UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended December 31, ~~2017~~2019



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

For the transition period from to

Commission File Number: 001-36837

ENERGIZER HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



Missouri			36-4802442
(State or other jurisdiction of			(I. R. S. Employer
incorporation or organization)			Identification No.)

533 Maryville University Drive
St. Louis,	Missouri		63141
(Address of principal executive offices)			(Zip Code)

	(314)	985-2000
(Registrant’s telephone number, including area code)

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



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	ENR	New York Stock Exchange
7.50% Series A Mandatory Convertible Preferred Stock, par value $.01 per share	ENR PRA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated ~~filer”,~~filer,” “accelerated ~~filer”,~~filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x☒	Accelerated filer	o☐

Non-accelerated filer	o☐	Smaller reporting company	o☐

~~(Do not check if smaller reporting company)~~		Emerging growth company	o☐

If an emerging growth company, indicate by check mark 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. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒

Indicate the number of shares of Energizer Holdings, Inc. common stock, $.01 par value, outstanding as of the close of business on ~~January 29, 2018: 59,685,726.~~February 3, 2020: 69,432,763.



INDEX
	Page
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Consolidated Statements of Earnings and Comprehensive Income (Condensed) for the Quarters Ended December 31, ~~2017~~2019 and ~~2016~~2018	34

Consolidated Balance Sheets (Condensed) as of December 31, ~~2017~~2019 and September 30, ~~2017~~2019	45

Consolidated Statements of Cash Flows (Condensed) for the Three Months Ended December 31, ~~2017~~2019 and ~~2016~~2018	56

Consolidated Statements of Shareholders' Equity (Condensed) for the Three Months Ended December 31, 2019 and 2018	7

Notes to Consolidated (Condensed) Financial Statements	68

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2136

Item 3. Quantitative and Qualitative Disclosures About Market Risk	3248

Item 4. Controls and Procedures	3350

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	3451

Item 1A. Risk Factors	3451

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3651

Item 6. Exhibits	37

~~SIGNATURES~~	3851

EXHIBIT INDEX	3952

SIGNATURES	55

ENERGIZER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

(Condensed)

(In millions, except per share data - Unaudited)

For the Quarter Ended December 31,
2017 2016
Net sales $ 573.3
$ 559.6
Cost of products sold 295.0
288.0
Gross profit 278.3
271.6

Selling, general and administrative expense 99.2
84.4
Advertising and sales promotion expense 37.3
34.3
Research and development expense 5.3
5.8
Amortization of intangible assets 2.8
2.6
Spin restructuring —
(1.3 )
Interest expense 13.4
13.3
Other items, net 1.3
(1.6 )
Earnings before income taxes 119.0
134.1
Income tax provision 58.6
38.5
Net earnings $ 60.4
$ 95.6

Basic net earnings per share $ 1.00
$ 1.55
Diluted net earnings per share $ 0.98
$ 1.52

Weighted average shares of common stock - Basic 60.2
61.8
Weighted average shares of common stock - Diluted 61.5
62.9

Statements of Comprehensive Income:
Net earnings $ 60.4
$ 95.6
Other comprehensive income/(loss), net of tax expense/(benefit)
Foreign currency translation adjustments 7.4
(31.9 )
Pension activity, net of tax of $0.5 and $0.6, respectively. 1.2
3.8
Deferred gain on hedging activity, net of tax of $1.1 and $3.7, respectively. 2.5
8.2
Total comprehensive income $ 71.5
$ 75.7



	For the Three Months Ended December 31,
	2019			2018
Net sales	$	736.8		$	571.9
Cost of products sold	435.5			296.4
Gross profit	301.3			275.5
Selling, general and administrative expense	122.1			104.6
Advertising and sales promotion expense	46.8			40.9
Research and development expense	8.9			5.5
Amortization of intangible assets	13.8			3.2
Interest expense	51.0			48.2
Other items, net	—			(16.9		)
Earnings before income taxes	58.7			90.0
Income tax provision	12.9			19.2
Net earnings from continuing operations	45.8			70.8
Net earnings from discontinued operations, net of income tax expense of $7.5 for the quarter ended December 31, 2019	0.3			—
Net earnings	46.1			70.8
Mandatory convertible preferred stock dividends	(4.0		)	—
Net earnings attributable to common shareholders	$	42.1		$	70.8

Basic net earnings per common share - continuing operations	$	0.60		$	1.19
Basic net earnings per common share - discontinued operations	0.01			—
Basic net earnings per common share	$	0.61		$	1.19

Diluted net earnings per common share - continuing operations	$	0.60		$	1.16
Diluted net earnings per common share - discontinued operations	—			—
Diluted net earnings per common share	$	0.60		$	1.16

Weighted average shares of common stock - Basic	69.1			59.7
Weighted average shares of common stock - Diluted	70.2			61.0

Statements of Comprehensive Income:
Net earnings	$	46.1		$	70.8
Other comprehensive (loss)/income, net of tax expense/(benefit)
Foreign currency translation adjustments	30.0			(3.7		)
Pension activity, net of tax of $0.5 and $0.3, respectively.	(0.2		)	1.1
Deferred loss on hedging activity, net of tax of ($1.0) and ($1.0), respectively,	(4.6		)	(3.3		)
Total comprehensive income	$	71.3		$	64.9

The above financial statements should be read in conjunction with the Notes To Consolidated (Condensed) Financial Statements (Unaudited).

ENERGIZER HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(Condensed)

(In millions - Unaudited)


Assets	December 31, 2017			September 30, 2017			December 31, 2019			September 30, 2019
Current assets
Cash and cash equivalents	$	454.3		$	378.0		$	293.5		$	258.5
Trade receivables, less allowance for doubtful accounts of $6.1 and $5.8, respectively	214.8			230.2
Trade receivables, less allowance for doubtful accounts of $4.4 and $3.8, respectively							369.9			340.2
Inventories	276.2			317.1			435.8			469.3
Other current assets	93.7			94.9			163.0			177.1
Assets held for sale							805.5			791.7
Total current assets	1,039.0			1,020.2			2,067.7			2,036.8
Property, plant and equipment, net	171.7			176.5			357.7			362.0
Operating lease assets							82.9			—
Goodwill	230.1			230.0			1,022.5			1,004.8
Other intangible assets, net	220.9			223.8			1,946.3			1,958.9
Deferred tax asset	34.1			47.7			23.4			22.8
Other assets	68.3			125.4			66.3			64.3
Total assets	$	1,764.1		$	1,823.6		$	5,566.8		$	5,449.6

Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt	$	4.0		$	4.0		$	68.4		$	—
Note payable	110.5			104.1
Current portion of capital leases							1.7			1.6
Notes payable							28.1			31.9
Accounts payable	190.8			219.3			288.9			299.0
Current operating lease liabilities							15.6			—
Other current liabilities	241.6			254.6			355.1			333.6
Liabilities held for sale							387.1			402.9
Total current liabilities	546.9			582.0			1,144.9			1,069.0
Long-term debt	977.9			978.5			3,383.6			3,461.6
Operating lease liabilities							68.4			—
Deferred tax liability							176.2			170.6
Other liabilities	205.6			178.0			206.2			204.6
Total liabilities	1,730.4			1,738.5			4,979.3			4,905.8
Shareholders' equity
Common stock	0.6			0.6			0.7			0.7
Mandatory convertible preferred stock							—			—
Additional paid-in capital	198.7			196.7			852.6			870.3
Retained earnings	180.4			198.7			149.1			129.5
Treasury stock	(118.3		)	(72.1		)	(141.8		)	(158.4		)
Accumulated other comprehensive loss	(227.7		)	(238.8		)	(273.1		)	(298.3		)
Total shareholders' equity	33.7			85.1			587.5			543.8
Total liabilities and shareholders' equity	$	1,764.1		$	1,823.6		$	5,566.8		$	5,449.6

The above financial statements should be read in conjunction with the Notes To Consolidated (Condensed) Financial Statements (Unaudited).

ENERGIZER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Condensed)

(In millions - Unaudited)


	For the Three Months Ended December 31,						For the Three Months Ended December 31,
	2017			2016			2019			2018
Cash Flow from Operating Activities
Net earnings	$	60.4		$	95.6		$	46.1		$	70.8
Net earnings from discontinued operations							0.3			—
Net earnings from continuing operations							45.8			70.8
Non-cash integration and restructuring charges							4.4			—
Depreciation and amortization	12.0			10.6			27.6			11.6
Deferred income taxes	12.2			4.8			2.8			2.3
Share-based compensation expense	6.7			5.2			7.2			6.5
Mandatory transition tax	30.0			—
Non-cash items included in income, net	3.0			(0.4		)	7.3			(9.1		)
Other, net	0.1			(2.1		)	2.6			(1.1		)
Changes in current assets and liabilities used in operations	16.6			(21.9		)	35.8			37.9
Net cash from operating activities from continuing operations							133.5			118.9
Net cash used by operating activities from discontinued operations							(10.0		)	—
Net cash from operating activities	141.0			91.8			123.5			118.9

Cash Flow from Investing Activities
Capital expenditures	(5.5		)	(4.9		)	(11.7		)	(4.8		)
Proceeds from sale of assets	—			4.3			1.5			0.1
Acquisitions, net of cash acquired							(3.6		)	—
Net cash used by investing activities from continuing operations							(13.8		)	(4.7		)
Net cash used by investing activities from discontinued operations							(2.4		)	—
Net cash used by investing activities	(5.5		)	(0.6		)	(16.2		)	(4.7		)

Cash Flow from Financing Activities
Cash proceeds from issuance of debt with original maturities greater than 90 days							365.0			1,200.0
Payments on debt with maturities greater than 90 days	(1.0		)	(1.0		)	(400.3		)	(1.0		)
Net increase/(decrease) in debt with original maturities of 90 days or less	6.5			(27.9		)
Dividends paid	(17.6		)	(18.1		)
Common stock purchased	(50.0		)	(8.1		)
Net (decrease)/increase in debt with original maturities of 90 days or less							(4.0		)	28.0
Debt issuance costs							(0.9		)	(16.5		)
Dividends paid on mandatory convertible preferred stock							(4.0		)	—
Dividends paid on common stock							(22.7		)	(19.8		)
Taxes paid for withheld share-based payments	(1.8		)	(8.1		)	(9.4		)	(7.1		)
Net cash used by financing activities	(63.9		)	(63.2		)
Net cash (used by)/from financing activities from continuing operations							(76.3		)	1,183.6
Net cash used by financing activities from discontinued operations							(1.1		)	—
Net cash (used by)/from financing activities							(77.4		)	1,183.6

Effect of exchange rate changes on cash	4.7			(17.6		)	5.1			(2.3		)

Net increase in cash and cash equivalents	76.3			10.4
Cash and cash equivalents, beginning of period	378.0			287.3
Cash and cash equivalents, end of period	$	454.3		$	297.7
Net increase in cash, cash equivalents, and restricted cash from continuing operations							48.5			1,295.5
Net decrease in cash, cash equivalents, and restricted cash from discontinued operations							(13.5		)	—
Net increase in cash, cash equivalents, and restricted cash							35.0			1,295.5
Cash, cash equivalents, and restricted cash, beginning of period							258.5			1,768.3
Cash, cash equivalents, and restricted cash, end of period							$	293.5		$	3,063.8

The above financial statements should be read in conjunction with the Notes To Consolidated (Condensed) Financial Statements (Unaudited).

ENERGIZER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY/(DEFICIT)

(Condensed)

(Amounts in millions, Shares in thousands - Unaudited)



	Number of Shares		Amount
	Preferred Stock	Common Stock	Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)/Income			Treasury Stock			Total Shareholders' Equity
September 30, 2019	2,156	68,902	$	—	$	0.7	$	870.3		$	129.5		$	(298.3	)	$	(158.4	)	$	543.8
Net earnings from continuing operations	—	—	—		—		—			45.8			—			—			45.8
Net earnings from discontinued operations	—	—	—		—		—			0.3			—			—			0.3
Share based payments	—	—	—		—		7.2			—			—			—			7.2
Activity under stock plans	—	374	—		—		(24.9		)	(1.1		)	—			16.6			(9.4		)
Dividends to common shareholders ($0.30 per share)	—	—	—		—		—			(21.4		)	—			—			(21.4		)
Dividends to preferred shareholders ($1.875 per share)	—	—	—		—		—			(4.0		)	—			—			(4.0		)
Other comprehensive loss	—	—	—		—		—			—			25.2			—			25.2
December 31, 2019	2,156	69,276	$	—	$	0.7	$	852.6		$	149.1		$	(273.1	)	$	(141.8	)	$	587.5



	Number of Shares		Amount
	Preferred Stock	Common Stock	Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Shareholders' Equity
September 30, 2018	—	59,608	$	—	$	0.6	$	217.8		$	177.3		$	(241.8	)	$	(129.4	)	$	24.5
Net earnings from continuing operations	—	—	—		—		—			70.8			—			—			70.8
Share based payments	—	—	—		—		6.5			—			—			—			6.5
Activity under stock plans	—	290	—		—		(16.1		)	(3.6		)	—			12.6			(7.1		)
Dividends to common shareholders ($0.30 per share)	—	—	—		—		—			(18.4		)	—			—			(18.4		)
Other comprehensive loss	—	—	—		—		—			—			(5.9		)	—			(5.9		)
December 31, 2018	—	59,898	$	—	$	0.6	$	208.2		$	226.1		$	(247.7	)	$	(116.8	)	$	70.4

The above financial statements should be read in conjunction with the Notes To Consolidated (Condensed) Financial Statement (Unaudited).

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

(1) Description of Business and Basis of Presentation

Description of Business - Energizer Holdings, Inc. and its subsidiaries (Energizer or the Company) is a global manufacturer, marketer and distributer of household batteries, specialty batteries, ~~and~~ portable lights, and automotive appearance, performance, refrigerants and freshener products.

Our batteries and lights are sold under the Energizer®, Eveready®, Rayovac® and ~~Eveready®~~Varta® brand ~~names.~~names following the fiscal 2019 acquisition of Spectrum Holdings, Inc.'s (Spectrum) global battery, lighting, and portable power business (Battery Acquisition). Energizer offers batteries using lithium, alkaline, carbon zinc, nickel metal hydride, zinc air and silver oxide constructions. ~~On July 1, 2016, Energizer expanded its portfolio of brands with an acquisition of a leading designer~~

Our automotive appearance, performance, refrigerants and ~~marketer of automotive fragrance and appearance~~freshener products ~~(auto care acquisition). With~~are sold under the ~~auto care acquisition, the Company's brands include~~ Refresh Your Car!®, California Scents®, Driven®, Bahama & Co.®, LEXOL®, Eagle One®, Armor All®, STP®, and ~~Eagle One®~~A/C PRO® brands following the fiscal 2019 acquisition of Spectrum's global auto care business (Auto Care Acquisition). Refer to Note 3, Acquisitions, for additional discussion on the fiscal 2019 acquisitions.

Subsequent to the quarter, on January 2, 2020, the Company sold the Varta® consumer battery business in the Europe, Middle East and Africa regions, including manufacturing and distribution facilities in Germany (Divestment Business) to VARTA Aktiengesellschaft (VARTA AG) for a contractual purchase price of €180.0, subject to purchase price adjustments (Varta Divestiture). In addition, pursuant to the terms of the Battery Acquisition agreement, Spectrum also contributed cash proceeds toward this sale. Total initial proceeds received were approximately $345, which will be subject to a final true up based upon the closing balance sheet. Refer to Note 4, Divestment, for further discussion.

Basis of Presentation - The accompanying ~~unaudited~~ Consolidated ~~Condensed~~(Condensed) Financial Statements include the accounts of Energizer and its subsidiaries. All significant intercompany transactions are eliminated. Energizer has no material equity method investments, variable interests or non-controlling interests.

The accompanying ~~unaudited~~ Consolidated ~~Condensed~~(Condensed) Financial Statements have been prepared in accordance with Article 10 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The year-end ~~condensed~~ Consolidated (Condensed) Balance Sheet was derived from the audited financial statements included in Energizer's Report on Form 10-K, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of our operations, financial position and cash flows

have been included. Certain reclassifications have been made to the prior year financial statements to conform to the current presentation. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year. These statements should be read in conjunction with the financial statements and notes thereto for Energizer for the year ended September 30, ~~2017~~2019 included in the Annual Report on Form 10-K dated November ~~14, 2017.~~19, 2019.

As a result of the Varta Divestiture the assets and liabilities associated with the Divestment Business as of December 31, 2019 and September 30, 2019 have been classified as held for sale in the accompanying Consolidated (Condensed) Balance Sheets and the respective operations of the Divestment Business during the three months ended December 31, 2019 have been classified as discontinued operations in the accompanying Consolidated (Condensed) Statements of Earnings and Comprehensive Income and Statements of Cash Flows. Refer to Note 4, Divestment, for more information on the assets and liabilities classified as held for sale and discontinued operations.

Recently Adopted Accounting Pronouncements -~~During the quarter ended December 31, 2017,~~ Effective October 1, 2019, the Company adopted ASU ~~2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost~~ 2016-02and ~~Net Periodic Postretirement Benefit Cost.~~related standards (collectively ASC 842, Leases). This update requires the service component of the net periodic pension cost to be reported in the same income statement line item as similar compensation costs, while all other pension cost components should be reported separately from the service cost component on the income statement. The adoption of this update resulted in $1.7 of non-compensation related pension benefit in Other items, net in the quarter ended December 31, 2017 and a reclassification of $3.1 of pension benefit out of Selling, general and administrative expense and into Other items, net for the quarter ended December 31, 2016. All non-compensation related pension costs will be recorded in Other items, net going forward.

~~During the quarter ended December 31, 2017, the Company adopted ASU 2015-11,~~ ~~Inventory (Topic 330), which aligns the measurement of inventory under GAAP more closely with International Financial Reporting Standards. Under the~~ new guidance an entity that measures inventory using the first-in, first-out or average cost should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The impact of adoption was immaterial.

~~During the quarter ended December 31, 2017, the Company early adopted ASU 2016-16,~~ ~~Intra-entity Transfers of Assets Other Than Inventory~~. This update requires tax expense to be recognized from the sale of intra-entity assets, other than inventory, when the transfer occurs, even though the effects of the transaction are eliminated in consolidation. Under the previous guidance, the tax effects of transfers would have been deferred until the transferred asset was sold or otherwise recovered through use. Upon adoption, any deferred charge previously established upon the intra-company transfer is recorded as a cumulative effect adjustment to retained earnings. During the quarter ended December 31, 2017, a deferred charge of $59.2 was removed from Other assets and recorded as an adjustment to retained earnings. Any future tax impacts will be recognized as incurred.

~~During the quarter ended December 31, 2017, the Company early adopted ASU 2017-01,~~ ~~Clarifying the Definition of a Business~~. This update creates a more practical definition and guidelines to determine whether a set of assets and activities is a business. This simplifies the decision making process of determining whether a purchase constitutes a business combination or an acquisition of assets and the Company will apply this definition for future acquisitions.

~~ENERGIZER HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS~~

~~(In millions - Unaudited)~~

~~During the quarter ended December 31, 2017, the Company early adopted ASU 2017-04,~~ ~~Simplifying the Test for Goodwill Impairment~~. This update eliminates the need to assign the fair value of a reporting unit to each of its assets and liabilities when quantifying an impairment charge. The impairment charge is now determined based on the comparison of the fair value of a reporting unit to its carrying amount. The Company will apply the new guidance when completing its goodwill testing procedures in the current year.

~~Recently Issued Accounting Pronouncements- On May 28, 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~, which provides a single comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries and across capital markets. On August 12, 2015, the FASB issued a one-year deferral of the effective date. This update is effective for Energizer beginning October 1, 2018. The Company is currently assessing the new guidance against its current accounting policies and procedures, through activities that include analysis of standard sales transactions and terms, coordination and discussion with our commercial teams and reviewing contracts with customers. The Company plans to adopt this update on a modified retrospective basis at the effective date. While the Company’s assessment is not yet complete, the new guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows. The Company is still assessing the overall impact on the Company’s disclosures.

~~On February 25, 2016, the FASB issued ASU 2016-02,~~ ~~Leases. This update~~ aligns the measurement of leases under GAAP more closely with International Financial Reporting Standards by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ~~amendments in this update will be effective~~Company elected the optional transition method and adopted the new guidance on a modified retrospective basis with no restatement of prior period amounts. Further, the Company elected to apply the package of practical expedients which allows companies to carry forward original lease determinations, lease classifications, and accounting for initial direct costs. Energizer ~~beginning October 1, 2019 with early~~also made the policy elections upon adoption ~~permitted. Energizer is in~~for the ~~process~~exclusion of ~~evaluating the impact the revised guidance will have on its financial statements.~~

~~On August 26, 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows- Classification of Certain Cash Receipts and Cash Payments~~, which is intended to reduce diversity in practice in how certain transactions are classified in the statements of cash flows. This update will be effective for Energizer beginning October 1, 2018. The Company is currently assessing the impact the revised guidance will have on our current classificationshort term leases on the ~~Statement of Cash Flows.~~

~~On August 28, 2017, the FASB issued ASU 2017-12,~~ ~~Targeted Improvements~~balance sheet and to ~~Accounting for Hedging Activities. This update intends to simplify hedge accounting~~not separate lease and decrease complexity for both the preparation and understanding of hedging disclosures in the financial statements. This update is effective for the Company beginning October 1, 2019. The Company is currently assessing the impact the revised guidance will have on its accounting practices and financial statements.non-lease components.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

The adoption of ASC 842, Leases, resulted in the recognition of additional assets and corresponding liabilities on the Consolidated Balance Sheet for the Company's operating leases, however it did not have a material impact on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income, the Consolidated Statement of Cash Flows and the Shareholder's Equity Statement, including retained earnings. Refer to Note 10, Leases, for further information.

(2) ~~Spin Costs~~Revenue Recognition

The Company, through its operating subsidiaries, is one of the world’s largest manufacturers, marketers and distributors of household batteries, specialty batteries and lighting products, and a leading designer and marketer of automotive fragrance, appearance, performance and air conditioning recharge products. We distribute our products to consumers through numerous retail locations worldwide, including mass merchandisers and warehouse clubs, food, drug and convenience stores, electronics specialty stores and department stores, hardware and automotive centers, e-commerce and military stores. We sell to our customers through a combination of a direct sales force and exclusive and non-exclusive third-party distributors and wholesalers.

