UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended ~~June 30, 2019~~March 31, 2020



☐	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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

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. ☐

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

Indicate the number of shares of Energizer Holdings, Inc. common stock, $.01 par value, outstanding as of the close of business on ~~August 2, 2019: 68,902,033.~~May 5, 2020: 68,457,266.



INDEX
	Page
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Consolidated Statements of Earnings and Comprehensive Income (Condensed) for the ~~Quarter~~Quarters and ~~Nine~~Six Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	4

Consolidated Balance Sheets (Condensed) as of ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018~~2019	5

Consolidated Statements of Cash Flows (Condensed) for the ~~Nine~~Six Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	6

Consolidated Statements of Shareholders' Equity/(Deficit) (Condensed) for the ~~Nine~~Six Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	7

Notes to Consolidated (Condensed) Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3938

Item 3. Quantitative and Qualitative Disclosures About Market Risk	5355

Item 4. Controls and Procedures	5557

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	5658

Item 1A. Risk Factors	5658

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 6. Exhibits	60

EXHIBIT INDEX	61

SIGNATURES	6364

ENERGIZER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

(Condensed)

(In millions, except per share data - Unaudited)


	For the Quarter Ended June 30,						For the Nine Months Ended June 30,						For the Quarter Ended March 31,						For the Six Months Ended March 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Net sales	$	647.2		$	392.8		$	1,775.5		$	1,340.5		$	587.0		$	556.4		$	1,323.8		$	1,128.3
Cost of products sold	400.9			216.7			1,059.5			717.6			351.4			362.2			786.9			658.6
Gross profit	246.3			176.1			716.0			622.9			235.6			194.2			536.9			469.7
Selling, general and administrative expense	127.6			111.9			373.5			315.3			116.1			141.3			238.2			245.9
Advertising and sales promotion expense	34.3			22.9			99.9			81.1			22.8			24.7			69.6			65.6
Research and development expense	9.5			5.2			23.7			15.9			8.3			8.7			17.2			14.2
Amortization of intangible assets	14.4			2.8			30.1			8.4			14.2			12.5			28.0			15.7
Gain on sale of real estate	—			(4.6		)	—			(4.6		)
Interest expense	51.9			17.7			177.3			47.6			47.2			77.2			98.2			125.4
Other items, net	(0.8		)	(11.3		)	(13.9		)	(9.1		)	5.1			3.8			5.1			(13.1		)
Earnings before income taxes	9.4			31.5			25.4			168.3
Income tax provision	0.2			7.7			7.7			76.3
Earnings from continuing operations	9.2			23.8			17.7			92.0
Net loss from discontinued operations, net of income tax expense of $0.4 and a benefit of $2.5 for the quarter and nine months ended June 30, 2019, respectively.	(1.8		)	—			(12.8		)	—
Net earnings	7.4			23.8			4.9			92.0
Earnings/(loss) before income taxes													21.9			(74.0		)	80.6			16.0
Income tax provision/(benefit)													8.2			(11.7		)	21.1			7.5
Net earnings/(loss) from continuing operations													13.7			(62.3		)	59.5			8.5
Net loss from discontinued operations, net of income tax benefit of $13.7 and $6.2 for the quarter and six months ended March 31, 2020, respectively, and a benefit of $2.9 for the quarter and six months ended March 31, 2019													(131.4		)	(11.0		)	(131.1		)	(11.0		)
Net loss													(117.7		)	(73.3		)	(71.6		)	(2.5		)
Mandatory convertible preferred stock dividends	(4.4		)	—			(7.7		)	—			(4.1		)	(3.3		)	(8.1		)	(3.3		)
Net earnings/(loss) attributable to common shareholders	$	3.0		$	23.8		$	(2.8	)	$	92.0
Net loss attributable to common shareholders													$	(121.8	)	$	(76.6	)	$	(79.7	)	$	(5.8	)

Basic net earnings per common share - continuing operations	$	0.07		$	0.40		$	0.15		$	1.54
Basic net earnings/(loss) per common share - continuing operations													$	0.14		$	(0.97	)	$	0.74		$	0.08
Basic net loss per common share - discontinued operations	(0.03		)	—			(0.19		)	—			(1.90		)	(0.17		)	(1.89		)	(0.17		)
Basic net earnings/(loss) per common share	$	0.04		$	0.40		$	(0.04	)	$	1.54
Basic net loss per common share													$	(1.76	)	$	(1.14	)	$	(1.15	)	$	(0.09	)

Diluted net earnings per common share - continuing operations	$	0.07		$	0.39		$	0.15		$	1.50
Diluted net earnings/(loss) per common share - continuing operations													$	0.14		$	(0.97	)	$	0.74		$	0.08
Diluted net loss per common share - discontinued operations	(0.03		)	—			(0.19		)	—			(1.89		)	(0.17		)	(1.88		)	(0.17		)
Diluted net earnings/(loss) per common share	$	0.04		$	0.39		$	(0.04	)	$	1.50
Diluted net loss per common share													$	(1.75	)	$	(1.14	)	$	(1.14	)	$	(0.09	)

Weighted average shares of common stock - Basic	69.6			59.7			65.5			59.9			69.1			67.3			69.1			63.5
Weighted average shares of common stock - Diluted	70.6			61.4			66.5			61.4			69.5			67.3			69.8			64.6

Statements of Comprehensive Income:
Net earnings	$	7.4		$	23.8		$	4.9		$	92.0
Other comprehensive (loss)/income, net of tax (benefit)/expense
Net loss													$	(117.7	)	$	(73.3	)	$	(71.6	)	$	(2.5	)
Other comprehensive (loss)/income, net of tax expense/(benefit)
Foreign currency translation adjustments	(12.3		)	(31.5		)	4.3			(14.9		)	(35.2		)	20.3			(5.2		)	16.6
Pension activity, net of tax of $0.2 and $0.8, for the quarter and nine months ended June 30, 2019, respectively, and $0.4 and $1.2 for the quarter and nine months ended June 30, 2018, respectively.	0.9			3.0			3.0			4.8
Deferred (loss)/gain on hedging activity, net of tax of ($1.9) and ($3.7), for the quarter and nine months ended June 30, 2019, respectively, and $2.1 and $4.7 for the quarter and nine months ended June 30, 2018, respectively.	(6.4		)	6.7			(10.8		)	13.0
Total comprehensive (loss)/income	$	(10.4	)	$	2.0		$	1.4		$	94.9
Pension activity, net of tax of $1.2 and $1.7 for the quarter and six months ended March 31, 2020, and $0.3 and $0.6, for the quarter and six months ended March 31, 2019 respectively.													5.4			1.0			5.2			2.1
Deferred loss on hedging activity, net of tax of ($1.2) and ($2.2) for the quarter and six months ended March 31, 2020, respectively, and ($0.8) and ($1.8) for the quarter and six months ended March 31, 2019, respectively.													(4.2		)	(1.1		)	(8.8		)	(4.4		)
Total comprehensive (loss)/gain													$	(151.7	)	$	(53.1	)	$	(80.4	)	$	11.8

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	June 30, 2019			September 30, 2018			March 31, 2020			September 30, 2019
Current assets
Cash and cash equivalents	$	206.4		$	522.1		$	277.9		$	258.5
Trade receivables, less allowance for doubtful accounts of $6.1 and $4.0, respectively	341.1			230.4
Trade receivables, less allowance for doubtful accounts of $4.9 and $3.8, respectively							311.6			340.2
Inventories	524.3			323.1			470.7			469.3
Other current assets	196.0			95.5			205.9			177.1
Assets held for sale	807.6			—			—			791.7
Total current assets	2,075.4			1,171.1			1,266.1			2,036.8
Restricted cash	—			1,246.2
Property, plant and equipment, net	361.0			166.7			346.6			362.0
Operating lease assets							91.9			—
Goodwill	1,062.4			244.2			1,008.9			1,004.8
Other intangible assets, net	1,922.2			232.7			1,934.3			1,958.9
Deferred tax asset	52.9			36.9			21.9			22.8
Other assets	103.8			81.0			82.8			64.3
Total assets	$	5,577.7		$	3,178.8		$	4,752.5		$	5,449.6

Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt	$	10.0		$	4.0		$	91.3		$	—
Current portion of capital leases	1.6			—			1.7			1.6
Notes payable	41.5			247.3			184.1			31.9
Accounts payable	308.4			228.9			280.6			299.0
Current operating lease liabilities							14.0			—
Other current liabilities	359.2			271.0			321.2			333.6
Liabilities held for sale	384.9			—			—			402.9
Total current liabilities	1,105.6			751.2			892.9			1,069.0
Long-term debt	3,493.2			976.1			3,010.6			3,461.6
Long-term debt held in escrow	—			1,230.7
Operating lease liabilities							80.0			—
Deferred tax liability							173.0			170.6
Other liabilities	408.2			196.3			222.3			204.6
Total liabilities	5,007.0			3,154.3			4,378.8			4,905.8
Shareholders' equity
Common stock	0.7			0.6			0.7			0.7
Mandatory convertible preferred stock	—			—			—			—
Additional paid-in capital	867.2			217.8			853.9			870.3
Retained earnings	109.5			177.3			5.8			129.5
Treasury stock	(161.4		)	(129.4		)	(179.6		)	(158.4		)
Accumulated other comprehensive loss	(245.3		)	(241.8		)	(307.1		)	(298.3		)
Total shareholders' equity	570.7			24.5			373.7			543.8
Total liabilities and shareholders' equity	$	5,577.7		$	3,178.8		$	4,752.5		$	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 Nine Months Ended June 30,
2019 2018
Cash Flow from Operating Activities
Net earnings $ 4.9
$ 92.0
Loss from discontinued operations, net of tax (12.8 ) —
Net earnings from continuing operations 17.7

92.0
Depreciation and amortization 70.8
33.8
Deferred income taxes (1.2 ) 11.1
Share-based compensation expense 20.8
21.0
Gain on sale of real estate —
(4.6 )
Mandatory transition tax 0.7
28.2
Inventory step up 33.7
—
Non-cash items included in income, net (3.0 ) (2.1 )
Other, net (16.7 ) (7.8 )
Changes in current assets and liabilities used in operations (92.4 ) 16.4
Net cash from operating activities from continuing operations 30.4
188.0
Net cash used by operating activities from discontinued operations (23.4 ) —
Net cash from operating activities 7.0
188.0

Cash Flow from Investing Activities
Capital expenditures (36.4 ) (17.2 )
Proceeds from sale of assets 0.1
6.1
Acquisitions, net of cash acquired (2,453.8 ) —
Net cash used by investing activities from continuing operations (2,490.1 ) (11.1 )
Net cash used by investing activities from discontinued operations (403.1 ) —
Net cash used by investing activities (2,893.2 ) (11.1 )

Cash Flow from Financing Activities
Cash proceeds from issuance of debt with original maturities greater than 90 days 1,800.0
—
Payments on debt with maturities greater than 90 days (513.8 ) (3.0 )
Net (decrease)/increase in debt with original maturities of 90 days or less (204.5 ) 70.6
Debt issuance costs (40.1 ) (1.4 )
Net proceeds from issuance of mandatory convertible preferred stock 199.5
—
Net proceeds from issuance of common stock 205.3
—
Dividends paid on mandatory convertible preferred stock (4.0 ) —
Dividends paid on common stock (61.7 ) (52.3 )
Common stock purchased (45.0 ) (50.0 )
Taxes paid for withheld share-based payments (7.2 ) (1.8 )
Net cash from/(used by) financing activities from continuing operations 1,328.5
(37.9 )
Net cash used by financing activities from discontinued operations (2.9 ) —
Net cash from/(used by) financing activities 1,325.6
(37.9 )

Effect of exchange rate changes on cash (1.3 ) (6.1 )

Net (decrease)/increase in cash, cash equivalents, and restricted cash from continuing operations (1,132.5 ) 132.9
Net decrease in cash, cash equivalents, and restricted cash from discontinued operations (429.4 ) —
Net (decrease)/increase in cash, cash equivalents, and restricted cash (1,561.9 )
132.9
Cash, cash equivalents, and restricted cash, beginning of period 1,768.3
378.0
Cash, cash equivalents, and restricted cash, end of period $ 206.4

$ 510.9



	For the Six Months Ended March 31,
	2020			2019
Cash Flow from Operating Activities
Net loss	$	(71.6	)	$	(2.5	)
Net loss from discontinued operations	(131.1		)	(11.0		)
Net earnings from continuing operations	59.5			8.5
Non-cash integration and restructuring charges	8.1			—
Depreciation and amortization	56.1			40.0
Deferred income taxes	2.6			0.2
Share-based compensation expense	15.9			14.1
Mandatory transition tax	—			1.5
Inventory step up	—			27.2
Non-cash items included in income, net	14.4			(5.8		)
Other, net	(0.1		)	(3.5		)
Changes in current assets and liabilities used in operations	(57.3		)	(69.2		)
Net cash from operating activities from continuing operations	99.2			13.0
Net cash used by operating activities from discontinued operations	(12.9		)	(11.2		)
Net cash from operating activities	86.3			1.8

Cash Flow from Investing Activities
Capital expenditures	(27.7		)	(20.7		)
Proceeds from sale of assets	1.5			0.1
Acquisitions, net of cash acquired	(4.5		)	(2,403.8		)
Net cash used by investing activities from continuing operations	(30.7		)	(2,424.4		)
Net cash from/(used by) investing activities from discontinued operations	305.9			(450.6		)
Net cash from/(used by) investing activities	275.2			(2,875.0		)

Cash Flow from Financing Activities
Cash proceeds from issuance of debt with original maturities greater than 90 days	365.0			1,800.0
Payments on debt with maturities greater than 90 days	(747.2		)	(438.4		)
Net increase/(decrease) in debt with original maturities of 90 days or less	150.3			(239.1		)
Debt issuance costs	(0.9		)	(40.1		)
Net proceeds from issuance of mandatory convertible preferred stock	—			199.5
Net proceeds from issuance of common stock	—			205.3
Dividends paid on mandatory convertible preferred stock	(8.1		)	—
Dividends paid on common stock	(43.7		)	(40.8		)
Common stock purchased	(45.0		)	—
Taxes paid for withheld share-based payments	(9.7		)	(7.1		)
Net cash (used by)/from financing activities from continuing operations	(339.3		)	1,439.3
Net cash used by financing activities from discontinued operations	(1.1		)	(1.0		)
Net cash (used by)/from financing activities	(340.4		)	1,438.3

Effect of exchange rate changes on cash	(1.7		)	(0.5		)

Net decrease in cash, cash equivalents, and restricted cash from continuing operations	(272.5		)	(972.6		)
Net increase/(decrease) in cash, cash equivalents, and restricted cash from discontinued operations	291.9			(462.8		)
Net increase/(decrease) in cash, cash equivalents, and restricted cash	19.4			(1,435.4		)
Cash, cash equivalents, and restricted cash, beginning of period	258.5			1,768.3
Cash, cash equivalents, and restricted cash, end of period	$	277.9		$	332.9

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																			Number of Shares			Amount
	Preferred Stock	Common Stock		Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive (Loss)/Income			Total Shareholders' Equity/(Deficit)			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, 2018	—	59,608		$	—	$	0.6	$	217.8		$	177.3		$	(129.4	)	$	(241.8	)	$	24.5
September 30, 2019																							2,156	68,902		$	—	$	0.7	$	870.3		$	129.5		$	(298.3	)	$	(158.4	)	$	543.8
Net earnings from continuing operations	—	—		—		—		—			70.8			—			—			70.8			—	—		—		—		—			45.8			—			—			45.8
Net earnings from discontinued operations																							—	—		—		—		—			0.3			—			—			0.3
Share based payments	—	—		—		—		6.5			—			—			—			6.5			—	—		—		—		7.2			—			—			—			7.2
Activity under stock plans	—	290		—		—		(16.1		)	(3.6		)	12.6			—			(7.1		)	—	374		—		—		(24.9		)	(1.1		)	—			16.6			(9.4		)
Dividends to 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		$	(116.8	)	$	(247.7	)	$	70.4
Net loss from continuing operations	—	—		—		—		—			(62.3		)	—			—			(62.3		)
Net loss from discontinued operations	—	—		—		—		—			(11.0		)	—			—			(11.0		)
Share based payments	—	—		—		—		7.6			—			—			—			7.6
Issuance of common stock	—	9,966				0.1		445.7			—			—			—			445.8
Issuance of preferred stock	2,156	—		—		—		199.5			—			—			—			199.5
Activity under stock plans	—	11		—		—		(0.5		)	—			0.5			—			—
Dividends to common shareholders ($0.30 per share)	—	—		—		—		—			(21.6		)	—			—			(21.6		)	—	—		—		—		—			(21.4		)	—			—			(21.4		)
Dividends to preferred shareholders ($1.83 per share)	—	—		—		—		—			(3.3		)	—			—			(3.3		)
Dividends to preferred shareholders ($1.875 per share)																							—	—		—		—		—			(4.0		)	—			—			(4.0		)
Other comprehensive income	—	—		—		—		—			—			—			20.2			20.2			—	—		—		—		—			—			25.2			—			25.2
March 31, 2019	2,156	69,875		$	—	$	0.7	$	860.5		$	127.9		$	(116.3	)	$	(227.5	)	$	645.3
December 31, 2019																							2,156	69,276		$	—	$	0.7	$	852.6		$	149.1		$	(273.1	)	$	(141.8	)	$	587.5
Net earnings from continuing operations	—	—		—		—		—			9.2			—			—			9.2			—	—		—		—		—			13.7			—			—			13.7
Net loss from discontinued operations	—	—		—		—		—			(1.8		)	—			—			(1.8		)	—	—		—		—		—			(131.4		)	—			—			(131.4		)
Share based payments	—	—		—		—		6.7			—			—			—			6.7			—	—		—		—		8.7			—			—			—			8.7
Common stock purchased	—	(1,036	)	—		—		—			—			(45.0		)	—			(45.0		)	—	(980	)	—		—		—			—			—			(45.0		)	(45.0		)
Activity under stock plans	—	1		—		—					—			(0.1		)	—			(0.1		)	—	36		—		—		(1.7		)	(0.1		)	—			1.5			(0.3		)
Deferred compensation plan																							—	125		—		—		(5.7		)				—			5.7			—
Dividends to common shareholders ($0.30 per share)	—	—		—		—		—			(21.4		)	—			—			(21.4		)	—	—		—		—		—			(21.4		)	—			—			(21.4		)
Dividends to preferred shareholders ($1.875 per share)	—	—		—		—		—			(4.4		)	—			—			(4.4		)	—	—		—		—		—			(4.1		)	—			—			(4.1		)
Other comprehensive loss	—	—		—		—		—			—			—			(17.8		)	(17.8		)	—	—		—		—		—			—			(34.0		)	—			(34.0		)
June 30, 2019	2,156	68,840		$	—	$	0.7	$	867.2		$	109.5		$	(161.4	)	$	(245.3	)	$	570.7
March 31, 2020																							2,156	68,457		$	—	$	0.7	$	853.9		$	5.8		$	(307.1	)	$	(179.6	)	$	373.7

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 Treasury Stock Accumulated Other Comprehensive (Loss)/Income Total Shareholders' Equity/(Deficit)
September 30, 2017 —
60,709
$ —
$ 0.6
$ 196.7
$ 198.7
$ (72.1 ) $ (238.8 ) $ 85.1
Net earnings —
—
—
—
—
60.4
—
—
60.4
Adoption of ASU 2016-16 —
—
—
—
—
(59.2 ) —
—
(59.2 )
Share based payments —
—
—
—
6.7
—
—
—
6.7
Common stock purchased —
(1,126 ) —
—
—
—
(50.0 ) —
(50.0 )
Activity under stock plans —
91
—
—
(4.8 ) (0.8 ) 3.8
—
(1.8 )
Dividends to shareholders ($0.29 per share) —
—
—
—
—
(18.7 ) —
—
(18.7 )
Other comprehensive income —
—
—
—
—
—
—
11.1
11.1
December 31, 2017 —
59,674
$ —
$ 0.6
$ 198.6
$ 180.4
$ (118.3 ) $ (227.7 ) $ 33.6
Net earnings —
—
—
—
—
7.8
—
—
7.8
Adoption of ASU 2018-02 —
—
—
—
—
20.1
—
(20.1 ) —
Share based payments —
—
—
—
7.3
—
—
—
7.3
Activity under stock plans —
12
—
—
(0.5 ) —
0.6
—
0.1
Dividends to shareholders ($0.29 per share) —
—
—
—
—
(17.8 ) —
—
(17.8 )
Other comprehensive income —
—
—
—
—
—
—
13.7
13.7
March 31, 2018 —
59,686
$ —
$ 0.6
$ 205.4
$ 190.5
$ (117.7 ) $ (234.1 ) $ 44.7
Net earnings —
—
—
—
—
23.8
—
—
23.8
Share based payments —
—
—
—
7.0
—
—
—
7.0
Deferred compensation plan —
—
—
—
12.0
—
—
—
12.0
Dividends to shareholders ($0.29 per share) —
—
—
—
—
(17.9 ) —
—
(17.9 )
Other comprehensive loss —
—
—
—
—
—
—
(21.8 ) (21.8 )
June 30, 2018 —
59,686
$ —
$ 0.6
$ 224.4
$ 196.4
$ (117.7 ) $ (255.9 ) $ 47.8



	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, 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
Net loss from continuing operations	—	—	—		—		—			(62.3		)	—			—			(62.3		)
Net loss from discontinued operations	—	—	—		—		—			(11.0		)	—			—			(11.0		)
Share based payments	—	—	—		—		7.6			—			—			—			7.6
Issuance of common stock	—	9,966	—		0.1		445.7			—			—			—			445.8
Issuance of preferred stock	2,156	—	—		—		199.5			—			—			—			199.5
Activity under stock plans	—	11	—		—		(0.5		)	—			—			0.5			—
Dividends to common shareholders ($0.30 per share)	—	—	—		—		—			(21.6		)	—			—			(21.6		)
Dividends to preferred shareholders ($1.83 per share)	—	—	—		—		—			(3.3		)	—			—			(3.3		)
Other comprehensive income	—	—	—		—		—			—			20.2			—			20.2
March 31, 2019	2,156	69,875	$	—	$	0.7	$	860.5		$	127.9		$	(227.5	)	$	(116.3	)	$	645.3

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~~distributor of household batteries, specialty batteries, ~~and~~ portable lights, and automotive appearance, performance, refrigerants and freshener products.

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~~Automotive appearance, performance, refrigerants and ~~marketer of automotive fragrance and appearance products. The Company's brands include~~freshener products are sold under the Refresh Your Car!®, California Scents®, Driven®, Bahama & Co.®, LEXOL®, Eagle One®, Armor All®, STP®, and ~~Eagle One®. On July 2, 2018, Energizer acquired~~A/C PRO® brands following the ~~Nu Finish® and Scratch Doctor® brands to add to its automotive appearance offerings.~~

~~On January 2,~~fiscal 2019 Energizer expanded its battery portfolio with the acquisitions of Spectrum Holdings, Inc.’s (Spectrum) global battery, lighting, and portable power business (Battery Acquisition). The Battery Acquisition included the Rayovac® and Varta® brands (Acquired Battery Business).

~~On January 28, 2019, Energizer further expanded its auto care portfolio with the acquisitions~~acquisition of Spectrum's global auto care business (Auto Care Acquisition). ~~The Auto Care Acquisition included~~Refer to Note 3, Acquisitions, for additional discussion on the ~~Armor All®, STP®, and A/C PRO® brands (Acquired Auto Care Business).~~fiscal 2019 acquisitions.

On ~~May 29, 2019,~~January 2, 2020, the Company ~~entered into a definitive Acquisition Agreement (the “Acquisition Agreement”) with VARTA Aktiengesellschaft (VARTA AG) to divest~~sold the Varta® consumer battery business in the Europe, Middle East and Africa regions, including manufacturing and distribution facilities in Germany (Divestment Business)~~. The Company will sell the Divestment Business~~ to VARTA Aktiengesellschaft (VARTA AG) for ~~an aggregate~~a contractual purchase price of €180.0, subject to purchase price adjustments (Varta Divestiture). This business was acquired as part of the Battery Acquisition. Pursuant to the terms of the ~~acquisition agreement with Spectrum for the~~ Battery Acquisition agreement, Spectrum ~~will~~also contributed cash proceeds toward this sale. Total cash proceeds received, including related hedging arrangements, were $345.8 and the Company recorded a pre-tax loss of $137.6. The cash proceeds are subject to a working capital settlement and other contractual adjustments which is expected to be ~~contributing an additional $200.0~~completed in the third fiscal quarter. Refer to ~~Energizer in connection with the divestiture.~~Note 4, Divestment, for further discussion.

Basis of Presentation - The accompanying Consolidated (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 Consolidated (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 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, ~~2018~~2019 included in the Annual Report on Form 10-K dated November ~~16, 2018.~~19, 2019.

~~On January 2, 2019, the Company completed the Battery Acquisition. The European Commission approved the acquisition conditioned on the divestiture~~As a result of the Divestment Business. On May 29, 2019, the Company signed a definitive agreement for the sale of the Divestment Business to VARTA AG and expects to complete this divestiture by the end of calendar year 2019, subject to customary closing conditions. As a result,Varta Divestiture, the assets and liabilities associated with the Divestment Business ~~have been~~as of September 30, 2019 were classified as held for sale in the accompanying Consolidated (Condensed) Balance ~~Sheets and the~~Sheet. There were no assets or liabilities from these operations as of March 31, 2020. The respective operations of the Divestment Business, including the loss recorded on divestment, for the three and six months ended March 31, 2020 and 2019 have also been classified as discontinued operations in the accompanying Consolidated (Condensed) Statements of Earnings and Comprehensive Income and Statements of Cash Flows. ~~See~~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 -~~In the prior quarter, the Company early adopted ASU 2017-12,~~ ~~Targeted Improvements to Accounting for Hedging Activities,~~ on a modified retrospective basis effective October 1, 2018. This update simplifies hedge accounting and decreases complexity for both the preparation and understanding of hedging disclosures in the financial statements. Upon adoption, the Company reclassified $4.8 of

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

hedging settlement gains for the six months ended March 31, 2019 from Other items, net and into Cost of products sold. The gains were related to our currency hedges on payment of inventory purchases and will now be recorded in Cost of products sold to align with the new guidance. The Company recorded gains of $6.7 related to these hedging programs during the nine months ended June 30, 2019. The Company also began a zinc hedging program in the second quarter. See additional discussion in Note 13, Financial Instruments and Risk Management.

Effective October 1, ~~2018,~~2019, the Company adopted ASU ~~2014-09,~~ ~~Revenue from Contracts with Customers~~, on a modified retrospective basis for all contracts as of the effective date. This guidance provides a single comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries and across capital markets. There was no material impact to retained earnings as a result of the adoption. See Note 2, Revenue Recognition, for additional discussion.

~~Effective October 1, 2018, the Company early adopted ASU 2018-15,~~ ~~Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract~~. This update requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement similar to internal-use software guidance. The Company will defer and recognize allowable implementation costs for future projects. Capitalized implementation costs were not material for the quarter and nine months ended June 30, 2019.

~~Effective October 1, 2018, the Company adopted 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. The Company has determined that this new guidance has no immediate impact on the Company's consolidated financial position, results of operations or cash flows.

~~Recently Issued Accounting Pronouncements~~2016-02 ~~- On February 25, 2016, the FASB issued ASU 2016-02,~~and related standards (collectively ASC 842, Leases). This ~~update~~new guidance 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

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

initial direct costs. Energizer ~~beginning October 1, 2019. Energizer is~~also made the policy elections upon adoption for the exclusion of short term leases on the balance sheet and to not separate lease and non-lease components.

