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What changed in Spectrum Brands Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Spectrum Brands Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+364 added−367 removedSource: 10-K (2023-11-21) vs 10-K (2022-11-22)

Top changes in Spectrum Brands Holdings, Inc.'s 2023 10-K

364 paragraphs added · 367 removed · 275 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

38 edited+10 added−10 removed28 unchanged
Biggest changeOur Company also began producing and selling Cutter® Hand Sanitizer during the initial peak of the pandemic, which were eventually sent to employee homes for personal use and donated to health facilities. 9 Table of Conten t s Diversity, Equity and Inclusion Spectrum Brands is committed to fostering a diverse, equitable, and inclusive workplace for employees of every race, color, gender identity, sexual orientation, age, physical or mental ability and background.
Biggest changeDiversity, Equity and Inclusion Spectrum Brands is committed to fostering a diverse, equitable, and inclusive workplace for employees of every race, color, gender identity, sexual orientation, age, physical or mental ability and background. At Spectrum Brands, we strive to make our employees feel valued and respected and given the opportunity to thrive as their authentic selves.
General Overview We are a diversified global branded consumer products and home essentials company. We manage the business in three vertically integrated, product focused segments: (i) Home and Personal Care (“HPC”), (ii) Global Pet Care (“GPC”), and (iii) Home and Garden (“H&G”).
General Overview We are a diversified global branded consumer products and home essentials company. We manage the business in three vertically integrated, product focused segments: (i) Global Pet Care (“GPC”), (ii) Home and Garden (“H&G”) and (iii) Home and Personal Care (“HPC”).
We continually evaluate capacity at our manufacturing facilities and related utilization. In general, we believe our existing facilities are adequate for our present and foreseeable operating needs. Our research and development strategy is focused on new product development and performance enhancements of our existing products.
We continually evaluate capacity at our manufacturing facilities and related utilization. In general, we believe our existing facilities are adequate for our present and foreseeable future operating needs. Our research and development strategy is focused on new product development and performance enhancements of our existing products.
Aquatics Consumer and commercial aquarium kits, stand-alone tanks; aquatics equipment such as filtration systems, heaters and pumps; and aquatics consumables such as fish food, water management and care Tetra®, Marineland®, Whisper®, Instant Ocean®, GloFish®, OmegaOne® and OmegaSea®. We sell primarily to large retailers, pet superstores, online retailers, food and drug chains, warehouse clubs and other specialty retail outlets.
Aquatics Consumer and commercial aquarium kits, stand-alone tanks; aquatics equipment such as filtration systems, heaters and pumps; and aquatics consumables such as fish food, water management and care Tetra®, Marineland®, Instant Ocean®, GloFish®, and OmegaSea®. We sell primarily to large retailers, pet superstores, online retailers, food and drug chains, warehouse clubs and other specialty retail outlets.
Aquatics and certain other companion animal products are produced in various manufacturing plants located in the U.S. and Germany, including the production of glass aquariums in in our Noblesville, Indiana facility, shampoos and aquarium salt in our Blacksburg, Virginia facility, OmegaSea® salt with bird and other small animal products manufactured in our Bridgeton, Missouri facility, and aquatics nutrition and care products manufactured in Melle, Germany.
Aquatics and certain other companion animal products are produced in various manufacturing plants located in the U.S. and Germany, including the production of glass aquariums in in our Noblesville, Indiana facility, shampoos and aquarium salt in our Blacksburg, Virginia facility, OmegaSea® fish food with bird and other small animal products manufactured in our Bridgeton, Missouri facility, and aquatics nutrition and care products manufactured in Melle, Germany.
The following is an overview of the consolidated business showing net sales by segment and geographic region sold (based upon destination) as a percentage of consolidated net sales for the year ended September 30, 2022.
The following is an overview of the consolidated business showing net sales by segment and geographic region sold (based upon destination) as a percentage of consolidated net sales for the year ended September 30, 2023.
International distribution varies by region and is often executed on a country-by-country basis. Our sales generally are made through the use of individual purchase orders. In addition to product sales, we also perform installation and maintenance services on commercial aquariums.
International distribution varies by region and is often executed on a country-by-country basis. Our sales generally are made through the use of individual purchase orders. In addition to product sales within the United States, we also perform installation and maintenance services on commercial aquariums.
(Hamilton Beach, Proctor Silex), Sensio, Inc. (Bella); SEB S.A.(T-fal, Krups, Rowenta), Whirlpool Corporation (Kitchen Aid), Conair Corporation (Cuisinart, Waring), Koninklijke Philips N.V. (Philips), Glen Dimplex (Morphy Richards), Gourmia, and private label brands for major retailers. Primary competitors in personal care include Koninklijke Philips Electronics N.V.
(Hamilton Beach, Proctor Silex), Sensio, Inc. (Bella); SEB S.A.(T-fal, Krups, Rowenta), Whirlpool Corporation (Kitchen Aid), Conair Corporation (Cuisinart, Waring), Versuni (Philips), Donlim (Morphy Richards), Gourmia, and private label brands for major retailers. Primary competitors in personal care include Koninklijke Philips Electronics N.V.
Louis, Missouri, with production primarily consisting of liquids and aerosols, and the remaining portion of products being produced by various third-party manufacturers, consisting of granulates, candles, baits & traps, and wipes. Products produced for the Rejuvenate® business are primarily provided by third-party manufacturers. The main raw materials purchased are plastic bottles, steel aerosol cans, corrugate, active ingredients, and bulk chemicals.
Louis, Missouri, with production primarily consisting of liquids and aerosols, and the remaining portion of products being produced by various third-party manufacturers, consisting of granulates, candles, baits & traps, wipes and Rejuvenate® cleaning products. The main raw materials purchased are plastic bottles, steel aerosol cans, corrugate, active ingredients, and bulk chemicals.
(Norelco), The Procter & Gamble Company (Braun), Conair Corporation, Wahl Clipper Corporation, and Helen of Troy Limited.
(Norelco), The Procter & Gamble Company (Braun), Conair Corporation, Wahl Clipper Corporation, Helen of Troy Limited, SharkNinja (Shark), and Dyson Limited (Dyson).
Live fish under our GloFish® brand are produced, marketed, and sold by independent third-party breeders through a supply and licensing agreement with the Company. A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represent approximately 34% of segment sales for the fiscal year ended September 30, 2022.
Live fish under our GloFish® brand are produced, marketed, and sold by an independent third-party breeder through a supply and licensing agreement with the Company. A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represented approximately 33.4% of segment sales for the fiscal year ended September 30, 2023.
