SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Name of Registrant, State of Incorporation,

Address of Principal Offices, and Telephone No.

Spectrum Brands Holdings, Inc.

Yes

☒

☐

SB/RH Holdings, LLC

Yes

☒

☐

Registrant

Large Accelerated Filer

Accelerated ~~filer~~

Filer

Non-accelerated ~~filer~~

Filer

Smaller ~~reporting company~~

Reporting Company

Spectrum Brands Holdings, Inc.

SB/RH Holdings, LLC

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Spectrum Brands Holdings, Inc.

Yes

☐

☒

SB/RH Holdings, LLC

Yes

☐

☒

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of ~~1993~~1933 (§232.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter

Spectrum Brands Holdings, Inc.

Yes

☐

☒

SB/RH Holdings, LLC

Yes

☐

☒

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Spectrum Brands Holdings, Inc.

☐

SB/RH Holdings, LLC

☐

Securities registered pursuant to Section 12(b) of the Exchange Act:

Registrant

Title of Each Class

Trading Symbol

Name of Exchange On Which Registered

Spectrum Brands Holdings, Inc.

Common Stock, $0.01 par value

SPB

New York Stock Exchange

As of ~~February 6, 2018~~,May 8, 2023, there were 41,004,457 shares outstanding ~~57,880,340 shares~~ of Spectrum Brands Holdings, Inc.’s common stock, par value $0.01 per share.

SB/RH Holdings, LLC meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this report with a reduced disclosure format as permitted by general instruction H(2).

Forward-Looking Statements

We have made or implied certain forward-looking statements in this ~~report.~~document. All statements, other than statements of historical facts included or incorporated by reference in this ~~report,~~document, including the statements under ~~“Management’s~~Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations”~~Operations, without limitation, statements or expectations regarding our business strategy, future operations, financial condition, estimated revenues, projected costs, earnings power, projected synergies, prospects, plans and objectives of management, ~~as well as~~outcome of any litigation and information concerning expected actions of third parties are forward-looking statements. When used in this report, the words future, anticipate, pro forma, seek, intend, plan, envision, estimate, believe, belief, expect, project, forecast, outlook, earnings framework, 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 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;~~

•the COVID-19 pandemic, economic, social and political conditions or civil unrest, terrorist attacks, acts of war, natural disasters, other public health concerns or unrest in the United States ("U.S.") or the international markets impacting our business, customers, employees (including our ability to retain and attract key personnel), manufacturing facilities, suppliers, capital markets, financial condition and results of operations, all of which tend to aggravate the other risks and uncertainties we face;

~~any failure to comply with financial covenants and other provisions and restrictions of our debt instruments;~~

•the impact of a number of local, regional and global uncertainties could negatively impact our business;

~~the impact of actions taken by significant stockholders;~~

•the negative effect of the armed conflict between Russia and Ukraine and its impact on those regions and surrounding regions, including on our operations and on those of our customers, suppliers and other stakeholders;

~~the impact of fluctuations in commodity prices, costs or availability of raw materials or terms and conditions available from suppliers, including suppliers’ willingness to advance credit;~~

•our increased reliance on third-party partners, suppliers and distributors to achieve our business objectives;

~~interest rate and exchange rate fluctuations;~~

•the impact of expenses resulting from the implementation of new business strategies, divestitures or current and proposed restructuring and optimization activities, including distribution center changes which are complicated and involve coordination among a number of stakeholders, including our suppliers and transportation and logistics handlers;

~~the loss of, significant reduction in, or dependence upon, sales to any significant retail customer(s);~~

•the impact of our indebtedness and financial leverage position on our business, financial condition and results of operations;

~~competitive promotional activity or spending by competitors, or price reductions by competitors;~~

•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;

~~the introduction of new product features or technological developments by competitors and/or the development of new competitors or competitive brands;~~

•any failure to comply with financial covenants and other provisions and restrictions of our debt instruments;

the effects of general economic conditions, including inflation, recession or fears of a recession, depression or fears of a depression, labor costs and stock market volatility or changes in trade, monetary or fiscal policies in the countries where we do business;

•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;

~~changes in consumer spending preferences and demand for our products;~~

•the impact of fluctuations in transportation and shipment costs, fuel costs, commodity prices, costs or availability of raw materials or terms and conditions available from suppliers, including suppliers’ willingness to advance credit;

~~our ability to develop and successfully introduce new products, protect our intellectual property and avoid infringing the intellectual property of third parties;~~

•interest rate fluctuations;

~~our ability to successfully implement, achieve and sustain manufacturing and distribution cost efficiencies and improvements, and fully realize anticipated cost savings;~~

•changes in foreign currency exchange rates that may impact our purchasing power, pricing and margin realization within international jurisdictions;

~~the seasonal nature of sales of certain of our products;~~

•the loss of, significant reduction in or dependence upon, sales to any significant retail customer(s), including their changes in retail inventory levels and management thereof;

~~the effects of climate change and unusual weather activity;~~

•competitive promotional activity or spending by competitors, or price reductions by competitors;

~~the cost and effect of unanticipated legal, tax or regulatory proceedings or new laws or regulations (including environmental, public health and consumer protection regulations);~~

•the introduction of new product features or technological developments by competitors and/or the development of new competitors or competitive brands;

public perception regarding the safety of products, that we manufacture or sell, including the potential for environmental liabilities, product liability claims, litigation and other claims related to products manufactured by us and third parties;

•changes in consumer spending preferences and demand for our products, particularly in light of economic stress and the COVID-19 pandemic;

~~the impact of pending or threatened litigation;~~

•our ability to develop and successfully introduce new products, protect our intellectual property and avoid infringing the intellectual property of third parties;

~~the impact of cybersecurity breaches or our actual or perceived failure to protect company and personal data;~~

•our ability to successfully identify, implement, achieve and sustain productivity improvements, cost efficiencies (including at our manufacturing and distribution operations) and cost savings;

~~changes in accounting policies applicable to our business;~~

•the seasonal nature of sales of certain of our products;

~~our ability to utilize our net operating loss carry-forwards to offset tax liabilities from future taxable income;~~

•the impact weather conditions may have on the sales of certain of our products;

~~government regulations;~~

•the effects of climate change and unusual weather activity as well as our ability to respond to future natural disasters and pandemics and to meet our environmental, social and governance goals;

~~the impact of expenses resulting from the implementation of new business strategies, divestitures or current and proposed restructuring activities;~~

•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 inability to successfully integrate and operate new acquisitions at the level of financial performance anticipated;~~

•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 unanticipated loss of key members of senior management;~~

•the impact of existing, pending or threatened litigation, government regulation or other requirements or operating standards applicable to our business;

~~the effects of political or economic conditions, terrorist attacks, acts of war or other unrest in international markets; and~~

•the impact of cybersecurity breaches or our actual or perceived failure to protect company and personal data, including our failure to comply with new and increasingly complex global data privacy regulations;

~~the special committee’s exploration of strategic alternatives and the terms of any strategic transaction, if any.~~

•changes in accounting policies applicable to our business;

•our discretion to adopt, conduct, suspend or discontinue any share repurchase program (including our discretion to conduct purchases, if any, in a variety of manners including open-market purchases or privately negotiated transactions);

•our ability to utilize net operating loss carry-forwards to offset tax liabilities from future taxable income;

•our ability to consummate the announced Hardware and Home Improvement ("HHI") divestiture on the expected terms and within the anticipated time period, or at all, which is dependent on the parties' ability to satisfy certain closing conditions and our ability to realize the benefits of the transaction, including reducing the financial leverage of the Company, investing in the organic growth of the Company, funding any future acquisitions, returning capital to shareholders, and/or maintaining our quarterly dividends;

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•the risk that ASSA ABLOY and Fortune Brands fail to satisfy the conditions to closing of their divestiture transaction and/or otherwise fail to consummate their divestiture transaction in connection with the settlement with the U.S. Department of Justice;

•the risk that regulatory approvals that are required to complete the proposed HHI divestiture may not be realized, may take longer than expected or may impose adverse conditions;

•our ability to successfully integrate the February 18, 2022, acquisition of the home appliances and cookware products business from Tristar Products, Inc. (the "Tristar Business") into the Company's Home and Personal Care ("HPC") business and realize the benefits of this acquisition;

•our ability to separate the Company's HPC business and create an independent Global Appliances business on expected terms, and within the anticipated time period, or at all, and to realize the potential benefits of such business;

•our ability to create a pure play consumer products company composed of our Global Pet Care ("GPC") and Home & Garden ("H&G") business and to realize the expected benefits of such creation, and within the anticipated time period, or at all;

•our ability to successfully implement further acquisitions or dispositions and the impact of any such transactions on our financial performance;

•the impact of actions taken by significant shareholders; and

•the unanticipated loss of key members of senior management and the transition of new members of our management teams to their new roles.

Some of the above-mentioned factors are described in further detail in the sections entitled ~~“Risk Factors”~~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.

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SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

TABLE OF CONTENTS

This report is a combined report of Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC. The combined notes to the condensed consolidated financial statements include notes representing Spectrum Brands Holdings, Inc. and SB/RH Holdings, ~~LLC and certain notes related specifically to SB/RH Holdings,~~ LLC.


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 ~~December 31, 2017~~April 2, 2023 and September 30, ~~201~~20227	2
	Condensed Consolidated Statements of Income for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 201~~April 3, 20227	3
	Condensed Consolidated Statements of Comprehensive Income for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 201~~April 3, 20227	4
	Condensed Consolidated Statements of Shareholders’ Equity for the six month periods ended April 2, 2023 and April 3, 2022	5
	Condensed Consolidated Statements of Cash Flows for the ~~three~~six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 201~~April 3, 20227	5 7
SB/RH Holdings, LLC Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Financial Position as of ~~December 31, 2017~~April 2, 2023 and September 30, ~~201~~20227	6 8
	Condensed Consolidated Statements of Income for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 201~~April 3, 20227	7 9
	Condensed Consolidated Statements of Comprehensive Income for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 201~~April 3, 20227	7 10
	Condensed Consolidated Statements of Shareholder's Equity for the six month periods ended April 2, 2023 and April 3, 2022	11
	Condensed Consolidated Statements of Cash Flows for the ~~three~~six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 201~~April 3, 20227	8 13
Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC Combined (Unaudited)
	~~Combined~~ Notes to the Condensed Consolidated Financial Statements	9 14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33 31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43 44
Item 4.	Controls and Procedures	44 45
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	45 46
Item 1A.	Risk Factors	45 46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47 46
Item 5.	Other Information	47 46
Item 6.	Exhibits	47 46
Signatures		48 47

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PART I.FINANCIAL INFORMATION

Item 1. Financial Statements

SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Financial Position

~~December 31, 2017~~

As of April 2, 2023 andSeptember 30, ~~2017~~

~~(in millions, unaudited)~~

2022

December 31, 2017

September 30, 2017
Assets

Cash and cash equivalents

$
137.9

$
168.2
Trade receivables, net

278.4

266.0
Other receivables

18.8

19.4
Inventories

580.7

496.3
Prepaid expenses and other current assets

56.2

54.2
Current assets of business held for sale

1,990.6

603.0
Total current assets

3,062.6

1,607.1
Property, plant and equipment, net

506.0

503.6
Deferred charges and other

61.2

43.5
Goodwill

2,276.4

2,277.1
Intangible assets, net

1,598.6

1,612.0
Noncurrent assets of business held for sale

—

1,376.4
Total assets

$
7,504.8

$
7,419.7
Liabilities and Shareholders' Equity

Current portion of long-term debt

$
20.1

$
19.4
Accounts payable

320.7

371.6
Accrued wages and salaries

27.9

50.6
Accrued interest

40.7

48.5
Other current liabilities

118.1

123.4
Current liabilities of business held for sale

608.2

499.9
Total current liabilities

1,135.7

1,113.4
Long-term debt, net of current portion

3,959.2

3,752.6
Deferred income taxes

298.2

493.2
Other long-term liabilities

137.2

58.0
Noncurrent liabilities of business held for sale

—

155.8
Total liabilities

5,530.3

5,573.0
Commitments and contingencies (Note 17)

Shareholders' equity

Common Stock

0.6

0.6
Additional paid-in capital

2,122.0

2,145.3
Accumulated earnings

397.9

262.3
Accumulated other comprehensive loss, net of tax

(209.9)

(209.6)
Treasury stock, at cost

(345.9)

(360.7)
Total shareholders' equity

1,964.7

1,837.9
Noncontrolling interest

9.8

8.8
Total equity

1,974.5

1,846.7
Total liabilities and equity

$
7,504.8

$
7,419.7
(unaudited)


(in millions)	April 2, 2023		September 30, 2022
Assets
Cash and cash equivalents	$	327.8	$	243.7
Trade receivables, net	305.5		247.4
Other receivables	101.3		95.7
Inventories	585.6		780.6
Prepaid expenses and other current assets	51.5		51.2
Current assets of business held for sale	1,799.6		1,816.7
Total current assets	3,171.3		3,235.3
Property, plant and equipment, net	268.7		263.8
Operating lease assets	129.7		82.5
Deferred charges and other	106.1		38.7
Goodwill	968.5		953.1
Intangible assets, net	1,140.7		1,202.2

Total assets	$	5,785.0	$	5,775.6
Liabilities and Shareholders' Equity
Current portion of long-term debt	$	13.1	$	12.3
Accounts payable	495.9		453.1
Accrued wages and salaries	28.1		28.4
Accrued interest	37.0		27.6
Other current liabilities	200.7		203.0
Current liabilities of business held for sale	401.8		463.7
Total current liabilities	1,176.6		1,188.1
Long-term debt, net of current portion	3,175.6		3,144.5
Long-term operating lease liabilities	104.9		56.0
Deferred income taxes	75.0		60.1
Other long-term liabilities	63.8		57.8

Total liabilities	4,595.9		4,506.5
Commitments and contingencies (Note 16)
Shareholders' equity
Common stock	0.5		0.5
Additional paid-in capital	2,016.2		2,032.5
Accumulated earnings	252.6		362.1
Accumulated other comprehensive loss, net of tax	(272.9)		(303.1)
Treasury stock	(814.2)		(828.8)
Total shareholders' equity	1,182.2		1,263.2
Non-controlling interest	6.9		5.9
Total equity	1,189.1		1,269.1
Total liabilities and equity	$	5,785.0	$	5,775.6

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Income

For thethree and six monthperiods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017~~

~~(in millions, except per share figures, unaudited)~~

April 3, 2022

December 31, 2017

January 1, 2017
Net sales

$
646.5

$
602.3
Cost of goods sold

403.8

362.1
Restructuring and related charges

1.8

1.1
Gross profit

240.9

239.1
Selling

113.3

106.6
General and administrative

62.8

60.0
Research and development

7.0

6.6
Acquisition and integration related charges

5.2

3.3
Restructuring and related charges

18.6

1.1
Total operating expenses

206.9

177.6
Operating income

34.0

61.5
Interest expense

38.6

43.0
Other non-operating expense (income), net

1.3

(1.0)
(Loss) income from operations before income taxes

(5.9)

19.5
Income tax (benefit) expense

(126.0)

6.7
Net income from continuing operations

120.1

12.8
Income from discontinued operations, net of tax

40.9

52.4
Net income

161.0

65.2
Net income attributable to non-controlling interest

0.9

—
Net income attributable to controlling interest

$
160.1

$
65.2
Amounts attributable to controlling interest

Net income from continuing operations attributable to controlling interest

$
119.3

$
12.7
Net Income from discontinued operations attributable to controlling interest

40.8

52.5
Net Income attributable to controlling interest

$
160.1

$
65.2
Earnings Per Share

Basic earnings per share from continuing operations

$
2.07

$
0.21
Basic earnings per share from discontinued operations

0.70

0.89
Basic earnings per share

$
2.77

$
1.10
Diluted earnings per share from continuing operations

$
2.07

$
0.21
Diluted earnings per share from discontinued operations

0.70

0.89
Diluted earnings per share

$
2.77

$
1.10
Dividends per share

$
0.42

$
0.38
Weighted Average Shares Outstanding

Basic

57.7

59.3
Diluted

57.7

59.5
(unaudited)


	Three Month Periods Ended				Six Month Periods Ended
(in millions, except per share)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Net sales	$	729.2	$	807.8	$	1,442.5	$	1,565.0
Cost of goods sold	514.7		552.2		1,026.1		1,090.1

Gross profit	214.5		255.6		416.4		474.9
Selling	133.1		149.8		264.4		296.1
General and administrative	86.2		105.7		170.8		195.0
Research and development	5.2		8.2		11.4		15.8


Impairment of intangible assets	67.0		—		67.0		—

Total operating expenses	291.5		263.7		513.6		506.9
Operating loss	(77.0)		(8.1)		(97.2)		(32.0)
Interest expense	31.6		24.7		65.0		46.4

Other non-operating expense (income), net	1.2		(0.9)		(0.3)		(0.3)
Loss from continuing operations before income taxes	(109.8)		(31.9)		(161.9)		(78.1)
Income tax benefit	(34.8)		(6.8)		(46.9)		(22.8)
Net loss from continuing operations	(75.0)		(25.1)		(115.0)		(55.3)
Income from discontinued operations, net of tax	21.4		41.1		40.9		79.9
Net (loss) income	(53.6)		16.0		(74.1)		24.6
Net income from continuing operations attributable to non-controlling interest	0.1		—		0.3		—
Net income from discontinued operations attributable to non-controlling interest	—		0.1		0.2		0.5
Net (loss) income attributable to controlling interest	$	(53.7)	$	15.9	$	(74.6)	$	24.1
Amounts attributable to controlling interest
Net loss from continuing operations attributable to controlling interest	$	(75.1)	$	(25.1)	$	(115.3)	$	(55.3)
Net income from discontinued operations attributable to controlling interest	21.4		41.0		40.7		79.4
Net (loss) income attributable to controlling interest	$	(53.7)	$	15.9	$	(74.6)	$	24.1
Earnings Per Share
Basic earnings per share from continuing operations	$	(1.83)	$	(0.61)	$	(2.82)	$	(1.35)
Basic earnings per share from discontinued operations	0.52		1.00		1.00		1.94
Basic earnings per share	$	(1.31)	$	0.39	$	(1.82)	$	0.59
Diluted earnings per share from continuing operations	$	(1.83)	$	(0.61)	$	(2.82)	$	(1.35)
Diluted earnings per share from discontinued operations	0.52		1.00		1.00		1.94
Diluted earnings per share	$	(1.31)	$	0.39	$	(1.82)	$	0.59
Dividend per share	$	0.42	$	0.42	$	0.84	$	0.84
Weighted Average Shares Outstanding
Basic	41.0		40.8		40.9		41.1
Diluted	41.0		40.8		40.9		41.1

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, ~~INC.~~

INC

Condensed Consolidated Statements of Comprehensive Income

For the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017~~

~~(in millions, unaudited)~~

April 3, 2022

December 31, 2017

January 1, 2017
Net income

$
161.0

$
65.2
Other comprehensive income (loss), net of tax:

Foreign currency translation loss, net tax of $7.3 and $3.9, respectively

(2.0)

(46.1)
Unrealized gain on hedging activity, net tax of $0.0 and $(14.2), respectively

1.8

24.2
Defined benefit pension gain , net tax of $0.0 and $(1.2), respectively

0.1

3.3
Other comprehensive loss, net of tax

(0.1)

(18.6)
Comprehensive income

160.9

46.6
Comprehensive income (loss) attributable to non-controlling interest

0.2

(0.3)
Comprehensive income attributable to controlling interest

$
160.7

$
46.9
(unaudited)


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Net (loss) income	$	(53.6)	$	16.0	$	(74.1)	$	24.6
Other comprehensive (loss) income
Foreign currency translation adjustment
Foreign currency translation gain (loss)	27.1		(13.5)		87.6		(17.4)
Unrealized (loss) gain from net investment hedge	(12.5)		11.9		(46.4)		22.5
Foreign currency translation adjustment before tax	14.6		(1.6)		41.2		5.1
Deferred tax effect	3.7		(3.1)		12.5		(7.6)
Foreign currency translation adjustment, net	18.3		(4.7)		53.7		(2.5)
Unrealized (loss) gain on derivative instruments
Unrealized (loss) gain on hedging activity before reclassification	(7.1)		6.4		(32.5)		7.6
Net reclassification for loss (gain) to income from continuing operations	4.9		(1.5)		2.4		(3.6)
Net reclassification for gain to income from discontinued operations	(0.1)		(0.7)		(0.1)		(1.2)
Unrealized (loss) gain on hedging instruments after reclassification	(2.3)		4.2		(30.2)		2.8
Deferred tax effect	0.7		(1.0)		7.8		3.5
Net unrealized (loss) gain on hedging derivative instruments	(1.6)		3.2		(22.4)		6.3
Defined benefit pension (loss) gain
Defined benefit pension gain (loss) before reclassification	0.1		1.0		(2.1)		1.7
Net reclassification for (gain) loss to income from continuing operations	(0.7)		1.0		0.2		2.0

Defined benefit pension (loss) gain after reclassification	(0.6)		2.0		(1.9)		3.7
Deferred tax effect	0.1		(0.6)		1.3		(3.5)
Net defined benefit pension (loss) gain	(0.5)		1.4		(0.6)		0.2

Net change to derive comprehensive income for the period	16.2		(0.1)		30.7		4.0
Comprehensive (loss) income	(37.4)		15.9		(43.4)		28.6
Comprehensive income (loss) from continuing operations attributable to non-controlling interest	0.1		(0.1)		0.3		(0.1)
Comprehensive income from discontinuing operations attributable to non-controlling interest	0.1		—		0.2		0.1
Comprehensive (loss) income attributable to controlling interest	$	(37.6)	$	16.0	$	(43.9)	$	28.6

See accompanying notes to the condensed consolidated financial statements

Table of Contents

SPECTRUM BRANDS HOLDINGS, ~~INC.~~

INC

Condensed Consolidated Statements of ~~Cash Flows~~

Shareholders' Equity

For the ~~three~~six month ~~periods~~period ended ~~December 31, 2017 and January 1, 2017~~

~~(in millions, unaudited)~~

April 2, 2023

December 31, 2017

January 1, 2017
Cash flows from operating activities

Net income

$
161.0

$
65.2
Income from discontinued operations, net of tax

40.9

52.4
Net income from continuing operations

120.1

12.8
Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

33.0

30.0
Share based compensation

3.8

7.2
Amortization of debt issuance costs

2.1

1.8
Purchase accounting inventory adjustment

0.8

—
Non-cash restructuring

(1.5)

0.7
Pet safety recall inventory write-off

1.6

—
Write-off of debt issuance costs

—

1.9
Non-cash debt accretion

0.4

0.2
Deferred tax benefit

(127.1)

19.6
Net changes in operating assets and liabilities

(170.9)

(134.1)
Net cash used by operating activities from continuing operations

(137.7)

(59.9)
Net cash (used) provided by operating activities from discontinued operations

(15.3)

65.7
Net cash (used) provided by operating activities

(153.0)

5.8
Cash flows from investing activities

Purchases of property, plant and equipment

(17.9)

(21.1)
Proceeds from sales of property, plant and equipment

0.6

—
Other investing activities

—

(0.8)
Net cash used by investing activities from continuing operations

(17.3)

(21.9)
Net cash used by investing activities from discontinued operations

(6.9)

(6.8)
Net cash used by investing activities

(24.2)

(28.7)
Cash flows from financing activities

Proceeds from issuance of debt

226.1

168.5
Payment of debt

(29.8)

(133.9)
Payment of debt issuance costs

(0.1)

(0.5)
Payment of cash dividends

(24.2)

(22.6)
Treasury stock purchases

(7.9)

(97.6)
Share based tax withholding payments, net of proceeds upon vesting

(22.2)

(23.2)
Net cash provided (used) by financing activities from continuing operations

141.9

(109.3)
Net cash provided by financing activities from discontinued operations

5.2

6.6
Net cash provided (used) by financing activities

147.1

(102.7)
Effect of exchange rate changes on cash and cash equivalents

(0.2)

(6.4)
Net change in cash and cash equivalents

(30.3)

(132.0)
Cash and cash equivalents, beginning of period

168.2

275.3
Cash and cash equivalents, end of period

$
137.9

$
143.3
Supplemental disclosure of cash flow information

Cash paid for interest

$
57.5

$
44.5
Cash paid for taxes

$
10.0

$
10.4
Non cash investing activities

Acquisition of property, plant and equipment through capital leases

$
2.1

$
30.7
Non cash financing activities

Issuance of shares through stock compensation plan

$
37.8

$
52.2
(unaudited)


	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, 2022	40.8	$	0.5	$	2,032.5	$	362.1	$	(303.1)	$	(828.8)	$	1,263.2	$	5.9	$	1,269.1
Net (loss) income from continuing operations	—	—		—		(40.3)		—		—		(40.3)		0.3		(40.0)
Income from discontinued operations, net of tax	—	—		—		19.4		—		—		19.4		0.1		19.5
Other comprehensive income, net of tax	—	—		—		—		14.2		—		14.2		0.3		14.5

Restricted stock issued and related tax withholdings	0.2	—		(25.1)		—		—		14.6		(10.5)		—		(10.5)
Share based compensation	—	—		4.1		—		—		—		4.1		—		4.1
Dividends declared	—	—		—		(17.3)		—		—		(17.3)		—		(17.3)

Balances as of January 1, 2023	41.0	0.5		2,011.5		323.9		(288.9)		(814.2)		1,232.8		6.6		1,239.4
Net (loss) income from continuing operations	—	—		—		(75.1)		—		—		(75.1)		0.1		(75.0)
Income from discontinued operations, net of tax	—	—		—		21.4		—		—		21.4		—		21.4

Other comprehensive income, net of tax	—	—		—		—		16.0		—		16.0		0.2		16.2


Share based compensation	—	—		4.7		—		—		—		4.7		—		4.7
Dividends declared	—	—		—		(17.6)		—		—		(17.6)		—		(17.6)










Balances at April 2, 2023	41.0	$	0.5	$	2,016.2	$	252.6	$	(272.9)	$	(814.2)	$	1,182.2	$	6.9	$	1,189.1

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC

Condensed Consolidated Statements of Shareholders' Equity

For the six month period ended April 3, 2022

(unaudited)


	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, 2021	41.8	$	0.5	$	2,063.8	$	359.9	$	(235.3)	$	(717.0)	$	1,471.9	$	7.1	$	1,479.0
Net loss from continuing operations	—	—		—		(30.2)		—		—		(30.2)		—		(30.2)
Income from discontinued operations, net of tax	—	—		—		38.4		—		—		38.4		0.4		38.8
Other comprehensive income, net of tax	—	—		—		—		4.0		—		4.0		0.1		4.1
Treasury stock repurchases	(1.1)	—		—		—		—		(110.0)		(110.0)		—		(110.0)

Restricted stock issued and related tax withholdings	0.3	—		(46.6)		—		—		22.2		(24.4)		—		(24.4)
Share based compensation	—	—		8.3		—		—		—		8.3		—		8.3
Dividends declared	—	—		—		(17.7)		—		—		(17.7)		—		(17.7)

Balances as of January 2, 2022	41.0	0.5		2,025.5		350.4		(231.3)		(804.8)		1,340.3		7.6		1,347.9
Net loss from continuing operations	—	—		—		(25.1)		—		—		(25.1)		—		(25.1)
Income from discontinued operations, net of tax	—	—		—		41.0		—		—		41.0		0.1		41.1

Other comprehensive loss, net of tax	—	—		—		—		—		—		—		(0.1)		(0.1)
Treasury stock repurchases	(0.2)	—		—		—		—		(24.0)		(24.0)		—		(24.0)

Restricted stock issued and related tax withholdings	—	—		(0.1)		—		—		—		(0.1)		—		(0.1)
Share based compensation	—	—		7.8		—		—		—		7.8		—		7.8
Dividends declared	—	—		—		(17.6)		—		—		(17.6)		—		(17.6)
Dividends paid by subsidiary to non-controlling interest	—	—		—		—		—		—		—		(1.3)		(1.3)
Balances as of April 3, 2022	40.8	$	0.5	$	2,033.2	$	348.7	$	(231.3)	$	(828.8)	$	1,322.3	$	6.3	$	1,328.6

See accompanying notes to the condensed consolidated financial statements

Table of Contents

SB~~/RH~~

SPECTRUM BRANDS HOLDINGS, ~~LLC~~

INC.

Condensed Consolidated Statements of ~~Financial Position~~

~~December 31, 2017~~Cash Flows

For the six month periods ended April 2, 2023 and ~~September 30, 2017~~

~~(in millions, unaudited)~~

April 3, 2022

December 31, 2017

September 30, 2017
Assets

Cash and cash equivalents

$
137.9

$
168.2
Trade receivables, net

278.4

266.0
Other receivables

33.7

18.7
Inventories

580.7

496.3
Prepaid expenses and other current assets

56.2

54.2
Current assets of business held for sale

1,990.6

603.0
Total current assets

3,077.5

1,606.4
Property, plant and equipment, net

506.0

503.6
Deferred charges and other

51.0

28.4
Goodwill

2,276.4

2,277.1
Intangible assets, net

1,598.6

1,612.0
Noncurrent assets of business held for sale

—

1,376.4
Total assets

$
7,509.5

$
7,403.9
Liabilities and Shareholder's Equity

Current portion of long-term debt

$
20.1

$
19.4
Accounts payable

320.7

371.6
Accrued wages and salaries

27.9

50.6
Accrued interest

40.7

48.5
Other current liabilities

116.6

118.9
Current liabilities of business held for sale

608.2

499.9
Total current liabilities

1,134.2

1,108.9
Long-term debt, net of current portion

3,959.2

3,752.6
Deferred income taxes

297.9

493.2
Other long-term liabilities

137.2

58.0
Noncurrent liabilities of business held for sale

—

155.8
Total liabilities

5,528.5

5,568.5
Commitments and contingencies (Note 17)

Shareholder's equity

Other capital

2,079.6

2,079.0
Accumulated earnings (deficit)

101.5

(42.8)
Accumulated other comprehensive loss, net of tax

(209.9)

(209.6)
Total shareholder's equity

1,971.2

1,826.6
Noncontrolling interest

9.8

8.8
Total equity

1,981.0

1,835.4
Total liabilities and equity

$
7,509.5

$
7,403.9
(unaudited)


	Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022
Cash flows from operating activities
Net (loss) income	$	(74.1)	$	24.6
Income from discontinued operations, net of tax	40.9		79.9
Net loss from continuing operations	(115.0)		(55.3)
Adjustments to reconcile net (loss) income to net cash from operating activities:
Depreciation	24.1		24.4
Amortization	20.9		26.7
Share based compensation	7.7		12.2

Impairment of intangible assets	67.0		—
Impairment of equipment and leases	4.5		—
Amortization of debt issuance costs and debt discount	4.0		3.1

Gain from remeasurement of contingent consideration liability	(1.5)		—
Non-cash purchase accounting adjustments	0.9		3.5
Deferred tax benefit	(62.0)		(43.7)
Net changes in operating assets and liabilities	198.0		(183.1)
Net cash provided (used) by operating activities from continuing operations	148.6		(212.2)
Net cash provided by operating activities from discontinued operations	29.0		5.3
Net cash provided (used) by operating activities	177.6		(206.9)
Cash flows from investing activities
Purchases of property, plant and equipment	(25.9)		(24.3)
Proceeds from disposal of property, plant and equipment	—		0.1


Business acquisitions, net of cash acquired	—		(314.3)

Other investing activity	—		(0.1)
Net cash used by investing activities from continuing operations	(25.9)		(338.6)
Net cash used by investing activities from discontinued operations	(7.9)		(12.4)
Net cash used by investing activities	(33.8)		(351.0)
Cash flows from financing activities
Payment of debt	(21.7)		(6.5)
Proceeds from issuance of debt	—		775.0
Payment of debt issuance costs	(2.3)		(6.7)

Treasury stock purchases	—		(134.0)

Dividends paid to shareholders	(34.4)		(34.4)

Share based award tax withholding payments, net of proceeds upon vesting	(10.5)		(24.5)

Net cash (used) provided by financing activities from continuing operations	(68.9)		568.9
Net cash used by financing activities from discontinued operations	(0.7)		(2.2)
Net cash (used) provided by financing activities	(69.6)		566.7
Effect of exchange rate changes on cash and cash equivalents	9.7		(3.0)
Net change in cash, cash equivalents and restricted cash in continuing operations	83.9		5.8
Cash, cash equivalents, and restricted cash, beginning of period	243.9		190.0
Cash, cash equivalents, and restricted cash, end of period	$	327.8	$	195.8
Supplemental disclosure of cash flow information
Cash paid for interest associated with continued operations	$	56.8	$	50.9
Cash paid for interest associated with discontinued operations	29.9		30.2
Cash paid for taxes associated with continued operations	11.7		19.0
Cash paid for taxes associated with discontinued operations	13.5		10.1
Non cash investing activities
Acquisition of property, plant and equipment through finance leases	$	2.4	$	0.5
Non cash financing activities
Issuance of shares through stock compensation plan	$	27.2	$	33.4

See accompanying notes to the condensed consolidated financial statements

Table of Contents

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of ~~Income~~

~~For the~~ ~~three~~ ~~month periods ended December 31, 2017~~Financial Position

As of April 2, 2023 and ~~January 1, 2017~~

~~(in millions, unaudited)~~

September 30, 2022

December 31, 2017

January 1, 2017
Net sales
$
646.5

$
602.3
Cost of goods sold

403.8

362.1
Restructuring and related charges

1.8

1.1
Gross profit

240.9

239.1
Selling

113.3

106.6
General and administrative

59.6

58.8
Research and development

7.0

6.6
Acquisition and integration related charges

5.2

3.3
Restructuring and related charges

18.6

1.1
Total operating expenses

203.7

176.4
Operating income

37.2

62.7
Interest expense

38.6

43.3
Other non-operating expense (income), net

1.3

(1.0)
(Loss) income from operations before income taxes

(2.7)

20.4
Income tax (benefit) expense

(131.2)

7.9
Net income from continuing operations

128.5

12.5
Income from discontinued operations, net of tax

40.9

52.4
Net income

169.4

64.9
Net income attributable to non-controlling interest

0.9

(0.1)
Net income attributable to controlling interest
$
168.5

$
65.0
Amounts attributable to controlling interest

Net income from continuing operations attributable to controlling interest
$
127.7

$
12.5
Net Income from discontinued operations attributable to controlling interest

40.8

52.5
Net Income attributable to controlling interest
$
168.5

$
65.0
(unaudited)