The adoption of ASC 842, Leases, resulted in the ~~process~~recognition of additional assets and corresponding liabilities on the Consolidated (Condensed) 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 (Condensed) Statement of Cash Flows and the Consolidated (Condensed) Statement of Shareholders' Equity/(Deficit), including retained earnings. Refer to Note 10, Leases, for further information.

Recently Announced Accounting Pronouncements - In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendment provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on contracts, hedging relationships and other transactions that reference LIBOR. These updates are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently evaluating our contracts and the ~~impact the guidance will have on its financial statements.~~optional expedients provided by this update.

(2) Revenue Recognition

~~Effective for the Company October 1, 2018, ASU 2014-09,~~ ~~Revenue from Contracts with Customers,~~ introduced a five-step model for revenue recognition. In this new model, each contract should be reviewed and analyzed to determine its performance obligations, items affecting the transaction price, how to allocate the transaction price to the performance obligations and when to recognize revenue. The Company performed a review of its contracts and accounting policies considering the new revenue model. Through this review the Company determined that there was no material impact to our financial statements. The Company's revenue recognition policy, controls and processes have been updated to align with the new revenue recognition model.

~~Nature of Our Business~~

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.

Our Americas segment sales are comprised of North America and Latin America market groups. North America sales are generally through large retailers with nationally or regionally recognized brands. Latin America sales are generally through distributors or sales by wholesalers or small retailers who may not have national or regional presence.

Our International segment sales are comprised of modern trade, developing and distributor market groups. Modern trade, which is most prevalent in Western Europe and more developed economies throughout the world, generally refers to sales through large retailers with nationally or regionally recognized brands. Developing markets generally

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

include sales by wholesalers or small retailers who may not have a national or regional presence. Distributors are utilized in other markets where the Company does not have a direct sales force. Each market's determination is based on the predominant customer type or sales strategy utilized in the market.

~~Supplemental product and market information is presented below for revenues from external customers for the quarter and nine months ended June 30, 2019 and 2018:~~

For the Quarter Ended June 30, For the Nine Months Ended June 30,
Net Sales 2019 2018 2019 2018
Batteries $ 457.2
$ 350.1
$ 1,398.5
$ 1,204.9
Auto Care 160.8
24.1
289.9
68.9
Lights and Licensing 29.2
18.6
87.1
66.7
Total Net Sales $ 647.2

$ 392.8

$ 1,775.5

$ 1,340.5

For the Quarter Ended June 30, For the Nine Months Ended June 30,
2019 2018 2019 2018
Net Sales
North America $ 410.3
$ 216.5
$ 1,075.2
$ 748.1
Latin America 54.8
24.8
145.0
90.4
Americas 465.1
241.3
1,220.2
838.5
Modern Markets 101.9
81.3
331.8
295.1
Developing Markets 47.6
44.9
142.2
136.2
Distributors Markets 32.6
25.3
81.3
70.7
International 182.1
151.5
555.3
502.0
Total Net Sales $ 647.2
$ 392.8
$ 1,775.5
$ 1,340.5

~~When Performance Obligations are Satisfied~~

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.

~~Transaction Price~~

~~In accordance with the guidance, the Company measures revenue as the amount of consideration~~Supplemental product and market information is presented below for which it expects to be entitled in exchange for transferring goods. Net sales reflect the transaction prices for contracts, which include units shipped at selling list prices reduced by variable consideration as determined by the terms of each individual contract. Discounts are offered torevenues from external customers for ~~early payment~~the quarters and ~~an estimate of the discount is recorded as a reduction of net sales in the same period as the sale.~~six months ended March 31, 2020 and 2019:

The Company offers a variety of programs, primarily to its retail customers, designed to promote sales of its products. Such programs require periodic payments and allowances based on estimated results of specific programs. These programs are considered variable consideration and are recorded as a reduction to net sales at the time revenue is recognized. Methodologies for determining these provisions are dependent on specific customer pricing and promotional practices, which range from contractually fixed percentage price reductions to reimbursement based on actual occurrence or performance. Where applicable, future reimbursements are estimated based on a combination of historical patterns and future expectations regarding specific in-market product performance. The Company accrues, at the time of sale, the estimated total payments and allowances associated with each transaction. Customers redeem trade promotions in the form of payments from the accrued trade allowances or invoice credits against trade receivables. Additionally, the Company offers programs directly to



	For the Quarter Ended March 31,				For the Six Months Ended March 31,
Net Sales	2020		2019		2020		2019
Batteries	$	427.7	$	419.4	$	1,049.6	$	941.3
Auto Care	130.2		108.6		208.9		129.1
Lights and Licensing	29.1		28.4		65.3		57.9
Total Net Sales	$	587.0	$	556.4	$	1,323.8	$	1,128.3

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

~~consumers~~



	For the Quarter Ended March 31,				For the Six Months Ended March 31,
	2020		2019		2020		2019
Net Sales
North America	$	360.3	$	323.9	$	814.0	$	664.9
Latin America	49.6		57.7		110.4		90.2
Americas	409.9		381.6		924.4		755.1
Modern Markets	101.1		102.5		243.9		229.9
Developing Markets	46.2		44.9		97.4		94.6
Distributors Markets	29.8		27.4		58.1		48.7
International	177.1		174.8		399.4		373.2
Total Net Sales	$	587.0	$	556.4	$	1,323.8	$	1,128.3

(3) Acquisitions

Custom Accessories Europe Acquisition - On January 31, 2020, the Company entered into a share purchase agreement to ~~promote~~acquire Custom Accessories Europe Group International Limited (“CAE”) for $1.9 in cash. CAE is a well-established marketer of branded automotive accessories throughout the ~~sale of its products.~~United Kingdom and Europe. CAE partners with major automotive accessory brand owners to identify and develop complimentary brand extensions supported by sourcing and distribution activities. The purchase agreement has potential earnout payments that could increase the purchase price up to $9.9 if certain financial metrics are achieved over the next three years. The Company ~~continually assesses~~has estimated the ~~adequacy of accruals for customer~~preliminary purchase price to be $7.0 and ~~consumer promotional program costs not yet paid. To~~has preliminarily allocated the ~~extent total program payments differ from estimates, adjustments may be necessary. Historically, these adjustments have not been material.~~

Our standard sales terms generally include payments within 30 to 60 days and are final with returns or exchanges not permitted unless a special exception is made. Reserves are established based on historical data and recorded in cases where the right of return does exist for a particular sale. The Company does not offer warranties on products.

The Company’s contracts with customers do not have significant financing components or non-cash consideration and the Company does not have unbilled revenue or significant amounts of prepayments from customers. Revenue is recorded net of the taxes we collect on behalf of governmental authorities which are generally included in thepurchase price to the ~~customer. Shipping~~assets acquired and ~~handling activities are accounted~~liabilities assumed, resulting in identified intangible assets for ~~as contract fulfillment costs and recorded in Cost~~vendor relationships of ~~products sold.~~

~~(3) Acquisitions~~approximately $5.7, which will be amortized over the three-year lives of the vendor agreements.

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 ~~initial~~final cash paid after contractual and ~~estimated~~ working capital adjustments was ~~$1,956.2.~~$1,962.4. Included in ~~the above~~that amount is $400.0 of cash consideration that has ~~preliminarily~~ been allocated to the Divestment business discussed below. Energizer funded the Battery Acquisition through net proceeds from the issuance of senior notes, term loans and cash on hand. See Note 10, Debt, for additional discussion on the senior notes and term loans issued.Business.

~~Success fees of $13.0 were earned by financial advisers in January 2019 after closing the acquisition. This was in addition to the $2.0 paid in January 2018 for services rendered on the transaction.~~

On December 11, 2018, the European Commission approved the acquisition of the Acquired Battery Business conditioned on the divestiture of the Divestiture Business. Energizer will retain the rights to the Varta brand in Latin America and Asia Pacific, as well as Spectrum’s global Rayovac branded consumer and hearing aid batteries business. On May 29, 2019, the Company signed a definitive agreement for the sale of the Divestment Business to VARTA AG and expects to complete this divestiture by the end of calendar year 2019, subject to customary closing conditions. The assets and liabilities associated with this business have been reported as held for sale both on the preliminary purchase price allocation and the Consolidated (Condensed) Balance Sheets as of June 30, 2019.

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 prior quarter ended December 31, 2019, the Company completed the valuation analysis for the Battery Acquisition ~~based on our preliminary valuation analysis. Certain preliminary values, including Inventory, Property, plant~~ and ~~equipment, Intangible assets, Deferred taxes and~~no significant changes were made to the resultant Goodwill, are not yet finalized pending the final purchase price allocation and are subject to change as additional information is obtained and the final valuation is completed. Preliminary estimates will be finalized within one year of the date of acquisition. valuation.

For purposes of the allocation, the Company determined a ~~preliminary~~ 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 ~~preliminary~~ fair value adjustment for the inventory of ~~$14.2~~$14.6 was recorded as expense to Cost of products sold ~~in the second quarter 2019~~ as that inventory was ~~sold.~~ 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 such as~~approach. The fair value of the ~~relief from royalty method~~acquired trade names and customer relationships was determined by applying the multi-period excess earnings ~~method.~~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 Company is still evaluating the current and deferred tax implications and the accounting implications of the asset versus stock deal by legal jurisdiction, as well as the varying statutory tax rates across the global business. The Company maintained the deferred balances from the carrying amount of the Acquired BatteryDivestment Business ~~as of January 2, 2019 until that evaluation is completed. Preliminary step ups on the deferred tax liabilities have been recorded based on~~included the valuation of ~~the~~Inventory, Property, plant and equipment and Intangible ~~assets.~~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

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

~~Assets~~was also allocated to the Divestment Business. The assets and liabilities of the Divestment Business were included as held for sale ~~include~~on the valuation of Inventory, Property, plant and equipment and Intangible assets consistent with the valuation methods discussed above. The preliminary fair value adjustment for the inventory of $11.2 was recorded as expense in the results from discontinued operations in the second quarter 2019 as that inventory was sold. A preliminary estimate of goodwill has also been allocated to the Assets held for sale.purchase price allocation.

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


Cash and cash equivalents	$	37.8		$	37.8
Trade receivables	59.4			54.2
Inventories	82.4			80.8
Other current assets	22.5			28.2
Assets held for sale	805.0			794.6
Property, plant and equipment, net	138.5			133.2
Goodwill	547.2			496.0
Other intangible assets, net	747.5			805.8
Other assets	14.1			10.3
Current portion of capital leases	(1.2		)	(1.2		)
Accounts payable	(39.2		)	(39.2		)
Other current liabilities	(24.8		)	(19.3		)
Long-term debt	(14.7		)	(14.7		)
Liabilities held for sale	(405.0		)	(394.6		)
Other liabilities	(13.3		)	(9.5		)
Net assets acquired	$	1,956.2		$	1,962.4

The table below outlines the purchased identifiable intangible assets of ~~$747.5:~~$805.8:


	Total		Weighted Average Useful Lives	Total		Weighted Average Useful Lives
Trade names	$	513.0	Indefinite	$	587.0	Indefinite
Proprietary technology	61.0		5.9	59.0		6.2
Customer relationships	173.5		15.0	159.8		15.0
Total Other intangible assets, net	$	747.5		$	805.8

During the quarter, the Company continued to review its allocation of fair value to assets acquired and liabilities assumed. The Company adjusted the allocation of goodwill between the assets held for sale of the Divestment Business and the remaining assets of the Battery Acquisition. The goodwill allocated to the Divestment business was decreased by $50.0.

Estimated asset valuations and assumed liabilities, including deferred income taxes, may be adjusted in subsequent filings as final purchase price allocations are completed. Any changes to the initial estimates of the fair value of assets and liabilities acquired will be allocated to residual goodwill.

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,~~Selling, general and administrative expense (SG&A) reductions and procurement efficiencies. ~~The assignment of goodwill to our reportable segments, as well as the allocation to Assets held for sale, is not currently complete.~~ The goodwill associated with this acquisition is deductible for tax purposes.

Auto Care Acquisition - On ~~November 15, 2018,~~January 28, 2019, Energizer ~~entered into a definitive~~completed the acquisition ~~agreement to acquire~~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

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

~~$937.5~~ $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 auto care portfolio.

On January 28, 2019, the Company completed the Auto Care Acquisition. The initial cash paid after contractual and estimated working capital adjustments was $938.7. Per the acquisition agreement, the equity consideration to Spectrum was determined by dividing the contractually committed common stock amount of $312.5 by the volume weighted average sales price (VWAP) per share of the Company's common stock for the 10 consecutive trading days immediately preceding November 15, 2018, subject to certain potential adjustments under such agreement. As a result, 5.3 million shares were issued to Spectrum on January 28, 2019. The equity consideration paid to Spectrum was fair valued at $240.5 based on the 5.3 million shares at the Energizer closing stock price of $45.55 on January 28, 2019. In addition, per the terms of the agreement, additional consideration of $36.8 was included in the above cash consideration paid to Spectrum based on the difference between the 10 day VWAP and the 20 day VWAP beginning with the 10th trading day immediately preceding November 15, 2018.

The Company funded a portion of the cash consideration of the Auto Care Acquisition with the issuance of new senior notes and the issuance of common stock and Series A mandatory convertible preferred stock in January 2019. Refer to Note 10, Debt, and Note 12, Shareholders' Equity, for further information on the debt and equity issuances, respectively.

Success fees of $6.0 were earned by a financial adviser in January 2019 after closing the acquisition. This was in addition to the $2.0 earned in November 2018 for services rendered on the transaction.

The Auto Care 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 Auto Care ~~Acquisition based on our preliminary~~Acquisition. During the quarter ended December 31, 2019, the Company completed the valuation ~~analysis. Certain preliminary values, including Inventory, Property, plant and equipment, Intangible assets, Deferred taxes and~~analysis for the ~~resultant Goodwill, are not yet finalized pending~~Auto Care Acquisition. The only

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

significant change in the ~~final~~analysis since the end of fiscal 2019 was the increase in purchase price ~~allocation and are subject to change as additional information is obtained and the final valuation is completed. Preliminary estimates will be finalized within one year~~ of ~~the date of acquisition.~~ $3.6 mentioned above.

For purposes of ~~the~~ allocation, the Company determined a ~~preliminary~~ 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 ~~preliminary~~ fair value adjustment for the inventory was ~~$19.5, of which $13.0~~$21.6 and ~~$6.5~~ was recorded ~~in the second and third quarter, respectively,~~ to Cost of products sold as the respective inventory was ~~sold.~~ 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 such as the relief from royalty method~~approach. The fair value of trade names and customer relationships acquired was determined by applying the multi-period excess earnings ~~method.~~

method under the income approach. The ~~Company is still evaluating~~fair value of proprietary technology acquired was determined by applying the ~~current and deferred tax implications and~~relief-from-royalty method under the accounting implications of the asset versus stock deal by legal jurisdiction, as well as the varying statutory tax rates across the global business. The Company maintained the deferred balances from the carrying amount of the Acquired Auto Care Business as of January 28, 2019 until that evaluation is completed. Preliminary step ups on the deferred tax liabilities have been recorded based on the valuation of the Property, plant and equipment and Intangible assets.

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

income approach.

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


Cash and cash equivalents	$	3.3		$	3.3
Trade receivables	42.1			39.7
Inventories	96.1			98.6
Other current assets	8.9			8.9
Property, plant and equipment, net	66.5			70.8
Goodwill	270.1			274.0
Other intangible assets, net	972.5			965.3
Deferred tax assets	12.1			4.2
Other assets	3.2			1.7
Current portion of capital leases	(0.4		)	(0.4		)
Accounts payable	(28.6		)	(28.6		)
Other current liabilities	(13.6		)	(10.9		)
Long-term debt	(31.9		)	(31.9		)
Other liabilities (deferred tax liabilities)	(221.1		)	(211.9		)
Net assets acquired	$	1,179.2		$	1,182.8

The table below outlines the purchased identifiable intangible assets of ~~$972.5:~~$965.3:


	Total		Weighted Average Useful Lives	Total		Weighted Average Useful Lives
Trade names	$	702.9	Indefinite	$	701.6	Indefinite
Trade names	16.7		15.0	15.4		15.0
Proprietary technology	113.5		9.8	113.5		9.8
Customer relationships	139.4		15.0	134.8		15.0
Total Other intangible assets, net	$	972.5		$	965.3

During the quarter, the Company continued its assessment of the value of inventory on the opening balance sheet. As a result it was determined that a $1.7 reduction to inventory, along with an offsetting increase to goodwill, was needed to adjust the preliminary allocation of fair value to assets acquired and liabilities assumed.

Estimated asset valuations and assumed liabilities, including deferred income taxes, will be adjusted in subsequent filings as final purchase price allocations are completed. Any changes to the initial estimates of the fair value of assets and liabilities acquired will be allocated to residual goodwill.

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~~SG&A reductions and procurement efficiencies. The ~~assignment of goodwill to our reportable segments is not currently complete. The~~ goodwill is not ~~deductible for tax purposes.~~

~~Nu Finish Acquisition -~~ On July 2, 2018, the Company acquired all of the assets of Reed-Union Corporation's automotive appearance business, including Nu Finish Car Polish and Scratch Doctor brands (Nu Finish Acquisition). The acquisition purchase price of $38.1 was funded through a combination of cash on hand and committed debt facilities. The revenue in the quarter and nine months ended June 30, 2019 associated with the Nu Finish Acquisition was $3.0 and $5.9, respectively, and earnings before income taxes was a loss of $0.6 and earnings of $0.2, respectively.

We have calculated fair values of assets and liabilities acquired for the Nu Finish Acquisition and completed our valuation analysis. 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

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

disposal and (b) a reasonable profit allowance for the selling effort of the acquiring entity. The fair value adjustment for the inventory of $0.2 was recorded as expense to Cost of products sold in the fourth quarter 2018 as that inventory was sold. The fair values of the Nu Finish Acquisition's identifiable intangible assets were estimated using variations of the income approach such as the relief from royalty method and the multi-period excess earnings method.

~~The purchase price allocation is as follows:~~

Trade receivables $ 2.4
Inventories 0.9
Goodwill 14.7
Other intangible assets, net 21.8
Accounts payable (1.7 )
Net assets acquired $ 38.1

~~The table below outlines the purchased identifiable intangible assets of $21.8:~~

Total
Weighted Average Useful Lives
Customer relationships $ 15.2

15.0
Trade names 4.2

14.0
Proprietary formula 2.4

11.0
Total Other intangible assets, net $ 21.8

14.4

The goodwill acquired in this acquisition is attributable to the workforce of the acquired business and the synergies expected to arise with this transaction. The acquired goodwill has been allocated to the Americas' reportable segment. The goodwill is deductible for tax purposes.

Pro Forma Financial Information- Pro forma net sales, Pro forma net earnings from continuing operations ~~Pro forma net earnings from continuing operations attributable to common shareholders~~ and Pro forma diluted net earnings per common share - continuing operations for the quarter and ~~nine~~six months ended ~~June 30,~~March 31, 2019 ~~and 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. Pro forma results for the CAE acquisition were not considered

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

material and, as such, are not included below. 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. ~~The Nu Finish Acquisition was immaterial for this disclosure and is only included for the periods owned by the Company.~~

The pro forma adjustments are based upon ~~preliminary~~ 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 June 30,				For the Nine Months Ended June 30,
	2019		2018		2019		2018			For the Quarter Ended March 31, 2019		For the Six Months Ended March 31, 2019
Pro forma net sales	$	647.2	$	684.0	$	2,000.4	$	2,077.2		$	578.5	$	1,353.2
Pro forma net earnings from continuing operations	14.2		37.5		113.6		9.1			16.1		103.2
Pro forma mandatory preferred stock dividends	4.1		4.1		12.2		12.2			4.1		8.1
Pro forma net earnings from continuing operations attributable to common shareholders	$	10.1	$	33.4	$	101.4	$	(3.1	)	$	12.0	$	95.1
Pro forma diluted net earnings per common share - continuing operations	$	0.14	$	0.47	$	1.43	$	(0.04	)	$	0.17	$	1.34
Pro forma weighted average shares of common stock - Diluted	70.6		71.4		71.0		71.4			71.0		71.0

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

The shares included in the above are adjusted to assume that the issuance of the common stock and ~~MCPS~~Mandatory Convertible Preferred Shares (MCPS) shares ~~issued~~ for the Auto Care Acquisition occurred as of October 1, 2017. For ~~all periods presented,~~the quarter and six months ended March 31, 2019, the MCPS conversion was anti-dilutive and not assumed in the calculation.

The unaudited pro forma data above includes the following significant adjustments ~~made to account~~ for certain costs in order to ~~adjust for~~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 ~~each~~the respective period:


	For the Quarter Ended June 30,				For the Nine Months Ended June 30,
Expense removed/(Additional Expense)	2019		2018		2019			2018
Expense removed/(Additional expense)											For the Quarter Ended March 31, 2019		For the Six Months Ended March 31, 2019
Inventory step up (1)	$	5.0	$	—	$	27.5		$	(26.5	)	$	22.5	$	22.0
Acquisition and integration costs (2)	—		13.2		30.1			(49.1		)	30.1		50.3
Interest and ticking fees on escrowed debt (3)	—		3.4		27.5			4.9			27.5		53.0
Gains on escrowed funds (4)	—		—		(12.0		)	—			—		(12.0		)

(1) The inventory step up was removed from ~~fiscal~~the quarter and six months ended March 31, 2019 ~~and recorded in the first quarter of fiscal 2018~~pro forma results as the inventory turn would have occurred in ~~that quarter.~~the first quarter of fiscal 2018.

(2) 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~~as those costs would have occurred in ~~the first quarter of~~ fiscal 2018 when the transaction is assumed to have occurred.

(3) 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~~interest expense amounts of ~~$50.0~~$47.6 and ~~$150.0~~$95.2 for the three and ~~nine~~six month periods, respectively, were included in the results above.

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

~~The pro-forma results above include restructuring charges recorded by the Auto Care Business of $7.6 and $14.7 during the three and nine months ended June 30, 2018, respectively.~~ Excluded from the above pro forma results is the ~~Write-down~~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~~business during the ~~nine~~six months ended ~~June 30,~~March 31, 2019. This loss was recorded as a direct result of the transaction and would not have impacted the combined ~~company~~Company results.

Net sales and Income/(loss) 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 Loss before income taxes includes the inventory fair value adjustment recorded for the acquisitions, but excludes all acquisition and integration costs as well as any additional interest incurred by the Company for the debt issuances to complete the acquisitions:

For the Quarter Ended June 30, 2019 For the Nine Months Ended June 30, 2019
Battery Acquisition Auto Care Acquisition Battery Acquisition Auto Care Acquisition
Net sales $ 109.1
$ 135.6
$ 209.0
$ 220.1
Inventory fair value adjustment —
6.5
14.2
19.5
Income/(loss) before income taxes 6.1
13.6
(6.3 ) 16.4

Acquisition and Integration Costs- The Company incurred pre-tax acquisition and integration costs related to the Battery ~~Acquisition, the~~and Auto Care ~~Acquisition,~~Acquisitions of $16.9 and ~~the Nu Finish Acquisition of $28.0 and $159.9~~$36.2 in the quarter and ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, respectively, and ~~$15.9~~$95.4 and ~~$41.0~~$131.9 for the quarter and ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, respectively.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

Pre-tax costs recorded in Costs of products sold were ~~$12.4~~$8.3 and ~~$44.1~~$15.2 for the quarter and ~~the nine~~six months ended ~~June 30,~~March 31, 2020, primarily related to the facility exit and restructuring related costs, discussed in Note 5, Restructuring. Pre-tax costs recorded in Costs of products sold were $31.7 for both the quarter and the six months ended March 31, 2019 ~~respectively,~~ and primarily related to the inventory fair value adjustment of ~~$6.5 and $33.7 for the quarter and nine months, respectively.~~$27.2.

Pre-tax acquisition and integration costs recorded in SG&A were ~~$15.1~~$8.1 and ~~$63.1~~$19.2 for the quarter and ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, respectively, related to the integration of the acquisitions, including consulting fees and ~~$22.4~~costs of integrating the information technology systems of the businesses. Pre-tax acquisition and ~~$44.6~~integration costs recorded in SG&A were $29.1 and $48.0 for the quarter and ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, respectively, ~~and~~ primarily related to acquisition success fees and legal, consulting and advisory fees to assist with obtaining regulatory approval around the globe and to plan for the closing and integration of the Battery ~~Acquisition~~ and Auto Care ~~Acquisition.~~Acquisitions.

For the quarter and ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020, the Company recorded ~~$0.3~~$0.6 and $1.0, respectively, in research and development.

Also included in the pre-tax acquisition costs for the ~~nine~~quarter and six months ended ~~June 30,~~March 31, 2019 was $33.2 and $65.6, respectively, of interest expense, including ticking fees, related to the escrowed debt for the Battery Acquisition and the financing fees incurred related to amending and issuing the debt for the Battery and Auto Care Acquisitions. ~~The quarter and nine months ended June 30, 2018 each included $3.4 and $6.3, respectively, related to debt for the Battery Acquisition.~~

Included in Other items, net for the quarter ended March 31, 2020 was $0.1 of pre-tax transition services income. Other items, net for the six months ended March 31, 2020 were pre-tax expenses of ~~$0.2 and pre-tax income of $13.2 in the three and nine months ended June 30, 2019, respectively. The quarter~~$0.8, which included ~~transition services income of $0.7 offset by~~ a ~~$0.9~~$2.2 loss related to the hedge contract on the ~~expected~~ proceeds from the ~~anticipated~~ Varta ~~Divestiture.~~Divestiture, offset by a $1.0 gain on the sale of assets and $0.4 transition services income.

~~The pre-tax~~In the quarter ended March 31, 2019, the Company incurred $1.5 of expense to settle hedge contracts of the acquired business and earned income of ~~$13.2~~$0.1 related to transition services agreements. During the first quarter of 2019, prior to closing on the Battery Acquisition, the Company held the funds from the escrowed debt offerings in a restricted cash account. Other items, net infor the ~~nine~~six months ended ~~June 30,~~March 31, 2019 ~~were primarily driven by the escrowed debt funds held in restricted cash prior to the closing of the Battery acquisition. The Company recorded~~also included a pre-tax gain of $9.0 related to the favorable movement in the escrowed USD restricted cash held in our European Euro functional entity ~~during the nine months ended June 30, 2019. The Company also recorded~~and interest income of $5.8 earned on the Restricted cash funds held in escrow associated with the Battery Acquisition during the nine months ended June 30, 2019. The Company also earned income related to transition services agreements of $0.8 for the nine months ended June 30, 2019. These income items were offset by $1.5 of expense to settle hedge contracts of the acquired business as well as the $0.9 loss related to the hedge contract on the expected proceeds from the anticipated Varta Divestiture.

During the quarter and nine months ended June 30, 2018, the Company also recorded a gain in Other items, net of $9.9 on foreign currency contracts which were entered into in June 2018 and locked in the U.S. dollar (USD) value of the Euro notes related to the Battery Acquisition. These contracts were terminated when the funds were placed into escrow on July 6, 2018. The Company also incurred $0.5 and $6.0 of tax withholding costs in the quarter and nine months ending June 30, 2018, related to anticipated cash movement to fund the acquisition.

(4) Divestment

As discussed in Note 1, Description of Business and Basis of Presentation, the Divestment Business was classified as discontinued operations in the accompanying Consolidated (Condensed) Statements of Earnings and Comprehensive Income and as held for sale in the accompanying Consolidated (Condensed) Balance ~~Sheets and~~Sheet as ~~discontinued operations in the accompanying Consolidated (Condensed) Statement~~ of ~~Earnings and Comprehensive Income.~~September 30, 2019.

