terms;~~

authorize the board of directors to issue preferred shares and to determine the terms, including the number of shares, voting powers, redemption provisions, dividend rates, liquidation preferences and conversion rights, of those shares, without stockholder approval;

~~permit the removal of directors by the stockholders only for cause and then only by the affirmative vote of a majority of the outstanding shares of our common stock;~~

opt in to Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in a “business combination” with any interested stockholder (generally speaking a stockholder who holds 15% or more of our voting stock) for three years from the date such stockholder becomes an interested stockholder unless certain conditions are met; and

subject to certain exceptions, prohibit any person from acquiring shares of our common stock if such person is, or would become as a result of the acquisition, a “Substantial Holder” (as defined in our charter).

~~These provisions may frustrate or prevent attempts by stockholders to cause a change in control of the Company or to replace members of its board of directors.~~

~~Item 1B. Other Information~~

On April 30, 2020, the Company announced that it is withdrawing the guidance it released with respect to its fiscal 2020 and the first quarter of 2020 as a result of the lack of business visibility into the impacts of the COVID-19 pandemic. The reason for the withdrawal of guidance included demand volatility and unpredictability in supply chain disruptions. The Company expects to provide an annual outlook when business conditions return to a more normal environment.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On 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 common stock repurchases under the program for the six month period ended ~~March 29, 2020:~~

April 4, 2021:

Total Number
Average
Total Number
Approximate Dollar Value
of Shares
Price Paid
of Shares Purchased
of Shares that may
Purchased
Per Share
as Part of Plan
Yet Be Purchased
As of September 30, 2019
4,610,700
$
54.22
4,610,700
$
750,001,219
October 1, 2019 to October 27, 2019
—
—
—
750,001,219
October 28, 2019 to November 24, 2019
35,568
62.27
35,568
747,786,559
November 25, 2019 to December 29, 2019
1,275,844
62.05
1,275,844
668,618,252
ASR November, 2019
1,719,534
61.79
1,719,534
562,368,246
As of December 29, 2019
7,641,646
57.27
7,641,646
562,368,246
December 30, 2019 to January 26, 2020
168,646
63.54
168,646
551,652,108
January 27, 2020 to February 23, 2020
226,217
60.00
226,217
538,079,881
February 24, 2020 to March 29, 2020
2,340,571
53.36
2,340,571
413,186,222
ASR March, 2020
309,857
60.51
309,857
394,436,228
As of March 29, 2020
10,686,937
$
56.66
10,686,937
$
394,436,228


	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, 2020	10,686,937	$	56.66	10,686,937	$	394,436,227
October 1, 2020 to November 1, 2020	—	—		—	394,436,227
November 2, 2020 to November 29, 2020	647,498	65.27		647,498	352,176,858
November 30, 2020 to January 3, 2021	—	—		—	352,176,858
As of January 3, 2021	11,334,435	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, 2021	11,334,435	$	57.16	11,334,435	$	352,176,858

~~During~~

On May 4, 2021, subsequent to the ~~six month periods ended March 29, 2020,~~balance sheet date, the ~~Company also repurchased $9.2 million~~Board of Directors approved a new share repurchase program authorizing the purchase of up to $1 billion of common ~~stock~~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 ~~private~~open market or through privately negotiated transactions, including by direct purchases ~~with employees at fair value, consisting~~or purchases pursuant to derivative instruments or other transactions (including pursuant to accelerated share repurchase agreements, the writing and settlement of ~~0.2 million~~put options and the purchase and exercise of ~~common stock~~call options). The number of shares to be repurchased and the timing of any repurchases ~~at an average~~will depend on factors such as the share price, ~~of $62.30 per~~economic and market conditions, and corporate and regulatory requirements. The share ~~which are not included in the common stock~~ repurchase program ~~summarized above.~~

‎

may be suspended, amended or discontinued at any time.

Item 5. Other Information

None

Item 6. Exhibits

Please refer to the Exhibit Index.

‎

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 ~~5, 2020~~7, 2021
		SPECTRUM BRANDS HOLDINGS, INC.
		By:	/s/ Jeremy W. Smeltser
			Jeremy W. Smeltser

			Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

‎

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 ~~5, 2020~~7, 2021
		SB/RH HOLDINGS, LLC
		By:	/s/ Jeremy W. Smeltser
			Jeremy W. Smeltser

			Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

‎