The Company’s revenue is primarily generated from the sale of finished product to customers. Sales predominantly contain a single delivery element, or performance obligation, and revenue is recognized at a single point in time when title, ownership and risk of loss pass to the customer. This typically occurs when finished goods are delivered to the customer or when finished goods are picked up by a customer or customer’s carrier, depending on contract terms.

Supplemental product and market information is presented below for revenues from external customers for the quarters ended December 31, 2019 and 2018:



	For the Quarter Ended December 31,
Net Sales	2019		2018
Batteries	$	621.9	$	521.9
Auto Care	78.7		20.5
Lights and Licensing	36.2		29.5
Total Net Sales	$	736.8	$	571.9



	For the Quarter Ended December 31,
	2019		2018
Net Sales
North America	$	453.7	$	341.0
Latin America	60.8		32.5
Americas	514.5		373.5
Modern Markets	142.8		127.4
Developing Markets	51.2		49.7
Distributors Markets	28.3		21.3
International	222.3		198.4
Total Net Sales	$	736.8	$	571.9

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

(3) Acquisitions

Battery Acquisition - On January 2, 2019, the Company completed the Battery Acquisition with a contractual purchase price of $2,000.0, subject to certain purchase price adjustments. The acquisition expanded our battery portfolio globally with the addition of a strong value brand. The final cash paid after contractual and working capital adjustments was $1,962.4. Included in that amount is $400.0 of cash consideration that has been allocated to the Divestment Business discussed below.

On ~~July 1, 2015,~~May 29, 2019, the Company signed a definitive agreement for the sale of the Divestment Business to VARTA AG, and subsequent to the quarter, on January 2, 2020, the Company sold the Varta® consumer battery business. Refer to Note 4, Divestment, for further discussion. As of December 31, 2019, the assets and liabilities associated with this business have been reported as held for sale both on the purchase price allocation and the Consolidated (Condensed) Balance Sheets.

The Battery Acquisition was accounted for as a business combination using the acquisition method of accounting which requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. We have calculated fair values of assets and liabilities acquired for the Battery Acquisition. During the quarter ended December 31, 2019 the Company completed the valuation analysis for the Battery Acquisition and no significant changes were made to the valuation.

For purposes of the allocation, the Company determined a fair value adjustment for inventory based on the estimated selling price of finished goods on hand at the closing date less the sum of (a) costs of disposal and (b) a reasonable profit allowance for the selling effort of the acquiring entity. The fair value adjustment for the inventory of $14.6 was recorded as expense to Cost of products sold as that inventory was sold in fiscal 2019.

The fair values of the Battery Acquisition's Property, plant and equipment were estimated using the market approach for land and variations of the cost approach for the buildings and equipment. The fair values of the Battery Acquisition's identifiable intangible assets were estimated using variations of the income approach. The fair value of the acquired trade names and customer relationships was determined by applying the multi-period excess earnings method under the income approach. The fair value of proprietary technology acquired was determined by applying the relief-from-royalty method under the income approach.

Assets held for sale related to the the Divestment Business include the valuation of Inventory, Property, plant and equipment and Intangible assets consistent with the valuation methods discussed above. The fair value adjustment for the inventory of $11.2 was recorded as expense in the results from discontinued operations in fiscal 2019 as that inventory was sold. Goodwill has also been allocated to the Assets held for sale.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

The following table outlines the purchase price allocation as of the date of acquisition:



Cash and cash equivalents	$	37.8
Trade receivables	54.2
Inventories	80.8
Other current assets	28.2
Assets held for sale	794.6
Property, plant and equipment, net	133.2
Goodwill	496.0
Other intangible assets, net	805.8
Other assets	10.3
Current portion of capital leases	(1.2		)
Accounts payable	(39.2		)
Other current liabilities	(19.3		)
Long-term debt	(14.7		)
Liabilities held for sale	(394.6		)
Other liabilities	(9.5		)
Net assets acquired	$	1,962.4

The table below outlines the purchased identifiable intangible assets of $805.8:



	Total		Weighted Average Useful Lives
Trade names	$	587.0	Indefinite
Proprietary technology	59.0		6.2
Customer relationships	159.8		15.0
Total Other intangible assets, net	$	805.8

The goodwill acquired in this acquisition is attributable to the workforce of the acquired business and the synergies expected to arise with this transaction through network optimization, Selling, general and administrative expense (SG&A) reductions and procurement efficiencies. The goodwill associated with this acquisition is deductible for tax purposes.

Auto Care Acquisition - On January 28, 2019, Energizer completed the acquisition of Spectrum’s global auto care business, including the Armor All, STP, and A/C PRO brands for a contractual purchase price of $1,250.0, subject to certain purchase price adjustments. The contractual purchase price was comprised of $937.5 in cash and $312.5 of newly-issued Energizer common stock to Spectrum. The initial cash paid in fiscal 2019 after contractual and estimated working capital adjustments was $938.7. During the quarter ended December 31, 2019, the Company finalized the working capital adjustments with Spectrum and paid an additional $3.6 of cash. The equity consideration paid to Spectrum was fair valued at $240.5 based on the 5.3 million shares issued to Spectrum at the Energizer closing stock price of $45.55 on January 28, 2019. The final purchase price paid in cash and equity consideration was $1,182.8. The acquisition allowed for the Company to become a global leader in the auto care market and added automotive performance and air conditioning recharge products to its ~~legal separation from Edgewell Personal~~auto care portfolio.

The Auto Care ~~Company (Edgewell) via~~Acquisition was accounted for as a ~~tax free spin-off (the spin-off or spin). The Company incurred costs associated with~~business combination using the ~~evaluation, planning~~acquisition method of accounting which requires assets acquired and ~~execution~~liabilities assumed to be recognized at fair value as of the ~~spin transaction.~~ acquisition date. We have calculated fair values of assets and liabilities acquired for the Auto Care Acquisition. During the quarter ended December 31, 2019, the Company completed the valuation analysis for the Auto Care Acquisition. The only significant change in the analysis since the end of fiscal 2019 was the increase in purchase price of $3.6 mentioned above.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

For purposes of allocation, the Company determined a fair value adjustment for inventory based on the estimated selling price of finished goods on hand at the closing date less the sum of (a) costs of disposal and (b) a reasonable profit allowance for the selling effort of the acquiring entity. The fair value adjustment for the inventory was $21.6 and was recorded to Cost of products sold as the respective inventory was sold in fiscal 2019.

The fair values of the Auto Care Acquisition's Property, plant and equipment were estimated using variations of the cost approach for the building and equipment. The fair values of the Auto Care Acquisition's identifiable intangible assets were estimated using variations of the income approach. The fair value of trade names and customer relationships acquired was determined by applying the multi-period excess earnings method under the income approach. The fair value of proprietary technology acquired was determined by applying the relief-from-royalty method under the income approach.

The following table outlines the purchase price allocation as of the date of acquisition:



Cash and cash equivalents	$	3.3
Trade receivables	39.7
Inventories	98.6
Other current assets	8.9
Property, plant and equipment, net	70.8
Goodwill	274.0
Other intangible assets, net	965.3
Deferred tax assets	4.2
Other assets	1.7
Current portion of capital leases	(0.4		)
Accounts payable	(28.6		)
Other current liabilities	(10.9		)
Long-term debt	(31.9		)
Other liabilities (deferred tax liabilities)	(211.9		)
Net assets acquired	$	1,182.8

The table below outlines the purchased identifiable intangible assets of $965.3:



	Total		Weighted Average Useful Lives
Trade names	$	701.6	Indefinite
Trade names	15.4		15.0
Proprietary technology	113.5		9.8
Customer relationships	134.8		15.0
Total Other intangible assets, net	$	965.3

The goodwill acquired in this acquisition is attributable to the workforce of the acquired business and the synergies expected to arise with this transaction through network optimization, SG&A reductions and procurement efficiencies. The goodwill is not deductible for tax purposes.

Pro Forma Financial Information- Pro forma net sales, Pro forma net earnings from continuing operations and Pro forma diluted net earnings per common share - continuing operations for the quarter ended December 31, 2018 are shown in the table below. The pro forma results are presented as if the Battery and Auto Care Acquisitions had occurred on October 1, 2017. The pro forma results are not indicative of the results the Company would have achieved if the acquisitions had occurred that date or indicative of the results of the future operation of the combined company.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

The pro forma adjustments are based upon purchase price allocations and include purchase accounting adjustments for the impact of the inventory step up charge, depreciation and amortization expense from the fair value of the intangible assets and property, plant and equipment, interest and financing costs and the impact of the equity consideration completed to fund the acquisitions. Cost synergies that may result from combining Energizer and the Battery and Auto Care Acquisitions are not included in the pro forma table below.



	For the Quarter Ended December 31, 2018
Pro forma net sales	$	774.7
Pro forma net earnings from continuing operations	87.1
Pro forma diluted net earnings per common share - continuing operations	$	1.15
Pro forma weighted average shares of common stock - Diluted	75.7

The shares included in the above are adjusted to assume that the common stock and Mandatory Convertible Preferred Shares (MCPS) shares issued for the Auto Care Acquisition occurred as of October 1, 2017. For the quarter ended December 31, 2018, the MCPS conversion was dilutive and assumed in the calculation.

The unaudited pro forma data above includes the following significant adjustments for certain costs in order to present results as if the acquisitions had occurred as of October 1, 2017. The following expenses, which are net of the applicable tax rates, were added to or removed from the net earnings amounts for the respective period:



Expense removed/(Additional expense)	For the Quarter Ended December 31, 2018
Acquisition and integration costs (1)	$	20.3
Interest and ticking fees on escrowed debt (2)	1.2
Gains on escrowed funds (3)	(11.6		)

(1) Acquisition and integration costs incurred to obtain legal approval, investment banking fees and other transaction related expenses that occurred prior to closing of the acquisitions, were removed from the various periods and recorded in the first quarter of fiscal 2018 when the transaction is assumed to have occurred.

(2) Interest and ticking fees from the acquisition related debt were accrued over the periods prior to the acquisition occurring. These fees were removed as they would not have been incurred if the acquisition occurred October 1, 2017. The interest from the new capital structure was included in the results and the pre-tax amount of $47.6 for interest expense was included in the results above.

(3) The escrowed debt funds earned interest income and had gains on the non-functional currency balances. These gains would not have been realized if the transaction had occurred as of October 1, 2017.

Excluded from the above pro forma results is the write down of assets of business held for sale to fair value less cost to sell of $107.2 recorded by the Auto Care business during the three months ended December 31, ~~2017,~~2018. This loss was recorded as a direct result of the transaction and would not have impacted the combined Company results.

Net sales and Earnings before income taxes for the Battery and Auto Care Acquisitions included in the Company's Consolidated (Condensed) Statement of Earnings and Comprehensive Income are shown in the following table. The Earnings before income taxes excludes all acquisition and integration costs as well as any additional interest incurred by the Company ~~recorded no activity~~for the debt issuances to complete the acquisitions:



	For the Quarter Ended December 31, 2019
	Battery Acquisition		Auto Care Acquisition
Net sales	$	125.5	$	61.4
Earnings before income taxes	17.1		0.4

Acquisition and Integration Costs- The Company incurred pre-tax acquisition and integration costs related to ~~spin. During~~the Battery Acquisition and Auto Care Acquisition of $19.3 and $36.5 in the quarters ended December 31, 2019 and 2018, respectively.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

Pre-tax costs recorded in Costs of products sold were $6.9 for the quarter ended December 31, ~~2016,~~2019, primarily related to the facility exit and restructuring related costs, discussed in Note 5, Restructuring.

Pre-tax acquisition and integration costs recorded in SG&A were $11.1 and $18.9 for the quarters ended December 31, 2019 and 2018, respectively. The current year costs are related to the integration of the Battery Acquisition and Auto Care Acquisition, including consulting fees and costs of integrating the information technology systems of the businesses. The prior year costs are related to legal, consulting and advisory fees to assist with obtaining regulatory approval around the globe and to plan for the closing.

For the quarter ended December 31, 2019 the Company ~~sold~~recorded $0.4 in research and development.

Also, included in the pre-tax acquisition costs for the quarter ended December 31, 2018 was $32.4 of interest expense, including ticking fees, related to the escrowed debt for the Battery Acquisition.

Included in Other items, net were pre-tax expenses of $0.9 and pre-tax income of $14.8 in the quarters ended December 31, 2019 and 2018, respectively. Other items, net for the quarter ended December 31, 2019 included a ~~facility in North America that was previously closed as part~~$2.2 loss related to the hedge contract on the proceeds from the Varta Divestiture, offset by $1.0 gain on the sale of assets, and $0.3 transition services income. Other items, net for the ~~spin and recorded a~~quarter ended December 31, 2018 included pre-tax gain of $1.3 in spin restructuring. On a project to date basis, the total costs incurred or allocated to Energizer for the spin were $197.6, inclusive of the costs of early debt retirement recorded in fiscal 2015. We do not expect any additional costs$9.0 related to ~~spin.~~the favorable movement in the escrowed USD restricted cash held in our European Euro functional entity and interest income of $5.8 earned on the Restricted cash funds held in escrow associated with the Battery Acquisition.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

(4) Divestment

As discussed in Note 1, Description of Business and Basis of Presentation, the Divestment Business was classified as held for sale in the accompanying Consolidated (Condensed) Balance Sheets and as discontinued operations in the accompanying Consolidated (Condensed) Statement of Earnings and Comprehensive Income. On May 29, 2019, the Company entered into a definitive agreement with VARTA AG to sell the Divestment Business for €180.0, subject to approval by the European Commission and certain purchase price adjustments.

The following table ~~represents~~summarizes the ~~spin restructuring accrual activity~~assets and ~~ending accrual balance~~liabilities of the Divestment Business classified as held for sale as of December 31, ~~2016~~2019 and September 30, 2019:



	December 31, 2019		September 30, 2019
Assets
Trade receivables	$	60.1	$	50.9
Inventories	44.8		59.8
Other current assets	34.7		41.5
Property, plant and equipment, net	83.7		78.8
Goodwill	47.2		50.5
Other intangible assets, net	503.9		489.0
Other assets	31.1		21.2
Assets held for sale	$	805.5	$	791.7

Liabilities
Current portion of capital leases	$	5.5	$	5.3
Accounts payable	29.5		45.9
Notes payable	0.6		0.6
Other current liabilities	90.8		99.8
Long-term debt	22.9		23.5
Long term deferred tax liability	166.0		169.9
Other liabilities (1)	71.8		57.9
Liabilities held for sale	$	387.1	$	402.9

(1) Included in Other liabilities are pension liabilities of $44.0 and $42.4 related to the Divestment Business as of December 31, 2019 and September 30, 2019, respectively.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

The following table summarizes the components of Net earnings from discontinued operations in the accompanying Consolidated (Condensed) Statement of Earnings and Comprehensive Income for the quarter ended December 31, 2019. As the Company acquired the business on January 2, 2019, there is no activity on the Consolidated ~~Condensed Balance Sheet.~~(Condensed) Statement of Earnings and Comprehensive Income for the quarter ended December 31, 2018:



	For the Quarter Ended
	December 31, 2019
Net sales	$	115.8
Cost of products sold	88.2
Gross profit	27.6
Selling, general and administrative expense	17.4
Advertising and sales promotion expense	0.3
Research and development expense	0.8
Interest expense	5.2
TSA income	(3.8		)
Other items, net	(0.1		)
Earnings before income taxes	7.8
Income tax expense	7.5
Net earnings from discontinued operations	$	0.3

Included in the Net earnings from discontinued operations for the quarter ended December 31, 2019 are divestment related pre-tax costs of $1.1 and allocated pre-tax interest expense of $5.0.

Subsequent to the quarter, on January 2, 2020, the Company sold the business to VARTA AG and received initial combined cash proceeds of approximately $345 from Varta AG and Spectrum. Spectrum contributed proceeds pursuant to the terms of the Battery Acquisition agreement. The initial proceeds received are subject to contractual purchase price adjustments between the Company and VARTA AG. The Company is evaluating the impact of the divestiture and currently estimates a pre-tax loss of between $80 and $90 based on the preliminary cash proceeds.

(5) Restructuring

In the fourth fiscal quarter of 2019, Energizer's Board of Directors approved restructuring related integration plans for our manufacturing and distribution networks. These plans include the closure and combination of distribution and manufacturing facilities in order to reduce complexity and realize greater efficiencies in our manufacturing, packaging and distribution processes. All activities within this plan are expected to be completed by December 31, 2021.

The pre-tax expense for charges related to the restructuring plans for the quarter ended December 31, 2019 is noted in the table below and was reflected in Cost of products sold on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income:



	For the Quarter Ended December 31, 2019
Severance and related benefit costs	$	0.9
Accelerated depreciation & asset write-offs	3.4
Other exit costs⁽¹⁾	2.0
Total	$	6.3

(1) Includes charges primarily related to environmental investigatory and mitigation costs, relocation and other facility exit costs.

The restructuring costs noted above for the quarter ended December 31, 2019, were incurred within the Americas and International segments in the amount of $5.9 and $0.4, respectively.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

The following table summarizes the activity related to the restructuring for the three months ended December 31, 2019:



					Utilized
	September 30, 2019		Charge to Income		Cash		Non-Cash		December 31, 2019⁽¹⁾
Severance & termination related costs	$	9.8	$	0.9	$	—	$	—	$	10.7
Accelerated depreciation & asset write-offs	—		3.4		—		3.4		—
Other exit costs	—		2.0		1.3		—		0.7
Total	$	9.8	$	6.3	$	1.3	$	3.4	$	11.4

(1) At December 31, ~~2016, $2.2 of~~2019, the ~~liability was~~restructuring reserve is recorded on the Consolidated (Condensed) Balance Sheet in Other current liabilities of $6.9 and Other liabilities of $4.5.

We expect to incur additional severance and related benefit costs and other exit-related costs associated with these plans of approximately $55 through the ~~remaining $2.1 was recorded in Other liabilities. There were no liabilities outstanding at September 30, 2017 or December 31, 2017.~~end of calendar 2021.

Utilized
October 1, 2016 Charge to Income Cash Non-Cash December, 2016
Severance and termination related costs $ 2.8
$ —
$ (1.8 ) $ —
$ 1.0
Contract termination costs 3.6
—
(0.3 ) —
3.3
Net gain on asset sales —

(1.3 )
1.3

—

—
Total $ 6.4
$ (1.3 ) $ (0.8 ) $ —
$ 4.3

~~(3)~~(6) Income Taxes

The ~~three month~~ effective tax rate for the three months ended December 31, 2019 was ~~49.2%~~22.0% as compared to ~~28.7%~~21.3% for the prior year comparative period. OnThe prior year rate includes $1.5 for the one-time impact of U.S. tax legislation passed in December ~~22, 2017, H.R. 1, formally known~~2017. The increase in the rate versus prior year is due to the country mix of earnings which drove a higher foreign rate as well as the Tax Cuts and Jobs Act (the Act) was enacted into law. The Act provides for numerous significant tax law changes and modifications with varying effective dates, which include reducing the corporate income tax rate from 35% to 21%, creating a territorial tax system (with a mandatory transition tax on previously deferred foreign earnings) and allowing for immediate capital expensingexpiration of certain qualified property. As a fiscal year end taxpayer, certain provisions of the Act will begin to impact us in our fiscal first quarter ended December 31, 2017, while other provisions will impact us beginning in fiscal year 2019. The corporate tax rate reduction is effective for Energizer as of January 1, 2018 and, accordingly, will reduce our current fiscal year federal statutory rate to a blended rate of approximately 24.5% for fiscal year 2018.

The changes included in the Act are broad and complex. The final transition impacts of the Act may differ from our current estimates, possibly materially, due to, among other things, changes in interpretations of the Act, any legislative action to address questions that arise because of the Act, any changes in accounting standards for income taxes or related interpretations in response to the Act, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Act to finalize the recording of the related tax impacts.

As a result of the reduction of the Federal corporate income tax rate, we have remeasured certain deferred tax assets and liabilities at the rate which they are expected to reverse in the future. We are still analyzing certain aspects of the Act, including the future impacts of the Global Intangible Low-Taxed Income provision, and refining our calculations, which could potentially affect the remeasurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the remeasurement of our deferred tax balance was tax expense of approximately $1.

The mandatory transition tax is based on our total post-1986 earnings and profits (E&P) that we previously deferred from U.S. income taxes. We recorded a provisional amount for our mandatory transition tax liability, resulting in an increase in income tax expense of approximately $30. We have not yet completed our calculation of the total

post-1986 E&P for these foreign subsidiaries. Further, the mandatory transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S federal taxation and finalize the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the mandatory transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvestedholidays in foreign ~~operations.~~jurisdictions.

~~(4)~~(7) Share-Based Payments

The Board of Directors adopted the Energizer Holdings, Inc. Equity Incentive Plan (the 2015 Plan) on July 1, 2015, upon completion of the Spin-off. Under the terms of the 2015 Plan, stock options, restricted stock awards, restricted stock equivalents, stock appreciation rights and performance-based stock awards may be granted to directors, officers and employees of the Company. The 2015 Plan authorized a maximum number of 10 million common shares to be awarded.

Subsequent to the quarter, on January 27, 2020, the Company's shareholders approved the Energizer Holdings, Inc. Omnibus Incentive Plan (Omnibus Plan). The Omnibus Plan replaces and supersedes the 2015 Plan. No new awards will be issued under the 2015 Plan, though the terms of the 2015 Plan will continue to govern all awards granted under that plan.

The Omnibus Plan authorizes 6.5 million shares to be awarded, as well as the 0.3 million shares that were still available for grant under the 2015 Plan. Under the terms of the Omnibus Plan, stock options, stock appreciation rights, restricted stock and restricted stock units (time-based or performance-based), other stock awards and cash-based awards may be granted to directors, officers and employees of the Company. For purposes of determining the number of shares available for future issuance under the Plan, awards other than stock options and stock appreciation rights, will reduce the shares available for future issuance by two for every one share awarded. Stock options and stock appreciation rights reduce the shares available for future issuance on a one-for-one basis.

Total compensation cost ~~charged against income~~ for Energizer’s share-based compensation arrangements was ~~$6.7~~$7.2 and $6.5 for the ~~quarter~~quarters ended December 31, ~~2017~~2019 and ~~$5.2 for the quarter ended December 31, 2016~~2018, respectively, and was recorded in SG&A expense.