Primary competitors are Mars Corporation, the Hartz Mountain Corporation, and Central Garden & Pet Company all of which sell a comprehensive line of pet supplies that compete across our product categories.
Primary competitors are Mars Corporation, Nestle Purina, and the Central Garden & Pet Company all of which sell a comprehensive line of pet products that compete across our product categories.
Cleaning Household surface cleaning, maintenance, and restoration products, including bottled liquids, mops, wipes, and markers. Rejuvenate® We sell primarily to large retailers, home improvement centers, mass merchants, dollar stores, hardware stores, lawn and garden distributors, food and drug retailers, and e-commerce. We sell primarily in the U.S. with some distribution in LATAM and the Caribbean.
Cleaning Household surface cleaning, maintenance, and restoration products, including bottled liquids, mops, wipes, and markers. Rejuvenate® We sell primarily to large retailers, home improvement centers, mass merchants, dollar stores, hardware stores, lawn and garden distributors, food and drug retailers, and e-commerce.
Sales from electric personal care product categories tend to increase during the December holiday season (the Company's fiscal first quarter), while small appliances sales typically increase from July through December primarily due to the increased demand by customers in the late summer for “back-to-school” sales (the Company's fiscal fourth quarter) and in December for the holiday season. 6 Table of Conten t s Our sales by quarter as a percentage of annual net sales during the years ended September 30, 2022 and 2021 are as follows (excluding acquisition sales attributable to the Tristar Business): 2022 2021 First Quarter 32 % 30 % Second Quarter 24 % 24 % Third Quarter 22 % 22 % Fourth Quarter 22 % 24 % Substantially all of our home appliances and personal care products are manufactured by third-party suppliers that are primarily located in the APAC region, the prices of which may be susceptible to changes in transportation costs, government regulations and tariffs, and changes in currency exchange rates.
Sales from electric personal care product categories tend to increase during the December holiday season (the Company's fiscal first quarter), while small appliances sales typically increase from July through December primarily due to the increased demand by customers in the late summer for “back-to-school” sales (the Company's fiscal fourth quarter) and in December for the holiday season. 8 Table of Contents Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2023 are as follows: 2023 First Quarter 27 % Second Quarter 23 % Third Quarter 23 % Fourth Quarter 27 % Substantially all of our home appliances and personal care products are manufactured by third-party suppliers that are primarily located in the APAC region, the prices of which may be susceptible to changes in transportation costs, government regulations and tariffs, and changes in currency exchange rates.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations , included in Item 7 to this Annual Report, for further discussion of the consolidated operating results and segment operating results. 5 Table of Conten t s Home and Personal Care (HPC) The following is an overview of net sales by product category and geographic region sold by destination for the year ended September 30, 2022.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations , included in Item 7 to this Annual Report, for further discussion of the consolidated operating results and segment operating results. 5 Table of Contents Global Pet Care (GPC) The following is an overview of GPC net sales by product category and geographic region sold by destination for the year ended September 30, 2023.
The pet supplies product category is highly fragmented with no competitor holding a substantial market share and consists of small companies with limited product lines, including private label products and suppliers. Sales remain fairly consistent throughout the year with little variation.
The pet supplies (non-food) product category is highly fragmented with no competitor holding a substantial market share and consists of small companies with limited product lines, including private label products and suppliers. Sales remain mostly consistent throughout the year with slight variations during holiday periods.
We strive to live our core values of trust, accountability and collaboration every day by serving our customers, consumers, and communities. Our workplace culture is centered around practices that support our communities and promote sustainable practices and a diverse, equitable, and inclusive workforce.
We strive to live our core values of trust, accountability and collaboration every day by serving our customers, consumers, and communities. Our workplace culture is centered around practices that support our communities and promote sustainable practices and a diverse, equitable, and inclusive workforce. As of September 30, 2023, we have approximately 3,100 full-time employees worldwide.
Our sales by quarter as a percentage of annual net sales during the years ended September 30, 2022, and 2021 are as follows: 2022 2021 First Quarter 26 % 24 % Second Quarter 25 % 26 % Third Quarter 25 % 23 % Fourth Quarter 24 % 27 % 7 Table of Conten t s Rawhide products are produced at third-party suppliers in the APAC region and Mexico.
Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2023 are as follows: 2023 First Quarter 24 % Second Quarter 26 % Third Quarter 24 % Fourth Quarter 26 % Chews products are produced at third-party suppliers in the APAC region and Mexico.
We solicit and receive questions and feedback from our employees through this process. COVID-19 Response In response to COVID-19, our Company took swift and effective action to protect the health and safety of our global employees.
COVID-19 Response In response to COVID-19, our Company took swift and effective action to protect the health and safety of our global employees.
Our sales by quarter as a percentage of annual net sales during the years ended September 30, 2022, and 2021 are as follows: 2022 2021 First Quarter 12 % 14 % Second Quarter 33 % 29 % Third Quarter 35 % 35 % Fourth Quarter 20 % 22 % 8 Table of Conten t s H&G currently produces the majority of its products in one facility in St.
Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2023 are as follows: 2023 First Quarter 12 % Second Quarter 29 % Third Quarter 35 % Fourth Quarter 24 % H&G produces the majority of its products in one facility in St.
Certain other aquatics equipment and companion animal hard goods are also produced at third-party suppliers in the APAC region. We maintain ownership of most of the tooling and molds used by third-party suppliers.
Certain other aquatics equipment and companion animal hard goods are also produced at third-party suppliers in the APAC region. We maintain ownership of most of the tooling and molds used by third-party suppliers. Product purchased from third-party suppliers are susceptible to fluctuations in transportation costs, government regulations and tariffs, and foreign currency exchange rates.
At Spectrum Brands, we strive to make our employees feel valued and respected and given the opportunity to thrive as their authentic selves. To further that objective we have: • Engaged the services of a third-party consultant with expertise in diversity, equity and inclusion ("DEI") to help us create long-lasting change; • Implemented a DEI program; • Created a U.S.
To further that objective we have: • Engaged the services of a third-party consultant with expertise in diversity, equity and inclusion (“DEI”) to help us create long-lasting change; • Implemented a DEI program; • Created a U.S.
Product Category Products Brands Companion Animal Rawhide chews, dog and cat clean-up, training, health and grooming products, small animal food and care products, rawhide-free dog treats, and wet and dry pet food for dogs and cats 8IN1® (8-in-1), Dingo®, Nature's Miracle®, Wild Harvest™, Littermaid®, Jungle®, Excel®, FURminator®, IAMS® (Europe only), Eukanuba® (Europe only), Healthy-Hide®, DreamBone®, SmartBones®, ProSense®, Perfect Coat®, eCOTRITION®, Birdola®, Good Boy®, Meowee!®, Wildbird®, and Wafcol®.