(in millions)	April 2, 2023		September 30, 2022
Assets
Cash and cash equivalents	$	326.6	$	242.4
Trade receivables, net	305.5		247.4
Other receivables	191.2		183.1
Inventories	585.6		780.6
Prepaid expenses and other current assets	51.5		51.2
Current assets of business held for sale	1,799.6		1,816.7
Total current assets	3,260.0		3,321.4
Property, plant and equipment, net	268.7		263.8
Operating lease assets	129.7		82.5
Deferred charges and other	47.3		38.1
Goodwill	968.5		953.1
Intangible assets, net	1,140.7		1,202.2

Total assets	$	5,814.9	$	5,861.1
Liabilities and Shareholder's Equity
Current portion of long-term debt	$	21.1	$	12.3
Accounts payable	496.5		453.3
Accrued wages and salaries	28.1		28.4
Accrued interest	37.0		27.6
Other current liabilities	198.1		197.3
Current liabilities of business held for sale	401.8		463.7
Total current liabilities	1,182.6		1,182.6
Long-term debt, net of current portion	3,175.6		3,144.5
Long-term operating lease liabilities	104.9		56.0
Deferred income taxes	234.4		279.3
Other long-term liabilities	63.7		65.6

Total liabilities	4,761.2		4,728.0
Commitments and contingencies (Note 16)
Shareholder's equity
Other capital	2,162.4		2,164.6
Accumulated deficit	(844.4)		(736.0)
Accumulated other comprehensive loss, net of tax	(272.8)		(303.0)
Total shareholder's equity	1,045.2		1,125.6
Non-controlling interest	8.5		7.5
Total equity	1,053.7		1,133.1
Total liabilities and equity	$	5,814.9	$	5,861.1

See accompanying notes to the condensed consolidated financial statements

Table of Contents

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of ~~Comprehensive~~ Income

For thethree and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017~~

~~(in millions, unaudited)~~

April 3, 2022

December 31, 2017

January 1, 2017
Net income

$
169.4

$
64.9
Other comprehensive income (loss), net of tax:

Foreign currency translation loss, net tax of $7.3 and $3.9, respectively

(2.0)

(46.1)
Unrealized gain on hedging activity, net tax of $0.0 and $(14.2), respectively

1.8

24.2
Defined benefit pension gain , net tax of $0.0 and $(1.2), respectively

0.1

3.3
Other comprehensive loss, net of tax

(0.1)

(18.6)
Comprehensive income

169.3

46.3
Comprehensive income (loss) attributable to non-controlling interest

0.2

(0.3)
Comprehensive income attributable to controlling interest

$
169.1

$
46.6
(unaudited)


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Net sales	$	729.2	$	807.8	$	1,442.5	$	1,565.0
Cost of goods sold	514.7		552.2		1,026.1		1,090.1

Gross profit	214.5		255.6		416.4		474.9
Selling	133.1		149.8		264.4		296.1
General and administrative	85.5		104.9		170.1		193.8
Research and development	5.2		8.2		11.4		15.8



Impairment of intangible assets	67.0		—		67.0		—
Total operating expenses	290.8		262.9		512.9		505.7
Operating loss	(76.3)		(7.3)		(96.5)		(30.8)
Interest expense	31.7		24.8		65.1		46.7
Other non-operating expense (income), net	1.2		(0.9)		(0.3)		(0.4)
Loss from continuing operations before income taxes	(109.2)		(31.2)		(161.3)		(77.1)
Income tax benefit	(34.0)		(6.6)		(46.3)		(22.4)
Net loss from continuing operations	(75.2)		(24.6)		(115.0)		(54.7)
Income from discontinued operations, net of tax	21.9		41.1		41.4		79.9
Net (loss) income	(53.3)		16.5		(73.6)		25.2
Net income from continuing operations attributable to non-controlling interest	0.1		—		0.3		—
Net income from discontinued operations attributable to non-controlling interest	—		0.1		0.2		0.5
Net (loss) income attributable to controlling interest	$	(53.4)	$	16.4	$	(74.1)	$	24.7
Amounts attributable to controlling interest
Net loss from continuing operations attributable to controlling interest	$	(75.3)	$	(24.6)	$	(115.3)	$	(54.7)
Net income from discontinued operations attributable to controlling interest	21.9		41.0		41.2		79.4
Net (loss) income attributable to controlling interest	$	(53.4)	$	16.4	$	(74.1)	$	24.7

See accompanying notes to the condensed consolidated financial statements

Table of Contents

SB/RH HOLDINGS, LLC

~~Condens~~ed

Condensed Consolidated Statements of ~~Cash Flows~~

Comprehensive Income

For thethree and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017~~

~~(in millions, unaudited)~~

April 3, 2022

December 31, 2017

January 1, 2017
Cash flows from operating activities

Net income

$
169.4

$
64.9
Income from discontinued operations, net of tax

40.9

52.4
Income from continuing operations

128.5

12.5
Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

33.0

30.0
Share based compensation

3.3

6.2
Amortization of debt issuance costs

2.1

1.8
Purchase accounting inventory adjustment

0.8

—
Noncash restructuring

(1.5)

0.7
Pet safety recall inventory write-off

1.6

—
Write-off of debt issuance costs

—

1.9
Non-cash debt accretion

0.4

0.2
Deferred tax benefit

(132.2)

20.8
Net changes in operating assets and liabilities

(203.8)

(157.2)
Net cash used by operating activities from continuing operations

(167.8)

(83.1)
Net cash (used) provided by operating activities from discontinued operations

(15.3)

65.7
Net cash used by operating activities

(183.1)

(17.4)
Cash flows from investing activities

Purchases of property, plant and equipment

(17.9)

(21.1)
Proceeds from sales of property, plant and equipment

0.6

—
Other investing activities

—

(0.8)
Net cash used by investing activities from continuing operations

(17.3)

(21.9)
Net cash used by investing activities from discontinued operations

(6.9)

(6.8)
Net cash used by investing activities

(24.2)

(28.7)
Cash flows from financing activities

Proceeds from issuance of debt

226.1

200.3
Payment of debt

(29.8)

(133.9)
Payment of debt issuance costs

(0.1)

(0.5)
Payment of cash dividends to parent

(24.2)

(147.6)
Net cash provided (used) by financing activities from continuing operations

172.0

(81.7)
Net cash provided by financing activities from discontinued operations

5.2

6.6
Net cash provided (used) by financing activities

177.2

(75.1)
Effect of exchange rate changes on cash and cash equivalents

(0.2)

(6.4)
Net change in cash and cash equivalents

(30.3)

(127.6)
Cash and cash equivalents, beginning of period

168.2

270.8
Cash and cash equivalents, end of period

$
137.9

$
143.2
Supplemental disclosure of cash flow information

Cash paid for interest

$
57.5

$
44.5
Cash paid for taxes

$
10.0

$
10.4
Non cash investing activities

Acquisition of property, plant and equipment through capital leases

$
2.1

$
30.7
(unaudited)


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Net (loss) income	$	(53.3)	$	16.5	$	(73.6)	$	25.2
Other comprehensive (loss) income
Foreign currency translation adjustment
Foreign currency translation gain (loss)	27.1		(13.5)		87.6		(17.4)
Unrealized (loss) gain from net investment hedge	(12.5)		11.9		(46.4)		22.5
Foreign currency translation adjustment before tax	14.6		(1.6)		41.2		5.1
Deferred tax effect	3.7		(3.1)		12.5		(7.6)
Foreign currency translation adjustment, net	18.3		(4.7)		53.7		(2.5)
Unrealized (loss) gain on derivative instruments
Unrealized (loss) gain on hedging activity before reclassification	(7.1)		6.4		(32.5)		7.6
Net reclassification for loss (gain) to income from continuing operations	4.9		(1.5)		2.4		(3.6)
Net reclassification for gain to income from discontinued operations	(0.1)		(0.7)		(0.1)		(1.2)
Unrealized (loss) gain on hedging instruments after reclassification	(2.3)		4.2		(30.2)		2.8
Deferred tax effect	0.7		(1.0)		7.8		3.5
Net unrealized (loss) gain on hedging derivative instruments	(1.6)		3.2		(22.4)		6.3
Defined benefit pension (loss) gain
Defined benefit pension gain (loss) before reclassification	0.1		1.0		(2.1)		1.7
Net reclassification for (gain) loss to income from continuing operations	(0.7)		1.0		0.2		2.0

Defined benefit pension (loss) gain after reclassification	(0.6)		2.0		(1.9)		3.7
Deferred tax effect	0.1		(0.6)		1.3		(3.5)
Net defined benefit pension (loss) gain	(0.5)		1.4		(0.6)		0.2

Net change to derive comprehensive income for the period	16.2		(0.1)		30.7		4.0
Comprehensive (loss) income	(37.1)		16.4		(42.9)		29.2
Comprehensive income (loss) from continuing operations attributable to non-controlling interest	0.1		(0.1)		0.3		(0.1)
Comprehensive income from discontinuing operations attributable to non-controlling interest	0.1		—		0.2		0.1
Comprehensive (loss) income attributable to controlling interest	$	(37.3)	$	16.5	$	(43.4)	$	29.2

See accompanying notes to the condensed consolidated financial statements

Table of Contents

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Shareholder's Equity

For the six month period ended April 2, 2023

(unaudited)


(in millions)	Other Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholder's Equity		Non- controlling Interest		Total Equity
Balances at September 30, 2022	$	2,164.6	$	(736.0)	$	(303.0)	$	1,125.6	$	7.5	$	1,133.1
Net (loss) income from continuing operations	—		(40.1)		—		(40.1)		0.3		(39.8)
Income from discontinued operations, net of tax	—		19.4		—		19.4		0.1		19.5
Other comprehensive income, net of tax	—		—		14.2		14.2		0.3		14.5
Restricted stock issued and related tax withholdings	(10.5)		—		—		(10.5)		—		(10.5)
Share based compensation	3.9		—		—		3.9		—		3.9
Dividends paid to parent	—		(17.1)		—		(17.1)		—		(17.1)

Balances as of January 1, 2023	2,158.0		(773.8)		(288.8)		1,095.4		8.2		1,103.6
Net (loss) income from continuing operations	—		(75.3)		—		(75.3)		0.1		(75.2)
Income from discontinued operations, net of tax	—		21.9		—		21.9		—		21.9

Other comprehensive income, net of tax	—		—		16.0		16.0		0.2		16.2

Share based compensation	4.4		—		—		4.4		—		4.4
Dividends paid to parent	—		(17.2)		—		(17.2)		—		(17.2)

Balances as of April 2, 2023	$	2,162.4	$	(844.4)	$	(272.8)	$	1,045.2	$	8.5	$	1,053.7

Table of Contents

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Shareholder's Equity

For the six month period ended April 3, 2022

(unaudited)


(in millions)	Other Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholder's Equity		Non- controlling Interest		Total Equity
Balances at September 30, 2021	$	2,174.8	$	(614.9)	$	(235.2)	$	1,324.7	$	8.7	$	1,333.4
Net loss from continuing operations	—		(30.1)		—		(30.1)		—		(30.1)
Income from discontinued operations, net of tax	—		38.4		—		38.4		0.4		38.8
Other comprehensive income, net of tax	—		—		4.0		4.0		0.1		4.1
Restricted stock issued and related tax withholdings	(24.3)		—		—		(24.3)		—		(24.3)
Share based compensation	8.2		—		—		8.2		—		8.2
Dividends paid to parent	—		(119.2)		—		(119.2)		—		(119.2)

Balances as of January 2, 2022	2,158.7		(725.8)		(231.2)		1,201.7		9.2		1,210.9
Net loss from continuing operations	—		(24.6)		—		(24.6)		—		(24.6)
Income from discontinued operations, net of tax	—		41.0		—		41.0		0.1		41.1

Other comprehensive loss, net of tax	—		—		—		—		(0.1)		(0.1)

Share based compensation	7.4		—		—		7.4		—		7.4
Dividends paid to parent	—		(41.2)		—		(41.2)		—		(41.2)
Dividends paid by subsidiary to non-controlling interest	—		—		—		—		(1.3)		(1.3)
Balances as of April 3, 2022	$	2,166.1	$	(750.6)	$	(231.2)	$	1,184.3	$	7.9	$	1,192.2

See accompanying notes to the condensed consolidated financial statements

Table of Contents

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Cash Flows

For the six month periods ended April 2, 2023 and April 3, 2022

(unaudited)


	Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022
Cash flows from operating activities
Net (loss) income	$	(73.6)	$	25.2
Income from discontinued operations, net of tax	41.4		79.9
Net loss from continuing operations	(115.0)		(54.7)
Adjustments to reconcile net (loss) income to net cash from operating activities:
Depreciation	24.1		24.4
Amortization	20.9		26.7
Share based compensation	7.1		11.8
Impairment of equipment and leases	4.5		—
Impairment of intangible assets	67.0		—
Amortization of debt issuance costs and debt discount	4.0		3.1
Gain from contingent consideration liability	(1.5)		—

Non-cash purchase accounting adjustments	0.9		3.5
Deferred tax benefit	(61.3)		(43.3)
Net changes in operating assets and liabilities	187.5		(216.1)
Net cash provided (used) by operating activities from continuing operations	138.2		(244.6)
Net cash provided by operating activities from discontinued operations	29.0		5.3
Net cash provided (used) by operating activities	167.2		(239.3)
Cash flows from investing activities
Purchases of property, plant and equipment	(25.9)		(24.3)
Proceeds from disposal of property, plant and equipment	—		0.1


Business acquisitions, net of cash acquired	—		(314.3)

Other investing activities	—		(0.1)
Net cash used by investing activities from continuing operations	(25.9)		(338.6)
Net cash used by investing activities from discontinued operations	(7.9)		(12.4)
Net cash used by investing activities	(33.8)		(351.0)
Cash flows from financing activities
Payment of debt	(21.7)		(6.5)
Proceeds from issuance of debt	—		775.0
Payment of debt issuance costs	(2.3)		(6.7)

Payment of cash dividends to parent	(34.4)		(160.4)


Net cash (used) provided by financing activities from continuing operations	(58.4)		601.4
Net cash used by financing activities from discontinued operations	(0.7)		(2.2)
Net cash (used) provided by financing activities	(59.1)		599.2
Effect of exchange rate changes on cash and cash equivalents	9.7		(3.0)
Net change in cash, cash equivalents and restricted cash	84.0		5.9
Cash, cash equivalents, and restricted cash, beginning of period	242.6		188.3
Cash, cash equivalents, and restricted cash, end of period	$	326.6	$	194.2
Supplemental disclosure of cash flow information
Cash paid for interest associated with continued operations	$	56.8	$	50.9
Cash paid for interest associated with discontinued operations	29.9		30.2
Cash paid for taxes associated with continued operations	11.7		19.0
Cash paid for taxes associated with discontinued operations	13.5		10.1
Non cash investing activities
Acquisition of property, plant and equipment through finance leases	$	2.4	$	0.5

See accompanying notes to the condensed consolidated financial statements

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

This report is a combined report of Spectrum Brands Holdings, Inc. (“SBH”) and SB/RH Holdings, LLC (“SB/RH”) (collectively, the “Company”). The notes to the condensed consolidated financial statements that follow include both consolidated SBH and SB/RH ~~notes,~~Notes, unless otherwise indicated below.

NOTE 1 -1– BASIS OF PRESENTATION AND ~~DESCRIPTION OF BUSINESS~~

We are a diversified global branded consumer products company. The Company manufactures, markets and/or distributes its products in approximately 160 countries in the North America (“NA”), Europe, Middle East & Africa (“EMEA”), Latin America (“LATAM”)SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Asia-Pacific (“APAC”) regions through a variety of trade channels, including retailers, wholesalers and distributors, original equipment manufacturers (“OEMs”), construction companies and hearing aid professionals. We enjoy strong name recognition in our regions under our various brands and patented technologies. Our diversified global branded consumer products have positions in several product categories and types. We manage the businesses in five vertically integrated, product-focused segments: (i) Global Batteries & Appliances (“GBA”), (ii) Global Pet Supplies (“PET”), (iii) Home and Garden (“H&G”), (iv) Hardware & Home Improvement (“HHI”) and (v) Global Auto Care (“GAC”). 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 responsible for sales and marketing initiatives and the financial results for all product lines within that segment.

Effective December 29, 2017, the Company’s Board of Directors approved a plan to explore strategic alternatives, including a planned sale of the Company’s GBA segment. The Company expects a sale to be realized by December 31, 2018. As a result, the Company’s assets and liabilities associated with the GBA segment have been classified as held for sale in the accompanying Condensed Consolidated Balance Sheets and the respective operations of the GBA segment have been classified as discontinued operations in the accompanying Condensed Consolidated Statements of Income and Statements of Cash Flows; and reported separately for all periods presented as the disposition represents a strategic shift that will have a major effect on the Company’s operations and financial results. See ~~Note 3 – Divestitures~~ ~~for more information on the assets and liabilities classified as held for sale and discontinued operations. See~~ ~~Note 18 - Segment Information~~ for more information pertaining to segments of continuing operations. The following table summarizes the respective product types, brands, and regions for each of the segments of continuing operations:

Fiscal Period-End


~~Segment~~	~~Products~~	~~Brands~~	~~Regions~~
~~HHI~~	~~Hardware:~~ ~~Hinges, security hardware, screen and storm door products, garage door hardware, window hardware and floor protection.~~ ~~Security: Residential locksets and door hardware including knobs, levers, deadbolts, handlesets and electronics. Commercial doors, locks, and hardware.~~ ~~Plumbing:~~ ~~Kitchen, bath and shower faucets and plumbing products.~~	~~Hardware:~~ ~~National Hardware®, Stanley® and FANAL®.~~ ~~Security:~~ ~~Kwikset®, Weiser®, Baldwin®, EZSET® and Tell®.~~ ~~Plumbing:~~ ~~Pfister®.~~	NA ~~EMEA~~ ~~LATAM~~ ~~APAC~~
~~PET~~	~~Companion Animal:~~ ~~Dog, cat and small animal food and treats; clean-up and training aid products and accessories; pet health and grooming products.~~ ~~Aquatics:~~ ~~Aquariums and aquatic health supplies.~~	~~Companion Animal:~~ ~~8-in-1®, Dingo~~®, Nature's Miracle®, Wild Harvest®, Littermaid®, Jungle®, Excel®, FURminator®, IAMS®, Eukanuba®, Healthy-Hide®, DreamBone®, SmartBones®, GloFish®, ProSense®, Perfect Coat®, eCOTRITION®, Birdola® and Digest-eeze®. ~~Aquatics:~~ ~~Tetra®, Marineland®, Whisper® and Instant Ocean®.~~	NA ~~EMEA~~ ~~LATAM~~ ~~APAC~~
~~H&G~~	~~Controls:~~ ~~Outdoor insect and weed control solutions, animal repellents.~~ ~~Household:~~ ~~Household insecticides and pest controls.~~ ~~Repellents:~~ ~~Personal use pesticides and insect repellent products.~~	~~Controls:~~ ~~Spectracide®, Garden Safe®, Liquid Fence®, and EcoLogic®.~~ ~~Household:~~ ~~Hot Shot®, Black Flag®, Real Kill®, Ultra Kill®, The Ant Trap® (TAT), and Rid-a-Bug®.~~ ~~Repellents:~~ ~~Cutter® and Repel®.~~	NA ~~LATAM~~
~~GAC~~	~~Appearance:~~ ~~Protectants, wipes, tire and wheel care products, glass cleaners, leather care products, air fresheners and washes.~~ ~~Performance:~~ ~~Automotive fuel and oil additives, and functional fluids.~~ ~~A/C Recharge:~~ ~~Do-it-yourself air conditioner recharge products, refrigerant and oil recharge kits, sealants and accessories.~~	~~Appearance:~~ ~~Armor All®.~~ ~~Performance:~~ ~~STP®.~~ ~~A/C Recharge:~~ ~~A/C PRO®.~~	NA ~~EMEA~~ ~~LATAM~~ ~~APAC~~

~~Table of Contents~~

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, ~~2017.~~

2022.

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 2, 2023 and April 3, 2022, respectively.

Newly Adopted Accounting Standards

In March 2020, the FASB issued ASU 2020- 04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, which adds implementation guidance to clarify certain optional expedients in Topic 848. The adoption did not have a material impact on the consolidated financial statements.

Recently Issued Accounting Standards

In September 2022, the FASB issued ASU 2022-04, Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations to enhance transparency about the use of supplier finance programs. Under the ASU, the buyer in a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented. The amendments in ASU 2022-04 are effective for all entities for fiscal years beginning after December 15, 2022, including interim periods within those financial years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company is evaluating the effect of adopting this new accounting guidance.

NOTE 2 ~~- SIGNIFICANT ACCOUNTING POLICIES~~

~~Assets Held for Sale and Discontinued Operations~~

– DIVESTITURES

The ~~Company reports~~following table summarizes the ~~results~~components of operations of a business as discontinued operations if a disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the business is sold and classified as held for sale, in accordance with the criteria of Accounting Standard Codification (“ASC”) Topic 205 ~~Presentation of Financial Statements~~ ~~and ASC Topic 360~~ ~~Property, Plant and Equipment~~ ~~(“ASC 360”). The results of discontinued operations are reported in~~ Income ~~From~~from Discontinued Operations, Net of Tax in the accompanying Condensed Consolidated Statements of Income for the ~~current~~three and prior periods commencing in the period in which the business meets the criteria of a discontinued operations, and include any gain or loss recognized on closing, or adjustment of the carrying amount to fair value less cost to sell. Assets and liabilities of a business classified as held for sale are recorded at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized. Assets and liabilities related to a business classified as held for sale are segregated in the current and prior balance sheets in the period in which the business is classified as held for sale. Transactions between the businesses held for sale and businesses held for use that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and balances held for sale. If a business is classified as held for sale after the balance sheet date but before the financial statements are issued or are available to be issued, the business continues to be classified as held and used in those financial statements when issued or when available to be issued.

~~Recently Issued Accounting Standards~~

~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605,~~ ~~Revenue Recognition.~~ This ASU requires revenue recognition to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue recognition model requires identifying the contract and performance obligations, determining the transaction price, allocating the transaction price to performance obligations and recognizing the revenue upon satisfaction of performance obligations. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. This ASU can be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the updates recognized at the date of the initial application along with additional disclosures. The ASU will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2019. We have performed a preliminary assessment over the impact of the pronouncement to the Company and are currently performing detailed assessments over the contracts with our customers and the impact to our processes and control environment. We have not measured the impact of adoption at this point in our assessment and have not concluded on the overall materiality of the impact of adoption to the Company’s consolidated financial statements and disclosures, or the method of adoption, but have not identified any matters that are considered significant for further disclosure.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842),~~ ~~which supersedes the lease requirements in ASC 840,~~ ~~Leases~~. This ASU requires lessees to recognize lease assets and liabilities on the balance sheet, as well as disclosing key information about leasing arrangements. Although the new ASU requires both operating 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. The ASU can be applied using a modified retrospective approach, with a number of optional practical expedients relating to the identification and classification of leases that commenced before the effective date, along with the ability to use hindsight in the evaluation of lease decisions, that entities may elect to apply. As a result, the ASU will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020, with early adoption applicable. We have not measured the impact of adoption at this point in our assessment and have not concluded on the overall materiality of the impact of adoption to the Company’s consolidated financial statements, or determined the method and timing of adoption.

~~Table of Contents~~

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments~~, which addresses diversity in practice with the classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update address the classification within the statement of cash flow for debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent payments made after a business combination, proceeds from the settlement of insurance claims and corporate-owned life insurance policies, distributions received from equity method investees, and beneficial interests in securitization transactions, among other separately identifiable cash flows when applying the predominance principle. The ASU is applied on a retrospective basis, and will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2019; with early adoption available. We are currently assessing the impact this pronouncement will have on the consolidated financial statements of the Company and have not yet concluded on the materiality or timing of adoption.

~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Restricted Cash~~, which addresses diversity in practice with the classification and presentation of restricted cash in the statement of cash flow, classifying transfers between cash and restricted cash as operating, investing, or financing activities, or as a combination of those activities, in the statement of cash flows. The amendment requires the statement of cash flows to explain the change during the period in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents; and include with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statement of cash flows. The ASU is applied on a retrospective basis, and will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2019; with early adoption available. We are currently assessing the impact this pronouncement will have on the consolidated financial statements of the Company and have not yet concluded on the materiality or timing of adoption.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~, which requires an employer to disaggregate the service cost component from the other components of net periodic pension costs within the statement of income. The amendment provides guidance requiring the service cost component to be recognized consistent with other compensation costs arising from service rendered by employees during the period, and all other components to be recognized separately outside of the subtotal of income from operations. The ASU is applied on a retrospective basis, and will become effective for us in the first quarter of the year ending September 30, 2019; with early adoption available. We are currently assessing the impact this pronouncement will have on the consolidated financial statements of the Company and have not yet concluded on the materiality of the adoption.

~~In August 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-12,~~ ~~Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815)~~, which changes the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The amendments in this update make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP, better aligning the entity’s risk management activities and financial reporting for hedging relationships. The ASU can only be applied prospectively, and will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020; with early adoption available. We are currently assessing the impact this pronouncement will have on the consolidated financial statements of the Company and have not yet concluded on the materiality or timing of the adoption.

During the three month period ended December 31, 2017, the Company adopted SEC Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when the registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act. See ~~Note 16 – Income Taxes~~ ~~for additional discussion.~~

~~Table of Contents~~

~~NOTE 3 – DIVESTITURES~~

~~As previously discussed in~~ ~~Note 1 - Basis of Presentation and Nature of Operations,~~ the GBA segment was classified as held for sale in the accompanying Condensed Consolidated Balance Sheets and as discontinued operations in the accompanying Condensed Consolidated Statements of Income. The following table summarizes the assets and liabilities of the GBA segment classified as held for sale as of December 31, 2017 and September 30, 2017.

(in millions)

December 31, 2017

September 30, 2017
Assets

Trade receivables, net

$
282.5

$
260.1
Other receivables

29.1

24.1
Inventories

273.3

279.1
Prepaid expenses and other current assets

40.7

39.7
Property, plant and equipment, net

194.8

196.4
Deferred charges and other

17.3

19.2
Goodwill

348.6

348.9
Intangible assets, net

804.3

811.9
Total assets of business held for sale

$
1,990.6

$
1,979.4
Liabilities

Current portion of long-term debt

23.5

17.3
Accounts payable

302.3

355.9
Accrued wages and salaries

29.8

36.9
Other current liabilities

98.8

89.8
Long-term debt, net of current portion

51.1

51.4
Deferred income taxes

36.8

38.2
Other long-term liabilities

65.9

66.2
Total liabilities of business held for sale

$
608.2

$
655.7

~~The following table summarizes the components of Income From Discontinued Operations in the accompanying Condensed Consolidated Statements of Operations for the three~~six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017.~~

April 3, 2022:

(in millions)

December 31, 2017

January 1, 2017
Net sales

$
603.3

$
609.5
Cost of goods sold

403.4

398.6
Gross profit

199.9

210.9
Operating expenses

131.7

121.3
Operating income

68.2

89.6
Interest expense

13.7

12.8
Other non-operating expense, net

0.3

—
Income from discontinued operations before income taxes

54.2

76.8
Income tax expense

13.3

24.4
Net income from discontinued operations

40.9

52.4
Net income from discontinued operations attributable to non-controlling interest

0.1

(0.1)
Net income from discontinued operations attributable to controlling interest

$
40.8

$
52.5


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Income from discontinued operations before income taxes – HHI	$	59.5	$	71.0	$	104.4	$	130.9
Loss from discontinued operations before income taxes – Other	(1.4)		(3.1)		(2.0)		(3.4)

Interest on corporate debt allocated to discontinued operations	17.8		11.0		34.0		21.4
Income from discontinued operations before income taxes	40.3		56.9		68.4		106.1
Income tax expense from discontinued operations	18.9		15.8		27.5		26.2
Income from discontinued operations, net of tax	21.4		41.1		40.9		79.9
Net income from discontinued operations attributable to noncontrolling interest	—		0.1		0.2		0.5
Net income from discontinued operations attributable to controlling interest	$	21.4	$	41.0	$	40.7	$	79.4

Interest from corporate debt allocated to discontinued operations includes interest expense ~~consists of interest~~ from ~~debt directly held by subsidiaries of the business held for sale, including interest from capital leases, and interest on~~ Term Loans required to be paid down using proceeds received on disposal on sale of a business, ~~within 365 days with~~and interest expense from corporate debt not directly attributable to or related to other operations based on the ~~exception for funds used for capital expenditures and acquisitions. There has been no impairment loss recognized as the fair value or expected proceeds from~~ratio of net assets of the disposal group held for sale to the consolidated net assets of the ~~businesses is anticipated~~Company plus consolidated debt, excluding debt assumed in the transaction, required to be ~~in excess~~repaid, or directly attributable to other operations of the ~~asset carrying values.~~

~~Energizer Holdings, Inc.~~

~~On January 15, 2018, subsequent~~Company. Corporate debt, including Term Loans required to be paid down, are not classified as held for sale as they are not directly attributable to the ~~end of the three month period ended December 31, 2017,~~identified disposal group.

Hardware and Home Improvement ("HHI")

On September 8, 2021, the Company entered into a definitive ~~Acquisition~~Asset and Stock Purchase Agreement ~~(“Agreement”~~(the "ASPA") with ~~Energizer Holdings, Inc. (“Energizer”~~ASSA ABLOY AB ("ASSA") ~~where Energizer will acquire from the Company~~to sell its ~~Global Battery and Lighting (“GBL”) business~~HHI segment for ~~an aggregate purchase price~~cash proceeds of ~~$2.0~~$4.3 billion, ~~in cash,~~ subject to customary purchase price ~~adjustments.~~

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

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 2 – DIVESTITURES (continued)

The ~~Agreement~~ASPA provides that ~~Energizer~~ASSA will purchase the equity of certain subsidiaries of the Company, and acquire certain assets and assume certain liabilities of other subsidiaries used or held for the purpose of the ~~GBL~~HHI business.

~~In the Agreement, the~~The Company and ~~Energizer~~ASSA have made customary representations and warranties and have agreed to customary covenants relating to the acquisition. Among other things, prior to the consummation of the acquisition, the Company will be subject to certain business conduct restrictions with respect to its operation of the ~~GBL~~HHI business.

The Company and ~~Energizer~~ASSA have agreed to indemnify each other for losses arising from certain breaches of the ~~Agreement~~ASPA and for certain other matters. In particular, the Company has agreed to indemnify ~~Energizer~~ASSA for certain liabilities relating to the assets retained by the Company, and ~~Energizer~~ASSA has agreed to indemnify the Company for certain liabilities assumed by ~~Energizer,~~ASSA, in each case as described in the ~~Agreement.~~

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

services.

The consummation of the acquisition is subject to certain customary conditions, including, among other things, (i) the absence of a material adverse effect on ~~GBL,~~HHI, (ii) the expiration or termination of required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) the receipt of certain other antitrust approvals in certain specified foreign jurisdictions (the conditions contained in (ii) and (iii) together, the “Antitrust Conditions”), (iv) the accuracy of the representations and warranties of the parties generally subject to a customary material adverse effect standard (as described in the ~~Agreement)~~ASPA) or other customary materiality qualifications), (v) the absence of governmental restrictions on the consummation of the acquisition in certain jurisdictions, and (vi) material compliance by the parties with their respective covenants and agreements under the ~~Agreement.~~ASPA. The consummation of the ~~transaction~~acquisition is not subject to any financing condition.

The ~~transaction is expected to be consummated prior to December 31, 2018.~~

~~The Agreement~~ASPA also contains certain termination rights, including the right of either party to terminate the ~~Agreement~~ASPA if the consummation of the acquisition has not occurred on or before ~~July 15, 2019~~December 8, 2022 (the “Termination Date”). Further, if the acquisition has not been consummated by the Termination Date and all conditions precedent to ~~Energizer’s~~ASSA's obligation to consummate the acquisition have otherwise been satisfied except for one or more of the Antitrust Conditions, then ~~Energizer~~ASSA would be required to pay the Company a termination fee of ~~$100~~$350 million.

On July 14, 2022, the parties entered into an amendment to the ASPA (the “Amendment”) pursuant to which the Termination Date was extended to June 30, 2023. Except for the foregoing amendment to the Termination Date, the ASPA remains in full force and effect as written, including with respect to the termination fee of $350 million. On September 15, 2022, the Department of Justice ("DOJ") filed a complaint seeking to enjoin the transaction and block the acquisition of the HHI division by ASSA. On December 2, 2022, ASSA announced an agreement to sell its Emtek and the Smart Residential Business in the U.S. and Canada to Fortune Brands in response to competitive concerns raised by the DOJ in their complaint. On May 5, 2023, the Company agreed to a stipulation with the DOJ to settle the DOJ's challenge of the HHI transaction, pursuant to which ASSA will proceed with the divestment of Emtek and its Smart Residential business in the U.S.and Canada to Fortune Brands. Approval of the Mexican competition authority is the only outstanding regulatory approval. The ~~GBL business is~~Company continues to recognize the HHI division as held for sale and as a component of our discontinued operations. The parties are committed to closing the ~~GBA segment, which also includes shared operations~~HHI transaction, and the Company and ASSA both continue to expect that the HHI transaction will close on or prior to June 30, 2023.

The following table summarizes the assets and liabilities of the ~~remaining~~HHI disposal group classified as held for sale as of April 2, 2023 and September 30, 2022:


(in millions)	April 2, 2023		September 30, 2022
Assets
Trade receivables, net	$	143.4	$	135.5
Other receivables	3.9		6.7
Inventories	286.9		327.1
Prepaid expenses and other current assets	34.2		33.1
Property, plant and equipment, net	176.2		166.6
Operating lease assets	64.2		63.6
Deferred charges and other	14.4		11.7
Goodwill	701.6		698.6
Intangible assets, net	374.8		373.8
Total assets of business held for sale	$	1,799.6	$	1,816.7
Liabilities
Current portion of long-term debt	$	1.4	$	1.4
Accounts payable	190.0		224.7
Accrued wages and salaries	22.4		32.7
Other current liabilities	67.1		79.9
Long-term debt, net of current portion	53.9		54.6
Long-term operating lease liabilities	42.7		46.9
Deferred income taxes	10.4		10.1
Other long-term liabilities	13.9		13.4
Total liabilities of business held for sale	$	401.8	$	463.7

Table of Contents

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 before income taxes associated with the ~~segment consisting~~HHI divestiture in the accompanying Condensed Consolidated Statements of the Home and Personal Care (“HPC”) business. The Company is actively marketing the HPC business with interested parties for a separate transaction(s) expected to be entered into and consummated prior to December 31, 2018.