On May 29, 2019, the Company entered into a definitive purchase agreement with VARTA AG to sell the Divestment Business for €180.0, subject to approval by the European Commission and certain purchase price adjustments. ~~Pursuant~~On January 2, 2020, the Company sold the business to VARTA AG and received cash proceeds of $345.8 from Varta AG and Spectrum, together with proceeds from related hedging arrangements. Spectrum contributed proceeds pursuant to the terms of the Battery Acquisition ~~agreement, Spectrum will be contributing an additional $200.0~~agreement. The cash proceeds are subject to ~~Energizer in connection with the divestiture. The total proceeds anticipated prior to contractual purchase price adjustments with VARTA AG is approximately $405. The Company estimates the~~a working capital settlement and other contractual adjustments ~~could be up to $100. The Divestment Business~~which is expected to be ~~sold by~~completed in the ~~end~~third fiscal quarter.

The Company has recorded a pre-tax loss of ~~calendar year 2019~~$137.6 for the divestment, which includes an estimate for the working capital settlement, contractual adjustments and recognition of tax and other indemnifications under the definitive purchase agreement. Under the definitive purchase agreement, the Company ~~anticipates recording a loss at~~indemnified VARTA AG for certain tax liabilities that existed as of the ~~time~~divestment date. As previously disclosed, Spectrum has further indemnified the Company for those liabilities that arose from the tax years prior to the Company's acquisition of ~~divestment, which would include~~ the ~~impact of any contractual adjustments.~~Divestment Business. An indemnification asset and liability, where necessary, has been recorded to reflect these arrangements.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

The following table summarizes the assets and liabilities of the Divestment Business classified as held for sale as of ~~June~~September 30, ~~2019. As~~2019:



	September 30, 2019
Assets
Trade receivables	$	50.9
Inventories	59.8
Other current assets	41.5
Property, plant and equipment, net	78.8
Goodwill	50.5
Other intangible assets, net	489.0
Other assets	21.2
Assets held for sale	$	791.7
Liabilities
Current portion of capital leases	$	5.3
Accounts payable	45.9
Notes payable	0.6
Other current liabilities	99.8
Long-term debt	23.5
Long term deferred tax liability	169.9
Other liabilities (1)	57.9
Liabilities held for sale	$	402.9

(1) Included in Other liabilities are pension liabilities of $42.4 related to the ~~Company did not own the business~~Divestment Business as of September 30, ~~2018, there are no Divestment Business assets or liabilities as of that period:~~

June 30, 2019
Assets
Trade receivables $ 41.1
Inventories 60.8
Other current assets 30.4
Property, plant and equipment, net 77.5
Goodwill 15.5
Other intangible assets, net 565.7
Other assets 16.6
Assets held for sale $ 807.6

Liabilities
Current portion of capital leases $ 5.4
Accounts payable 32.0
Notes payable 2.5
Other current liabilities 78.9
Long-term debt 26.7
Other liabilities (1) 239.4
Liabilities held for sale $ 384.9

~~(1) Included in other liabilities is deferred tax liabilities of $198.2 and pension liabilities of $40.3 related to the Divestment Business.~~2019, respectively.

The following table summarizes the components of ~~Loss~~Net loss from discontinued operations in the accompanying Consolidated (Condensed) Statement of Earnings and Comprehensive Income for the quarter and ~~nine~~six months ended ~~June 30,~~March 31, 2020 and 2019. As the Company acquired the business on January 2, 2019, there is no activity on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income for the three and nine months ended June 30, 2018:


	For the Quarter Ended			For the Nine Months Ended			For the Quarter Ended March 31,						For the Six Months Ended March 31,
	June 30, 2019			June 30, 2019			2020			2019			2020			2019
Net sales	$	69.9		$	150.1		$	—		$	80.2		$	115.8		$	80.2
Cost of products sold	52.5			122.3			—			69.8			88.2			69.8
Gross profit	17.4			27.8			—			10.4			27.6			10.4
Selling, general and administrative expense	18.1			39.2			0.6			21.1			18.0			21.1
Advertising and sales promotion expense	0.2			0.5			—			0.3			0.3			0.3
Research and development expense	0.2			0.2			—			—			0.8			—
Interest expense	3.7			10.4			6.9			6.7			12.1			6.7
TSA income							—			—			(3.8		)	—
Loss on sale of disposition							137.6			—			137.6			—
Other items, net	(3.4		)	(7.2		)	—			(3.8		)	(0.1		)	(3.8		)
Loss before income taxes from discontinued operations	(1.4		)	(15.3		)
Income tax expense (benefit)	0.4			(2.5		)
Loss before income taxes							(145.1		)	(13.9		)	(137.3		)	(13.9		)
Income tax benefit							(13.7		)	(2.9		)	(6.2		)	(2.9		)
Net loss from discontinued operations	$	(1.8	)	$	(12.8	)	$	(131.4	)	$	(11.0	)	$	(131.1	)	$	(11.0	)

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

Included in the Net loss from discontinued operations for the quarter and six months ended ~~June 30, 2019~~March 31, 2020, are divestment related pre-tax costs of ~~$4.2~~$0.6 and $1.7, respectively. Also included in the Net loss from discontinued operations for the quarter and six months ended March 31, 2020 is the write off of $6.9 of deferred financing fees related to the pre-payment of debt from the divestment proceeds. For the six months ended March 31, 2020 the Net loss from discontinued operations included $5.0 of allocated pre-tax interest ~~expense of $3.7. The nine~~expense.

Included in the Net loss from discontinued operations for the quarter and six months ended ~~June 30,~~March 31, 2019, ~~include~~are the inventory fair value pre-tax adjustment of $11.2, divestment related pre-tax costs of ~~$9.9,~~$5.7 and allocated pre-tax interest expense of ~~$9.9.~~$6.2.

(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 and six months ended March 31, 2020 are noted in the table below and were reflected in Cost of products sold on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income:



	For the Quarter Ended March 31, 2020		For the Six Months Ended March 31, 2020
Severance and related benefit costs	$	0.2	$	1.1
Accelerated depreciation & asset write-offs	2.5		5.9
Other exit costs⁽¹⁾	4.7		6.7
Total	$	7.4	$	13.7

(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 March 31, 2020, were incurred within the Americas and International segments in the amount of $6.9 and $0.5, respectively. The restructuring costs for the six months ended March 31, 2020 were incurred within the Americas and International segments in the amount of $12.8 and $0.9, respectively.

The following table summarizes the activity related to the restructuring for the six months ended March 31, 2020:



					Utilized
	September 30, 2019		Charge to Income		Cash		Non-Cash		March 31, 2020⁽¹⁾
Severance & termination related costs	$	9.8	$	1.1	$	—	$	—	$	10.9
Accelerated depreciation & asset write-offs	—		5.9		—		5.9		—
Other exit costs	—		6.7		4.2		—		2.5
Total	$	9.8	$	13.7	$	4.2	$	5.9	$	13.4

(1) At March 31, 2020, the restructuring reserve is recorded on the Consolidated (Condensed) Balance Sheet in Other current liabilities of $9.7 and Other liabilities of $3.7.

The Company expects to incur additional severance and related benefit costs and other exit-related costs associated with these plans of approximately $50 through the end of calendar 2021.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

(6) Income Taxes

The ~~nine month~~ effective tax rate for the six months ended March 31, 2020 was ~~30.3%~~26.2% as compared to ~~45.3%~~46.9% for the prior year comparative period.

The current year ~~provision included~~rate includes the ~~estimated~~unfavorable impact of the Coronavirus Aid, Relief and Economic Security (CARES) Act of $3.4, which was signed into law on March 27, 2020 and provides, among other things, increased interest deduction limitations to companies which can decrease overall cash taxes paid. The current year rate also increased due to the country mix of earnings which drove a higher foreign rate as well as the expiration of certain tax holidays in foreign jurisdictions.

The prior year rate includes $1.5 for the one-time impact of U.S. tax legislation passed in December 2017 and the impact of disallowed transaction costs ~~related to~~resulting from the ~~Battery Acquisition and~~acquisitions.

(7) Share-Based Payments

The Board of Directors adopted the ~~Auto Care Acquisition for which the Company does not believe that there will be an income tax benefit. Both years' provision included the impact~~Energizer Holdings, Inc. Equity Incentive Plan (the 2015 Plan) on July 1, 2015, upon completion of the ~~U.S. tax legislation discussed below.~~Company's spin-off from its predecessor. 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.

On ~~December 22, 2017, H.R. 1, formally known as~~January 27, 2020, the ~~Tax Cuts~~Company's shareholders approved the Energizer Holdings, Inc. Omnibus Incentive Plan (Omnibus Plan). The Omnibus Plan replaces and ~~Jobs Act (the Tax Act) was enacted into law. The Tax Act provided for numerous significant tax law changes and modifications with varying effective dates, which included reducing~~supersedes 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 expensing of certain qualified property. As a fiscal year end taxpayer, certain provisions2015 Plan. No new awards will be issued under the 2015 Plan, though the terms of the ~~Tax Act began~~2015 Plan will continue to impact us in the fiscal quarter ended December 31, 2017, while other provisions did not impact us until fiscal 2019. The corporate tax rate reduction was effective for Energizer as of January 1, 2018 and resulted in a fiscal year federal statutory blended rate of 24.5% for fiscal year 2018 with the full impact of the reduced rate to 21% beginning in fiscal year 2019.

As a result of the reduction of the Federal corporate income tax rate, the Company remeasured certain deferred tax assets and liabilities at the rate which they are expected to reverse in the future. The Company has finalized the remeasurement and did not have any adjustments to the $3.0 recorded in fiscal year 2018. The provision for the nine months ended June 30, 2018, included approximately $0.6.govern all awards granted under that plan.

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~~Omnibus Plan authorizes 6.5 million shares to be awarded, as well as the ~~amount of non-U.S. income tax paid on such earnings. We have completed our accounting~~0.3 million shares that were still available for grant under the ~~income tax effect~~2015 Plan. Under the terms of the ~~mandatory transition tax in~~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 ~~first quarter~~Company. For purposes of ~~fiscal 2019. We recorded an additional $0.7 during~~determining the ~~nine months ended June 30, 2019 related to~~number of shares available for future issuance under the ~~anticipated state tax impact~~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 ~~total tax of $36.7. Included in the provision for the nine months ended June 30, 2018 was an initial estimate of $30.0 related to the transition tax.~~

The Tax Act created a provision known as Global Intangible Low Taxed Income (GILTI) that imposes tax on certain earnings of foreign subsidiaries. The Company has elected to treat GILTI as a current period expense.

~~(6) Share-Based Payments~~one-for-one basis.

Total compensation cost for Energizer’s share-based compensation arrangements was ~~$6.7~~$8.7 and ~~$20.8~~$15.9 for the quarter and ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, respectively, and ~~$7.0~~$7.6 and ~~$21.0~~$14.1 for the quarter and ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, 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 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.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

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

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

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 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.

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. The closing stock price on the date of the grant used to determine the award fair value was $37.34.

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

~~(7)~~(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, performance share awards and deferred compensation equity plans. Common shares issuable upon conversion of the ~~Mandatory Convertible Preferred Stock (MCPS)~~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 quarter and nine months ended June 30, 2019 and 2018:~~

(in millions, except per share data) For the Quarter Ended June 30, For the Nine Months Ended June 30,
Basic earnings per share 2019 2018 2019 2018
Net earnings from continuing operations $ 9.2
$ 23.8
$ 17.7
$ 92.0
Mandatory preferred stock dividends (4.4 ) —
(7.7 ) —
Net earnings from continuing operations attributable to common shareholders 4.8

23.8

10.0

92.0
Net loss from discontinued operations, net of tax (1.8 ) —
(12.8 ) —
Net earnings/(loss) attributable to common shareholders $ 3.0

$ 23.8

$ (2.8 )
$ 92.0

Weighted average common shares outstanding - basic 69.6
59.7
65.5
59.9

Basic net earnings per common share from continuing operations $ 0.07
$ 0.40
$ 0.15
$ 1.54
Basic net loss per common share from discontinued operations (0.03 ) —
(0.19 ) —
Basic net earnings/(loss) per common share $ 0.04
$ 0.40
$ (0.04 ) $ 1.54

Diluted earnings per share
Net earnings/(loss) attributable to common shareholders $ 3.0
$ 23.8
$ (2.8 ) $ 92.0

Weighted average common shares outstanding - basic 69.6
59.7
65.5
59.9
Dilutive effect of restricted stock equivalents 0.3
0.5
0.3
0.4
Dilutive effect of performance shares 0.5
1.0
0.5
0.9
Dilutive effect of stock based deferred compensation plan 0.2
0.2
0.2
0.2
Weighted average common shares outstanding - diluted 70.6
61.4
66.5
61.4

Diluted net earnings per common share from continuing operations $ 0.07
$ 0.39
$ 0.15
$ 1.50
Diluted net loss per common share from discontinued operations (0.03 ) —
(0.19 ) —
Diluted net earnings/(loss) per common share $ 0.04
$ 0.39
$ (0.04 ) $ 1.50

For the quarter and nine months ended June 30, 2019, 0.1 million restricted stock equivalents were anti-dilutive and not included in the diluted net earnings per share calculation. For the quarter and nine months ended June 30, 2018, all restricted stock equivalents were dilutive and included in the diluted net earnings per share calculations.

~~The Company's MCPS were considered anti-dilutive for all periods and excluded for the calculations of diluted earnings per share.~~

Performance based restricted stock equivalents of 0.8 were excluded for both the quarter and nine months ended June 30, 2019 and 0.5 were excluded for both the quarter and nine months ended June 30, 2018, respectively, as the performance targets for those shares had not been achieved as of the end of the applicable period.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

~~(8)~~The following table sets forth the computation of basic and diluted earnings per share for the quarters and six months ended March 31, 2020 and 2019:



(in millions, except per share data)	For the Quarter Ended March 31,						For the Six Months Ended March 31,
Basic earnings/(loss) per share	2020			2019			2020			2019
Net earnings/(loss) from continuing operations	$	13.7		$	(62.3	)	$	59.5		$	8.5
Mandatory preferred stock dividends	(4.1		)	(3.3		)	(8.1		)	(3.3		)
Net earnings/(loss) from continuing operations attributable to common shareholders	9.6			(65.6		)	51.4			5.2
Net loss from discontinued operations, net of tax	(131.4		)	(11.0		)	(131.1		)	(11.0		)
Net loss attributable to common shareholders	$	(121.8	)	$	(76.6	)	$	(79.7	)	$	(5.8	)

Weighted average common shares outstanding - Basic	69.1			67.3			69.1			63.5

Basic net earnings/(loss) per common share from continuing operations	$	0.14		$	(0.97	)	$	0.74		$	0.08
Basic net loss per common share from discontinued operations	(1.90		)	(0.17		)	(1.89		)	(0.17		)
Basic net loss per common share	$	(1.76	)	$	(1.14	)	$	(1.15	)	$	(0.09	)

Diluted earnings/(loss) per share
Net loss attributable to common shareholders	$	(121.8	)	$	(76.6	)	$	(79.7	)	$	(5.8	)

Weighted average common shares outstanding - Basic	69.1			67.3			69.1			63.5

Dilutive effect of restricted stock equivalents	0.2			—			0.2			0.3
Dilutive effect of performance shares	0.1			—			0.4			0.6
Dilutive effect of stock based deferred compensation plan	0.1			—			0.1			0.2
Weighted average common shares outstanding - Diluted	69.5			67.3			69.8			64.6

Diluted net earnings/(loss) per common share from continuing operations	$	0.14		$	(0.97	)	$	0.74		$	0.08
Diluted net loss per common share from discontinued operations	(1.89		)	(0.17		)	(1.88		)	(0.17		)
Diluted net loss per common share	$	(1.75	)	$	(1.14	)	$	(1.14	)	$	(0.09	)

For the quarters and six months ended March 31, 2020, 0.1 million restricted stock equivalents were anti-dilutive and not included in the diluted net earnings/(loss) per share calculation. For the quarter ended March 31, 2019, as our continuing operations were in a loss position, all restricted shares were anti-dilutive and excluded from our dilutive net earnings/(loss) per share calculation. For the six months ended March 31, 2019, 0.1 million restricted stock equivalents were anti-dilutive and not included in the diluted net earnings/(loss) per share calculation.

Performance based restricted stock equivalents of 1.3 million and 1.1 million were excluded for the quarter and six months ended March 31, 2020, respectively and 0.7 million for the six months ended March 31, 2019, respectively, as the performance targets for those shares had not been achieved as of the end of the applicable period. All performance shares were excluded from the quarter ended March 31, 2019 as our continuing operations were in a loss position.

The Company's MCPS were considered anti-dilutive for all periods and excluded for the calculations of diluted earnings/(loss) per share.

(9) Segments

Operations for Energizer are managed via ~~two~~2 major geographic reportable segments: Americas and International. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based compensation costs, acquisition and integration activities, amortization costs, research & development costs and other items determined to be corporate in nature. Financial items, such as interest income and expense,

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

are managed on a global basis at the corporate level. The exclusion of substantially all acquisition and integration costs from segment results reflects management’s view on how it evaluates segment performance.

Segment sales and profitability for the ~~quarter~~quarters and ~~nine~~six months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, are presented below:


	For the Quarter Ended June 30,						For the Nine Months Ended June 30,						For the Quarter Ended March 31,						For the Six Months Ended March 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Net Sales
Americas	$	465.1		$	241.3		$	1,220.2		$	838.5		$	409.9		$	381.6		$	924.4		$	755.1
International	182.1			151.5			555.3			502.0			177.1			174.8			399.4			373.2
Total net sales	$	647.2		$	392.8		$	1,775.5		$	1,340.5		$	587.0		$	556.4		$	1,323.8		$	1,128.3
Segment Profit
Americas	$	103.8		$	60.4		$	308.6		$	239.2		$	101.8		$	88.7		$	231.0		$	204.8
International	41.0			32.6			132.0			115.9			40.4			36.4			92.6			91.0
Total segment profit	144.8			93.0			440.6			355.1			142.2			125.1			323.6			295.8

General corporate and other expenses (1)	(29.9		)	(24.7		)	(78.3		)	(71.0		)	(23.5		)	(29.7		)	(48.4		)	(48.4		)
Global marketing expense (2)	(3.0		)	(4.6		)	(12.5		)	(13.0		)	(5.6		)	(6.4		)	(11.7		)	(9.5		)
Research and development expense (3)	(9.2		)	(5.2		)	(23.4		)	(15.9		)
Research and development expense - Adjusted (3)													(7.7		)	(8.7		)	(16.2		)	(14.2		)
Amortization of intangible assets	(14.4		)	(2.8		)	(30.1		)	(8.4		)	(14.2		)	(12.5		)	(28.0		)	(15.7		)
Acquisition and integration costs (4)	(28.0		)	(15.9		)	(159.9		)	(41.0		)	(16.9		)	(95.4		)	(36.2		)	(131.9		)
Gain on sale of real estate	—			4.6			—			4.6
Interest expense (5)	(51.9		)	(14.3		)	(111.7		)	(41.3		)
Other items, net (6)	1.0			1.4			0.7			(0.8		)
Total earnings before income taxes	$	9.4		$	31.5		$	25.4		$	168.3
Interest expense - Adjusted (5)(6)													(47.2		)	(44.0		)	(94.0		)	(59.8		)
Loss on extinguishment of debt (6)													—			—			(4.2		)	—
Other items, net - Adjusted (7)													(5.2		)	(2.4		)	(4.3		)	(0.3		)
Total earnings/(loss) before income taxes													$	21.9		$	(74.0	)	$	80.6		$	16.0

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

(2) ~~The~~Global marketing expense for the quarter and ~~nine~~six months ended ~~June 30, 2019 includes $0.6~~March 31, 2020 included $2.6 and ~~$4.0~~$5.5 recorded in SG&A, respectively, and ~~$2.4~~$3.0 and ~~$8.5~~$6.2 recorded in Advertising and sales promotion expense, respectively, in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income. The quarter and ~~nine~~six months ended ~~June 30, 2018 includes $1.6~~March 31, 2019 included $2.2 and $3.4 recorded in SG&A, respectively, and ~~$3.0~~$4.2 and ~~$9.6~~$6.1 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 and ~~nine~~six months ended ~~June 30, 2019 on the Consolidated (Condensed) Statement~~March 31, 2020 included $0.6 and $1.0, respectively, of ~~Earnings and Comprehensive Income includes $0.3 which has been reclassified to Acquisition~~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)

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


	For the Quarter Ended June 30,					For the Nine Months Ended June 30,						For the Quarter Ended March 31,					For the Six Months Ended March 31,
	2019		2018			2019			2018			2020			2019		2020		2019
Inventory Step Up												$	—		$	27.2	$	—	$	27.2
Cost of products sold	$	12.4	$	—		$	44.1		$	—		8.3			4.5		15.2		4.5
Selling, general and administrative expense	15.1		22.4			63.1			44.6			8.1			29.1		19.2		48.0
Research and development expense	0.3		—			0.3			—			0.6			—		1.0		—
Interest expense	—		3.4			65.6			6.3			—			33.2		—		65.6
Other items, net	0.2		(9.9		)	(13.2		)	(9.9		)	(0.1		)	1.4		0.8		(13.4		)
Total acquisition and integration costs	$	28.0	$	15.9		$	159.9		$	41.0		$	16.9		$	95.4	$	36.2	$	131.9

(5) Interest expense ~~on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income for the nine months ended June 30, 2019 includes $65.6 and~~ for the quarter and ~~nine~~six months ended ~~June 30, 2018 includes $3.4~~March 31, 2019 included $33.2 and ~~$6.3,~~$65.6, respectively, of acquisition commitment fees, debt ticking fees and interest on escrowed debt which ~~has~~have been reclassified ~~to Acquisition and integration costs~~ for purposes of the reconciliation above.

(6) ~~The amounts~~Loss on extinguishment of debt for the ~~quarter and nine~~six months ended ~~June 30, 2019~~March 31, 2020 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 and Comprehensive Income includes a loss of $0.2 and a gain of $13.2, respectively, which have been reclassified for purposes of the reconciliation above. The amounts for the quarter and nine months ended June 30, 2018 on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income included a gain of $9.9 on acquisition foreign currency contracts.Income.

(7)

Other items, net for the quarter and six months ended March 31, 2020 on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income included acquisition related income of $0.1 and costs of $0.8, respectively, which has been reclassified for purposes of the reconciliation above. For the quarter and six months ended March 31, 2019 on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income included acquisition related costs of $1.4 and income of $13.4, respectively, which has been reclassified for purposes of the reconciliation above.

Corporate assets shown in the following table include all ~~restricted cash related to the Battery Acquisition,~~ financial instruments, pension assets, amounts indemnified by Spectrum per the purchase agreements and ~~deferred~~ tax ~~assets~~asset balances that are managed outside of operating segments. ~~Total~~In addition, the Assets held for sale are assets ~~by segment are presented below:~~utilized outside of the operating segments.


	June 30, 2019		September 30, 2018
Total Assets					March 31, 2020		September 30, 2019
Americas	$	982.1	$	504.2	$	1,099.4	$	991.9
International	659.3		851.5		555.8		621.0
Total segment assets	$	1,641.4	$	1,355.7	$	1,655.2	$	1,612.9
Corporate	144.1		1,346.3		154.1		81.3
Goodwill and other intangible assets	2,984.6		476.8		2,943.2		2,963.7
Assets held for sale	807.6		—		—		791.7
Total assets	$	5,577.7	$	3,178.8	$	4,752.5	$	5,449.6

(10) Leases

~~(9)~~The Company determines whether an arrangement contains a lease at the inception of the contract by 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 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

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

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.

As of March 31, 2020 the amounts for leases included in our Consolidated (Condensed) Balance Sheet include:



Balance Sheet Location	March 31, 2020
Operating Leases:
Operating lease asset	$	91.9

Operating lease liabilities - current	14.0
Operating lease liabilities	80.0
Total Operating Lease Liabilities	$	94.0

Weighted-average remaining lease term (in years)	16.3
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	44.7
Total Finance Lease Liabilities	$	46.4

Weighted Average remaining lease term (in years)	20.7
Weighted-average discount rate	6.8		%

During the first quarter of fiscal 2020, Energizer entered into an operating lease that will result in significant rights and obligations; however, the lease will not commence until the third fiscal quarter of 2020. The commencement date was determined in accordance with ASC 842 based on when the lessor makes the underlying asset available for use. The lease term is for 16 years and the Company expects 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,		For the Six Months ended,
	March 31, 2020		March 31, 2020
Operating lease cost	$	5.0	$	9.5
Finance lease cost:
Amortization of assets	0.8		1.6
Interest on lease liabilities	0.7		1.5
Variable lease costs	0.8		1.1
Total lease costs	$	7.3	$	13.7

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

Supplemental cash and non-cash information related to leases:



	For the Six Months ended,
	March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9.7
Operating cash flows from finance leases	1.5
Financing cash flows from finance leases	0.7

Non-cash increase in lease assets and lease liabilities:
Operating leases (1) (2)	$	51.0

(1) During the first quarter of fiscal 2020, Energizer entered into a material embedded lease agreement which resulted in operating lease asset and lease liabilities of approximately $34. The embedded operating lease commenced on November 1, 2019. During the second quarter of fiscal 2020, Energizer renewed the North America headquarters lease, which resulted in a material lease modification and additional operating lease assets and lease liabilities of approximately $17.

(2) 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 March 31, 2020 are as follows:



	Operating Leases			Finance Leases
2020	$	9.4		$	2.3
2021	15.8			4.6
2022	14.1			4.7
2023	13.1			4.6
2024	12.9			4.4
Thereafter	72.9			70.8
Total lease payments	138.2			91.4

Less: Imputed interest	(44.2		)	(45.0		)
Present value of lease liabilities	$	94.0		$	46.4

As previously disclosed in our 2019 Annual Report on Form 10-K and under ASC 840, the 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.

(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, 2018 and June 30, 2019:~~

Americas International Unallocated Total
Balance at October 1, 2018 $ 228.4
$ 15.8
$ —
$ 244.2
Battery Acquisition —
—
547.2
547.2
Auto Care Acquisition —
—
270.1
270.1
Cumulative translation adjustment —
(0.2 ) 1.1
0.9
Balance at June 30, 2019 $ 228.4
$ 15.6
$ 818.4
$ 1,062.4

~~The Company is still evaluating the reporting unit and segment allocation of the goodwill acquired in the Battery and Auto Care Acquisitions as of June 30, 2019.~~

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

The following table sets forth goodwill by segment as of October 1, 2019 and March 31, 2020:



	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	(0.1		)	(0.6		)	(0.7		)
Balance at March 31, 2020	$	866.0		$	142.9		$	1,008.9

Energizer had indefinite-lived intangible assets of ~~$1,292.4~~$1,361.5 at ~~June 30, 2019~~March 31, 2020 and ~~$76.9~~$1,363.8 at September 30, ~~2018.~~2019. The ~~increase was due to~~difference between the ~~Battery Acquisition of $513.0 and the Auto Care Acquisition of $702.9, slightly offset~~periods is driven by ~~changes in foreign~~ currency ~~of $0.4.~~adjustments.