Product Category Products Brands Companion Animal Dog and cat chews, treats, wet and dry foods; Dog and cat clean-up, behavioral training aides, health and grooming products; Indoor bird and other small animal food and care products. Good'n'Fun®, DreamBone®, GOOD BOY®, SmartBones®, IAMS® (Europe only), EUKANUBA® (Europe only), Nature's Miracle®, FURminator®, Dingo®, 8IN1® (8-in-1), Meowee!®, and Wild Harvest™.
(Raid, OFF!), Central Garden & Pet (AMDRO, Sevin), SBM Company (BioAdvanced), Henkel AG & Co. KGaA (Combat), Bona AB (Bona), and Procter & Gamble (Swiffer).
Primary competitors include The Scotts Miracle-Gro Company (Ortho, Roundup, Tomcat), S.C. Johnson & Son, Inc. (Raid, OFF!), Central Garden & Pet (AMDRO, Sevin), SBM Company (BioAdvanced), Henkel AG & Co. KgaA (Combat), Bona AB (Bona), and Procter & Gamble (Swiffer, Zevo).
International distribution varies by region and is often executed on a country-by-country basis. Our sales generally are made through the use of individual purchase orders. A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represent approximately 35% of segment sales for the year ended September 30, 2022.
We sell primarily in the U.S. with some distribution in LATAM.Our sales generally are made through the use of individual purchase orders. A significant percentage of our sales are attributable to a limited group of retailer customers, including Lowe’s, Home Depot, and Walmart, which represent approximately 63.1% segment sales for the year ended September 30, 2023.
Employee Communication and Feedback In an ongoing effort to understand our employees needs, and deliver on our values of trust, accountability and collaboration, we listen. We regularly host company-wide and business unit town halls to offer employees an opportunity to ask questions about Company activities and policies that impact them.
We regularly host company-wide and business unit town halls to offer employees an opportunity to ask questions about Company activities and policies that impact them. We solicit and receive questions and feedback from our employees through this process.
As of September 30, 2022, we have approximately 11,000 full-time employees worldwide with approximately 3,300 employees associated with our continuing operations. Approximately 17% of our total labor force is covered by collective bargaining agreements, of which 67% is subject to arrangements under negotiations or expiring within 12 months.
Approximately 25% of our total labor force is covered by collective bargaining agreements, of which approximately 25% is subject to arrangements under negotiations or expiring within 12 months. We believe that our overall relationship with our employees is good.
Learning and development is a critical part of creating Spectrum Brands’ culture of high performance, innovation, and inclusion. We believe on-the-job experience is an outstanding way to learn, and performance and development plans ensure that managers and employees have conversations about career aspirations, mobility, developmental goals and interests.
We believe on-the-job experience is an outstanding way to learn, and performance and development plans ensure that managers and employees have conversations about career aspirations, mobility, developmental goals and interests. 9 Table of Contents Employee Communication and Feedback In an ongoing effort to understand our employees needs, and deliver on our values of trust, accountability and collaboration, we listen.
See Note 4 – Acquisitions included in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail. HPC products are sold primarily to large retailers, online retailers, wholesalers, distributors, warehouse clubs, food and drug chains and specialty trade or retail outlets such as consumer electronics stores, department stores, discounters and other specialty stores.
We retain the trademark for nearly all products which we believe can benefit from the use of the brand name in our distribution channels. HPC products are sold primarily to large retailers, online retailers, wholesalers, distributors, warehouse clubs, food and drug chains and specialty trade or retail outlets such as consumer electronics stores, department stores, discounters and other specialty stores.
DEI Advisory Counsel made up of our employees of diverse backgrounds to help design and develop DEI-related priorities and goals; and • Developed educational content and trainings to help leaders foster a more inclusive environment.
DEI Advisory Counsel made up of our employees of diverse backgrounds to help design and develop DEI-related priorities and goals, advise on ways to advance the DEI dialogue and drive meaningful cultural change at the Company ; • Created affinity groups for our diverse employees and developing trainings, communications and programs to further facilitate and encourage open and transparent DEI discussions among our employee populations; and • Developed educational content and trainings to help leaders foster a more inclusive environment.
We plan to continue to use our brand names, customer relationships and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality.
We plan to continue to use our brand names, customer relationships and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality. 6 Table of Contents Home and Garden (H&G) The following is an overview of H&G net sales by product category and geographic region sold by destination for the year ended September 30, 2023.
We plan to continue to use our brand names, customer relationships, and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality.
We plan to continue to use our brand names, customer relationships, and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality. 7 Table of Contents Home and Personal Care (HPC) The following is an overview of net sales by product category and geographic region sold by destination for the year ended September 30, 2023.
The result is a work environment that encourages the well being of our employees wholistically - mind and body. Employee Health and Safety We are committed to the Environmental Health and Safety (EHS) safety of our employees. We continuously strive to maintain our strong safety performance as we continue to grow our business around the globe.
Employee Wellness We encourage our employees to “Speak Up,” “Be Accountable,” “Take Action,” and “Grow Talent,” promote innovation, trust, accountability and collaboration. The result is a work environment that encourages the well being of our employees wholistically - mind and body. Employee Health and Safety We are committed to the Environmental Health and Safety (EHS) safety of our employees.
The keys to our EHS success are a workforce that is engaged, a management team who supports and invests in employee safety, and the leadership of our skilled EHS team. In the last several years, the team has added dedicated EHS professionals to individual sites to train employees and ensure compliance with applicable safety standards and regulations.
In the last several years, the team has added dedicated EHS professionals to individual sites to train employees and ensure compliance with applicable safety standards and regulations. The team hosts regular meetings to share information and discuss best practices across plants.
The team hosts regular meetings to share information and discuss best practices across plants. Talent Development Spectrum Brands is committed to developing our future leaders at every level. Our talent processes start with understanding what current and future talent is needed to deliver business goals, followed by a talent review process to assist managers with evaluating talent.
Our talent processes start with understanding what current and future talent is needed to deliver business goals, followed by a talent review process to assist managers with evaluating talent. Learning and development is a critical part of creating Spectrum Brands’ culture of high performance, innovation, and inclusion.
The Emeril License is set to expire effective December 31, 2022 with options of up to three one-year renewal periods following the initial expiration. Under the terms of the agreement, we are obligated to pay the license holder a percentage of sales, with minimum annual royalty payments of $1.5 million, increasing to $1.8 million in subsequent renewal periods.