~~NOTE 4 – ACQUISITION AND INTEGRATION COSTS~~

~~The following summarizes acquisition and integration related charges~~Operations for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017:~~

April 3, 2022:

(in millions)

December 31, 2017

January 1, 2017
HHI Business

$
2.7

$
1.9
PetMatrix

1.6

—
Glofish

0.4

—
Armored AutoGroup

0.2

1.3
Other

0.3

0.1
Total acquisition and integration related charges

$
5.2

$
3.3


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Net sales	$	383.3	$	420.8	$	746.1	$	795.4
Cost of goods sold	253.3		275.4		498.0		520.4

Gross profit	130.0		145.4		248.1		275.0
Operating expenses	68.9		72.3		140.0		139.5
Operating income	61.1		73.1		108.1		135.5
Interest expense	0.8		0.8		1.7		1.7
Other non-operating expense, net	0.8		1.3		2.0		2.9
Income from discontinued operations before income taxes	$	59.5	$	71.0	$	104.4	$	130.9

Beginning in September 2021, the Company ceased the recognition of depreciation and ~~integration costs include costs directly~~amortization of long-lived assets associated with the ~~completion~~HHI disposal group classified as held for sale. Interest expense consists of interest from debt directly attributable to HHI operations that primarily consist of interest from finance leases. No impairment loss was recognized on the assets held for sale as the purchase price of the ~~purchase~~business less estimated cost to sell is more than its carrying value. The following table presents significant non-cash items and capital expenditures of net assets or equity interest of a business such as a business combination, equity investment, joint venture or purchase of non-controlling interest. Included costs include transactions costs; advisory,discontinued operations from the HHI divestiture for the three and six month periods ended April 2, 2023 and April 3, 2022:


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022

Share based compensation	$	0.3	$	1.2	$	1.1	$	4.1
Purchases of property, plant and equipment	4.4		7.5		8.0		12.4

Loss from discontinued operations before income taxes – other includes incremental pre-tax loss for changes to tax and legal ~~accounting, valuation,~~indemnifications and other ~~professional fees;~~agreed-upon funding under the acquisition agreements for the sale and ~~integration~~divestiture of ~~acquired operations onto~~ the ~~Company’s shared service platform~~Global Batteries & Lighting ("GBL") and ~~termination of redundant positions and locations.~~

~~Table of Contents~~

~~NOTE 5 - RESTRUCTURING AND RELATED CHARGES~~

~~PET Rightsizing Initiative –~~ ~~During the second quarter of~~Global Auto Care ("GAC") divisions to Energizer Holdings, Inc. ("Energizer") during the year ended September 30, ~~2017,~~2019. The Company and Energizer agreed to indemnify each other for losses arising from certain breaches of the acquisition agreement and for certain other matters, in each case as described in the acquisition agreements. Subsequently, effective January 2, 2020, Energizer closed its divestitures of the European based Varta® consumer battery business in the EMEA region to Varta AG and transferred all respective rights and indemnifications attributable to the Varta® consumer battery business provided by the GBL sale to Varta AG. As of April 2, 2023 and September 30, 2022, the Company ~~implemented~~recognized $24.6 million and $22.3 million, respectively, related to indemnification payables in accordance with the acquisition agreements, primarily attributable with uncertain tax benefit obligations and outstanding settlements with tax authorities that were transferred and indemnified in accordance with the acquisition agreement, including $9.0 million and $7.0 million within Other Current Liabilities, respectively, and $15.6 million and $15.3 million, within Other Long-Term Liabilities, respectively, on the Company’s Condensed Consolidated Statements of Financial Position.

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 3 – RESTRUCTURING CHARGES

During the three and six month periods ended April 2, 2023, the Company entered into a ~~rightsizing~~new initiative in response to the continuing pressures within the ~~PET segment to streamline~~consumer products and retail markets and adjusted strategic initiatives within certain ~~operations~~segments, resulting in the realization of another round of headcount reductions. Total cumulative exit and ~~reduce operating costs. The initiative includes headcount reductions and the rightsizing of certain facilities. Total~~disposal costs associated with ~~this~~the initiative ~~are expected to be approximately $9 million, of which $8.8 million has~~were $4.5 million. Substantially all exit and disposal charges associated with the initiative have been ~~incurred to date. The balance is anticipated to be incurred through September 30, 2018.~~

~~HHI Distribution Center Consolidation –~~ recognized.

During ~~the second quarter of~~ the year ended September 30, ~~2017,~~2022, the Company ~~implemented an~~entered into a new initiative in response to changes observed within consumer products and retail markets, continued inflationary cost pressures and headwinds, and to facilitate changes in the ~~HHI segment to consolidate certain operations~~management structure for enabling functions of the consolidated group, resulting in the realization of headcount reductions. Total cumulative exit and ~~reduce operating costs. The initiative includes headcount reductions and the exit of certain facilities. Total~~disposal costs associated with the initiative ~~are expected~~were $10.5 million. Substantially all exit and disposal costs associated, with the initiative have been recognized in the prior year with incremental costs realized during the three and six month periods ended April 2, 2023, which were attributable to ~~be approximately $55 million, of which $42.6 million has been incurred to date. The balance is anticipated to be incurred through September 30, 2018.~~

~~GAC Business Rationalization Initiatives –~~ ~~During~~changes in timing and accruals previously recognized since the ~~third quarter of~~initiative was established.

During the year ended September 30, ~~2016,~~2022, the Company ~~implemented a series of initiatives in the GAC segment to consolidate certain operations and reduce operating costs. These initiatives included headcount reductions and~~initiated the exit of ~~certain facilities.~~its in-country commercial operations in Russia, predominantly supporting the HPC segment, including costs for severance and other exit and disposal activity to close the operations. Total cumulative exit and disposal costs associated with ~~these initiatives are expected to be approximately $~~35 ~~million, of which $33.6~~ ~~million has~~the initiative were $1.3 million. Substantially all exit and disposal costs associated with the initiative have been ~~incurred to date. The balance is anticipated to be incurred through September 30, 2018.~~

~~Other Restructuring Activities~~ – recognized.

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

The following summarizes restructuring ~~and related~~ charges for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017:~~

April 3, 2022:

(in millions)

December 31, 2017

January 1, 2017

HHI distribution center consolidation

$
15.2

$
—

GAC business rationalization initiative

4.0

1.5

PET rightsizing initiative

0.6

—

Other restructuring activities

0.6

0.7

Total restructuring and related charges

$
20.4

$
2.2

Reported as:

Cost of goods sold

$
1.8

$
1.1

Operating expense

18.6

1.1


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Fiscal 2023 restructuring	$	4.5	$	—	$	4.5	$	—
Fiscal 2022 restructuring	0.1		—		0.6		—
Russia dissolution	0.1		—		0.7		—

GPC distribution center transition	—		5.6		—		15.9
Global productivity improvement program	—		2.3		—		4.1
Other project costs	0.1		8.5		1.0		13.8
Total restructuring charges	$	4.8	$	16.4	$	6.8	$	33.8
Reported as:
Cost of goods sold	$	0.3	$	1.2	$	0.7	$	1.5
Selling expense	—		5.6		—		15.9
General and administrative expense	4.5		9.6		6.1		16.4

The following is a summary of restructuring ~~and related~~ charges by segment for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017 and cumulative costs for current~~April 3, 2022.


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
HPC	$	2.5	$	3.7	$	3.2	$	4.3
GPC	2.2		8.2		3.0		19.6
H&G	—		—		0.2		—
Corporate	0.1		4.5		0.4		9.9
Total restructuring charges	$	4.8	$	16.4	$	6.8	$	33.8

The following is a summary of restructuring ~~initiatives as of December 31, 2017,~~charges by cost ~~type:~~

Termination

Other

(in millions)

Benefits

Costs

Total
For the three month period ended December 31, 2017

$
1.1

$
19.3

$
20.4
For the three month period ended January 1, 2017

0.8

1.4

2.2
Cumulative costs through December 31, 2017

12.1

73.9

86.0
Future costs to be incurred

0.2

16.0

16.2

~~Termination costs consist of involuntary employee termination benefits~~type for the three and severance pursuant to a one-time benefit arrangement recognized as part of a restructuring initiative. Other costs consist of non-termination type costs related to restructuring initiatives such as incremental costs to consolidate or close facilities, relocate employees, cost to retrain employees to use newly deployed assets or systems, lease termination costs,six month periods ended April 2, 2023 and ~~redundant or incremental transitional operating costs and customer fines and penalties during transition, among others.~~

April 3, 2022.


(in millions)	Termination Benefits		Other Costs		Total
For the three month period ended April 2, 2023	$	4.4	$	0.4	$	4.8
For the three month period ended April 3, 2022	1.2		15.2		16.4
For the six month period ended April 2, 2023	5.7		1.1		6.8
For the six month period ended April 3, 2022	1.9		31.9		33.8

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 4 –REVENUE RECOGNITION

The Company generates all of its revenue from contracts with customers. The following ~~summarizes restructuring~~table disaggregates our revenue for the three and ~~related charges~~six month periods ended April 2, 2023 and April 3, 2022, by the Company’s key revenue streams, segments and geographic region (based upon destination):


	Three Month Period Ended April 2, 2023								Three Month Period Ended April 3, 2022
(in millions)	HPC		GPC		H&G		Total		HPC		GPC		H&G		Total
Product Sales
NA	$	121.6	$	186.4	$	151.3	$	459.3	$	136.8	$	182.2	$	194.2	$	513.2
EMEA	99.2		94.4		—		193.6		109.1		95.3		—		204.4
LATAM	38.8		4.5		1.5		44.8		51.5		4.5		1.7		57.7
APAC	17.4		7.4		—		24.8		16.2		9.0		—		25.2
Licensing	1.9		2.6		0.5		5.0		2.1		2.4		0.7		5.2
Service and other	0.3		1.4		—		1.7		0.4		1.7		—		2.1
Total Revenue	$	279.2	$	296.7	$	153.3	$	729.2	$	316.1	$	295.1	$	196.6	$	807.8


	Six Month Period Ended April 2, 2023								Six Month Period Ended April 3, 2022
(in millions)	HPC		GPC		H&G		Total		HPC		GPC		H&G		Total
Product Sales
NA	$	286.1	$	360.8	$	220.2	$	867.1	$	264.2	$	369.7	$	266.9	$	900.8
EMEA	236.5		181.0		—		417.5		268.5		189.7		—		458.2
LATAM	80.6		7.7		3.5		91.8		120.1		9.2		4.1		133.4
APAC	35.2		16.9		—		52.1		37.9		20.2		—		58.1
Licensing	4.3		5.0		0.9		10.2		4.7		5.1		0.9		10.7
Service and other	0.9		2.9		—		3.8		0.4		3.4		—		3.8
Total Revenue	$	643.6	$	574.3	$	224.6	$	1,442.5	$	695.8	$	597.3	$	271.9	$	1,565.0

The Company has a broad range of customers, including many large mass retail customers. During the three month periods ended April 2, 2023 and April 3, 2022, there were two large retail customers, each exceeding 10% of consolidated Net Sales and representing 33.5% and 33.3% of consolidated Net Sales, respectively. During the six month periods ended April 2, 2023 and April 3, 2022, there were two large retail customers exceeding 10% of consolidated Net Sales and representing 34.8% and 33.1% of consolidated Net Sales, respectively.

A significant portion of our product sales from our HPC segment are subject to the continued use and access to the Black & Decker ("B&D") brand through a license agreement with Stanley Black and Decker. The license agreement was renewed through June 30, 2025, including a sell-off period from April 1, 2025 to June 30, 2025 whereby the Company can continue to sell and distribute but no longer produce products subject to the license agreement. Net sales from B&D product sales consisted of $85.1 million, or 11.7% of consolidated net sales, and $98.0 million, or 12.1% of consolidated Net Sales, for the three month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017, cumulative costs incurred through December 31, 2017,~~April 3, 2022, respectively. Net sales from B&D product sales consisted of $171.9 million, or 11.9%, and ~~future~~$229.8 million, or 14.7%, of consolidated Net Sales for the six month periods ended April 2, 2023 and April 3, 2022, respectively. All other significant brands and tradenames used in the Company’s commercial operations are directly owned and not subject to further restrictions.

In the normal course of business, the Company may allow customers to return products 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 ~~costs~~ to be ~~incurred by segment:~~

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

(in millions)

PET

HHI

GAC

Corporate

Total
For the three month period ended December 31, 2017

$
0.6

$
15.2

$
4.0

$
0.6

$
20.4
For the three month period ended January 1, 2017

0.6

0.1

1.5

—

2.2
Cumulative costs through December 31, 2017

8.8

42.6

33.6

1.0

86.0
Future costs to be incurred

0.2

12.3

1.2

2.5

16.2

NOTE ~~6 -~~5 – RECEIVABLES AND CONCENTRATION OF CREDIT RISK

The allowance for ~~uncollectible~~credit losses on the Company's trade receivables as of ~~December 31, 2017~~April 2, 2023 and September 30, ~~2017~~2022 was ~~$29.0~~$6.1 million and ~~$23.5~~$7.3 million, respectively.

The Company has a broad range of customers, including many large mass retail ~~outlet chains, three~~customers. As of ~~which exceed~~April 2, 2023, there was one large retail customer exceeding 10% of consolidated Net ~~Sales and/or~~Trade Receivables and representing 19.7% of consolidated Net Trade Receivables. ~~These three~~As of September 30, 2022 there were two large retail customers ~~represented 35% and 36%~~exceeding 10% of consolidated Net ~~Sales for the three month periods ended December 31, 2017 and January 1, 2017, respectively; and 30% and 36% of~~ Trade Receivables ~~at December 31, 2017~~ and ~~September 30, 2017, respectively.~~

representing 21.9% of consolidated Net Trade Receivables.

NOTE ~~7 -~~6 – INVENTORIES

Inventories consist of the following:

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited

NOTE 87 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

NOTE ~~9 -~~8 – GOODWILL AND INTANGIBLE ASSETS

Goodwill ~~by segment,~~ consists of the following:

During the three month period ended January 1, 2023, the Company recognized incremental adjustments to HPC goodwill attributable to changes to the preliminary valuation of net assets acquired associated with the acquisition of the Tristar Business, previously acquired on February 18, 2022, primarily associated with the valuation of reserves on trade receivables and deferred tax assets as of the acquisition date. The preliminary values recorded were determined based upon a valuation with estimates and assumptions used in such valuation that are subject to change within the measurement period (up to one year from the acquisition date). The one year measurement period has closed and there are no further adjustments on the valuation of acquired net assets. See Note 4 - Acquisitions in the Notes to the Consolidated Financial Statements within the Company's Annual Report on Form 10-K, released on November 22, 2022, for further discussion on the Tristar Business acquisition.

The carrying value and accumulated amortization ~~for intangible assets subject to amortization are as follows:~~

December 31, 2017

September 30, 2017
(in millions)

Gross Carrying Amount

Accumulated Amortization

Net

Gross Carrying Amount

Accumulated Amortization

Net
Customer relationships

$
672.6

$
(232.4)

$
440.2

$
671.7

$
(222.3)

$
449.4
Technology assets

231.6

(101.2)

130.4

194.6

(59.7)

134.9
Tradenames

5.5

(2.8)

2.7

18.5

(15.1)

3.4
Total

$
909.7

$
(336.4)

$
573.3

$
884.8

$
(297.1)

$
587.7

~~The range and weighted average useful lives for definite-lived~~of intangible assets are as follows:


~~Asset Type~~	~~Range~~	~~Weighted Average~~
~~Customer relationships~~	~~2 - 20 years~~	~~17.9 years~~
~~Technology assets~~	~~6 - 18 years~~	~~11.4 years~~
~~Tradenames~~	~~5 - 13 years~~	~~6.2 years~~


	April 2, 2023						September 30, 2022
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Amortizable intangible assets:
Customer relationships	$	638.2	$	(397.6)	$	240.6	$	627.8	$	(373.9)	$	253.9
Technology assets	75.3		(33.4)		41.9		75.3		(30.8)		44.5
Tradenames	11.0		(6.1)		4.9		10.6		(5.1)		5.5
Total amortizable intangible assets	724.5		(437.1)		287.4		713.7		(409.8)		303.9
Indefinite-lived intangible assets – tradenames	853.3		—		853.3		898.3		—		898.3
Total Intangible Assets	$	1,577.8	$	(437.1)	$	1,140.7	$	1,612.0	$	(409.8)	$	1,202.2

During the three and six month periods ended April 2, 2023, we identified triggering events for our Rejuvenate and PowerXL tradename intangible assets ~~have an indefinite life and are not amortized. The balance~~resulting in recognition of ~~tradenames not subject to amortization was $1,025.3~~a $67.0 million ~~and $1,024.3 million as of December 31, 2017 and September 30, 2017, respectively. There was no~~ impairment loss on ~~indefinite-lived trade names for~~intangible assets. The loss associated with the ~~three month periods ended December 31, 2017~~Rejuvenate tradename is primarily attributable to a shift in the projected timing and ~~January 1, 2017.~~

realization of future revenues associated with the acquired brand due to changes in strategic distribution opportunities as well as a change in the amount and timing of product innovations being introduced to customers by the H&G segment. The loss associated with the PowerXL tradename was primarily attributable to a decrease in projected future revenues associated with the brand driven by decrease in realized sales with expected continuation of retail inventory reduction, lower consumer demand, increased competition in product categories, and adverse macro-economic factors.

Amortization expense from the intangible assets for the three month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017~~April 3, 2022 was ~~$15.0~~$10.5 million and ~~$15.4~~$13.5 million, respectively; and for the six month periods ended April 2, 2023 and April 3, 2022 was $20.9 million and $26.7 million, respectively.

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS (continued)

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

(in millions)

Amortization
2018

$
57.5
2019

57.4
2020

55.0
2021

49.7
2022

48.0


(in millions)	Amortization
2023	$	42.0
2024	41.2
2025	38.8
2026	38.3
2027	37.8

NOTE ~~10 -~~9 – DEBT

Debt ~~for SBH and SB/RH~~with external lenders consists of the following:

December 31, 2017

September 30, 2017
(in millions)

Amount

Rate

Amount

Rate
Term Loan, variable rate, due June 23, 2022

$
1,241.1

3.5
%

$
1,244.2

3.4
%
CAD Term Loan, variable rate, due June 23, 2022

34.3

5.0
%

59.0

4.9
%
4.00% Notes, due October 1, 2026

507.6

4.0
%

500.9

4.0
%
5.75% Notes, due July 15, 2025

1,000.0

5.8
%

1,000.0

5.8
%
6.125% Notes, due December 15, 2024

250.0

6.1
%

250.0

6.1
%
6.625% Notes, due November 15, 2022

570.0

6.6
%

570.0

6.6
%
Revolver Facility, variable rate, expiring March 6, 2022

226.0

4.1
%

—

—
%
Other notes and obligations

4.0

8.0
%

4.7

8.0
%
Obligations under capital leases

200.7

5.7
%

200.0

5.7
%
Total debt

4,033.7

3,828.8

Unamortized discount on debt

(3.3)

(3.7)

Debt issuance costs

(51.1)

(53.1)

Less current portion

(20.1)

(19.4)

Long-term debt, net of current portion

$
3,959.2

$
3,752.6



	April 2, 2023				September 30, 2022
(in millions)	Amount		Rate		Amount		Rate

Revolver Facility, variable rate, expiring June 30, 2025	$	725.0	7.9	%	$	740.0	5.7	%
Term Loan Facility, variable rate, due March 3, 2028	392.0		7.1	%	394.0		5.2	%


5.75% Notes, due July 15, 2025	450.0		5.8	%	450.0		5.8	%
4.00% Notes, due October 1, 2026	463.5		4.0	%	417.1		4.0	%
5.00% Notes, due October 1, 2029	300.0		5.0	%	300.0		5.0	%
5.50% Notes, due July 15, 2030	300.0		5.5	%	300.0		5.5	%
3.875% Notes, due March 15, 2031	500.0		3.9	%	500.0		3.9	%

Obligations under finance leases	91.1		6.0	%	92.7		5.1	%
Total Spectrum Brands, Inc. debt	3,221.6				3,193.8
Unamortized discount on debt	(0.7)				(0.8)
Debt issuance costs	(32.2)				(36.2)
Less current portion	(13.1)				(12.3)
Long-term debt, net of current portion	$	3,175.6			$	3,144.5

Our Revolver Facility ~~are subject to variable interest rates, (i)~~has a total capacity of $1,100 million. Borrowings from the ~~USD Term Loan is~~initial revolver capacity of $600 million are subject to either adjusted ~~LIBOR (International Exchange~~ London ~~Interbank~~Inter-Bank Offered Rate), plus margin of 2.00% per annum, or base rate plus margin of 1.00% per annum, (ii) the CAD Term Loan is subject to either CDOR (Canadian Dollar Offered Rate), subject to a 0.75% floor plus 3.50% per annum, or base rate with a 1.75% floor plus 2.50% per annum, (iii) the Revolver Facility is subject to either adjusted LIBORRate ("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.~~annum; and borrowings under the incremental revolver capacity of $500 million, per the third amendment to the Amended and Restated Credit Agreement (the "Credit Agreement"), are subject to Secured Overnight Financing Rate ("SOFR") plus margin ranging from 1.75% to 2.75% per annum or base rate plus margin ranging from 0.75% to 1.75%. Effective November 3, 2022, the applicable margin increased 25 bps resulting in an increase to the SOFR margin ranging from 2.00% to 3.00% per annum or base rate plus margin ranging from 1.00% to 2.00%, with subsequent increases of 25 bps each 90-day anniversary after the initial step-up date. The LIBOR borrowings are subject to a 0.75% LIBOR floor, and the SOFR borrowings are subject to a 0.50% SOFR floor. Our Revolver Facility allows for the LIBOR rate to be phased out and replaced with the SOFR, and therefore we do not anticipate a material impact by the expected upcoming LIBOR transition. We expect the transition from the LIBOR rate to SOFR will be effective no later than the end of June 2023. As a result of borrowings and payments under the Revolver Facility, ~~at December 31, 2017,~~ the Company had borrowing availability of ~~$454.4~~$362.1 million at April 2, 2023, net of outstanding letters of credit of ~~$18.0 million and a $1.5 million amount allocated~~$12.9 million.

The Term Loan Facility is subject to a ~~foreign subsidiary.~~

~~NOTE 11 - DERIVATIVES~~

~~Cash Flow Hedges~~

~~Interest~~rate per annum equal to either (1) the LIBO Rate ~~Swaps.~~ (as defined in the Credit Agreement), subject to a 0.50% floor, adjusted for statutory reserves, plus a margin of 2.00% per annum or (2) the Alternate Base Rate (as defined in the Credit Agreement), plus a margin of 1.00% per annum.

On November 17, 2022, the Company entered into the fourth amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio permitted to be no greater than 7.0 to 1.0 before returning to 6.0 to 1.0 at the earliest of (i) September 29, 2023, or (ii) 10 business days after the closing of the HHI divestiture or receipt of the related termination fee. The Company ~~uses~~incurred $2.3 million in connection with the fourth amendment, which has been recognized as interest expense for the six month period ended April 2, 2023.

In addition to debt with external lenders, SB/RH has an outstanding loan with a subsidiary of its Parent in the amount of $8.0 million, including cumulative interest, with a stated interest rate ~~swaps to manage its interest rate risk.~~of 4.01%, due March 15, 2024. The ~~swaps are designated as cash flow hedges~~outstanding loan with the ~~changes~~ Parent is subject to termination or acceleration by the Parent and is included as Current Portion of Long-Term Debt on the SB/RH Condensed Consolidated Statement of Financial Position as of April 2, 2023.

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in fair value recorded in Accumulated Other Comprehensive Income (“AOCI”) and as a derivative hedge asset or liability, as applicable. The swaps settle periodically in arrears with the related amounts for the current settlement period payable to, or receivable from, the counterparties included in accrued liabilities or receivables, respectively, and recognized in earnings as an adjustment to interest from the underlying debt to which the swap is designated. At December 31, 2017 and September 30, 2017,millions, unaudited)

NOTE 10 – DERIVATIVES

Derivative financial instruments are used by the Company ~~had a series~~principally in the management of U.S. dollar denominated interest rate swaps outstanding which effectively fix the interest on floating rate debt, exclusive of lender spreads, at 1.76% for a notional principal amount of $300.0 million through May 2020.its foreign currency exchange rates. The ~~derivative net gain estimated to be reclassified from AOCI into earnings over the next 12 months is $0.1 million, net of tax. The Company’s interest rate swap~~Company does not hold or issue derivative financial instruments ~~at December 31, 2017 and September 30, 2017 are as follows:~~

December 31, 2017

September 30, 2017
(in millions)

Notional Amount

Remaining Years

Notional Amount

Remaining Years
Interest rate swaps - fixed

$
300.0

2.3

$
300.0

2.6

~~Table of Contents~~

~~Commodity Swaps.~~ ~~The Company is exposed to risk from fluctuating prices~~ for raw materials, specifically brass used in its manufacturing processes. The Company hedges a portion of the risk associated with the purchase of these materials through the use of commodity swaps. The hedge contracts are designated as cash flow hedges with the fair value changes recorded in AOCI and as a hedge asset or liability, as applicable. The unrecognized changes in fair value of the hedge contracts are reclassified from AOCI into earnings when the hedged purchase of raw materials also affects earnings. The swaps effectively fix the floating price on a specified quantity of raw materials through a specified date. At December 31, 2017, the Company had a series of brass swap contracts outstanding through June 2019. The derivative net gains estimated to be reclassified from AOCI into earnings over the next 12 months is $0.6 million, net of tax. The Company had the following commodity swap contracts outstanding as of December 31, 2017 and September 30, 2017.

trading purposes.

December 31, 2017

September 30, 2017
(in millions, except notional)

Notional

Contract Value

Notional

Contract Value
Brass swap contracts

1.2 Tons

$
6.4

1.3 Tons

$
6.6
Cash Flow Hedges

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.~~Australian Dollars, Canadian Dollars, Euros, ~~Canadian Dollars~~Japanese Yen, Pound Sterling, or ~~Japanese Yen.~~U.S. Dollars. These foreign exchange contracts are cash flow hedges of fluctuating foreign exchange related to ~~sales~~inventory purchases or the sale of ~~product or raw material purchases.~~product. Until the ~~sale~~purchase or ~~purchase~~sale is recognized, the fair value of the related hedge is recorded in ~~AOCI~~Accumulated Other Comprehensive Income ("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 or Net Sales on the Condensed Consolidated Statements of Income. At ~~December 31, 2017,~~April 2, 2023, the Company had a series of foreign exchange derivative contracts outstanding through ~~August 2019.~~September 2024. The derivative net ~~gains~~loss estimated to be reclassified from AOCI into earnings over the next 12 months is ~~$0.8~~$10.6 million, net of tax. At ~~December 31, 2017~~April 2, 2023 and September 30, ~~2017,~~2022, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of ~~$53.2~~$302.8 million and ~~$67.5~~$289.5 million, respectively.

~~Net Investment Hedge~~

~~On September 20, 2016, SBI issued €425 million aggregate principle amount~~

The following table summarizes the impact of ~~4.00% Notes. See~~ ~~Note 10 - Debt~~ ~~for further detail. The 4.00% Notes are denominated in Euros~~designated cash flow hedges and ~~have been designated as a net investment hedge of~~ the translation of the Company’s net investments in Euro denominated subsidiaries at the time of issuance. As a result, the translation of the Euro denominated debt is recognized as AOCI with any ineffective portion recognized as foreign currency translation gains or losses on the statement of income when the aggregate principal exceeds the net investment in its Euro denominated subsidiaries. Net gains or losses from the net investment hedge are reclassified from AOCI into earnings upon a liquidation event or deconsolidation of Euro denominated subsidiaries. As of December 31, 2017, the hedge was fully effective and no ineffective portion waspre-tax gain (loss) recognized in ~~earnings.~~

the Condensed Consolidated Statements of Income for the three and six month periods ended April 2, 2023 and April 3, 2022, respectively:


	Unrealized Gain (Loss) in OCI Before Reclassification				Reclassified Gain (Loss) to Continuing Operations
For the three month periods ended (in millions)	April 2, 2023		April 3, 2022		Line Item	April 2, 2023		April 3, 2022
Foreign exchange contracts	$	0.1	$	0.1	Net sales	$	—	$	—
Foreign exchange contracts	(7.5)		4.7		Cost of goods sold	(4.9)		1.5
Total	$	(7.4)	$	4.8		$	(4.9)	$	1.5


	Gain (Loss) in OCI				Reclassified Gain (Loss) to Continuing Operations
For the six month periods ended (in millions)	April 2, 2023		April 3, 2022		Line Item	April 2, 2023		April 3, 2022
Foreign exchange contracts	$	0.1	$	0.1	Net sales	$	0.1	$	—
Foreign exchange contracts	(33.2)		3.9		Cost of goods sold	(2.5)		3.6
Total	$	(33.1)	$	4.0		$	(2.4)	$	3.6

Derivative Contracts Not Designated as Hedges for Accounting Purposes

~~Foreign exchange contracts.~~

The Company periodically enters into ~~forward and swap~~ foreign exchange forward contracts to economically hedge a portion of the risk from third party and intercompany payments resulting from existing obligations. These obligations generally require the Company to exchange foreign currencies for, ~~U.S.~~among others, Australian Dollars, Canadian Dollars, Colombian Peso, Euros, Hungarian Forint, Japanese Yen, Mexican Pesos, Philippine Pesos, Polish Zloty, Pounds Sterling, Swiss Franc, Taiwanese Dollars, ~~Hong Kong Dollars~~Turkish Lira, or ~~Australian~~U.S. Dollars. 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 ~~December 31, 2017,~~April 2, 2023, the Company had a series of forward exchange contracts outstanding through ~~January 2018.~~March 2024. At ~~December 31, 2017~~April 2, 2023 and September 30, ~~2017,~~2022, the Company had ~~$90.5~~$596.7 million and $~~62.9~~$513.7 million,, respectively, of notional value of such foreign exchange derivative contracts outstanding.

~~Table~~The following summarizes the impact of ~~Contents~~

derivative instruments not designated as hedges for accounting purposes on the accompanying Condensed Consolidated Statements of Income for the three and six month periods ended April 2, 2023 and April 3, 2022, pre-tax:


		Three Month Periods Ended				Six Month Periods Ended
(in millions)	Line Item	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Foreign exchange contracts	Other non-operating expense (income)	$	(0.1)	$	0.2	$	(22.3)	$	(0.9)

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

December 31, 2017

September 30, 2017
Derivative Assets

Commodity swaps - designated as hedge

Receivables—Other

$
0.9

$
0.6
Commodity swaps - designated as hedge

Deferred charges and other

0.1

—
Interest rate swaps - designated as hedge

Receivables—Other

0.1

—
Interest rate swaps - designated as hedge

Deferred charges and other

2.1

0.4
Foreign exchange contracts - designated as hedge

Receivables—Other

0.2

0.2
Foreign exchange contracts - not designated as hedge

Receivables—Other

0.4

0.3
Total Derivative Assets

$
3.8

$
1.5
Derivative Liabilities

Interest rate swaps - designated as hedge

Other current liabilities

$
—

$
0.5
Interest rate swaps - designated as hedge

Accrued interest

0.2

0.2
Foreign exchange contracts - designated as hedge

Accounts payable

1.3

2.3
Foreign exchange contracts - designated as hedge

Other long-term liabilities

—

0.3
Total Derivative Liabilities

$
1.5

$
3.3


(in millions)	Line Item	April 2, 2023		September 30, 2022
Derivative Assets
Foreign exchange contracts – designated as hedge	Other receivables	$	1.1	$	14.4
Foreign exchange contracts – designated as hedge	Deferred charges and other	—		0.4
Foreign exchange contracts – not designated as hedge	Other receivables	10.7		7.4
Total Derivative Assets		$	11.8	$	22.2
Derivative Liabilities
Foreign exchange contracts – designated as hedge	Accounts payable	$	15.2	$	—
Foreign exchange contracts – designated as hedge	Other long term liabilities	1.3		1.0
Foreign exchange contracts – not designated as hedge	Accounts payable	10.3		5.0
Total Derivative Liabilities		$	26.8	$	6.0

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 10 – DERIVATIVES (continued)

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 ~~was less than $0.1 million~~were not significant as of ~~December 31, 2017 and September 30, 2017.~~

April 2, 2023.

The Company’s standard contracts do not contain credit risk related contingent features whereby the Company would be required to post additional cash collateral ~~as a result~~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 ~~December 31, 2017~~April 2, 2023 and September 30, ~~2017,~~2022, there was no cash collateral ~~outstanding. In addition, as of December 31, 2017~~outstanding and ~~September 30, 2017, the Company had~~ no posted standby letters of credit related to such liability positions.