Total intangible assets at ~~June 30, 2019~~March 31, 2020 are as follows:


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trademarks and trade names	$	61.0	$	8.8	$	52.2	$	59.7	$	(11.9	)	$	47.8
Customer relationships	412.5		28.2		384.3		394.2		(47.6		)	346.6
Patents	34.5		7.6		26.9		34.5		(9.5		)	25.0
Proprietary technology	174.5		10.5		164.0		172.5		(26.6		)	145.9
Proprietary formulas	2.4		0.2		2.2		2.4		(0.4		)	2.0
Non-compete	0.5		0.3		0.2		0.5		(0.4		)	0.1
Vendor relationships							5.7		(0.3		)	5.4
Total Amortizable intangible assets	685.4		55.6		629.8		669.5		(96.7		)	572.8
Trademarks and trade names - indefinite lived	1,292.4		—		1,292.4		1,361.5		—			1,361.5
Total Other intangible assets, net	$	1,977.8	$	55.6	$	1,922.2	$	2,031.0	$	(96.7	)	$	1,934.3

Total intangible assets at September 30, ~~2018~~2019 were as follows:


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trademarks and trade names	$	44.3	$	6.1	$	38.2	$	59.7	$	(9.9	)	$	49.8
Customer relationships	99.6		13.4		86.2		394.2		(34.3		)	359.9
Patents	34.5		5.7		28.8		34.5		(8.2		)	26.3
Proprietary technology							172.5		(15.7		)	156.8
Proprietary formulas	2.4		0.1		2.3		2.4		(0.3		)	2.1
Non-compete	0.5		0.2		0.3		0.5		(0.3		)	0.2
Total Amortizable intangible assets	181.3		25.5		155.8		663.8		(68.7		)	595.1
Trademarks and trade names - indefinite lived	76.9		—		76.9		1,363.8		—			1,363.8
Total Other intangible assets, net	$	258.2	$	25.5	$	232.7	$	2,027.6	$	(68.7	)	$	1,958.9

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

~~(10)~~(12) Debt

The detail of long-term debt was as follows:


	June 30, 2019			September 30, 2018			March 31, 2020			September 30, 2019
2019 Senior Secured Term Loan A Facility Due 2022							$	365.0		$	—
Senior Secured Term Loan A Facility due 2021	$	77.5		$	—		—			77.5
Senior Secured Term Loan B Facility due 2025	997.5			—			313.5			982.5
5.50% Senior Notes due 2025	600.0			600.0			600.0			600.0
6.375% Senior Notes due 2026	500.0			—			500.0			500.0
4.625% Senior Notes due 2026 (Euro Notes of €650.0)	739.2			—			717.0			708.4
7.750% Senior Notes due 2027	600.0			—			600.0			600.0
Senior Secured Term Loan B Facility due 2022	—			388.0
Capital lease obligations	47.4			—			46.4			46.9
Total long-term debt, including current maturities	3,561.6			988.0			3,141.9			3,515.3
Less current portion	(11.6		)	(4.0		)	(93.0		)	(1.6		)
Less unamortized debt discount and debt issuance fees	(56.8		)	(7.9		)	(38.3		)	(52.1		)
Total long-term debt	$	3,493.2		$	976.1		$	3,010.6		$	3,461.6

6.375% Senior Notes due 2026	—			500.0
4.625% Senior Notes due 2026 (Euro Notes of €650.0)	—			754.2
Total gross long-term debt held in escrow	—			1,254.2
Less unamortized debt issuance fees	—			(23.5		)
Total long-term debt held in escrow	$	—		$	1,230.7

Long-term debt - On December ~~17, 2018,~~27, 2019, the Company ~~entered into a credit agreement which provided for a 5-year $400.0 revolving credit facility (2018 Revolving Facility)~~amended the existing Term Loan Agreement and ~~which provided for a $200.0 3-year~~refinanced $365.0 of term loan debt. The amendment established a new $365.0 Term Loan A facility ~~and $1,000.0 7-year term loan~~due December 2022, which was used to pay down $300.0 of the existing Term Loan B facility ~~(2018~~due in 2025 and $65.0 of the existing Term ~~Loans).~~Loan A facility due in 2021. The ~~borrowings under~~pay down of the Term Loan B facility was deemed to be an extinguishment and the Company wrote-off $4.2 of deferred financing fees during the first quarter. Debt issuance fees paid related to the term loan ~~A require quarterly principal payments at a rate of 6.25% of~~refinancing were $0.9 during the original principal balance, or $12.5. The borrowings under the term loan B require quarterly principal payments at a rate of 0.25% of the original principal balance, or $2.5. The borrowings 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. The 2018 Term Loans began to accrue ticking fees in July 2018 and interest in December 2018 upon funding the Term Loans into escrow. The funds were released from escrow and used to fund the closing of the Battery Acquisition on January 2, 2019.six months ended March 31, 2020.

Obligations under the 2018 Revolving Facility and 2018 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.

During the ~~nine months~~quarter ended ~~June 30, 2019,~~March 31, 2020, the Company ~~made payments~~utilized the available proceeds from the Varta Divestiture and the related hedging arrangements to pay down $345.8 of ~~$122.5 and $2.5 on~~ the ~~Term Loan A and Term Loan B facilities, respectively. Subsequent to the quarter, the Company made additional payments of $15.0~~borrowings outstanding on the Term Loan B ~~facility.~~ facility due in 2025.

As of ~~June 30, 2019,~~March 31, 2020, the Company had ~~$40.0~~$173.0 of outstanding borrowings under the Revolving Credit Facility and ~~had $7.6~~$7.3 of outstanding letters of credit. Taking into account outstanding letters of credit, ~~$352.4~~$219.7 remained available as of ~~June 30, 2019.~~March 31, 2020. As of ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018,~~2019, our weighted average interest rate on short-term borrowings was ~~4.9%~~3.6% and ~~4.3%~~3.8%, respectively.

Subsequent to the quarter, on April 2, 2020, the Company drew down the remaining availability on its Revolving Credit Facility. On ~~January 17, 2019,~~April 22, 2020, the Company finalized ~~pricing~~an add-on offering of ~~$600.0 in senior notes~~$250.0 of our 6.375% Senior Notes due ~~in 2027 at 7.750% (2027 Notes)~~2026 (2026 Notes Add-On). The ~~2027~~2026 Notes Add-On priced at ~~100%~~102.25% of the principal ~~amount and~~amount. The Company used the net proceeds from the offering ~~closed concurrently with the Auto Care Acquisition on January 28, 2019 and the proceeds were utilized~~ to fund the acquisition. The 2027 Notes were sold to qualified institutional buyers and will not be registered under federal or applicable state securities laws. Interest is payable semi-annually on the 2027 Notes in January and July. The 2027 Notes are jointly and severally guaranteed

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

~~on an unsecured basis by certain of the Company's domestic restricted subsidiaries that guarantee~~repay indebtedness ~~of the Company~~outstanding under its ~~2018~~ Revolving ~~Facility.~~

~~Debt issuance~~Credit Facility and to pay fees ~~paid~~and expenses related to the ~~bonds and the credit agreement, including the 2018 Revolving Credit Facility, were $40.1 during the nine months ended June 30, 2019.~~

In June 2018, the Company finalized the pricing of two senior note offerings due in 2026 of $500.0 at 6.375% (USD Notes) and €650.0 at 4.625% (Euro Notes and collectively with the USD Notes, the 2026 Notes), which were issued by wholly-owned subsidiaries.offering. The 2026 Notes ~~priced at 100% of the principal amount and the offering closed in July 2018. The 2026 Notes were sold~~Add-On was offered to qualified institutional buyers and will not be registered under federal or applicable state securities laws. Interest is payable semi-annually on the 2026 Notes in January and July. The 2026 Notes are jointly and severally guaranteed on an unsecured basis by the Company's domestic restricted subsidiaries that guarantee indebtedness of the Company under its 2018 Revolving Facility.

On January 2, 2019, the proceeds of the 2018 Term Loans and the 2026 Notes were released from escrow and utilized to fund the Battery Acquisition, repay borrowings under the Term Loan due in 2022, amounts drawn on the 2015 Revolving Facility, and pay acquisition related costs, including debt issuance costs.

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%.

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 at an interest rate of 2.47%. ~~The~~At the effective date, the swap ~~has~~had a ~~current~~ notional value of $400.0. OnBeginning April 1, 2019, the notional amount ~~decreased $50.0. This decrease will continue~~decreases $50.0 each quarter, and continues to decrease until its termination date of December 31, 2020. The notional value of the swap was $200.0 at March 31, 2020.

Notes payable - The notes payable balance was ~~$41.5~~$184.1 at ~~June 30, 2019~~March 31, 2020 and ~~$247.3~~$31.9 at September 30, ~~2018.~~2019. The ~~June 30, 2019~~March 31, 2020 balance was comprised ~~primarily~~ of ~~$40.0~~$173.0 of borrowings on the ~~2018~~ Revolving Credit Facility as well ~~as$1.5~~as $11.1 of

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

other borrowings, including those related to foreign affiliates. The September 30, ~~2018~~2019 balance was comprised of ~~$240.0~~$25.0 outstanding borrowings on the ~~2015~~ Revolving Credit facility as well as ~~$7.3~~$6.9 of other borrowings, including those related to foreign affiliates. ~~On January 2, 2019, the outstanding borrowings on the 2015 Revolving Facility were paid with the proceeds from the 2018 Term Loans and 2026 Notes.~~

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~~debt agreements would trigger cross defaults to other borrowings. As of ~~June 30, 2019,~~March 31, 2020, the Company was in compliance with the provisions and covenants associated with its debt agreements.

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.

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

Subsequent to quarter end, the Company entered into an amendment to the Credit Agreement that governs the Revolving Credit Facility and Term Loan facilities to reduce the contractual step-down in the maximum Total Net Leverage Ratio at the end of the fourth quarter of fiscal 2021.

Debt Maturities - Aggregate maturities of long term debt ~~including Capital leases acquired with the Battery and Auto Care Acquisitions,~~ as of ~~June 30, 2019~~March 31, 2020 are as follows:



	Long-term debt
One year	$	91.3
Two year	91.3
Three year	182.5
Four year	10.0
Five year	10.0

Thereafter	2,710.4
Total long-term debt payments due	$	3,095.5

Long-term debt Capital leases
2020 $ 10.0
$ 4.7
2021 10.0
4.7
2022 87.5
4.7
2023 10.0
4.6
2024 10.0
5.5
Thereafter 3,386.7
70.9
Total long-term debt payments due $ 3,514.2
95.1

Less: Interest on capital leases (47.7 )
Present value of capital lease payments (1)
$ 47.4

~~(1) Includes~~Refer to Note 10, Leases, for the capital lease ~~obligation of $1.6 recorded in Current portion of capital leases and $45.8 in Long-term debt on the Consolidated (Condensed) Balance Sheet.~~aggregate maturity table.

~~(11)~~(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.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

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

For the Quarter Ended June 30,
U.S. International
2019 2018 2019 2018
Service cost $ —
$ —
$ 0.1
$ 0.1
Interest cost 5.1
4.7
0.8
1.1
Expected return on plan assets (6.6 ) (7.5 ) (1.3 ) (1.6 )
Amortization of unrecognized net losses 1.1
1.1
0.2
0.5
Net periodic (benefit)/cost $ (0.4 ) $ (1.7 ) $ (0.2 ) $ 0.1


	For the Nine Months Ended June 30,												For the Quarter Ended March 31,
	U.S.						International						U.S.						International
	2019			2018			2019			2018			2020			2019			2020			2019
Service cost	$	—		$	—		$	0.4		$	0.4		$	—		$	—		$	0.2		$	0.2
Interest cost	15.3			14.1			2.3			3.2			4.0			5.1			0.3			0.8
Expected return on plan assets	(19.6		)	(22.6		)	(3.8		)	(4.8		)	(6.1		)	(6.5		)	(0.6		)	(1.3		)
Amortization of unrecognized net losses	3.1			3.3			0.7			1.6			1.6			1.0			0.3			0.2
Settlement charge	—			0.1			—			—
Net periodic (benefit)/cost	$	(1.2	)	$	(5.1	)	$	(0.4	)	$	0.4		$	(0.5	)	$	(0.4	)	$	0.2		$	(0.1	)

													For the Six Months Ended March 31,
													U.S.						International
													2020			2019			2020			2019
Service cost													$	—		$	—		$	0.4		$	0.3
Interest cost													8.0			10.2			0.6			1.4
Expected return on plan assets													(12.2		)	(13.0		)	(1.2		)	(2.5		)
Amortization of unrecognized net losses													3.2			2.0			0.6			0.5
Net periodic (benefit)/cost													$	(1.0	)	$	(0.8	)	$	0.4		$	(0.3	)

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.

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

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.

~~(12)~~(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 the quarter ~~and nine months~~ ended ~~June 30, 2019,~~March 31, 2020, the Company repurchased ~~1,036,000~~980,136 shares for $45.0, at an average price of ~~$43.46. During the nine months ended June 30, 2018, the Company repurchased 1,126,379 shares for $50.0, at an average price of $44.41~~$45.93 per share, under this authorization. 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 ~~12, 2018,~~11, 2019, the Board of Directors declared a cash dividend for the first quarter of fiscal ~~2019~~2020 of $0.30 per common share of common ~~stock. The dividend was paid~~stock, payable on December ~~13, 2018,~~17, 2019, to all shareholders of record as of the close of business on November ~~30, 2018.~~26, 2019.

On January ~~28, 2019,~~27, 2020, the Board of Directors declared a cash dividend for the second quarter of ~~2019~~2020 of $0.30 per share of common stock, payable on March 18, ~~2019,~~2020, to all shareholders of record as of the close of business February ~~25, 2019.~~22, 2020.

During the six months ended March 31, 2020 and 2019, total dividends declared were $42.8 and $40.0, respectively. The payments made of $43.7 and $40.8 during the six months ended March 31, 2020 and 2019, respectively, included the cumulative dividends paid upon the vesting of restricted shares during the periods.

The Company paid a cash dividend of $1.875 per share of MCPS on October 15, 2019 which had been declared in fiscal 2019. On ~~April 29,~~November 11, 2019, the Board of Directors declared a cash dividend ~~for the third quarter~~ of ~~2019 of $0.30~~$1.875 per ~~common~~ share of ~~common stock, payable on June 10, 2019,~~MCPS to all shareholders of record as of the close of ~~business May 21, 2019.~~

~~During the nine months ended June 30, 2019, total dividends declared~~January 1, 2020, which was paid on common stock were $61.4 and common stock dividends paid were $61.7. The dividends paid included amounts on restricted shares that vested in the period. During the nine months ended June 30, 2018, total dividends declared on common stock were $54.4 and common stock dividends paid were $52.3. The unpaid common stock dividends were associated with unvested restricted shares and were recorded in other liabilities.

~~Subsequent to the end of the fiscal quarter, on July 29, 2019,~~January 15, 2020. On January 27, 2020, the Board of Directors declared a cash dividend ~~for the~~

~~fourth quarter~~ of ~~2019 of $0.30~~$1.875 per share of ~~common stock, payable on September 10, 2019,~~MCPS to all shareholders of ~~record as of the close of business August 20, 2019.~~

~~Issuance of Common Stock~~ - In January 2019, the Company issued 4,687,498 shares of common stock, which included the underwriters' exercise in full of their option to purchase 611,412 additional shares of common stock to cover over-allotments. The net proceeds from the sale of the common stock was $205.3, after deducting the underwriting discounts and third party fees, and were utilized to fund a portion of the cash consideration for the Auto Care Acquisition and related fees and expenses.

On January 28, 2019, in connection with the Auto Care Acquisition, the Company issued 5,278,921 shares of common stock to Spectrum as partial consideration for the purchase of the Auto Care Acquisition. The equity consideration paid to Spectrum was valued at $240.5 based on the closing stock price of $45.55 on January 28, 2019.

In association with the equity consideration paid to Spectrum, the Company entered into a Shareholder Agreement with Spectrum. The Shareholder Agreement includes a 24 month standstill provision and an 18 month period as of the date of the Auto Care Acquisition closing date (Closing Date), in which Spectrum is required to vote in agreement with the Company's Board of Directors. In addition, Spectrum is unable to sell any of its shares for the first 12 months after the Closing Date. After the 12 month period has ended, Spectrum can require the Company to file a shelf registration allowing for Spectrum to sell its common shares in one or more registered offerings. However, Spectrum can not transfer common shares to any entity that would result in the entity owning more than

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

~~4.9%~~record as of the ~~Company's outstanding common shares, after giving effect to the sale. Following the 18 month anniversary~~close of the Closing Date, the Company will have the right to repurchase any or all of the common shares then held by Spectrum for a purchase price per share equal to the greater of the VWAP per share for the ten consecutive trading days beginning on the 12th trading day immediately preceding notice of the repurchase from the Company,April 1, 2020. This dividend was accrued at March 31, 2020 and ~~$65.12, which equals 110% of the Common Stock VWAP, as defined by the Auto Care Acquisition purchase agreement.~~

~~Issuance of Series A Mandatory Convertible Preferred Stock -~~ In January 2019, the Company issued 2,156,250 shares of Series A Mandatory Convertible Preferred Stock (MCPS), with a par value of $0.01 per share and liquidation preference of $100.00 per share, which included the underwriters' exercise in full of their option to purchase 281,250 additional shares of MCPS to cover over-allotments. The net proceeds from the sale of the MCPS was $199.5, after deducting the underwriting discounts and third party fees, as well as the capped call transaction described below, and were utilized to fund the Auto Care Acquisition and related fees and expenses.

Each outstanding share of MCPS will convert automatically on the mandatory conversion date, which is expected to be January 15, 2022, into between 1.7892 and 2.1739 shares of common stock, subject to certain anti-dilution and other adjustments. The number of shares of common stock issuable upon conversion will be determined based on the average VWAP per share of common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately prior to January 15, 2022.

~~Dividends on the MCPS will be payable on a cumulative basis at an annual rate of 7.50% of the liquidation preference of $100.00 per share of MCPS, and may be~~ paid in cash or, subject to certain limitations, in shares of common stock, or in any combination of cash and shares of common stock. If declared, dividends on the MCPS will be payable quarterly on January 15, April 15, July 15 and October 15 of each year, commencing on April 15, ~~2019 and ending on, and including, January 15, 2022.~~2020.

~~On January 28, 2019,~~Subsequent to the end of the fiscal quarter, on April 27, 2020, the Board of Directors declared a cash dividend for the third quarter of ~~$1.8333~~2020 of $0.30 per share of ~~MCPS. The dividend was paid~~common stock, payable on June 10, 2020, to all shareholders of record as of the close of business May 20, 2020.

Subsequent to the end of the fiscal quarter, on April ~~15, 2019 and totaled $3.9.~~

~~On April 29, 2019,~~27, 2020, the Board of Directors declared a cash dividend of $1.875 per share of ~~MCPS. The dividend was paid~~MCPS, payable on July 15, ~~2019, and totaled $4.0.~~

~~Subsequent to the end of the fiscal quarter, on July 29, 2019, the Board of Directors declared a dividend of $1.875 per share of MCPS, payable on October 15, 2019,~~2020, to all shareholders of record as of the close of business ~~October~~on July 1, ~~2019.~~

~~During the nine months ended June 30, 2019, total dividends declared on MCPS were $7.7 while dividends paid on MCPS were $4.0.~~

No dividend or distributions may be declared or paid on shares of common stock, and no common stock shall be, directly or indirectly, purchased, redeemed, or otherwise acquired for consideration by the Company, or any of its subsidiaries, unless all accumulated and unpaid dividends for all preceding dividend periods have been declared and paid upon, or a sufficient sum of cash or number of shares of common stock has been set aside for the payment of such dividends upon, all outstanding shares of MCPS.

In connection with the offering of the MCPS, the Company entered into capped call transactions with certain counterparties. The capped call options are expected to reduce potential dilution to the Company’s Common Stock, subject to a cap, upon any conversion of MCPS. The Company paid $9.0 for the capped call transactions which reduced the net proceeds received from the MCPS.2020.

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

~~(13)~~(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 ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018,~~2019, as well as the Company's objectives and strategies for holding these derivative instruments.

Commodity Price Risk—The Company uses raw materials that are subject to price volatility. At times, the Company uses hedging instruments to reduce exposure to variability in cash flows associated with future purchases of certain materials and commodities.

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 2020. There were four open contracts at June 30, 2019, with a total notional value of approximately$16. The pre-tax loss recognized on the zinc contracts was $0.7 at June 30, 2019, and was included in Accumulated other comprehensive income on the Consolidated (Condensed) Balance Sheet.

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 inof 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 (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 ~~June 30, 2019,~~March 31, 2020, Energizer had variable rate debt outstanding with a principal balance of ~~$1,075.0~~$851.5 under the 2019 and 2018 Term ~~Loans.~~ Loans and the Revolving Credit Facility. 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

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

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 $200.0 at March 31, 2020.

Derivatives Designated as Cash Flow 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. These foreign currencies represent a significant portion of Energizer's foreign currency exposure. At March 31, 2020 and September 30, 2019, Energizer had an unrealized pre-tax gain of $5.1 and $4.5, respectively, on these forward currency contracts accounted for as cash flow hedges included in Accumulated other comprehensive loss on the Consolidated (Condensed) Balance Sheets. Assuming foreign exchange rates versus the U.S. dollar remain at March 31, 2020 levels, over the next 12 months, $5.0 of the pre-tax gain included in Accumulated other comprehensive loss is expected to be recognized in earnings. Contract maturities for these hedges extend into fiscal year 2021. There were 64 open foreign currency contracts at March 31, 2020, with a total notional value of approximately $141.

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 16 open contracts at March 31, 2020, with a total notional value of approximately $29. The pre-tax loss recognized on the zinc contracts was $7.0 and $1.0 at March 31, 2020 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.

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

~~These hedging instruments are considered cash flow hedges for accounting purposes.~~ The notional value of the swap was $200.0 at March 31, 2020. At ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018,~~2019, Energizer recorded an unrealized pre-tax net loss of ~~$3.9~~$9.2 and ~~a net gain of $7.7,~~$4.7, respectively, on these interest rate swap contracts, both of which were included in Accumulated other comprehensive loss on the Consolidated Balance Sheet.

~~Cash Flow Hedges~~—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. These foreign currencies represent a significant portion of Energizer's foreign currency exposure. At June 30, 2019 and September 30, 2018, Energizer had an unrealized pre-tax gain of $1.3 and $4.3, respectively, on these forward currency contracts accounted for as cash flow hedges included in Accumulated other comprehensive loss on the Consolidated (Condensed) Balance Sheets. Assuming foreign exchange rates versus the U.S. dollar remain at June 30, 2019 levels, over the next 12 months, $1.5 of the pre-tax gain included in Accumulated other comprehensive loss is expected to be recognized in earnings. Contract maturities for these hedges extend into fiscal year 2020. There were 64 open foreign currency contracts at June 30, 2019, with a total notional value of approximately $140.

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, and as such are not subject to significant market risk. There were ~~ten~~7 open foreign currency derivative contracts which are not designated as cash flow hedges at ~~June 30, 2019,~~March 31, 2020, with a total notional value of approximately ~~$206.~~$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 ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018,~~2019, and the amounts of gains and losses on derivative instruments classified as cash flow hedges for the quarter and ~~nine~~six months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively:


	At June 30, 2019			For the Quarter Ended June 30, 2019						For the Nine Months Ended June 30, 2019						At March 31, 2020			For the Quarter Ended March 31, 2020						For the Six Months Ended March 31, 2020
Derivatives designated as Cash Flow Hedging Relationships	Estimated Fair Value Asset/(Liability) (1)			Loss Recognized in OCI (2)			Gain Reclassified From OCI into Income (3) (4)			Gain/(Loss) Recognized in OCI (2)			Gain Reclassified From OCI into Income (3) (4)			Estimated Fair Value Asset/ (Liability) (1)			Gain/(loss) Recognized in OCI (2)			Gain/(Loss) Reclassified From OCI into Income (3)(4)			Gain/(Loss) Recognized in OCI (2)			Gain/(Loss) Reclassified From OCI into Income (3) (4)
Foreign currency contracts	$	1.3		$	(0.4	)	$	1.9		$	3.7		$	6.7		$	5.1		$	7.3		$	0.8		$	3.3		$	2.7
Interest rate swaps (2017 and 2018)	(3.9		)	(4.1		)	0.2			(11.0		)	0.4			(9.2		)	(5.9		)	(0.6		)	(5.4		)	(1.1		)
Zinc contracts	(0.7		)	(0.9		)	—			(0.7		)	—			(7.0		)	(5.3		)	—			(6.3		)	(0.3		)
Total	$	(3.3	)	$	(5.4	)	$	2.1		$	(8.0	)	$	7.1		$	(11.1	)	$	(3.9	)	$	0.2		$	(8.4	)	$	1.3

	At September 30, 2018			For the Quarter Ended June 30, 2018						For the Nine Months Ended June 30, 2018						At September 30, 2019			For the Quarter Ended March 31, 2019						For the Six Months Ended March 31, 2019
Derivatives designated as Cash Flow Hedging Relationships	Estimated Fair Value Asset (1)			Gain Recognized in OCI (2)			Loss Reclassified From OCI into Income (4) (5)			Gain Recognized in OCI (2)			Loss Reclassified From OCI into Income (4) (5)			Estimated Fair Value Asset/(Liability) (1)			Gain/(Loss) Recognized in OCI (2)			Gain Reclassified From OCI into Income (3)(4)			Gain/(Loss) Recognized in OCI (2)			Gain Reclassified From OCI into Income (3)(4)
Foreign currency contracts	$	4.3		$	5.6		$	(0.8	)	$	4.8		$	(5.1	)	$	4.5		$	0.9		$	2.0		$	4.1		$	4.8
Interest rate swaps (2017 and 2018)	7.7			2.2			(0.2		)	6.7			(1.0		)	(4.7		)	(2.2		)	0.3			(6.9		)	0.2
Zinc contracts																(1.0		)	0.2			—			0.2			—
Total	$	12.0		$	7.8		$	(1.0	)	$	11.5		$	(6.1	)	$	(1.2	)	$	(1.1	)	$	2.3		$	(2.6	)	$	5.0

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

(2) OCI is defined as other comprehensive income.

(3) ~~Gain~~Gain/(Loss) reclassified to Income was recorded as follows: Foreign currency contracts in Cost of products sold, interest rate contracts in Interest expense, and commodity contracts in Cost of products sold.

(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.

~~(5) Loss reclassified to Income was recorded as follows: Foreign currency contracts in Other items, net, interest rate contracts in Interest expense, and commodity contracts in Cost of products sold.~~

The following table provides estimated fair values as of ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018~~2019 and the gains and losses on derivative instruments not classified as cash flow hedges for the quarter ended March 31, 2020 and ~~nine months ended June~~September 30, 2019, ~~and 2018,~~ respectively:


	At June 30, 2019			For the Quarter Ended June 30, 2019			For the Nine Months Ended June 30, 2019			At March 31, 2020			For the Quarter Ended March 31, 2020			For the Six Months Ended March 31, 2020
	Estimated Fair Value Liability (1)			Loss Recognized in Income (2) (3)			Loss Recognized in Income (2) (3)			Estimated Fair Value Liability (1)			Loss Recognized in Income (2)			Loss Recognized in Income (2) (3)
Foreign currency contracts	$	(1.0	)	$	(1.3	)	$	(0.2	)	$	(0.4	)	$	(0.7	)	$	(1.6	)
	At September 30, 2018			For the Quarter Ended June 30, 2018			For the Nine Months Ended June 30, 2018
	Estimated Fair Value Liability (1)			Gain Recognized in Income (4)			Gain Recognized in Income (4)			At September 30, 2019			For the Quarter Ended March 31, 2019			For the Six Months Ended March 31, 2019
										Estimated Fair Value Asset (1)			Gain Recognized in Income (2)			Gain Recognized in Income (2)
Foreign currency contracts	$	(0.1	)	$	8.7		$	10.0		$	4.3		$	0.1		$	1.1

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

(2) ~~Loss recognized in Income was recorded as foreign currency in Cost of products sold.~~

~~(3) Includes a $0.9 loss on a hedge contract on the Euro proceeds anticipated from the Varta divestiture.~~

~~(4)~~ (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 June 30, 2019									At September 30, 2018										At March 31, 2020									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			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	$	2.3		$	(0.4	)	$	1.9		$	4.7		$	(0.2	)	$	4.5		Other Current Assets, Other Assets	$	6.7		$	(0.7	)	$	6.0		$	9.4		$	(0.4	)	$	9.0

Offsetting of derivative liabilities
		At June 30, 2019									At September 30, 2018										At March 31, 2020									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			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	$	(1.6	)	$	—		$	(1.6	)	$	(0.3	)	$	—		$	(0.3	)	Other Current Liabilities, Other Liabilities	$	(1.9	)	$	0.6		$	(1.3	)	$	(0.4	)	$	0.2		$	(0.2	)

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.