Restricted Stock Equivalents (RSE)—(in whole dollars and total shares)

In November 2019, the Company granted RSE awards to a group of key employees of approximately 134,000 shares that vest ratably over four years and granted RSE awards to a group of key executives of approximately 81,000 shares that vest on the third anniversary of the date of grant. In addition, the Company granted approximately 306,000 performance shares to a group of key employees and key executives that will vest subject to meeting target amounts for both cumulative adjusted earnings per share and cumulative free cash flow as a percentage of sales over the three year performance period. These performance measures are equally weighted in

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

determining the final share award with the maximum award payout of approximately 612,000 shares. The closing stock price on the date of the grant used to determine the award fair value was $43.10.

In November 2018, the Company granted RSE awards to a group of key employees of approximately 73,000 shares that vest ratably over four years and granted RSE awards to a group of key executives of approximately 55,000 shares that vest on the third anniversary of the date of grant. In addition, the Company granted approximately 190,000 performance shares to a group of key employees and key executives that will vest subject to meeting target amounts for both cumulative adjusted earnings per share and cumulative free cash flow as a percentage of sales over the three year performance period. These performance measures are equally weighted in determining the final share award with the maximum award payout of approximately 380,000 shares. The closing stock price on the date of the grant used to determine the award fair value was $60.25.

In November 2017, the Company granted RSE awards to a group of key employees of approximately 100,000 shares that vest ratably over four years and granted RSE awards to a group of key executives of approximately 68,000 shares that vest on the third anniversary of the date of grant. In addition, the Company granted approximately 238,000 performance shares to a group of key employees and key executives that will vest subject to meeting target amounts for both cumulative adjusted earnings per share and cumulative free cash flow as a percentage of sales over the three year performance period. These performance measures are equally weighted in determining the final share award with the maximum award payout of approximately 476,000 shares. The closing stock price on the date of the grant used to determine the award fair value was $44.20.

In November 2016, the Company granted RSE awards to a group of key employees of approximately 92,000 shares that vest ratably over four years and granted RSE awards to a group of key executives of approximately 73,000 shares that vest on the third anniversary of the date of the grant. In addition, the Company granted approximately 249,000 performance shares to a group of key employees and key executives that will vest subject to meeting targeted amounts for both cumulative adjusted earnings per share and cumulative free cash flow as a percentage of sales over the three year performance period. These performance measures are equally weighted in determining the final share award. These performance measures are equally weighted in determining the final share award with the maximum award payout of approximately 498,000 shares.years. The closing stock price on the date of the grant used to determine the award fair value was $43.84.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In November 2015, the Company granted RSE awards to a group of key employees of approximately 106,000 shares that vest ratably over four years and granted RSE awards to a group of key executives of approximately 87,000 shares that vest on the third anniversary of the date of the grant. In addition, the Company granted approximately 290,000 performance shares to a group of key employees and key executives that will vest subject to meeting targeted amounts for both cumulative adjusted earnings per share and cumulative free cash flow as a percentage of sales over the three year performance period. These performance measures are equally weighted in determining the final share award. These performance measures are equally weighted in determining the final share award with the maximum award payout of approximately 580,000 shares. The closing stock price on the date of the grant used to determine the award fair value was $37.34.millions - Unaudited)

~~(5)~~

(8)Earnings per share

Basic earnings per share is based on the average number of common shares outstanding during the period. Diluted earnings per share is based on the average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of restricted stock equivalents, ~~and~~ performance share ~~awards.~~awards and deferred compensation equity plans. Common shares issuable upon conversion of the Mandatory Convertible Preferred Stock (MCPS) are included in the calculation of diluted earnings per share using the if-converted method and are only included if the conversion would be further dilutive to the calculation.

The following table sets forth the computation of basic and diluted earnings per share for the quarters ended December 31, ~~2017~~2019 and ~~2016:~~2018:



(in millions, except per share data)	For the Quarter Ended December 31,
Basic earnings per share	2019			2018
Net earnings from continuing operations	$	45.8		$	70.8
Mandatory preferred stock dividends	(4.0		)	—
Net earnings from continuing operations attributable to common shareholders	41.8			70.8
Net earnings from discontinued operations, net of tax	0.3			—
Net earnings attributable to common shareholders	$	42.1		$	70.8

Weighted average common shares outstanding - Basic	69.1			59.7

Basic net earnings per common share from continuing operations	$	0.60		$	1.19
Basic net earnings per common share from discontinued operations	0.01			—
Basic net earnings per common share	$	0.61		$	1.19

Diluted earnings per share
Net earnings from continuing operations attributable to common shareholders	$	41.8		$	70.8
Net earnings from discontinued operations, net of tax	0.3			$	—
Net earnings attributable to common shareholders	$	42.1		$	70.8

Weighted average common shares outstanding - Basic	69.1			59.7
Dilutive effect of restricted stock equivalents	0.2			0.4
Dilutive effect of performance shares	0.7			0.7
Dilutive effect of stock based deferred compensation plan	0.2			0.2
Weighted average common shares outstanding - Diluted	70.2			61.0

Diluted net earnings per common share from continuing operations	$	0.60		$	1.16
Diluted net earnings per common share from discontinued operations	—			—
Diluted net earnings per common share	$	0.60		$	1.16

(in millions, except per share data)
For the Quarter
Ended December 31,
2017 2016
Net earnings $ 60.4
$ 95.6
Basic average shares outstanding 60.2
61.8
Effect of dilutive restricted stock equivalents 0.4
0.6
Effect of dilutive performance shares 0.9
0.5
Diluted average shares outstanding 61.5
62.9
Basic earnings per common share $ 1.00
$ 1.55
Diluted earnings per common share $ 0.98
$ 1.52

For ~~the~~both quarters ended December 31, ~~2017~~2019 and ~~December 31, 2016, all~~2018, 0.1 million restricted stock equivalents were anti-dilutive and ~~performance shares were dilutive and~~not included in the diluted net earnings per share ~~calculations.~~calculation.

Performance based restricted stock equivalents of 0.9 million were excluded for the quarter ended December 31, 2019 and 0.7 million for the quarter ended December 31, 2018, as the performance targets for those shares had not been achieved as of the end of the applicable period.

As of December 31, 2019, all of the Company's MCPS were considered anti-dilutive and excluded from the calculations of diluted earnings per share.

~~(6)~~

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

(9) Segments

Operations for Energizer are managed via ~~three~~2 major geographic reportable segments: Americas ~~(North America~~ and ~~Latin America), Europe, Middle East and Africa (EMEA), and Asia Pacific.~~

International. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based compensation costs, ~~costs associated with restructuring initiatives,~~ acquisition and integration activities, amortization costs, ~~business realignment activities,~~ research & development costs and other items determined to be corporate in nature. Financial items, such as interest income and expense, are managed on a global basis at the corporate level. The exclusion of substantially all acquisition ~~integration, restructuring~~ and ~~realignment~~integration costs from segment results reflects management’s view on how it evaluates segment performance.

Segment sales and profitability for the quarters ended December 31, 2019 and 2018, respectively, are presented below:



	For the Quarter Ended December 31,
	2019			2018
Net Sales
Americas	$	514.5		$	373.5
International	222.3			198.4
Total net sales	$	736.8		$	571.9
Segment Profit
Americas	$	129.2		$	116.1
International	52.2			54.6
Total segment profit	181.4			170.7
General corporate and other expenses (1)	(24.9		)	(18.7		)
Global marketing expense (2)	(6.1		)	(3.1		)
Research and development expense - Adjusted (3)	(8.5		)	(5.5		)
Amortization of intangible assets	(13.8		)	(3.2		)
Acquisition and integration costs (4)	(19.3		)	(36.5		)
Interest expense - Adjusted (5)(6)	(46.8		)	(15.8		)
Loss on extinguishment of debt (6)	(4.2		)	—
Other items, net - Adjusted (7)	0.9			2.1
Total earnings before income taxes	$	58.7		$	90.0

(1) Included in SG&A in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income.

(2) Global marketing expense for the quarters ended December 31, 2019 and 2018 included $2.9 and $1.2 recorded in SG&A, respectively, and $3.2 and $1.9 recorded in Advertising and sales promotion expense, respectively, in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income.

(3) Research and development expense for the quarter ended December 31, 2019 included $0.4 of acquisition and integration costs which have been reclassified for purposes of the reconciliation above.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

~~Segment sales~~(4) Acquisition and ~~profitability~~integration costs were included in the following lines in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income:



	For the Quarter Ended December 31,
	2019		2018
Cost of products sold	$	6.9	$	—
Selling, general and administrative expense	11.1		18.9
Research and development expense	0.4		—
Interest expense	—		32.4
Other items, net	0.9		(14.8		)
Total acquisition and integration costs	$	19.3	$	36.5

(5) Interest expense for the quarter ended December 31, ~~2017~~2018 included $32.4 of acquisition debt ticking fees and ~~2016, respectively, are presented below:~~

For the Quarter Ended December 31,
2017 2016
Net Sales
Americas $ 373.1
$ 365.1
EMEA 117.6
114.7
Asia Pacific 82.6
79.8
Total net sales $ 573.3
$ 559.6
Segment Profit
Americas $ 123.1
$ 123.1
EMEA 25.5
26.1
Asia Pacific 23.7
24.7
Total segment profit 172.3
173.9
    General corporate and other expenses (1) (2) (21.6 ) (17.2 )
    Global marketing expense (1) (3.2 ) (3.0 )
    Research and development expense (5.3 ) (5.8 )
    Amortization of intangible assets (2.8 ) (2.6 )
    Acquisition and integration costs (1) (5.7 ) (0.8 )
Spin restructuring —
1.3
Interest expense (13.4 ) (13.3 )
Other items, net (2) (1.3 ) 1.6
Total earnings before income taxes $ 119.0
$ 134.1

~~(1) Included in SG&A in the unaudited Consolidated Condensed Statement of Earnings and Comprehensive Income.~~

~~(2) As a result~~interest expense which have been reclassified for purposes of the ~~adoption~~reconciliation above.

(6) Loss on extinguishment of ~~ASU 2017-07 in the current quarter, a $3.1 benefit was reclassified from SG&A to Other items, net~~debt for the quarter ended December 31, ~~2016.~~2019 includes the write off of deferred financing fees related to the term loan refinancing and was recorded in Interest expense on the Consolidated (Condensed) Statement of Earnings.


(7)	Other items, net for the quarters ended December 31, 2019 and 2018 on the Consolidated (Condensed) Statement of Earnings included acquisition related costs of $0.9 million andincome of $14.8 million, respectively, which has been reclassified for purposes of the reconciliation above.

~~Supplemental product information is presented below for revenues from external customers:~~

For the Quarter Ended December 31,
Net Sales 2017 2016
Batteries $ 524.5
$ 503.1
Other 48.8
56.5
Total net sales $ 573.3
$ 559.6

Corporate assets shown in the following table include all financial instruments, ~~deferred tax~~pension assets and ~~deferred charges~~tax asset balances that are managed outside of operating segments. ~~Total~~In addition, the Assets held for sale are assets utilized outside of the operating segments.



Total Assets	December 31, 2019		September 30, 2019
Americas	$	1,006.5	$	991.9
International	691.0		621.0
Total segment assets	$	1,697.5	$	1,612.9
Corporate	95.0		81.3
Goodwill and other intangible assets	2,968.8		2,963.7
Assets held for sale	805.5		791.7
Total assets	$	5,566.8	$	5,449.6

(10) Leases

The Company determines whether an arrangement contains a lease at the inception of the contract by ~~segment~~determining if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Energizer's portfolio of leases contains certain real estate, equipment, vehicles and office equipment leases. Leases with an initial term of 12 months or less are ~~presented below:~~not recorded on the balance sheet. Additionally, the Company's leases do not contain material residual value guarantees or material restrictive covenants.

Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company does not account for lease components separately from non-lease components. The discount rate used to calculate present value for both operating and financing leases is Energizer's incremental borrowing rate based on information available at the commencement date, or if available, the rate implicit in the lease. The incremental borrowing rate used is determined based on fully secured borrowings at the time of adoption, or going forward, at the date of lease commencement. Many of these agreements contain options to renew or terminate the lease. For calculating lease liabilities, the Company includes these options within the lease term when it is reasonably certain that the Company will execute such options. Some of the leases include variable payments, which primarily are tied to asset usage or sales rather than an index or rate. As such, these variable payments are not included in the calculation of the Company's lease assets and liabilities.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

As of December 31, 2019 the amounts for leases included in our condensed balance sheet include:



Balance Sheet Location	December 31, 2019
Operating Leases:
Operating lease asset	$	82.9

Operating lease liabilities - current	15.6
Operating lease liabilities	68.4
Total Operating Lease Liabilities	$	84.0

Weighted-average remaining lease term (in years)	17.9
Weighted-average discount rate	4.4		%

Finance Leases:
Property, plant and equipment, net	$	45.7

Current portion of capital leases	1.7
Long-term debt	45.1
Total Finance Lease Liabilities	$	46.8

Weighted Average remaining lease term (in years)	20.8
Weighted-average discount rate	6.7		%

During the quarter ended December 31, 2019, Energizer entered into an operating lease that will result in significant rights and obligations; however, the lease will not commence until later in fiscal year 2020. The commencement date will be determined in accordance with ASC 842 when the lessor makes the underlying asset available for use. The lease term is for 16 years and we expect this lease to result in a material right of use operating lease asset and operating liabilities upon commencement.

The following table presents the components of lease expense:



	For the Quarter ended,
	December 31, 2019
Operating lease cost	$	4.5
Finance lease cost:
Amortization of assets	0.8
Interest on lease liabilities	0.8
Variable lease costs	0.3
Total lease costs	$	6.4

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

Supplemental cash and non-cash information related to leases:

December 31, 2017 September 30, 2017
Americas $ 510.0
$ 533.9
EMEA 246.3
240.3
Asia Pacific 489.8
457.9
Total segment assets $ 1,246.1
$ 1,232.1
Corporate 67.0
137.7
Goodwill and other intangible assets 451.0
453.8
Total assets $ 1,764.1
$ 1,823.6



	Quarter ended,
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4.4
Operating cash flows from finance leases	0.7
Financing cash flows from finance leases	0.3

Non-cash increase in lease assets and lease liabilities:
Operating leases (1)	$	33.6

(1) During the first quarter of fiscal 2020, Energizer entered into a material embedded lease agreement which resulted in right of use asset and lease liabilities of $33.6. The embedded operating lease commenced on November 1, 2019. The non-cash increase in operating lease assets and liabilities above does not include the lease assets and lease liabilities recorded due to the ASC 842 implementation on October 1, 2019.

Minimum lease payments under operating and finance leases with non-cancellable terms in excess of one year as of December 31, 2019 are as follows:



	Operating Leases			Finance leases
2020	$	14.1		$	3.5
2021	14.6			4.6
2022	10.9			4.7
2023	9.9			4.6
2024	9.7			4.4
Thereafter	69.2			70.8
Total lease payments	128.4			92.6

Less: Imputed interest	(44.4		)	(45.8		)
Present value of lease liabilities	$	84.0		$	46.8

Minimum rental commitments under non-cancellable operating leases directly held by Energizer and were in effect as of September 30, 2019, were $16.8 in fiscal 2020, $10.3 in fiscal 2021, $6.6 in fiscal 2022, $5.8 in fiscal 2023, $5.4 in fiscal 2024 and $38.9 thereafter.

~~(7)~~(11) Goodwill and intangible assets

Goodwill and intangible assets deemed to have an indefinite life are not amortized, but are evaluated annually for impairment as part of our annual business planning cycle in the fourth fiscal quarter, or when indicators of a potential impairment are present.

The following table sets forth goodwill by segment as of October 1, ~~2017~~2019 and December 31, ~~2017:~~2019:



	Americas		International		Total
Balance at October 1, 2019	$	861.6	$	143.2	$	1,004.8
Battery Acquisition	0.7		0.2		0.9
Auto Care Acquisition	3.8		0.1		3.9
Cumulative translation adjustment	0.3		12.6		12.9
Balance at December 31, 2019	$	866.4	$	156.1	$	1,022.5

Americas EMEA Asia Pacific Total
Balance at October 1, 2017 $ 213.8
$ 5.5
$ 10.7
$ 230.0
Cumulative translation adjustment (0.2 ) 0.1
0.2
0.1
Balance at December 31, 2017 $ 213.6
$ 5.6
$ 10.9
$ 230.1

Energizer had indefinite-lived intangible assets of ~~$78.2~~$1,365.0 at December 31, ~~2017~~2019 and ~~$78.3~~$1,363.8 at September 30, ~~2017. Changes in indefinite-lived intangible assets are due to changes in foreign~~2019. The difference between the periods is driven by currency ~~translation.~~adjustments.

~~Total amortizable intangible assets at December 31, 2017 are as follows:~~

Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trademarks $ 40.1
$ 4.0
$ 36.1
Customer relationships 84.4
8.8
75.6
Patents 34.5
3.8
30.7
Non-compete 0.5
0.2
0.3
Total intangible assets at December 31, 2017 $ 159.5
$ 16.8
$ 142.7

~~Total amortizable intangible assets at September 30, 2017 were as follows:~~

Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trademarks $ 40.1
$ 3.4
$ 36.7
Customer relationships 84.4
7.3
77.1
Patents 34.5
3.2
31.3
Non-compete 0.5
0.1
0.4
Total intangible assets at September 30, 2017 $ 159.5
$ 14.0
$ 145.5

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

~~(8)~~

Total intangible assets at December 31, 2019 are as follows:



	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trademarks and trade names	$	59.7	$	(10.9	)	$	48.8
Customer relationships	394.2		(41.0		)	353.2
Patents	34.5		(8.8		)	25.7
Proprietary technology	172.5		(21.1		)	151.4
Proprietary formulas	2.4		(0.3		)	2.1
Non-compete	0.5		(0.4		)	0.1
Total Amortizable intangible assets	663.8		(82.5		)	581.3
Trademarks and trade names - indefinite lived	1,365.0		—			1,365.0
Total Other intangible assets, net	$	2,028.8	$	(82.5	)	$	1,946.3

Total intangible assets at September 30, 2019 were as follows:



	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trademarks and trade names	$	59.7	$	(9.9	)	$	49.8
Customer relationships	394.2		(34.3		)	359.9
Patents	34.5		(8.2		)	26.3
Proprietary technology	172.5		(15.7		)	156.8
Proprietary formulas	2.4		(0.3		)	2.1
Non-compete	0.5		(0.3		)	0.2
Total Amortizable intangible assets	663.8		(68.7		)	595.1
Trademarks and trade names - indefinite lived	1,363.8		—			1,363.8
Total Other intangible assets, net	$	2,027.6	$	(68.7	)	$	1,958.9

(12) Debt

The detail of long-term debt was as follows:



	December 31, 2019			September 30, 2019
2019 Senior Secured Term Loan A Facility Due 2022	$	365.0		$	—
Senior Secured Term Loan A Facility due 2021	—			77.5
Senior Secured Term Loan B Facility due 2025	660.0			982.5
5.50% Senior Notes due 2025	600.0			600.0
6.375% Senior Notes due 2026	500.0			500.0
4.625% Senior Notes due 2026 (Euro Notes of €650.0)	728.8			708.4
7.750% Senior Notes due 2027	600.0			600.0
Capital lease obligations	46.8			46.9
Total long-term debt, including current maturities	3,500.6			3,515.3
Less current portion	(70.1		)	(1.6		)
Less unamortized debt discount and debt issuance fees	(46.9		)	(52.1		)
Total long-term debt	$	3,383.6		$	3,461.6

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

December 31, 2017 September 30, 2017
Senior Secured Term Loan B Facility, net of discount due 2022 $ 391.0
$ 392.0
5.50% Senior Notes due 2025 600.0
600.0
Total long-term debt, including current maturities 991.0
992.0
Less current portion (4.0 ) (4.0 )
Less unamortized debt discount and debt issuance fees (9.1 ) (9.5 )
Total long-term debt $ 977.9
$ 978.5

Long-term debt - On December 27, 2019, the Company amended the existing Term Loan Agreement and refinanced $365.0 of term loan debt. The amendment established a new $365.0 Term Loan A facility due December 2022, which was used to pay down $300.0 of the existing Term Loan B facility due in 2025 and $65.0 of the existing Term Loan A facility due in 2021. The pay down of the Term Loan B facility was determined to be a deemed extinguishment and the Company wrote-off $4.2 of deferred financing fees during the quarter. Debt issuance fees paid related to the term loan refinancing were $0.9 during the three months ended December 31, 2019. No other modifications were made to the Term Loan Agreement.

~~The Company's $600.0 of 5.50% Senior Notes due 2025 (Senior Notes) were sold~~

Subsequent to ~~qualified institutional buyers and will not be registered under federal or applicable state securities laws. Interest is payable semi-annually~~the quarter, the Company utilized the available proceeds from the Varta Divestiture to pay down borrowings outstanding on the Senior Notes in December and June. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis by each of the Company's domestic restricted subsidiaries that is a borrower or guarantor under the Revolving Facility and Term ~~Loan.~~Loan B facility.

The Company has a credit agreement which provides for a five-year $350.0 senior secured revolving credit facility (Revolving Facility) which matures in June 2020 and a seven-year $400.0 senior secured term loan B facility (Term Loan) which is due in June 2022. Borrowings under the Revolving Facility will bear interest at LIBOR or the Base Rate (as defined) plus the applicable margin based on total Company leverage. As of December 31, ~~2017,~~2019, the Company had ~~$87.5~~$20.0 of outstanding borrowings under the Revolving Facility and had ~~$6.7~~$7.3 of outstanding letters of credit. Taking into account outstanding letters of credit, ~~$255.8 remains~~$372.7 remained available as of December 31, ~~2017.~~2019. As of December 31, ~~2017,~~2019 and September 30, 2019, our weighted average interest rate on short-term borrowings was ~~3.19%.~~3.5% and 3.8%, respectively.

The $400.0 Term Loan was issued at a $1.0 discount which is amortized with a corresponding charge to interest expense over the remaining life of the loan. The original interest rate was LIBOR subject to a 75 basis points floor, plus 250 basis points. On March 13, 2017, the Company completed the repricing of its Term Loan reducing the interest to LIBOR plus 200 basis points and eliminating the 75 basis points floor. The loans and commitments under the Term Loan require quarterly principal payments at a rate of 0.25%, or $1.0, of the original principal balance.

Obligations under the Revolving Facility and Term Loan are jointly and severally guaranteed by certain of its existing and future direct and indirectly wholly-owned U.S. subsidiaries. There is a first priority perfected lien on substantially all of the assets and property of the Company and guarantors and proceeds therefrom excluding certain excluded assets. No other terms were changed as result of the Term Loan repricing.