Net Investment Hedge

Spectrum Brands, Inc. has €425.0 million aggregate principal amount of 4.00% Notes designated as a non-derivative economic hedge, or net investment hedge, of the translation of the Company’s net investments in Euro denominated subsidiaries at the time of issuance. The hedge effectiveness is measured on the beginning balance of the net investment and re-designated every three months. Any gains and losses attributable to the translation of the Euro denominated debt designated as net investment hedge are recognized as a component of foreign currency translation within AOCI, and gains and losses attributable to the translation of the undesignated portion are recognized as foreign currency translation gains or losses within Other Non-Operating Expense (Income). Net gains or losses from the net investment hedge are reclassified from AOCI into earnings upon a liquidation event or deconsolidation of Euro denominated subsidiaries. As of April 2, 2023, the full principal amount was designated as a net investment hedge and considered fully effective. The following summarizes the ~~impact of derivative instruments on~~unrealized gain (loss) from the ~~accompanying Condensed Consolidated Statements of~~net investment hedge recognized in Other Comprehensive Income for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017, pretax:~~

April 3, 2022, pre-tax:

Effective Portion

For the three month period ended

Gain (Loss)

Reclassified to Continuing Operations

Ineffective portion
December 31, 2017 (in millions)

in OCI

Line Item

Gain (Loss)

Line Item

Gain (Loss)
Interest rate swaps

$
2.0

Interest expense

$
(0.3)

Interest expense

$
—
Commodity swaps

1.8

Cost of goods sold

0.3

Cost of goods sold

—
Net investment hedge

(6.6)

Other non-operating expense

—

Other non-operating expense

—
Foreign exchange contracts

—

Net sales

0.1

Net sales

—
Foreign exchange contracts

2.0

Cost of goods sold

0.2

Cost of goods sold

—
Total

$
(0.8)

$
0.3

$
—

Effective Portion

For the three month period ended

Gain (Loss)

Reclassified to Continuing Operations

Ineffective portion
January 1, 2017 (in millions)

in OCI

Line Item

Gain (Loss)

Line Item

Gain (Loss)
Interest rate swaps

$
0.1

Interest expense

$
(0.3)

Interest expense

$
—
Commodity swaps

0.1

Cost of goods sold

—

Cost of goods sold

—
Net investment hedge

32.5

Other non-operating expense

—

Other non-operating expense

—
Foreign exchange contracts

0.2

Net sales

—

Net sales

—
Foreign exchange contracts

10.3

Cost of goods sold

0.1

Cost of goods sold

—
Total

$
43.2

$
(0.2)

$
—


	Three Month Periods Ended				Six Month Periods Ended
Unrealized Gain (Loss) in OCI (in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Net investment hedge	$	(12.5)	$	11.9	$	(46.4)	$	22.5

(in millions)

Line Item

December 31, 2017

January 1, 2017
Foreign exchange contracts

Other non-operating expenses, net

0.3

(2.1)

NOTE ~~12 -~~11 – 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 ~~Company’s derivative portfolio contains Level~~carrying value and estimated fair value of financial instruments as of April 2, ~~instruments. See~~ ~~Note 11 - Derivatives~~ ~~for additional detail.~~ 2023 and September 30, 2022 according to the fair value hierarchy are as follows:


	April 2, 2023										September 30, 2022
(in millions)	Level 1		Level 2		Level 3		Fair Value		Carrying Amount		Level 1		Level 2		Level 3		Fair Value		Carrying Amount

Derivative Assets	$	—	$	11.8	$	—	$	11.8	$	11.8	$	—	$	22.2	$	—	$	22.2	$	22.2
Derivative Liabilities	—		26.8		—		26.8		26.8		—		6.0		—		6.0		6.0
Debt	—		3,026.0		—		3,026.0		3,188.7		—		2,815.9		—		2,815.9		3,156.8

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 9 – Debt for additional detail on outstanding debt. See Note 10 – Derivatives for additional detail on derivative ~~instruments as of December 31, 2017~~assets and ~~September 30, 2017 are as follows:~~

liabilities.

December 31, 2017

September 30, 2017

Carrying

Carrying

(in millions)

Amount

Fair Value

Amount

Fair Value
Derivative Assets

$
3.8

$
3.8

$
1.5

$
1.5
Derivative Liabilities

$
1.5

$
1.5

$
3.3

$
3.3

NOTE 12 – SHAREHOLDERS' EQUITY

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 May 4, 2021, the Board of Directors approved a $1 billion common stock repurchase program and terminated the ~~Company’s debt are valued~~previously approved share repurchase program. The authorization is effective for 36 months. As part of our share repurchase programs, the Company has purchased treasury shares in open market purchases at ~~quoted input prices that are directly observable or indirectly observable through corroboration with observable~~ market ~~data (Level 2). The carrying value and~~ fair value ~~for debt as~~along with participating in private purchases from Company employees, significant shareholders and beneficial interest owners at fair value. The following summarizes the activity of ~~December 31, 2017 and September 30, 2017 are as follows:~~

December 31, 2017

September 30, 2017

Carrying

Carrying

(in millions)

Amount

Fair Value

Amount

Fair Value
Total debt - SBH

$
3,979.3

$
4,175.0

$
3,772.0

$
3,973.1
Total debt - SB/RH

$
3,979.3

$
4,175.0

$
3,772.0

$
3,973.1

~~NOTE 13 - EMPLOYEE BENEFIT PLANS~~

~~The net periodic benefit cost for the Company’s pension and deferred compensation plans for the~~ ~~three month periods~~ ~~ended December 31, 2017, and January 1, 2017 are as follows:~~

Non U.S. Plans
(in millions)

December 31, 2017

January 1, 2017
Service cost

$
0.5

$
0.7
Interest cost

0.5

0.4
Expected return on assets

(0.4)

(0.3)
Recognized net actuarial loss

0.3

0.5
Net periodic benefit cost

$
0.9

$
1.3
Weighted average assumptions

Discount rate

1.13 - 7.50%

1.00 - 8.68%
Expected return on plan assets

1.13 - 3.50%

1.00 - 3.50%
Rate of compensation increase

1.37 - 7.00%

2.25 - 7.00%

~~Company contributions to its pension and deferred compensation plans, including discretionary amounts,~~common stock repurchases for the three ~~months~~and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017, are $0.4 million and $0.3 million, respectively.~~

April 3, 2022:


	April 2, 2023					April 3, 2022
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	—	$	—	$	—	0.2	$	96.90	$	24.0


	April 2, 2023					April 3, 2022
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	—	$	—	$	—	1.3	$	97.34	$	134.0

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE ~~14 -~~13 – SHARE BASED COMPENSATION

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


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
SBH	$	4.5	$	6.6	$	7.7	$	12.2
SB/RH	$	4.0	$	6.2	$	7.1	$	11.8

The Company ~~measures the~~recognizes share based compensation expense from the issuance of ~~its~~ Restricted Stock Units (“RSUs”), primarily under its Long-Term Incentive Plan ("LTIP"). RSUs granted under the LTIP include time-based grants and performance-based grants. The Company regularly issues annual RSU grants under its LTIP during the first quarter of the fiscal year. Compensation cost is based on the fair value of the awards, as determined ~~based on~~by the market price of the Company’s shares of common stock on the designated grant date and ~~recognizes these costs~~recognized on a straight-line basis over the requisite service period of the awards. ~~Certain RSUs are performance-based~~Time-based RSU awards ~~that~~provide for either three year cliff vesting or graded vesting depending upon the vesting conditions and forfeitures provided by the grant. Performance-based RSU awards are dependent upon achieving specified financial metrics (adjusted EBITDA, return on adjusted equity, and/or adjusted free cash flow) by the end of the three year vesting period. The Company assesses the probability of achievement of the performance conditions and recognizes expense for the awards based on the probable achievement of such metrics. 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, valued based on the fair value of the awards as determined by the market price of the Company's share of common stock on the designated grant price date and recognized as a component of share-based compensation on a straight-line basis over ~~a designated~~the requisite service period of ~~time. In addition~~the award. RSUs are subject to forfeiture if employment terminates prior to vesting with forfeitures recognized as they occur. RSUs have dividend equivalents credited to the ~~Company also provides~~recipient and are paid only to the extent the RSU vests and the related stock is issued. Shares issued upon exercise of RSUs are sourced from treasury shares when available.

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


	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 12 months	0.13	$	56.51	$	7.1	0.10	$	58.52	$	5.6
Vesting in more than 12 months	0.14	50.50		7.1		0.14	50.50		7.1
Total time-based grants	0.27	$	53.36	$	14.2	0.24	$	53.77	$	12.7
Performance-based grants	0.27	$	50.63	$	13.9	0.27	$	50.63	$	13.9
Total grants	0.54	$	51.98	$	28.1	0.51	$	52.08	$	26.6

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 14 – ACCUMULATED OTHER COMPREHENSIVE INCOME

The change in the components of AOCI for ~~a portion of its annual management incentive compensation plan to be paid in common stock~~the six month period ended April 2, 2023, was as follows:


(in millions)	Foreign Currency Translation		Derivative Instruments		Defined Benefit Pension		Total
Balance at September 30, 2022	$	(285.9)	$	16.8	$	(34.0)	$	(303.1)
Other comprehensive income (loss) before reclassification	26.6		(25.4)		(2.3)		(1.1)
Net reclassification for (gain) loss to income from continuing operations	—		(2.5)		0.9		(1.6)

Other comprehensive income (loss) before tax	26.6		(27.9)		(1.4)		(2.7)
Deferred tax effect	8.8		7.2		1.2		17.2
Other comprehensive income (loss), net of tax	35.4		(20.7)		(0.2)		14.5
Less: other comprehensive income from continuing operations attributable to non-controlling interest	0.2		—		—		0.2
Less: other comprehensive income from discontinued operations attributable to non-controlling interest	0.1		—		—		0.1
Other comprehensive income (loss) attributable to controlling interest	35.1		(20.7)		(0.2)		14.2
Balance at January 1, 2023	(250.8)		(3.9)		(34.2)		(288.9)
Other comprehensive income (loss) before reclassification	14.6		(7.1)		0.1		7.6
Net reclassification for loss (gain) to income from continuing operations	—		4.9		(0.7)		4.2
Net reclassification for (gain) to income from discontinued operations	—		(0.1)		—		(0.1)
Other comprehensive income (loss) before tax	14.6		(2.3)		(0.6)		11.7
Deferred tax effect	3.7		0.7		0.1		4.5
Other comprehensive income (loss), net of tax	18.3		(1.6)		(0.5)		16.2
Less: other comprehensive loss from continuing operations attributable to non-controlling interest	0.1		—		—		0.1
Less: other comprehensive income from discontinued operations attributable to non-controlling interest	0.1		—		—		0.1
Other comprehensive income (loss) attributable to controlling interest	18.1		(1.6)		(0.5)		16.0
Balance at April 2, 2023	$	(232.7)	$	(5.5)	$	(34.7)	$	(272.9)

The following table presents reclassifications of the ~~Company, in lieu of cash payment, and is considered a liability plan. Share based compensation expense is recognized as General and Administrative Expenses~~gain (loss) on the Condensed Consolidated Statements of ~~Income. The following is a summary of share based compensation expense~~Income from AOCI for the ~~three month~~ periods ~~ended December 31, 2017 and January 1, 2017.~~

indicated:

(in millions)

December 31, 2017

January 1, 2017
SBH

$
3.8

$
7.2
SB/RH

3.3

6.2


(in millions)	Three Month Period Ended April 2, 2023						Six Month Period Ended April 2, 2023
	Derivative Instruments		Defined Benefit Pension		Total		Derivative Instruments		Defined Benefit Pension		Total
Net Sales	$	—	$	—	$	—	$	0.1	$	—	$	0.1
Cost of goods sold	(4.9)		—		(4.9)		(2.5)		—		(2.5)

Other non-operating expense (income), net	—		0.7		0.7		—		(0.2)		(0.2)

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
Time-based grants

0.1

$
113.29

$
10.4

0.1

$
114.74

$
8.9
Performance-based grants

Vesting in 12 to 24 months

0.1

110.17

12.8

0.1

110.17

12.8
Vesting in more than 24 months

0.1

110.17

12.8

0.1

110.17

$
12.8
Total performance-based grants

0.2

$
110.17

$
25.6

0.2

$
110.17

$
25.6
Total grants

0.3

$
111.06

$
36.0

0.3

$
111.33

$
34.5

~~A summary of the activity in the Company’s RSUs during the three month period ended December 31, 2017 is as follows:~~

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, 2017

0.8

$
114.67

$
87.2

0.7

$
116.32

$
82.4
Granted

0.3

111.06

36.0

0.3

111.33

34.5
Forfeited

—

123.78

(0.2)

—

123.78

(0.2)
Vested

(0.5)

113.24

(51.7)

(0.4)

114.30

(47.4)
At December 31, 2017

0.6

$
113.82

$
71.3

0.6

$
115.12

$
69.3

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE ~~15 -~~14 – ACCUMULATED OTHER COMPREHENSIVE INCOME ~~(LOSS)~~

(continued)

The ~~changes~~change in the components of AOCI ~~net of tax,~~ for the ~~three~~six month period ended ~~December 31, 2017~~April 3, 2022, was as follows:

Foreign

Employee

Currency

Hedging

Benefit

(in millions)

Translation

Activity

Plans

Total
Accumulated other comprehensive loss, as of September 30, 2017

$
(131.2)

$
(26.0)

$
(52.4)

$
(209.6)
Other comprehensive loss before reclassification

(9.3)

(0.8)

(0.7)

(10.8)
Amounts reclassified from accumulated other comprehensive loss

—

2.6

0.8

3.4
Other comprehensive (loss) income

(9.3)

1.8

0.1

(7.4)
Deferred tax effect

7.2

—

—

7.2
Deferred tax valuation allowance

0.1

—

—

0.1
Other comprehensive (loss) income, net of tax

(2.0)

1.8

0.1

(0.1)
Other comprehensive income attributable to non-controlling interest

0.2

—

—

0.2
Other comprehensive (loss) income attributable to controlling interest

(2.2)

1.8

0.1

(0.3)
Accumulated other comprehensive loss, as of December 31, 2017

$
(133.4)

$
(24.2)

$
(52.3)

$
(209.9)


(in millions)	Foreign Currency Translation		Derivative Instruments		Defined Benefit Pension		Total
Balance at September 30, 2021	$	(194.8)	$	6.4	$	(46.9)	$	(235.3)
Other comprehensive income before reclassification	6.8		1.2		0.6		8.6
Net reclassification for (gain) loss to income from continuing operations	—		(2.1)		1.0		(1.1)
Net reclassification for gain to income from discontinued operations	—		(0.5)		—		(0.5)
Other comprehensive income (loss) before tax	6.8		(1.4)		1.6		7.0
Deferred tax effect	(4.5)		4.5		(2.9)		(2.9)
Other comprehensive income (loss), net of tax	2.3		3.1		(1.3)		4.1
Less: other comprehensive income from continuing operations attributable to non-controlling interest	0.1		—		—		0.1

Other comprehensive income (loss) attributable to controlling interest	2.2		3.1		(1.3)		4.0
Balance at January 2, 2022	(192.6)		9.5		(48.2)		(231.3)
Other comprehensive (loss) income before reclassification	(1.6)		6.4		1.0		5.8
Net reclassification for (gain) loss to income from continuing operations	—		(1.5)		1.0		(0.5)
Net reclassification for gain to income from discontinued operations	—		(0.7)		—		(0.7)
Other comprehensive (loss) income before tax	(1.6)		4.2		2.0		4.6
Deferred tax effect	(3.1)		(1.0)		(0.6)		(4.7)
Other comprehensive (loss) income, net of tax	(4.7)		3.2		1.4		(0.1)
Less: other comprehensive loss from continuing operations attributable to non-controlling interest	(0.1)		—		—		(0.1)

Other comprehensive (loss) income attributable to controlling interest	(4.6)		3.2		1.4		—
Balance at April 3, 2022	$	(197.2)	$	12.7	$	(46.8)	$	(231.3)

~~Amounts reclassified from AOCI associated with employee benefit plan costs and recognized~~

The following table presents reclassifications of the gain (loss) on the ~~Company’s~~ Condensed Consolidated Statements of Income from AOCI for the ~~three month~~ periods ~~ended December 31, 2017 and January 1, 2017 were as follows:~~

indicated:

(in millions)

December 31, 2017

January 1, 2017
Cost of goods sold

$
0.1

$
0.3
Selling expenses

0.1

0.2
General and administrative expenses

0.1

—
Amounts reclassified from accumulated other comprehensive loss

$
0.3

$
0.5


(in millions)	Three Month Period Ended April 3, 2022						Six Month Period Ended April 3, 2022
	Derivative Instruments		Defined Benefit Pension		Total		Derivative Instruments		Defined Benefit Pension		Total

Cost of goods sold	$	1.5	$	—	$	1.5	$	3.6	$	—	$	3.6

Other non-operating income, net	—		(1.0)		(1.0)		—		(3.1)		(3.1)
Income from discontinued operations, net of tax	0.7		—		0.7		1.2		—		1.2

For the three month period ended December 31, 2017, there was $0.5 million of expense reclassified from AOCI associated with employee benefit plan costs recognized in income from discontinued operations. For the three month period ended January 1, 2017 there was $0.8 million of gains reclassified from AOCI associated with employee benefit plan costs recognized in discontinued operations.

~~See~~ ~~Note 11 - Derivatives~~ ~~for amounts reclassified from AOCI from the Company’s derivative hedging activity.~~

~~Table of Contents~~

NOTE ~~16 -~~15 – INCOME TAXES

The effective tax rate for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017~~April 3, 2022, was as follows:


						Three Month Periods Ended				Six Month Periods Ended
Effective tax rate	December 31, 2017		January 1, 2017		Effective tax rate	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
SBH	2,176.4	%	34.6	%	SBH	31.7	%	21.3	%	29.0	%	29.2	%
SB/RH	5,138.1	%	39.2	%	SB/RH	31.2	%	21.1	%	28.7	%	29.1	%

The estimated annual effective tax rate applied to the ~~Tax Cuts~~three and ~~Jobs Act (the "Tax Reform Act") was signed into law. The legislation significantly changes~~six month periods ended April 2, 2023, differs from the US federal statutory rate of 21% principally due to income earned outside the U.S. that is subject to U.S. tax, law by, among other things, lowering corporate income tax rates, implementing a dividends received deduction for dividends from foreign subsidiaries and imposing a tax on deemed repatriated accumulated earnings of foreign subsidiaries. The Tax Reform Act reducesincluding the U.S. ~~corporate income~~ tax ~~rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. Since the Company files its U.S. tax returns~~ on ~~a September fiscal year basis, its US tax rate for Fiscal 2018 will be a blended rate of 24.53%.~~

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Reform Act, the Company revalued its ending net deferred tax liabilities at December 31, 2017 and recognized a provisional $206.7 million tax benefit in the Company’s net income from continuing operations for the three month period ended December 31, 2017. The Company determined the impact of the U.S. federal corporate income tax rate change on the U.S. deferred tax assets and liabilities is provisional because certain of the timing differences reversing at the Company’s Fiscal 2018 blended rate must be estimated until the Fiscal 2018 reversing timing differences are known.

As of December 31, 2017, the Company has recorded $41.4 million of valuation allowance against its U.S. state net operating losses. It is currently unclear which of the Tax Reform Act provisions will be adopted by U.S. states. State conformity to the provisions of the Tax Reform Act could have a material impact on the valuation allowance recorded on U.S. state net operating losses.

The Tax Reform Act provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”). The Company had an estimated $623.1 million of undistributed foreign E&P subject to the deemed mandatory repatriation and recognized a provisional $78.8 million of income tax expense in the Company’s net income from continuing operations for the three month period ended December 31, 2017. The mandatory repatriation tax is payable over 8 years. The repatriation tax liability is classified as Other Long-Term Liabilities on the Condensed Consolidated Statement of Financial Position as of December 31, 2017. The provisional tax expense for the mandatory repatriation is based on currently available information and additional information needs to be prepared, obtained and analyzed in order to determine the final amount, including further analysis of certain foreign exchange gains or losses, earnings and profits, foreign tax credits, and estimated cash and cash equivalents as of the measurement dates in the Tax Reform Act. Tax effects for changes to these items will be recorded in a subsequent quarter, as discrete adjustments to our income tax provision, once complete.

The Tax Reform Act provides for additional limitations on the deduction of business interest expense, effective with the Company’s Fiscal 2019 tax year. Unused interest deductions can be carried forward and may be used in future years to the extent the interest limitation is not exceeded in those periods. It is possible that a portion of the Company’s future U.S. interest expense could be nondeductible and impact the Company’s effective tax rate.

The Tax Reform Act also contains additional limits on deducting compensation, including performance-based compensation, in excess of $1 million paid to certain executive officers for any fiscal year, effective with the Company’s Fiscal 2019 tax year. The Company’s future compensation payments will be subject to these limits, which could impact the Company’s effective tax rate.

~~The Company continues to review the anticipated impacts of the~~ global intangible low taxed income (“GILTI”), certain nondeductible expenses, foreign currency impacts, and ~~base erosion anti-abuse tax (“BEAT”) on~~foreign rates that differ from the ~~Company, which are not effective until fiscal year 2019.~~U.S. federal statutory rate. The Company has U.S. net operating loss carryforwards ("NOL"), which do not ~~recorded any impact associated with either GILTI or BEAT in~~allow it to take advantage of the foreign-derived intangible income deduction. The Company’s federal effective tax rate on GILTI is therefore 21%. During the six month period ended April 2, 2023, the Company recorded a discrete $16.8 million tax benefit related to the impairment of certain intangible assets. The Company generated a pretax loss on continuing operations for the three and six month ~~period~~periods ended ~~December 31, 2018. The FASB allows~~April 2, 2023, so additional discrete tax benefits result in an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or treating such taxes as a current-period expense when incurred. Dueincrease to the ~~complexity~~tax rate.

Table of Contents

~~In response to the enactment of the Tax Reform Act, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP~~

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. SAB 118 allows registrants to record provisional amounts during a one year measurement period in a manner similar to accounting for business combinations. The Company has recognized the provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the three month period ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Reform Act.

millions, unaudited)

NOTE ~~17 -~~16 – COMMITMENTS AND CONTINGENCIES

The Company is a defendant in various litigation matters generally arising out of the ordinary course of business. ~~The~~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.

~~Environmental.~~

Environmental Liability.The Company has ~~provided for an estimated cost of $4.3 million and $4.4 million, as of December 31, 2017 and September 30, 2017, respectively, associated with~~realized commitments attributable to environmental remediation activities ~~at some of its current and~~primarily associated with former manufacturing ~~sites.~~sites of the Company's HPC segment. In coordination with local and federal regulatory agencies, we have conducted testing on certain sites, which have resulted in the identification of contamination that has been attributed to historical activities at the properties, resulting in the realization of incremental costs to be assumed by the Company towards the remediation of these properties and the recognition of an environmental remediation liability. We have not conducted invasive testing at all sites and locations and have identified an environmental remediation liability to the extent such remediation requirements have been identified and are considered estimable.

As of April 2, 2023, there was an environmental remediation liability of $6.3 million, with $2.2 million included in Other Current Liabilities and $4.1 million included in Other Long-Term Liabilities on the Condensed Consolidated Statements of Financial Position. As of September 30, 2022, there was an environmental remediation liability of $8.8 million, with $4.7 million included in Other Current Liabilities and $4.1 million included in Other Long-Term Liabilities on the Condensed Consolidated Statements of Financial Position. The Company believes that any additional liability in excess of the amounts provided that may result from resolution of these matters will not have a material adverse effect on the consolidated financial condition, results of operations, or cash flows of the Company.

Product 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 ~~December 31, 2017~~April 2, 2023 and September 30, ~~2017,~~2022, the Company recognized ~~$4.0~~$3.2 million and ~~$5.3~~$3.4 million in product liability, ~~accruals,~~ 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~~warranties 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 ~~$5.7~~$0.3 million and ~~$5.4~~$0.4 million of warranty accruals as of ~~December 31, 2017~~April 2, 2023 and September 30, ~~2017,~~2022, respectively, included in Other Current Liabilities on the Condensed Consolidated ~~Statement~~Statements of Financial ~~Statement.~~

Position.

Product Safety Recall.~~On June 10, 2017,~~ During the year ended September 30, 2022, the HPC segment initiated voluntary product recalls in collaboration with the U.S. Consumer Product Safety Commission ("CPSC"), suspending sales of the affected products and issuing a stop sale with its customers. The Company ~~initiated a voluntary safety~~has assessed the incremental costs attributable to the recall, including the anticipated returns from customers for existing retail inventory, write-off of ~~various rawhide chew~~inventory on hand, and other costs to facilitate the recall such as notification, shipping and handling, rework and destruction of affected products, ~~for dogs sold by~~as needed, and evaluated the ~~Company’s PET segment due to possible chemical contamination.~~probability of redemption. As a result, the Company recognized ~~a loss related to~~$8.4 million and $7.5 million as of April 2, 2023 and September 30, 2022, respectively,in Other Current Liabilities on the ~~recall~~Consolidated Statement of ~~$7.3 million~~Financial Position associated with the costs for the ~~three month period ended December 31, 2017, which comprised of inventory write-offs of $1.6 million~~recalls. Additionally, the Company has indemnification provisions that are contractually provided by third parties for inventory at our distribution centers and production facilities that were considered obsolete and disposed, customer losses of $0.4 million for returned or disposed product held by our customers, and $5.3 million of incremental costs for disposal and operating costs during a temporary shutdown and subsequent start-up of production facilities impacted by the recall. The Company suspended production at facilities impacted by the product safety recall, completed a comprehensive manufacturing review and subsequently recommenced production during the fourth quarter ended September 30, 2017. The impacted production facilities are subject to incremental costs during start-up requiring alternative treatment on affected product SKUs until appropriate regulatory approvals have been received. The amounts for customer losses reflect the cost of the affected products ~~returned to or replaced by~~and as a result the Company has also recognized $8.2 million and $4.7 million as of April 2, 2023 and September 30, 2022, respectively, in Other Receivables on the ~~expected cost to reimburse customers for costs incurred by them~~Consolidated Statement of Financial Position related to the recall. The incremental costs incurred directly by the company do not include lost earnings associated with interruption of production at the Company’s facilities, or the costs to put into place corrective and preventative actions at those facilities. The Company’s estimates for losses related to the recall are provisional and were determined based on an assessment of information currently available and may be revised in subsequent periods as the Company continues to work with its customers to substantiate claims received to date and any additional claims that may be received. There have been no lawsuits or claims filed against the Company related to the recalled product.

recovery from such indemnification provisions.

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE ~~18 -~~17 – SEGMENT INFORMATION

~~The Company identifies its segments based upon the~~ internal organization that is used by management for making operating decisions and assessing performance as the source of the Company’s reportable segments. The Company manufactures, markets and/or distributes multiple product lines through various distribution networks, and in multiple geographic regions. Effective December 29, 2017, the Company approved a plan to sell its GBA segment. As a result, the Company’s assets and liabilities associated with the GBA segment have been classified as discontinued operations; and reported separately for all periods presented. See ~~Note 3 – Divestitures~~ ~~for more information on the assets and liabilities classified as held for sale and discontinued operations.~~ ~~The~~ ~~Company~~ manages its continuing operations in vertically integrated, product-focused reporting segments: (i) Hardware & Home Improvement, which consists of the Company’s worldwide hardware, security and plumbing business; (ii) Global Pet Supplies, which consists of the Company’s worldwide pet supplies business; (iii) Home and Garden, which consists of the Company’s home and garden and insect control business and (iv) Global Auto Care, which consists of the Company’s automotive appearance and performance products. Global strategic initiatives and financial objectives for each reportable segment are determined at the corporate level. Each segment is responsible for implementing defined strategic initiatives and achieving certain financial objectives, and has a general manager responsible for the sales and marketing initiatives and financial results for product lines within the segment.

Net sales relating to the segments ~~of the Company~~ for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017~~April 3, 2022, are as follows:

Net sales to external customers (in millions)

December 31, 2017

January 1, 2017
Hardware & Home Improvement

325.9

288.8
Global Pet Supplies

202.4

194.2
Home and Garden

49.3

49.8
Global Auto Care

68.9

69.5
Net sales

$
646.5

$
602.3


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022

HPC	$	279.2	$	316.1	$	643.6	$	695.8
GPC	296.7		295.1		574.3		597.3
H&G	153.3		196.6		224.6		271.9
Net sales	$	729.2	$	807.8	$	1,442.5	$	1,565.0

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 (1) share~~excludes:

•Share based compensation ~~expense as it is a non-cash based compensation cost; (2) acquisition and integration~~ costs ~~that~~ consist of transaction costs from acquisition transactions during the period, or subsequent integration related project costs directly associated with the acquired business; (3) restructuring and related costs, which consist of project costs associated with long-term incentive compensation arrangements that generally consist of non-cash, stock-based compensation. See Note 13 – Share Based Compensation for further details;

•Incremental amounts attributable to strategic transactions and business development initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business. These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards business development activities, incremental costs attributable to such transactions and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;

•Incremental amounts realized towards restructuring and optimization projects including, but not limited to, costs towards the development and implementation of strategies to optimize operations and improve efficiency, reduce costs, increase revenues, increase or maintain our current profit margins, including recognition of one-time exit or disposal costs. These amounts are excluded from our ongoing performance metrics as they are reflective of incremental investment by the Company towards significant initiatives controlled by management, incremental costs directly attributable to such initiatives, indirect impact or disruption to operating performance during implementation, and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;

•Unallocated shared costs associated with discontinued operations from certain shared and center-led administrative functions the Company's business units excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations. Amounts attributable to unallocated shared costs would be mitigated through subsequent strategic or restructuring initiatives, ~~across~~TSAs, elimination of extraneous costs, or re-allocations or absorption of existing continuing operations following the ~~segments; (4) non-cash~~completed sale of the discontinued operations. See Note 2 – Divestitures for further details;

•Non-cash purchase accounting ~~inventory~~ adjustments recognized in earnings from continuing operations subsequent to an ~~acquisition; (5) non-cash~~acquisition, including, but not limited to, the costs attributable to the step-up in inventory value, and the incremental value in operating lease assets with below market rent, among others;

•Non-cash gain from the reduction in the contingent consideration liability recognized during the six month period ended April 2, 2023, associated with the Tristar Business acquisition in the prior year on February 18, 2022;

•Non-cash asset impairments or write-offs ~~realized; (6)~~realized and ~~other. During~~recognized in earnings from continuing operations, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets;

•Impact from the ~~three~~early settlement of foreign currency cash flow hedges in the prior year, resulting in subsequent assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early in the prior year due to changes in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region, resulting in the recognition of excluded gains in the prior year intended to mitigate costs through the year ending September 30, 2023;

•Incremental reserves for non-recurring litigation or environmental remediation activity including the proposed settlement on outstanding litigation matters at our H&G division attributable to significant and unusual nonrecurring claims with no previous history or precedent with remeasurements during the six month period ended ~~December 31, 2017, other~~April 3, 2022; and

•Other adjustments ~~consisted of~~are primarily attributable to: (1) costs ~~for a non-recurring voluntary recall of rawhide product by the PET segment (See~~ ~~Note 17 – Commitments and Contingencies~~ ~~for further details) and professional fees~~ associated with ~~non-acquisition based strategic initiatives~~Salus as they are not considered a component of ~~SBH. Segment Adjusted EBITDA in relation to~~ the ~~Company’s reportable segments for~~continuing commercial products company; (2) key executive severance related costs; and (3) insurable losses associated with hurricane damages at a key supplier of our Glofish business and loss realized from misapplied funds during the ~~three~~six month ~~periods~~period ended ~~December 31, 2017 and January 1, 2017, is as follows:~~

April 2, 2023.

SBH

SB/RH
Segment Adjusted EBITDA (in millions)

December 31, 2017

January 1, 2017

December 31, 2017

January 1, 2017
Hardware & Home Improvement

60.0

59.2

60.0

59.2
Global Pet Supplies

34.1

30.7

34.1

30.7
Home and Garden

5.4

5.7

5.4

5.7
Global Auto Care

14.8

19.8

14.8

19.8
Total Segment Adjusted EBITDA

114.3

115.4

114.3

115.4
Corporate expenses

8.6

10.2

8.4

10.0
Depreciation and amortization

33.0

30.0

33.0

30.0
Share-based compensation

3.8

7.2

3.3

6.2
Acquisition and integration related charges

5.2

3.3

5.2

3.3
Restructuring and related charges

20.4

2.2

20.4

2.2
Interest expense

38.6

43.0

38.6

43.3
Inventory acquisition step-up

0.8

—

0.8

—
Pet safety recall

7.3

—

7.3

—
Other

2.5

—

—

—
(Loss) income from operations before income taxes

$
(5.9)

$
19.5

$
(2.7)

$
20.4

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 1917 - SEGMENT INFORMATION (continued)

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


	Three Month Periods Ended				Six Month Periods Ended
SBH (in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022

HPC	$	(1.9)	$	10.6	$	11.3	$	38.0
GPC	46.3		40.6		83.5		79.3
H&G	15.1		37.7		12.8		30.4
Total Segment Adjusted EBITDA	59.5		88.9		107.6		147.7
Corporate	8.5		9.9		16.8		19.4
Interest expense	31.6		24.7		65.0		46.4
Depreciation	11.9		12.2		24.1		24.4
Amortization	10.5		13.5		20.9		26.7
Share and incentive based compensation	4.5		6.6		7.7		12.2
Tristar acquisition and integration	4.0		12.7		9.7		14.4
HHI divestiture	1.4		1.2		2.9		5.5
HPC separation initiatives	1.1		3.0		3.5		4.7
Coevorden operations separation	1.4		2.1		2.7		5.3
Rejuvenate integration	—		2.6		—		7.0
Armitage integration	—		0.5		—		1.2
Omega integration	—		0.5		—		1.4
Fiscal 2023 restructuring	4.5		—		4.5		—
Fiscal 2022 restructuring	0.1		—		0.6		—
Russia closing initiatives	(0.1)		—		2.8		—
Global ERP transformation	3.3		3.2		4.9		6.0
HPC brand portfolio transitions	0.5		—		1.4		—
GPC distribution center transition	—		7.1		—		19.9
Global productivity improvement program	—		2.3		—		4.1
Other project costs	4.6		8.2		7.8		10.2
Unallocated shared costs	6.3		6.9		12.5		13.8
Non-cash purchase accounting adjustments	0.5		3.5		0.9		3.5
Gain from remeasurement of contingent consideration liability	—		—		(1.5)		—
Impairment of equipment and operating leases	4.2		—		4.5		—
Impairment of intangible assets	67.0		—		67.0		—
Early settlement of foreign currency cash flow hedges	1.3		—		3.9		—
HPC product recall	1.6		—		1.9		—
Legal and environmental	—		—		—		(0.5)
Salus and other	0.6		0.1		5.0		0.2
Loss from continuing operations before income taxes	$	(109.8)	$	(31.9)	$	(161.9)	$	(78.1)

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 17 - SEGMENT INFORMATION (continued)

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


	Three Month Periods Ended				Six Month Periods Ended
SB/RH (in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022

HPC	$	(1.9)	$	10.6	$	11.3	$	38.0
GPC	46.3		40.6		83.5		79.3
H&G	15.1		37.7		12.8		30.4
Total Segment Adjusted EBITDA	59.5		88.9		107.6		147.7
Corporate	8.3		9.6		16.7		18.9
Interest expense	31.7		24.8		65.1		46.7
Depreciation	11.9		12.2		24.1		24.4
Amortization	10.5		13.5		20.9		26.7
Share and incentive based compensation	4.0		6.2		7.1		11.8
Tristar acquisition and integration	4.0		12.7		9.7		14.4
HHI divestiture	1.4		1.2		2.9		5.5
HPC separation initiatives	1.1		3.0		3.5		4.7
Coevorden operations separation	1.4		2.1		2.7		5.3
Rejuvenate integration	—		2.6		—		7.0
Armitage integration	—		0.5		—		1.2
Omega integration	—		0.5		—		1.4
Fiscal 2023 restructuring	4.5		—		4.5		—
Fiscal 2022 restructuring	0.1		—		0.6		—
Russia closing initiatives	(0.1)		—		2.8		—
Global ERP transformation	3.3		3.2		4.9		6.0
HPC brand portfolio transitions	0.5		—		1.4		—
GPC distribution center transition	—		7.1		—		19.9
Global productivity improvement program	—		2.3		—		4.1
Other project costs	4.6		8.2		7.8		10.2
Unallocated shared costs	6.3		6.9		12.5		13.8
Non-cash purchase accounting adjustments	0.5		3.5		0.9		3.5
Gain from remeasurement of contingent consideration liability	—		—		(1.5)		—
Impairment of equipment and operating leases	4.2		—		4.5		—
Impairment of intangible assets	67.0		—		67.0		—
Early settlement of foreign currency cash flow hedges	1.3		—		3.9		—
HPC product recall	1.6		—		1.9		—
Legal and environmental	—		—		—		(0.5)
Other	0.6		—		5.0		(0.2)
Loss from continuing operations before income taxes	$	(109.2)	$	(31.2)	$	(161.3)	$	(77.1)

Table of Contents

SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 18 – 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 ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017~~April 3, 2022, are as follows:

Table of Contents

~~NOTE 20 - GUARANTOR STATEMENTS – SB/RH~~

Spectrum Brands, Inc. (“SBI”) with SB/RH as a parent guarantor (collectively, the “Parent”), with SBI’s domestic subsidiaries as subsidiary guarantors, has issued the 6.625% Notes under the 2020/22 Indenture, 6.125% Notes under the 2024 Indenture, the 5.75% Notes under the 2025 Indenture and the 4.00% Notes under the 2026 Indenture.