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 ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018~~2019 that are measured on a recurring basis during the period, segregated by level within the fair value hierarchy:


	Level 2						Level 2
Assets/(Liabilities) at estimated fair value:	June 30, 2019			September 30, 2018			March 31, 2020			September 30, 2019
Deferred compensation	$	(27.4	)	$	(29.0	)	$	(24.3	)	$	(28.1	)
Exit lease liability							—			(0.1		)
Derivatives - Foreign Currency contracts	1.3			4.3			5.1			4.5
Derivatives - Foreign Currency contracts (non-hedge)	(1.0		)	(0.1		)	(0.4		)	4.3
Derivatives - 2017 and 2018 Interest Rate swaps	(3.9		)	7.7			(9.2		)	(4.7		)
Derivatives - Zinc contracts	(0.7		)	—			(7.0		)	(1.0		)
Exit lease liability	(0.3		)	(0.6		)
Net Liabilities at estimated fair value	$	(32.0	)	$	(17.7	)	$	(35.8	)	$	(25.1	)

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

Energizer had no Level 1 financial assets or liabilities, other than pension plan assets, and no Level 3 financial assets or liabilities at ~~June 30, 2019~~March 31, 2020 and at September 30, ~~2018.~~2019.

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

At ~~June 30, 2019,~~March 31, 2020, 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, 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 ~~June~~March 31, 2020, the fair market value of fixed rate long-term debt was $2,385.2 compared to its carrying value of $2,417.0, and at September 30, 2019 the fair market value of fixed rate long-term debt was ~~$2,493.4~~$2,474.7 compared to its carrying value of $2,439.2 and at September 30, 2018, the fair market value of fixed rate long-term debt was $599.2 compared to its carrying value of $600.0. At September 30, 2018, the fair market value of the fixed rate long-term debt held in escrow was $1,274.4 compared to its carrying value $1,254.2. The long term debt held in escrow outstanding at September 30, 2018 was funded in the the second quarter and was no longer held in escrow at June 30, 2019.$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.

~~(14)~~(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 (1)			Pension Activity			Zinc Contracts			Foreign Currency Contracts			Interest Rate Contracts			Total			Foreign Currency Translation Adjustments			Pension Activity			Zinc Contracts			Foreign Currency Contracts			Interest Rate Contracts			Total
Balance at September 30, 2018	$	(113.6	)	$	(136.4	)	$	—		$	3.3		$	4.9		$	(241.8	)
Balance at September 30, 2019																			$	(124.0	)	$	(173.3	)	$	0.2		$	3.1		$	(4.3	)	$	(298.3	)
OCI before reclassifications	3.3			(0.2		)	(0.5		)	2.9			(8.3		)	(2.8		)	(24.5		)	(0.8		)	(5.0		)	2.3			(4.2		)	(32.2		)
Reclassifications to earnings	—			3.2			—			(5.2		)	(0.3		)	(2.3		)	—			3.0			0.3			(2.1		)	0.8			2.0
Activity related to discontinued operations	1.0			—			0.6			—			—			1.6			19.3			3.0			(0.9		)	—			—			21.4
Balance at June 30, 2019	$	(109.3	)	$	(133.4	)	$	0.1		$	1.0		$	(3.7	)	$	(245.3	)
Balance at March 31, 2020																			$	(129.2	)	$	(168.1	)	$	(5.4	)	$	3.3		$	(7.7	)	$	(307.1	)

(1) This component contains non-functional currency translation gains and losses as a result of new intercompany investment balances that are recorded at historical cost on the Battery and Auto Care acquisition date, but are denominated in a currency other than the functional currency of the investment entity. The non-functional currency movement of these investment balances must be measured and the gain or loss calculated must be recognized within Currency translation adjustment as a component of AOCI.

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

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


	For the Quarter Ended June 30,						For the Nine Months Ended June 30,							For the Quarter Ended March 31,						For the Six Months Ended March 31,
	2019			2018			2019			2018				2020			2019			2020			2019
Details of AOCI Components	Amount Reclassified from AOCI (1)						Amount Reclassified from AOCI (1)						Affected Line Item in the Combined Statements of Earnings	Amount Reclassified from AOCI (1)						Amount Reclassified from AOCI (1)						Affected Line Item in the Combined Statements of Earnings
Gains and losses on cash flow hedges	Gains and losses on cash flow hedges													Gains and losses on cash flow hedges
Foreign currency contracts	$	1.9		$	(0.8	)	$	6.7		$	(5.1	)	Other items, net	$	0.8		$	2.0		$	2.7		$	4.8		Cost of products sold
Interest rate contracts	0.2			(0.2		)	0.4			(1.0		)	Interest expense	(0.6		)	0.3			(1.1		)	0.2			Interest expense
Zinc contracts														—			—			(0.3		)	—			Cost of products sold
	2.1			(1.0		)	7.1			(6.1		)	(Loss)/earnings before income taxes	0.2			2.3			1.3			5.0			Earnings before income taxes
	(0.4		)	0.2			(1.6		)	1.4			Income tax (benefit)/provision	(0.1		)	(0.5		)	(0.3		)	(1.2		)	Income tax benefit
	$	1.7		$	(0.8	)	$	5.5		$	(4.7	)	Net (loss)/earnings	$	0.1		$	1.8		$	1.0		$	3.8		Net earnings
Amortization of defined benefit pension items	Amortization of defined benefit pension items													Amortization of defined benefit pension items
Actuarial loss	(1.3		)	(1.6		)	(3.8		)	(4.9		)	(2)	(1.9		)	(1.2		)	(3.8		)	(2.5		)	(2)
Settlement loss	—			—			—			(0.1		)	(2)
	(1.3		)	(1.6		)	(3.8		)	(5.0		)	(Loss)/earnings before income taxes
	0.2			0.5			0.6			1.3			Income tax (benefit)/provision	0.3			0.2			0.8			0.4			Income tax provision
	$	(1.1	)	$	(1.1	)	$	(3.2	)	$	(3.7	)	Net (loss)/earnings	$	(1.6	)	$	(1.0	)	$	(3.0	)	$	(2.1	)	Net loss
Total reclassifications to earnings	$	0.6		$	(1.9	)	$	2.3		$	(8.4	)	Net (loss)/earnings	$	(1.5	)	$	0.8		$	(2.0	)	$	1.7		Net (loss)/earnings

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

(2) This AOCI component is included in the computation of net periodic pension (benefit)/cost (see Note ~~11,~~13, Pension Plans, for further details).

~~(15)~~(17) Supplemental Financial Statement Information

The components of certain income statement accounts are as follows:


	For the Quarters Ended June 30,						For the Nine Months Ended June 30,						For the Quarter Ended March 31,						For the Six Months Ended March 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Other items, net
Interest income	$	(0.3	)	$	(0.4	)	$	(1.3	)	$	(1.2	)	$	(0.1	)	$	(0.7	)	$	(0.2	)	$	(1.0	)
Foreign currency exchange gain													5.5			3.8			5.1			2.7
Pension benefit other than service costs													(0.5		)	(0.7		)	(1.0		)	(1.4		)
Other													0.3			—			0.4			—
Acquisition foreign currency loss/(gain)													—			—			2.2			(9.0		)
Interest income on restricted cash	—			—			(5.8		)	—			—			—			—			(5.8		)
Foreign currency exchange (gain)/loss	(0.3		)	0.7			2.4			7.7
Pension benefit other than service costs	(0.7		)	(1.7		)	(2.1		)	(5.1		)
Acquisition foreign currency loss/(gain)	0.9			(9.9		)	(8.1		)	(9.9		)
Transition services agreement income													(0.1		)	(0.1		)	(0.4		)	(0.1		)
Gain on sale of assets													—			—			(1.0		)	—
Settlement of acquired business hedging contracts	—			—			1.5			—			—			1.5			—			1.5
Transition services agreement income	(0.7		)	—			(0.8		)	—
Other	0.3			—			0.3			(0.6		)
Total Other items, net	$	(0.8	)	$	(11.3	)	$	(13.9	)	$	(9.1	)	$	5.1		$	3.8		$	5.1		$	(13.1	)

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

The components of certain balance sheet accounts are as follows:


	June 30, 2019			September 30, 2018			March 31, 2020			September 30, 2019
Inventories
Raw materials and supplies	$	85.6		$	40.0		$	85.2		$	70.5
Work in process	143.2			86.5			102.7			103.7
Finished products	295.5			196.6			282.8			295.1
Total inventories	$	524.3		$	323.1		$	470.7		$	469.3
Other Current Assets
Miscellaneous receivables	$	15.5		$	9.9		$	23.1		$	16.5
Due from Spectrum	18.9			—			44.0			7.6
Prepaid expenses	119.7			52.2			97.2			71.3
Value added tax collectible from customers	20.0			20.8			22.6			23.1
Other	21.9			12.6			19.0			58.6
Total other current assets	$	196.0		$	95.5		$	205.9		$	177.1
Property, Plant and Equipment
Land	$	9.8		$	4.5		$	9.0		$	9.6
Buildings	171.8			110.8			118.8			119.9
Machinery and equipment	767.2			696.2			812.7			823.0
Capital leases	50.5			—			45.7			50.4
Construction in progress	26.1			12.1			36.2			25.8
Total gross property	1,025.4			823.6			1,022.4			1,028.7
Accumulated depreciation	(664.4		)	(656.9		)	(675.8		)	(666.7		)
Total property, plant and equipment, net	$	361.0		$	166.7		$	346.6		$	362.0
Other Current Liabilities
Accrued advertising, sales promotion and allowances	$	19.7		$	16.5		$	10.8		$	11.8
Accrued trade allowances	49.3			39.4			24.6			53.1
Accrued salaries, vacations and incentive compensation	46.5			48.8			34.1			59.2
Accrued interest expense	58.3			27.1			36.0			37.4
Due to Spectrum	10.7			—			1.4			2.6
Accrued acquisition and integration costs							5.2			7.9
Restructuring reserve							9.7			9.8
Income taxes payable	49.2			23.4			23.2			23.4
Other	125.5			115.8			176.2			128.4
Total other current liabilities	$	359.2		$	271.0		$	321.2		$	333.6
Other Liabilities
Pensions and other retirement benefits	$	66.5		$	70.2		$	103.2		$	109.0
Deferred compensation	27.4			29.0			24.3			28.1
Restructuring reserve							3.7			—
Mandatory transition tax	16.7			33.1			16.7			16.7
Deferred tax liability	247.9			19.3
Other non-current liabilities	49.7			44.7			74.4			50.8
Total other liabilities	$	408.2		$	196.3		$	222.3		$	204.6

~~(16)~~

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

(18) Related Party Transactions

On January 28, 2019, the Company completed the Auto Care Acquisition from Spectrum, which included Energizer stock ~~consideration~~consideration. In accordance with the terms of ~~5.3 million~~our Shareholder Agreement with Spectrum, Spectrum has the right to sell such shares on or after January 28, 2020, including through one or more registered secondary offerings. Upon Spectrum’s written request that is not withdrawn, Energizer is obligated to use commercially reasonable efforts to file a shelf registration statement covering the resale by Spectrum of its Energizer common stock. As of ~~June 30, 2019,~~March 31, 2020, Spectrum owns ~~7.7%~~4.3 million shares, or 6.3% of the Company's outstanding common shares. ~~Refer to Note 12 Shareholders' Equity for additional discussion on the common shares issued to Spectrum.~~

~~ENERGIZER HOLDINGS, INC.~~

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

~~(In millions - Unaudited)~~

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. ~~Energizer anticipates that it will generally be in a position to complete~~As of March 31, 2020, the ~~transition of~~Company has exited most ~~services on or before 12 months following the date~~ of the ~~acquisitions.~~TSA and reverse TSA. The Company still has certain information systems and back office support agreements that will continue throughout fiscal 2020 as the Company continues its integration of its information systems.

During the quarter and six months ended March 31, 2020, the Company paid $0.5 and $1.1, respectively to Spectrum related to rent for office space at their Middleton, Wisconsin headquarters.

For the quarter ended March 31, 2020, the Company incurred expenses of $1.9 in SG&A and ~~nine~~$0.1 in Cost of products sold. For the six months ended ~~June 30, 2019,~~March 31, 2020, the Company incurred expenses of $6.3 in SG&A and $0.3 in Cost of products sold. The Company incurred expense of ~~$5.7 and $10.7~~$5.0 in SG&A ~~respectively,~~ and ~~$0.3 and $0.7~~$0.4 in COGS ~~respectively.~~ during the quarter and six months ended March 31, 2019.

The Company also recorded income of ~~$0.7~~$0.1 and ~~$0.8~~$0.4 in Other items, net related to the reverse transaction services agreements provided for the quarter and ~~nine month period,~~six months ended March 31, 2020, respectively. The Company recorded income of $0.1 in Other items, net related to the reverse transaction services agreements provided for the quarter and six months ended March 31, 2019.

Related to these agreements, the Company ~~has~~had a payable to Spectrum of ~~$10.7~~$1.4 and $2.6 in Other current liabilities and a receivable from Spectrum of ~~$18.9~~$44.0 and $7.6 in Other current assets ~~to Spectrum~~ as of ~~June~~March 31, 2020 and September 30, ~~2019.~~2019, respectively, as well as a receivable from Spectrum in Other assets of $16.8 as of March 31, 2020. The asset balances from Spectrum also include the tax indemnifications due from Spectrum under the initial purchase agreements.

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~~$4.6 and ~~$9.2~~$9.4 for the quarter and ~~nine~~six months ended ~~June 30, 2019, respectively,~~March 31, 2020 and ~~$0.2~~$4.4 for the quarter and six months ended March 31, 2019. The Company recorded $1.9 and $0.1 in Accounts payable at ~~June~~March 31, 2020 and September 30, 2019, respectively, related to these purchases.

In addition, at June 30, 2019, the Company had open invoices payable to Spectrum for $0.4 related to construction in process at the Spectrum headquarters as well as $0.3 related to the IT project to clone their accounting system.

In discontinued operations, the Company recorded income of ~~$4.0 and $8.1~~$3.8 for reverse TSA, and recorded expense of $0.3 ~~and $1.0~~ for the ~~quarter and nine~~six months ended ~~June 30, 2019, respectively.~~March 31, 2020 and recorded income of $4.1 for reverse TSA, and recorded expense of $0.7 for the three and six months ended March 31, 2019. In addition, there was a payable due to Spectrum of ~~$10.9~~$22.5 recorded in Liabilities held for sale and a receivable from Spectrum of ~~$4.8~~$8.9 recorded in Assets held for sale as of ~~June~~September 30, 2019.

~~(17)~~(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

ENERGIZER HOLDINGS, INC.

NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS

(In millions - Unaudited)

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.

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 ~~June 30, 2019,~~March 31, 2020, the Company had approximately ~~$22.7~~$19.8 of purchase ~~obligations.~~obligations under these contracts.

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 is 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, 2018 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.

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 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,” “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;

the impact of the novel coronavirus (COVID-19) global pandemic;

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;

financial strength of distributors and suppliers;

our ability to improve operations and realize cost savings;

the impact of the United Kingdom’s future trading relationships following its exit from the European Union;

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

the impact of adverse or unexpected weather conditions;

uncertainty from the expected discontinuance of LIBOR and the transition to 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 19, 2019, as well as in Item 1A. Risk Factors of this Form 10-Q.

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~~Coronavirus Aid, Relief and Economic Security (CARES) Act and the U.S. tax ~~legislation.~~legislation from December 2017. In addition, these measures help investors to ~~see~~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 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 two reportable segments including allocations for shared support functions. General corporate and other expenses, Global marketing expenses, R&D expenses, Amortization expense, ~~Gain on sale of real estate,~~ 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 ~~gain~~loss on ~~sale~~extinguishment of ~~real estate~~debt and the one-time impact of the ~~new~~CARES Act and the U.S. income tax ~~legislation.~~legislation from December 2017.

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 CARES Act and the U.S. tax legislation from December 2017.

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, ~~2018, and Nu Finish Acquisition on July 2, 2018.~~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. ~~For presentation purposes, the Company has recast Argentina's prior period operations as well.~~

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) and Gross Margin as a percent of sales. Detail for adjusted gross margin and 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~~Novel Coronavirus (COVID-19)

~~This document contains both historical~~In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic. The COVID-19 health crisis poses significant and ~~forward-looking statements. Forward-looking statements~~widespread risks to the Company’s business as well as to the business environment and the markets in which the Company operates.

During these challenging times, the Company is operating with two enduring principles - ensuring the health of our colleagues and business continuity. We are ~~not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation,~~following the ~~future sales, gross margins, costs, earnings, cash flows, tax rates and performance of Energizer. These statements generally can be identified~~guidelines issued by the ~~use~~U.S. Center for Disease Control and Prevention and the World Health Organization and have instituted work from home for the majority of ~~forward-looking words~~our office locations. We have also instituted additional measures at our production facilities, including temperature monitoring, enhanced facility cleaning, visual cues to aid in social distancing, and staggered shifts to minimize the number of colleagues on-site at any given time. We track and monitor suspected and confirmed cases of COVID-19, and we encourage colleagues to stay home if they or ~~phrases~~their family members are ill.

During natural disasters and other crises such as ~~"believe," "expect," "expectation," "anticipate," "may," "could," "intend," "belief," "estimate," "plan," "target," "predict," "likely," "will," "should," "forecast," "outlook," or~~the COVID-19 pandemic, our battery products are needed not only by end consumers, but also by healthcare professionals and others who are directly combatting COVID-19, including doctors, nurses and first responders, as well as others who are performing essential services, such as truck drivers. This has been evident in the recent increased demand for our battery products in several key markets in the U.S. across nearly all retail channels. Energizer provides batteries that power medical devices, including thermometers, blood pressure, heart and fall monitors and pulse oximeters, and other products that are critical during the COVID-19 outbreak. Energizer’s batteries also power devices and equipment that keep people safe and working at home, such as water heaters, smoke alarms, carbon monoxide detectors, wireless keyboards and mice.

Auto care products are more discretionary by nature, and COVID-19 has negatively impacted our sales of these products and may continue to do so as we expect an overall reduction in travel due to shelter-in-place orders, work and travel restrictions, and other similar ~~words or phrases. These statements are not guarantees~~measures to try to contain the COVID-19 virus. However, we expect consumers to focus on wipes and cleaning products and during recessions consumers often turn to less expensive Do It Yourself versus Do It for Me services.

Our core batteries business in North America and EMEA performed strongly in the second fiscal quarter of ~~performance~~2020, and ~~are inherently subject to known~~we have experienced softness in Latin America and ~~unknown risks, uncertainties~~Asia across both the battery 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 that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this document are only madeauto care businesses, as well as modest incremental operating costs, as a result of the ~~date~~social distancing measures enacted to combat COVID-19. While the full impact of ~~this document and~~COVID-19 is uncertain, we ~~disclaim any obligation~~have multiple options 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~~further mitigate the ~~categories in which we compete;~~

our ability to integrate businesses; to realize the projected results of acquisitions 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~~liquidity impact of the ~~acquired businesses~~COVID-19 pandemic and preserve our financial flexibility in light of current uncertainty in the global markets, including the deferral or reduction of capital expenditures and reduction or delay of overhead expenses and other expenditures. Such delays could slow future growth or impact our business plan. The full impact of COVID-19 on our ~~business operations;~~

~~our ability to close~~financial and operating performance will depend significantly on the ~~divestiture~~duration and severity of the ~~Europe-based Varta® consumer battery, chargers, portable power and portable lighting business which serves~~outbreak, the ~~Europe, the Middle East and Africa markets;~~

~~the success of new products~~actions taken to contain or mitigate its impact, disruption to our global supply chain, and the ~~ability to continually develop and market new products;~~

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

~~our ability to continue planned advertising and other promotional spending;~~

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

consumers return to more normalized purchasing behavior, among others factors beyond our ~~ability to maintain and improve market share in the categories in which we operate despite heightened competitive pressure;~~

~~our ability to improve operations and realize cost savings;~~

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

~~the impact of the United Kingdom’s announced intention to exit the European Union;~~

~~uncertainty from the expected discontinuance of LIBOR and the transition to any other interest rate benchmark;~~

~~the impact of raw materials and other commodity costs;~~

~~the impact of legislative changes~~knowledge 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 16, 2018 as well as incontrol. See Item 1A. Risk Factors, ~~of this Form 10-Q.~~for additional considerations.

Battery Acquisition

On January 2, 2019, the Company completed its acquisition of Spectrum Holdings, Inc.’s (Spectrum) global battery, lighting, and portable power business for a contractual purchase price of $2,000.0, subject to certain purchase price adjustments (Battery Acquisition). The Battery Acquisition included the Rayovac® and Varta® brands (Acquired Battery Business). The ~~initial cash paid after contractual~~Company's second quarter of fiscal 2020 and ~~estimated working capital adjustments was $1,956.2. Success fees of $13.0 were earned by financial advisers in January~~ 2019 ~~after closing~~both included the ~~acquisition. This was in addition to the $2.0 paid in January 2018 for services rendered on the transaction.~~

~~On December 11, 2018, the European Commission approved the acquisition~~operations of the Acquired Battery Business. For fiscal 2020, the incremental revenues and segment profit from the Acquired Battery

Business ~~conditioned on~~were $125.5 and $27.9, respectively, relating to three months of activity for which they were not owned in the ~~divestiture of the Divestment Business. Energizer will retain the rights to the Varta brand~~comparable periods in Latin America and Asia Pacific, as well as Spectrum’s global Rayovac®-branded consumer and hearing aid batteries business. Energizer began the formal divestiture process immediately after close. On May 29, 2019, the Company signed a definitive agreement for the sale of the Divestment Business to VARTA AG and expects to complete the divestiture by the end of calendar 2019, subject to customary closing conditions. The operations of this business have been reported as discontinued operations for the three and nine months ended June 30,fiscal 2019.

~~For~~Subsequent to the quarter, on January 2, 2020, the Company sold the Varta® consumer battery business in the Europe, Middle East and ~~nine months ended June 30, 2019~~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 ~~revenue associated with~~terms of the Battery Acquisition ~~was $109.1~~agreement, Spectrum also contributed cash proceeds toward this sale. Total cash proceeds received were approximately $346, which are subject to a working capital settlement and ~~$209.0, respectively, and the income before income taxes was $6.1 and a loss before income taxes of $6.3, respectively,~~other contractual adjustments which ~~included the inventory fair value adjustment of $14.2~~are expected to be completed in the ~~nine months ended June 30, 2019.~~third fiscal quarter.

Auto Care Acquisition

On ~~November 15, 2018, Energizer entered into a definitive acquisition agreement to acquire~~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). The ~~contractual purchase price was comprised~~months of ~~$937.5 in cash~~February and ~~$312.5~~March of ~~newly-issued Energizer common stock to Spectrum.~~

~~Success fees~~2019 and 2020 both include the operations of ~~$6.0 were earned by a financial adviser in January 2019 after closing~~ the ~~acquisition on January 28, 2019. This was in addition to the $2.0 paid in November 2018 for services rendered on the transaction.~~

~~For the quarter and nine months ended June 30, 2019 the revenue associated with the~~Acquired Auto Care ~~Acquisition was $135.6~~Business. For January 2020, the Acquired Auto Care Business added incremental revenues and ~~$220.1,~~segment profit of $23.7 and $7.0, respectively, ~~and the income before income taxes was $13.6 and $16.4, respectively,~~relating to one month of activity for which ~~included the inventory fair value adjustment of $6.5 and $19.5, respectively.~~

~~Nu Finish Acquisition~~

On July 2, 2018, the Company acquired all of the assets of Reed-Union Corporation's automotive appearance business, including Nu Finish Car Polish and Scratch Doctor brands (Nu Finish Acquisition). The acquisition purchase price of $38.1 was funded through a combination of cash on hand and committed debt facilities. The revenuethey were not owned in the comparable second fiscal quarter of 2019. For fiscal year 2020, the incremental revenues and ~~nine~~segment profit from the Acquired Auto Care Business were $85.1 and $17.1, respectively, relating to four months ~~ended June 30, 2019 associated with~~of activity for which they were not owned in the ~~Nu Finish Acquisition was $3.0 and $5.9, respectively, and earnings before income taxes was a loss of $0.6 and earnings of $0.2, respectively.~~comparable periods in fiscal 2019.

Acquisition and Integration Costs

The Company incurred pre-tax acquisition and integration costs ~~related to the Battery Acquisition, the Auto Care Acquisition,~~of $16.9 and ~~the Nu Finish Acquisition of $28.0 and $159.9~~$36.2 in the quarter and ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, respectively, and ~~$15.9~~$95.4 and ~~$41.0~~$131.9 for the quarter and ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, respectively.

For the quarter and ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, the Company recorded ~~$0.3~~$0.6 and $1.0, respectively, in research and development.

Included in Other items, net for the quarter ended March 31, 2020 was $0.1 of pre-tax transition services income. Other items, net for the six months ended March 31, 2020 were pre-tax expenses of ~~$0.2 and pre-tax income of $13.2 in the three and nine months ended June 30, 2019, respectively. The quarter~~$0.8, which included ~~transition services income of $0.7 offset by~~ a ~~$0.9~~$2.2 loss related to the hedge contract on the ~~expected~~ proceeds from the ~~anticipated~~ Varta ~~divestiture.~~Divestiture, offset by a $1.0 gain on the sale of assets and $0.4 transition services income.

$9.0 related to the favorable movement in the escrowed USD restricted cash held in our European Euro functional entity ~~during the nine months ended June 30, 2019. The Company also recorded~~and interest income of $5.8 earned on the Restricted cash funds held in escrow associated with the Battery ~~Acquisition during~~Acquisition.

Restructuring Costs

In the ~~nine months ended June 30, 2019.~~ 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 ~~Company also earned income related to transition services agreements of $0.8 for the nine months ended June 30, 2019. These income items were offset by $1.5 of~~total pre-tax expense ~~to settle hedge contracts of the acquired business as well as the $0.9 loss~~ related to the ~~hedge contract on the expected proceeds from the anticipated Varta divestiture.~~

~~During~~restructuring plans for the quarter and ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2020 were $7.4 and $13.7, respectively. These 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. The costs were reflected in Cost of products sold on the ~~Company also~~Consolidated (Condensed) Statement of Earnings and Comprehensive Income. Costs for the quarter ended March 31, 2020 were incurred within the Americas and International segments in the amount of $6.9 and $0.5, respectively. Costs for the six months end March 31, 2020 were incurred within the Americas and International segments in the amount of $12.8 and $0.9, respectively.

Total pre-tax charges relating to the restructuring since inception were $25.8. At March 31, 2020, the restructuring reserve was recorded ~~a gain~~on the Consolidated (Condensed) Balance sheet in Other ~~items, net~~current liabilities of ~~$9.9 on foreign currency contracts which were entered into in June 2018~~$9.7 and ~~locked~~Other liabilities of $3.7.