Under the terms of the agreement, we are obligated to pay the license holder a percentage of sales, with minimum annual royalty payments of $1.6 million, increasing to $1.8 million in subsequent renewal periods. We own the right to use the Remington® trademark for electric shavers, shaver accessories, grooming products and personal care products; and Remington Arms Company, Inc.
A significant percentage of our sales are attributable to a limited group of retailer customers, including Lowe’s, Home Depot, and Walmart, which represent approximately 66% segment sales for the year ended September 30, 2022. Primary competitors include The Scotts Miracle-Gro Company (Ortho, Roundup, Tomcat), S.C. Johnson & Son, Inc.
A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represent approximately 37.1% of segment sales for the year ended September 30, 2023. Primary competitors for home appliances include Newell Brands (Sunbeam, Mr. Coffee, Crockpot, Oster), De’Longhi America (DeLonghi, Kenwood, Braun), SharkNinja (Shark, Ninja), Hamilton Beach Holding Co.
See Note 6 – Revenue Recognition included in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail on revenue concentration from B&D products. We own the right to use the Remington® trademark for electric shavers, shaver accessories, grooming products and personal care products; and Remington Arms Company, Inc.
See Note 6 – Revenue Recognition included in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail on revenue concentration from B&D branded products. The Emeril License is set to expire effective December 31, 2023, with options of up to two additional one-year renewal periods following the initial expiration.
Removed
We retain the trademark for nearly all products which we believe can benefit from the use of the brand name in our distribution channels. On February 18, 2022, the Company acquired the home appliances and cookware products sold under the PowerXL®, Emeril Legasse®, and Copper Chef® brands from Tristar Products, Inc. (the "Tristar Business").
Added
We continuously monitor and evaluate our supplier network for quality, cost, and manufacturing capacity.
Removed
The net assets and operations of the Tristar Business are integrated within the HPC segment. As part of the acquisition, the PowerXL® and Copper Chef® brands were acquired outright by the Company while the Emeril Legasse® brand remains subject to a trademark license agreement with the license holder (the "Emeril License").
Added
HPC products are also sold direct-to-consumer through direct response television, brand websites, and other online marketplaces. International distribution varies by region and is often executed on a country-by-country basis. Our sales generally are made through the use of individual purchase orders.
Removed
Pursuant to the Emeril License, the HPC segment will continue to license the Emeril brands within the US, Canada, Mexico, and the United Kingdom for certain designated product categories of household appliances, including small kitchen food preparation products, indoor and outdoor grills and grill accessories, and cookbooks.
Added
On June 20, 2023, the Company completed its divestiture of its HHI segment resulting in the recognition of a gain on sale of $2.8 billion included as a component of Income From Discontinued Operations, Net of Tax.
Removed
With the acquisition of the Tristar Business, we have expanded our distribution channels with more direct-to-consumer capabilities which we anticipate will be utilized more frequently with our legacy HPC business and products. Primary competitors for home appliances include Newell Brands (Sunbeam, Mr. Coffee, Crockpot, Oster), De’Longhi America (DeLonghi, Kenwood, Braun), SharkNinja (Shark, Ninja), Hamilton Beach Holding Co.
Added
We continuously strive to maintain our strong safety performance as we continue to grow our business around the globe. The keys to our EHS success are a workforce that is engaged, a management team who supports and invests in employee safety, and the leadership of our skilled EHS team.
Removed
Global Pet Care (GPC) The following is an overview of GPC net sales by product category and geographic region sold by destination for the year ended September 30, 2022.
Added
Environmental, Social and Governance Spectrum Brands is committed to further enhancing our environmental, social and governance (“ESG”) efforts and recognizes the impact our business has on our communities and the world.
Removed
Product purchased from third-party suppliers, especially those from the APAC regions, are susceptible to fluctuations in transportation costs, government regulations and tariffs, and changes in currency exchange rates. We continuously monitor and evaluate our supplier network for quality, cost, and manufacturing capacity.
Added
We believe in making a positive difference in the communities in which we live and work and strive to discharge our corporate social responsibilities from a global perspective and throughout every aspect of our operations, consistent with our focus on creating value for all of our stakeholders over the long term.
Removed
Home and Garden (H&G) The following is an overview of H&G net sales by product category and geographic region sold by destination for the year ended September 30, 2022.
Added
Our decisions regarding business strategy, operations and resource allocation are guided by this purpose and are rooted in our core values. Our Board recognizes the negative effect that poor environmental practices and human capital management may have on us and our returns.
Removed
On May 28, 2021, the Company acquired 100% of the membership interest in For Life Products, LLC ("FLP"); a leading manufacturer of household cleaning, maintenance, and restoration sold under the Rejuvenate® brand, expanding the product categories provided by the H&G segment. Our sales generally are made through the use of individual purchase orders.
Added
Accordingly, our Board considers and balances the impact on the environment, people and the communities of which we are a part in deciding how to operate our business. Our Board receives periodic reports regarding our risk exposure and risk mitigation efforts in these areas.
Removed
The Company's assets and liabilities associated with HHI have been classified as held for sale, and the respective operations have been classified as discontinued operations and reported separately for all periods presented.
Added
We are committed to operating our business with all stakeholders in mind and with a view toward long-term sustainability and value creation, even as our business and society face a variety of existing and emerging challenges. We leverage our expertise, along with external partners, to help address these challenges.
Removed
Approximately 21% of our labor force associated with our continued operations is subject to collective bargaining agreements, none of which expire within 12 months. We believe that our overall relationship with our employees is good. Employee Wellness We encourage our employees to “Speak Up,” “Be Accountable,” “Take Action,” and “Grow Talent,” promote innovation, trust, accountability and collaboration.
Added
While our corporate social responsibility commitments address many areas, we focus on five key priorities: product and content safety, environmental sustainability, human rights and ethical sourcing, employee safety and well-being and diversity and inclusion. Talent Development Spectrum Brands is committed to developing our future leaders at every level.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe are subject to the various risks of importing merchandise from abroad and purchasing product made in foreign countries, such as: • potential disruptions in manufacturing, logistics and supply; • changes in duties, tariffs, quotas and voluntary export restrictions on imported goods; • strikes and other events affecting delivery; • product compliance with laws and regulations of the destination country; • product liability claims from customers or penalties from government agencies relating to products that are recalled, defective or otherwise noncompliance or alleged to be harmful; • concerns about human rights, working conditions and other labor rights and conditions and environmental impact in foreign countries where goods are produced and materials or components are sourced, and changing labor, environmental and other laws in these countries; • local business practice and political issues that may result in adverse publicity or threatened or actual adverse consumer actions, including boycotts; • compliance with laws and regulations concerning ethical business practices, such as the U.S.