The following consolidating financial statements illustrate the components of the consolidated financial statements of SB/RH. The ‘Parent’ consists of the financial statements of SBI as the debt issuer, with SB/RH as a parent guarantor, without consolidated entities. SB/RH financial information is not presented separately as there are no independent assets or operations and is therefore determined not to be material. Investments in subsidiaries are accounted for using the equity method for purposes of illustrating the consolidating presentation. The elimination entries presented herein eliminate investments in subsidiaries and intercompany balances and transactions.

Statement of Financial Position

Guarantor

Nonguarantor

As of December 31, 2017 (in millions)

Parent

Subsidiaries

Subsidiaries

Eliminations

Consolidated
Assets
Cash and cash equivalents

$
3.6

$
0.7

$
133.6

$
—

$
137.9
Trade receivables, net

92.0

108.6

77.8

—

278.4
Intercompany receivables

—

1,249.4

325.2

(1,574.6)

—
Other receivables

18.4

6.2

10.2

(1.1)

33.7
Inventories

198.8

257.8

140.4

(16.3)

580.7
Prepaid expenses and other

30.9

10.3

15.0

—

56.2
Current assets of business held for sale

1,004.2

123.8

867.4

(4.8)

1,990.6
Total current assets

1,347.9

1,756.8

1,569.6

(1,596.8)

3,077.5
Property, plant and equipment, net

179.0

178.1

148.9

—

506.0
Long-term intercompany receivables

296.6

80.9

12.5

(390.0)

—
Deferred charges and other

246.9

2.9

38.1

(236.9)

51.0
Goodwill

568.6

1,463.4

244.4

—

2,276.4
Intangible assets, net

398.1

1,017.6

182.9

—

1,598.6
Investments in subsidiaries

4,839.3

1,352.3

—

(6,191.6)

—
Total assets

$
7,876.4

$
5,852.0

$
2,196.4

$
(8,415.3)

$
7,509.5
Liabilities and Shareholder's Equity

Current portion of long-term debt

$
14.5

$
4.4

$
4.6

$
(3.4)

$
20.1
Accounts payable

87.5

115.0

118.2

—

320.7
Intercompany accounts payable

1,576.0

—

—

(1,576.0)

—
Accrued wages and salaries

8.4

2.3

17.2

—

27.9
Accrued interest

40.7

—

—

—

40.7
Other current liabilities

43.1

18.8

55.8

(1.1)

116.6
Current liabilities of business held for sale

147.9

1.8

458.5

—

608.2
Total current liabilities

1,918.1

142.3

654.3

(1,580.5)

1,134.2
Long-term debt, net of current portion

3,858.5

91.7

9.0

—

3,959.2
Long-term intercompany debt

12.5

282.7

90.0

(385.2)

—
Deferred income taxes

—

489.9

49.9

(241.9)

297.9
Other long-term liabilities

90.2

6.1

40.9

—

137.2
Total liabilities

5,879.3

1,012.7

844.1

(2,207.6)

5,528.5
Shareholder's equity:

Other capital

2,088.1

1,041.5

(1,124.3)

74.3

2,079.6
Accumulated earnings

119.3

3,969.4

2,630.0

(6,617.2)

101.5
Accumulated other comprehensive loss

(210.3)

(171.6)

(163.2)

335.2

(209.9)
Total shareholder's equity

1,997.1

4,839.3

1,342.5

(6,207.7)

1,971.2
Non-controlling interest

—

—

9.8

—

9.8
Total equity

1,997.1

4,839.3

1,352.3

(6,207.7)

1,981.0
Total liabilities and equity

$
7,876.4

$
5,852.0

$
2,196.4

$
(8,415.3)

$
7,509.5

~~Table of Contents~~

Statement of Financial Position

Guarantor

Nonguarantor

As of September 30, 2017 (in millions)

Parent

Subsidiaries

Subsidiaries

Eliminations

Consolidated
Assets
Cash and cash equivalents

$
6.0

$
4.8

$
157.4

$
—

$
168.2
Trade receivables, net

85.4

102.4

78.2

—

266.0
Intercompany receivables

0.7

1,288.1

335.4

(1,624.2)

—
Other receivables

4.4

4.7

10.6

(1.0)

18.7
Inventories

184.7

205.6

126.4

(20.4)

496.3
Prepaid expenses and other

30.9

8.6

14.6

0.1

54.2
Current assets of business held for sale

228.7

0.2

378.4

(4.3)

603.0
Total current assets

540.8

1,614.4

1,101.0

(1,649.8)

1,606.4
Property, plant and equipment, net

182.2

178.9

142.5

—

503.6
Long-term intercompany receivables

317.2

96.6

12.5

(426.3)

—
Deferred charges and other

244.2

3.0

35.6

(254.4)

28.4
Goodwill

568.6

1,463.4

245.1

—

2,277.1
Intangible assets, net

401.4

1,027.7

182.9

—

1,612.0
Investments in subsidiaries

4,730.1

1,290.3

—

(6,020.4)

—
Noncurrent assets of business held for sale

814.3

124.4

437.7

—

1,376.4
Total assets

$
7,798.8

$
5,798.7

$
2,157.3

$
(8,350.9)

$
7,403.9
Liabilities and Shareholder's Equity

Current portion of long-term debt

$
13.8

$
4.3

$
5.2

$
(3.9)

$
19.4
Accounts payable

122.2

108.3

141.1

—

371.6
Intercompany accounts payable

1,629.6

—

—

(1,629.6)

—
Accrued wages and salaries

28.2

2.3

20.1

—

50.6
Accrued interest

48.5

—

—

—

48.5
Other current liabilities

50.1

25.6

44.2

(1.0)

118.9
Current liabilities of business held for sale

176.6

0.9

322.4

—

499.9
Total current liabilities

2,069.0

141.4

533.0

(1,634.5)

1,108.9
Long-term debt, net of current portion

3,650.8

92.1

9.7

—

3,752.6
Long-term intercompany debt

12.6

302.1

102.4

(417.1)

—
Deferred income taxes

177.9

523.5

52.0

(260.2)

493.2
Other long-term liabilities

11.5

6.1

40.4

—

58.0
Noncurrent liabilities of business held for sale

22.8

3.4

129.6

—

155.8
Total liabilities

5,944.6

1,068.6

867.1

(2,311.8)

5,568.5
Shareholder's equity:

Other capital

2,107.1

1,089.9

(1,075.0)

(43.0)

2,079.0
Accumulated (deficit) earnings

(42.8)

3,814.1

2,521.6

(6,335.7)

(42.8)
Accumulated other comprehensive loss

(210.1)

(173.9)

(165.2)

339.6

(209.6)
Total shareholder's equity

1,854.2

4,730.1

1,281.4

(6,039.1)

1,826.6
Non-controlling interest

—

—

8.8

—

8.8
Total equity

1,854.2

4,730.1

1,290.2

(6,039.1)

1,835.4
Total liabilities and equity

$
7,798.8

$
5,798.7

$
2,157.3

$
(8,350.9)

$
7,403.9

~~Table of Contents~~

Statement of Income

Guarantor

Nonguarantor

Three month period ended December 31, 2017 (in millions)

Parent

Subsidiaries

Subsidiaries

Eliminations

Consolidated
Net sales

$
334.1

$
386.3

$
290.7

$
(364.6)

$
646.5
Cost of goods sold

254.6

297.3

220.5

(368.6)

403.8
Restructuring and related charges

—

1.7

0.1

—

1.8
Gross profit

79.5

87.3

70.1

4.0

240.9
Selling

43.9

36.5

32.9

—

113.3
General and administrative

24.0

24.7

10.9

—

59.6
Research and development

1.7

3.0

2.3

—

7.0
Acquisition and integration related charges

2.7

1.3

1.2

—

5.2
Restructuring and related charges

15.4

2.4

0.8

—

18.6
Total operating expense

87.7

67.9

48.1

—

203.7
Operating (loss) income

(8.2)

19.4

22.0

4.0

37.2
Interest expense

33.5

4.9

0.2

—

38.6
Other non-operating (income) expense, net

(68.5)

(19.1)

(0.1)

89.0

1.3
Income from operations before income taxes

26.8

33.6

21.9

(85.0)

(2.7)
Income tax (benefit) expense

(98.6)

(34.8)

1.4

0.8

(131.2)
Net income from continuing operations

125.4

68.4

20.5

(85.8)

128.5
Income from discontinued operations, net of tax

41.2

38.3

39.2

(77.8)

40.9
Net income

166.6

106.7

59.7

(163.6)

169.4
Net income attributable to non-controlling interest

—

—

0.9

—

0.9
Net income attributable to controlling interest

$
166.6

$
106.7

$
58.8

$
(163.6)

$
168.5

Statement of Income

Guarantor

Nonguarantor

Three month period ended January 1, 2017 (in millions)

Parent

Subsidiaries

Subsidiaries

Eliminations

Consolidated
Net sales

$
379.3

$
192.7

$
247.3

$
(217.0)

$
602.3
Cost of goods sold

247.8

137.4

193.8

(216.9)

362.1
Restructuring and related charges

—

1.1

—

—

1.1
Gross profit

131.5

54.2

53.5

(0.1)

239.1
Selling

53.9

20.9

32.1

(0.3)

106.6
General and administrative

33.9

13.7

11.3

(0.1)

58.8
Research and development

2.8

0.7

3.1

—

6.6
Acquisition and integration related charges

2.8

0.1

0.4

—

3.3
Restructuring and related charges

0.5

0.3

0.3

—

1.1
Total operating expense

93.9

35.7

47.2

(0.4)

176.4
Operating income

37.6

18.5

6.3

0.3

62.7
Interest expense

37.7

4.1

1.5

—

43.3
Other non-operating (income) expense, net

(41.7)

(8.2)

(0.9)

49.8

(1.0)
Income from operations before income taxes

41.6

22.6

5.7

(49.5)

20.4
Income tax (benefit) expense

(4.8)

(15.0)

(6.5)

34.2

7.9
Net income from continuing operations

46.4

37.6

12.2

(83.7)

12.5
Income from discontinued operations, net of tax

18.1

18.8

37.3

(21.8)

52.4
Net income

64.5

56.4

49.5

(105.5)

64.9
Net income attributable to non-controlling interest

—

—

(0.1)

—

(0.1)
Net income attributable to controlling interest

$
64.5

$
56.4

$
49.6

$
(105.5)

$
65.0

~~Table of Contents~~

Statement of Comprehensive Income

Guarantor

Nonguarantor

Three month period ended December 31, 2017 (in millions)

Parent

Subsidiaries

Subsidiaries

Eliminations

Consolidated
Net income

$
166.6

$
106.7

$
59.7

$
(163.6)

$
169.4
Other comprehensive income (loss), net of tax:

Foreign currency translation loss

(2.0)

(2.0)

(2.2)

4.2

(2.0)
Unrealized gain on derivative instruments

1.8

4.3

4.3

(8.6)

1.8
Defined benefit pension gain

0.1

0.1

0.1

(0.2)

0.1
Other comprehensive (loss) income

(0.1)

2.4

2.2

(4.6)

(0.1)
Comprehensive income

166.5

109.1

61.9

(168.2)

169.3
Comprehensive income attributable to non-controlling interest

—

—

0.2

—

0.2
Comprehensive income attributable to controlling interest

$
166.5

$
109.1

$
61.7

$
(168.2)

$
169.1

Statement of Comprehensive Income

Guarantor

Nonguarantor

Three month period ended January 1, 2017 (in millions)

Parent

Subsidiaries

Subsidiaries

Eliminations

Consolidated
Net income

$
64.5

$
56.4

$
49.5

$
(105.5)

$
64.9
Other comprehensive income (loss), net of tax:

Foreign currency translation loss

(46.1)

(49.9)

(49.9)

99.8

(46.1)
Unrealized gain on derivative instruments

24.2

4.2

4.3

(8.5)

24.2
Defined benefit pension gain

3.3

3.3

3.4

(6.7)

3.3
Other comprehensive loss

(18.6)

(42.4)

(42.2)

84.6

(18.6)
Comprehensive income

45.9

14.0

7.3

(20.9)

46.3
Comprehensive loss attributable to non-controlling interest

—

—

(0.3)

—

(0.3)
Comprehensive income attributable to controlling interest

$
45.9

$
14.0

$
7.6

$
(20.9)

$
46.6

~~Table of Contents~~

Statement of Cash Flows

Guarantor

Nonguarantor

Three month period ended December 31, 2017 (in millions)

Parent

Subsidiaries

Subsidiaries

Eliminations

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

$
(192.2)

$
(35.4)

$
66.2

$
(6.4)

$
(167.8)
Net cash provided (used) by operating activities from discontinued operations

5.5

0.1

(3.9)

(17.0)

(15.3)
Net cash (used) provided by operating activities

(186.7)

(35.3)

62.3

(23.4)

(183.1)
Cash flows from investing activities

.

Purchases of property, plant and equipment

(3.9)

(3.8)

(10.2)

—

(17.9)
Proceeds from sales of property, plant and equipment

0.5

0.1

—

—

0.6
Net cash used by investing activities from continuing operations

(3.4)

(3.7)

(10.2)

—

(17.3)
Net cash used by investing activities from discontinued operations

(4.7)

—

(2.2)

—

(6.9)
Net cash used by investing activities

(8.1)

(3.7)

(12.4)

—

(24.2)
Cash flows from financing activities

Proceeds from issuance of debt

226.0

—

0.1

—

226.1
Payment of debt

(28.9)

—

(0.9)

—

(29.8)
Payment of debt issuance costs

(0.1)

—

—

—

(0.1)
Payment of cash dividends to parent

(24.2)

—

—

—

(24.2)
Advances related to intercompany transactions

20.9

34.9

(79.2)

23.4

—
Net cash provided (used) by financing activities from continuing operations

193.7

34.9

(80.0)

23.4

172.0
Net cash (used) provided by financing activities from discontinued operations

(1.3)

—

6.5

—

5.2
Net cash provided (used) by financing activities

192.4

34.9

(73.5)

23.4

177.2
Effect of exchange rate changes on cash and cash equivalents

—

—

(0.2)

—

(0.2)
Net decrease in cash and cash equivalents

(2.4)

(4.1)

(23.8)

—

(30.3)
Cash and cash equivalents, beginning of period

6.0

4.8

157.4

—

168.2
Cash and cash equivalents, end of period

$
3.6

$
0.7

$
133.6

$
—

$
137.9

~~Table of Contents~~

Statement of Cash Flows

Guarantor

Nonguarantor

Three month period ended January 1, 2017 (in millions)

Parent

Subsidiaries

Subsidiaries

Eliminations

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

$
(21.9)

$
67.4

$
251.2

$
(379.8)

$
(83.1)
Net cash provided (used) by operating activities from discontinued operations

4.6

—

(4.4)

65.5

65.7
Net cash (used) provided by operating activities

(17.3)

67.4

246.8

(314.3)

(17.4)
Cash flows from investing activities

—

Purchases of property, plant and equipment

(6.0)

(7.3)

(7.8)

—

(21.1)
Other investing activities

—

(0.8)

—

—

(0.8)
Net cash used by investing activities from continuing operations

(6.0)

(8.1)

(7.8)

—

(21.9)
Net cash used by investing activities from discontinued operations

(4.8)

—

(2.0)

—

(6.8)
Net cash used by investing activities

(10.8)

(8.1)

(9.8)

—

(28.7)
Cash flows from financing activities

Proceeds from issuance of debt

197.2

—

3.1

—

200.3
Payment of debt

(133.9)

—

—

—

(133.9)
Payment of debt issuance costs

(0.5)

—

—

—

(0.5)
Payment of cash dividends to parent

(147.6)

—

—

—

(147.6)
Advances related to intercompany transactions

20.5

(62.2)

(272.6)

314.3

—
Net cash used by financing activities from continuing operations

(64.3)

(62.2)

(269.5)

314.3

(81.7)
Net cash (used) provided by financing activities from discontinued operations

(0.2)

—

6.8

—

6.6
Net cash used by financing activities

(64.5)

(62.2)

(262.7)

314.3

(75.1)
Effect of exchange rate changes on cash and cash equivalents

—

—

(6.4)

—

(6.4)
Net decrease in cash and cash equivalents

(92.6)

(2.9)

(32.1)

—

(127.6)
Cash and cash equivalents, beginning of period

98.6

3.1

169.1

—

270.8
Cash and cash equivalents, end of period

$
6.0

$
0.2

$
137.0

$
—

$
143.2

~~Table of Contents~~

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,” ~~“Spectrum,”~~ “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

~~Refer to~~

The Company is a diversified global branded consumer products company. We manage the businesses in three vertically integrated, product-focused segments: (i) Home and Personal Care (“HPC”), (ii) Global Pet Care (“GPC”), and (iii) Home and Garden (“H&G”). 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. 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 responsible for sales and marketing initiatives and financial results for all product lines within that segment, on a global basis. The segments are supported through center-led shared service operations and enabling functions consisting of finance and accounting, information technology, legal, human resources, supply chain, and commercial operations. See Note 117 – ~~Basis of Presentation and Nature of Business~~Segment Information included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for more information pertaining to segments of continuing operations. The following is an overview of ~~our business.~~

~~Divestitures~~

the consolidated business, by segment, summarizing product types and brands:

Segment

Products

Brands

HPC

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

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

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

Personal Care: Remington®

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.

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®, Good Boy®, Meowee!®, Wildbird®, and Wafcol®

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.

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.

Household: Hot Shot®, Black Flag®, Real-Kill®, Ultra Kill®, The Ant Trap® (TAT), and Rid-A-Bug®.

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.

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

Repellents: Personal use pesticides and insect repellent products, including aerosols, lotions, pump sprays and wipes, yard sprays and citronella candles.

Repellents: Cutter® and Repel®.

Cleaning: Household surface cleaning, maintenance, and restoration products, including bottled liquids, mops, wipes and markers.

Cleaning: Rejuvenate®

On September 8, 2021, the Company entered into a definitive Asset and Stock Purchase Agreement (the "Purchase Agreement") with ASSA ABLOY AB ("ASSA") to sell its HHI segment for cash proceeds of $4.3 billion, subject to customary purchase price adjustments. The Company's assets and liabilities associated with ~~the GBA segment~~HHI have been classified as held for sale, and the respective operations have been classified as discontinued operations and reported separately for all periods presented. ~~The exclusion~~HHI consists of residential locksets and door hardware, including knobs, levers, deadbolts, handle sets, and electronic and connected locks under the Kwikset®, Weiser®, Baldwin®, Tell Manufacturing®, and EZSET® brands; kitchen and bath faucets and accessories under the Pfister® brand; and builders' hardware consisting of hinges, metal shapes, security hardware, rack and sliding door hardware, and gate hardware under the National Hardware® and FANAL® brands. Refer to Note 2 - Divestitures included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further discussion pertaining the HHI divestiture.

All brands and tradenames are directly owned by the Company with the exception of the ~~GBA~~Black & Decker® ("B&D") and Emeril Legasse® ("Emeril") brands used by the HPC segment. The Company has a trademark license agreement (the "License Agreement") with Stanley Black & Decker ("SBD") pursuant to which we license the B&D brand in North America, Latin America (excluding Brazil) and the Caribbean for four core categories of household appliances within the Company's HPC segment: beverage products, food preparation products, garment care products and cooking products. The License Agreement has a term ending June 30, 2025, including a sell-off period from April 1, 2025 to June 30, 2025, whereby the Company can continue to sell and distribute but no longer produce products subject to the License Agreement. Under the terms of the License Agreement, we agree to pay SBD royalties based on a percentage of sales, with minimum annual royalty payments of $15.0 million, with the exception of the minimum annual royalty will no longer be applied effective January 1, 2024, through the expiration of the agreement. The License Agreement also requires us to comply with maximum annual return rates for products. Subsequent to the completion of the License Agreement, there are no non-competition provisions or restrictions provided following its expiration. See Note 4 – Revenue Recognition included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail on revenue concentration from B&D branded products.

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Pursuant to the Emeril License, the Company licenses the Emeril brands within the US, Canada, Mexico, and the United Kingdom for certain designated product categories of household appliances within the HPC segment, ~~from~~including small kitchen food preparation products, indoor and outdoor grills and grill accessories, and cookbooks. The Emeril License has a current expiration of December 31, 2023, with options for one-year renewal periods following the ~~results~~initial expiration through December 31, 2025. Under the terms of ~~operations from continuing operations may have~~the agreement, we agreed to pay the license holder a ~~significant impact on the comparability~~percentage of ~~consolidated results~~sales, with minimum annual royalty payments of ~~operations.~~$1.6 million, increasing to $1.8 million in subsequent renewal periods.

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 39 – ~~Divestitures~~Debt included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for more information pertaining to debt. The reportable segments of SB/RH are consistent with the segments of SBH.

Acquisitions, Divestitures and Other Business Development Initiatives

The Company periodically evaluates strategic transactions that may result in the acquisition of a business or assets that qualify as a business combination, or a divestiture of a business or assets that may be recognized as either a component of continuing operations or discontinued operations, depending on the significance to the consolidated group. Acquisitions may impact the comparability of the consolidated or segment financial information with the inclusion of the operating results for the acquired business in periods subsequent to acquisition date, the inclusion of acquired assets, both tangible and ~~liabilities classified as~~intangible (including goodwill), and the related amortization, depreciation or other non-cash purchase accounting adjustments of acquired assets. Divestitures may impact the comparability of the consolidated or segment financial information with the recognition of an impairment loss when held for sale, gain or loss on disposition, or change in classification to discontinued operations for qualifying transactions. Moreover, the comparability of consolidated or segment financial information may be impacted by incremental costs to facilitate and ~~discontinued operations.~~

~~Acquisitions~~

effect such transactions and initiatives to integrate acquired business or separate divested operations and assets with the consolidated group. The following ~~acquisition activity has~~strategic transactions have been considered as having a significant impact on the comparability of the financial results on the condensed consolidated financial ~~statements.~~

~~PetMatrix~~ – On June 1, 2017, the Company completed the acquisition of PetMatrix LLC, a manufacturer and marketer of rawhide-free dog chews consisting primarily of the DreamBone® and SmartBones® brands. The results of PetMatrix’s operations since June 1, 2017 are included in the Company’s Condensed Consolidated Statements of Income and reported within the PET reporting segment for the three month period ended December 31, 2017.

statements and segment financial information.

~~GloFish~~ – On May 12, 2017, the Company entered into an asset purchase agreement with Yorktown Technologies LP, for the acquisition of assets consisting of the GloFish operations, including transfer of the GloFish® brand, related intellectual property and operating agreements. The GloFish operations consist of the development and licensing of fluorescent fish for sale through retail and online channels. The results of GloFish’s operations since May 12, 2017 are included in the Company’s Consolidated Statement of Income and reported within the PET reporting segment for the three month period ended December 31, 2017.

•Tristar Business Acquisition - On February 18, 2022, the Company acquired 100% of the Tristar Business that includes a portfolio of home appliances and cookware products sold under the PowerXL®, Emeril, and Copper Chef® brands. The net assets and operating results of the Tristar Business are included in the Company’s condensed consolidated financial statements and reported within the HPC reporting segment for the three and six month period ended April 2, 2023 and April 3, 2022, effective as of the transaction date. The Company incurred incremental costs to combine and integrate the acquired business with the HPC segment, primarily towards the integration of systems and processes, merger of commercial operations and supply chain, professional fees to consolidate financial records, plus incremental retention costs for personnel supporting the transition and integration efforts.Costs attributable to the integration of the Tristar Business are projected to continue through the year ending September 30, 2023.

•HPC Separation - The Company has initiated projects to facilitate a strategic separation of the Company's ownership in the HPC segment in the most advantageous way to realize value for both the HPC business as a standalone appliance business either through a spin, merger or sale of the business and the retained GPC and H&G businesses of the consolidated group. Costs are primarily attributable to legal and professional fees incurred to assess opportunities, evaluate transaction considerations for a separation, including potential tax and compliance implications to the consolidated group, costs directly attributable to the legal entity separation and transfer of net assets of the HPC operations from the commingled operations of the Company, plus the segregation of systems and processes. The realization of the transaction, if any, is likely not to occur until after completion of the HHI divestiture. Costs attributable to the initiative are expected to be incurred until a transaction is realized or otherwise canceled.

•HHI Divestiture - On September 8, 2021, the Company entered into an Asset and Stock Purchase Agreement ("ASPA") with ASSA ABLOY AB ("ASSA") to sell its HHI segment. The consummation of the transaction is pending and subject to customary conditions, including the absence of a material adverse effect of HHI and certain antitrust conditions or other governmental restrictions, amongst others. On September 15, 2022, the DOJ filed a complaint seeking to enjoin the transaction and block the acquisition of the HHI division by ASSA. On December 2, 2022, ASSA announced an agreement to sell its Emtek and the Smart Residential Business in the U.S. and Canada to Fortune Brands in response to competitive concerns raised by the DOJ in their complaint. On May 5, 2023, the Company agreed to a stipulation with the DOJ to settle the DOJ's challenge of the HHI transaction, pursuant to which ASSA will proceed with the divestment of Emtek and its Smart Residential business in the U.S> and Canada to Fortune Brands. The Company continues to recognize the HHI division as held for sale and as a component of our discontinued operations and are reported separately for all periods presented. The Company and ASSA both continue to expect that they will close the HHI transaction on or prior to June 30, 2023. See Note 2 - Divestitures in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail. The Company has incurred incremental costs attributable to the pending transaction, primarily consisting of legal and professional fees to effect the realization of the ASPA, facilitate antitrust or other governmental restrictions to consummate the transaction, preparation for separation of systems and processes supporting the divested business and enabling functions under a transition services agreement ("TSA"), plus incremental retention costs for personnel supporting the transition efforts. Incremental costs are expected to be incurred through the consummation of the pending transaction to support TSA processes and mitigation following the close of the sale, which are expected to be incurred for a transition period of approximately 12-24 months following the close of the transaction.

•Coevorden Operations - On March 29, 2020, the Company completed the sale of its dog and cat food ("DCF") production facility and distribution center in Coevorden, Netherlands with United Petfood Producers NV ("UPP"). Following the separation of the Coevorden Operations, the Company has incurred incremental costs attributable to a tolling charge for the continued production of DCF products through a three-year manufacturing agreement with the buyer entered into concurrently with the sale, rent charges associated with the transferred warehouse operated by the Company during an 18-month transition period following the sale, plus costs to facilitate the transfer of the warehouse operations to the buyer and the movement of inventory and distribution center operations from the Coevorden facility to a new distribution center supporting GPC operations in EMEA during the prior year. Incremental costs attributable to the three-year tolling arrangement were completed in March 2023.

•Rejuvenate Acquisition - On May 28, 2021, the Company acquired 100% of the membership interests in For Life Products, LLC ("FLP"), a manufacturer of household cleaning, maintenance, and restoration products sold under the Rejuvenate® brand. The net assets and operating results of FLP are included in the Company’s condensed consolidated financial statements and reported within the H&G reporting segment for the three and six month periods ended April 2, 2023 and April 3, 2022. The Company incurred incremental costs to combine and integrate the acquired business with the H&G segment, primarily towards the integration of systems and processes, transfer of inventory and integration to an existing H&G distribution center, retention costs for personnel supporting transition and integration efforts. Costs attributable to the integration of the Rejuvenate business were completed in the prior year.

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•Armitage Acquisition - On October 26, 2020, the Company completed the acquisition of Armitage Pet Care Ltd ("Armitage"), a pet treats and toys business in Nottingham, United Kingdom, including a portfolio of brands that include the dog treats brand, Good Boy®, cat treats brand, Meowee!®, and Wildbird® bird feed products, among others, that are predominantly sold within the United Kingdom. The net assets and results of operations of Armitage are included in the Company’s condensed consolidated financial statements and reported within the GPC reporting segment for the three and six month periods ended April 2, 2023 and April 3, 2022. The Company incurred incremental costs to combine and integrate the acquired business with the GPC segment, primarily towards the integration of systems and processes, transfer of inventory and integration to existing GPC supply chain and distribution centers within the EMEA region, plus retention costs for personnel supporting the transition and integration efforts. Costs attributable to the integration of the Armitage business were completed in the prior year.

•Omega Acquisition - On March 10, 2020, the Company acquired 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. The net assets and results of operations of Omega are included in the Company's condensed consolidated financial statements and reported within GPC segment for the three and six month periods ended April 2, 2023 and April 3, 2022. The Company incurred incremental costs to combine and integrate the acquired business within the GPC segment, primarily towards the integration of systems and processes, transfer of inventory and production to an existing GPC facility, including related exit and disposal costs of the assumed leased facility, related start-up costs and operational inefficiencies attributable to the transferred production, plus retention costs for personnel supporting the transition and integration after the transaction date. Costs attributable to the integration of the Omega business were completed in the prior year.

The following is a summary of costs attributable to strategic transactions and business development costs for the respective projects during three and six month periods ended April 2, 2023 and April 3, 2022. In addition to the initiatives discussed above, the Company regularly engages in other business development initiatives that may incur incremental costs which may not result in a realized transaction or are less significant and therefore have been separately disclosed and recognized as other project costs.


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Tristar acquisition and integration	$	4.0	$	12.7	$	9.7	$	14.4
HHI divestiture	1.4		1.2		2.9		5.5
HPC separation initiatives	1.1		3.0		3.5		4.7
Coevorden operations separation	1.4		2.1		2.7		5.3
Rejuvenate integration	—		2.6		—		7.0
Armitage integration	—		0.5		—		1.2
Omega integration	—		0.5		—		1.4
Other project costs	0.1		0.3		0.3		0.6
Total	$	8.0	$	22.9	$	19.1	$	40.1
Reported as:
Net sales	$	—	$	0.7	$	—	$	0.7
Cost of goods sold	—		1.7		—		3.5
General & administrative expense	8.0		20.5		19.1		35.9

Restructuring ~~Activity~~

and Optimization Initiatives

We continually seek and develop operating strategies to improve our operational efficiency, match our ~~manufacturing~~ capacity and product costs to market demand and better utilize our manufacturing ~~resources.~~and distribution resources in order to reduce costs, increase revenues, and increase or maintain our current profit margins. 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. These changes and updates are inherently difficult and are made even more difficult by current global economic conditions. Our ability to achieve the anticipated cost savings and other benefits from such operating strategies may be affected by a number of other macro-economic factors, or inflation increased interest rates, many of which are beyond our control. The ~~most~~following initiatives have been considered as having a significant impact on the comparability of ~~these~~the financial results on the condensed consolidated financial statements and segment financial information.

•Fiscal 2023 Restructuring - During the three month period ending April 2, 2023, the Company entered into a new initiative in response to the continuing pressures within the consumer products and retail markets and adjusted strategic initiatives ~~are:~~

~~GAC Business Rationalization Initiative,~~ ~~which began in the third quarter of the year ended September 30, 2016 and is anticipated to be incurred through September 30, 2018;~~

~~PET Rightsizing Initiative,~~ ~~which began during the second quarter of the year ended September 30, 2017 and is anticipated to be incurred through September 30, 2018; and~~

~~HHI Distribution Center Consolidation,~~ ~~which began in second quarter of the year ended September 30, 2017 and is anticipated to be incurred through September 30, 2018.~~

within certain segments, resulting in the realization of another round of headcount reductions. Substantially all costs associated with the initiative had been recognized. See Note 53 - Restructuring Charges inNotes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail on related exit or disposal costs attributable to this initiative.

•Fiscal 2022 Restructuring - During the year ended September 30, 2022, the Company entered into a new initiative in response to changes observed within consumer products and ~~Related~~retail markets, continued inflationary cost pressures and headwinds, resulting in the realization of a headcount reduction. Substantially all costs associated with the initiative had been recognized in the prior year with amounts during the three and six months period ended April 2, 2023 due to change in estimates, headcounts and timing of communication. See Note 3 - Restructuring ChargesinNotes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail on related exit or disposal costs attributable to this initiative.

•Global ERP Transformation - During the year ended September 30, 2021, the Company entered into a SAP S/4 HANA ERP transformation project to upgrade and implement our enterprise-wide operating systems to SAP S/4 HANA on a global basis. This is a multi-year project that includes various costs, including software configuration and implementation costs that would be recognized as either capital expenditures or deferred costs in accordance with applicable accounting policies, with certain costs recognized as operating expense associated with project development and project management costs, and professional services with business partners engaged towards planning, design and business process review that would not qualify as software configuration and implementation costs. The Company has substantially completed the build phase and initiated data transfer and testing for its initial implementation. Costs are anticipated to be incurred through various deployments expected through September 30, 2024.

•HPC Brand Portfolio Transitions - In light of the acquisition of the Tristar Business and the PowerXL® brand, the Company has initiated a project within its HPC segment to assess and evaluate the current utilization of tradenames and brands across its portfolio of home and kitchen appliance products. The project will require incremental costs to facilitate potential transitions of branded product offerings on global basis, including potential investment with our supply base and retail partners to manage inventory and transition new branded products to market.