Energizer expects to incur additional severance and related benefit costs and other exit-related costs associated with these plans of approximately $50 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 ~~U.S. dollar (USD) value~~first quarter of ~~the Euro notes related~~fiscal 2020.

Refer to ~~the Battery Acquisition. These contracts were terminated when the funds were placed into escrow~~Note 5 for additional discussion on ~~July 6, 2018. The Company also incurred $0.5 and $6.0 of tax withholding costs in the quarter and nine months ending June 30, 2018, related to anticipated cash movement to fund the acquisition.~~our restructuring costs.

Highlights / Operating Results

Financial Results (in millions, except per share data)

Energizer reported ~~third~~second fiscal quarter Net earnings from continuing operations of ~~$9.2,~~$13.7, or ~~$0.07~~$0.14 per diluted common share. This compares to a Net ~~earnings~~loss from continuing operations of ~~$23.8,~~$62.3, or ~~$0.39~~a loss of $0.97 per diluted common share, in the prior year ~~third~~second fiscal quarter. Adjusted diluted net earnings from continuing operations per common share was $0.37 for the ~~third~~second fiscal quarter as compared to ~~$0.54~~$0.20 in the prior year quarter, ~~a decrease~~an increase of ~~31.5%~~85.0%.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, Energizer reported Net earnings from continuing operations of ~~$17.7,~~$59.5, or ~~$0.15~~$0.74 per diluted common share. This compares to the net earnings from continuing operations of ~~$92.0,~~$8.5, or ~~$1.50~~$0.08 per diluted common ~~share~~shares in the prior year comparable period. Adjusted diluted net earnings from continuing operations per common share was ~~$2.07~~$1.22 for the ~~nine~~six month period as compared to ~~$2.55~~the $1.69 in the prior year comparable period, a decrease of ~~18.8%~~27.8%.

Net earnings from continuing operations and Diluted net earnings from continuing operations per common share for the time periods presented were impacted by certain items related to acquisition and integration costs, ~~gain~~the loss on ~~sale~~extinguishment of ~~real estate~~debt and the one-time impact of the ~~new~~CARES Act and the U.S. tax legislation from December 2017 as described in the tables below. The impact of these items are provided below as a reconciliation of Net ~~earnings~~earnings/(loss) from continuing operations and Diluted net ~~earnings~~earnings/(loss) from continuing operations per common share to Adjusted net earnings from continuing operations and Adjusted diluted net earnings from continuing operations per common share, which are non-GAAP measures. See disclosure on non-GAAP measures above.

For the Quarter Ended June 30, For the Nine Months Ended June 30,
2019 2018 2019 2018
Net earnings/(loss) attributable to common shareholders $ 3.0
$ 23.8
$ (2.8 ) $ 92.0
Mandatory preferred stock dividends (4.4 ) —
(7.7 ) —
Net earnings 7.4
23.8
4.9
92.0
Net loss from discontinued operations, net of income tax benefit (1.8 ) —
(12.8 ) —
Net earnings from continuing operations $ 9.2
$ 23.8
$ 17.7
$ 92.0
Adjustments
Pre-tax acquisition and integration (1) 28.0
15.9
159.9
41.0
Tax impact of acquisition and integration charges (5.9 ) (2.9 ) (30.8 ) (9.8 )
Gain on sale of real estate —
(3.5 ) —
(3.5 )
Acquisition withholding tax (2) —
0.5
—
6.0
One-time impact of the new U.S. Tax Legislation (0.8 ) (0.6 ) 0.7
30.6
Adjusted net earnings from continuing operations (3) $ 30.5
$ 33.2
$ 147.5
$ 156.3

For the Quarter Ended June 30, For the Nine Months Ended June 30,
2019 2018 2019 2018
Diluted net earnings per common share - continuing operations $ 0.07
$ 0.39
$ 0.15
$ 1.50
Adjustments
Pre-tax acquisition and integration (1) 0.40
0.26
2.25
0.67
Tax impact of acquisition and integration charges (0.09 ) (0.05 ) (0.43 ) (0.16 )
Gain on sale of real estate —
(0.06 ) —
(0.06 )
Acquisition withholding tax (2) —
0.01
—
0.10
One-time impact of the new U.S. Tax Legislation (0.01 ) (0.01 ) 0.01
0.50
Impact for diluted share calculation (4) —
—
0.10
$ —
Adjusted diluted net earnings per diluted share - continuing operations $ 0.37
$ 0.54
$ 2.07
$ 2.55
Weighted average shares of common stock - Diluted 70.6
61.4
66.5
61.4
Adjusted Weighted average shares of common stock - Diluted (4) 70.6
61.4
71.2
61.4



	For the Quarter Ended March 31,						For the Six Months Ended March 31,
	2020			2019			2020			2019
Net loss attributable to common shareholders	$	(121.8	)	$	(76.6	)	$	(79.7	)	$	(5.8	)
Mandatory preferred stock dividends	(4.1		)	(3.3		)	(8.1		)	(3.3		)
Net loss	$	(117.7	)	$	(73.3	)	$	(71.6	)	$	(2.5	)
Net loss from discontinued operations	(131.4		)	(11.0		)	(131.1		)	(11.0		)
Net earnings/(loss) from continuing operations	$	13.7		$	(62.3	)	$	59.5		$	8.5
Pre-tax adjustments
Acquisition and integration (1)	$	16.9		$	95.4		$	36.2		$	131.9
Loss on extinguishment of debt (2)	—			—			4.2			—
Total adjustments, pre-tax	$	16.9		$	95.4		$	40.4		$	131.9
After tax adjustments
Acquisition and integration	$	12.8		$	79.1		27.5			107.0
Loss on extinguishment of debt	—			—			3.2			—
One-time impact of the CARES Act	3.4			—			3.4			—
One-time impact of the new U.S. Tax Legislation	—			—			—			1.5
Total adjustments, after tax	$	16.2		$	79.1		$	34.1		$	108.5
Adjusted net earnings from continuing operations (3)	$	29.9		$	16.8		$	93.6		$	117.0
Mandatory preferred stock dividends	(4.1		)	(3.3		)	(8.1		)	(3.3		)
Adjusted net earnings from continuing operations attributable to common shareholders	$	25.8		$	13.5		$	85.5		$	113.7

Diluted net earnings/(loss) per common share - continuing operations	$	0.14		$	(0.97	)	$	0.74		$	0.08
Adjustments (per common share)
Acquisition and integration	0.18			1.16			0.39			1.54
Loss on extinguishment of debt	—			—			0.04			—
One time impact of the CARES Act	0.05			—			0.05			—
One-time impact of new U.S tax legislation	—			—			—			0.02
Impact for diluted share calculation (3)	—			0.01			—			0.05
Adjusted diluted net earnings per diluted common share - continuing operations	$	0.37		$	0.20		$	1.22		$	1.69
Weighted average shares of common stock - Diluted	69.5			67.3			69.8			64.6
Adjusted Weighted average shares of common stock - Diluted (4)	69.5			68.3			69.8			69.3

(1) Acquisition and integration costs were included in the following lines in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income:


	For the Quarter Ended June 30,					For the Nine Months Ended June 30,						For the Quarter Ended March 31,					For the Six Months Ended March 31,
	2019		2018			2019			2018			2020			2019		2020		2019
Inventory step up (COGS)												$	—		$	27.2	$	—	$	27.2
Cost of products sold	$	12.4	$	—		$	44.1		$	—		8.3			4.5		15.2		4.5
Selling, general and administrative expense	15.1		22.4			63.1			44.6
Research and development expense	0.3		—			0.3			—
SG&A												8.1			29.1		19.2		48.0
Research and development												0.6			—		1.0		—
Interest expense	—		3.4			65.6			6.3			—			33.2		—		65.6
Other items, net	0.2		(9.9		)	(13.2		)	(9.9		)	(0.1		)	1.4		0.8		(13.4		)
Total acquisition and integration costs	$	28.0	$	15.9		$	159.9		$	41.0		$	16.9		$	95.4	$	36.2	$	131.9

(2) This ~~represents~~loss on extinguishment of debt is associated with the ~~prior year tax withholding~~term loan refinancing which occurred in the first fiscal quarter of 2020 and was recorded in interest expense ~~related to~~on the ~~cash movement to fund the Battery Acquisition.~~Consolidated (Condensed) Statement of Earnings.

(3) The effective tax rate for the quarter ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ for the Adjusted - Non-GAAP Net ~~earnings from continuing operations~~Earnings and ~~Adjusted diluted net earnings per common share from continuing operations~~Diluted EPS was ~~18.4%~~22.9% and ~~22.4%~~21.5%,

respectively, as calculated utilizing the statutory rate for where the costs were incurred. The effective tax rate for the ~~nine~~six months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ for the Adjusted - Non-GAAP Net Earnings ~~from continuing operations~~ and ~~diluted net earnings per common share from continuing operations~~Diluted EPS was ~~20.4%~~22.6% and ~~23.6%~~20.9%, respectively, as calculated utilizing the statutory rate for where the costs were incurred.

(4) Adjusted net earnings from continuing operations for the quarter ended March 31, 2019 results in net earnings compared to the reported number of a net loss. To calculate the Adjusted diluted net earnings per common share - continuing operations, the Adjusted Weighted average shares of common stock - Diluted factor in the diluted performance shares and restricted shares of 1.0 million which were anti-dilutive on a reported basis.

For the ~~nine month~~six months ended March 31, 2019 calculation, the Adjusted Weighted average shares of common stock - Diluted is assuming conversion of the preferred shares as those results are more dilutive. The shares have been adjusted for the 4.7 million share conversion and the preferred dividend has been adjusted out of the Adjusted net earnings.

Highlights

Total Net Sales (In millions - Unaudited)
Quarter and Nine Months Ended June 30, 2019
Total Net Sales Q3 % Chg Nine Months % Chg
Net sales - FY '18 $ 392.8
$ 1,340.5

Organic 14.2
3.6 % 31.2
2.3 %
Impact of Battery Acquisition 109.1
27.8 % 209.0
15.6 %
Impact of Auto Care Acquisition 135.6
34.5 % 220.1
16.4 %
Impact of Nu Finish Acquisition 3.0
0.8 % 5.9
0.4 %
Change in Argentina operations (0.1 ) — % (4.3 ) (0.3 )%
Impact of currency (7.4 ) (1.9 )% (26.9 ) (1.9 )%
Net sales - FY '19 $ 647.2
64.8 % $ 1,775.5
32.5 %



Total Net sales (In millions - Unaudited)
	For the Quarter Ended March 31, 2020					For the Six Months Ended March 31, 2020
	$ Change			% Chg		$ Change			% Chg
Net sales - prior year	$	556.4				$	1,128.3
Organic	15.0			2.7	%	(4.7		)	(0.4	)%
Impact of Battery Acquisition	—			—	%	125.5			11.1	%
Impact of Auto Care Acquisition	23.7			4.3	%	85.1			7.5	%
Change in Argentina	(0.7		)	(0.1	)%	(0.5		)	—	%
Impact of currency	(7.4		)	(1.4	)%	(9.9		)	(0.9	)%
Net Sales - current year	$	587.0		5.5	%	$	1,323.8		17.3	%

See non-GAAP measure disclosures above.

Net sales were ~~$647.2~~$587.0 for the ~~third~~second quarter of ~~2019,~~2020, an increase of ~~$254.4~~$30.6 as compared to the prior year quarter driven by the following items:

Organic net sales ~~were up 3.6%~~increased 2.7% in the second fiscal quarter due to the following items:


◦	~~Favorable pricing~~Increased distribution across both of our segments contributed ~~1.8% to the organic increase;~~1.9%;


◦	~~Distribution gains~~Replenishment volumes, including the beneficial impacts of COVID-19 on battery demand, contributed ~~1.3% to the organic increase; and~~1.6%;


◦	~~The impact of~~Channel and product mix in addition to trade investment reduced the ~~reclassification of licensing revenues contributed 0.5%~~organic increase by 0.8%.

The ~~positive impact~~Auto Care Acquisition, which occurred on January 28, 2019, contributed one additional month of ~~the acquisitions was $247.7,~~Net sales of $23.7, or ~~63.1%~~4.3%;

The ~~negative~~unfavorable impact due to the change in Argentina operations was ~~$0.1;~~$0.7; and

Unfavorable foreign currency impacts were $7.4, or ~~1.9%~~1.4%.

Net sales for the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 were ~~$1,775.5,~~$1,323.8, an increase of ~~32.5%~~$195.5 as compared to the prior year comparative period, driven by the following items:

Organic net sales ~~increased by 2.3% primarily driven by:~~were down 0.4% due to the following items:

◦

~~Category growth, pricing~~A decline in point-of-sale trends driven by the US price increase taken in the prior year and ~~distribution gains~~the impacts of a competitive launch, coupled with lower replenishment volumes associated with hurricane activity in the fourth fiscal quarter of 2019, offset by the beneficial impacts of COVID-19 on battery demand, contributed ~~2.4%~~1.8% to the organic ~~increase;~~decrease;


◦	~~The impact~~Phasing of holiday activity from the ~~reclassification~~first quarter to the fourth quarter of ~~licensing revenues~~fiscal 2019 contributed ~~0.4%~~1.2% to the organic decrease;


◦	Increased distribution across both of our segments partially offset the organic decrease by 2.2%; and


◦	~~Partially offsetting~~Pricing actions, slightly offset by channel and product mix in addition to increased trade investment, offset the ~~above was 0.5% related to volume declines as a result of lapping fill volume benefits of our prior year portfolio alignment.~~organic decrease by 0.4%.

•The positive impact of the acquisitions was ~~$435.0,~~$210.6, or ~~32.5%~~18.6%;

•The ~~negative~~unfavorable impact due to the change in Argentina operations was ~~$4.3, or 0.3%;~~$0.5; and

•Unfavorable currency impacts were ~~$26.9,~~$9.9, or ~~1.9%~~0.9%.

Gross margin percentageon a reported basis for the ~~third~~second fiscal quarter of ~~2019~~2020 was ~~38.1%~~40.1%, compared to ~~44.8%~~34.9% in the prior year. Excluding ~~$12.4 from~~$8.3 of integration costs in the current quarter, adjusted gross margin was 41.6%, compared to 40.6% in the prior year, excluding inventory step up ~~resulting from purchase accounting~~costs of $27.2 and ~~current quarter~~ acquisition and integration costs of $4.5 in the prior year. The 100 basis point increase from prior year was driven by realized synergies and improved material pricing partially offset by unfavorable channel and product mix, the operational impact of COVID-19 and foreign currency movements.

Gross margin percentage on a reported basis for the six months ended March 31, 2020 was 40.6%, compared to 41.6% in the prior year comparative period. Excluding $15.2 of acquisition and integration costs in the current year, adjusted gross margin was ~~40.0%~~41.7%, ~~down 480~~compared to 44.4% in the prior year, excluding inventory step up costs of $27.2 and acquisition and integration costs of $4.5 in the prior year. The 270 basis ~~points~~point decrease from prior year was largely driven by the lower margin rate profile of the acquired ~~businesses. Unfavorable movement in~~businesses, as well as unfavorable channel and product mix, foreign ~~currencies~~currency movements, tariffs and ~~material pricing also contributed to~~ the ~~decrease but was offset by improved pricing realized across both~~operational impact of ~~our segments.~~

Gross margin percentage for the nine months ended June 30, 2019 was down 620 basis points. Excluding $44.1 from the current year inventory step up resulting from purchase accounting and current year acquisition and integration costs, gross margin decreased 370 basis points driven by the lower margin rate profile of the acquired businesses and unfavorable movement in foreign currency.COVID-19. These decreases were partially offset by ~~the lapping of the investments made in continuous improvement initiatives in the prior year~~improved material pricing and ~~the reclassification of currency gains from Other items, net into Cost of products sold, due to the adoption of new accounting guidance in the second fiscal quarter.~~realized synergies.

Advertising and sales promotion expense (A&P) was ~~$34.3,~~$22.8, or ~~5.3%~~3.9% of net sales, in the ~~third~~second fiscal quarter of ~~2019,~~2020, as compared to ~~$22.9,~~$24.7, or ~~5.8%~~4.4% of net sales, in the prior ~~third~~second fiscal quarter ~~2018. Excluding~~2019. The decrease of $1.9 was due to timing of spending for our broad portfolio as well as product and packaging innovation and promotional support for the ~~$11.0 million of A&P from the acquired businesses, the legacy business A&P was $23.3 million, or 5.8% of net sales, essentially flat compared to the prior year.~~auto care brands.

A&P was ~~$99.9,~~$69.6, or ~~5.6%~~5.3% of net sales, ~~for the nine months ended June 30, 2019,~~ as compared to ~~$81.1,~~$65.6, or ~~6.0%~~5.8% of net sales, in the prior year comparative period. ~~Excluding~~The increase of $4.0 over the ~~$14.6~~prior year is driven by incremental spending of ~~A&P from the~~$3.5 on our acquired businesses ~~the legacy business had A&P of $85.3, or 6.4% of legacy net sales, an increase of 40 basis points, driven by increased media spending.~~which was primarily for product and packaging innovation and promotional support for our auto care brands.

Selling, general, and administrative expense (SG&A) was ~~$127.6~~$116.1 in the ~~third~~second fiscal quarter of ~~2019,~~2020, or ~~19.7%~~19.8% of net sales, as compared to ~~$111.9,~~$141.3, or ~~28.5%~~25.4% of net sales, in the prior period. Included in the ~~third~~second fiscal quarter of ~~2019~~2020 and ~~2018~~2019 results were acquisition and integration costs of ~~$15.1~~$8.1 and ~~$22.4,~~$29.1, respectively. Excluding acquisition and integration costs, adjusted SG&A was ~~$112.5,~~$108.0, or ~~17.4%~~18.4% of net sales, as compared to ~~$89.5,~~$112.2, or ~~22.8%~~20.2% of net sales, in the prior year. ~~Excluding~~The decrease of $4.2 was driven by synergy realization primarily due to transition service agreement (TSA) exits, lower mark to market expense on deferred compensation and reduced spending in the ~~SG&A~~back half of the ~~acquired business of $30.8~~quarter due in part to COVID-19 impacts and the acquisition and integration costs, legacy SG&A as a percent of net sales was 20.4%, or $81.7, down 240 basis points to prior year third quarter. The benefit of our continuous improvement initiatives as well as lapping prior year investments in those initiatives, lower compensation expense, favorable impacts of foreign currency and lapping prior year unfavorable legal costs were slightly offset by the licensing revenue reclassification to net sales.restrictions.

SG&A was ~~$373.5~~$238.2 for the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, or ~~21.0%~~18.0% of net sales, as compared to ~~$315.3~~$245.9, or ~~23.5%~~21.8% of net sales, in the prior year comparative period. Included in the ~~nine~~six months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ results were acquisition and integration costs of ~~$63.1~~$19.2 and ~~$44.6,~~$48.0, respectively. Excluding the acquisition and integration costs, adjusted SG&A was ~~$310.4, an increase~~$219.0 or 16.5% of ~~$39.7 over~~net sales, as compared to the ~~prior year. SG&A, excluding acquisition and integration costs was~~$197.9, or 17.5% of net sales, ~~compared to 20.2%~~ in the prior year, down 270 basis points. Excluding the SG&A of the acquired business of $56.3 and the acquisition and integration costs, legacy SG&A as a percent of net sales was 19.0%, or $254.1, a decrease of $16.6 over the prior year. The ~~benefit~~absolute dollar increase was due to the incremental SG&A of ~~our continuous improvement initiatives as well as lapping prior year investments~~approximately $26 from the acquired businesses in ~~those initiatives~~fiscal 2020 compared to fiscal 2019, slightly offset by synergy realization and lower mark to market expense. The decrease in percentage was driven by synergy realization, primarily due to TSA exits, lower mark to market expense on ~~our unfunded~~ deferred compensation ~~liability was partially offset by~~and reduced spending in the ~~licensing revenue reclassification~~back half of the second quarter due in part to ~~net sales.~~

COVID-19 impacts and restrictions.

Research and Development (R&D) was ~~$9.5,~~$8.3, or ~~1.5%~~1.4% of net sales, for the quarter ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$5.2,~~$8.7, or ~~1.3%~~1.6% of net sales, in the prior year comparative period. For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, R&D was ~~$23.7,~~$17.2, or 1.3% of net sales, as compared to ~~$15.9,~~$14.2, or ~~1.2%~~1.3% of net sales in the prior year comparative period.

Interest expense was ~~$51.9~~$47.2 for the ~~third~~second fiscal quarter of ~~2019,~~2020, compared to ~~$17.7~~$77.2 for the prior year comparative period. Excluding the prior year acquisition costs ~~in the prior year~~ of ~~$3.4,~~$33.2, the current year ~~interest~~Interest expense increased ~~$37.6~~$3.2 attributed to a higher average debt balance associated with the acquisitions.

Interest expense was ~~$177.3~~$98.2 for the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, and ~~$47.6~~$125.4 for the prior year comparative period. ~~The nine months ended June 30, 2019 expense included $65.6~~Excluding the current year $4.2 loss on extinguishment of debt and the prior year interest expense and ticking fees related

to the the Battery Acquisition as well as the issuance fees associated with the Battery and Auto Care ~~Acquisition's~~Acquisitions' new debt issued in January ~~2019. Excluding the acquisition costs in the current year~~2019 of $65.6, ~~and the prior year of $6.3,~~ the current year interest expense increased ~~$70.4 for the nine months ended June 30, 2019, compared~~$34.2 attributed to ~~the prior year comparative period driven by~~a higher average debt balance associated with the acquisitions.

Other items, net was ~~income~~expense of ~~$0.8~~$5.1 for the ~~third~~second fiscal quarter of ~~2019~~2020 compared to ~~$11.3~~$3.8 for the prior year ~~third~~second quarter. Other items, net was ~~income~~expense of ~~$13.9~~$5.1 and a benefit of ~~$9.1~~$13.1 for ~~the nine~~six months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

For the Quarter Ended June 30, For the Nine Months Ended June 30,
2019 2018 2019 2018
Other items, net
Interest income $ (0.3 ) $ (0.4 ) $ (1.3 ) $ (1.2 )
       Interest income on restricted cash (1) —
—
(5.8 ) —
Foreign currency exchange (gain)/loss (0.3 ) 0.7
2.4
7.7
       Pension benefit other than service costs (0.7 ) (1.7 ) (2.1 ) (5.1 )
Acquisition foreign currency loss/(gain) (2) 0.9
(9.9 ) (8.1 ) (9.9 )
Settlement of acquired business hedging contracts (3) —
—
1.5
—
Transition services agreement income (0.7 ) —
(0.8 ) —
      Other 0.3
—
0.3
(0.6 )
Total Other items, net $ (0.8 ) $ (11.3 ) $ (13.9 ) $ (9.1 )

~~(1) Represents the interest income earned on the restricted cash held for the Battery Acquisition.~~

(2) Gain relates to currency movement in the escrowed USD funds held in our European Euro functional currency entity. The loss relates to our hedge contract on the expected proceeds from the anticipated Varta Divestiture.

~~(3) Settlement of acquired business hedging contracts that were terminated upon the Company's request at the acquisition date.~~



	For the Quarter Ended March 31,						For the Six Months Ended March 31,
	2020			2019			2020			2019
Other items, net
Interest income	$	(0.1	)	$	(0.7	)	$	(0.2	)	$	(1.0	)
Foreign currency exchange loss	5.5			3.8			5.1			2.7
Pension benefit other than service costs	(0.5		)	(0.7		)	(1.0		)	(1.4		)
Other	0.3			—			0.4			—
Acquisition foreign currency loss/(gain)	—			—			2.2			(9.0		)
Interest income on restricted cash	—			—			—			(5.8		)
Transition services agreement income	(0.1		)	(0.1		)	(0.4		)	(0.1		)
Gain on sale of assets	—			—			(1.0		)	—
Settlement of acquired business hedging contract	—			1.5			—			1.5
Total Other items, net	$	5.1		$	3.8		$	5.1		$	(13.1	)

The effective tax rate on a year to date basis was ~~30.3%~~26.2% as compared to ~~45.3%~~46.9% in the prior year. The current year rate includes costs related to acquisition and integration in addition to the unfavorable impact of the CARES Act, which was signed into law on March 27, 2020 and provides, among other things, increased interest deduction limitations to companies in order to decrease overall cash taxes paid. The prior year rate includes $1.5 for the ~~prior year comparative period. The current rate includes $0.7 for the one-time~~one-

time impact of U.S. tax legislation passed in December 2017 and the impact of the disallowed transaction costs resulting from the acquisitions, which drove a higher tax ~~rate. The~~rate in the prior year rate includes $30.6 million for the one-time impact of the new U.S. tax legislation passed in December 2017 and the impact of tax withholding expense related to the cash movement that occurred to fund the Battery Acquisition.year. Excluding the impact of ~~our~~these Non-GAAP adjustments, the year to date adjusted effective tax rate was ~~20.4%~~22.6% as compared to ~~23.6%~~20.9% in the prior year. The ~~decrease~~increase in the rate versus prior year is ~~driven by the new 21% statutory U.S. rate effective for all of fiscal year 2019 compared~~due to the ~~statutory~~country mix of earnings which drove a higher foreign tax rate as well as the expiration of ~~24.5%~~certain tax holidays in ~~fiscal year 2018.~~foreign jurisdictions.

Segment Results

Operations for Energizer are managed via two major geographic reportable segments: Americas and International. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based compensation costs, acquisition and integration activities, amortization costs, research & development costs ~~gain on sale of real estate~~ 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 and integration costs from segment results reflects management’s view on how it evaluates segment performance.

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 8,9, Segments, to the Consolidated (Condensed) Financial Statements for the periods ended ~~June 30,~~March 31, 2020 and 2019. Segment sales and Segment profit analysis for the quarter and ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 are presented below.