Biggest changeAlthough we have implemented policies and procedures designed to facilitate compliance with laws and regulations relating to doing business in foreign markets and importing merchandise from abroad, there can be no assurance that suppliers and other third parties with whom we do business will not violate such laws and regulations or our policies, which could subject us to liability and could adversely affect our results of operations. 19 Table of Contents We are subject to the various risks of importing merchandise from abroad and purchasing product made in foreign countries, such as: • potential disruptions in manufacturing, logistics and supply; • changes in duties, tariffs, quotas and voluntary export restrictions on imported goods; • strikes and other events affecting delivery; • product compliance with laws and regulations of the destination country; • product liability claims from customers or penalties from government agencies relating to products that are recalled, defective or otherwise noncompliance or alleged to be harmful; • concerns about human rights, working conditions and other labor rights and conditions and environmental impact in foreign countries where goods are produced and materials or components are sourced, and changing labor, environmental and other laws in these countries; • local business practice and political issues that may result in adverse publicity or threatened or actual adverse consumer actions, including boycotts; • compliance with laws and regulations concerning ethical business practices, such as the U.S.
In particular, these risks include, but are not limited to: • Risks related to our business operations: We participate in very competitive markets and we may not be able to compete successfully, causing us to lose market share and sales. • Risks related to our indebtedness and financing abilities: Our substantial indebtedness may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our substantial indebtedness. • Risks related to our international operations: We are subject to significant international business risks that could hurt our business and cause our results of operations to fluctuate. • Risks related to data privacy and intellectual property: We may not be able to adequately establish and protect our intellectual property rights, and the infringement or loss of our intellectual property rights could harm our business. • Risks related to litigation and regulatory compliance: We are subject to a number of claims and litigation and may be subject to future claims and litigation, any of which may adversely affect our business. • Risks related to investment in our common stock: The market price of the Company’s common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control.
In particular, these risks include, but are not limited to: • Risks related to our business operations: We participate in very competitive markets and we may not be able to compete successfully, causing us to lose market share and sales. • Risks related to our indebtedness and financing abilities: Our indebtedness may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our substantial indebtedness. • Risks related to our international operations: We are subject to significant international business risks that could hurt our business and cause our results of operations to fluctuate. • Risks related to data privacy and intellectual property: We may not be able to adequately establish and protect our intellectual property rights, and the infringement or loss of our intellectual property rights could harm our business. • Risks related to litigation and regulatory compliance: We are subject to a number of claims and litigation and may be subject to future claims and litigation, any of which may adversely affect our business. • Risks related to investment in our common stock: The market price of the Company’s common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control.
See Note 20 - Commitments and Contingencies to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion on product liability. Agreements, transactions and litigation involving or resulting from the activities of our predecessor and its former subsidiaries may subject us to future claims or litigation that could materially adversely impact our capital resources.
See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion on product liability. Agreements, transactions and litigation involving or resulting from the activities of our predecessor and its former subsidiaries may subject us to future claims or litigation that could materially adversely impact our capital resources.
Any damage to its facility or interruption in manufacturing could result in production delays and delays in meeting contractual obligations which could have a material adverse effect on relationships with customers and on its results of operations, financial condition or cash flows in any given period. We face risks related to our sales of products obtained from third-party suppliers.
Any damage to this facility or interruption in manufacturing could result in production delays and delays in meeting contractual obligations which could have a material adverse effect on relationships with customers and on its results of operations, financial condition or cash flows in any given period. We face risks related to our sales of products obtained from third-party suppliers.
In addition, our debt agreements may require us to dedicate a portion of cash flow from operations to payments on debt and also contain borrowing restrictions based on, among other things, our fixed charge coverage ratio. Furthermore, the credit agreement governing our senior secured facilities contains a financial covenant relating to maximum leverage.
In addition, our debt agreements may require us to dedicate a portion of cash flow from operations to payments on debt and also contain borrowing restrictions based on, among other things, our fixed charge coverage ratio. Furthermore, the credit agreement governing our senior secured facilities contains a financial covenant relating to maximum net leverage.
It is difficult to quantify with certainty the potential financial impact of actions regarding expenditures for environmental matters, particularly remediation, and future capital expenditures for environmental control equipment. See Note 20 - Commitments and Contingencies to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion on estimated liabilities arising from such environmental matters.
It is difficult to quantify with certainty the potential financial impact of actions regarding expenditures for environmental matters, particularly remediation, and future capital expenditures for environmental control equipment. See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion on estimated liabilities arising from such environmental matters.
See Note 6 - Revenue Recognition and Note 21 – Segment Information to the Consolidated Financial Statements included elsewhere in the Annual Report, for sales by geographic region. Our pursuit of international growth opportunities may require significant investments for an extended period before returns on these investments, if any, are realized.
See Note 6 - Revenue Recognition and Note 21 – Segment Information in the Notes to the Consolidated Financial Statements included elsewhere in the Annual Report, for sales by geographic region. Our pursuit of international growth opportunities may require significant investments for an extended period before returns on these investments, if any, are realized.
While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure to currency fluctuations. See Note 14 - Derivatives to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail on related hedging activity.
While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure to currency fluctuations. See Note 14 - Derivatives in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail on related hedging activity.
Our substantial indebtedness has had, and could continue to have, material adverse consequences for our business, and may: • require us to dedicate a large portion of our cash flow to pay principal and interest on our indebtedness, which will reduce the availability of our cash flow to fund working capital, capital expenditures, research and development expenditures and other business activities; • increase our vulnerability to general adverse economic and industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • restrict our ability to make strategic acquisitions, dispositions or to exploit business opportunities; • place us at a competitive disadvantage compared to our competitors that have less debt; and • limit our ability to borrow additional funds (even when necessary to maintain adequate liquidity) or dispose of assets.
Our indebtedness has had, and could continue to have, adverse consequences for our business, and may: • require us to dedicate a large portion of our cash flow to pay principal and interest on our indebtedness, which will reduce the availability of our cash flow to fund working capital, capital expenditures, research and development expenditures and other business activities; • increase our vulnerability to general adverse economic and industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • restrict our ability to make strategic acquisitions, dispositions or to exploit business opportunities; • place us at a competitive disadvantage compared to our competitors that have less debt; and • limit our ability to borrow additional funds (even when necessary to maintain adequate liquidity) or dispose of assets.