Interest Rate Swaps -In March 2017, the Company entered into an interest rate swap agreement with one major financial institution that fixed the variable benchmark component (LIBOR) on $200.0 of Energizer's variable rate debt through June 2022 at an interest rate of 2.03%.

~~For~~In February 2018, the ~~quarter ended December 31, 2017, our weighted average~~Company entered into a forward starting interest rate swap with an effective date of October 1, 2018 with one major financial institution that fixed the variable benchmark component (LIBOR) on additional variable rate debt ~~inclusive~~at an interest rate of 2.47%. At the effective date, the swap had a notional value of $400.0. Beginning April 1, 2019, the notional amount decreases $50.0 each quarter, and continues to decrease until its termination date of December 31, 2020. The notional value of the ~~interest rate~~ swap was ~~3.42%.~~$250 at December 31, 2019.

Notes payable -The notes payable balance was ~~$110.5~~$28.1 at December 31, ~~2017~~2019 and ~~$104.1~~$31.9 at September 30, ~~2017.~~2019. The December 31, ~~2017~~2019 balance was comprised primarily of ~~$87.5 outstanding~~$20.0 of borrowings on the 2018 Revolving Facility as well as ~~$23.0~~$8.1 of other borrowings, including those ~~from~~related to foreign affiliates. The September 30, ~~2017~~2019 balance was comprised of ~~$95.0~~$25.0 outstanding borrowings on the 2015 Revolving facility as well as ~~$9.1~~$6.9 of other borrowings, including those ~~from~~related to foreign affiliates.

Debt Covenants

- The agreements governing the Company's debt contain certain customary representations and warranties, affirmative, negative and financial covenants and provisions relating to events of default. If the Company fails to comply with these covenants or with other requirements of these debt agreements, the lenders may have the right to accelerate the maturity of the debt. Acceleration under one of these facilities would trigger cross defaults to other

~~ENERGIZER HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS~~

~~(In millions - Unaudited)~~

borrowings. As of December 31, ~~2017,~~2019, the Company was ~~and expects to remain,~~ in compliance with the provisions and covenants associated with its debt agreements.

Aggregate maturities of long-term debt, including current maturities, at December 31, 2017 were as follows: $4.0 in one year, $4.0 in two years, $4.0 in three years, $4.0 in four years, $375.0 in five years and $600.0 thereafter.

The counterparties to long-term committed borrowings consist of a number of major financial institutions. The Company consistently monitors positions with, and credit ratings of, counterparties both internally and by using outside ratings agencies.

Debt Maturities - Aggregate maturities of long term debt as of December 31, 2019 are as follows:



	Long-term debt
2020	$	68.4
2021	91.3
2022	205.3
2023	7.5
2024	10.0

Thereafter	3,071.3
Total long-term debt payments due	$	3,453.8

Refer to Note 10, Leases, for the capital lease aggregate maturity table.

~~(9)~~

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

(13) Pension Plans

The Company has several defined benefit pension plans covering many of its employees in the U.S. and certain employees in other countries. The plans provide retirement benefits based on various factors including years of service and in certain circumstances, earnings. The U.S. plan was frozen in fiscal year 2015.

The Company’s net periodic pension (benefit)/cost for these plans are as follows:



	For the Quarter Ended December 31,
	U.S.						International
	2019			2018			2019			2018
Service cost	$	—		$	—		$	0.2		$	0.1
Interest cost	4.0			5.1			0.3			0.7
Expected return on plan assets	(6.1		)	(6.5		)	(0.6		)	(1.2		)
Amortization of unrecognized net losses	1.6			1.0			0.3			0.3
Net periodic (benefit)/cost	$	(0.5	)	$	(0.4	)	$	0.2		$	(0.1	)

For the Quarter Ended December 31,
U.S. International
2017 2016 2017 2016
Service Cost $ —
$ —
$ 0.2
$ 0.4
Interest Cost 4.7
4.5
1.1
0.9
Expected return on plan assets (7.5 ) (8.6 ) (1.6 ) (2.0 )
Amortization of unrecognized net losses 1.0
1.2
0.5
0.9
Settlement charge 0.1
—
—
—
Net periodic (benefit)/cost $ (1.7 ) $ (2.9 ) $ 0.2
$ 0.2

~~The Company adopted ASU 2017-07 in the current quarter.~~ The service cost component of the net periodic (benefit)/cost above is recorded in Selling, general and administrative expense on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income, while the remaining components are recorded to Other items, net. ~~The prior year amounts have been reclassified to provide comparable presentation in line with the guidance.~~

The Company also sponsors or participates in a number of other non-U.S. pension arrangements, including various retirement and termination benefit plans, some of which are required by local law or coordinated with government-sponsored plans, which are not significant in the aggregate and, therefore, are not included in the information presented above.

The Company acquired a pension as part of the Divestment Business with the Battery Acquisition which is included in Liabilities held for sale. No other material plans were acquired with the acquisitions.

~~(10) Shareholder's~~(14) Shareholders' Equity

In July 2015, the Company's Board of Directors approved an authorization for the Company to acquire up to 7.5 million shares of its common stock. ~~During~~There were no shares repurchased during the ~~three months ended December 31, 2017, the Company repurchased 1,126,379 shares for $50.0, at an average price~~first quarter of ~~$44.41 per share, under this authorization.~~fiscal 2020 or 2019. Future share repurchases, if any, will be determined by the Company based on its evaluation of the market conditions, capital allocation objectives, legal and regulatory requirements and other factors.

On November ~~13, 2017,~~11, 2019, the Board of Directors declared a dividend for the first quarter of fiscal ~~2018~~2020 of ~~$0.29~~$0.30 per common share of common ~~stock. The dividend was paid~~stock, payable on December ~~14, 2017~~17, 2019, to all shareholders of record as of the close of business on November ~~30, 2017~~26, 2019. During the quarters ended December 31, 2019 and ~~totaled $17.3.~~2018, total dividends declared were $21.4 and $18.4, respectively. The ~~incremental~~payments made of $22.7 and $19.8 during the quarters ended December 31, 2019 and 2018, respectively, included the cumulative dividends paid upon the vesting of restricted shares during the period.

The Company also paid a cash dividend ~~payments~~ of ~~$0.3 made~~$1.875 per share of MCPS on October 15, 2019 which had been declared in fiscal ~~2018 were related to restricted stock awards that vested during~~2019. The total payment made was $4.0. On November ~~2017.~~

~~Subsequent to the fiscal quarter end, on January 29, 2018,~~11, 2019, the Board of Directors declared a cash dividend of $1.875 per share of MCPS to all shareholders of record as of the close of January 1, 2020. This $4.0 dividend was accrued as of December 31, 2019 and was paid on January 15, 2020.

Subsequent to the end of the fiscal quarter, on January 27, 2020, the Board of Directors declared a cash dividend for the second quarter of ~~2018~~2020 of ~~$0.29~~$0.30 per share of common stock, payable on March ~~13, 2018,~~18, 2020, to all shareholders of record as of the close of business February ~~20, 2018.~~22, 2020.

Subsequent to the end of the fiscal quarter, on January 27, 2020, the Board of Directors declared a cash dividend of $1.875 per share of MCPS, payable on April 15, 2020, to all shareholders as of the close of business on April 1, 2020.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

~~(11)~~(15) Financial Instruments and Risk Management

The market risk inherent in the Company's operations creates potential earnings volatility arising from changes in currency rates, interest rates and commodity prices. The Company's policy allows derivatives to be used only for identifiable exposures and, therefore, the Company does not enter into hedges for trading or speculative purposes where the sole objective is to generate profits.

Concentration of Credit Risk—The counterparties to derivative contracts consist of a number of major financial institutions and are generally institutions with which the Company maintains lines of credit. The Company does not enter into derivative contracts through brokers nor does it trade derivative contracts on any other exchange or over-the-counter markets. Risk of currency positions and mark-to-market valuation of positions are strictly ~~monitored.~~monitored at all times.

The Company continually monitors positions with, and credit ratings of, counterparties both internally and by using outside rating agencies. While nonperformance by these counterparties exposes Energizer to potential credit losses, such losses are not anticipated.

In the ordinary course of business, the Company may enter into contractual arrangements (derivatives) to reduce its exposure to commodity price and foreign currency risks. The section below outlines the types of derivatives that existed at December 31, ~~2017~~2019 and September 30, ~~2017,~~2019, as well as the Company's objectives and strategies for holding these derivative instruments.

Commodity Price Risk—~~Energizer~~The Company uses raw materials that are subject to price volatility. ~~The~~At times, the Company ~~has used, and may in the future use,~~uses hedging instruments to reduce exposure to variability in cash flows associated with future purchases of certain materials and commodities. ~~At December 31, 2017 and September 30, 2017, there were no open derivative or hedging instruments for future purchases of raw materials or commodities.~~

Foreign Currency Risk—A significant portion of Energizer’s product cost is more closely tied to the U.S. dollar than to the local currencies in which the product is sold. As such, a weakening of currencies relative to the U.S. dollar results in margin declines unless mitigated through pricing actions, which are not always available due to the economic or competitive environment. Conversely, a strengthening in currencies relative to the U.S. dollar can improve margins. The primary currencies to which Energizer is exposed include the Euro, the British pound, the Canadian dollar and the Australian dollar. However, the Company also has significant exposures in many other currencies which, in the aggregate, may have a material impact on the Company's operations.

Additionally, Energizer’s foreign subsidiaries enter into internal and external transactions that create nonfunctional

currency balance sheet positions at the foreign subsidiary level. These exposures are generally the result of intercompany purchases, intercompany loans and, to a lesser extent, external purchases, and are revalued in the foreign subsidiary’s local currency at the end of each period. Changes in the value of the non-functional currency balance sheet positions in relation to the foreign subsidiary’s local currency results in a transaction gain or loss recorded in Other items, net on the Consolidated ~~Statements~~(Condensed) Statement of Earnings and Comprehensive Income. The primary currency to which Energizer’s foreign subsidiaries are exposed is the U.S. dollar.

Interest Rate Risk—Energizer has interest rate risk with respect to interest expense on variable rate debt. At December 31, ~~2017,~~2019, Energizer had variable rate debt outstanding with ~~an original~~a principal balance of ~~$400.0~~$1,025.0 under the 2019 and 2018 Term ~~Loan.~~Loans. In March 2017, the Company entered into an interest rate swap agreement (2017 Interest rate swap) with one major financial institution that fixed the variable benchmark component (LIBOR) on $200.0 of Energizer's variable rate debt through June 2022 at an interest rate of 2.03%.

~~This hedging instruments is considered~~ In February 2018, the Company entered into a ~~cash flow hedge for accounting purposes. At~~forward starting interest rate swap (2018 Interest rate swap) with an effective date of October 1, 2018, with one major financial institution that fixed the variable benchmark component (LIBOR) on additional variable rate debt of $400.0 at an interest rate of 2.47%. Beginning April 1, 2019, the notional amount decreases $50.0 each quarter until its termination date of December 31, ~~2017~~2020. The notional value of the swap ~~had an unrecognized pre-tax gain of $0.7 and~~was $250 at ~~September 30, 2017 the swap had an unrecognized pre-tax loss of $1.3, both of which were included in Accumulated other comprehensive loss on the Consolidated Balance Sheet.~~December 31, 2019.

~~ENERGIZER HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS~~

~~(In millions - Unaudited)~~

Derivatives Designated as Cash Flow ~~Hedges -~~ Hedging Relationships—The Company has entered into a series of forward currency contracts to hedge the cash flow uncertainty of the forecasted payment of inventory purchases due to short term currency fluctuations. Energizer’s foreign affiliates, which have the largest exposure to U.S. dollar purchases, have the Euro, the British pound, the Canadian dollar and the Australian dollar as their local currencies.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

These foreign currencies represent a significant portion of Energizer's foreign currency exposure. At December 31, ~~2017~~2019 and September 30, ~~2017,~~2019, Energizer had an unrealized pre-tax loss of ~~$4.2~~$1.4 and ~~$5.8,~~pre-tax gain of $4.5, respectively, on these forward currency contracts accounted for as cash flow hedges included in Accumulated other comprehensive loss on the ~~unaudited Condensed~~ Consolidated (Condensed) Balance Sheets. Assuming foreign exchange rates versus the U.S. dollar remain at December 31, ~~2017~~2019 levels, over the next 12 months, ~~$4.1~~$1.2 of the pre-tax loss included in Accumulated other comprehensive loss is expected to be recognized in earnings. Contract maturities for these hedges extend into fiscal year ~~2019.~~2021. There were 64 open foreign currency contracts at December 31, ~~2017,~~2019, with a total notional value of approximately ~~$134.~~$131.

The Company began entering into hedging contracts on zinc purchases in March 2019. The contracts are determined to be cash flow hedges and qualify for hedge accounting. The contract maturities for these hedges extend into 2021. There were 9 open contracts at December 31, 2019, with a total notional value of approximately $22. The pre-tax loss recognized on the zinc contracts was $1.7 and $1.0 at December 31, 2019 and September 30, 2019, respectively, and was included in Accumulated other comprehensive loss on the Consolidated (Condensed) Balance Sheet.

In March 2017, the Company entered into an interest rate swap agreement (2017 Interest rate swap) with one major financial institution that fixed the variable benchmark component (LIBOR) on $200.0 of Energizer's variable rate debt through June 2022 at an interest rate of 2.03%. In February 2018, the Company entered into a forward starting interest rate swap (2018 Interest rate swap) with an effective date of October 1, 2018, with one major financial institution that fixed the variable benchmark component (LIBOR) on additional variable rate debt of $400.0 at an interest rate of 2.47%. Beginning April 1, 2019, the notional amount decreases $50.0 each quarter until its termination date of December 31, 2020. The notional value of the swap was $250 at December 31, 2019. At December 31, 2019 and September 30, 2019, Energizer recorded an unrealized pre-tax net loss of $3.7 and $4.7, respectively, on these interest rate swap contracts, both of which were included in Accumulated other comprehensive loss on the Consolidated Balance Sheet.

Derivatives not Designated in Hedging Relationships - —Energizer enters into foreign currency derivative contracts which are not designated as cash flow hedges for accounting purposes, to hedge existing balance sheet exposures. Any gains or losses on these contracts are expected to be offset by corresponding exchange losses or gains on the underlying ~~exposures;~~exposures, and as such are not subject to significant market risk. There were 107 open foreign currency derivative contracts which are not designated as cash flow hedges at December 31, ~~2017,~~2019, with a total notional value of approximately ~~$85.~~$70.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

The following table provides the Company's estimated fair values as of December 31, ~~2017~~2019 and September 30, ~~2017,~~2019, and the amounts of gains and losses on derivative instruments classified as cash flow hedges for the quarters ended December 31, ~~2017~~2019 and ~~2016,~~2018, respectively:


	At December 31, 2017			For the Quarter Ended December 31, 2017						At December 31, 2019			For the Quarter Ended December 31, 2019
Derivatives designated as Cash Flow Hedging Relationships	Estimated Fair Value (Liability)/Asset (1) (2)			(Loss)/Gain Recognized in OCI (3)			Loss Reclassified From OCI into Income (Effective Portion) (4) (5)			Estimated Fair Value Liability (1)			(Loss)/Gain Recognized in OCI (2)			Gain/(Loss) Reclassified From OCI into Income (3)(4)
Foreign currency contracts	$	(4.2	)	$	(0.8	)	$	(2.4	)	$	(1.4	)	$	(4.0	)	$	1.9
Interest rate contracts	0.7			1.5			(0.5		)
Interest rate swaps (2017 and 2018)										(3.7		)	0.5			(0.5		)
Zinc contracts										(1.7		)	(1.0		)	(0.3		)
Total	$	(3.5	)	$	0.7		$	(2.9	)	$	(6.8	)	$	(4.5	)	$	1.1

	At September 30, 2017			For the Quarter Ended December 31, 2016						At September 30, 2019			For the Quarter Ended December 31, 2018
Derivatives designated as Cash Flow Hedging Relationships	Estimated Fair Value Liability (1) (2)			Gain Recognized in OCI (3)			Gain/(Loss) Reclassified From OCI into Income (Effective Portion) (4) (5)			Estimated Fair Value Asset/(Liability) (1)			Gain/(Loss) Recognized in OCI (2)			Gain/(Loss) Reclassified From OCI into Income (3)(4)
Foreign currency contracts	$	(5.8	)	$	5.2		$	0.5		$	4.5		$	3.2		$	2.8
Interest rate contracts	(1.3		)	6.5			(0.7		)
Interest rate swaps (2017 and 2018)										(4.7		)	(4.8		)	(0.1		)
Zinc contracts										$	(1.0	)	$	—		$	—
Total	$	(7.1	)	$	11.7		$	(0.2	)	$	(1.2	)	$	(1.6	)	$	2.7

(1) All derivative assets are presented in Other current assets or Other assets.

~~(2)~~ All derivative liabilities are presented in Other current liabilities or Other liabilities.

~~(3)~~(2) OCI is defined as other comprehensive income.

~~(4)~~(3) Gain/~~(loss)~~(Loss) reclassified to Income was recorded as follows: Foreign currency contracts in ~~other~~Cost of products sold in fiscal 2020 and Other items, net ~~and~~in fiscal 2019, interest rate contracts in ~~interest expense.~~Interest expense, and commodity contracts in Cost of products sold.

~~(5)~~(4) Each of these hedging relationships has derivative instruments with a high correlation to the underlying exposure being hedged and has been deemed highly effective in offsetting the underlying risk.

~~ENERGIZER HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS~~

~~(In millions - Unaudited)~~

The following table provides estimated fair values as of December 31, ~~2017~~2019 and September 30, ~~2017~~2019 and the gains and losses on derivative instruments not classified as cash flow hedges for the quarter ended December 31, ~~2017~~2019 and ~~2016,~~September 30, 2019, respectively:


	At December 31, 2017		For the Quarter Ended December 31, 2017			At December 31, 2019		For the Quarter Ended December 31, 2019
	Estimated Fair Value Asset		Gain Recognized in Income (1)			Estimated Fair Value Asset (1)		Loss Recognized in Income (2)(3)
Foreign currency contracts	$	0.5	$	0.3		$	0.1	$	(0.9	)
						At September 30, 2019		For the Quarter Ended December 31, 2018
	At September 30, 2017		For the Quarter Ended December 31, 2016			Estimated Fair Value Asset (1)		Gain Recognized in Income (2)
	Estimated Fair Value Asset		Loss Recognized in Income (1)
Foreign currency contracts	$	0.9	$	(1.9	)	$	4.3	$	1.0

(1) ~~Gain/(loss)~~All derivative assets are presented in Other current assets or Other assets.

(2) (Loss)/Gain recognized in Income was recorded as foreign currency in Other items, net.

(3) Includes a $2.2 loss on a hedge contract on the proceeds from the Varta Divestiture.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

Energizer has the following recognized financial assets resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for balance sheet offsetting.



Offsetting of derivative assets
		At December 31, 2019									At September 30, 2019
Description	Balance Sheet location	Gross amounts of recognized assets			Gross amounts offset in the Balance Sheet			Net amounts of assets presented in the Balance Sheet			Gross amounts of recognized assets			Gross amounts offset in the Balance Sheet			Net amounts of assets presented in the Balance Sheet
Foreign Currency Contracts	Other Current Assets, Other Assets	$	1.1		$	(0.4	)	$	0.7		$	9.4		$	(0.4	)	$	9.0

Offsetting of derivative liabilities
		At December 31, 2019									At September 30, 2019
Description	Balance Sheet location	Gross amounts of recognized liabilities			Gross amounts offset in the Balance Sheet			Net amounts of liabilities presented in the Balance Sheet			Gross amounts of recognized liabilities			Gross amounts offset in the Balance Sheet			Net amounts of liabilities presented in the Balance Sheet
Foreign Currency Contracts	Other Current Liabilities, Other Liabilities	$	(2.4	)	$	0.4		$	(2.0	)	$	(0.4	)	$	0.2		$	(0.2	)

Offsetting of derivative assets
At December 31, 2017 At September 30, 2017
Description Balance Sheet location Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet
Foreign Currency Contracts Other Current Assets, Other Assets $ 1.0
$ —
$ 1.0
$ 1.1
$ —
$ 1.1

Offsetting of derivative liabilities
At December 31, 2017 At September 30, 2017
Description Balance Sheet location Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet
Foreign Currency Contracts Other Current Liabilities, Other Liabilities $ (4.9 ) $ 0.2
$ (4.7 ) $ (6.4 ) $ 0.4
$ (6.0 )

Fair Value Hierarchy—Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.

~~ENERGIZER HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS~~

~~(In millions - Unaudited)~~

Under the fair value accounting guidance hierarchy, an entity is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The following table sets forth the Company's financial assets and liabilities, which are carried at fair value, as of December 31, ~~2017~~2019 and September 30, ~~2017~~2019 that are measured on a recurring basis during the period, segregated by level within the fair value hierarchy:



	Level 2
Assets/(Liabilities) at estimated fair value:	December 31, 2019			September 30, 2019
Deferred compensation	$	(28.6	)	$	(28.1	)
Exit lease liability	—			(0.1		)
Derivatives - Foreign Currency contracts	(1.4		)	4.5
Derivatives - Foreign Currency contracts (non-hedge)	0.1			4.3
Derivatives - 2017 and 2018 Interest Rate swaps	(3.7		)	(4.7		)
Derivatives - Zinc contracts	(1.7		)	(1.0		)
Net Liabilities at estimated fair value	$	(35.3	)	$	(25.1	)

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

Level 2
Liabilities at estimated fair value: December 31,
2017 September 30,
2017
Deferred Compensation $ (41.8 ) $ (41.0 )
Derivatives - Foreign Currency Contracts (3.7 ) (4.9 )
Derivatives - Interest Rate Swap 0.7
(1.3 )
Exit lease liability —
(0.3 )
Net Liabilities at estimated fair value $ (44.8 ) $ (47.5 )

Energizer had no Level 1 financial assets or liabilities, other than pension plan assets, and no Level 3 financial assets or liabilities at December 31, ~~2017~~2019 and at September 30, ~~2017.~~2019.

Due to the nature of cash and cash equivalents carrying amounts on the balance sheets approximate estimated fair value. The estimated fair value of cash ~~and cash equivalents has been~~was determined based on level 1 inputs and cash equivalents are determined based on level 2 ~~inputs, respectively.~~inputs.