Net ~~Sales~~sales (In millions)

Quarter and ~~Nine~~Six Months Ended ~~June 30, 2019~~March 31, 2020


	Quarter Ended June 30, 2019					Nine Months Ended June 30, 2019					Quarter Ended March 31, 2020					Six Months Ended March 31, 2020
	$ Change			% Chg		$ Change			% Chg		$ Change			% Chg		$ Change			% Chg
Americas
Net sales - FY '18	$	241.3				$	838.5
Net sales - FY '19											$	381.6				$	755.1
Organic	7.2			3.0	%	13.9			1.7	%	10.9			2.9	%	(8.1		)	(1.1	)%
Impact of Battery Acquisition	89.9			37.3	%	168.0			20.0	%	—			—	%	107.1			14.2	%
Impact of Auto Care Acquisition	124.7			51.7	%	202.6			24.2	%	21.1			5.5	%	74.0			9.8	%
Impact of Nu Finish Acquisition	2.9			1.2	%	5.7			0.7	%
Change in Argentina	(0.1		)	—	%	(4.3		)	(0.5	)%	(0.7		)	(0.2	)%	(0.5		)	(0.1	)%
Impact of currency	(0.8		)	(0.5	)%	(4.2		)	(0.6	)%	(3.0		)	(0.8	)%	(3.2		)	(0.4	)%
Net Sales - FY '19	$	465.1		92.7	%	$	1,220.2		45.5	%
Net sales - FY '20											$	409.9		7.4	%	$	924.4		22.4	%

International
Net sales - FY '18	$	151.5				$	502.0
Net sales - FY '19											$	174.8				$	373.2
Organic	7.0			4.6	%	17.3			3.4	%	4.1			2.3	%	3.4			0.9	%
Impact of Battery Acquisition	19.2			12.7	%	41.0			8.2	%	—			—	%	18.4			4.9	%
Impact of Auto Care Acquisition	10.9			7.2	%	17.5			3.5	%	2.6			1.5	%	11.1			3.0	%
Impact of Nu Finish Acquisition	0.1			0.1	%	0.2			—	%
Impact of currency	(6.6		)	(4.4	)%	(22.7		)	(4.5	)%	(4.4		)	(2.5	)%	(6.7		)	(1.8	)%
Net Sales - FY '19	$	182.1		20.2	%	$	555.3		10.6	%
Net sales - FY '20											$	177.1		1.3	%	$	399.4		7.0	%

Total Net Sales
Net sales - FY '18	$	392.8				$	1,340.5
Total Net sales
Net sales - FY '19											$	556.4				$	1,128.3
Organic	14.2			3.6	%	31.2			2.3	%	15.0			2.7	%	(4.7		)	(0.4	)%
Impact of Battery Acquisition	109.1			27.8	%	209.0			15.6	%	—			—	%	125.5			11.1	%
Impact of Auto Care Acquisition	135.6			34.5	%	220.1			16.4	%	23.7			4.3	%	85.1			7.5	%
Impact of Nu Finish Acquisition	3.0			0.8	%	5.9			0.4	%
Change in Argentina	(0.1		)	—	%	(4.3		)	(0.3	)%	(0.7		)	(0.1	)%	(0.5		)	—	%
Impact of currency	(7.4		)	(1.9	)%	(26.9		)	(1.9	)%	(7.4		)	(1.4	)%	(9.9		)	(0.9	)%
Net Sales - FY '19	$	647.2		64.8	%	$	1,775.5		32.5	%
Net sales - FY '20											$	587.0		5.5	%	$	1,323.8		17.3	%

Results for the Quarter Ended ~~June 30, 2019~~March 31, 2020

Americas reported Net sales increase of 7.4%. Excluding the impact of acquisitions, which positively impacted Net sales by $21.1, or 5.5%, the unfavorable impact of Argentina operations of $0.7, or 0.2%, and unfavorable foreign currency impact of $3.0, or 0.8%, organic net sales increased 2.9% for the second fiscal quarter. The organic increase was driven by increased distribution and replenishment volumes, including the beneficial net impacts of COVID-19, slightly offset by channel and product mix and increased trade investment.

International reported a net sales increase of ~~92.7%~~1.3%. Excluding the impact of acquisitions, which positively impacted net sales by ~~$217.5,~~$2.6, or ~~90.1%~~1.5%, and the unfavorable foreign currency movement of ~~$0.8,~~$4.4, or ~~0.5%~~2.5%, organic net sales increased 2.3% driven by increased distribution, slightly offset by channel and product mix and increased trade investment.

Results for the Six Months Ended March 31, 2020

Americas reported Net sales increase of 22.4%. Excluding the impact of acquisitions, which positively impacted Net sales by $181.1, or 24.0%, the unfavorable impact of Argentina operations of ~~$0.1,~~$0.5, or ~~0.0%~~0.1%, ~~which negatively impacted net sales,~~and unfavorable foreign currency impact of $3.2, or 0.4%, organic net sales ~~growth was 3.0%~~decreased 1.1% for the ~~third~~second fiscal quarter. The organic ~~increase~~decrease was driven by ~~category growth,~~a decline in point-of-sale trends due to the US price increase taken in the prior year, the

impacts of a competitive launch, as well as lower replenishment volumes associated with hurricane activity in the fourth fiscal quarter of 2019 and phasing of holiday shipments from the first quarter to the fourth quarter of fiscal 2019. Offsetting some of the organic decrease was increased distribution, ~~gains~~favorable pricing and ~~pricing.~~the beneficial net impacts of COVID-19, driven by our battery business.

International reported ~~a net~~Net sales increase of ~~20.2%~~7.0%. Excluding the impact of acquisitions, which positively impacted net sales by ~~$30.2,~~$29.5, or 20.0% and foreign currency of $6.6, or 4.4%, which negatively impacted net sales, organic net sales growth was 4.6% for the third fiscal quarter. The organic increase was driven by strong volumes and continued growth in our modern markets and the reclassification of licensing revenue.

~~Results for the Nine Months Ended June 30, 2019~~

Americas reported net sales improved 45.5%. The acquisitions positively impacted net sales by $376.3, or 44.9%. These increases were partially offset by the decline in Argentina operations of $4.3, or 0.5%7.9%, and the ~~negative impact of~~unfavorable foreign currency movement of ~~$4.2,~~$6.7, or ~~0.6%. Excluding these items,~~1.8%, organic net sales increased ~~1.7%~~0.9% driven by ~~category growth,~~increased distribution, ~~gains, pricing and the reclassification of licensing income. These gains were~~ slightly offset by the phasing of holiday shipments from the first quarter to the fourth quarter of fiscal 2019, channel and product mix and increased ~~retailer promotional activity and the lapping of fill volume benefits from our prior year portfolio alignment.~~trade investment.

International reported net sales improved 10.6%. This growth was driven by the positive impact of the acquisitions of $58.7, or 11.7% partially offset by the negative impact of foreign currency of $22.7, or 4.5%. Excluding these items, organic net sales increased 3.4%, resulting fro~~m strong volumes and pricing actions in our developed markets and modern markets as well as the reclassification of licensing revenue.~~

Segment Profit (In millions)

Quarter and ~~Nine~~Six Months Ended ~~June 30, 2019~~March 31, 2020


	Quarter Ended June 30, 2019					Nine Months Ended June 30, 2019					For the Quarter Ended March 31, 2020					Six Months Ended March 31, 2020
	$ Change			% Chg		$ Change			% Chg		$ Change			% Chg		$ Change			% Chg
Americas
Segment Profit - FY '18	$	60.4				$	239.2
Segment profit - FY '19											$	88.7				$	204.8
Organic	2.8			4.6	%	0.3			0.1	%	8.6			9.7	%	(8.5		)	(4.2	)%
Impact of Battery Acquisition	13.0			21.5	%	20.1			8.4	%	—			—	%	21.8			10.6	%
Impact of Auto Care Acquisition	28.8			47.7	%	52.8			22.1	%	6.7			7.6	%	15.8			7.7	%
Impact of Nu Finish Acquisition	(0.1		)	(0.2	)%	1.9			0.8	%
Change in Argentina	(0.6		)	(1.0	)%	(2.9		)	(1.2	)%	(0.3		)	(0.3	)%	(0.9		)	(0.4	)%
Impact of currency	(0.5		)	(0.7	)%	(2.8		)	(1.2	)%	(1.9		)	(2.2	)%	(2.0		)	(0.9	)%
Segment Profit - FY '19	$	103.8		71.9	%	$	308.6		29.0	%
Segment profit - FY '20											$	101.8		14.8	%	$	231.0		12.8	%

International
Segment Profit - FY '18	$	32.6				$	115.9
Segment profit - FY '19											$	36.4				$	91.0
Organic	5.2			16.0	%	18.2			15.7	%	6.1			16.8	%	(2.2		)	(2.4	)%
Impact of Battery Acquisition	6.3			19.3	%	12.3			10.6	%	—			—	%	6.1			6.7	%
Impact of Auto Care Acquisition	1.4			4.3	%	2.1			1.8	%	0.3			0.8	%	1.3			1.4	%
Impact of Nu Finish Acquisition	0.1			0.3	%	0.1			0.1	%
Impact of currency	(4.6		)	(14.1	)%	(16.6		)	(14.3	)%	(2.4		)	(6.6	)%	(3.6		)	(3.9	)%
Segment profit - FY '20											$	40.4		11.0	%	$	92.6		1.8	%

Total Segment profit
Segment Profit - FY '19	$	41.0		25.8	%	$	132.0		13.9	%	$	125.1				$	295.8

Total Segment Profit
Segment Profit - FY '18	$	93.0				$	355.1
Organic	8.0			8.6	%	18.5			5.2	%	14.7			11.8	%	(10.7		)	(3.6	)%
Impact of Battery Acquisition	19.3			20.8	%	32.4			9.1	%	—			—	%	27.9			9.4	%
Impact of Auto Care Acquisition	30.2			32.5	%	54.9			15.5	%	7.0			5.6	%	17.1			5.8	%
Impact of Nu Finish Acquisition	—			—	%	2.0			0.6	%
Change in Argentina	(0.6		)	(0.6	)%	(2.9		)	(0.8	)%	(0.3		)	(0.2	)%	(0.9		)	(0.3	)%
Impact of currency	(5.1		)	(5.6	)%	(19.4		)	(5.5	)%	(4.3		)	(3.5	)%	(5.6		)	(1.9	)%
Segment Profit - FY '19	$	144.8		55.7	%	$	440.6		24.1	%
Segment profit - FY '20											$	142.2		13.7	%	$	323.6		9.4	%

Refer to Note 8,9, Segments, in the Consolidated (Condensed) Financial Statements for a reconciliation from segment profit to ~~(Loss)/~~earnings before income taxes.

Results for the Quarter Ended ~~June 30, 2019~~March 31, 2020

Global reported segment profit ~~improved~~increased by ~~$51.8,~~$17.1, or ~~55.7%~~13.7%. ~~Segment profit was negatively impacted by foreign currencies~~The organic increase of ~~$5.1 and the change in Argentina operations of $0.6. The acquisitions had a positive impact on segment profit of $49.5. Excluding these impacts, organic segment profit increased $8.0,~~$14.7, or ~~8.6%~~11.8%, ~~in the current fiscal period. The increase in the quarter~~ was driven by top-line organic growth, realized synergies and improved material pricing, lower ~~overhead spending slightly offset by higher~~ A&P spending and favorable SG&A due to reduced spending driven in part by ~~the brand refresh in~~COVID-19 impacts and restrictions. The impact of our ~~international markets.~~Auto Care Acquisition was also a favorable impact of $7.0, or 5.6%. Offsetting this favorable impact was our Argentina operations which had an unfavorable impact on segment profit of $0.3, or 0.2%, and unfavorable foreign currency impacts of $4.3, or 3.5%.

Americas reported segment profit ~~improved~~increased by ~~$43.4,~~$13.1, or ~~71.9%~~14.8%. The increase was driven by the acquisitions which contributed ~~$41.7,~~$6.7, or ~~69.0%~~7.6%. The change in Argentina operations had a negative impact on segment profit of ~~$0.6,~~$0.3, or ~~1.0%~~0.3%, while the unfavorable impact from foreign currency was ~~$0.5.~~$1.9. Excluding these items, organic segment profit increased by ~~$2.8,~~$8.6, or ~~4.6%~~9.7%, driven by top-line growth, realized synergies and improved material pricing. Offsetting some of the organic ~~growth~~increase was unfavorable spending, as higher SG&A spending was slightly offset by A&P and ~~a decrease in overhead spending.~~R&D favorability, due to timing.

International reported segment profit ~~improved $8.4,~~increased $4.0, or ~~25.8%~~11.0%. Excluding ~~the unfavorable movement in foreign currencies of $4.6 and~~ the positive impact of the acquisitions of ~~$7.8,~~$0.3, the movement in foreign currencies decreased $2.4 and organic segment profit increased ~~$5.2,~~$6.1, or ~~16.0%~~16.8%, driven by top-line growth ~~in the quarter~~ and ~~the benefit of our continuous improvement initiatives as well as lapping prior year investments in those initiatives. These increases were partially offset by higher A&P~~lower overhead spending, driven in part by ~~the brand refresh in our international markets~~COVID-19 impacts and ~~slightly higher overhead spending.~~restrictions.

Results for the ~~Nine~~Six Months Ended ~~June 30, 2018~~March 31, 2020

Global reported segment profit ~~improved~~increased by ~~$85.5,~~$27.8, or ~~24.1%~~9.4%. ~~Excluding~~The organic decline of $10.7, or 3.6%, was driven by the ~~unfavorable movement in foreign currencies of $19.4, positive impact of acquisitions of $89.3, and~~net sales decrease, the negative impact of tariffs, higher product costs due to lower production volumes in the fourth quarter of fiscal 2019 and increased A&P spending. Slightly offsetting these decreases were realized synergies and improved material pricing. Our Argentina operations ~~of $2.9~~, ~~organic~~had an unfavorable impact on segment profit ~~increased $18.5,~~of $0.9, or ~~5.2%, in~~0.3% and foreign currency impacts were unfavorable by $5.6, or 1.9%. Offsetting the ~~current fiscal period. This increase~~segment profit organic decrease for the quarter was the ~~result~~favorable impact of ~~top-line organic growth and~~ the ~~benefit~~acquisition of our continuous improvement initiatives as well as lapping prior year investments in those initiatives. These increases were partially offset by higher A&P spending driven by higher media spending and our brand refresh.$45.0, or 15.2%.

Americas reported segment profit ~~improved~~increased by ~~$69.4,~~$26.2, or ~~29.0%, compared to~~12.8%. The increase was driven by the ~~prior period. Excluding the~~

~~unfavorable movement in foreign currencies of $2.8, the decline~~acquisitions which contributed $37.6, or 18.3%. The change in Argentina operations had a negative impact on segment profit of ~~$2.9,~~$0.9, or 0.4%, while the unfavorable impact from foreign currency was $2.0. Excluding these items, organic segment profit decreased by $8.5, or 4.2%, driven by the net sales decrease slightly offset by realized synergies, improved material pricing and favorable A&P spending, due to timing.

International reported segment profit increased $1.6, or 1.8%. Excluding the positive impact of the acquisitions of ~~$74.8, organic segment profit increased by $0.3, or 0.1%, in~~$7.4, the ~~current fiscal period driven by the increase in gross profit offset by higher A&P driven by the timing of media spending.~~

~~International reported segment profit improved by $16.1, or 13.9%, compared to the prior period. Excluding the unfavorable~~ movement in foreign currencies ~~of $16.6,~~decreased $3.6 and ~~the positive impact from the acquisitions of $14.5,~~ organic segment profit ~~increased~~decreased $2.2, or 2.4%, as top-line growth was more than offset by ~~$18.2, or 15.7% in the current fiscal period~~decreased gross margin due to channel and product mix and higher spending, driven by ~~top-line growth and the benefit~~A&P timing of our continuous improvement initiatives as well as lapping prior year investments in those initiatives and favorable overheads versus the prior year comparative period. Slightly offsetting the increase was higher A&P driven by the brand ~~refresh across our international markets.~~investments.

General Corporate and Global Marketing Expenses


	For the Quarter Ended June,						For the Nine Months Ended June 30,						For the Quarter Ended March 31,						For the Six Months Ended March 31,
	2019			2018			2019			2018			2020			2019			2020			2019
General corporate and other expenses	$	29.9		$	24.7		$	78.3		$	71.0		$	23.5		$	29.7		$	48.4		$	48.4
Global marketing expense	3.0			4.6			12.5			13.0			5.6			6.4			11.7			9.5
General corporate and global marketing expense	$	32.9		$	29.3		$	90.8		$	84.0		$	29.1		$	36.1		$	60.1		$	57.9
% of Net Sales	5.1		%	7.5		%	5.1		%	6.3		%	5.0		%	6.5		%	4.5		%	5.1		%

For the quarter ended ~~June 30, 2019,~~March 31, 2020, general corporate and other expenses were ~~$29.9, an increase~~$23.5, a decrease of ~~$5.2~~$6.2 as compared to the prior year comparative ~~period. Excluding the corporate and other expenses of $8.4 related~~period, driven by synergy realization primarily due to ~~the acquisitions, the legacy business accounted for $21.5, a decrease of $3.2 compared to the prior year. The decreases were due to~~TSA exits, lower mark to market expense on our ~~unfunded~~ deferred compensation ~~liability~~plan and reduced spending in the ~~current year as well as lapping unfavorable legal reserves in~~back half of the ~~prior year fiscal quarter.~~quarter largely driven by COVID-19 impacts and restrictions.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, general corporate and other expenses were ~~$78.3, an increase of $7.3 as compared~~$48.4 and flat to ~~the prior year comparative period. Excluding the corporate and other expenses of $14.4 related to the acquisitions, the legacy business accounted for $63.9, a decrease of $7.1 compared to the~~ prior year. The ~~decreases~~current year included additional costs from the acquired businesses of $5.6. These costs were offset by synergy realization, primarily due to TSA exits, lower ~~compensation costs and~~ mark to market expense on our ~~unfunded~~ deferred compensation ~~liability~~plan and reduced spending in the ~~current year as well as benefits realized from our prior year continuous improvement initiatives.~~back half of the quarter largely driven by COVID-19 impacts and restrictions in the second fiscal quarter.

For the quarter and ~~nine~~six months ended ~~June 30, 2019, respectively,~~March 31, 2020, global marketing expenses were ~~$3.0~~$5.6 and ~~$12.5~~$11.7 compared to ~~$4.6~~$6.4 and ~~$13.0~~$9.5 in the prior year comparative periods. 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 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, ~~2018~~2019 filed with the Securities and Exchange Commission on November ~~16, 2018 and~~19, 2019, as well as in Item 1A1A. Risk Factors of this Form 10-Q.

Cash is managed centrally with net earnings reinvested locally and working capital requirements met from existing liquid funds. At ~~June 30, 2019,~~March 31, 2020, Energizer had ~~$206.4~~$277.9 of cash and cash equivalents, approximately ~~96%~~67% 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.

On December 17, 2018, the Company entered into a credit agreement which provided for a 5-year $400.0 revolving credit facility ~~(2018 Revolving~~(Revolving Credit 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 ~~June 30, 2019,~~March 31, 2020, the Company had ~~$40.0~~$173.0 of outstanding borrowings under the ~~2018~~ Revolving Credit Facility and had ~~$7.6~~$7.3 of outstanding letters of credit. Taking into account outstanding letters of credit, $219.7 remained available as of March 31, 2020. Subsequent to the quarter, the Company also amended its credit agreement to reduce the contractual step-down in the maximum Total Net Leverage Ratio at the end of the fourth quarter of fiscal 2021.

~~On January 2, 2019,~~Subsequent to the quarter, the Company borrowed an additional $219.7 under its Revolving Credit Facility, representing all of the remaining capacity available under such Revolving Credit Facility. The Company then completed an add-on offering of $250.0 of our 6.375% Senior Notes due 2026. The 2026 Notes priced at 102.25% of principal and the ~~Battery Acquisition and paid cash consideration of $1,918.4, net of cash acquired.~~offering closed on April 22, 2020. The Company utilized the proceeds from the add-on offering to repay funds on the Revolving Credit Facility. As of two senior note offerings due in 2026 of $500.0 at 6.375% and €650.0 at 4.625% as well as the proceeds of $1,200.0 of borrowings under a $200.0 3-year term loan A facility and $1,000.0 7-year term loan B facility. The term loan borrowings bear interest at a rate per annum equal to, at the option ofMay 1, 2020, the Company ~~LIBOR or~~had nearly $600 of cash on hand and approximately $200 of availability on the ~~Base Rate (as defined) plus~~Revolving Credit Facility. The Company's required debt repayments are $93.0 over the ~~applicable margin based on total~~next 12 months.

While the Company ~~leverage. The proceeds~~believes it had sufficient liquidity prior to taking these actions to fund its operations and meet its obligations, the Company has increased its cash position as a precautionary measure in order to preserve financial flexibility in light of current uncertainty in the global markets resulting from the borrowings were utilized to fund the Battery Acquisition, repay borrowings under the Term Loan due in 2022 and outstanding under the Revolving Facility, and pay acquisition related costs including debt issuance costs.

On January 17, 2019, the Company finalized pricing of $600.0 million in senior notes due in 2027 at 7.750% (2027 Notes), which were issued by wholly-owned subsidiaries. The 2027 Notes priced at 100% of the principal amount and the offering closed concurrently with the Auto Care Acquisition on January 28, 2019.

On January 28, 2019, the Company completed the Auto Care Acquisition and paid cash consideration of $935.4, net of cash acquired, and equity consideration of $240.5. The Company utilized the proceeds of the 2027 Notes as well as the net proceeds of $404.8 from issuance of common stock and Series A Mandatory Convertible Preferred Stock in January 2019 to fund the cash consideration of the Auto Care Acquisition and pay acquisition related costs including debt issuance costs and the capped call transactions.COVID-19 pandemic.

Operating Activities

Cash flow from operating activities from continuing operations was ~~$30.4~~$99.2 in the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$188.0~~$13.0 in the prior year comparative period. This change of ~~$157.6~~$86.2 was primarily driven by higher year over year ~~working capital changes~~net earnings resulting from lower cash expenditures of approximately ~~$109.~~

~~The largest impact driving the working capital change was the year over year increase in Accounts receivable of $72.~~

Approximately $25 of the increase relates to receivables of the newly acquired Auto Care and Battery businesses since the acquisition date. The Auto Care business is in its peak season, which contributed to higher balances at June 30, 2019 versus the prior year legacy business.

Prior to closing the acquisitions, the business factored its receivables through various arrangements which were in part paused or terminated upon close. During the third fiscal quarter we reinstated various factoring arrangements, which helped to offset some of the accounts receivable increase. We expect to see additional benefit in the fourth quarter as we continue to reinstate the factoring programs.

~~Finally, our legacy business had strong organic growth year over year due to distribution gains and price increases, which also added to the year over year increase in receivables.~~

Increased inventory also contributed to the working capital change of approximately $60. This was due to a planned shift in production to build inventory at our US plants earlier in the fiscal year to allow for better response time on holiday orders and potential hurricane activity in the fourth fiscal quarter.

~~The remaining outflow was due to cash expenditures~~$75 associated with the Battery and Auto Care Acquisitions, most notably the payment of interest and ticking fees associated with the Term Loan facility that was utilized to fund the Battery Acquisition and the fees paid related to the issuance of the bonds to fund the Auto Care ~~Acquisition.~~Acquisition in the prior year.

In addition, working capital changes favorably impacted cash flow from operations year over year by approximately $12, driven by the following: Approximately $9 related to a planned shift in production to build inventory at our US plants earlier in the prior fiscal year and lower inventories in the current year due to temporary plant shutdowns as well as higher demand driven by COVID-19. 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 lower trade and A&P accruals of approximately $28 driven by timing of payments and programs.

Investing Activities

Net cash used by investing activities from continuing operations was ~~$2,490.1~~$30.7 and ~~$11.1 in nine~~$2,424.4 for the six months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, and consisted of the following:

Capital expenditures of ~~$36.4~~$27.7 and ~~$17.2~~$20.7 in the ~~nine~~six months ended ~~June 30,~~March 31, 2020 and 2019, respectively.

Proceeds from sale of assets of $1.5 and ~~2018,~~$0.1 in the six months ended March 31, 2020 and 2019, respectively.

Acquisitions, net of cash acquired was ~~$2,453.8~~$4.5 in the ~~nine~~six months ended ~~June 30,~~March 31, 2020. The majority of this payment was due to the finalization of working capital adjustments with Spectrum for the Auto Care Acquisition while $0.9 was utilized to complete the CAE acquisition.

Acquisitions, net of cash acquired was $2,403.8 in the six months ended March 31, 2019. This included ~~$1,518.4~~$1,468.4 for the Battery Acquisition and $935.4 for the cash portion of the Auto Care Acquisition. Net cash from discontinued operations includes the remaining ~~$400.0~~$450.0 currently allocated to the purchase of the Divestment Business.

Investing cash outflows of approximately ~~$60~~$30 to $35 are anticipated for the full fiscal year ~~2019~~2020 for capital expenditures relating to ~~capital integration activities for the Battery and Auto Care Acquisitions, as well as~~ maintenance, product development and cost reduction ~~initiatives on~~investments. Additional investing cash outflows of approximately $50 to $60 are anticipated in full fiscal year 2020 for integration related capital expenditures. The Company will also weigh market conditions and other capital needs, the ~~legacy business.~~potential impact of COVID-19 and other factors deemed relevant, in the decisions to prioritize or delay funding and may adjust these projected amounts if necessary.

Financing Activities

Net cash ~~from financing activities from continuing operations was $1,328.5 for the nine months ended June 30, 2019 as compared to net cash~~ used by financing activities from continuing operations was $339.3 for the six months ended March 31, 2020 as compared to net cash inflow from financing activities from continuing operations of ~~$37.9~~$1,439.3 in the prior fiscal year comparative period. For the ~~nine~~six months ended ~~June 30,~~March 31, 2020, cash used by 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 $747.2, related to the Term Loan refinancing in December 2019, the repayment of $345.8 of debt from the proceeds of the Varta divestiture as well as incremental payments on the 2018 Term Loan A and 2018 Term Loan B prior to the refinancing;

Net increase in debt with original maturities of 90 days or less of $150.3, primarily related to borrowings on the Revolving Credit Facility;

Dividends paid on common stock of $43.7 (see below);

Dividends paid on mandatory convertible preferred stock of $8.1;

Common stock repurchases of $45.0 at an average price of $45.93 per share

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

Taxes paid for withheld share-based payments of $9.7.

For the six months ended March 31, 2019, cash from financing activities from continuing operations ~~consists~~consisted of the following:

Cash proceeds from issuance of debt with original maturities greater than 90 days of $1,800.0 related to the funding of the ~~2018~~ Term Loans and the bonds utilized to fund the ~~Battery and~~acquisitions;

Net proceeds from the issuance of common stock of $205.3 utilized to fund the Auto Care ~~Acquisitions;~~Acquisition;


•	~~Net proceeds from the issuance of common stock of~~ ~~$205.3~~ ~~utilized to fund the Auto Care Acquisition;~~

Net proceeds from the issuance of Mandatory Preferred Convertible Stock of $199.5 utilized to fund the Auto Care Acquisition;

Payments of debt with maturities greater than 90 days of ~~$513.8,~~$438.4, primarily related to the repayment of our Term Loan due in 2022 and an additional ~~$125.0 of payments~~$50.0 payment on the 2018 Term Loan ~~A and 2018 Term Loan B;~~A;

Net decrease in debt with original maturities of 90 days or less of ~~$204.5,~~$239.1, primarily related to repayment of borrowings on our ~~2015~~ Revolving Credit Facility;

Dividends paid ~~on common stock~~ of ~~$61.7~~$40.8 (see below);

~~Dividends paid on mandatory convertible preferred stock of $4.0;~~

~~Common stock purchased of $45.0 at an average price of $43.46 (see below);~~

Debt issuance costs of $40.1; and

Taxes paid for withheld share-based payments of ~~$7.2.~~$7.1.

~~For the nine months ended June 30, 2018, cash used by financing activities from continuing operations consisted of the following:~~

~~Dividends paid on common stock of $52.3;~~

~~Common stock repurchases of $50.0 at an average price of $44.41 per share;~~

~~Payments of debt with maturities greater than 90 days of $3.0;~~

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

~~Debt issuance costs of $1.4; and~~

~~Net increase in debt with original maturities of 90 days or less of $70.6.~~

Dividends

On November ~~12, 2018,~~11, 2019, the Board of Directors declared a ~~cash~~ dividend for the first quarter of fiscal ~~2019~~2020 of $0.30 per common share of common ~~stock. The dividend was paid~~stock, payable on December ~~13, 2018 to shareholders of record as of November 30, 2018~~17, 2019 and ~~totaled $18.0.~~

Onon January ~~28, 2019,~~27, 2020, the Board of Directors declared a cash dividend for the second quarter of ~~2019 of $0.30 per share of common stock. The dividend was paid on March 18, 2019, to shareholders of record as of February 25, 2019 and totaled $21.0.~~

On April 29, 2019, the Board of Directors declared a cash dividend for the third quarter of 2019 of $0.30 per common share of common stock. The dividend was paid on June 10, 2019, to all shareholders of record as May 21, 2019 and totaled $21.0.

~~Subsequent to the end of the fiscal quarter, on July 29, 2019, the Board of Directors declared a dividend for the~~

~~fourth quarter of 2019~~2020 of $0.30 per share of common stock, payable on ~~September 10, 2019, to all shareholders of record as of the close of business August 20, 2019.~~March 18, 2020.