The Company’s insurance policies have coverage in case of significant damage to its manufacturing facilities but may not fully compensate for the cost of replacement for any such damage and any loss from business interruption. As a result, we may not be adequately insured to cover losses resulting from significant damage to its manufacturing facility.
The Company’s insurance policies have coverage in case of significant damage to its manufacturing facilities but may not fully compensate for the cost of replacement for any such damage and any loss from business interruption. As a result, we may not be adequately insured to cover losses resulting from significant damage to our manufacturing facility.
See Note 20 - Commitments and Contingencies to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion over material claims and litigation. The Company may be subject to product liability claims and product recalls, which could negatively impact its profitability.
See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion over material claims and litigation. The Company may be subject to product liability claims and product recalls, which could negatively impact its profitability.
See Note 11 – Goodwill and Intangible Assets to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail. The successful execution of our operational efficiency and multi-year restructuring initiatives are important to the long-term growth of our business.
See Note 11 – Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail. The successful execution of our operational efficiency and multi-year restructuring initiatives are important to the long-term growth of our business.
The loss or disruption of such manufacturing and supply arrangements, including for issues such as labor disputes, labor shortages, loss or impairment of key manufacturing sites, discontinuity in our internal information and data systems, inability to procure sufficient raw or input materials, significant changes in trade policy, natural disasters, increasing severity or frequency of extreme weather events due to climate change or otherwise, acts of war or terrorism, the COVID-19 pandemic or other disease outbreaks or other external factors over which we have no control, including inflation, have interrupted product supply and, if not effectively managed and remedied, could have an adverse impact on our business, financial condition or results of operations.
The loss or disruption of such manufacturing and supply arrangements, including for issues such as labor disputes, labor shortages, loss or impairment of key manufacturing sites, discontinuity in our internal information and data systems, inability to procure sufficient raw or input materials, significant changes in trade policy, natural disasters, increasing severity or frequency of extreme weather events due to climate change or otherwise, acts of war or terrorism, or disease outbreaks or other external factors over which we have no control, including inflation, have interrupted product supply and, if not effectively managed and remedied, could have an adverse impact on our business, financial condition or results of operations.
As of September 30, 2022, we have issued 6.9 million restricted stock units (or the equivalent number of shares of common stock upon the lapsing of the applicable restrictions) under the 2011 Equity Plan and have a remaining authorization to issue up to a total of 0.2 million shares of our common stock, or options or restricted stock units exercisable for shares of common stock.
As of September 30, 2023, we have issued 6.9 million restricted stock units (or the equivalent number of shares of common stock upon the lapsing of the applicable restrictions) under the 2011 Equity Plan and have a remaining authorization to issue up to a total of 0.2 million shares of our common stock, or options or restricted stock units exercisable for shares of common stock.
Our success is dependent on our ability to manage our retailer relationships, including offering mutually acceptable trade terms. Concentration of sales are further discussed in Item 1 - Business and Note 6 - Revenue Recognition to the Consolidated Financial Statements included elsewhere in this Annual Report.
Our success is dependent on our ability to manage our retailer relationships, including offering mutually acceptable trade terms. Concentration of sales are further discussed in Item 1 - Business above and Note 6 - Revenue Recognition in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.
Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially increase our costs, negatively impact our sales and damage our results of operations and liquidity position. The duration of any such impacts cannot be predicted.
Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic, or future pandemics, that are not currently foreseeable, could materially increase our costs, negatively impact our sales and damage our results of operations and liquidity position. The duration of any such impacts cannot be predicted.
For example, the European Union adopted the General Data Protection Regulation (the “GDPR”), which became effective on May 25, 2018, and California passed the California Consumer Privacy Act (the "CCPA"), which became effective on January 1, 2020, and is being amended by the California Privacy Rights Act ("CPRA"), which will become effective on January 1, 2023.
For example, the European Union adopted the General Data Protection Regulation (the “GDPR”), which became effective on May 25, 2018, and California passed the California Consumer Privacy Act (the "CCPA"), which became effective on January 1, 2020, and is being amended by the California Privacy Rights Act ("CPRA"), which became effective on January 1, 2023.
On July 28, 2020, the Company's shareholders approved the Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan (the "2020 Equity Plan") pursuant to which 1.2 million shares of common stock were authorized to be issued.
On July 28, 2020, the Company's shareholders approved the Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan (the "2020 Equity Plan") pursuant to which 2.6 million shares of common stock were authorized to be issued.
Regardless of their subject matter or merits, class action lawsuits and other government investigations may result in significant cost to us, which may not be covered by insurance, may divert the attention of management or may otherwise have an adverse effect on our business, financial condition and results of operations. 21 Table of Conten t s We are subject to a number of claims and litigation and may be subject to future claims and litigation, any of which may adversely affect our business.
Regardless of their subject matter or merits, class action lawsuits and other government investigations may result in significant cost to us, which may not be covered by insurance, may divert the attention of management or may otherwise have an adverse effect on our business, financial condition and results of operations. 21 Table of Contents We are subject to a number of claims and litigation and may be subject to future claims and litigation, any of which may adversely affect our business.
To the extent we have not identified such environmental liabilities or to the extent the indemnifications obtained from our counterparties are insufficient to cover such environmental liabilities, these environmental liabilities could have a material adverse effect on our business. 22 Table of Conten t s We are also subject to proceedings related to our disposal of industrial and hazardous material at off-site disposal locations or similar disposals made by other parties for which we are responsible as a result of our relationship with such other parties.
To the extent we have not identified such environmental liabilities or to the extent the indemnifications obtained from our counterparties are insufficient to cover such environmental liabilities, these environmental liabilities could have a material adverse effect on our business. 22 Table of Contents We are also subject to proceedings related to our disposal of industrial and hazardous material at off-site disposal locations or similar disposals made by other parties for which we are responsible as a result of our relationship with such other parties.
An adverse finding against us in these or similar trademark or other intellectual property litigations may have a material adverse effect on our business, financial condition and results of operations.
An adverse finding against us in these or similar trademark or other intellectual property litigation may have a material adverse effect on our business, financial condition and results of operations.
The loss of one or more of our suppliers, a material reduction in their supply of products or provision of services to us or extended disruptions or interruptions in their operations could have a material adverse effect on our business, financial condition and results of operations. Our home and garden products are mainly manufactured from our St.
The loss of one or more of our suppliers, a material reduction in their supply of products or provision of services to us or extended disruptions or interruptions in their operations could have a material adverse effect on our business, financial condition and results of operations. 12 Table of Contents Our home and garden products are mainly manufactured from our St.