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•Russia Closing Initiative - The Company initiated an assessment of its in-country commercial operations in Russia, predominantly supporting the HPC segment, and other commercial activity directly impacted by the Russia-Ukraine conflict. The Company has recognized impairment costs on inventory and receivables that are at risk of recoverability as the Company has discontinued importing products directly into Russia, has suspended its commercial activity and has liquidated substantially all assets. The initiative is subject to exit and disposal costs for severance benefits of personnel associated with the operations, see Note 3 - Restructuring Charges inNotes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail. Remaining costs primarily cost of administrative cost to dissolve the entity and are anticipated to be incurred through September 30, 2023.

•GPC Distribution Transition - During the year ended September 30, 2021, the GPC segment entered into an initiative to update its supply chain and distribution operations within the U.S. to address capacity needs, optimize and improve fill rates attributable to recent growth in the business and consumer demand, and improve overall operational effectiveness and throughput. The initiative includes the transition of its third party logistics (3PL) service provider at its existing distribution center, incorporating new facilities into the distribution footprint by expanding warehouse capacity and securing additional space to support long-term distribution and fulfillment, plus updating engagement and processes with suppliers and its transportation and logistics handlers. Incremental costs include one-time transition, implementation and start-up cost with the new 3PL service provider, including the integration of provider systems and technology, incentive-based compensation to maintain performance during transition, duplicative and redundant costs, and incremental costs for various disruptions in the operations during the transition period including supplemental transportation and storage costs, incremental detention and demurrage costs. Additionally, the Company experienced an increase in customer fines and penalties during the transition period (recognized as a reduction in net sales). Costs attributable to the initiative were completed during the year ended September 30, 2022.

•Global Productivity Improvement Program - During the year ended September 30, 2019, the Company initiated a company-wide, multi-year program, consisting 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. With the Company’s divestitures of GBL and GAC during the year ended September 30, 2019, the project focus includes the transition of the Company’s continuing operations in a post-divestiture environment and exiting of TSAs, which were fully exited in January 2022. 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 and exit of certain internal production to third-party suppliers, among others, resulting in the recognition of severance benefits and other exit and disposal costs to facilitate such activity. Costs attributable to the initiative were completed during the year ended September 30, 2022.

The following is a summary of impacts to operating results attributable to restructuring initiatives and other optimization projects incurred for the respective projects during three and six month periods ended April 2, 2023 and April 3, 2022. In addition to the projects and initiatives discussed above, the Company regularly incurs costs and engages in less significant restructuring and optimization initiatives that individually are not substantial and occur over a shorter time period (generally less than 12 months).


	Three Month Periods Ended				Six Month Periods Ended
(in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Fiscal 2023 restructuring	$	4.5	$	—	$	4.5	$	—
Fiscal 2022 restructuring	0.1		—		0.6		—
Global ERP transformation	3.3		3.2		4.9		6.0
HPC brand portfolio transitions	0.5		—		1.4		—
Russia closing initiative	(0.1)		—		2.8		—
GPC distribution center transition	—		7.1		—		19.9
Global productivity improvement program	—		2.3		—		4.1
Other project costs	4.5		7.9		7.5		9.6
Total	$	12.8	$	20.5	$	21.7	$	39.6
Reported as:
Net sales	$	(0.1)	$	1.4	$	(1.0)	$	3.9
Cost of goods sold	0.4		0.9		1.9		1.1
Selling expense	0.1		5.6		0.4		15.9
General & administrative expense	12.4		12.6		20.4		18.7

Financing Activity

Financing activity during and between comparable periods may have a significant impact on the comparability of financial results on the condensed consolidated financial statements.

•On November 17, 2022, the Company entered into the fourth amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio permitted to be no greater than 7.0 to 1.0 before returning to 6.0 to 1.0 at the earliest of (i) September 29, 2023, or (ii) 10 business days after the closing of the HHI divestiture or receipt of the related termination fee. The Company incurred $2.3 million in connection with the fourth amendment, which has been recognized as interest expense for the six month period ended April 2, 2023.

•During the year ended September 30, 2022, the Company entered into the third amendment to the Credit Agreement that provides for incremental capacity on the Revolver Facility of $500 million that was used to support the acquisition of the Tristar Business and the continuing operations and working capital requirements of the Company. Borrowings under the incremental capacity are subject to a borrowing rate which is subject to SOFR plus margin ranging from 1.75% to 2.75%, per annum or base rate plus margin ranging from 0.75% to 1.75% per annum, with an increase by 25 basis points 270 days after the effective date of the third amendment and an additional 25 basis points on each 90 day anniversary of such date.

See Note 9 - Debt in the Notes to the Condensed Consolidated Financial Statements, included elsewhere ~~within this Quarterly report for additional detail.~~

~~Table of Contents~~

~~Safety Recall~~

On June 10, 2017, the Company initiated a voluntary safety recall of various rawhide chew products for dogs sold by the Company’s PET segment due to possible chemical contamination. The Company incurred losses of $7.3 million for the three month period ended December 31, 2017, which comprised of $5.7 million for customer losses and direct incremental costs incurred by the Company, and $1.6 million of incremental inventory write-offs associated with inventory that was determined to be obsolete. The Company suspended production at facilities impacted by the product safety recall, completed a comprehensive manufacturing review and recommenced production during the fourth quarter ended September 30, 2017. Production facilities impacted by the recall are subject to incremental costs during start-up requiring alternative treatment on affected product SKUs until the appropriate regulatory approvals have been received. ~~See~~ ~~Note 17 - Commitments and Contingencies~~ ~~to the Condensed Consolidated Financial Statements, included elsewhere within~~in this Quarterly Report for additional ~~detail.~~

~~Tax Reform~~

~~On December 22, 2017,~~detail regarding debt and financing activity.

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Russia-Ukraine Conflict

The impacts of the ~~Tax Cuts~~Russia-Ukraine conflict and ~~Jobs Act (the "Tax Reform Act") was signed into law.~~the sanctions imposed by other nations in response to the conflict are evolving and may have an impact on the Company's consolidated operations and cash flow attributable to operations and distribution within the region. The ~~legislation significantly changes U.S. tax law~~Company does not maintain a significant level of operations within Ukraine and does not maintain material assets within Russia, which mostly consist of working capital associated with the in-country distribution operations. In response to matters within the territory, we have adjusted our risks associated with the collectability and realizable value for working capital within the region and we have initiated the closing of the in-country commercial operations in Russia.

Inflation and Supply Chain Constraints

While certain aspects of our financial results have been favorably impacted by ~~among other things, lowering corporate income tax rates, implementing a dividends received deduction~~increased demand attributable to the COVID-19 pandemic, in addition to favorable consumer conditions, including incremental financial assistance provided by various government agencies, our business continues to experience challenges towards product availability to meet customer demand. We experienced increased labor shortages in the wake of the COVID-19 pandemic along with increased freight and distribution costs from transportation and logistics and disruptions within our supply chain. Together with labor shortages and higher demand for ~~dividends from foreign subsidiaries~~talent, the current economic environment is driving higher wages. Our ability to meet labor needs, control wage and imposing a tax on deemed repatriated accumulated earnings of foreign subsidiaries. The Tax Reform Act reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. Since the Company files its U.S. tax returns on a September fiscal year basis, its US tax rate for Fiscal 2018labor-related costs and minimize labor disruptions will be ~~a blended rate~~key to our success of ~~24.53%. The Company~~operating our business and executing our business strategies. Furthermore, our business is experiencing an inflationary environment, which has ~~recognized~~negatively impacted our gross margin rates. In response to inflation, our segments have taken pricing actions to address rising costs and mitigate impacts to our margins. We are unable to predict how long the ~~provisional tax impacts related~~current inflationary environment, including increased energy costs, will continue. We expect the economic environment to ~~deemed repatriated earnings~~remain uncertain as we navigate the current geopolitical environment, post-pandemic volatility, labor challenges, supply chain constraints and the ~~revaluation of deferred tax assets~~current inflationary environment, including increasing energy and liabilities and included these amounts in its consolidated financial statements for the three month period ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Reform Act. See ~~Note 16 – Income Taxes~~ ~~to the Condensed Consolidated Financial Statements, included elsewhere within this Quarterly Report for additional detail.~~

commodity prices.

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”). and adjusted EBITDA margin. 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~~rates 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 ~~period~~periods ended ~~December 31, 2017~~April 2, 2023 compared to net sales for the three and six month ~~period~~periods ended ~~January 1, 2017, respectively:~~

April 3, 2022:

December 31, 2017

Three Month Period 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
January 1, 2017

Variance
Hardware & Home Improvement

325.9

(2.1)

323.8

—

323.8

288.8

35.0

12.1%
Global Pet Supplies

202.4

(4.8)

197.6

(24.8)

172.8

194.2

(21.4)

(11.0%)
Home and Garden

49.3

—

49.3

—

49.3

49.8

(0.5)

(1.0%)
Global Auto Care

68.9

(0.6)

68.3

—

68.3

69.5

(1.2)

(1.7%)
Total

$
646.5

$
(7.5)

$
639.0

$
(24.8)

$
614.2

$
602.3

11.9

2.0%


Three Month Periods Ended (in millions, except %)	April 2, 2023
	Net Sales		Effect of Changes in Currency		Net Sales Excluding Effect of Changes in Currency		Effect of Acquisitions		Organic Net Sales		Net Sales April 3, 2022		Variance
HPC	$	279.2	$	11.8	$	291.0	$	(22.1)	$	268.9	$	316.1	$	(47.2)	(14.9)	%
GPC	296.7		7.6		304.3		—		304.3		295.1		9.2		3.1	%
H&G	153.3		—		153.3		—		153.3		196.6		(43.3)		(22.0)	%
Total	$	729.2	$	19.4	$	748.6	$	(22.1)	$	726.5	$	807.8	(81.3)		(10.1)	%


Six Month Periods Ended (in millions, except %)	April 2, 2023
	Net Sales		Effect of Changes in Currency		Net Sales Excluding Effect of Changes in Currency		Effect of Acquisitions		Organic Net Sales		Net Sales April 3, 2022		Variance
HPC	$	643.6	$	37.5	$	681.1	$	(89.9)	$	591.2	$	695.8	$	(104.6)	(15.0)	%
GPC	574.3		21.5		595.8		—		595.8		597.3		(1.5)		(0.3)	%
H&G	224.6		—		224.6		—		224.6		271.9		(47.3)		(17.4)	%
Total	$	1,442.5	$	59.0	$	1,501.5	$	(89.9)	$	1,411.6	$	1,565.0	(153.4)		(9.8)	%

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~~Adjusted EBITDA.~~

Adjusted EBITDA ~~is a metric~~and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures used by management, ~~and~~which we believe ~~this non-GAAP measure provides~~provide useful information to investors because ~~it reflects~~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. ItThey also ~~facilitates~~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 ~~covenant. See~~ ~~Note 10 - Debt~~ ~~to the Condensed Consolidated Financial Statements, included elsewhere within this Quarterly Report, for additional detail.~~

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:

~~Stock based compensation expense as it is a non-cash based compensation cost, see~~ ~~Note 14 - Share Based Compensation~~ ~~to the Condensed Consolidated Financial Statements, included elsewhere within this Quarterly Report for further details;~~

~~Acquisition and integration charges that consist of transaction~~•Share based compensation costs ~~from acquisition transactions during the period or subsequent integration related project costs directly associated with the acquired business, see~~ ~~Note 4 - Acquisition and Integration Costs~~ ~~to the Condensed Consolidated Financial Statements, included elsewhere within this Quarterly Report for further details;~~

~~Restructuring and related charges, which consist of project costs associated with restructuring initiatives across the segments, see~~ ~~Note 5 - Restructuring and Related Charges~~ ~~to the Condensed Consolidated Financial Statements, included elsewhere within this Quarterly Report for further details;~~

~~Non-cash purchase accounting inventory adjustments recognized in earnings subsequent to an acquisition (when applicable);~~

~~Non-cash asset impairments or write-offs realized (when applicable); and~~

~~Other adjustments as further discussed.~~

~~During the three month period ended December 31, 2017, other adjustments~~ consist of ~~estimated~~ costs ~~for a non-recurring voluntary recall~~associated with long-term incentive compensation arrangements that generally consist of ~~rawhide product by~~non-cash, stock-based compensation. See Note 13 – Share Based Compensation in the ~~PET segment (see~~ ~~Note 17 - Commitment and Contingencies~~Notes to the Condensed Consolidated Financial Statements, included elsewhere ~~within~~in this Quarterly Report, for further ~~details)~~details;

•Incremental amounts attributable to strategic transactions and ~~professional fees~~business development initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business. These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards business development activities, incremental costs attributable to such transactions and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;

•Unallocated shared costs associated with ~~non-acquisition based strategic initiatives~~discontinued operations from certain shared and center-led administrative functions the Company's business units excluded from income from discontinued operations as they are not a direct cost of the ~~Company.~~

discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations. Amounts attributable to unallocated shared costs would be mitigated through subsequent strategic or restructuring initiatives, TSAs, elimination of extraneous costs, or re-allocations or absorption of existing continuing operations following the completed sale of the discontinued operations. See Note 2 – Divestitures in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;

•Non-cash purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value and the incremental value in operating lease assets with below market rent, among others;

•Non-cash gain from the reduction in the contingent consideration liability recognized during the six month periods ended April 2, 2023, associated with the Tristar Business acquisition in the prior year on February 18, 2022;

•Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets;

•Impact from the early settlement of foreign currency cash flow hedges in the prior year, resulting in subsequent assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early in the prior year due to changes in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region, resulting in the recognition of excluded gains in the prior year intended to mitigate costs through the year ending September 30, 2023.

•Incremental costs recognized by the HPC segment attributable to the realization of product recalls initiated by the Company in the prior year. See Note 16 - Commitments and Contingencies in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further details; and

•Other adjustments are primarily attributable to: (1) costs associated with Salus as they are not considered a component of the continuing commercial products company; (2) key executive severance related costs; and (3) insurable losses associated with hurricane damages at a key supplier of our Glofish business and loss realized from misapplied funds during the six month period ended April 2, 2023.

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

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The following is a reconciliation of net income to ~~adjusted~~Adjusted EBITDA for the three month ~~period~~periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017, respectively~~April 3, 2022, for SBH.

SPECTRUM BRANDS HOLDINGS, INC. (in millions)

HHI

PET

H&G

GAC

Corporate

Consolidated
Three Month Period Ended December 31, 2017

Net income from continuing operations

$
31.1

$
12.9

$
0.7

$
6.7

$
68.7

$
120.1
Income tax benefit

—

—

—

—

(126.0)

(126.0)
Interest expense

—

—

—

—

38.6

38.6
Depreciation and amortization

11.0

10.4

4.7

3.9

3.0

33.0
EBITDA

42.1

23.3

5.4

10.6

(15.7)

65.7
Share based compensation

—

—

—

—

3.8

3.8
Acquisition and integration related charges

2.7

2.1

—

0.2

0.2

5.2
Restructuring and related charges

15.2

0.6

—

4.0

0.6

20.4
Inventory acquisition step-up

—

0.8

—

—

—

0.8
Pet safety recall

—

7.3

—

—

—

7.3
Other

—

—

—

—

2.5

2.5
Adjusted EBITDA

$
60.0

$
34.1

$
5.4

$
14.8

$
(8.6)

$
105.7
Three Month Period Ended January 1, 2017

Net income from continuing operations

$
48.4

$
19.4

$
1.6

$
13.1

$
(69.7)

$
12.8
Income tax expense

—

—

—

—

6.7

6.7
Interest expense

—

—

—

—

43.0

43.0
Depreciation and amortization

8.9

10.6

4.1

3.9

2.5

30.0
EBITDA

57.3

30.0

5.7

17.0

(17.5)

92.5
Share based compensation

—

—

—

—

7.2

7.2
Acquisition and integration related charges

1.8

0.1

—

1.3

0.1

3.3
Restructuring and related charges

0.1

0.6

—

1.5

—

2.2
Adjusted EBITDA

$
59.2

$
30.7

$
5.7

$
19.8

$
(10.2)

$
105.2


SPECTRUM BRANDS HOLDINGS, INC. (in millions)	HPC			GPC			H&G			Corporate		Consolidated
Three Month Period Ended April 2, 2023
Net (loss) income from continuing operations	$	(37.7)		$	30.2		$	(39.8)		$	(27.7)	$	(75.0)
Income tax benefit	—			—			—			(34.8)		(34.8)
Interest expense	—			—			—			31.6		31.6
Depreciation	2.9			3.8			1.9			3.3		11.9
Amortization	2.1			5.5			2.9			—		10.5
EBITDA	(32.7)			39.5			(35.0)			(27.6)		(55.8)
Share based compensation	—			—			—			4.5		4.5
Tristar integration	4.0			—			—			—		4.0
HHI divestiture	—			—			—			1.4		1.4
HPC separation initiatives	—			—			—			1.1		1.1
Coevorden operations separation	—			1.4			—			—		1.4
Fiscal 2023 restructuring	2.4			2.1			—			—		4.5
Fiscal 2022 restructuring	—			—			—			0.1		0.1
Russia closing initiatives	(0.1)			—			—			—		(0.1)
Global ERP transformation	—			—			—			3.3		3.3
HPC brand portfolio transitions	0.5			—			—			—		0.5
Other project costs	0.1			0.2			2.1			2.2		4.6
Unallocated shared costs	—			—			—			6.3		6.3
Non-cash purchase accounting adjustments	0.5			—			—			—		0.5

Impairment of equipment and operating leases	1.5			2.7			—			—		4.2
Impairment of intangible assets	19.0			—			48.0			—		67.0
Early settlement of foreign currency cash flow hedges	1.3			—			—			—		1.3
HPC product recall	1.6			—			—			—		1.6
Salus and other	—			0.4			—			0.2		0.6
Adjusted EBITDA	$	(1.9)		$	46.3		$	15.1		$	(8.5)	$	51.0
Net Sales	$	279.2		$	296.7		$	153.3		$	—	$	729.2
Adjusted EBITDA Margin	(0.7)		%	15.6		%	9.8		%	—		7.0		%
Three Month Period Ended April 3, 2022
Net (loss) income from continuing operations	$	(19.1)		$	19.0		$	30.4		$	(55.4)	$	(25.1)
Income tax benefit	—			—			—			(6.8)		(6.8)
Interest expense	—			—			—			24.7		24.7
Depreciation	3.2			3.6			1.8			3.6		12.2
Amortization	4.9			5.7			2.9			—		13.5
EBITDA	(11.0)			28.3			35.1			(33.9)		18.5
Share based compensation	—			—			—			6.6		6.6
Tristar acquisition	14.4			—			—			(1.7)		12.7
Rejuvenate integration	—			—			2.6			—		2.6
Armitage integration	—			0.5			—			—		0.5
Omega integration	—			0.5			—			—		0.5
HHI divestiture	—			—			—			1.2		1.2
HPC separation initiatives	—			—			—			3.0		3.0
Coevorden operations separation	—			2.1			—			—		2.1
Global ERP transformation	—			—			—			3.2		3.2
GPC distribution center transition	—			7.1			—			—		7.1
Global productivity improvement program	1.5			0.5			—			0.3		2.3
Other project costs	2.2			1.6			—			4.4		8.2
Unallocated shared costs	—			—			—			6.9		6.9
Non-cash purchase accounting adjustments	3.5			—			—			—		3.5


Salus and other	—			—			—			0.1		0.1
Adjusted EBITDA	$	10.6		$	40.6		$	37.7		$	(9.9)	$	79.0
Net Sales	$	316.1		$	295.1		$	196.6		$	—	$	807.8
Adjusted EBITDA margin	3.4		%	13.8		%	19.2		%	—		9.8		%

Table of Contents

The following is a reconciliation of net income to ~~adjusted~~Adjusted EBITDA for the six month periods ended April 2, 2023 and April 3, 2022 for SBH.


SPECTRUM BRANDS HOLDINGS, INC. (in millions)	HPC			GPC			H&G			Corporate			Consolidated
Six Month Period Ended April 2, 2023
Net (loss) income from continuing operations	$	(41.8)		$	53.3		$	(47.0)		$	(79.5)		$	(115.0)
Income tax benefit	—			—			—			(46.9)			(46.9)
Interest expense	—			—			—			65.0			65.0
Depreciation	6.1			7.5			3.7			6.8			24.1
Amortization	4.2			11.0			5.7			—			20.9
EBITDA	(31.5)			71.8			(37.6)			(54.6)			(51.9)
Share based compensation	—			—			—			7.7			7.7
Tristar integration	9.7			—			—			—			9.7
HHI divestiture	—			—			—			2.9			2.9
HPC separation initiatives	—			—			—			3.5			3.5
Coevorden operations separation	—			2.7			—			—			2.7
Fiscal 2023 restructuring	2.4			2.1			—			—			4.5
Fiscal 2022 restructuring	—			—			0.2			0.4			0.6
Russia closing initiatives	2.8			—			—			—			2.8
Global ERP transformation	—			—			—			4.9			4.9
HPC brand portfolio transitions	1.4			—			—			—			1.4
Other project costs	0.2			0.9			2.1			4.6			7.8
Unallocated shared costs	—			—			—			12.5			12.5
Non-cash purchase accounting adjustments	0.9			—			—			—			0.9
Gain from contingent consideration liability	(1.5)			—			—			—			(1.5)
Impairment of equipment and operating leases	1.8			2.7			—			—			4.5
Impairment of intangible assets	19.0			—			48.0			—			67.0
Early settlement of foreign currency cash flow hedges	3.9			—			—			—			3.9
HPC product recall	1.9			—			—			—			1.9
Salus and other	0.3			3.3			0.1			1.3			5.0
Adjusted EBITDA	$	11.3		$	83.5		$	12.8		$	(16.8)		$	90.8
Net Sales	$	643.6		$	574.3		$	224.6		$	—		$	1,442.5
Adjusted EBITDA Margin	1.8		%	14.5		%	5.7		%	—			6.3		%
Six Month Period Ended April 3, 2022
Net income (loss) from continuing operations	$	—		$	30.6		$	14.6		$	(100.5)		$	(55.3)
Income tax benefit	—			—			—			(22.8)			(22.8)
Interest expense	—			—			—			46.4			46.4
Depreciation	6.3			7.1			3.6			7.4			24.4
Amortization	9.5			11.5			5.7			—			26.7
EBITDA	15.8			49.2			23.9			(69.5)			19.4
Share based compensation	—			—			—			12.2			12.2
Tristar acquisition	14.4			—			—			—			14.4
Rejuvenate integration	—			—			7.0			—			7.0
Armitage integration	—			1.2			—			—			1.2
Omega integration	—			1.4			—			—			1.4
HHI divestiture	—			—			—			5.5			5.5
HPC separation initiatives	—			—			—			4.7			4.7
Coevorden operations separation	—			5.3			—			—			5.3
Global ERP transformation	—			—			—			6.0			6.0
GPC distribution center transition	—			19.9			—			—			19.9
Global productivity improvement program	2.1			0.7			—			1.3			4.1
Other project costs	2.2			1.6			—			6.4			10.2
Unallocated shared costs	—			—			—			13.8			13.8

Non-cash purchase accounting adjustments	3.5			—			—			—			3.5
Legal and environmental	—			—			(0.5)			—			(0.5)
Salus and other	—			—			—			0.2			0.2
Adjusted EBITDA	$	38.0		$	79.3		$	30.4		$	(19.4)		$	128.3
Net sales	$	695.8		$	597.3		$	271.9		$	—		$	1,565.0
Adjusted EBITDA margin	5.5		%	13.3		%	11.2		%	—		%	8.2		%

Table of Contents

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017~~April 3, 2022, for SB/RH.

SB/RH HOLDINGS, LLC (in millions)

HHI

PET

H&G

GAC

Corporate

Consolidated
Three Month Period Ended December 31, 2017

Net income from continuing operations

$
31.1

$
12.9

$
0.7

$
6.7

$
77.1

$
128.5
Income tax benefit

—

—

—

—

(131.2)

(131.2)
Interest expense

—

—

—

—

38.6

38.6
Depreciation and amortization

11.0

10.4

4.7

3.9

3.0

33.0
EBITDA

42.1

23.3

5.4

10.6

(12.5)

68.9
Share based compensation

—

—

—

—

3.3

3.3
Acquisition and integration related charges

2.7

2.1

—

0.2

0.2

5.2
Restructuring and related charges

15.2

0.6

—

4.0

0.6

20.4
Inventory acquisition step-up

—

0.8

—

—

—

0.8
Pet safety recall

—

7.3

—

—

—

7.3
Adjusted EBITDA

$
60.0

$
34.1

$
5.4

$
14.8

$
(8.4)

$
105.9
Three Month Period Ended January 1, 2017

Net income from continuing operations

$
48.4

$
19.4

$
1.6

$
13.1

$
(70.0)

$
12.5
Income tax expense

—

—

—

—

7.9

7.9
Interest expense

—

—

—

—

43.3

43.3
Depreciation and amortization

8.9

10.6

4.1

3.9

2.5

30.0
EBITDA

57.3

30.0

5.7

17.0

(16.3)

93.7
Share based compensation

—

—

—

—

6.2

6.2
Acquisition and integration related charges

1.8

0.1

—

1.3

0.1

3.3
Restructuring and related charges

0.1

0.6

—

1.5

—

2.2
Adjusted EBITDA

$
59.2

$
30.7

$
5.7

$
19.8

$
(10.0)

$
105.4


SB/RH HOLDINGS, LLC (in millions)	HPC			GPC			H&G			Corporate		Consolidated
Three Month Period Ended April 2, 2023
Net (loss) income from continuing operations	$	(37.7)		$	30.2		$	(39.8)		$	(27.9)	$	(75.2)
Income tax benefit	—			—			—			(34.0)		(34.0)
Interest expense	—			—			—			31.7		31.7
Depreciation	2.9			3.8			1.9			3.3		11.9
Amortization	2.1			5.5			2.9			—		10.5
EBITDA	(32.7)			39.5			(35.0)			(26.9)		(55.1)
Share based compensation	—			—			—			4.0		4.0
Tristar integration	4.0			—			—			—		4.0
HHI divestiture	—			—			—			1.4		1.4
HPC separation initiatives	—			—			—			1.1		1.1
Coevorden operations separation	—			1.4			—			—		1.4
Fiscal 2023 restructuring	2.4			2.1			—			—		4.5
Fiscal 2022 restructuring	—			—			—			0.1		0.1
Russia closing initiatives	(0.1)			—			—			—		(0.1)
Global ERP transformation	—			—			—			3.3		3.3
HPC brand portfolio transitions	0.5			—			—			—		0.5
Other project costs	0.1			0.2			2.1			2.2		4.6
Unallocated shared costs	—			—			—			6.3		6.3
Non-cash purchase accounting adjustments	0.5			—			—			—		0.5
Impairment of equipment and operating leases	1.5			2.7			—			—		4.2
Impairment of intangible assets	19.0			—			48.0			—		67.0

Early settlement of foreign currency cash flow hedges	1.3			—			—			—		1.3
HPC product recall	1.6			—			—			—		1.6
Other	—			0.4			—			0.2		0.6
Adjusted EBITDA	$	(1.9)		$	46.3		$	15.1		$	(8.3)	$	51.2
Net Sales	$	279.2		$	296.7		$	153.3		$	—	$	729.2
Adjusted EBITDA margin	(0.7)		%	15.6		%	9.8		%	—		7.0		%
Three Month Period Ended April 3, 2022
Net (loss) income from continuing operations	$	(19.1)		$	19.0		$	30.4		$	(54.9)	$	(24.6)
Income tax benefit	—			—			—			(6.6)		(6.6)
Interest expense	—			—			—			24.8		24.8
Depreciation	3.2			3.6			1.8			3.6		12.2
Amortization	4.9			5.7			2.9			—		13.5
EBITDA	(11.0)			28.3			35.1			(33.1)		19.3
Share based compensation	—			—			—			6.2		6.2
Tristar acquisition	14.4			—			—			(1.7)		12.7
Rejuvenate integration	—			—			2.6			—		2.6
Armitage integration	—			0.5			—			—		0.5
Omega integration	—			0.5			—			—		0.5
HHI divestiture	—			—			—			1.2		1.2
HPC separation initiatives	—			—			—			3.0		3.0
Coevorden operations separation	—			2.1			—			—		2.1
Global ERP transformation	—			—			—			3.2		3.2
GPC distribution center transition	—			7.1			—			—		7.1
Global productivity improvement program	1.5			0.5			—			0.3		2.3
Other project costs	2.2			1.6			—			4.4		8.2
Unallocated shared costs	—			—			—			6.9		6.9
Non-cash purchase accounting adjustments	3.5			—			—			—		3.5


Adjusted EBITDA	$	10.6		$	40.6		$	37.7		$	(9.6)	$	79.3
Net Sales	$	316.1		$	295.1		$	196.6		$	—	$	807.8
Adjusted EBITDA margin	3.4		%	13.8		%	19.2		%	—		9.8		%

Table of Contents

The following is a reconciliation of net income to Adjusted EBITDA for the six month periods ended April 2, 2023 and April 3, 2022, for SB/RH.


SB/RH HOLDINGS, LLC (in millions)	HPC			GPC			H&G			Corporate		Consolidated
Six Month Period Ended April 2, 2023
Net (loss) income from continuing operations	$	(41.8)		$	53.3		$	(47.0)		$	(79.5)	$	(115.0)
Income tax benefit	—			—			—			(46.3)		(46.3)
Interest expense	—			—			—			65.1		65.1
Depreciation	6.1			7.5			3.7			6.8		24.1
Amortization	4.2			11.0			5.7			—		20.9
EBITDA	(31.5)			71.8			(37.6)			(53.9)		(51.2)
Share based compensation	—			—			—			7.1		7.1
Tristar acquisition and integration	9.7			—			—			—		9.7
HHI divestiture	—			—			—			2.9		2.9
HPC separation initiatives	—			—			—			3.5		3.5
Coevorden operations separation	—			2.7			—			—		2.7
Fiscal 2023 restructuring	2.4			2.1			—			—		4.5
Fiscal 2022 restructuring	—			—			0.2			0.4		0.6
Russia closing initiatives	2.8			—			—			—		2.8
Global ERP transformation	—			—			—			4.9		4.9
HPC brand portfolio transitions	1.4			—			—			—		1.4
Other project costs	0.2			0.9			2.1			4.6		7.8
Unallocated shared costs	—			—			—			12.5		12.5
Non-cash purchase accounting adjustments	0.9			—			—			—		0.9
Gain from contingent consideration liability	(1.5)			—			—			—		(1.5)
Impairment of equipment and operating leases	1.8			2.7			—			—		4.5
Impairment of intangible assets	19.0			—			48.0			—		67.0
Early settlement of foreign currency cash flow hedges	3.9			—			—			—		3.9
HPC product recalls	1.9			—			—			—		1.9
Other	0.3			3.3			0.1			1.3		5.0
Adjusted EBITDA	$	11.3		$	83.5		$	12.8		$	(16.7)	$	90.9
Net sales	$	643.6		$	574.3		$	224.6		$	—	$	1,442.5
Adjusted EBITDA margin	1.8		%	14.5		%	5.7		%	—		6.3		%
Six Month Period Ended April 3, 2022
Net income (loss) from continuing operations	$	—		$	30.6		$	14.6		$	(99.9)	$	(54.7)
Income tax benefit	—			—			—			(22.4)		(22.4)
Interest expense	—			—			—			46.7		46.7
Depreciation	6.3			7.1			3.6			7.4		24.4
Amortization	9.5			11.5			5.7			—		26.7
EBITDA	15.8			49.2			23.9			(68.2)		20.7
Share based compensation	—			—			—			11.8		11.8
Tristar acquisition	14.4			—			—			—		14.4
Rejuvenate integration	—			—			7.0			—		7.0
Armitage integration	—			1.2			—			—		1.2
Omega integration	—			1.4			—			—		1.4
HHI divestiture	—			—			—			5.5		5.5
HPC separation initiatives	—			—			—			4.7		4.7
Coevorden operations separation	—			5.3			—			—		5.3
Global ERP transformation	—			—			—			6.0		6.0
GPC distribution center transition	—			19.9			—			—		19.9
Global productivity improvement program	2.1			0.7			—			1.3		4.1
Other project costs	2.2			1.6			—			6.4		10.2
Unallocated shared costs	—			—			—			13.8		13.8
Non-cash purchase accounting adjustments	3.5			—			—			—		3.5
Legal and environmental	—			—			(0.5)			—		(0.5)
Other	—			—			—			(0.2)		(0.2)
Adjusted EBITDA	$	38.0		$	79.3		$	30.4		$	(18.9)	$	128.8
Net sales	$	695.8		$	597.3		$	271.9		$	—	$	1,565.0
Adjusted EBITDA margin	5.5		%	13.3		%	11.2		%	—		8.2		%

Table of Contents

Consolidated Results of Operations

The following is summarized consolidated results of operations for ~~Spectrum Brands Holdings, Inc.~~SBH for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017 respectively:~~

April 3, 2022.


(in millions, except %)								(in millions, except %)	Three Month Periods Ended						Variance									Six Month Periods Ended										Variance
	December 31, 2017		January 1, 2017		Variance				April 2, 2023			April 3, 2022										April 2, 2023					April 3, 2022
Net sales	$	646.5	$	602.3	$	44.2	7.3%	Net sales	$	729.2		$	807.8					$	(78.6)			(9.7)	%				$	1,442.5				$	1,565.0				$	(122.5)			(7.8)	%
Gross profit		240.9		239.1		1.8	0.8%	Gross profit	214.5			255.6			(41.1)					(16.1)	%			416.4					474.9					(58.5)					(12.3)	%
Gross profit margin								Gross profit margin	29.4		%	31.6		%	(220)		bps							28.9		%			30.3		%			(140)		bps
Operating expenses		206.9		177.6		29.3	16.5%	Operating expenses	$	291.5		$	263.7		$	27.8				10.5	%			$	513.6				$	506.9				$	6.7				1.3	%
Interest expense		38.6		43.0		(4.4)	(10.2%)	Interest expense	31.6			24.7			6.9					27.9	%			65.0					46.4					18.6					40.1	%
Income tax expense		(126.0)		6.7		(132.7)	(1,980.6%)
Net income from continuing operations		120.1		12.8		107.3	838.3%
Other non-operating expense (income), net								Other non-operating expense (income), net	1.2			(0.9)			2.1					n/m				(0.3)					(0.3)					—					—	%
Income tax benefit								Income tax benefit	(34.8)			(6.8)			(28.0)					411.8	%			(46.9)					(22.8)					(24.1)					105.7	%
Net loss from continuing operations								Net loss from continuing operations	(75.0)			(25.1)			(49.9)					198.8	%			(115.0)					(55.3)					(59.7)					108.0	%
Income from discontinued operations, net of tax		40.9		52.4		(11.5)	(21.9%)	Income from discontinued operations, net of tax	21.4			41.1			(19.7)					(47.9)	%			40.9					79.9					(39.0)					(48.8)	%
Net income		161.0		65.2		95.8	146.9%
Net (loss) income								Net (loss) income	(53.6)			16.0			(69.6)					n/m				(74.1)					24.6					(98.7)					n/m
n/m = not meaningful								n/m = not meaningful

Net Sales.Net sales for the three month period ended December 31, 2017 increased $44.2 million, or 7.3%, compared to the three month period ended January 1, 2017. Organic net sales increased $11.9 million, or 2.0%, for the three month period ended December 31, 2017. Organic net sales excludes the impact of foreign currency translation and acquisition sales, and is considered a non-GAAP measurement. The following ~~sets forth~~is a summary of net sales by segment for the three and six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017:~~

(in millions, except %)

December 31, 2017

January 1, 2017

Variance
Hardware & Home Improvement

325.9

288.8

37.1

12.8%
Global Pet Supplies

202.4

194.2

8.2

4.2%
Home & Garden

49.3

49.8

(0.5)

(1.0%)
Global Auto Care

68.9

69.5

(0.6)

(0.9%)
Net Sales

$
646.5

$
602.3

44.2

7.3%

~~The following sets forth~~April 3, 2022, and the ~~principle~~principal components of ~~change~~changes in net sales for the respective periods.