At December 31, ~~2017,~~2019, the estimated fair value of the Company's unfunded deferred compensation liability is determined based upon the quoted market prices of investment options that are offered under the plan. The estimated fair value of foreign currency contracts, ~~and~~ interest rate swap and zinc contracts, as described above, is the amount that the Company would receive or pay to terminate the contracts, considering first, quoted market prices of comparable agreements, or in the absence of quoted market prices, such factors as interest rates, currency exchange rates and remaining maturities. The estimated fair value of the exit lease liability was determined based on the discounted cash flows of the remaining lease rentals reduced by estimated sublease rentals that could be reasonably obtained for the property.

At December 31, ~~2017 and September 30, 2017,~~2019, the fair market value of fixed rate long-term debt was ~~$610.3 and $615.7, respectively~~$2,497.1 compared to its carrying value of ~~$600.0.~~$2,428.8, and at September 30, 2019 the fair market value of fixed rate long-term debt was $2,474.7 compared to its carrying value of $2,408.4. The estimated fair value of the long-term debt is estimated using yields obtained from independent pricing sources for similar types of borrowing arrangements. The estimated fair value of fixed rate long-term debt has been determined based on Level 2 inputs.

~~(12)~~(16) Accumulated Other Comprehensive (Loss)/Income

The following table presents the changes in accumulated other comprehensive (loss)/income (AOCI), net of tax by component:



	Foreign Currency Translation Adjustments			Pension Activity			Zinc Contracts			Foreign Currency Contracts			Interest Rate Contracts			Total
Balance at September 30, 2019	$	(124.0	)	$	(173.3	)	$	0.2		$	3.1		$	(4.3	)	$	(298.3	)
OCI before reclassifications	14.1			1.3			(0.8		)	(3.0		)	0.5			12.1
Reclassifications to earnings	—			(1.4		)	0.2			(1.5		)	0.4			(2.3		)
Activity related to discontinued operations	15.9			(0.1		)	(0.4		)	—			—			15.4
Balance at December 31, 2019	$	(94.0	)	$	(173.5	)	$	(0.8	)	$	(1.4	)	$	(3.4	)	$	(273.1	)

Foreign Currency Translation Adjustments Pension Activity Hedging Activity Interest Rate Swap Total
Balance at September 30, 2017 $ (93.1 ) $ (139.4 ) $ (4.5 ) $ (1.8 ) $ (238.8 )
OCI before reclassifications 7.4
—
(0.7 ) 0.9
7.6
Reclassifications to earnings —
1.2
1.9
0.4
3.5
Balance at December 31, 2017 $ (85.7 ) $ (138.2 ) $ (3.3 ) $ (0.5 ) $ (227.7 )

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

The following table presents the reclassifications out of ~~AOCI:~~AOCI to earnings:

For the Quarter Ended December 31,
2017 2016
Details of AOCI Components
Amount Reclassified
from AOCI (1)
Affected Line Item in the Combined Statements of Earnings
Gains and losses on cash flow hedges
Foreign exchange contracts $ (2.4 ) $ 0.5
Other items, net
Interest rate swap (0.5 ) (0.7 ) Interest expense
(2.9 ) (0.2 ) Total before tax
0.6
0.2
Tax benefit
$ (2.3 ) $ —
Net of tax
Amortization of defined benefit pension items
Actuarial loss (1.5 ) (2.0 ) (2)
Settlement loss (0.1 ) —
(2)
(1.6 ) (2.0 ) Total before tax
0.4
0.6
Tax benefit
$ (1.2 ) $ (1.4 ) Net of tax
Total reclassifications for the period $ (3.5 ) $ (1.4 ) Net of tax



	For the Quarter Ended December 31,
	2019			2018
Details of AOCI Components	Amount Reclassified from AOCI (1)						Affected Line Item in the Combined Statements of Earnings
Gains and losses on cash flow hedges
Foreign currency contracts	$	1.9		$	2.8		(2)
Interest rate contracts	(0.5		)	(0.1		)	Interest expense
Zinc contracts	(0.3		)	—			Cost of products sold
	1.1			2.7			Earnings before income taxes
	(0.2		)	(0.6		)	Income tax provision
	$	0.9		$	2.1		Net earnings
Amortization of defined benefit pension items
Actuarial gain/(loss)	1.9			(1.3		)	(3)
	1.9			(1.3		)	Earnings before income taxes
	(0.5		)	0.2			Income tax provision
	$	1.4		$	(1.1	)	Net earnings
Total reclassifications to earnings	$	2.3		$	1.0		Net earnings

(1) Amounts in parentheses indicate debits to Consolidated (Condensed) Statement of ~~Earnings.~~Earnings and Comprehensive Income.

(2) The Company adopted ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities in the second quarter of fiscal 2019. The fiscal 2020 impact is recorded in Cost of products sold and fiscal 2019 impact is recorded in Other items, net.

(3) This AOCI component is included in the computation of net periodic pension (benefit)/cost (see Note 9,13, Pension Plans, for further details).

(17) Supplemental Financial Statement Information

The components of certain income statement accounts are as follows:



	For the Quarters Ended December 31,
	2019			2018
Other items, net
Interest income	$	(0.1	)	$	(0.2	)
Interest income on restricted cash	—			(5.8		)
Foreign currency exchange gain	(0.4		)	(1.1		)
Pension benefit other than service costs	(0.5		)	(0.7		)
Acquisition foreign currency loss/(gain)	2.2			(9.0		)
Gain on sale of assets	(1.0		)	—
Transition services agreement income	(0.3		)	—
Other	0.1			(0.1		)
Total Other items, net	$	—		$	(16.9	)

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

~~(13) Supplemental Financial Statement Information~~

The components of certain balance sheet accounts are as follows:



	December 31, 2019			September 30, 2019
Inventories
Raw materials and supplies	$	73.7		$	70.5
Work in process	92.3			103.7
Finished products	269.8			295.1
Total inventories	$	435.8		$	469.3
Other Current Assets
Miscellaneous receivables	$	15.4		$	16.5
Due from Spectrum	13.0			7.6
Prepaid expenses	91.0			71.3
Value added tax collectible from customers	32.3			23.1
Other	11.3			58.6
Total other current assets	$	163.0		$	177.1
Property, Plant and Equipment
Land	$	9.7		$	9.6
Buildings	121.5			119.9
Machinery and equipment	834.8			823.0
Capital leases	45.7			50.4
Construction in progress	31.9			25.8
Total gross property	1,043.6			1,028.7
Accumulated depreciation	(685.9		)	(666.7		)
Total property, plant and equipment, net	$	357.7		$	362.0
Other Current Liabilities
Accrued advertising, sales promotion and allowances	$	26.7		$	11.8
Accrued trade allowances	59.8			53.1
Accrued salaries, vacations and incentive compensation	29.8			59.2
Accrued interest expense	55.9			37.4
Due to Spectrum	4.4			2.6
Accrued acquisition and integration costs	6.1			7.9
Restructuring reserve	6.9			9.8
Income taxes payable	43.3			23.4
Other	122.2			128.4
Total other current liabilities	$	355.1		$	333.6
Other Liabilities
Pensions and other retirement benefits	$	107.0		$	109.0
Deferred compensation	28.6			28.1
Restructuring reserve	4.5			—
Mandatory transition tax	16.7			16.7
Other non-current liabilities	49.4			50.8
Total other liabilities	$	206.2		$	204.6

December 31, 2017 September 30, 2017
Inventories
Raw materials and supplies $ 42.9
$ 36.6
Work in process 72.8
84.8
Finished products 160.5
195.7
Total inventories $ 276.2
$ 317.1
Other Current Assets
Miscellaneous receivables $ 11.1
$ 13.7
Prepaid expenses 47.7
52.7
Value added tax collectible from customers 30.6
23.4
Other 4.3
5.1
Total other current assets $ 93.7
$ 94.9
Property, Plant and Equipment
Land $ 4.6
$ 4.6
Buildings 123.1
122.4
Machinery and equipment 693.9
697.9
Construction in progress 24.1
19.4
Total gross property 845.7
844.3
Accumulated depreciation (674.0 ) (667.8 )
Total property, plant and equipment, net $ 171.7
$ 176.5
Other Current Liabilities
Accrued advertising, sales promotion and allowances $ 23.2
$ 21.8
Accrued trade allowances 50.8
51.1
Accrued salaries, vacations and incentive compensation 24.1
54.4
Income taxes payable 29.3
21.6
Other 114.2
105.7
Total other current liabilities $ 241.6
$ 254.6
Other Liabilities
Pensions and other retirement benefits $ 83.9
$ 87.7
Deferred compensation 41.8
41.0
Mandatory transition tax 27.6
—
Other non-current liabilities 52.3
49.3
Total other liabilities $ 205.6
$ 178.0

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

~~(14)~~(18) Related Party Transactions

On January 28, 2019, the Company completed the Auto Care Acquisition from Spectrum, which included stock consideration of 5.3 million shares of Energizer common stock. As of December 31, 2019, Spectrum owns 7.6% of the Company's outstanding common shares. In accordance with the terms of our Shareholder Agreement with Spectrum, Spectrum provided notice to the Company on the 12 month anniversary date of the closing of the Auto Care Acquisition to register its Energizer common stock to cover the potential resale by Spectrum of its Energizer common stock, and Energizer will use commercially reasonable efforts to file a shelf registration statement covering the resale by Spectrum of its Energizer common stock.

Following the completion of the Battery and Auto Care Acquisitions, the Company and Spectrum have entered into transition service agreements (TSA) and reverse TSA. Under the agreements, Energizer and Spectrum will provide each other certain specified back office support services on a transitional basis, including among other things, payroll and other human resource services, information systems as well as accounting support.

The charges for the transition services are generally intended to allow the providing company to fully recover the allocated direct costs of providing the services, plus all out-of-pocket costs and expenses, and including a nominal profit. As of January 31, 2020, the Company exited most of the TSA and reverse TSA. The Company still has certain information systems and back office support agreements that will continue throughout fiscal 2020 as we continue our integration of our information systems.

During the quarter ended December 31, 2019, the Company paid $0.6 to Spectrum related to rent for office space at their Middleton, Wisconsin headquarters.

For the quarter ended December 31, 2019, the Company incurred expense of $4.4 in SG&A and $0.2 in Cost of products sold. The Company also recorded income of $0.3 in Other items, net related to the reverse transaction services agreements provided for the quarter. Related to these agreements, the Company had a payable of $4.4 and $2.6 in Other current liabilities and a receivable of $13.0 and $7.6 in Other current assets to Spectrum as of December 31, 2019 and September 30, 2019, respectively.

The Company also entered into a supply agreement with Spectrum, ancillary to the Auto Care Acquisition that became effective upon the consummation of the acquisition. The supply agreement resulted in expense to the Company of $4.8 for the quarter ended December 31, 2019 and $1.9 and $0.1 in Accounts payable at December 31, 2019 and September 30, 2019, respectively, related to these purchases.

In discontinued operations, the Company recorded income of $3.8 for reverse TSA, and recorded expense of $0.3 for the quarter ended December 31, 2019. In addition, there was a payable due to Spectrum of $5.3 and $22.5 recorded in Liabilities held for sale and a receivable from Spectrum of $7.8 and $8.9 recorded in Assets held for sale as of December 31, 2019 and September 30, 2019, respectively.

(19) Legal proceedings/contingencies and other obligations

Legal proceedings/contingencies - The Company and its affiliates are subject to a number of legal proceedings in various jurisdictions arising out of its operations. Many of these legal matters are in preliminary stages and involve complex issues of law and fact, and may proceed for protracted periods of time. The amount of liability, if any, from these proceedings cannot be determined with certainty. We are a party to legal proceedings and claims that arise during the ordinary course of business. We review our legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions. We establish accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements to not be misleading. We do not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated. Based upon present information, the Company believes that its liability, if any, arising from such pending legal proceedings, asserted legal claims and known potential legal claims which are likely to be asserted, is not reasonably likely to be material to the Company's financial position, results of operations, or cash flows, when taking into account established accruals for estimated liabilities.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

Other obligations - In the ordinary course of business, the Company also enters into supply and service contracts. These contracts can include either volume commitments or fixed expiration dates, termination provisions and other standard contractual considerations. At December 31, ~~2017,~~2019, the Company had approximately ~~$98~~$8.6 of purchase obligations.

~~(15) Subsequent Event~~

On January 15, 2018, the Company entered into a definitive acquisition agreement with Spectrum Brands Holdings, Inc. to acquire its global battery, lighting, and portable power business for a purchase price of $2,000.0 in cash, subject to certain purchase price adjustments. Energizer intends to fund the acquisition through a combination of existing cash and committed debt facilities, expected to ultimately consist of a new term loan and senior notes. In addition, Energizer intends to maintain its existing senior notes, maturing in 2025. The closing of this transaction is subject to various conditions and regulatory approvals.

The Company is also committed to pay a $100.0 termination fee to Spectrum if the transaction does not close by July 15, 2019, and all conditions precedent to the Company’s obligation to consummate the acquisition have otherwise been satisfied except for one or more of the regulatory approval conditions specified in the acquisition agreement. Success fees are due to the financial adviser of $13.0, of which $2.0 was paid in January with the remainder to be paid subject to the closing of the transaction.

~~The Company incurred $5.7 in acquisition costs recorded in SG&A expense on the Consolidated Statement of Earnings in the first quarter of 2018 related to this transaction.~~

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

The following discussion is meant to provide investors with information that management believes helpful in reviewing Energizer’s historical-basis results of operations, operating segment results, and liquidity and capital resources. Statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) that are not historical may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should read the following MD&A in conjunction with the Consolidated Financial Statements (unaudited) and corresponding notes included herein. This MD&A contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those projected or implied in the forward-looking statements. Please see “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017 for a discussion of the uncertainties, risks and assumptions associated with these statements as well as in Item 1A. Risk Factors of this Form 10-Q.

All amounts discussed are in millions of U.S. dollars, unless otherwise indicated.

~~Non-GAAP Financial Measures~~

The Company reports its financial results in accordance with accounting principles generally accepted in the U.S. ("GAAP"). However, management believes that certain non-GAAP financial measures provide users with additional meaningful comparisons to the corresponding historical or future period. These non-GAAP financial measures exclude items that are not reflective of the Company's on-going operating performance, such as acquisition and integration costs, costs related to the spin, and the one-time impact of the new U.S. tax legislation. In addition, these measures help investors to see year over year comparability when excluding currency fluctuations, acquisition activity as well as other company initiatives that are not on-going. We believe these non-GAAP financial measures are an enhancement to assist investors in understanding our business and in performing analysis consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or superior to, the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items being adjusted.

~~We provide the following non-GAAP measures and calculations, as well as the corresponding reconciliation to the closest GAAP measure:~~

~~Segment Profit.~~ This amount represents the operations of our three geographic segments including allocations for shared support functions. General corporate and other expenses, Global marketing expenses, R&D expenses, amortization expense, interest expense, other items, net and charges related to acquisition and integration and the spin-off have all been excluded from segment profit.

~~Adjusted Earnings Before Income Taxes, Adjusted Net Earnings and Adjusted Diluted Earnings Per Share (EPS). These measures exclude the impact of the costs related to acquisition and integration, the spin-off, and the one-time impact of the new U.S. income tax legislation.~~

~~Organic.~~ This is the non-GAAP financial measurement of the change in revenue, segment profit or other margins that excludes or otherwise adjusts for the impact of currency from the changes in foreign currency exchange rates as defined below:

~~Impact of currency~~. The Company evaluates the operating performance of our Company on a currency neutral basis. The impact of currency is the difference between the value of current year foreign operations at the current period ending USD exchange rate, compared to the value of the current year foreign operations at the prior period ending USD exchange rate.

~~Adjusted Selling, General & Administrative (SG&A) as a percent of sales.~~ ~~Detail for adjusted SG&A as a percent of sales are also supplemental non-GAAP measures. These measures exclude the impact of costs related to acquisition and integration.~~

Forward-Looking Statements

This document contains both historical and forward-looking statements. Forward-looking statements are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, the future sales, gross margins, costs, earnings, cash flows, tax rates and performance of ~~Energizer.~~the Company. These statements generally can be identified by the use of forward-looking words or phrases such as "believe," "expect," "expectation," "anticipate," "may," "could," "intend," "belief," "estimate," "plan," "target," "predict," "likely,~~" "will,~~" "should," "forecast," "outlook," or other similar words or phrases. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this document are only made as of the date of this document and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation:

market and economic conditions;

market trends in the categories in which we compete;

our ability to integrate businesses, to realize the projected results of the acquired businesses, and to obtain expected cost savings, synergies and other anticipated benefits of the acquired businesses within the expected timeframe, or at all;

the impact of the acquired businesses on our business operations;

the success of new products and the ability to continually develop and market new products;

our ability to attract, retain and improve distribution with key customers;

our ability to continue planned advertising and other promotional spending;

our ability to timely execute strategic initiatives, including restructurings, and international go-to-market changes in a manner that will positively impact our financial condition and results of operations and does not disrupt our business operations;

the impact of strategic initiatives, including restructurings, on our relationships with employees, customers and vendors;

our ability to maintain and improve market share in the categories in which we operate despite heightened competitive pressure;

~~our ability to close the proposed acquisition~~financial strength of ~~the global battery, lighting,~~disturbers and portable power business (the “Business”) of Spectrum Brands Holdings, Inc. (the “Acquisition”), which may be delayed or may not close at all due to the failure to obtain required regulatory approvals, or satisfy other closing conditions;

~~our ability to obtain financing for the Acquisition on favorable terms;~~

our ability to acquire and integrate businesses, and to realize the projected results of acquisitions, including our ability to promptly and effectively integrate the Business after the Acquisition has closed, and our ability to obtain expected cost savings, synergies and other anticipated benefits of the Acquisition within the expected timeframe;

~~the impact of the pending Acquisition on the respective business operations;~~suppliers;

our ability to improve operations and realize cost savings;

the impact of foreign currency exchange rates and currency controls, as well as offsetting ~~hedges, including~~ hedges;

the impact of adverse or unexpected weather conditions;

uncertainty from the ~~United Kingdom's referendum vote~~expected discontinuance of LIBOR and ~~announced intention~~the transition to ~~exit the European Union;~~any other interest rate benchmark;

the impact of raw materials and other commodity costs;

the impact of legislative changes or regulatory determinations or changes by federal, state and local, and foreign authorities, including customs and tariff determinations, as well as the impact of potential changes to tax laws, policies and regulations;

costs and reputational damage associated with cyber-attacks or information security breaches or other events;

the impact of advertising and product liability claims and other litigation; and

compliance with debt covenants and maintenance of credit ratings as well as the impact of interest and principal repayment of our existing and any future debt.

In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of any such forward-looking statements. The list of factors above is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Additional risks and uncertainties include those detailed from time to time in our publicly filed documents, including those described under the heading “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on November ~~14, 2017~~19, 2019.

Non-GAAP Financial Measures

The Company reports its financial results in accordance with accounting principles generally accepted in the U.S. ("GAAP"). However, management believes that certain non-GAAP financial measures provide users with additional meaningful comparisons to the corresponding historical or future period. These non-GAAP financial measures exclude items that are not reflective of the Company's on-going operating performance, such as acquisition and integration costs and related items, loss on extinguishment of debt, and the one-time impact of the new U.S. tax legislation. In addition, these measures help investors to analyze year over year comparability when excluding currency fluctuations, acquisition activity as well as other company initiatives that are not on-going. We believe these non-GAAP financial measures are an enhancement to assist investors in ~~Item 1A. Risk Factors~~understanding our business and in performing analysis consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or superior to, the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items being adjusted.

We provide the following non-GAAP measures and calculations, as well as the corresponding reconciliation to the closest GAAP measure:

Segment Profit. This amount represents the operations of ~~this Form 10-Q.~~our two reportable segments including allocations for shared support functions. General corporate and other expenses, Global marketing expenses, R&D expenses, Amortization expense, Interest expense, Other items, net and charges related to Acquisition and integration have all been excluded from segment profit.

Adjusted Net Earnings From Continuing Operations and Adjusted Diluted Net Earnings From Continuing Operations Per Common Share (EPS). These measures exclude the impact of the costs related to acquisition and integration, the loss on extinguishment of debt and the one-time impact of the new U.S. income tax legislation.

Non-GAAP Tax Rate. This is the tax rate when excluding the pre-tax impact of acquisition and integration and the loss on extinguishment of debt, as well as the related tax impact for these items, calculated utilizing the statutory rate for where the impact was incurred, as well as the one-time impact of the new U.S. tax legislation.

Organic. This is the non-GAAP financial measurement of the change in revenue, segment profit or other margins that excludes or otherwise adjusts for the impact of acquisitions, change in Argentina Operations and impact of currency from the changes in foreign currency exchange rates as defined below:

Impact of acquisitions. Energizer completed the Auto Care Acquisition on January 28, 2019 and Battery Acquisition on January 2, 2019. These adjustments include the impact of the acquisitions' ongoing operations contributed to each respective income statement caption for the first year's operations directly after the acquisition date. This does not include the impact of acquisition and integration costs associated with any acquisition.

Change in Argentina Operations. The Company is presenting separately all changes in sales and segment profit from our Argentina affiliate due to the designation of the economy as highly inflationary as of July 1, 2018.

Impact of currency. The Company evaluates the operating performance of our Company on a currency neutral basis. The impact of currency is the difference between the value of current year foreign operations at the current period ending USD exchange rate, compared to the value of the current year foreign operations at the prior period ending USD exchange rate.

Adjusted Selling, General & Administrative (SG&A) as a percent of sales. Detail for adjusted SG&A as a percent of sales are also supplemental non-GAAP measures. These measures exclude the impact of costs related to acquisition and integration.

Battery Acquisition

On January ~~15, 2018,~~2, 2019, the Company ~~entered into a definitive~~completed its acquisition ~~agreement with~~of Spectrum ~~Brands~~ Holdings, Inc. ~~to acquire its~~’s (Spectrum) global battery, lighting, and portable power business for a contractual purchase price of $2,000.0, ~~in cash,~~ subject to certain purchase price ~~adjustments. Energizer intends~~adjustments (Battery Acquisition). The Battery Acquisition included the Rayovac® and Varta® brands (Acquired Battery Business). For the quarter ended December 31, 2019 the revenue associated with the Battery Acquisition was $125.5 and the income before income taxes was $17.1.