Our ability to realize the anticipated benefits of the acquisition of the Tristar Business depend, to a large extent, on our ability to integrate the acquired business into our current HPC segment in a manner that facilitates growth opportunities and achieves projected growth trends without adversely affecting revenue and investments in future growth.
Our ability to realize the anticipated benefits of the acquisition of the Tristar Business is dependent, to a large extent, on our ability to integrate the acquired business into our current HPC segment in a manner that facilitates growth opportunities and achieves projected growth trends without adversely affecting revenue and investments in future growth.
Moreover, it is possible that in the future Chinese authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market. 18 Table of Conten t s Additionally, many products in our international operations are sourced through USD denominated transactions and sold within their respective markets using local currencies.
Moreover, it is possible that in the future Chinese authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market. 18 Table of Contents Additionally, many products in our international operations are sourced through USD denominated transactions and sold within their respective markets using local currencies.
The disclosure of our trade secrets would impair our competitive position, thereby weakening demand for our products or services and harming our ability to maintain or increase our customer base. 20 Table of Conten t s Claims by third parties that we are infringing their intellectual property and other litigation could adversely affect our business.
The disclosure of our trade secrets would impair our competitive position, thereby weakening demand for our products or services and harming our ability to maintain or increase our customer base. 20 Table of Contents Claims by third parties that we are infringing their intellectual property and other litigation could adversely affect our business.
You should also be aware that price volatility might be worse if the trading volume of shares of the common stock is low. Additional issuances of the Company’s common stock may result in dilution to its existing stockholders.
You should also be aware that price volatility might be worse if the trading volume of shares of the common stock is low. 25 Table of Contents Additional issuances of the Company’s common stock may result in dilution to its existing stockholders.
If our obligations under the senior secured facilities are accelerated, we cannot assure you that our assets would be sufficient to repay in full such indebtedness. 17 Table of Conten t s Future financing activities may adversely affect our leverage and financial condition.
If our obligations under the senior secured facilities are accelerated, we cannot assure you that our assets would be sufficient to repay in full such indebtedness. 17 Table of Contents Future financing activities may adversely affect our leverage and financial condition.
We expect to incur one-time costs in connection with integrating our operations, products and personnel and those of the businesses we acquire or divest, in addition to costs related directly to completing such transactions. We would expect similar costs to be incurred with any future acquisition or divestiture.
We expect to incur one-time costs in connection with integrating our operations, products and personnel and those of the businesses we acquire or divest, including our purchase of the Tristar Business, in addition to costs related directly to completing such transactions. We would expect similar costs to be incurred with any future acquisition or divestiture.
Environmental law requirements and the enforcement thereof, change frequently, have tended to become more stringent over time and could require us to incur significant expenses. 23 Table of Conten t s Most federal, state and local authorities require certification by Underwriters Laboratory, Inc.
Environmental law requirements and the enforcement thereof, change frequently, have tended to become more stringent over time and could require us to incur significant expenses. 23 Table of Contents Most federal, state and local authorities require certification by Underwriters Laboratory, Inc.
Any failure to timely obtain suitable supplies at competitive prices could materially adversely affect our business, financial condition and results of operations. 12 Table of Conten t s Our dependence on a few suppliers for certain of our products makes us vulnerable to a disruption in the supply of our products.
Any failure to timely obtain suitable supplies at competitive prices could materially adversely affect our business, financial condition and results of operations. Our dependence on a few suppliers for certain of our products makes us vulnerable to a disruption in the supply of our products.
As of September 30, 2022, we have not issued restricted stock units (or the equivalent number of shares of common stock upon the lapsing of the applicable restrictions) under the 2020 Equity Plan and have a remaining authorization to issue up to a total of 1.2 million shares of our common stock or options or restricted stock units exercisable for shares of common stock.
As of September 30, 2023, we have issued 0.5 million stock units (or the equivalent number of shares of common stock upon lapsing of the applicable restrictions under the 2020 Equipment Plan and have a remaining authorization to issue up to a total of 2.1 million shares of our common stock or options or restricted stock units exercisable for shares of common stock.
We have concluded that it is more likely than not that the majority of the federal and state deferred tax assets will create tax benefits in the future.
We have concluded that it is more likely than not that the majority of the federal and state deferred tax assets related to loss and credit carryforwards will not create tax benefits in the future.
During the fiscal year ended September 30, 2022, approximately 39% of our net sales were denominated in foreign currencies.
During the fiscal year ended September 30, 2023, approximately 41% of our net sales were denominated in foreign currencies.
Even if our combined operations are integrated successfully, the full benefits of the acquisition of the Tristar Business, including anticipated synergies, cost savings or sales or growth opportunities, may not be realized, and these benefits may not be achieved within our anticipated time frame or at all. Further, additional unanticipated costs may be incurred in the integration of our businesses.
Additionally, the full benefits of the acquisition of the Tristar Business, including anticipated synergies, cost savings or sales or growth opportunities, may not be realized, and these benefits may not be achieved within our anticipated time frame or at all. Further, additional unanticipated costs may be incurred in the continued integration of our businesses.
If any of our key personnel or those of our acquired businesses were to join a competitor or form a competing company, existing and potential customers or suppliers could choose to form business relationships with that competitor instead of us.
Any failure to attract and retain key personnel could have a material adverse effect on our business. If any of our key personnel or those of our acquired businesses were to join a competitor or form a competing company, existing and potential customers or suppliers could choose to form business relationships with that competitor instead of us.
Disruption in our global supply chain may negatively impact our business results. Our ability to meet our customers’ needs and achieve cost targets depends on our ability to maintain key manufacturing and supply arrangements, including execution of supply chain optimizations and certain sole supplier or sole manufacturing plant arrangements.
Our ability to meet our customers’ needs and achieve cost targets depends on our ability to maintain key manufacturing and supply arrangements, including execution of supply chain optimizations and certain sole supplier or sole manufacturing plant arrangements.
Significant costs have been incurred and are expected to be incurred in connection with the consummation of recent and future strategic initiatives including the integration or separation of acquired or divested businesses within the Company.
See “Management’s Discussion & Analysis –Business Overview—Tristar Business Acquisition.” Significant costs have been incurred and are expected to be incurred in connection with the consummation of recent and future strategic initiatives including the integration or separation of acquired or divested businesses within the Company.
These measures had serious adverse impacts on domestic and foreign economies of uncertain severity and duration, and the uncertainty remains due to the potential for these measures to be re-implemented in the event of increased COVID-19 cases. The effectiveness of economic stabilization efforts, including potential government payments to affected citizens and industries, remains uncertain.