(in millions, except %)	Three Month Periods Ended				Variance				Six Month Periods Ended				Variance
	April 2, 2023		April 3, 2022						April 2, 2023		April 3, 2022
HPC	$	279.2	$	316.1	$	(36.9)	(11.7)	%	$	643.6	$	695.8	$	(52.2)	(7.5)	%
GPC	296.7		295.1		1.6		0.5	%	574.3		597.3		(23.0)		(3.9)	%
H&G	153.3		196.6		(43.3)		(22.0)	%	224.6		271.9		(47.3)		(17.4)	%
Net Sales	$	729.2	$	807.8	(78.6)		(9.7)	%	$	1,442.5	$	1,565.0	(122.5)		(7.8)	%


(in millions)	Three Month Periods Ended		Six Month Periods Ended
Net Sales for the period ended April 3, 2022	$	807.8	$	1,565.0
Increase (Decrease) in GPC	9.2		(1.5)
Decrease in HPC	(47.2)		(104.6)
Decrease in H&G	(43.3)		(47.3)
Acquisition sales	22.1		89.9
Foreign currency impact, net	(19.4)		(59.0)
Net Sales for the period ended April 2, 2023	$	729.2	$	1,442.5

Gross Profit. Gross profit and gross profit margin for the three and six month periods decreased primarily due to lower sales volume plus unfavorable mix from the ~~three month period~~ ~~ended January 1, 2017~~ torealization of higher inventoried costs accumulated in the ~~three month period~~ ~~ended December 31, 2017:~~


~~(in millions)~~	~~Net Sales~~
~~Net Sales for the three month period ended January 1, 2017~~	$	~~602.3~~
~~Increase due to acquisitions~~		~~24.8~~
~~Increase in hardware & home improvement~~		~~35.0~~
~~Decrease in global auto care~~		~~(1.2)~~
~~Decrease in home & garden~~		~~(0.5)~~
~~Decrease in global pet supplies~~		~~(21.4)~~
~~Foreign currency impact, net~~		~~7.5~~
~~Net Sales for the three month period ended December 31, 2017~~	$	~~646.5~~

~~Gross Profit.~~ ~~For the three month period ended December 31, 2017, gross profit increased $1.8 million~~prior year offset by positive pricing compared to the three month period ended January 1, 2017, with a decrease in gross profit margin from 39.7% to 37.3%. The increase in gross profit is due to the increase in sales volume from our HHI segment and acquisition sales in our PET segment. The decrease in gross profit margin is attributable to incremental costs and operating inefficiencies from restructuring initiatives in our GAC and HHI segments along with increased production costs associated with start-up costs on facilities impacted by the product safety recall in our PET segment.

prior year.

Operating Expenses.Operating expenses for the three and six month ~~period ended December 31, 2017~~periods increased ~~$29.3 million compared~~due to the ~~three month period ended January 1, 2017, primarily attributable to~~recognition of an ~~increase~~impairment on intangible assets of $67 million. See Note 8 - Goodwill and Intangible Assets in selling and general and administrative expenses of $9.5 million primarily driven by incremental costs from acquisitions in the prior year and the pet safety recall; increase in restructuring and related charges of $17.5 million related to HHI restructuring initiatives; and an increase in acquisition & integration related charges of $1.9 million due to integration of PetMatrix and GloFish. See ~~Note 4 – Acquisitions and Integration Costs~~ ~~to the Condensed Consolidated Financial Statements, and~~ ~~Note 5 – Restructuring and Related Charges~~Notes to the Condensed Consolidated Financial Statements included elsewhere ~~within~~in this Quarterly Report for additional detail.

~~Interest Expense.~~ ~~Interest~~ Excluding the impairment, selling expense for the three and six month ~~period ended December 31, 2017~~periods decreased ~~$4.4~~$16.7 million ~~or 10.2%,~~and $31.7 million, respectively, from a reduction in distribution and transportation costs with improved operating effectiveness plus initiatives to reduce operating spend, with partial offset from the ~~three month period ended January 1, 2017 due to non-recurring financing costs associated with a premium on~~impairment of equipment and operating lease assets. See Note 7 - Property, Plant and Equipment in the ~~redemption of 6.375%~~ Notes ~~during the three month period ended January 1, 2017.~~

~~Table of Contents~~

~~Income Taxes.~~ Our effective tax rate was significantly impacted for the three month period ended December 31, 2017 by the Tax Cuts and Jobs Act (“Tax Reform Act”). The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. Since we file U.S. tax returns on a September fiscal year basis, our US tax rate for Fiscal 2018 will be a blended rate of 24.53%. During the three month period ended December 31, 2017, we recorded a provisional $206.7 million tax benefit for restatement of U.S. deferred tax assets and liabilities and a provisional $78.8 million of income tax expense for the one-time deemed mandatory repatriation.

In response to the enactment of the Tax Reform Act, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. SAB 118 allows registrants to record provisional amounts during a one year measurement period in a manner similar to accounting for business combinations. The provisional tax impacts in our consolidated financial statements for the three month period ended December 31, 2017 may differ from these provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take as a result of the Tax Reform Act. See ~~Note 16 – Income Taxes~~ to the Condensed Consolidated Financial Statements included elsewhere ~~within~~in this Quarterly Report for additional detail.

General and administrative expenses for the three and six month periods decreased $19.5 million and $24.2 million, respectively, from operating spend initiatives and lower project cost towards strategic transactions and restructurings, plus a gain of $1.5 million from the remeasurement of the contingent consideration liability associated with the Tristar Business acquisition during the six month period.

Interest Expense. Interest expense for the three and six month periods increased due to a higher level of outstanding borrowings on the Revolver Facility with increased borrowing rates on variable rate debt plus an incremental $2.3 million during the six month period for the amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio during the year ending September 30, 2023. See Note 9 – 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 income for the three and six month periods increased due to changes in foreign currency compared to the prior year.

Income Taxes. Our estimated annual effective tax rate was impacted for the three and six month periods by income earned outside the U.S. that is subject to U.S. tax, including the U.S. tax on global intangible low taxed income, certain nondeductible expenses, foreign currency impact, and foreign rates that differ from the U.S. federal statutory rate. During the three and six month periods ended April 2, 2023, the Company recorded a $16.8 million tax benefit related to the impairment of certain intangible assets.

Income From Discontinued Operations. ~~Discontinued~~Income or loss attributable to discontinued operations ~~include our GBA segment that is held for sale, which were previously reported as a separate segment within consolidated continuing~~primarily reflect the income from the discontinued operations of the ~~Company. Results~~HHI segment. Income from discontinued operations attributable to the HHI segment decreased during the three and six month periods due to lower volumes offset by pricing increases and unfavorable mix from higher inventoried costs accumulated in the prior year. See Note 2 -Divestitures in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.

Table of Contents

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 a 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 ~~financial position~~for SB/RH for the three and ~~cash flows~~six month periods ended April 2, 2023 and April 3, 2022:


(in millions, except %)	Three Month Periods Ended						Variance					Six Month Periods Ended						Variance
	April 2, 2023			April 3, 2022								April 2, 2023			April 3, 2022
Net sales	$	729.2		$	807.8		$	(78.6)		(9.7)	%	$	1,442.5		$	1,565.0		$	(122.5)		(7.8)	%
Gross profit	214.5			255.6			(41.1)			(16.1)	%	416.4			474.9			(58.5)			(12.3)	%
Gross profit margin	29.4		%	31.6		%	(220)		bps			28.9		%	30.3		%	(140)		bps
Operating expenses	$	290.8		$	262.9		$	27.9		10.6	%	$	512.9		$	505.7		$	7.2		1.4	%
Interest expense	31.7			24.8			6.9			27.8	%	65.1			46.7			18.4			39.4	%
Other non-operating expense (income), net	1.2			(0.9)			2.1			n/m		(0.3)			(0.4)			0.1			(25.0)	%
Income tax benefit	(34.0)			(6.6)			(27.4)			415.2	%	(46.3)			(22.4)			(23.9)			106.7	%
Net loss from continuing operations	(75.2)			(24.6)			(50.6)			205.7	%	(115.0)			(54.7)			(60.3)			110.2	%
Income from discontinued operations, net of tax	21.9			41.1			(19.2)			(46.7)	%	41.4			79.9			(38.5)			(48.2)	%
Net (loss) income	(53.3)			16.5			(69.8)			n/m		(73.6)			25.2			(98.8)			n/m
n/m = not meaningful

The changes in SB/RH for ~~these businesses~~the three and six month periods are ~~separately reported as discontinued operations for all periods presented. On January 15, 2018,~~primarily attributable to the Company entered into a definitive Acquisition Agreement with Energizer Holdings, Inc. (“Energizer”) where Energizer will acquire from the Company its Global Battery and Lighting business. The sale is expected to be realized by December 31, 2018. The Company is actively marketing the remaining components of the segment consisting of the changes in SBH previously discussed.

Segment Financial Data

Home and Personal Care ~~business~~


(in millions, except %)	Three Month Periods Ended						Variance					Six Month Periods Ended						Variance
	April 2, 2023			April 3, 2022								April 2, 2023			April 3, 2022
Net sales	$	279.2		$	316.1		$	(36.9)		(11.7)	%	$	643.6		$	695.8		$	(52.2)		(7.5)	%
Operating (loss) income	(37.3)			(19.8)			(17.5)			88.4	%	(41.6)			0.6			(42.2)			n/m
Operating (loss) income margin	(13.4		%)	(6.3		%)	(710)		bps			(6.5)		%	0.1		%	(660)		bps
Adjusted EBITDA	$	(1.9)		$	10.6		$	(12.5)		n/m		$	11.3		$	38.0		$	(26.7)		(70.3)	%
Adjusted EBITDA margin	(0.7)		%	3.4		%	(410)		bps			1.8		%	5.5		%	(370)		bps
n/m = not meaningful

Net sales for the three and six month periods decreased due to category decline from lower consumer demands, particularly in kitchen appliances, and continued retailer inventory management in Americas. Sales in EMEA were further impacted by unfavorable foreign currency and the Russia-Ukraine war. Organic net sales for the three month period decreased $47.2 million, or 14.9%, excluding acquisition sales of $22.1 million and unfavorable foreign currency of $11.8 million. Net sales for the six month period were further impacted by the high competitive landscape during the holiday season and closing of our Russia commercial operations. Organic net sales for the six month period decreased $104.6 million, or 15.0%, excluding acquisition sales of $89.9 million and unfavorable foreign currency of $37.5 million.

Operating loss for the three and six month periods were driven by impairment of the Power XL tradename of $19.0 million with ~~interested parties~~lower adjusted EBITDA and margins driven by lower volume, the sale of higher cost inventory accumulated in the prior year and unfavorable foreign currency in EMEA, which were partially mitigated by cost savings from the reduction of operating expenses initiated in the prior year and additional actions undertaken during the second quarter.

Global Pet Care


(in millions, except %)	Three Month Periods Ended						Variance					Six Month Periods Ended						Variance
	April 2, 2023			April 3, 2022								April 2, 2023			April 3, 2022
Net sales	$	296.7		$	295.1		$	1.6		0.5	%	$	574.3		$	597.3		$	(23.0)		(3.9)	%
Operating income	30.3			19.9			10.4			52.3	%	53.0			32.2			20.8			64.6	%
Operating income margin	10.2		%	6.7		%	350		bps			9.2		%	5.4		%	380		bps
Adjusted EBITDA	$	46.3		$	40.6		$	5.7		14.0	%	$	83.5		$	79.3		$	4.2		5.3	%
Adjusted EBITDA margin	15.6		%	13.8		%	180		bps			14.5		%	13.3		%	120		bps

Net sales for the three month period increased due to strong growth in companion animals, including chews in Americas and dog and cat food in EMEA, partially offset by decrease in other goods and aquatic environments as compared to prior year elevated levels. Net sales were further helped by prior year price increases with new positive pricing adjustments in EMEA partially overcoming the unfavorable impact of foreign exchange rates. Organic net sales for three month period increased $9.2 million, or 3.1%, excluding unfavorable foreign currency impact of $7.6 million. Net sales for the six month period decreased due to higher retail inventory levels and unfavorable foreign exchange rates offset by pricing adjustments from the prior year. Organic net sales for the six month period decreased $1.5 million, or 0.3%, excluding unfavorable foreign currency impact of $21.5 million.

Operating income, adjusted EBITDA and margins increased due to lower distribution costs and improved fulfillment compared to prior year disruptions, positive pricing adjustments and savings from prior year cost reduction initiatives and from additional cost reduction actions in the current year offset by lower volumes and unfavorable foreign currency impact.

Home and Garden


(in millions, except %)	Three Month Periods Ended						Variance					Six Month Periods Ended						Variance
	April 2, 2023			April 3, 2022								April 2, 2023			April 3, 2022
Net sales	$	153.3		$	196.6		$	(43.3)		(22.0)	%	$	224.6		$	271.9		$	(47.3)		(17.4)	%
Operating (loss) income	(39.8)			30.4			(70.2)			n/m		(47.0)			14.7			(61.7)			n/m
Operating (loss) income margin	(26.0)		%	15.5		%	(4,150)		bps			(20.9)		%	5.4		%	(2,630)		bps
Adjusted EBITDA	$	15.1		$	37.7		$	(22.6)		(59.9)	%	$	12.8		$	30.4		$	(17.6)		(57.9)	%
Adjusted EBITDA margin	9.8		%	19.2		%	(940)		bps			5.7		%	11.2		%	(550)		bps
n/m = not meaningful

Net sales for the three and six month periods decreased due to reduction in retail inventory compared to a ~~separate transaction(s) expected~~strong prior year inventory build ahead of the season, as well as retail inventory reduction during the quarter, partially offset by positive pricing increases. Adverse weather conditions late in the periods also negatively impacted the pest controls category POS (point of sale) and resulted in lower replenishment orders. Cleaning products sales decreased as a slow start to ~~be entered into~~the spring cleaning season contributed to the POS decline in our relevant categories as well as comparison to last year inventory loads during the quarter.

Operating loss and ~~consummated~~margin for the three and six month periods decreased due to the recognition of an impairment on the Rejuvenate tradename of $48.0 million with a decrease in adjusted EBITDA and margins for the three and six month periods due to lower volumes, the realization of high inventoried costs accumulated in the prior year,and fixed cost restructuring and operational cost reductions initiated during the second half of the prior year.

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 2, 2023 and April 3, 2022, respectively.


	SBH				SB/RH
Six Month Periods Ended (in millions)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Operating activities	$	148.6	$	(212.2)	$	138.2	$	(244.6)
Investing activities	$	(25.9)	$	(338.6)	$	(25.9)	$	(338.6)
Financing activities	$	(68.9)	$	568.9	$	(58.4)	$	601.4

Cash Flows from Operating Activities

Cash flows provided by SBH's continuing operations increased $360.8 million, primarily due to ~~December 31, 2018. See~~ the reduction of cash used towards working capital compared to the prior year, primarily with the reduced purchasing and overall reduction of inventory compared to the prior year spending and higher supply chain costs, plus a decrease in cash paid towards strategic transactions and restructuring initiatives. Cash flows provided by SB/RH continuing operations increased $382.8 million primarily due to the items previously discussed above.

Cash Flows from Investing Activities

Cash flows used in investing activities for SBH continuing operations decreased $312.7 million, primarily from the cash used in the prior year of $314.3 million for the acquisition of the Tristar Business. Cash flows used in investing activities of SB/RH decreased due to the items previously discussed.

Cash Flows from Financing Activities

Cash flows used by financing activities for continuing operations increased $637.8 million primarily due to the incremental borrowings in the prior year from the Revolver Facility and Term Loans to support the Tristar Business acquisition and working capital needs, offset by the lower treasury share repurchases. During the six month period ended April 2, 2023, the Company reduced outstanding Revolver Facility with amortizing payments on other outstanding debt of $21.7 million. Refer to Note 39 – ~~Divestitures~~Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information on debt borrowings. During the ~~assets and liabilities classified as held for sale and discontinued operations.~~

~~Segment Financial Data~~

~~Hardware & Home Improvement~~

(in millions, except %)

December 31, 2017

January 1, 2017

Variance
Net sales

$
325.9

$
288.8

$
37.1

12.8%
Operating income

31.6

46.8

(15.2)

(32.5%)
Operating income margin

9.7%

16.2%

(650)
bps

Adjusted EBITDA

60.0

59.2

0.8

1.4%
Adjusted EBITDA margin

18.4%

20.5%

(210)
bps

~~Net sales for the three~~six month period ended ~~December 31, 2017 increased $37.1 million, or 12.8%, with an increase in organic net sales~~April 2, 2023, the Company did not repurchase any treasury stock. There was no issuance of ~~$35.0 million or 12.1%.~~

Security and lockset increased $32.7 million due to increased market share and promotional volumes with traditional retail, increased volumes through e-commerce channels with Amazon promotions, and expanded distribution through our home builder channel.

~~Plumbing accessories increased $3.1 million due to promotional volumes and new product introductions with significant retail partners.~~

~~Hardware marginally decreased $0.8 million.~~

~~Operating income~~ common stock, other than through the Company’s share-based compensation plans and which is recognized as a non-cash financing activity. See Note 12 – Shareholders’ Equity and Note 13 - Share Based Compensation in the ~~three month period ended December 31, 2017 decreased $15.2 million with operating income margin decrease of 650 bps due~~Notes to ~~incremental costs and inefficiencies driven by~~ the ~~HHI Distribution Center Consolidation restructuring initiative. Adjusted EBITDA increased $0.8 million primarily driven by~~Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail. During the ~~increase in sales volume with an adjusted EBITDA margin decrease of 210 bps from materials inflation, foreign exchange rates, product mix and operational inefficiencies.~~

~~Table of Contents~~

~~Global Pet Supplies~~

(in millions, except %)

December 31, 2017

January 1, 2017

Variance
Net sales

$
202.4

$
194.2

$
8.2

4.2%
Operating income

13.0

19.5

(6.5)

(33.3%)
Operating income margin

6.4%

10.0%

(360)
bps

Adjusted EBITDA

34.1

30.7

3.4

11.1%
Adjusted EBITDA margin

16.8%

15.8%

100
bps

~~Net sales for the three month period ended December 31, 2017 increased $8.2 million, or 4.2%, with a decrease in organic net sales of $21.4 million or 11.0%.~~

Companion animal decreased $14.1 million, excluding the impact of acquisition sales of $23.0 million from PetMatrix, with decrease in NA of $7.7 million driven by lower volumes after the pet safety recall, reduced listings and retail inventory reductions with specialty pet retailers; and a decrease in EMEA of $5.7 million due to the exit of a pet food tolling agreement.

Aquatics decreased $7.3 million, excluding the impact of acquisition sales of $1.8 million from GloFish, primarily due to product category softness in NA from slower POS and reduction in distribution with retailers.

Operating income for the three month period ended December 31, 2017 decreased $6.5 million with a decrease in operating income margin of 360 bps primarily driven by incremental production costs and inefficiencies for the startup of facilities impacted by the product safety recall, partially offset by improved margin from acquired businesses. Adjusted EBITDA in the three month period ended December 31, 2017 increased $3.4 million with an adjusted EBITDA margin increase of 100 bps due to improved product mix, and margin from acquired businesses.

~~Home and Garden~~

(in millions, except %)

December 31, 2017

January 1, 2017

Variance
Net sales

$
49.3

$
49.8

$
(0.5)

(1.0%)
Operating income

0.8

1.7

(0.9)

(52.9%)
Operating income margin

1.6%

3.4%

(180)
bps

Adjusted EBITDA

5.4

5.7

(0.3)

(5.3%)
Adjusted EBITDA margin

11.0%

11.4%

(40)
bps

~~Net sales and organic net sales for the three month period ended December 31, 2017 decreased $0.5 million, or 1.0%.~~

~~Lawn & garden control products decreased $3.5 million due to timing of distribution for seasonal orders with key retail partners.~~

~~Repellent products increased $1.5 million due to inventory replenishment after recent hurricane activity in the US and growth in e-commerce channels.~~

Household insect control products increased $1.5 million due to increased volumes for recent hurricane activity in the US, partially offset by timing of distribution for seasonal orders with key retail partners.

Operating income for the three month period ended December 31, 2017 decreased $0.9 million with a decline in operating income margin of 180 bps due to sales volumes discussed above. Adjusted EBITDA in the three month period ended December 31, 2017 decreased $0.3 million with a decline in adjusted EBITDA margin of 40 bps due to sales volumes discussed above.

~~Table of Contents~~

~~Global Auto Care~~

(in millions, except %)

December 31, 2017

January 1, 2017

Variance
Net sales

$
68.9

$
69.5

$
(0.6)

(0.9%)
Operating income

6.7

13.1

(6.4)

(48.9%)
Operating income margin

9.7%

18.8%

(910)
bps

Adjusted EBITDA

14.8

19.8

(5.0)

(25.3%)
Adjusted EBITDA margin

21.5%

28.5%

(700)
bps

~~Net sales for the three month period ended December 31, 2017 decreased $0.6 million, or 0.9%, with an organic sales decrease of $1.2 million, or 1.7%.~~

~~Auto appearance products decreased $0.2 million due to timing of shipping and distribution.~~

~~Refrigerant products decreased $1.4 million due to early purchasing by customers in the prior period in anticipation of commodity cost increases.~~

~~Auto performance products and other increased $0.4 million due to market growth in EMEA.~~

Operating income for the three month period ended December 31, 2017 decreased $6.4 million, with an operating income margin decrease of 910 bps due to sales volumes discussed above, product mix, and incremental costs and operating inefficiencies driven by GAC restructuring initiatives. Adjusted EBITDA for the three month period ended December 31, 2017 decreased by $5.0 million with adjusted EBITDA margin decrease of 700 bps due to sales volumes and product mix previously discussed.

~~Liquidity and Capital Resources~~

~~The following is a summary of the Company’s cash flows for the three~~six month periods ended ~~December 31, 2017~~April 2, 2023 and ~~January 1, 2017:~~

SBH

SB/RH
(in millions)

December 31, 2017

January 1, 2017

December 31, 2017

January 1, 2017
Net cash flow from operating activities

$
(153.0)

$
5.8

$
(183.1)

$
(17.4)
Net cash flow from investing activities

$
(24.2)

$
(28.7)

$
(24.2)

$
(28.7)
Net cash flow from financing activities

$
147.1

$
(102.7)

$
177.2

$
(75.1)

~~Cash Flows from Operating Activities~~

~~Cash flows from operating activities decreased $158.8~~April 3, 2022, SBH made cash dividend payments of $34.4 million, ~~during the three month period ended December 31, 2017 due to:~~

Decrease in cash generated from continuing operations of $62.7 million, with a cash payment to Stanley Black and Decker in the prior year of $23.2 million for a non-recurring settlement of transitional operating costs subsequent to the acquisition of the HHI Business acquired in 2013, plus cash invested in working capital of $84.8 million primarily for payment on accounts payable and accrued expenses in the current period.

~~Decrease in cash generated by discontinued operations of $81.0 million;~~

~~Increase in cash paid towards restructuring and integration related charges of $15.3 million;~~

Increase in cash paid for interest of $1.8 million including a non-recurring financing costs of $5.6 million associated with a premium on redemption of 6.375% Notes and costs for re-pricing the USD Term Loan in the prior year; partially offset by

~~Decrease in corporate-related expenditures of $1.6 million~~

~~Decrease in cash paid for income taxes of $0.4 million~~

~~Depreciation and Amortization~~

Depreciation and amortization for the Company was $33.0 million and $30.0 million for the three months ended December 31, 2017, and January 1, 2017, respectively. The increase in depreciation and amortization is attributable to the recognition of property, plant and equipment and definite lived intangible assets from acquisitions of PetMatrix and GloFish during the year ended September 30, 2017.

~~Table of Contents~~

~~Cash Flows from Investing Activities~~

Cash flows used in investing activities decreased $4.5 million during the three month period ended December 31, 2017 was primarily attributable to an decrease in purchase of property, plant and equipment.

~~Capital Expenditures~~

Capital expenditures for the Company are $17.9 million and $21.1 million for the three month periods ended December 31, 2017 and January 1, 2017, respectively. We expect to make investments in capital projects similar to historical levels.

~~Cash Flows from Financing Activities~~

or $0.42 per share. Cash flows from financing activity of SB/RH decreased $659.8 million and is highly dependent upon the financing cash flow activities ~~increased $249.8 million for~~of SBH.

Liquidity Outlook

Our ability to generate cash flow from operating activities coupled with our expected ability to access the ~~three month period ended December 31, 2017 due~~credit markets, enables us to ~~incremental~~execute our growth strategies and return value to our shareholders. Our ability to make principal and interest payments on borrowings under our debt agreements and ~~purchases of treasury stock~~our ability to fund planned capital expenditures will depend on the ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. We believe the negative operating cash flow recognized in the prior ~~year.~~

~~Debt~~

~~During~~year is not indicative of the ~~three month period ended December 31, 2017,~~ongoing near-term operations of the Company ~~recognized incremental~~and based upon our current and anticipated level of operations, existing cash balances, the anticipated proceeds from the ~~Revolver Facility~~HHI divestiture 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. It is not unusual for our business to experience negative operating cash flow during the first quarter of ~~$226.0 million primarily~~the fiscal year due to ~~support~~the operating calendar with our customers and the seasonality of our working capital. Additionally, we believe the availability under our credit facility and access to capital ~~and $10.4 million~~markets are sufficient to achieve our longer-term strategic plans. As of ~~other debt financing. As a result of borrowings and payments under the Revolver Facility, as of December 31, 2017,~~April 2, 2023, the Company had borrowing availability of ~~$454.4~~$362.1 million, net of outstanding letters of credit, under our credit facility. Liquidity and ~~amounts allocated to a foreign subsidiary. The Company made $32.5 million~~capital resources of SB/RH are highly dependent upon the cash flow activities of SBH.

Short-term financing needs primarily consist of working capital requirements, capital spending, periodic principal and interest payments on our long-term debt, ~~during~~and initiatives to support restructuring, integration or other related projects. Long-term financing needs depend largely on potential growth opportunities, including acquisition activity and repayment or refinancing of our long-term obligations. 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 consolidated group.

Table of Contents

We may, from time to time, seek to repurchase shares of our common stock. During the three and six month ~~period~~periods ended ~~December 31, 2017.~~

~~At December 31, 2017,~~April 2, 2023, the Company did not repurchase any shares. See Note 12 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail. Any repurchase activity will be dependent on prevailing market conditions, liquidity requirements and other factors.

We maintain a capital structure that we ~~were in compliance~~believe provides us with ~~all covenants under~~sufficient access to credit markets. When combined with strong levels of 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 6.625% Notes, the 6.125% Notes, the 5.75% Notes, and the 4.00% Notes.~~

return value to our shareholders. The Company’s access to ~~the~~ capital markets and financing costs may depend on the Company’s credit ~~ratings of the Company when it is accessing the capital markets.~~ratings. None of the Company’s current borrowings are subject to default or acceleration as a result of a downgrading of credit ratings, although a downgrade of the Company’s credit ratings could increase fees and interest charges on future borrowings.

~~Refer~~ At April 2, 2023, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 5.75% Notes, due July 15, 2025; the 4.00% Notes, due October 1, 2026; the 5.00% Notes, due October 1, 2029; the 5.50% Notes due July 15, 2030; and the 3.875% Notes, due March 15, 2031. On November 17, 2022, the Company entered into the fourth amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio permitted to be no greater than 7.0 to 1.0, before returning to 6.0 to 1.0 at the earliest of (i) September 29, 2023, or (ii) 10 business days after the closing of the HHI divestiture or receipt of the related termination fee.

A portion of our cash balance is located outside the U.S. given our international operations. We manage our worldwide cash requirements centrally by reviewing available cash balances across our worldwide group and the cost effectiveness with which this cash can be accessed. We generally repatriate cash from non-U.S. subsidiaries, provided the cost of the repatriation is not considered material. The counterparties that hold our deposits consist of major financial institutions.

The majority of our business is not considered seasonal with a year round selling cycle that is overall consistent during the fiscal year with the exception of our H&G segment. H&G sales typically peak during the first six months of the calendar year (the Company's second and third fiscal quarters) due to customer seasonal purchasing patterns and the timing of promotional activity. This seasonality requires the Company to ship large quantities of products ahead of peak consumer buying season that can impact cash flow demands to meet manufacturing and inventory requirements earlier in the fiscal year, as well as extended credit terms and/or promotional discounts throughout the peak season.

From time to time the Company enters into factoring agreements and customers' supply chain financing arrangements to provide for the sale of certain trade receivables to unrelated third-party financial institutions. The factored receivables are accounted for as a sale without recourse, and the balance of the receivables sold are removed from the Condensed Consolidated Balance Sheet at the time of the sales transaction, with the proceeds received recognized as an operating cash flow. Amounts received from customers for factored receivables are recognized as a payable and remitted to the factor based upon terms of the factoring agreements. The Company factored certain of its trade receivables during the three month period ending April 2, 2023. Additionally, the Company facilitates a voluntary supply chain financing program to provide certain of its suppliers with the opportunity to sell receivables due from the Company (the Company's trade payables) to an unrelated third-party financial institution under the sole discretion of the supplier and the participating financial institution. There are no guarantees provided by the Company or its subsidiaries and we do not enter into any agreements with the suppliers regarding their participation. The Company's responsibility is limited to payments on the original terms negotiated with its suppliers, regardless of whether the suppliers sell their receivables to the financial institution and continue to be recognized as accounts payable on the Company's Condensed Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow.

During the three month period ended April 2, 2023, there have been no material changes to our debt obligations, lease obligations, employee benefit obligations or other contractual obligations or commercial commitments previously discussed in our Annual Report on Form 10-K for the year ended September 30, 2022, other than the increase in our operating lease liabilities due to significant lease renewal with our HPC distribution center in Redlands, CA, resulting in an obligation of of $61.8 million with a five-year term expiring in August 2028. and changes to borrowings in our revolver under the Company's Credit Agreement, which have a maturity date of June 30, 2025 and are subject to repayment or re-borrowing by the Company without penalty. See Note 109 - Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for ~~additional information.~~

~~Equity~~

~~During the three month period ended December 31, 2017 and January 1, 2017, SBH did not issue additional shares of common stock outside the Company’s share-based compensation plans.~~

SBH made cash dividend payments of $24.2 million and $22.6 million during the three month periods ended December 31, 2017 and January 1, 2017, respectively, with a dividend rate of $0.42 and $0.38 per share, respectively.

From time-to-time we may repurchase outstanding shares of SBH common stock in the open market or otherwise. On January 24, 2017, the Board of Directors approved a $500 million common stock repurchase program. The authorization is effective for 36 months. As of September 30, 2017, the Company had repurchased 1,216,822 shares with an average price of $122.82, with $350.6 million of shares that may yet to be purchased under the program. During the three month period ended December 31, 2017, the Company repurchased 69,174 shares with an average price of $114.88 per share. During the three month period ended January 1, 2017, the Company repurchased 802,281 shares with an average price of $120.97 per share.

During the three month period ended December 31, 2017, SBH granted 0.3 million restricted stock units to our employees and our directors. All vesting dates are subject to the recipient’s continued employment, except as otherwise permitted by our Compensation Committee or Board of Directors or in certain cases if the employee is terminated without cause or as otherwise provided in an applicable employment agreement. The total market value of the RSUs on the date of grant was $36.0 million, which represents unearned share based compensation. Such unearned compensation is expensed over the appropriate vesting period. During the three month period ended December 31, 2017, SBH issued $37.8 million of shares through its stock compensation plans and paid $22.2 million in tax withholding payment on share-based compensation plans, net of proceeds received upon vesting. See ~~Note 14 - Share Based Compensation~~ ~~to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.~~

~~Table of Contents~~

~~SB/RH~~

Liquidity and capital resources of SB/RH are highly dependent upon the cash flow and financing activities of SBH; therefore there are no substantive differences between the cash flows of SBH and SB/RH.

~~Liquidity Outlook~~

The Company’s ability to make principal and interest payment on borrowings under its U.S. and foreign credit facilities 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. Due to the proposed sale of the GBA segment as previously discussed, the Company may be required to use proceeds to make payments on outstanding debt, including payment on its Term Loans and potential payment on outstanding Notes. 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.

~~Off-Balance Sheet Arrangements~~

further detail. 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~~

During the three month period ended December 31, 2017, the Company recognized a provisional $78.8 million associated with the deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings & profits due to the Tax Reform Act enacted on December 22, 2017, which is payable over 8 years and classified as Other Long-Term Liabilities on the Condensed Consolidated Statement of Financial Position as of December 31, 2017. It is not possible to reasonably predict or estimate the exact amounts and timing of these payments; however, it is reasonably possible that during the next 12 months, some portion could be recognized. See ~~Note 16 – Income Taxes~~ ~~of the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.~~

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 or~~ critical accounting estimates as discussed in our Annual Report on Form 10-K for the year ended September 30, ~~2017.~~

2022.