~~On January 28, 2019, the Board of Directors declared~~The Company also paid a cash dividend of ~~$1.8333~~$1.875 per share of ~~MCPS. The dividend was paid~~MCPS on ~~April~~October 15, 2019 ~~and totaled $3.9.~~

which had been declared in fiscal 2019. On ~~April 29,~~November 11, 2019, the Board of Directors declared a cash dividend of $1.875 per share of ~~MCPS. The dividend~~MCPS to all shareholders of record as of the close of January 1, 2020 which was paid on ~~July~~January 15, ~~2019, and totaled $4.0.~~2020. On January 27, 2020, 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 April 1, 2020. This dividend was accrued at March 31, 2020.

Subsequent to the end of the fiscal quarter, on ~~July 29, 2019,~~April 27, 2020, the Board of Directors declared a cash dividend for the third quarter of ~~$1.875~~2020 of $0.30 per share of ~~MCPS,~~common stock, payable on ~~October 15, 2019,~~June 10, 2020, to all shareholders of record as of the close of business ~~October~~May 20, 2020.

Subsequent to the end of the fiscal quarter, on April 27, 2020, the Board of Directors declared a cash dividend of $1.875 per share of MCPS, payable on July 15, 2020, to all shareholders of record as of the close of business on July 1, ~~2019.~~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 the quarter ~~and nine months~~ ended ~~June 30, 2019,~~March 31, 2020, the Company repurchased ~~1.0 million~~980,136 shares for $45.0, at an average price of ~~$43.46.~~$45.93 per share, under this authorization. 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. Share repurchases may be effected through open market purchases or privately negotiated transactions, including repurchase plans that satisfy the conditions of Rule 10b5-1 of the Exchange Act.

~~From July 2015~~The timing, declaration, amount and ~~through~~payment of future dividends to shareholders or repurchases of the ~~date~~Company’s Common stock will fall within the discretion of ~~this filing, a total~~our Board of ~~4.7 million~~Directors. The Board’s decisions regarding the payment of dividends or repurchase of shares ~~were repurchased~~will depend on ~~the open market at an average price~~many factors, such as our financial condition, earnings, capital requirements, debt service obligations, covenants associated with certain of ~~$43.91 under the current share repurchase authorization. At August 6, 2019, the date~~our debt service obligations, industry practice, legal requirements, regulatory constraints and other factors that our Board of ~~this filing, 2.8 million shares remain available for repurchase.~~Directors deems relevant.

Other Matters

Environmental Matters

Accrued environmental costs at ~~June 30, 2019~~March 31, 2020 were ~~$6.9.~~$8.2. 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 ~~June 30, 2019~~March 31, 2020 is 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	$	3,514.2	$	10.0	$	97.5	$	20.0	$	3,386.7	$	3,095.5	$	91.3	$	273.8	$	20.0	$	2,710.4
Interest on long-term debt (1)	1,388.5		194.5		386.3		380.8		426.9		998.3		104.5		471.7		287.3		134.8
Notes payable	41.5		41.5		—		—				184.1		184.1		—		—
Operating leases(2)	164.7		22.3		29.9		87.8		24.7		187.2		9.4		35.1		32.2		110.5
Capital leases ~~(2)~~(3)	95.1		4.7		9.4		10.1		70.9		91.4		2.3		9.3		9.0		70.8
Pension plans ~~(3)~~(4)	2.8		2.8		—		—		—		3.6		3.6		—		—		—
Purchase obligations and other ~~(4)~~(5)	22.7		22.1		0.6		—		—		19.8		11.3		8.5		—		—
Mandatory transition tax	16.7		—		—		3.9		12.8		16.7		—		—		9.4		7.3
Total	$	5,246.2	$	297.9	$	523.7	$	502.6	$	3,922.0	$	4,596.6	$	406.5	$	798.4	$	357.9	$	3,033.8

(1) The above table is based upon the debt balance and LIBOR rate as of ~~June 30, 2019.~~March 31, 2020. Energizer has an interest rate swap agreement that fixed the variable benchmark component (LIBOR) on $200 of Energizer's variable rate debt at an interest rate of 2.03% and an interest rate swap agreement that ~~the~~ 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 $94.0 as well as the imputed interest included in the payment of $44.2. This also includes the future payments of $49.0 for operating leases that have not yet commenced for accounting purposes, which are not included in our operating lease liabilities yet.

(3) Capital lease payments include the full capital leases obligation of ~~$47.4~~$46.4 as well as the interest included in the payment of ~~$47.7.~~$45.0.

~~(3)~~(4) Globally, total expected pension contributions for the Company for fiscal year ~~2019~~2020 are estimated to be ~~$6.8.~~$5.7. The Company has made payments of ~~$4.0~~$2.1 year to date. The projected payments beyond fiscal year ~~2019~~2021 are not currently estimable.

~~(4)~~(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 ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018,~~2019, Energizer had an unrealized pre-tax gain of ~~$1.3~~$5.1 and ~~$4.3,~~$4.5, respectively, on these forward currency contracts accounted for as cash flow hedges, included in Accumulated other comprehensive loss on the Consolidated (Condensed) Balance Sheets. Assuming foreign exchange rates versus the U.S. dollar remain at ~~June 30, 2019~~March 31, 2020 levels over the next twelve months, ~~$1.5~~$5.0 of the pre-tax gain included in Accumulated other comprehensive loss at ~~June 30, 2019,~~March 31, 2020, is expected to be recognized in earnings. Contract maturities for these hedges extend into fiscal year ~~2020.~~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~~quarters ended March 31, 2020 and ~~nine months ended June 30,~~ 2019 resulted in a loss of ~~$1.3~~$0.7 and ~~$0.2,~~a gain of $0.1, respectively, and ~~income~~a loss of ~~$8.7~~$1.6 and ~~$10.0~~a gain of $1.1 for the ~~quarter and nine~~six months ended ~~June 30, 2018,~~March 31, 2020 and 2019, respectively, and was recorded in Other items, net on the Consolidated (Condensed) Statements of Earnings and Comprehensive Income.

Commodity Price Exposure

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

The Company began entering into hedging contract on zinc purchases in ~~March~~fiscal 2019. The contracts are determined to be cash flow hedges and qualify for hedge accounting. The contract maturity for these hedges extend into ~~2020.~~2022. There were ~~four~~sixteen open contracts at ~~June 30, 2019,~~March 31, 2020, with a total notional value of approximately ~~$16.~~$29. The pre-tax loss recognized on the zinc contracts was ~~$0.7~~$7.0 at ~~June 30, 2019,~~March 31, 2020, and was included in Accumulated other comprehensive ~~income~~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 ~~June 30, 2019,~~March 31, 2020, Energizer had variable rate debt outstanding with a principal balance of ~~$1,075.0~~$851.5 under the refinanced 2018 and 2019 Term ~~Loans.~~Loans and the Revolving Credit Facility. 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%. 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 ~~June 30, 2019,~~March 31, 2020, our weighted average interest rate on variable rate debt, inclusive of the interest rate swap, was ~~4.86%~~3.29%.

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 ~~June 30, 2019,~~March 31, 2020, 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 ~~June 30, 2019~~March 31, 2020 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, ~~2018,~~2019, which was filed with the Securities and Exchange Commission on November ~~16, 2018,~~19, 2019, contains a detailed discussion of risk factors that could materially adversely affect our business, our operating results or our financial condition. ~~The Acquired Battery Business and the Acquired Auto Care Business are subject~~

Due to the ~~same risks as our other business and~~events that occurred in the second quarter of fiscal 2020 relating to the COVID-19 global pandemic, we have filed an additional risk ~~factors below. There have been no material changes~~factor that should be considered when reviewing our financial information in addition to the risk factors ~~included~~in Item 1A filed on our Annual Report on From 10-K for the year ended September 30, 2019. The additional risk factor is presented below:

We must successfully manage the demand, supply, and operational challenges brought about by the COVID-19 pandemic and any other disease outbreak, including epidemics, pandemics, or similar widespread public health concerns.

Our operations are impacted by consumer spending levels, impulse purchases, the availability of our products to retail and our ability to manufacture, store and distribute products to our customers and consumers in an effective and efficient manner. The fear of exposure to or actual effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern, such as the novel coronavirus (COVID-19), could negatively impact our overall business, financial position and financial results. These potential impacts caused by fear of exposure or the effects of a widespread public health concern may include, but are not limited to:

Significant reductions, shifts or fluctuations in demand for one or more of our products, which may be caused by, among other things:


◦	a decrease in consumer traffic in brick-and-mortar stores across all our major markets and the resulting negative impact on our net sales to customers in that channel;


◦	the temporary inability of our consumers to purchase our products due to illness, quarantine, other travel restrictions, or financial hardship;


◦	shifts in demand away from one or more of our premium products to lower priced value or private label products and lower demand in our discretionary product categories;


◦	stockpiling or similar “pantry-loading” activity by consumers, which may cause volatility in our quarterly results and, if prolonged, further increase the complexity of our operations planning and financial forecasting and adversely impact our results of operations;


◦	significant reductions in the availability of one or more of our products as a result of retailers, common carriers or other shippers modifying restocking, fulfillment and shipping practices; or


◦	shifts, fluctuations, or cancellation of orders due to the impact on customers’ operations, including the possibility of temporary or permanent closure;

Inability to meet our customers’ needs due to disruptions in our manufacturing and supply chain arrangements caused by the loss or disruption of essential manufacturing and supply chain elements, such

as raw materials or other finished product components, transportation, workforce, or other manufacturing and distribution capability. In addition, we may incur higher costs for transportation, workforce and distribution capability in order maintain the surety of supplying product to our customers;

Failure of third parties upon which we rely, including our suppliers, contract manufacturers, distributors, contractors and commercial banks, to meet their obligations to the Company, or significant disruptions in their ability to meet those obligations in a timely manner, which may be caused by their own financial or operational difficulties and may adversely impact our operations, liquidity and financial results;

Significant changes in the political and regulatory landscape in the markets in which we manufacture, sell or distribute our products. These changes may include, but are not limited to, expanded quarantines, restrictions on international trade, governmental or regulatory actions, closures or other restrictions that limit or suspend our operating and manufacturing capabilities, restrict our employees’ ability to travel or perform necessary business functions, or otherwise prevent our third-party partners or customers from sufficiently staffing operations, including operations necessary for the production, distribution, sale, and support of our products, which could adversely impact our results.

For example, we have experienced modest incremental operating costs in the second quarter of 2020 as a result of the COVID-19 pandemic. In addition, auto care products are more discretionary by nature and COVID-19 has negatively impacted our sales of these products and may continue to do so as we expect an overall reduction in travel due to shelter-in-place orders, work and travel restrictions, and other similar measures to try to contain the COVID-19 virus. Additionally, we have seen softness in Latin America and Asia across both the batteries and auto care businesses as a result of the social distancing measures enacted to combat COVID-19. We cannot guarantee that such trends will not continue or worsen. We have implemented remote work arrangements and an extended period of remote work arrangements could strain our business continuity plans, introduce operational risks, including, but not limited to, cybersecurity risks and internal control over financial reporting risks, and impair our ability to manage our business.

Our management is focused on mitigating COVID-19, which has required and will continue to require, a large investment of time and resources across our enterprise. We expect to expend all necessary efforts to ensure the business continuity of our operations. We have incurred additional costs and may continue to incur additional costs, which may be significant, if we are required to implement additional operational changes in response to this pandemic. While the full impact of COVID-19 is uncertain, our core batteries business in North America and EMEA performed strongly in the second fiscal quarter of 2020, and we have multiple options to further mitigate the liquidity impact of the COVID-19 pandemic and preserve our financial flexibility in light of current uncertainty in the global markets, including the deferral or reduction of capital expenditures and reduction or delay of overhead expenses and other expenditures. Such delays could delay our growth or impact business plan. However, it may be that despite our efforts to manage and remedy these impacts to the Company, the ultimate impact may depend on factors beyond our knowledge or control, including the duration and severity of any widespread public health concern as well as third-party actions, including governments and our business partners upon which we rely, taken to contain the spread and mitigate the public health effects of such concern.

In addition, we cannot predict the impact that COVID-19 will have on our customers, suppliers, vendors and other business partners, and each of their financial conditions; however, any material effect on these parties could adversely impact us. The impact of COVID-19 may also exacerbate other risks discussed in this “Risk Factors” section as well as in Item 1A. Risk Factors in our Annual Report on Form 10-K, ~~for the year ended September 30, 2018, except for the addition~~any of ~~the following:~~

~~Risks Related to the Acquired Battery Business and the Acquired Auto Care Business (collectively, the “Acquired Businesses”)~~

~~The operations and profitability of the Acquired Auto Care Business is highly dependent on the efficient~~

~~operation of its Dayton, Ohio facility.~~

In 2017, the Acquired Auto Care Business opened a new manufacturing and distribution facility in Dayton, Ohio. Due to deficiencies in planning and execution, including flawed planning assumptions and insufficient devotion of resources, the transition to the Dayton facility led to business disruptions, including shipment disruptions, and working capital management issues that are continuing which have led to an adverse impact on the Acquired Auto Care Business’ recent results. Despite Spectrum's significant expenditures to improve the operations at the Dayton facility, we expect to invest approximately an additional $25 million in such facility to remedy the issues. Spectrum has been unable to and it is unlikely that we will be able to pass all of such costs through to the Acquired Auto Care Business’ customers, and therefore, such expenditures may have an adverse impact on our results. There is no guarantee that such investments will result in future benefits, that such amounts will be sufficient to remedy the issues or that the Dayton facility will achieve its projected normal state operating model on the expected timeline, or at all. Any failure to achieve such projected normal state operating model and improve operating efficiencies, increase service level performance and drive cost improvement will continue to negatively affect operations and profitability of the Acquired Auto Care Business.

~~The Acquired Businesses are subject to seasonal volatility.~~

Sales of certain of the Acquired Businesses’ products tend to be seasonal. With respect to the Acquired Auto Care Business in particular, historically, sales typically have peaked during the first six months of the calendar year due to customer seasonal purchasing patterns and the timing of promotional activities. The Acquired Battery Business has similar seasonality and fluctuations in demand as our existing batteries business. As a result of this seasonality, the inventory and working capital needs fluctuate significantly throughout the year. Orders from retailers are often made late in the period preceding the applicable peak season, making forecasting of production schedules and inventory purchases difficult. Further, purchases of our Acquired Auto Care Business products, especially our auto appearance and A/C recharge products, can be significantly impacted by unfavorable weather conditions during the summer period, and as a result we may suffer decreases in net sales if conditions are not favorable for use of our products. If we are unable to accurately forecast and prepare for customer orders, or there is a general downturn in

~~business or economic conditions during these periods, the financial condition and results of operations of the Acquired Businesses could be materially and adversely affected.~~

~~A change in governmental regulations regarding the use of refrigerant gas R-134a or its potential future~~

~~substitutes could have a material adverse effect on the ability of the Acquired Auto Care Business to sell its aftermarket A/C products.~~

The refrigerant R-134a is a critical component of the Acquired Auto Care Business’ aftermarket A/C products. Older generation refrigerants such as R-12 (Freon) have been regulated for some time in the United States and elsewhere, due to concerns about their potential to contribute to ozone depletion. In recent years, refrigerants such as R-134a, which is an approved substitute for R-12, have also become the subject of regulatory focus due to their potential to contribute to global warming.

The European Union has passed regulations that essentially phased out of R-134a in automotive cooling systems in new vehicles by 2017. Canada has also implemented similar regulations, phasing into effect beginning in 2021. In the United States, while such regulations are not currently in effect, the applicable regulations could be implemented and if so, depending on the scope and timing of the regulations, could have a materially adverse impact on our business.

In addition, regulations may be enacted governing the packaging, use and disposal of the Acquired Auto Care Business’ products containing refrigerants. For example, regulations are currently in effect in California that govern the sale and distribution of products containing R-134a. If the future use of R-134a is phased out or is limited or prohibited in jurisdictions in which we do business, or if substitutes for R-134a become widely used in A/C systems and their use for DIY and retrofit purposes is not approved by the EPA or other regulatory bodies, the future market for Acquired Auto Care Business’ products containing R-134a may be limited, which could have a material ~~adverse impact~~effect on ~~its results~~us, including risks such as those relating to our high level of ~~operations, financial condition,~~indebtedness, our need to generate sufficient cash flows to service our indebtedness and ~~cash flows.~~

~~In addition, any alternatives~~our ability to ~~R-134a for use~~comply with the covenants contained in the ~~A/C systems~~agreements that govern our indebtedness. This situation is changing rapidly and additional impacts may arise that we are not aware of ~~new vehicles will likely be at a higher cost than that of R-134a and access to supply may be limited. If an alternative becomes widely used,~~currently. Even after the COVID-19 outbreak has subsided, we may ~~be unable~~continue to ~~obtain sufficient supply or we may obtain supply at a cost that impacts our net sales and gross margins if we are unable to price products to reflect the increased cost of the alternatives.~~

~~We may not be able to successfully close the divestiture of the Divestment Business.~~

On May 29, 2019, the Company entered into an Acquisition Agreement with VARTA AG to divest the Divestment Business. Pursuant to the terms of the Battery Acquisition agreement, the Company will sell the Divestment Business for an aggregate purchase price of €180 million, subject to purchase price adjustments. Pursuant to the terms of the acquisition agreement with Spectrum for the Battery Acquisition, Spectrum will be contributing an additional US $200 million to Energizer in connection with the divestiture of the Divestment Business. The Divestment Business is expected to be sold by the end of calendar year 2019.

~~Divestitures involve significant risks and uncertainties, including:~~

~~failure to effectively transfer liabilities, contracts, operations, facilities and employees to buyers;~~

~~requirements that we retain or indemnify buyers against certain liabilities and obligations;~~

~~the possibility that we will become subject to third-party claims arising out of such divestiture;~~

~~challenges in identifying and separating the intellectual property and data to be divested from the intellectual property and data that we wish to retain;~~

~~inability to reduce fixed costs previously associated with the divested assets or business;~~

~~challenges in collecting the proceeds from any divestiture;~~

~~ability to reduce costs to achieve expected synergies for the rest of our business;~~

~~disruption of our ongoing business and distraction of management;~~

~~difficulties with transition services following the divestiture that result in material~~experience materially adverse impacts to our ~~ongoing operations;~~

~~loss of key employees who leave the Company~~business as a result of ~~a divestiture;~~the virus’s global economic impact, including the availability of credit, adverse impacts on our liquidity and

~~if customers~~ the impacts of any recession that has occurred or ~~partners of the divested business do not receive the same level of service from the new owners, our other businesses~~ may ~~be adversely affected, to the extent that these customers or partners also purchase other products offered by us or otherwise conduct business with our retained business.~~

The Company and VARTA AG have agreed to enter into related agreements ancillary to the acquisition that will become effective upon the consummation of the acquisition, including a hearing aid battery supply agreement pursuant to which the Company will sell to VARTA AG hearing aid products bearing the Rayovac® trademark for

sale by VARTA AG to retail customers in EMEA; an Alkaline Supply Agreement for the sale by VARTA AG to the Company during a transition period of certain alkaline battery products bearing the Varta® trademark; an agreement for the allocation and shared use of certain tools acquired by the Company from Spectrum; and a transition services agreement. VARTA AG will also become a party to the transition services agreement previously entered into between the Company and Spectrum on January 2, 2019 under which VARTA AG will provide to Spectrum that portion of the transition services currently provided by the Business. In addition, as part of the Acquisition, VARTA AG will acquire, indirectly through the acquisition of the Business, the Varta® brand globally and will, immediately following the closing date, enter into a license agreement with the Company under which the Company will receive a royalty-free license to use the Varta® brandoccur in the non-EMEA territories for use in the consumer field (excluding sales to original equipment manufacturers) with the range of consumer product categories currently being sold by the Divestment Business under the Varta® brand consisting of certain consumer batteries, chargers, power banks and lighting products under the current Varta® trademarks and subbrands used today by the Divestment Business, as well as certain future Varta® marks. Subject to material compliance with its terms, the license granted to the Company is perpetual and exclusive within the specified field in all countries in the Non-EMEA territories where the Company currently sells Varta® branded products, and in respect of non-EMEA countries where the Company currently does not sell Varta® branded products, will also be exclusive unless after a specified period of time the Company does not reach certain sales thresholds in those countries, in which case the license will convert to non-exclusive in those territories where such thresholds are not achieved and will remain exclusive in all other territories.future.

Several factors, including consumer perception, adverse events and publicity about the products marketed under the brand, VARTA AG's failure to maintain the quality of products sold under Varta® brand, VARTA AG's failure to properly prosecute intellectual property rights related to the brand, or supply shortages or other operational issues in countries where we do not operate, could diminish the value of this brand with varying degrees of significance, including in countries where we operate and use it. Additionally, the lack of control over the sales and distribution of the Rayovac-branded hearing aid batteries in such channel could result in reduced customer loyalty and awareness which could have an adverse impact on the value of the Rayovac brand and our future revenues. Further, the transition services agreement could result in an increased risk of potential disruption to our business from the failure by a party to provide services in a timely fashion.

We cannot assure you that we will be successful in managing these or any other significant risks that we encounter in closing the divestiture of the Divestment Business, and such divestiture could materially and adversely affect our business, financial condition, results of operations and cash flows.

~~Our debt to finance the acquisitions of the Acquired Businesses is significant and could adversely affect our business and our ability to meet our obligations.~~

~~At June 30, 2019, our total aggregate outstanding indebtedness was approximately $3.5 billion. Our debt agreements contain negative or financial covenants that would limit our operational flexibility.~~

~~This significant amount of debt and other cash needs could have important consequences to us, including:~~

requiring a substantial portion of our cash flow from operations to make payments on this debt, thereby limiting the cash we have available to fund future growth opportunities, such as research and development, capital expenditures and acquisitions;

~~restrictive covenants in our debt arrangements which could limit our operations and borrowing;~~

~~the risk of a future credit ratings downgrade of our debt increasing future debt costs and limiting the future availability of debt financing;~~

increasing our vulnerability to general adverse economic and industry conditions and limiting our flexibility in planning for, or reacting to, changes in our business and industry, due to the need to use our cash to service our outstanding debt;

placing us at a competitive disadvantage relative to our competitors that are not as highly leveraged with debt and that may therefore be more able to invest in their business or use their available cash to pursue other opportunities, including acquisitions; and

~~limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise.~~

In addition, our actual cash requirements in the future may be greater than expected. Our cash flow from operations may not be sufficient to repay all of our outstanding debt as it becomes due, and we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance our debt.

~~Despite our high debt level, we may still be able to incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial debt.~~

We and our subsidiaries may be able to incur substantial additional debt in the future. Although the indentures governing the notes offered hereby, our existing notes and the credit agreement contain or will contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of significant qualifications and exceptions, and, under certain circumstances, the amount of debt that could be incurred in compliance with these restrictions could be substantial. If new debt is added to our and our subsidiaries’ existing debt levels, the related risks that we now face would increase. In addition, none of the indentures governing the notes offered hereby or the existing notes, or the credit agreement will prevent us from incurring obligations that do not constitute debt under those agreements.

We may not be able to generate sufficient cash to service all of our debt, including the notes, and fund our working capital and capital expenditures, and we may be forced to take other actions to satisfy our obligations under our debt, which may not be successful.

The ability of Energizer to make scheduled payments on their respective indebtedness will depend upon our future operating performance and on our ability to generate cash flow in the future, which is subject to general economic, financial, business, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings, including borrowings under our 2018 Revolving Facility, will be available to us in an amount sufficient to enable us and our subsidiaries to pay their debt, including the notes offered hereby, or to fund other liquidity needs.

If our cash flows and capital resources are insufficient to fund our and our subsidiaries debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investment and capital expenditures or to dispose of material assets or operations, seek additional equity capital or restructure or refinance our debt, including the notes. We may not be able to affect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet our scheduled debt service obligations. We anticipate that the indenture governing the notes offered hereby, similar to the credit agreement and existing notes, will restrict our ability to dispose of assets and use the proceeds from any such disposition.

If we or our subsidiaries cannot make scheduled payments on our debt, we and/or our subsidiaries, as the case may be in default and, as a result, the holders of the notes and the holders of the existing notes could declare all outstanding principal and interest to be due and payable, the lenders under the senior credit facilities could declare all outstanding amounts under such facilities due and payable and, with respect to the 2018 Revolving Facility, terminate their commitments to loan money, and, in each case, foreclose against the assets securing the borrowings under the senior credit facilities, and we could be forced into bankruptcy or liquidation, which could result in you losing all or a portion of your investment in the notes.

If our debt or the debt of our subsidiaries is accelerated, we may need to refinance all or a portion of our debt, including the notes, before maturity. We cannot assure that we will be able to refinance any of our debt, including borrowings under the senior credit facilities and our existing notes, on commercially reasonable terms or at all. There can be no assurance that we will be able to obtain sufficient funds to enable us to repay or refinance our debt obligations on commercially reasonable terms, or at all.

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

The following table reports purchases of equity securities during the ~~third~~second quarter of fiscal ~~2019~~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)
April 1 - April 30	—	—		—	3,838,791
May 1 - May 31	—	$	—	—	3,838,791
June 1 - June 30	1,036,356	$	43.46	1,036,000	3,838,791
January 1 - January 31						96	49.48		—	2,802,791
February 1 - February 29						652,189	$	46.03	652,033	2,150,758
March 1 - March 31						328,178	$	45.74	328,103	1,822,655
Total	1,036,356	$	43.46	1,036,000	2,802,791	980,463	$	45.93	980,136	1,822,655

(1) ~~356~~327 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. ~~1,036,000~~980,136 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. ~~1 to Credit Agreement,~~2, dated as of ~~June 10,~~December 27, 2019, byamong the Company, the other loan parties party thereto, the lenders party thereto, and ~~among Energizer Holdings, Inc.,~~ JPMorgan Chase Bank, N.A., as administrative ~~agent,~~agent.

10.2*		Amendment No. 3 dated as of April 24, 2020, to the Credit Agreement dated as of December 17, 2018, as amended, among the Company, the Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.

10.3		Retirement Transition Agreement, dated February 26, 2020, between Energizer Brands LLC and Gregory T. Kinder (incorporated by reference to Exhibit 99.1 to the ~~lenders party thereto.~~Company’s Current Report on Form 8-K filed February 27, 2020).

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:	~~August~~May 7, ~~2019~~2020

6364



	Americas		International			Unallocated		Total
Balance at October 1, 2018	$	228.4	$	15.8		$	—	$	244.2
Battery Acquisition	—		—			547.2		547.2
Auto Care Acquisition	—		—			270.1		270.1
Cumulative translation adjustment	—		(0.2		)	1.1		0.9
Balance at June 30, 2019	$	228.4	$	15.6		$	818.4	$	1,062.4



Total Net Sales (In millions - Unaudited)
Quarter and Nine Months Ended June 30, 2019
Total Net Sales	Q3			% Chg		Nine Months			% Chg
Net sales - FY '18	$	392.8				$	1,340.5
Organic	14.2			3.6	%	31.2			2.3	%
Impact of Battery Acquisition	109.1			27.8	%	209.0			15.6	%
Impact of Auto Care Acquisition	135.6			34.5	%	220.1			16.4	%
Impact of Nu Finish Acquisition	3.0			0.8	%	5.9			0.4	%
Change in Argentina operations	(0.1		)	—	%	(4.3		)	(0.3	)%
Impact of currency	(7.4		)	(1.9	)%	(26.9		)	(1.9	)%
Net sales - FY '19	$	647.2		64.8	%	$	1,775.5		32.5	%