Subsequent to ~~fund~~ the ~~acquisition through~~quarter, on January 2, 2020, the Company sold the Varta® consumer battery business in the Europe, Middle East and Africa regions, including manufacturing and distribution facilities in Germany (Divestment Business) to VARTA Aktiengesellschaft (VARTA AG) for a ~~combination~~contractual purchase price of ~~existing cash and committed debt facilities, expected~~€180.0, subject to ~~ultimately consist of a new term loan and senior notes.~~purchase price adjustments (Varta Divestiture). In addition, ~~Energizer intends~~pursuant to ~~maintain its existing senior notes, maturing in 2025. The closing~~the terms of the Battery Acquisition agreement, Spectrum also contributed cash proceeds toward this ~~transaction is~~sale. Total initial proceeds received were approximately $345, which will be subject to ~~various conditions and regulatory approvals, but is expected by~~a final true up based upon the ~~end of calendar 2018.~~

closing balance sheet. Refer to Note 4, Divestment, for further discussion. The Company is ~~also committed to pay a $100.0 termination fee to Spectrum if~~evaluating the ~~transaction does not close by July 15, 2019, and all conditions precedent to the Company’s obligation to consummate the acquisition have otherwise been satisfied except for one or more~~impact of the ~~regulatory approval conditions specified in~~divestiture and currently estimates a pre-tax loss of between $80 and $90 based on the ~~acquisition agreement.Success fees are due~~preliminary cash proceeds.

Auto Care Acquisition

On January 28, 2019, the Company acquired Spectrum’s global auto care business, including the Armor All®, STP®, and A/C PRO® brands (Acquired Auto Care Business) for a contractual purchase price of $1,250.0, subject to certain purchase price adjustments (Auto Care Acquisition). For the ~~financial adviser of $13.0, of which $2.0 was paid in January~~quarter ended December 31, 2019, the revenue associated with the ~~remainder to be paid subject to~~Auto Care Acquisition was $61.4 and the ~~closing of the transaction.~~income before income taxes was $0.4.

Acquisition and Integration Costs

The Company incurred ~~$5.7~~pre-tax acquisition and integration costs related to the Battery Acquisition and Auto Care Acquisition of $19.3 and $36.5 in the quarters ended December 31, 2019 and 2018, respectively.

Pre-tax costs recorded in Costs of products sold were $6.9 for the quarter ended December 31, 2019, primarily related to the facility exit and restructuring related costs, discussed in Note 5, Restructuring.

For the quarter ended December 31, 2019 the Company recorded $0.4 in research and development.

Included in Other items, net were pre-tax expenses of $0.9 and pre-tax income of $14.8 in the quarters ended December 31, 2019 and 2018, respectively. Other items, net for the quarter ended December 31, 2019 included a $2.2 loss related to the hedge contract on the proceeds from the Varta Divestiture, offset by $1.0 gain on the sale of assets, and $0.3 transition services income. Other items, net for the quarter ended December 31, 2018 included pre-tax gain of $9.0 related to the favorable movement in the escrowed USD restricted cash held in our European Euro functional entity and interest income of $5.8 earned on the Restricted cash funds held in escrow associated with the Battery Acquisition.

Restructuring Costs

The total pre-tax expense related to the restructuring plans for the quarter ended December 31, 2019 were $6.3, and consisted of charges for employee severance, retention, related benefit costs, accelerated depreciation, asset write-offs, relocation, environmental investigatory and mitigation costs, and other exit costs. These costs were reflected in Cost of products sold on the Consolidated Statement of Earnings and Comprehensive Income, and were incurred within the Americas and International segments in the amount of $5.9 and $0.4, respectively. Total pre-tax charges relating to the restructuring since inception were $18.4. At December 31, 2019, the restructuring reserve is recorded on the Consolidated (Condensed) Balance sheet in Other current liabilities of $6.9 and Other liabilities of $4.5.

Energizer expects to incur additional severance and related benefit costs and other exit-related costs associated with these plans of approximately $55 through the end of calendar 2021. Total cost savings by the end of calendar 2021 are expected to be approximately $60 to $65 annually, primarily to be realized within Cost of products sold. Realization of cost savings from the restructuring plans began in the first quarter of ~~2018 related~~fiscal 2020.

Refer to ~~this transaction.~~Note 5 for additional discussion on our restructuring costs.

Highlights / Operating Results

Financial Results (in millions, except per share data)

Energizer reported first fiscal quarter ~~net~~Net earnings from continuing operations of ~~$60.4,~~$45.8, or ~~$0.98~~$0.60 per diluted common share. This compares to ~~net~~Net earnings from continuing operations of ~~$95.6,~~$70.8, or ~~$1.52~~$1.16 per diluted common share, in the prior year first fiscal quarter. Adjusted diluted net earnings from continuing operations per ~~diluted~~common share ~~were $1.55~~was $0.85 for the first fiscal quarter as compared to ~~$1.51~~$1.64 in the prior year quarter, ~~an increase~~a decrease of ~~2.6%~~48.2%.

~~Earnings before income taxes,~~ Net earnings from continuing operations and Diluted ~~EPS~~net earnings from continuing operations per common share for the time periods presented were impacted by certain items related to ~~spin restructuring costs,~~ acquisition and integration costs, the loss on extinguishment of debt and the one-time impact of the new U.S. tax legislation as described in the tables below. The impact of these items are provided below as a reconciliation of ~~Earning before income taxes,~~ Net earnings from continuing operations and Diluted ~~EPS~~net earnings from continuing operations per common share to ~~adjusted Earnings before income taxes, adjusted Net~~Adjusted net earnings from continuing operations and ~~adjusted Diluted EPS,~~Adjusted diluted net earnings from continuing operations per common share, which are non-GAAP measures. See disclosure on non-GAAP measures above.

For the Quarters Ended December 31,
(in millions, except per share data) Earnings Before Income Taxes Net Earnings Diluted EPS
2017 2016 2017 2016 2017 2016
Reported - GAAP $ 119.0
$ 134.1
$ 60.4
$ 95.6
$ 0.98
$ 1.52
Impacts: Expense (Income)
  Spin restructuring —
(1.3 ) —
(1.0 ) —
(0.02 )
  Acquisition and integration costs (1) 5.7
0.8
4.1
0.5
0.07
0.01
  One-time impact of the new U.S. tax legislation —
—
31.0
—
0.50
—
     Adjusted - Non-GAAP (2) $ 124.7
$ 133.6
$ 95.5
$ 95.1
$ 1.55
$ 1.51
Weighted average shares - Diluted

61.5
62.9



	For the Quarter Ended December 31,
	2019			2018
Net earnings attributable to common shareholders	$	42.1		$	70.8
Mandatory preferred stock dividends	(4.0		)	—
Net earnings	$	46.1		$	70.8
Net earnings from discontinued operations	0.3			—
Net earnings from continuing operations	$	45.8		$	70.8
Pre-tax adjustments
Acquisition and integration (1)	$	19.3		$	36.5
Loss on extinguishment of debt (2)	4.2			—
Total adjustments, pre-tax	$	23.5		$	36.5
After tax adjustments
Acquisition and integration	$	14.7		$	27.9
Loss on extinguishment of debt	3.2			—
One-time impact of the new U.S. Tax Legislation	—			1.5
Total adjustments, after tax	$	17.9		$	29.4
Adjusted net earnings from continuing operations (3)	$	63.7		$	100.2
Mandatory preferred stock dividends	(4.0		)	—
Adjusted net earnings from continuing operations attributable to common shareholders	$	59.7		$	100.2

Diluted net earnings per common share - continuing operations	$	0.60		$	1.16
Adjustments
Acquisition and integration	0.21			0.46
Loss on extinguishment of debt	0.04			—
One-time impact of new U.S. tax legislation	—			0.02
Adjusted diluted net earnings per diluted common share - continuing operations	$	0.85		$	1.64
Weighted average shares of common stock - Diluted	70.2			61.0

(1) ~~Amounts~~Acquisition and integration costs were included in ~~SG&A~~the following lines in the ~~unaudited~~ Consolidated ~~Condensed~~(Condensed) Statement of Earnings and Comprehensive ~~Income.~~Income:



	For the Quarter Ended December 31,
	2019		2018
Cost of products sold	$	6.9	$	—
Selling, general and administrative expense	11.1		18.9
Research and development	0.4		—
Interest expense	—		32.4
Other items, net	0.9		(14.8		)
Total acquisition and integration costs	$	19.3	$	36.5

(2) This loss on extinguishment of debt is associated with the term loan refinancing and recorded in interest expense on the Consolidated (Condensed) Statement of Earnings.

(3) The effective tax rate for the ~~quarters~~quarter ended December 31, ~~2017~~2019 and ~~2016~~2018 for the Adjusted - Non-GAAP Net Earnings and Diluted EPS was ~~23.4%~~22.5% and ~~28.8%~~20.8%, respectively, as calculated utilizing the statutory rate for where the costs were incurred. ~~The net tax impact associated with the non-GAAP adjustments highlighted in the table was a benefit of $29.4 and zero, respectively, for the quarters ended December 31, 2017 and 2016.~~

Highlights

Total Net Sales (In millions - Unaudited)
Quarter Ended December 31, 2017
Total Net Sales Q1 % Chg
Net sales - FY '17 $ 559.6

Organic 5.9
1.1 %
Impact of currency 7.8
1.3 %
Net sales - FY '18 $ 573.3
2.4 %



Total Net sales (In millions - Unaudited)	For the Quarter Ended December 31, 2019
	$ Change			% Chg
Net Sales - prior year	$	571.9
Organic	(19.7		)	(3.4	)%
Impact of Battery Acquisition	125.5			21.9	%
Impact of Auto Care Acquisition	61.4			10.7	%
Change in Argentina	0.2			—	%
Impact of currency	(2.5		)	(0.4	)%
Net Sales - current year	$	736.8		28.8	%

See non-GAAP measure disclosures above.

Net sales were ~~$573.3~~$736.8 for the first quarter of ~~2018,~~2020, an increase of ~~$13.7~~$164.9 as compared to the prior year quarter driven by the following items:

Organic net sales were ~~up 1.1%~~down 3.4% in the first fiscal quarter due to the following items:


◦	~~Favorable pricing across several markets increased net sales~~A decline in point-of-sale trends driven by ~~3%;~~the US price increase taken in the prior year and the impacts of a competitive launch, coupled with lower replenishment volumes associated with hurricane activity in the fourth fiscal quarter of 2019, contributed 2.8% to the decrease;


◦	~~Investments made for our portfolio realignment in~~Phasing of holiday activity from the ~~back half~~first quarter to the fourth quarter of fiscal ~~2017 benefited our top-line in~~2019 contributed 2.4% to the ~~first fiscal quarter of 2018 accounting for 0.5% of the organic sales increase;~~decrease; and

◦

~~Partially offsetting~~Improved pricing offset the ~~above increases in~~ organic ~~net sales were retailer merchandising changes in the U.S. that negatively impacted net sales~~decrease by 1.3%, lapping of storm volume from prior year of 0.6% and the May 2017 divestiture of the non-core promotional sales business acquired with the auto care acquisition that negatively impacted net sales by 0.5%1.8%.

~~Favorable~~The positive impact of the acquisitions was $186.9, or 32.6%;

The positive impact due to the change in Argentina operations was $0.2; and

Unfavorable currency impacts were ~~$7.8,~~$2.5, or ~~1.3%~~0.4%.

Gross margin percentageon a reported basis for the first fiscal quarter of ~~2018~~2020 was ~~48.5% and~~40.9%, compared to 48.2% in the prior year. Excluding $6.9 of integration costs in the current quarter, gross margin was ~~flat to~~41.8%, down 640 basis points from prior year, largely driven by the lower margin rate profile of the acquired businesses, as well as the customer mix, unfavorable foreign currency, tariffs and higher product costs due to lower production volumes in the fourth quarter of fiscal 2019. These decreases were partially offset by improved pricing and the favorable impact of foreign currency. These items were primarily offset by less favorable overhead absorption versus the prior fiscal quarter and investments made in continuous improvement initiatives.realized synergies.

Advertising and sales promotion expense (A&P) was ~~$37.3~~$46.8, or 6.4% of net sales, in the first fiscal quarter of ~~2018,~~2020, as compared to $40.9, or ~~6.5%~~7.2% of net sales, in the prior first fiscal quarter 2019. Excluding the $2.6 million of A&P from the acquired businesses, the legacy business A&P was $44.2 million, an increase of $3.3 million versus prior year. The increased spending on the legacy business reflects continued support for our broad portfolio while spending for the acquired businesses largely reflects increased product and packaging innovation and promotional support for our auto care brands.

Selling, general, and administrative expense (SG&A) was $122.1 in the first fiscal quarter of 2020, or 16.6% of net sales, as compared to ~~$34.3,~~$104.6, or ~~6.1% of net sales, in the prior period primarily in support of portfolio initiatives and holiday programs.~~

~~Selling, general, and administrative expense (SG&A)~~ ~~was $99.2 in the first fiscal quarter of 2018, or 17.3% of net sales, as compared to $84.4, or 15.1%~~18.3% of net sales, in the prior period. Included in the first fiscal quarter of 2020 and 2019 results were ~~costs of $5.7 related to~~ acquisition and integration ~~costs. Included in the prior year quarter results were~~ costs of ~~$0.8 related to acquisition~~$11.1 and ~~integration costs.~~$18.9, respectively. Excluding acquisition and integration costs, ~~in both years,~~ SG&A was $93.5, an increase of $9.9 over the prior year due to our current year investments in our continuous improvement initiatives to simplify and streamline our business processes to reduce costs. SG&A, excluding acquisition and integration costs, was 16.3%$111.0, or 15.1% of net sales, as compared to ~~14.9%~~$85.7, or 15.0% of net sales, in the prior year. Excluding the SG&A of the acquired business of $23.5 and the acquisition and integration costs, legacy SG&A as a percent of net sales was 15.9%, or $87.5, up 90 basis points to prior year first quarter. The slight increase is due to increased mark to market adjustments on our deferred compensation plan.

Research and Development (R&D) ~~decreased to $5.3,~~ was $8.9, or ~~0.9%~~1.2% of net sales, for the quarter ended December 31, ~~2017,~~2019, as compared to ~~$5.8,~~$5.5, or 1.0% of net sales, in the prior year comparative period.

Interest expense was ~~$13.4~~$51.0 for the first fiscal quarter of ~~2018,~~2020, compared to ~~$13.3~~$48.2 for the prior year comparative period. Excluding the current year $4.2 loss on extinguishment of debt and prior year acquisition costs of $32.4, the current year interest expense increased $31.0 attributed to higher debt associated with the acquisitions.

Other items, net was ~~expense of $1.3~~$0.0 for the first fiscal quarter of ~~2018~~2020 compared to ~~income~~a benefit of ~~$1.6~~$16.9 for the prior year first quarter.



	For the Quarter Ended December 31,
	2019			2018
Other items, net
Interest income	$	(0.1	)	$	(0.3	)
Foreign currency exchange gain	(0.4		)	(1.1		)
Pension benefit other than service costs	(0.5		)	(0.7		)
Other	0.1			—
Acquisition foreign currency loss/(gain) (1)	2.2			(9.0		)
Interest income on restricted cash	—			(5.8		)
Transition services agreement income	(0.3		)	—
Gain on sale of business	(1.0		)	—
Total Other items, net	$	—		$	(16.9	)

(1) Gain relates to currency movement in the escrowed USD funds held in our European Euro functional currency entity. The ~~current year expense primarily reflects net revaluation losses~~loss relates to our hedge contract on ~~nonfunctional currency balance sheet exposures and translational hedge losses offset by~~ the ~~impact of interest income, non-compensation related pension benefit and transactional hedge gains. The prior fiscal quarter income of $1.6 reflects~~expected proceeds from the ~~net impact of interest income, non-compensation related pension benefit and hedging contract gains offset by revaluation losses on nonfunctional currency balance sheet exposures.~~ Varta Divestiture.

The effective tax rate was ~~49.2% in the first three months of the current fiscal year~~22.0% as compared to ~~28.7%~~21.3% for the prior year comparative period. The ~~current~~prior year rate includes ~~a $31.0 charge~~$1.5 for the one-time impact of the new U.S. tax legislation passed in December 2017. Excluding the impact of our ~~non-GAAP~~Non-GAAP adjustments, the year to date tax rate was ~~23.4%~~22.5% as compared to ~~28.8%,~~20.8% in the prior year. The ~~decrease~~increase in the rate versus prior year is ~~driven by the U.S. tax legislation and takes into account the new statutory U.S.~~due to mix of earnings which drove a higher foreign rate ~~that is now effective for fiscal year 2018.~~

~~Spin Costs~~

~~There were no costs associated with the spin transaction recorded in the first fiscal quarter of 2018~~as well as the ~~project has been completed. During the quarter ended December 31, 2016, the Company recorded $1.3~~expiration of certain tax holidays in income in spin restructuring. On a project to date basis, the total costs incurred or allocated to Energizer for the spin were $197.6, inclusive of the costs of early debt retirement recorded in fiscal 2015. We do not expect any additional costs related to spin.foreign jurisdictions.

Segment Results

Operations for Energizer are managed via ~~three~~two major geographic reportable segments: Americas ~~(North America~~ and ~~Latin America), Europe, Middle East and Africa (“EMEA”), and Asia Pacific.~~

Energizer’s operating model includes a combination of standalone and shared business functions between the geographic segments, varying by country and region of the world. Shared functions include, but are not limited to, IT, procurement and finance. Energizer applies a fully allocated cost basis, in which shared business functions are allocated between segments. Such allocations are estimates, and do not represent the costs of such services if performed on a standalone basis. This structure is the basis for Energizer's reportable operating segments information, as included in the tables in Note 6,9, Segments, to the ~~unaudited~~ Consolidated ~~Condensed~~(Condensed) Financial Statements for the ~~quarter~~periods ended December 31, ~~2017.~~

2019 and 2018. Segment sales and ~~profitability~~Segment profit analysis for the quarter ended December 31, ~~2017~~2019 are presented below.

Net ~~Sales~~sales (In millions)

Quarter Ended December 31, ~~2017~~2019

Quarter Ended December 31, 2017
$ Change % Chg
Americas
Net sales - FY '17 $ 365.1

Organic 7.2
2.0 %
Impact of currency 0.8
0.2 %
Net Sales - FY '18 $ 373.1
2.2 %

EMEA
Net sales - FY '17 $ 114.7

Organic (3.0 ) (2.6 )%
Impact of currency 5.9
5.1 %
Net Sales - FY '18 $ 117.6
2.5 %

Asia Pacific
Net sales - FY '17 $ 79.8

Organic 1.7
2.1 %
Impact of currency 1.1
1.4 %
Net Sales - FY '18 $ 82.6
3.5 %

Total Net Sales
Net sales - FY '17 $ 559.6

Organic 5.9
1.1 %
Impact of currency 7.8
1.3 %
Net Sales - FY '18 $ 573.3
2.4 %



	For the Quarter Ended December 31, 2019
	$ Change			% Chg
Americas
Net sales - FY '19	$	373.5
Organic	(19.0		)	(5.1	)%
Impact of Battery Acquisition	107.1			28.7	%
Impact of Auto Care Acquisition	52.9			14.2	%
Change in Argentina	0.2			0.1	%
Impact of currency	(0.2		)	(0.1	)%
Net sales - FY '20	$	514.5		37.8	%

International
Net sales - FY '19	$	198.4
Organic	(0.7		)	(0.4	)%
Impact of Battery Acquisition	18.4			9.3	%
Impact of Auto Care Acquisition	8.5			4.3	%
Impact of currency	(2.3		)	(1.2	)%
Net sales - FY '20	$	222.3		12.0	%

Total Net sales
Net sales - FY '19	$	571.9
Organic	(19.7		)	(3.4	)%
Impact of Battery Acquisition	125.5			21.9	%
Impact of Auto Care Acquisition	61.4			10.7	%
Change in Argentina	0.2			—	%
Impact of currency	(2.5		)	(0.4	)%
Net sales - FY '20	$	736.8		28.8	%

Results for the Quarter Ended December 31, ~~2017~~2019

Americas reported Net sales increase of 37.8%. Excluding the impact of acquisitions, which positively impacted Net sales by $160.0, or 42.9%, the positive impact of Argentina operations of $0.2, or 0.1%, and foreign currency of $0.2, or 0.1%, which negatively impacted Net sales, organic net sales decreased 5.1% for the first fiscal quarter. The organic decrease was driven by the phasing of holiday shipments from the current quarter to the fourth quarter of fiscal 2019, a decline in point-of-sale trends driven by the US price increase taken in the prior year, the impacts of a competitive launch and lower replenishment volumes associated with hurricane activity in the fourth fiscal quarter of 2019. Slightly offsetting the organic decrease was favorable pricing.

International reported a net sales increase of ~~2.2%~~12.0%. Excluding the impact of acquisitions, which ~~was~~ positively impacted net sales by $26.9, or 13.6%, and the unfavorable foreign currency movement of ~~0.8,~~$2.3, or ~~0.2%. Organic~~1.2%, organic net sales ~~increased 2.0% due primarily to price increases and the favorable net impact of our portfolio optimization. These amounts were partially~~decreased 0.4% as new distribution was more than offset by the ~~retailer merchandising changes, lapping of storm volume and the May 2017 divestiture of the non-core promotional sales business acquired with the auto care acquisition.~~

~~EMEA reported net sales increased 2.5% positively impacted by foreign currency of 5.1%. Organic net sales decreased by 2.6% driven by the shift~~phasing of holiday ~~orders into~~shipments from the current quarter to the fourth quarter of fiscal ~~2017.~~

~~Asia Pacific reported net sales increased by 3.5%, including the positive impact of foreign currency of 1.4%. Organic net sales increased 2.1% driven by price increases taken in several markets.~~2019 and customer and product mix.