New Accounting Pronouncements

~~In May 2014, the Financial~~

See Note 1 – Basis of Presentation and Significant Accounting ~~Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements~~Policies in ~~ASC 605,~~ ~~Revenue Recognition.~~ This ASU requires revenue recognition to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue recognition model requires identifying the contract and performance obligations, determining the transaction price, allocating the transaction price to performance obligations and recognizing the revenue upon satisfaction of performance obligations. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. This ASU can be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the updates recognized at the date of the initial application along with additional disclosures. The ASU will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2019. We have performed a preliminary assessment over the impact of the pronouncementNotes to the ~~Company and are currently performing detailed assessments over the contracts with our customers and the impact to our processes and control environment. We have not measured the impact of adoption at~~Condensed Consolidated Financial Statements elsewhere included in this point in our assessment and have not concluded on the overall materiality of the impact of adoption to the Company’s consolidated financial statements and disclosures, or the method of adoption, but have not identified any mattersQuarterly Report for information about accounting pronouncements that are ~~considered significant for further disclosure.~~

newly adopted and recent accounting pronouncements not yet adopted.

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~~In February 2016,~~

Guarantor Statements – SB/RH

SBI has issued the ~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02,~~ ~~Leases (Topic 842),~~ ~~which supersedes~~5.75% Notes under the ~~lease requirements~~2025 Indenture, the 4.00% Notes under the 2026 Indenture, the 5.00% Notes under the 2029 Indenture, the 5.50% Notes under the 2030 Indenture, and the 3.875% Notes under the 2031 Indentures (collectively, the “Notes”). The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by SB/RH and SBI’s domestic subsidiaries. The Notes and the related guarantees rank equally in ~~ASC 840,~~ ~~Leases. This ASU requires lessees~~right of payment with all of SBI and the guarantors’ existing and future senior indebtedness and rank senior in right of payment to ~~recognize lease assets~~all of SBI and ~~liabilities on~~ the balance sheet, as well as disclosing key information about leasing arrangements. Although the new ASU requires both operating 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. The ASU can be applied using a modified retrospective approach, with a number of optional practical expedients relatingguarantors’ future indebtedness that expressively provide for its subordination to the ~~identification~~Notes and ~~classification~~the related guarantees. Non-guarantor subsidiaries primarily consist of ~~leases that commenced before the effective date, along with the ability to use hindsight in the evaluation~~SBI’s foreign subsidiaries.

The following financial information consists of lease decisions, that entities may elect to apply. As a result, the ASU will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020, with early adoption applicable. We have not measured the impact of adoption at this point in our assessment and have not concluded on the overall materialitysummarized financial information of the ~~impact of adoption to the Company’s consolidated financial statements, or determined the method and timing of adoption.~~

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments~~, which addresses diversity in practice with the classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update addresses the classification within the statement of cash flow for debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent payments made after a business combination, proceeds from the settlement of insurance claims and corporate-owned life insurance policies, distributions received from equity method investees, and beneficial interests in securitization transactions, among other separately identifiable cash flows when applying the predominance principle. The ASU is appliedObligor, presented on a ~~retrospective basis, and will become effective for us beginning in~~combined basis. The “Obligor” consists of the ~~first quarter of our fiscal year ending September 30, 2019; with early adoption available. We are currently assessing the impact this pronouncement will have on the consolidated~~ financial statements of SBI as the ~~Company and have not yet concluded on the materiality or timing of adoption.~~


	Six Month Period Ended		Year Ended
(in millions)	April 2, 2023		September 30, 2022
Statements of Operations Data
Third party net sales	$	902.2	$	1,955.8
Intercompany net sales to non-guarantor subsidiaries	5.6		14.4
Net sales	907.8		1,970.2
Gross profit	238.7		551.2
Operating loss	(149.1)		(190.4)
Net loss from continuing operations	(176.4)		(263.2)
Net loss	(153.2)		(174.7)
Net loss attributable to controlling interest	(153.2)		(174.7)
Statements of Financial Position Data
Current Assets	$	2,550.7	$	2,634.4
Noncurrent Assets	2,208.3		2,169.9
Current Liabilities	1,731.7		1,634.1
Noncurrent Liabilities	3,515.1		3,423.4

The Obligor’s amounts due from, due to the ~~statement~~non-guarantor subsidiaries as of ~~cash flows. The amendment requires the statement of cash flows to explain the change during the period in total cash, cash equivalents,~~April 2, 2023 and amounts generally described as restricted cash or restricted cash equivalents; and include with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statement of cash flows. The ASU is applied on a retrospective basis, and will become effective for us beginning in the first quarter of our fiscal year ending September 30, ~~2019; with early adoption available. We~~2022 are ~~currently assessing the impact this pronouncement will have on the consolidated financial statements of the Company and have not yet concluded on the materiality or timing of adoption.~~

~~In March 2017, the FASB issued~~ ~~ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~, which requires an employer to disaggregate the service cost component from the other components of net periodic pension costs within the statement of income. The amendment provides guidance requiring the service cost component to be recognized consistent with other compensation costs arising from service rendered by employees during the period, and all other components to be recognized separately outside of the subtotal of income from operations. The ASU is applied on a retrospective basis, and will become effective for us in the first quarter of the year ending September 30, 2019; with early adoption available. We are currently assessing the impact this pronouncement will have on the consolidated financial statements of the Company and have not yet concluded on the materiality of the adoption.

~~In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12,~~ ~~Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815)~~, which changes the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The amendments in this update make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP, better aligning the entity’s risk management activities and financial reporting for hedging relationships. The ASU can only be applied prospectively, and will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020; with early adoption available. We are currently assessing the impact this pronouncement will have on the consolidated financial statements of the Company and have not yet concluded on the materiality or timing of the adoption.

as follows:


(in millions)	April 2, 2023		September 30, 2022
Statements of Financial Position Data
Current receivables from non-guarantor subsidiaries	$	30.8	$	8.1
Long-term receivable from non-guarantor subsidiaries	143.4		74.6
Current payable to non-guarantor subsidiaries	362.5		311.2
Long-term debt with non-guarantor subsidiaries	54.4		2.0

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk Factors

~~There has been no~~

No material ~~changes~~change in the Company’s market risk has occurred during the ~~three~~six month period ended ~~December 31, 2017.~~April 2, 2023. For additional information, refer to Note 9 – Debt and Note 10 ~~- Debt~~ ~~and~~ ~~Note 11 -~~– Derivatives to the Condensed Consolidated Financial ~~Statements~~Statement included elsewhere in the Quarterly Report and to Part II, ~~Item~~Items 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~

2022.

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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~~has 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.There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934, as amended) that occurred during the ~~three~~six month ~~period~~periods ended ~~December 31, 2017~~April 2, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except for internal controls over the identification, assessment, and reporting of assets and liabilities held for sale and discontinued operations in relation to the planned divestiture of the GBA segment.

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 ~~15d-15(b)~~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~~has 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. There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934, as amended) that occurred during the ~~three~~six month ~~period~~periods ended ~~January 1, 2017~~April 2, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except for internal controls over the identification, assessment, and reporting of assets and liabilities held for sale and discontinued operations in relation to the planned divestiture of the GBA segment.

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.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Litigation

We are a defendant in various litigation matters ~~of litigation~~ generally arising ~~out of~~in the ordinary course of business. WeSee risk factors below and Note 16 – 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, ~~2017. With~~2022, filed with the ~~exception~~SEC on November 22, 2022, and in Item 1A of ~~the change in risk factors discussed below, we~~our Quarterly Reports on Form 10-Q for quarterly periods subsequently filed. We believe that ~~at December 31, 2017,~~as of April 2, 2023, there have been no material changes in our risk factors from those ~~contained~~disclosed in Item 1A of our Annual Report on Form 10-K for the year ended September 30, ~~2017.~~

~~We are exploring strategic alternatives for a planned sale~~2022, and in our GBA segment, but there can be no assurance that we will be successful in identifying or completing any strategic alternative or that any such strategic alternative will yield additional value for stockholders.

We have commenced the process to dispose the GBA segment through a planned sale. There can be no assurance that the exploration of strategic alternatives will result in the identification or consummation of any transaction. The strategic review process may be suspended or terminated at any time without notice. In addition, we may incur substantial expenses associated with identifying and evaluating potential strategic alternatives and transactions. Furthermore, any attractive strategic alternative may be limited or prohibited by applicable regulatory regimes. Any potential transaction would be dependent upon a number of factors that may be beyond our control. If we are unable to effectively manage the process, the business, financial condition, and results of operations of the Company and its subsidiaries could be adversely affected. We also cannot assure that any potential transaction or strategic alternative, if identified, evaluated and consummated, will be successful in enhancing our business or financial conditions, or provide greater value to our stockholders than that reflected in the current stock price.

~~We could consume resources in pursuing strategic alternatives for the potential sale in our GBA segment, which could materially adversely affect our business.~~

~~We anticipate the investigation of strategic alternatives for the potential sale~~Item 1A of our GBA segment, and the negotiation, drafting and execution of relevant agreements, disclosure documents, and other instruments, with respect to such transactions, will require substantial management time and attention and substantial costsQuarterly Reports on Form 10-Q for financial advisors, accountants, attorneys and other advisors. The process of exploring strategic alternatives may be time consuming and disruptive to the business operations and the management teams of the Company and its subsidiaries. If a decision is made not to consummate a specific transaction, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific transaction, we may fail to consummate the transaction for any number of reasons, including those beyond our control. Any such event could consume significant management time and result in a loss to us of the related costs incurred, which could adversely affect our financial position and our business.

~~Table of Contents~~

~~The proposed sale of our Global Batteries & Lights division to Energizer Holdings, Inc. is subject to regulatory approval.~~

The consummation of the acquisition of the Global Batteries & Lights (“GBL”) division by Energizer Holdings, Inc. is subject to certain customary conditions, including, among other things, (i) the absence of a material adverse effect on GBL, (ii) the expiration or termination of required waitingquarterly periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) the receipt of certain other antitrust approvals in certain specified foreign jurisdictions (the conditions contained in (ii) and (iii) together, the “Antitrust Conditions”), (iv) the accuracy of the representations and warranties of the parties (generally subject to a customary material adverse effect standard (as described in the Agreement) or other customary materiality qualifications), (v) the absence of governmental restrictions on the consummation of the acquisition in certain jurisdictions, and (vi) material compliance by the parties with their respective covenants and agreements under the Agreement. The Company may not receive the required approval and other clearances for the transaction, or they may not be received in a timely manner. If such approvals are received, they may impose terms, conditions or restrictions that may cause a failure of the closing conditions set forth in the Agreement or that could have a detrimental impact on the Company following completion of the transaction. A substantial delay in obtaining the required authorizations, approvals or consents or the imposition of unfavorable terms, conditions or restrictions could prevent the completion of the sale. Even if the waiting periods under the Antitrust Conditions expire, government authorities could seek to block or challenge the transaction as they deem necessary or desirable in the public interest.

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

We operate globally and changes in tax laws could adversely affect our results. On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Reform Act") was signed into law. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a dividends received deduction for dividends from foreign subsidiaries, imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries, a minimum tax on foreign earnings, limitations on deduction of business interest expense and limits on deducting compensation to certain executive officers. At this point, it is unclear which of the Tax Reform Act provisions will be adopted by U.S. states and state conformity could have a material impact on the valuation allowance recorded on U.S. state net operating losses. Certain of these changes could have a negative or adverse impact on the operating results and cash flows of the Company.

The impact of the Tax Reform Act is still being evaluated by the Company. During the three month period ended December 31, 2017, the Company has recognized provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities. The ultimate impact from the Tax Reform Act may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Reform Act. Such changes in interpretations, guidance or assumptions could result in significant one-time charges and adversely change the Company’s effective tax rate. See ~~Note 16 – Income Taxes~~ ~~in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further discussion on the impact from the Tax Reform Act.~~

~~We may not be able to fully utilize our U.S. tax attributes.~~

The Company has accumulated a substantial amount of U.S. federal and state net operating loss (“NOLs”) carryforwards, capital loss carryforwards, and federal and state tax credits that will expire if unused. We have concluded that it is more likely than not that the majority of the federal and state deferred tax assets will create tax benefits in the future. As a consequence of earlier business combinations and issuances of common stock, the Company and its subsidiaries have had various changes of ownership that continue to subject a significant amount of the Company’s U.S. NOLs and other tax attributes to certain limitations; and therefore a valuation allowance is still recognized on certain federal and state tax asset carryforwards that are expected to expire due to the ownership change limitations or because we do not believe we will earn enough taxable income to utilize. Further, as a result of the Tax Reform Act being signed into law, it is unclear which provisions of the Tax Reform Act will be adopted by U.S. states. State conformity to the provisions of the Tax Reform Act could have a material impact on the valuation allowance recorded on U.S. state net operating losses. If we are unable to fully utilize our NOLs to offset taxable income generated in the future, our future cash taxes could be materially and negatively impacted. For further detail over the Company’s federal and state NOLs, credits, and applicable valuation allowance as of September 30, 2017, see ~~Note 14 – Income Taxes~~ ~~in the Notes to the Consolidated Financial Statements included in the Annual Report filed within the Form 10-K. See~~ ~~Note 16 – Income Taxes~~ in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further discussion on the impact from the Tax Reform Act on valuation allowance against its U.S. state net operating losses.

subsequently filed.

~~Table of Contents~~

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

~~During the~~ ~~three month period ended December 31, 2017, we did not sell any equity securities that were not registered under the Securities Act.~~

On ~~January 24, 2017,~~May 4, 2021, the Board of Directors approved a ~~$500 million~~share repurchase program authorizing the purchase of up to $1 billion of common ~~stock repurchase program.~~stock. The authorization is effective for 36 months. The share repurchase program permits shares to be repurchased in open market or through privately negotiated transactions, including by direct purchases or purchases pursuant to derivative instruments or other transactions (including pursuant to accelerated share repurchase agreements, the writing and settlement of put options and the purchase and exercise of call options). The number of shares to be repurchased, and the timing of any repurchases, will depend on factors such as the share price, economic and market conditions, and corporate and regulatory requirements. The share repurchase program may be suspended, amended or discontinued at any time.

The following table ~~reflects all shares repurchased within~~summarizes the common stock ~~repurchase program.~~

repurchases under the previous program for the three month period ended April 2, 2023:

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, 2017

1,216,822

$
122.82

1,216,822

$
350,550,095
October 1, 2017 to October 29, 2017

—

—

—

350,550,095
October 30, 2017 to November 26, 2017

—

—

—

350,550,095
November 27, 2017 to December 31, 2017

69,174

114.88

69,174

342,603,386
As of December 31, 2017

1,285,996

$
122.39

1,285,996

$
342,603,386


	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 January 1, 2023	2,239,367	$	95.72	2,239,367	$	785,647,294
January 2, 2023 to January 29, 2023	—	—		—	785,647,294
January 30, 2023 to February 26, 2023	—	—		—	785,647,294
February 27, 2023 to April 2, 2023	—	—		—	785,647,294
As of April 2, 2023	2,239,367	$	95.72	2,239,367	$	785,647,294

Item 5. Other Information

~~The Company previously reported that it would hold its 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”) on January 30, 2018. However, the~~ C~~ompany has postponed this meeting and is in the process of determining a new date on which to hold the meeting. Because the date of the 2018 Annual Meeting will likely be~~ ~~postponed to a date that is~~ ~~more than 30 days~~ ~~after January 24, 2018~~(~~the anniversary of the Company’s~~ ~~2017~~ ~~Annual Meeting of Stockholders~~)~~, in accordance with Rule 14a-5(f) under the Securities Exchange Act of 1934, as amended, the Company is disclosing such postponement in this report.~~

None

Item 6. Exhibits

Please refer to the Exhibit Index.

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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: ~~February 8, 2018~~ May 12, 2023
		SPECTRUM BRANDS HOLDINGS, INC.
		By:	/s/ ~~Douglas L. Martin~~ Jeremy W. Smeltser
			~~Douglas L. Martin~~ Jeremy W. Smeltser

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

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: ~~February 8, 2018~~ May 12, 2023
		SB/RH HOLDINGS, LLC
		By:	/s/ ~~Douglas L. Martin~~ Jeremy W. Smeltser
			~~Douglas L. Martin~~ Jeremy W. Smeltser

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

Table of Contents

EXHIBIT INDEX


~~Exhibit 2.1~~			Acquisition Agreement, dated as of January 15, 2018, by and between Spectrum Brands Holdings, Inc. and Energizer Holdings, Inc. (incorporated herein by reference to Exhibit 2.1 on the Current Report on Form 8-K filed with the SEC by Spectrum Brands Holdings, Inc. on January 16, 2018 (File no. 001-34757) (Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC a copy of any omitted schedule upon request)
Exhibit 21.1			List of Guarantor Subsidiaries*
Exhibit 31.1			Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Spectrum Brands Holdings, Inc.*
Exhibit 31.2			Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 the Sarbanes-Oxley Act of 2002. Spectrum Brands Holdings, Inc.Inc.
Exhibit 31.3			Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. SB/RH Holdings, LLC *
Exhibit 31.4			Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 the Sarbanes-Oxley Act of 2002. SB/RH Holdings, LLC *
Exhibit 32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Spectrum Brands Holdings, Inc.*
Exhibit 32.2			Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Spectrum Brands Holdings, Inc.*
Exhibit 32.3			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. SB/RH Holdings, LLC *
Exhibit 32.4			Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. SB/RH Holdings, LLC *
101.INS			XBRL Instance Document**
101.SCH			XBRL Taxonomy Extension Schema Document**
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB			XBRL Taxonomy Extension Label Linkbase Document**
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document**
* Filed herewith
** In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be "furnished" and not "filed."


(in millions)	December 31, 2017		September 30, 2017		(in millions)	April 2, 2023		September 30, 2022
Land, buildings and improvements	$	148.4	$	145.7	Land, buildings and improvements	$	78.7	$	75.7
Machinery, equipment and other		386.0		379.3	Machinery, equipment and other	398.9		394.1
Capital leases		212.2		210.7
Finance leases					Finance leases	143.3		139.8
Construction in progress		45.7		40.4	Construction in progress	69.0		54.7
Property, plant and equipment	$	792.3	$	776.1	Property, plant and equipment	689.9		664.3
Accumulated depreciation		(286.3)		(272.5)	Accumulated depreciation	(421.2)		(400.5)
Property, plant and equipment, net	$	506.0	$	503.6	Property, plant and equipment, net	$	268.7	$	263.8


	Termination		Other
(in millions)	Benefits		Costs		Total
For the three month period ended December 31, 2017	$	1.1	$	19.3	$	20.4
For the three month period ended January 1, 2017		0.8		1.4		2.2
Cumulative costs through December 31, 2017		12.1		73.9		86.0
Future costs to be incurred		0.2		16.0		16.2


(in millions)	Amortization
2018	$	57.5
2019		57.4
2020		55.0
2021		49.7
2022		48.0


	Effective Portion
For the three month period ended	Gain (Loss)		Reclassified to Continuing Operations			Ineffective portion
December 31, 2017 (in millions)	in OCI		Line Item	Gain (Loss)		Line Item	Gain (Loss)
Interest rate swaps	$	2.0	Interest expense	$	(0.3)	Interest expense	$	—
Commodity swaps		1.8	Cost of goods sold		0.3	Cost of goods sold		—
Net investment hedge		(6.6)	Other non-operating expense		—	Other non-operating expense		—
Foreign exchange contracts		—	Net sales		0.1	Net sales		—
Foreign exchange contracts		2.0	Cost of goods sold		0.2	Cost of goods sold		—
Total	$	(0.8)		$	0.3		$	—

	Effective Portion
For the three month period ended	Gain (Loss)		Reclassified to Continuing Operations			Ineffective portion
January 1, 2017 (in millions)	in OCI		Line Item	Gain (Loss)		Line Item	Gain (Loss)
Interest rate swaps	$	0.1	Interest expense	$	(0.3)	Interest expense	$	—
Commodity swaps		0.1	Cost of goods sold		—	Cost of goods sold		—
Net investment hedge		32.5	Other non-operating expense		—	Other non-operating expense		—
Foreign exchange contracts		0.2	Net sales		—	Net sales		—
Foreign exchange contracts		10.3	Cost of goods sold		0.1	Cost of goods sold		—
Total	$	43.2		$	(0.2)		$	—


	December 31, 2017				September 30, 2017
	Carrying				Carrying
(in millions)	Amount		Fair Value		Amount		Fair Value
Derivative Assets	$	3.8	$	3.8	$	1.5	$	1.5
Derivative Liabilities	$	1.5	$	1.5	$	3.3	$	3.3


	Non U.S. Plans
(in millions)	December 31, 2017		January 1, 2017
Service cost	$	0.5	$	0.7
Interest cost		0.5		0.4
Expected return on assets		(0.4)		(0.3)
Recognized net actuarial loss		0.3		0.5
Net periodic benefit cost	$	0.9	$	1.3
Weighted average assumptions
Discount rate	1.13 - 7.50%		1.00 - 8.68%
Expected return on plan assets	1.13 - 3.50%		1.00 - 3.50%
Rate of compensation increase	1.37 - 7.00%		2.25 - 7.00%


	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
Time-based grants	0.1	$	113.29	$	10.4	0.1	$	114.74	$	8.9
Performance-based grants
Vesting in 12 to 24 months	0.1		110.17		12.8	0.1		110.17		12.8
Vesting in more than 24 months	0.1		110.17		12.8	0.1		110.17	$	12.8
Total performance-based grants	0.2	$	110.17	$	25.6	0.2	$	110.17	$	25.6
Total grants	0.3	$	111.06	$	36.0	0.3	$	111.33	$	34.5



	Foreign				Employee
	Currency		Hedging		Benefit
(in millions)	Translation		Activity		Plans		Total
Accumulated other comprehensive loss, as of September 30, 2017	$	(131.2)	$	(26.0)	$	(52.4)	$	(209.6)
Other comprehensive loss before reclassification		(9.3)		(0.8)		(0.7)		(10.8)
Amounts reclassified from accumulated other comprehensive loss		—		2.6		0.8		3.4
Other comprehensive (loss) income		(9.3)		1.8		0.1		(7.4)
Deferred tax effect		7.2		—		—		7.2
Deferred tax valuation allowance		0.1		—		—		0.1
Other comprehensive (loss) income, net of tax		(2.0)		1.8		0.1		(0.1)
Other comprehensive income attributable to non-controlling interest		0.2		—		—		0.2
Other comprehensive (loss) income attributable to controlling interest		(2.2)		1.8		0.1		(0.3)
Accumulated other comprehensive loss, as of December 31, 2017	$	(133.4)	$	(24.2)	$	(52.3)	$	(209.9)


	SBH				SB/RH
Segment Adjusted EBITDA (in millions)	December 31, 2017		January 1, 2017		December 31, 2017		January 1, 2017
Hardware & Home Improvement		60.0		59.2		60.0		59.2
Global Pet Supplies		34.1		30.7		34.1		30.7
Home and Garden		5.4		5.7		5.4		5.7
Global Auto Care		14.8		19.8		14.8		19.8
Total Segment Adjusted EBITDA		114.3		115.4		114.3		115.4
Corporate expenses		8.6		10.2		8.4		10.0
Depreciation and amortization		33.0		30.0		33.0		30.0
Share-based compensation		3.8		7.2		3.3		6.2
Acquisition and integration related charges		5.2		3.3		5.2		3.3
Restructuring and related charges		20.4		2.2		20.4		2.2
Interest expense		38.6		43.0		38.6		43.3
Inventory acquisition step-up		0.8		—		0.8		—
Pet safety recall		7.3		—		7.3		—
Other		2.5		—		—		—
(Loss) income from operations before income taxes	$	(5.9)	$	19.5	$	(2.7)	$	20.4


						Three Month Periods Ended				Six Month Periods Ended
(in millions, except per share amounts)	December 31, 2017		January 1, 2017		(in millions, except per share amounts)	April 2, 2023		April 3, 2022		April 2, 2023		April 3, 2022
Numerator					Numerator
Net income from continuing operations attributable to controlling interest	$	119.3	$	12.7
Income from discontinued operations attributable to controlling interest		40.8		52.5
Net income attributable to controlling interest		160.1		65.2
Net loss from continuing operations attributable to controlling interest					Net loss from continuing operations attributable to controlling interest	$	(75.1)	$	(25.1)	$	(115.3)	$	(55.3)
Net income from discontinued operations attributable to controlling interest					Net income from discontinued operations attributable to controlling interest	21.4		41.0		40.7		79.4
Net (loss) income attributable to controlling interest					Net (loss) income attributable to controlling interest	$	(53.7)	$	15.9	$	(74.6)	$	24.1
Denominator					Denominator
Weighted average shares outstanding - basic		57.7		59.3
Weighted average shares outstanding – basic					Weighted average shares outstanding – basic	41.0		40.8		40.9		41.1
Dilutive shares		—		0.2	Dilutive shares	—		—		—		—
Weighted average shares outstanding - diluted		57.7		59.5
Weighted average shares outstanding – diluted					Weighted average shares outstanding – diluted	41.0		40.8		40.9		41.1
Earnings per share					Earnings per share
Basic earnings per share from continuing operations	$	2.07	$	0.21	Basic earnings per share from continuing operations	$	(1.83)	$	(0.61)	$	(2.82)	$	(1.35)
Basic earnings per share from discontinued operations		0.70		0.89	Basic earnings per share from discontinued operations	0.52		1.00		1.00		1.94
Basic earnings per share	$	2.77	$	1.10	Basic earnings per share	$	(1.31)	$	0.39	$	(1.82)	$	0.59
Diluted earnings per share from continuing operations	$	2.07	$	0.21	Diluted earnings per share from continuing operations	$	(1.83)	$	(0.61)	$	(2.82)	$	(1.35)
Diluted earnings per share from discontinued operations		0.70		0.89	Diluted earnings per share from discontinued operations	0.52		1.00		1.00		1.94
Diluted earnings per share	$	2.77	$	1.10	Diluted earnings per share	$	(1.31)	$	0.39	$	(1.82)	$	0.59
Weighted average number of anti-dilutive shares excluded from denominator					Weighted average number of anti-dilutive shares excluded from denominator	0.1		0.2		0.1		0.2
Restricted stock units		0.4		0.4



Statement of Financial Position			Guarantor		Nonguarantor
As of December 31, 2017 (in millions)	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	3.6	$	0.7	$	133.6	$	—	$	137.9
Trade receivables, net		92.0		108.6		77.8		—		278.4
Intercompany receivables		—		1,249.4		325.2		(1,574.6)		—
Other receivables		18.4		6.2		10.2		(1.1)		33.7
Inventories		198.8		257.8		140.4		(16.3)		580.7
Prepaid expenses and other		30.9		10.3		15.0		—		56.2
Current assets of business held for sale		1,004.2		123.8		867.4		(4.8)		1,990.6
Total current assets		1,347.9		1,756.8		1,569.6		(1,596.8)		3,077.5
Property, plant and equipment, net		179.0		178.1		148.9		—		506.0
Long-term intercompany receivables		296.6		80.9		12.5		(390.0)		—
Deferred charges and other		246.9		2.9		38.1		(236.9)		51.0
Goodwill		568.6		1,463.4		244.4		—		2,276.4
Intangible assets, net		398.1		1,017.6		182.9		—		1,598.6
Investments in subsidiaries		4,839.3		1,352.3		—		(6,191.6)		—
Total assets	$	7,876.4	$	5,852.0	$	2,196.4	$	(8,415.3)	$	7,509.5
Liabilities and Shareholder's Equity
Current portion of long-term debt	$	14.5	$	4.4	$	4.6	$	(3.4)	$	20.1
Accounts payable		87.5		115.0		118.2		—		320.7
Intercompany accounts payable		1,576.0		—		—		(1,576.0)		—
Accrued wages and salaries		8.4		2.3		17.2		—		27.9
Accrued interest		40.7		—		—		—		40.7
Other current liabilities		43.1		18.8		55.8		(1.1)		116.6
Current liabilities of business held for sale		147.9		1.8		458.5		—		608.2
Total current liabilities		1,918.1		142.3		654.3		(1,580.5)		1,134.2
Long-term debt, net of current portion		3,858.5		91.7		9.0		—		3,959.2
Long-term intercompany debt		12.5		282.7		90.0		(385.2)		—
Deferred income taxes		—		489.9		49.9		(241.9)		297.9
Other long-term liabilities		90.2		6.1		40.9		—		137.2
Total liabilities		5,879.3		1,012.7		844.1		(2,207.6)		5,528.5
Shareholder's equity:
Other capital		2,088.1		1,041.5		(1,124.3)		74.3		2,079.6
Accumulated earnings		119.3		3,969.4		2,630.0		(6,617.2)		101.5
Accumulated other comprehensive loss		(210.3)		(171.6)		(163.2)		335.2		(209.9)
Total shareholder's equity		1,997.1		4,839.3		1,342.5		(6,207.7)		1,971.2
Non-controlling interest		—		—		9.8		—		9.8
Total equity		1,997.1		4,839.3		1,352.3		(6,207.7)		1,981.0
Total liabilities and equity	$	7,876.4	$	5,852.0	$	2,196.4	$	(8,415.3)	$	7,509.5


Statement of Income			Guarantor		Nonguarantor
Three month period ended December 31, 2017 (in millions)	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	334.1	$	386.3	$	290.7	$	(364.6)	$	646.5
Cost of goods sold		254.6		297.3		220.5		(368.6)		403.8
Restructuring and related charges		—		1.7		0.1		—		1.8
Gross profit		79.5		87.3		70.1		4.0		240.9
Selling		43.9		36.5		32.9		—		113.3
General and administrative		24.0		24.7		10.9		—		59.6
Research and development		1.7		3.0		2.3		—		7.0
Acquisition and integration related charges		2.7		1.3		1.2		—		5.2
Restructuring and related charges		15.4		2.4		0.8		—		18.6
Total operating expense		87.7		67.9		48.1		—		203.7
Operating (loss) income		(8.2)		19.4		22.0		4.0		37.2
Interest expense		33.5		4.9		0.2		—		38.6
Other non-operating (income) expense, net		(68.5)		(19.1)		(0.1)		89.0		1.3
Income from operations before income taxes		26.8		33.6		21.9		(85.0)		(2.7)
Income tax (benefit) expense		(98.6)		(34.8)		1.4		0.8		(131.2)
Net income from continuing operations		125.4		68.4		20.5		(85.8)		128.5
Income from discontinued operations, net of tax		41.2		38.3		39.2		(77.8)		40.9
Net income		166.6		106.7		59.7		(163.6)		169.4
Net income attributable to non-controlling interest		—		—		0.9		—		0.9
Net income attributable to controlling interest	$	166.6	$	106.7	$	58.8	$	(163.6)	$	168.5


Statement of Comprehensive Income			Guarantor		Nonguarantor
Three month period ended December 31, 2017 (in millions)	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net income	$	166.6	$	106.7	$	59.7	$	(163.6)	$	169.4
Other comprehensive income (loss), net of tax:
Foreign currency translation loss		(2.0)		(2.0)		(2.2)		4.2		(2.0)
Unrealized gain on derivative instruments		1.8		4.3		4.3		(8.6)		1.8
Defined benefit pension gain		0.1		0.1		0.1		(0.2)		0.1
Other comprehensive (loss) income		(0.1)		2.4		2.2		(4.6)		(0.1)
Comprehensive income		166.5		109.1		61.9		(168.2)		169.3
Comprehensive income attributable to non-controlling interest		—		—		0.2		—		0.2
Comprehensive income attributable to controlling interest	$	166.5	$	109.1	$	61.7	$	(168.2)	$	169.1



Statement of Cash Flows			Guarantor		Nonguarantor
Three month period ended December 31, 2017 (in millions)	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net cash (used) provided by operating activities from continuing operations	$	(192.2)	$	(35.4)	$	66.2	$	(6.4)	$	(167.8)
Net cash provided (used) by operating activities from discontinued operations		5.5		0.1		(3.9)		(17.0)		(15.3)
Net cash (used) provided by operating activities		(186.7)		(35.3)		62.3		(23.4)		(183.1)
Cash flows from investing activities		.
Purchases of property, plant and equipment		(3.9)		(3.8)		(10.2)		—		(17.9)
Proceeds from sales of property, plant and equipment		0.5		0.1		—		—		0.6
Net cash used by investing activities from continuing operations		(3.4)		(3.7)		(10.2)		—		(17.3)
Net cash used by investing activities from discontinued operations		(4.7)		—		(2.2)		—		(6.9)
Net cash used by investing activities		(8.1)		(3.7)		(12.4)		—		(24.2)
Cash flows from financing activities
Proceeds from issuance of debt		226.0		—		0.1		—		226.1
Payment of debt		(28.9)		—		(0.9)		—		(29.8)
Payment of debt issuance costs		(0.1)		—		—		—		(0.1)
Payment of cash dividends to parent		(24.2)		—		—		—		(24.2)
Advances related to intercompany transactions		20.9		34.9		(79.2)		23.4		—
Net cash provided (used) by financing activities from continuing operations		193.7		34.9		(80.0)		23.4		172.0
Net cash (used) provided by financing activities from discontinued operations		(1.3)		—		6.5		—		5.2
Net cash provided (used) by financing activities		192.4		34.9		(73.5)		23.4		177.2
Effect of exchange rate changes on cash and cash equivalents		—		—		(0.2)		—		(0.2)
Net decrease in cash and cash equivalents		(2.4)		(4.1)		(23.8)		—		(30.3)
Cash and cash equivalents, beginning of period		6.0		4.8		157.4		—		168.2
Cash and cash equivalents, end of period	$	3.6	$	0.7	$	133.6	$	—	$	137.9


	December 31, 2017
Three Month Period 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 January 1, 2017		Variance
Hardware & Home Improvement		325.9		(2.1)		323.8		—		323.8		288.8		35.0	12.1%
Global Pet Supplies		202.4		(4.8)		197.6		(24.8)		172.8		194.2		(21.4)	(11.0%)
Home and Garden		49.3		—		49.3		—		49.3		49.8		(0.5)	(1.0%)
Global Auto Care		68.9		(0.6)		68.3		—		68.3		69.5		(1.2)	(1.7%)
Total	$	646.5	$	(7.5)	$	639.0	$	(24.8)	$	614.2	$	602.3		11.9	2.0%


	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, 2017	1,216,822	$	122.82	1,216,822	$	350,550,095
October 1, 2017 to October 29, 2017	—		—	—		350,550,095
October 30, 2017 to November 26, 2017	—		—	—		350,550,095
November 27, 2017 to December 31, 2017	69,174		114.88	69,174		342,603,386
As of December 31, 2017	1,285,996	$	122.39	1,285,996	$	342,603,386