Segment Profit (In millions)

Quarter Ended December 31, ~~2017~~2019

Quarter Ended December 31, 2017
$ Change % Chg
Americas
Segment Profit - FY '17 $ 123.1

Organic (0.5 ) (0.4 )%
Impact of currency 0.5
0.4 %
Segment Profit - FY '18 $ 123.1
— %

EMEA
Segment Profit - FY '17 $ 26.1

Organic (4.5 ) (17.2 )%
Impact of currency 3.9
14.9 %
Segment Profit - FY '18 $ 25.5
(2.3 )%

Asia Pacific
Segment Profit - FY '17 $ 24.7

Organic (1.5 ) (6.1 )%
Impact of currency 0.5
2.1 %
Segment Profit - FY '18 $ 23.7
(4.0 )%

Total Segment Profit
Segment Profit - FY '17 $ 173.9

Organic (6.5 ) (3.7 )%
Impact of currency 4.9
2.8 %
Segment Profit - FY '18 $ 172.3
(0.9 )%



	For the Quarter Ended December 31, 2019
	$ Change			% Chg
Americas
Segment profit - FY '19	$	116.1
Organic	(17.1		)	(14.7	)%
Impact of Battery Acquisition	21.8			18.8	%
Impact of Auto Care Acquisition	9.1			7.8	%
Change in Argentina	(0.6		)	(0.5	)%
Impact of currency	(0.1		)	(0.1	)%
Segment profit - FY '20	$	129.2		11.3	%

International
Segment profit - FY '19	$	54.6
Organic	(8.3		)	(15.2	)%
Impact of Battery Acquisition	6.1			11.2	%
Impact of Auto Care Acquisition	1.0			1.8	%
Impact of currency	(1.2		)	(2.2	)%
Segment profit - FY '20	$	52.2		(4.4	)%

Total Segment profit
Segment Profit - FY '19	$	170.7
Organic	(25.4		)	(14.9	)%
Impact of Battery Acquisition	27.9			16.3	%
Impact of Auto Care Acquisition	10.1			5.9	%
Change in Argentina	(0.6		)	(0.4	)%
Impact of currency	(1.3		)	(0.6	)%
Segment profit - FY '20	$	181.4		6.3	%

Refer to Note 6,9, Segments, in the ~~unaudited Condensed~~ Consolidated (Condensed) Financial Statements for a reconciliation from segment profit to earnings before income taxes.

~~Results for the Quarter Ended December 31, 2017~~

Global reported segment profit ~~declined~~increased by ~~$1.6,~~$10.7, or ~~0.9%~~6.3%. ~~Excluding~~The organic decline of $25.4, or 14.9%, was driven by the ~~favorable movement~~net sales decrease, the negative impact of tariffs and higher product costs due to lower production volumes in ~~foreign currencies~~the fourth quarter of ~~$4.9, organic~~fiscal 2019. In addition, higher A&P spending was nearly offset by SG&A favorability. Our Argentina operations had an unfavorable impact on segment profit ~~decreased $6.5,~~of $0.6, or ~~3.7%, in~~0.4% and foreign currency impacts were unfavorable by $1.3, or 0.6%. Offsetting the ~~current fiscal period. Top-line growth in~~segment profit organic decrease for the quarter was more than offset by increases in SG&A due to our continuous improvement initiatives to simplify and streamline our business processes to reduce costs and higher A&P spending related to our portfolio optimization and holiday programs.the favorable impact of the acquisition of $38.0, or 22.2%.

Americas reported segment profit ~~remained flat compared to~~increased by $13.1, or 11.3%. The increase was driven by the ~~prior period inclusive~~acquisitions which contributed $30.9, or 26.6%. The change in Argentina operations had a negative impact on segment profit of $0.6, or 0.5%, while the ~~positive~~unfavorable impact from foreign currency ~~of $0.5. Organic~~was $0.1. Excluding these items, organic segment profit decreased by ~~$0.5 as top-line growth was fully offset by increased A&P spending in support of portfolio initiatives and holiday programs.~~

~~EMEA reported segment profit declined $0.6 inclusive of the positive impact from foreign currency of $3.9. Organic segment profit decreased by $4.5~~$17.1, or 14.7%, driven by the net sales decrease, ~~in sales due to~~ the ~~shift~~negative impact of ~~holiday orders into~~tariffs and higher product costs. Slightly offsetting the ~~fourth quarter of fiscal 2017 as well as increased overhead~~organic decrease was favorable SG&A spending, ~~due to current year investments in our~~driven by continuous improvement ~~initiatives.~~and recognition of synergies.

~~Asia Pacific~~International reported segment profit decreased ~~$1.0.~~$2.4, or 4.4%. Excluding the ~~favorable~~positive impact ~~from~~of the acquisitions of $7.1, the movement in foreign ~~currency of $0.5,~~currencies decreased $1.2 and organic segment profit ~~declined~~decreased $8.3, or 15.2%, driven by ~~$1.5 as top-line growth was more than offset by increased overhead~~lower gross margins due to customer and product mix, higher A&P spending due to ~~current year~~timing of brand investments ~~in our continuous improvement initiatives.~~and slightly higher overhead spending.

General Corporate and Global Marketing Expenses


	For the Quarter Ended December 31,						For the Quarter Ended December 31,
	2017			2016			2019			2018
General corporate and other expenses	$	21.6		$	17.2		$	24.9		$	18.7
Global marketing expense	3.2			3.0			6.1			3.1
General corporate and global marketing expense	$	24.8		$	20.2		$	31.0		$	21.8
% of Net Sales	4.3		%	3.6		%	4.2		%	3.8		%

For the quarter ended December 31, ~~2017,~~2019, general corporate and other expenses were ~~$21.6,~~$24.9, an increase of ~~$4.4~~$6.2 as compared to the prior year comparative ~~period due~~period. Excluding the corporate and other expenses of $5.2 related to ~~increased compensation costs and~~the acquisitions, the legacy business accounted for $19.7, an increase of $1.0 compared to the prior year. The increase was driven by higher mark to market expense on our unfunded deferred compensation ~~liability.~~liability in the current year.

For the quarter ended December 31, ~~2017,~~2019, global marketing expenses were ~~$3.2~~$6.1 compared to ~~$3.0~~$3.1 in the prior year comparative ~~periods.~~period. The global marketing expense represents a center led approach to managing global marketing activities in support of our brands.

Liquidity and Capital Resources

Energizer’s primary future cash needs will be centered on operating activities, working capital, strategic investments and ~~strategic investments.~~debt reductions. We believe that our future cash from operations, together with our access to capital markets, will provide adequate resources to fund our operating and financing needs. Our access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) our credit rating, (ii) the liquidity of the overall capital markets and (iii) the current state of the economy. There can be no assurances that we will continue to have access to capital markets on terms acceptable to us. See the “Risk Factors” section of our Annual Report on Form 10-K for the year ended September 30, ~~2017~~2019 filed with the Securities and Exchange Commission on November ~~14, 2017 as well as in Item 1A. Risk Factors of this Form 10-Q.~~19, 2019.

Cash is managed centrally with net earnings reinvested locally and working capital requirements met from existing liquid funds. At December 31, ~~2017,~~2019, Energizer had ~~$454.3~~$293.5 of cash and cash equivalents, ~~substantially all~~approximately 89% of which was held outside of the U.S. Given our extensive international operations, a significant portion of our cash is denominated in foreign currencies. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to regulatory capital requirements; however, those balances are generally available without legal restrictions to fund ordinary business operations.

~~The~~On December 17, 2018, the Company ~~has~~entered into a ~~$350.0 senior secured~~credit agreement which provided for a 5-year $400.0 revolving credit facility ~~(Revolving~~(2018 Revolving Facility) ~~which matures in 2020. Borrowings under the Revolving Facility~~. The borrowings will bear interest at a rate per annum equal to, at the option of the Company, LIBOR or the Base Rate (as defined) plus the applicable margin based on total Company leverage. The credit agreement also contains customary affirmative and restrictive covenants. As of December 31, ~~2017,~~2019, the Company had ~~$87.5~~$20.0 of outstanding borrowings under the 2018 Revolving Facility and had ~~$6.7~~$7.3 of outstanding letters of credit. Taking into account outstanding letters of credit, ~~$255.8 remains~~$372.7 remained available as of December 31, ~~2017.~~2019.

Subsequent to the quarter, ~~on January 15, 2018,~~ the Company entered into a definitive acquisition agreement with Spectrum Brands Holdings, Inc. to acquire its global battery, lighting, and portable power business for a purchase price of $2,000.0 in cash, subject to certain purchase price adjustments. Energizer intends to fundutilized the acquisition through a combination of existing cash and committed debt facilities, expected to ultimately consist of a new term loan and senior notes. In addition, Energizer intends to maintain its existing senior notes, maturing in 2025. The closing of this transaction is subject to various conditions and regulatory approvals.

~~The Company is also committed~~available proceeds from the Varta Divestiture to pay ~~a $100.0 termination fee to Spectrum if~~down borrowings outstanding on the transaction does not close by July 15, 2019, and all conditions precedent to the Company’s obligation to consummate the acquisition have otherwise been satisfied except for one or more of the regulatory approval conditions specified in the acquisition agreement. Success fees are due to the financial adviser of $13.0, of which $2.0 was paid in January with the remainder to be paid subject to the closing of the transaction.Term Loan B facility.

Operating Activities

Cash flow from operating activities from continuing operations was ~~$141.0~~$133.5 in the three months ended December 31, ~~2017,~~2019, as compared to ~~$91.8~~$118.9 in the prior year comparative period. ~~The increase~~This change of $14.6 was primarily driven by the ~~year over year improvement~~following: Decreased inventory of approximately $10, driven by a planned shift in ~~working capital of $38.5. Accounts receivable was the main driver~~production to build inventory at our US plants earlier in the ~~working capital improvement as the strong operating performance in the last quarter~~prior fiscal year; higher A&P accruals of ~~fiscal 2017, largely~~approximately $14 driven by ~~hurricane activity in the U.S., distribution gains in international markets and~~ timing of ~~holiday activity resulted~~payments; and approximately $30 related to the agreement and final cash settlement from the Central Authority in Spain on a Spanish VAT refund payment. These inflows were offset by higher ~~collections~~accounts receivable of approximately $35 primarily driven by a reduction in factoring programs in the first fiscal quarter, which we plan to reinstate in the balance of ~~2018 as compared to 2017.~~the year.

Investing Activities

Net cash used by investing activities from continuing operations was ~~$5.5~~$13.8 and ~~$0.6~~$4.7 in three months ended December 31, ~~2017~~2019 and ~~2016,~~2018, respectively, and consisted of the following:

Capital expenditures of ~~$5.5~~$11.7 and ~~$4.9~~$4.8 in the three months ended December 31, ~~2017~~2019 and ~~2016,~~2018, respectively. ~~These capital expenditures were funded by cash flow~~

Proceeds from ~~operations.~~

~~The prior year expenditures were partially offset by proceeds from the~~ sale of assets of ~~$4.3 related~~$1.5 and $0.1 in the three months ended December 31, 2019 and 2018, respectively.

Acquisitions, net of cash acquired was $3.6 in the three months ended December 31, 2019. This payment was due to the ~~sale~~finalization of ~~two previously closed facilities.~~working capital adjustments with Spectrum for the Auto Care Acquisition.

Investing cash outflows of approximately ~~$30~~$40 to ~~$35~~$45 are anticipated for the full fiscal year ~~2018~~2020 for capital expenditures relating to maintenance, product development and cost reduction ~~initiatives. Total~~investments. Additional investing cash outflows of approximately $50 to $60 are anticipated in full fiscal year 2020 for integration related capital ~~expenditures are expected to be financed with funds generated from operations.~~expenditures.

Financing Activities

Net cash used by financing activities from continuing operations was ~~$63.9~~$76.3 for the three months ended December 31, ~~2017~~2019 as compared to ~~$63.2~~net cash inflow from financing activities from continuing operations of $1,183.6 in the prior fiscal year comparative period. For the three months ended December 31, ~~2017,~~2019, cash ~~flow used by~~from financing activities from continuing operations consists of the following:

Cash proceeds from the issuance of debt with original maturities greater than 90 days of $365.0 relating to the refinancing of the 2018 Term Loans in December 2019;

Payments of debt with maturities greater than 90 days of $400.3, primarily related the Term Loan refinancing in December 2019 as well as incremental payments on the 2018 Term Loan A and 2018 Term Loan B prior to the refinancing;

Net decrease in debt with original maturities of 90 days or less of $4.0, primarily related to repayment of borrowings on our 2015 Revolving Facility;

Dividends paid on common stock of $22.7 (see below);

Dividends paid on mandatory convertible preferred stock of $4.0;

Debt issuance costs of $0.9 relating to the Term Loan refinancing; and

Taxes paid for withheld share-based payments of $9.4.

For the three months ended December 31, 2018, cash from financing activities from continuing operations consisted of the following:

Cash proceeds from issuance of debt with original maturities greater than 90 days of $1,200.0;

Net increase in debt with original maturities of 90 days or less of ~~$6.5;~~

~~Dividends paid of $17.6 (see below);~~

~~Common stock repurchases of $50.0 at an average price of $44.41 per share (see below);~~

~~Taxes paid for withheld share-based payments of $1.8; and~~

~~Payments of debt with maturities greater than 90 days of~~ ~~$1.0~~.

~~For the three months ended December 31, 2016, cash used by financing activities consisted of the following:~~

~~Net decrease in debt with original maturities of 90 days or less of $27.9,~~$28.0, primarily related to ~~the repayment of~~

borrowings on our Revolving Facility;

Dividends paid on common stock of ~~$18.1;~~$19.8;

~~Common stock repurchases~~Debt issuance costs of ~~$8.1 at an average price of $44.43 per share;~~

~~Taxes paid for withheld share-based payments of $8.1;~~$16.5; and

Payments of debt with maturities greater than 90 days of ~~$1.0.~~$1.0; and

Taxes paid for withheld share-based payments of $7.1.

Dividends

On November ~~13, 2017,~~11, 2019, the Board of Directors declared a dividend for the first quarter of fiscal ~~2018~~2020 of ~~$0.29~~$0.30 per common share of common stock, payable on December 17, 2019, to all shareholders of record as of the close of business on November 26, 2019. During the quarter ended December 31, 2019, total dividends declared were $21.4. The payments made of $22.7 during the quarter ended December 31, 2019 included the cumulative dividends paid upon the vesting of restricted shares during the period.

The Company also paid a cash dividend of $1.875 per share of ~~common stock.~~Mandatory Convertible Preferred Share (MCPS) on October 15, 2019 which had been declared in fiscal 2019. The ~~dividend~~total payment made was ~~paid on December 14, 2017 to shareholders on record as of~~$4.0. On November ~~30, 2017 and totaled $17.3. The incremental dividend payments of $0.3 made in the first three months of 2018 were related to restricted stock awards that vested during November 2017.~~

Subsequent to the end of the fiscal quarter, on January 27, 2020, the Board of Directors declared a cash dividend for the second quarter of ~~2018~~2020 of ~~$0.29~~$0.30 per share of common stock, payable on March ~~13, 2018~~18, 2020, to all shareholders of record as of the close of business February ~~20, 2018.~~22, 2020.

Share Repurchases

In July 2015, the Company's Board of Directors approved an authorization for the Company to acquire up to 7.5 million shares of its common stock. ~~During~~There were no share repurchases during the ~~three months ended December 31, 2017, the Company repurchased 1,126,379 shares at an average price~~first quarter of ~~$44.41 per share, or $50.0, under this authorization.~~fiscal 2020. Future share ~~repurchase,~~repurchases, if any, will be determined by the Company based on its evaluation of the market conditions, capital allocation objectives, legal and regulatory requirements and other factors.

~~From July 2015 and~~ Share repurchases may be effected through ~~the date of this filing, a total of 3.3 million shares were repurchased on the~~ open market ~~at an average price~~purchases or privately negotiated transactions, including repurchase plans that satisfy the conditions of ~~$42.17 under~~Rule 10b5-1 of the ~~current share repurchase authorization. At January 31, 2018, the date of this filing, 4.2 million shares remain available for repurchase.~~Exchange Act.

Other Matters

Environmental Matters

Accrued environmental costs at December 31, ~~2017~~2019 were ~~$5.2.~~$8.5. It is difficult to quantify with certainty the cost of environmental matters, particularly remediation and future capital expenditures for environmental control equipment. Total environmental capital expenditures and operating expenses are not expected to have a material effect on our total capital and operating expenditures, earnings or competitive position. However, current environmental spending estimates could be modified as a result of changes in our plans or our understanding of underlying facts, changes in legal requirements, including any requirements related to global climate change, or other factors.

Contractual Obligations

A summary of Energizer's significant contractual obligations at December 31, ~~2017~~2019 is ~~show~~shown below:


	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years		Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Long term debt, including current maturities	$	991.0	$	4.0	$	8.0	$	379.0	$	600.0
Long-term debt, including current maturities											$	3,453.8	$	68.4	$	296.6	$	17.5	$	3,071.3
Interest on long-term debt (1)	310.3		27.2		94.0		90.1		99.0		1,154.6		182.1		351.4		335.2		285.9
Notes payable	110.5		110.5		—		—		—		28.1		28.1		—		—
Operating leases(2)	55.0		9.4		20.4		8.1		17.1		128.4		14.1		25.5		19.6		69.2
Pension plans (2)	7.7		7.7		—		—		—
Purchase obligations and other (3)	98.2		48.6		49.6		—		—
Capital leases (3)											92.6		3.5		9.3		9.0		70.8
Pension plans (4)											4.5		4.5		—		—		—
Purchase obligations and other (5)											8.6		8.2		0.4		—		—
Mandatory transition tax	30.0		2.6		4.7		9.2		13.5		16.7		—		—		9.4		7.3
Total	$	1,602.7	$	210.0	$	176.7	$	486.4	$	729.6	$	4,887.3	$	308.9	$	683.2	$	390.7	$	3,504.5

(1) The above table is based upon the debt balance and LIBOR rate as of December 31, ~~2017. In March 2017,~~2019. Energizer ~~entered into~~has an interest rate swap agreement ~~with one major financial institution~~ that fixed the variable benchmark component (LIBOR) on $200 of Energizer's variable rate debt ~~through June 2022~~ at an interest rate of 2.03% and an interest rate swap agreement that fixed the variable benchmark component (LIBOR) on $400 of variable rate debt at 2.47%.

(2) Operating lease payments include the net present value of the lease obligation of $84.0 as well as the imputed interest included in the payment of $44.4.

(3) Capital lease payments include the full capital leases obligation of $46.8 as well as the interest included in the payment of $45.8.

(4) Globally, total expected pension contributions for the Company for fiscal year ~~2018~~2020 are estimated to be ~~$8.9.~~$5.7. The Company has made payments of $1.2 year to date. The projected payments beyond fiscal year ~~2018~~2021 are not currently estimable.

~~(3)~~(5) Included in the table above are future purchase commitments for goods and services which are legally binding and that specify all significant terms including price and/or quantity.

Energizer is also party to various service and supply contracts that generally extend approximately one to three months. These arrangements are primarily individual, short-term purchase orders for routine goods and services at market prices, which are part of our normal operations and are reflected in historical operating cash flow trends. These contracts can generally be canceled at our option at any time. We do not believe such arrangements will adversely affect our liquidity position.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk Sensitive Instruments and Positions

The market risk inherent in the Company's financial instruments’ positions represents the potential loss arising from adverse changes in currency rates, commodity prices and interest rates. The following risk management discussion and the estimated amounts generated from the sensitivity analysis are forward-looking statements of market risk assuming certain adverse market conditions occur. The Company's derivatives are used only for identifiable exposures, and we have not entered into hedges for trading purposes where the sole objective is to generate profits.

Derivatives Designated as Cash Flow Hedging Relationships

A significant share of Energizer's product cost is more closely tied to the U.S. dollar than to the local currencies in which the product is sold. As such, a weakening of currencies relative to the U.S. dollar results in margin declines unless mitigated through pricing actions, which are not always available due to the economic or competitive environment. Conversely, strengthening of currencies relative to the U.S. dollar can improve reported results. The primary currencies to which Energizer is exposed include the Euro, the British pound, the Canadian dollar and the Australian dollar. However, the Company also has significant exposures in many other currencies which, in the aggregate, may have a material impact on the Company's operations.

The Company has entered into a series of forward currency contracts to hedge the cash flow uncertainty of forecasted payment of inventory purchases due to short term currency fluctuations. Energizer’s foreign affiliates, which have the largest exposure to U.S. dollar purchases, have the Euro, the British pound, the Canadian dollar and the Australian dollar as their local currencies. These foreign currencies represent a significant portion of Energizer's foreign currency exposure. At December 31, ~~2017~~2019 and September 30, ~~2017,~~2019, Energizer had an unrealized pre-tax loss of ~~$4.2~~$1.4 and ~~$5.8,~~pre-tax gain of $4.5, respectively, on these forward currency contracts accounted for as cash flow hedges, included in Accumulated other comprehensive loss on the ~~Unaudited Condensed~~ Consolidated (Condensed) Balance Sheets. Assuming foreign exchange rates versus the U.S. dollar remain at December 31, ~~2017~~2019 levels over the next twelve months, ~~$4.1~~$1.2 of the pre-tax loss included in Accumulated other comprehensive loss at December 31, ~~2017,~~2019, is expected to be ~~included~~recognized in earnings. Contract maturities for these hedges extend into fiscal year ~~2019.~~2021.

Derivatives Not Designated as Cash Flow Hedging Relationships

Energizer's foreign subsidiaries enter into internal and external transactions that create nonfunctional currency balance sheet positions at the foreign subsidiary level. These exposures are generally the result of intercompany purchases, intercompany loans and to a lesser extent, external purchases, and are revalued in the foreign subsidiary’s local currency at the end of each period. Changes in the value of the non-functional currency balance sheet positions in relation to the foreign subsidiary’s local currency results in an exchange gain or loss recorded in Other items, net on the Consolidated Statements of Earnings and Comprehensive Income. The primary currency to which Energizer’s foreign subsidiaries are exposed is the U.S. dollar.

The Company enters into foreign currency derivative contracts which are not designated as cash flow hedges for accounting purposes to hedge balance sheet exposures. Any gains or losses on these contracts are expected to be offset by exchange gains or losses on the underlying exposures, thus they are not subject to significant market risk. The change in estimated fair value of the foreign currency contracts for the quarter ended December 31, ~~2017~~2019 resulted in a loss of $0.9 and income of ~~$0.3 and expense of $1.9~~$1.0 for the quarter ~~ended~~ December 31, ~~2016~~2018, and was recorded in Other items, net on the ~~unaudited~~ Consolidated (Condensed) Statements of Earnings and Comprehensive ~~Income (Condensed).~~Income.

Commodity Price Exposure

The Company uses raw materials that are subject to price volatility. ~~The~~At times, the Company ~~has used, and may in the future use,~~uses hedging instruments to reduce exposure to variability in cash flows associated with future purchases of certain ~~raw~~ materials and commodities. At

The Company began entering into hedging contract on zinc purchases in fiscal 2019. The contracts are determined to be cash flow hedges and qualify for hedge accounting. The contract maturity for these hedges extend into 2021. There were nine open contracts at December 31, ~~2017, there were no open derivative or hedging instruments for future purchases~~2019, with a total notional value of ~~raw materials or commodities.~~approximately $22. The pre-tax loss recognized on the zinc contracts was $1.7 at December 31, 2019, and was included in Accumulated other comprehensive loss on the Consolidated (Condensed) Balance Sheet.

Interest Rate Exposure

The Company has interest rate risk with respect to interest expense on variable rate debt. At December 31, ~~2017,~~2019, Energizer had variable rate debt outstanding with ~~an original~~a principal balance of ~~$400.0~~$1,025.0 under the refinanced 2018 and 2019 Term ~~Loan.~~Loans. In March 2017, the Company ~~also~~ entered into an interest rate swap agreement with one major financial institution that fixed the variable benchmark component (LIBOR) on $200.0 of Energizer's variable rate debt through June 2022 at an interest rate of 2.03%. In February 2018, the Company entered into a forward starting interest rate swap with an effective date of October 1, 2018, with one major financial institution that fixed the variable benchmark component (LIBOR) on additional variable rate debt of $400.0 at an interest rate of 2.47%. Beginning April 1, 2019, the notional amount decreases $50.0 each quarter until its termination date of December 31, 2020.

For the quarter ended December 31, ~~2017,~~2019, our weighted average interest rate on variable rate debt, inclusive of the interest rate swap, was ~~3.42%~~4.05%.

Argentina Currency Exposure and Hyperinflation

Effective July 1, 2018, the financial statements for our Argentina subsidiary were consolidated under the rules

governing the translation of financial information in a highly inflationary economy. Under U.S. GAAP, an economy is

considered highly inflationary if the cumulative inflation rate for a three year period meets or exceeds 100 percent. The Argentina economy exceeded the three year cumulative inflation rate of 100 percent as of June 2018. If a subsidiary is considered to be in a highly inflationary economy, the financial statements of the subsidiary must be remeasured into the Company’s reporting currency (U.S. dollar) and future exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than exclusively in the equity section of the balance sheet, until such time as the economy is no longer considered highly inflationary. It is difficult to determine what continuing impact the use of highly inflationary accounting for Argentina may have on our consolidated financial statements as such impact is dependent upon movements in the applicable exchange rates between the local currency and the U.S. dollar and the amount of monetary assets and liabilities included in our affiliates' balance sheet.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain a comprehensive set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to Energizer's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Based on that evaluation performed, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of December 31, ~~2017,~~2019, to provide reasonable assurance of the achievement of these objectives. Notwithstanding the foregoing, there can be no assurance that the Company's disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to report material information otherwise required to be set forth in the Company's reports.

They have also determined in their evaluation that there was no change in the Company's internal control over financial reporting during the quarter ended December 31, ~~2017~~2019 that has materially affected or is reasonably likely to materially affect the Company's internal control over financial reporting.

PART II -- OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its affiliates are subject to a number of legal proceedings in various jurisdictions arising out of its operations. Many of these legal matters are in preliminary stages and involve complex issues of law and fact, and may proceed for protracted periods of time. The amount of liability, if any, from these proceedings cannot be determined with certainty. We are a party to legal proceedings and claims that arise during the ordinary course of business. We review our legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions. We establish accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements to not be misleading. We do not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated. Based upon present information, the Company believes that its liability, if any, arising from such pending legal proceedings, asserted legal claims and known potential legal claims which are likely to be asserted, is not reasonably likely to be material to the Company's financial position, results of operations, or cash flows, when taking into account established accruals for estimated liabilities.

Item 1A. Risk Factors

Our Annual Report on Form 10-K for the year ended September 30, ~~2017,~~2019, which was filed with the Securities and Exchange Commission on November ~~14, 2017,~~19, 2019, contains a detailed discussion of risk factors that could materially adversely affect our business, our operating results or our financial condition. There have been no material changes to the risk factors included in our Annual Report on Form 10-K for the year ended September 30, ~~2017, except for the addition of the following:~~2019.

~~Risks Related to the Acquisition of the Global Battery, Lighting, and Portable Power Business of Spectrum Brands Holdings, Inc. (the “Acquisition”)~~

The pending Acquisition is subject to the satisfaction of certain conditions, including obtaining required regulatory approvals, and may not be consummated, and if not consummated under certain circumstances, we may be subject to monetary or other damages under the acquisition agreement.

On January 16, 2018, we announced that we had entered into a definitive acquisition agreement to acquire the global battery, lighting, and portable power business (the “Business”) of Spectrum Brands Holdings, Inc. (“Spectrum”). The consummation of the Acquisition is subject to certain customary conditions, including, among other things, (i) the absence of a material adverse effect on the Business, (ii) the expiration or termination of required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), (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 acquisition 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 acquisition agreement.

Many of the closing conditions are not within our control, and there can be no assurance that the closing conditions for the Acquisition will be satisfied in a timely manner, or at all. Any delay could cause us not to realize some or all of the cost savings, synergies and other benefits that we expect to achieve if the Acquisition were to be successfully completed within its expected time frame. If any of these conditions are not satisfied or waived prior to July 15, 2019 (the “Termination Date”), it is possible that the acquisition agreement may be terminated. Further, if the Acquisition has not been consummated by the Termination Date and all conditions precedent to the Company’s obligation to consummate the Acquisition have otherwise been satisfied except for one or more of the Antitrust Conditions, then the Company would be required to pay Spectrum a termination fee of $100 million.

We may be unable to obtain the regulatory clearances required to complete the Acquisition or, in order to do so, we or Spectrum may be required to comply with material restrictions or satisfy material conditions.

The Acquisition is subject to review by the U.S. Department of Justice and the Federal Trade Commission under the HSR Act, and other regulatory agencies. The closing of the Acquisition is subject to the condition that the applicable waiting period, and any applicable extensions thereof, under the HSR Act have expired or been duly terminated, and that certain other antitrust approvals in specified foreign jurisdictions have been received. We cannot provide any assurance that all required antitrust clearances will be obtained. There can be no assurance as to the cost, scope or impact of the actions that may be required to obtain antitrust approval. In addition, the acquisition agreement provides that we are required to commit to dispositions of assets up to a certain amount in order to obtain regulatory clearance. If we are required to or otherwise decide to take such actions in order to close the Acquisition, it could be detrimental to the combined organization following the consummation of the Acquisition. Furthermore, these actions could have the effect of delaying or preventing completion of the proposed Acquisition or imposing additional costs on or limiting the revenues or cash of the combined organization following the consummation of the Acquisition. However, if certain antitrust clearances are not obtained and the acquisition agreement is terminated under specified circumstances, we could be liable to Spectrum for a termination fee of $100 million.

Even if the parties receive early termination of the statutory waiting period under the HSR Act or the waiting period required expires, the U.S. Department of Justice, the Federal Trade Commission, or other regulatory authorities could take action under the antitrust laws to prevent or rescind the Acquisition, require the divestiture of assets or seek other remedies. Additionally, state attorneys general could seek to block or challenge the Acquisition as they deem necessary or desirable in the public interest at any time, including after completion of the transaction. In addition, in some circumstances, a third party could initiate a private action under antitrust laws challenging or seeking to enjoin the merger, before or after it is completed. We may not prevail and may incur significant costs in defending or settling any action under the antitrust laws.

Our indebtedness following the completion of the Acquisition will be significant and could adversely affect our business and our ability to meet our obligations, and if sufficient financing on favorable terms or other sources of capital are not available, we may be subject to significant monetary or other damages under the Acquisition Agreement.

We currently expect to incur indebtedness in excess of $2 billion to finance the Acquisition. Interest costs related to this debt or other debt we may incur in connection with the Acquisition will be significant. Our new indebtedness may contain negative or financial covenants that would limit our operational flexibility. Our increased level of indebtedness could reduce funds available for additional acquisitions or other business purposes, restrict our financial and operating flexibility, or create competitive disadvantages compared to other companies with lower debt levels. This in turn may reduce our flexibility in responding to changes in our businesses and in our industry.

Additionally, although we have obtained financing commitments with respect to the Acquisition in an amount which we believe would be sufficient to allow us to complete the transaction, the consummation of the financing pursuant to these commitments is subject to conditions that may not be satisfied. Our ability to obtain any financing to fund a portion of the purchase price is not a condition to closing under the acquisition agreement. However, if we are unable to obtain sufficient financing on favorable terms or experience a significant diminution of our existing cash and cash equivalents or other sources of capital, and as a result we do not have sufficient funds to complete the Acquisition, we may be subject to monetary or other damages under the acquisition agreement as a result of our failure to complete the Acquisition.

~~We may be unable to integrate the Business successfully and realize the anticipated benefits of the Acquisition.~~

The pending Acquisition involves the combination of two companies that have operated independently. We will be required to devote significant management attention and resources to integrating business practices, cultures and operations of each business. Potential difficulties we may encounter as part of the integration process include the following:

~~the inability to successfully combine our respective businesses in a manner that permits us to achieve the cost savings, synergies and other anticipated benefits from the Acquisition;~~

the challenge of integrating complex systems, operating procedures, compliance programs, technology, networks and other assets of the Business in a manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;

~~difficulties in retaining key management and other key employees;~~

~~the challenge of managing the expanded operations of a significantly larger and more complex company and coordinating geographically separate organizations; and~~

potential unknown liabilities, liabilities that are significantly larger than we currently anticipate, and unforeseen increased expenses or delays associated with the Acquisition, including cash costs to integrate the two businesses that may exceed the cash costs that we currently anticipate.

Any one of these factors could result in increased costs, decreases in the amount of anticipated benefits and diversion of management’s attention, which could materially impact our business, financial condition and results of operations. In addition, even if we are able to integrate the Business successfully, the anticipated benefits of the pending Acquisition may not be realized fully, or at all, or may take longer to realize than expected.

~~Failure to complete the Acquisition could impact our stock price and our future business and financial results.~~

If the Acquisition is not completed, our ongoing business and financial results may be adversely affected and we will be subject to a number of risks, including the following: depending on the reasons for the failure to complete the Acquisition, we could be liable to Spectrum for monetary or other damages in connection with the termination or breach of the acquisition agreement, including a termination fee of $100 million; we have dedicated significant time and resources, financial and otherwise, in planning for the Acquisition and the associated integration, of which we would lose the benefit if the Acquisition is not completed; we are responsible for certain transaction costs relating to the Acquisition, whether or not the Acquisition is completed; while the acquisition agreement is in force, we are subject to certain restrictions on the conduct of our business, including our ability to make any other significant acquisition which would reasonably be expected to delay, hinder or otherwise obstruct the consummation of the Acquisition, which restrictions may adversely affect our ability to execute certain of our business strategies; and matters relating to the Acquisition (including integration planning) may require substantial commitments of time and resources by our management, whether or not the Acquisition is completed, which could otherwise have been devoted to other opportunities that may have been beneficial to us.

In addition, if the Acquisition is not completed, we may experience negative reactions from the financial markets and from our customers and employees. We also may be subject to litigation related to any failure to complete the Acquisition or to enforcement proceedings commenced against us to perform our obligations under the acquisition agreement. If the Acquisition is not completed, these risks may materialize and may adversely affect our business, financial results and financial condition, as well as the price of our common stock.

~~While the Acquisition is pending, we and Spectrum will be subject to business uncertainties that could adversely affect our respective businesses.~~

Our success following the Acquisition will depend in part upon the ability of us and Spectrum to maintain our respective business relationships. Uncertainty about the effect of the Acquisition on customers, suppliers, employees and other constituencies may have a material adverse effect on us and the Business. Customers, suppliers and others who deal with us or Spectrum may delay or defer business decisions, decide to terminate, modify or renegotiate their relationships or take other actions as a result of the Acquisition that could negatively affect the revenues, earnings and cash flows of the Company or the Business. If we are unable to maintain these business and operational relationships, our financial position, results of operations or cash flows could be materially affected.

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

The following table reports purchases of equity securities during the first quarter of fiscal ~~2018~~2020 by Energizer and any affiliated purchasers pursuant to SEC rules, including any treasury shares withheld to satisfy employee withholding obligations upon vesting of restricted stock and the execution of net exercises.

											Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number That May Yet Be Purchased Under the Plans or Programs (2)	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number That May Yet Be Purchased Under the Plans or Programs (2)
October 1 - October 31	—	$	—	—	5,278,002	—	—		—	2,802,791
November 1 - November 30	1,167,170	$	44.38	1,126,379	4,151,623	201,229	$	48.25	—	2,802,791
December 1 - December 31	—	—		—	4,151,623	570	$	50.46	—	2,802,791
Total	1,167,170	$	44.38	1,126,379		201,799	$	48.26	—	2,802,791

(1) ~~40,791~~201,799 shares purchased during the quarter relate to the surrender to the Company of shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock or execution of net exercises.

(2) On July 1, 2015, the Board of Directors approved a share repurchase authorization for the repurchase of up to 7.5 million shares. ~~1,126,379~~No shares were repurchased on the open market during the quarter under this share repurchase authorization.

Item 6. Exhibits

See the Exhibit Index hereto.

EXHIBIT INDEX

The exhibits below are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.



Exhibit No.		Description of Exhibit
2.1**†		Separation and Distribution Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 25, 2015 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed June 29, 2015).

2.2**		Tax Matters Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 26, 2015 (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed June 29, 2015).

2.3**		Employee Matters Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 25, 2015 (incorporated by reference to Exhibit 2.3 to the Company’s Current Report on Form 8-K filed June 29, 2015).

2.4**		Transition Services Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 25, 2015 (incorporated by reference to Exhibit 2.4 to the Company’s Current Report on Form 8-K filed June 29, 2015).

2.5		Contribution Agreement by and between the Company and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated June 30, 2015 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed June 30, 2015).

2.6**†		Agreement and Plan of Merger, dated as of May 24, 2016, by and among the Company, Energizer Reliance, Inc., Trivest Partners V, L.P., and HandStands Holding Corporation (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed May 27, 2016).

2.7**†		Acquisition Agreement, dated as of January 15, 2018, by and among the Company and Spectrum Brands Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed January 16, 2018).

2.8**†		Amended and Restated Acquisition Agreement, dated as of November 15, 2018, by and between Energizer Holdings, Inc. and Spectrum Brands Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed November 15, 2018).

2.9**†		Acquisition Agreement, dated as of November 15, 2018, by and between Energizer Holdings, Inc. and Spectrum Brands Holdings, Inc. (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed November 15, 2018).

2.10**†		Acquisition Agreement, dated May 29, 2019, between Energizer Holdings, Inc. and VARTA Aktiengesellschaft (Disclosure Letter and certain schedules and exhibits 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 the omitted Disclosure Letter and certain schedules and exhibits upon request) (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on May 29, 2019).

3.1		Third Amended and Restated Articles of Incorporation of Energizer Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed January 29, 2018).

3.2		Third Amended and Restated Bylaws of Energizer Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed January 29, 2018).



3.3		Certificate of Designations of the 7.50% Series A Mandatory Convertible Preferred Stock of Energizer Holdings, Inc., filed with the Secretary of State of the State of Missouri and effective January 17, 2019 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed January 18, 2019).

10.1		Incremental Term Loan Amendment and Refinancing Amendment No. 2, dated as of December 27, 2019, among the Company, the other loan parties party thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent.

10.2		Energizer Holdings, Inc. Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed January 27, 2020).

10.3*		Form of Performance Restricted Stock Unit Award Agreement under the Energizer Holdings, Inc. Omnibus Incentive Plan.

10.4*		Form of Restricted Stock Unit Award Agreement under the Energizer Holdings, Inc. Omnibus Incentive Plan.

10.5*		Form of Restricted Stock Unit Award Agreement for directors under the Energizer Holdings, Inc. Omnibus Incentive Plan

31(i)*		Certification of periodic financial report by the Chief Executive Officer of Energizer Holdings, Inc. pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31(ii)*		Certification of periodic financial report by the Chief Financial Officer of Energizer Holdings, Inc. pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32(i)*		Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Executive Officer of Energizer Holdings, Inc.

32(ii)*		Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Financial Officer of Energizer Holdings, Inc.

101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document.

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101).

*Filed herewith.

** The Company undertakes to furnish supplementally a copy of any omitted schedule or exhibit to such agreement to the Securities and Exchange Commission.

† These exhibits referenced herewith were filed to provide investors with information regarding their terms. They are not intended to provide any other factual information about the Company, the counterparties or the related businesses contemplated thereby. In particular, the assertions embodied in the representations and warranties in the agreements were made as of a specified date, are modified or qualified by information in a confidential disclosure letter prepared in connection with the execution and delivery of the agreements, may be subject to a contractual standard of materiality different from what might be viewed as material to shareholders, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the agreements are not necessarily characterizations of the actual state of facts about the Company, the counterparty(ies), or the related business contemplated thereby at the time they were made or otherwise and should only be read in conjunction with the other information that the Company makes publicly available in reports, statements and other documents filed with the SEC.

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.



		ENERGIZER HOLDINGS, INC.

		Registrant

		By:	/s/ Timothy W. Gorman
			Timothy W. Gorman
			Executive Vice President and Chief Financial Officer



Date:	~~January 31, 2018~~February 5, 2020

~~EXHIBIT INDEX~~

~~The exhibits below are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.~~



~~Exhibit No.~~		~~Description of Exhibit~~
~~2.1~~**		Separation and Distribution Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 25, 2015 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed June 29, 2015).

~~2.2~~**		Tax Matters Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 26, 2015 (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed June 29, 2015).

~~2.3~~**		Employee Matters Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 25, 2015 (incorporated by reference to Exhibit 2.3 to the Company’s Current Report on Form 8-K filed June 29, 2015).

~~2.4~~**		Transition Services Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 25, 2015 (incorporated by reference to Exhibit 2.4 to the Company’s Current Report on Form 8-K filed June 29, 2015).

~~2.5~~		Contribution Agreement by and between the Company and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated June 30, 2015 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed June 30, 2015).

~~2.6~~**		Agreement and Plan of Merger, dated as of May 24, 2016, by and among the Company, Energizer Reliance, Inc., Trivest Partners V, L.P., and HandStands Holding Corporation (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed May 27, 2016).

~~2.7~~**		Acquisition Agreement, dated as of January 15, 2018, by and among the Company and Spectrum Brands Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed January 16, 2018).

~~3.1~~		~~Third Amended and Restated Articles of Incorporation of Energizer Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed January 29, 2018).~~

~~3.2~~		~~Third Amended and Restated Bylaws of Energizer Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed January 29, 2018).~~

~~10.1~~		Commitment Letter, dated January 15, 2018, by and among the Company, Barclays Bank PLC and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed January 16, 2018).

~~31(i)~~*		Certification of periodic financial report by the Chief Executive Officer of Energizer Holdings, Inc. pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31(ii)~~*		Certification of periodic financial report by the Chief Financial Officer of Energizer Holdings, Inc. pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



~~32(i)~~*		Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Executive Officer of Energizer Holdings, Inc.

~~32(ii)~~*		Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Financial Officer of Energizer Holdings, Inc.

~~101~~		Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following documents formatted in eXtensible Business Reporting Language (XBRL): (i) the unaudited Consolidated Statements of Earnings and Comprehensive Income, (ii) the unaudited Consolidated Balance Sheets, (iii) the unaudited Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements (Condensed). The financial information contained in the XBRL-related documents is “unaudited” and “unreviewed.”

*~~Filed herewith.~~

** The Company undertakes to furnish supplementally a copy of any omitted schedule or exhibit to such agreement to the Securities and Exchange Commission.

*** Denotes a management contract or compensatory plan or arrangement.



						Utilized
	October 1, 2016		Charge to Income			Cash			Non-Cash		December, 2016
Severance and termination related costs	$	2.8	$	—		$	(1.8	)	$	—	$	1.0
Contract termination costs	3.6		—			(0.3		)	—		3.3
Net gain on asset sales	—		(1.3		)	1.3			—		—
Total	$	6.4	$	(1.3	)	$	(0.8	)	$	—	$	4.3



(in millions, except per share data)
	For the Quarter Ended December 31,
	2017		2016
Net earnings	$	60.4	$	95.6
Basic average shares outstanding	60.2		61.8
Effect of dilutive restricted stock equivalents	0.4		0.6
Effect of dilutive performance shares	0.9		0.5
Diluted average shares outstanding	61.5		62.9
Basic earnings per common share	$	1.00	$	1.55
Diluted earnings per common share	$	0.98	$	1.52



	December 31, 2017		September 30, 2017
Americas	$	510.0	$	533.9
EMEA	246.3		240.3
Asia Pacific	489.8		457.9
Total segment assets	$	1,246.1	$	1,232.1
Corporate	67.0		137.7
Goodwill and other intangible assets	451.0		453.8
Total assets	$	1,764.1	$	1,823.6



	December 31, 2017			September 30, 2017
Senior Secured Term Loan B Facility, net of discount due 2022	$	391.0		$	392.0
5.50% Senior Notes due 2025	600.0			600.0
Total long-term debt, including current maturities	991.0			992.0
Less current portion	(4.0		)	(4.0		)
Less unamortized debt discount and debt issuance fees	(9.1		)	(9.5		)
Total long-term debt	$	977.9		$	978.5



	Level 2
Liabilities at estimated fair value:	December 31, 2017			September 30, 2017
Deferred Compensation	$	(41.8	)	$	(41.0	)
Derivatives - Foreign Currency Contracts	(3.7		)	(4.9		)
Derivatives - Interest Rate Swap	0.7			(1.3		)
Exit lease liability	—			(0.3		)
Net Liabilities at estimated fair value	$	(44.8	)	$	(47.5	)



	Foreign Currency Translation Adjustments			Pension Activity			Hedging Activity			Interest Rate Swap			Total
Balance at September 30, 2017	$	(93.1	)	$	(139.4	)	$	(4.5	)	$	(1.8	)	$	(238.8	)
OCI before reclassifications	7.4			—			(0.7		)	0.9			7.6
Reclassifications to earnings	—			1.2			1.9			0.4			3.5
Balance at December 31, 2017	$	(85.7	)	$	(138.2	)	$	(3.3	)	$	(0.5	)	$	(227.7	)



Total Net Sales (In millions - Unaudited)
Quarter Ended December 31, 2017
Total Net Sales	Q1		% Chg
Net sales - FY '17	$	559.6
Organic	5.9		1.1	%
Impact of currency	7.8		1.3	%
Net sales - FY '18	$	573.3	2.4	%