These measures had serious adverse impacts on domestic and foreign economies of uncertain severity and duration, and the uncertainty remains due to the potential for these measures to be re-implemented in the event of increased COVID-19 cases.
In addition, the economic sanctions and hostilities in Russia and Ukraine may negatively impact our and our customers’ financial viability, which may negatively impact us or the demands or economic viability of our customers in Russia and in other parts of the world. 13 Table of Conten t s Additionally, global economic conditions or restrictions from armed conflicts or the COVID-19 pandemic may cause our suppliers, distributors, contractors, or other third-party partners to suffer financial or operating difficulties that they cannot overcome, resulting in their inability to provide us with the materials and services we need, in which case our business and results of operations could be adversely affected.
Additionally, global economic conditions or restrictions from armed conflicts or the COVID-19 pandemic may cause our suppliers, distributors, contractors, or other third-party partners to suffer financial or operating difficulties that they cannot overcome, resulting in their inability to provide us with the materials and services we need, in which case our business and results of operations could be adversely affected.
A determination that any of our products are not in compliance with these rules and regulations could result in the imposition of fines or an award of damages to private litigants. Public perceptions that some of the products we produce and market are not safe could adversely affect us.
A determination that any of our products are not in compliance with these rules and regulations could result in the imposition of fines or an award of damages to private litigants.
See Note 3 - Divestitures to the Consolidated Financial Statements included elsewhere in our Annual Report. Increased focus by governmental and non-governmental organizations, customers, consumers and investors on sustainability issues, including those related to climate change, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.
Increased focus by governmental and non-governmental organizations, customers, consumers and investors on sustainability issues, including those related to climate change, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.
If our customers delay or defer purchasing decisions, our revenues could materially decline or any anticipated increases in revenue could be lower than expected. The integration of the Tristar Business into our HPC segment may be more difficult, time-consuming, or costly than expected. Synergies and other anticipated benefits may not be realized within the expected time frames, or at all.
If our customers delay or defer purchasing decisions, our revenues could materially decline or any anticipated increases in revenue could be lower than expected. 14 Table of Contents The integration of the Tristar Business into our HPC segment may be more difficult, time-consuming, or costly than expected.
While we may enter into agreements limiting our exposure to higher debt service requirements, any such agreements may not offer complete protection from this risk. Upon completion of a divestiture, we may be required to pay down debt using proceeds from the sale. Restrictive covenants in our debt agreements may restrict our ability to pursue our business strategies.
While we may enter into agreements limiting our exposure to higher debt service requirements, any such agreements may not offer complete protection from this risk. Moreover, upon completion of a divestiture, we may be required to pay down debt using proceeds from the sale pursuant to the terms of the Company's outstanding indebtedness.
Under our 2011 equity incentive plan adopted by the shareholders in 2011, called the Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Award Plan (the “2011 Equity Plan”), a total of 7.1 million shares of common stock of the Company, net of cancellations, have been authorized to be issued through the original authorization of 4.6 million shares during the 2011 shareholders meeting, an additional authorization of 1.0 million during the 2014 shareholders meeting, and a subsequent authorization of 1.5 million during the 2016 shareholders meeting.
Under our 2011 equity incentive plan adopted by the shareholders in 2011, called the Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Award Plan (the “2011 Equity Plan”), a total of 7.1 million shares of common stock of the Company, net of cancellations, have been authorized to be issued.
If we do issue any such additional shares or any such options are exercised, such issuance or exercise also will cause a reduction in the proportionate ownership and voting power of all other stockholders.
If we do issue any such additional shares or any such options are exercised, such issuance or exercise also will cause a reduction in the proportionate ownership and voting power of all other stockholders. As a result of such dilution, the proportionate ownership interest and voting power of a holder of shares of common stock could be decreased. ITEM 1B.
Despite our efforts to manage and remedy the impact of COVID-19 on our financial condition and results of operations, the ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic, potential future waves of COVID-19 cases in the locations where we operate, and actions taken by governmental authorities to contain its spread and mitigate its public health effects.
As a result of the COVID-19 pandemic, we have experienced varying degrees of business disruptions and periods of closure of our distribution centers, and corporate facilities, as have our wholesale customers, licensing partners, suppliers and vendors, and despite our efforts to manage and remedy the impact of COVID-19 on our financial condition and results of operations, the ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic, potential future waves of COVID-19 cases in the locations where we operate, and actions taken by governmental authorities to contain its spread and mitigate its public health effects.
As a result of retailers maintaining tighter inventory control, we face risks related to meeting demand and storing inventory. As a result of the desire of retailers to more closely manage inventory levels, there is a growing trend among them to purchase products on a “just-in-time” basis.
As a result of the desire of retailers to more closely manage inventory levels, there is a growing trend among them to purchase products on a “just-in-time” basis.
Price increases for our raw materials have placed pressure on our costs and could continue to do so, and we may not be able to effectively hedge or pass along any such increases to our customers or consumers.
Under many of our supply arrangements, the price we pay for raw materials fluctuates along with certain changes in underlying commodities costs. Price increases for our raw materials have placed pressure on our costs and could continue to do so, and we may not be able to effectively hedge or pass along any such increases to our customers or consumers.
Risks Related to Investment in our Common Stock Our Restated Bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Refer to Note 5 - Restructuring Charges in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail over restructuring related activity. 24 Table of Contents Risks Related to Investment in our Common Stock Our Restated Bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our business may be materially affected by changes to fiscal and tax policies that could adversely affect our results of operations and cash flows. We operate globally and changes in tax laws could adversely affect our results. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law.
We operate globally and changes in tax laws could adversely affect our results. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law.
In some instances, we and certain acquired businesses have served the same customers, and some customers may decide that it is desirable to have additional or different suppliers.
In some instances, we and certain acquired businesses have served the same customers, and some customers may decide that it is desirable to have additional or different suppliers. Difficulties associated with the integration of acquired businesses could have a material adverse effect on our business.
Additionally, any decline in retail consumer spending, a significant deterioration in the financial condition of the retail industry in general, the bankruptcy of any of our customers or any of our customers ceasing operations could have a material adverse effect on our sales and profitability.
Additionally, any decline in retail consumer spending, a significant deterioration in the financial condition of the retail industry in general, the bankruptcy of any of our customers or any of our customers ceasing operations could have a material adverse effect on our sales and profitability. 11 Table of Contents As a result of retailers maintaining tighter inventory control, we face risks related to meeting demand and storing inventory.
We have, and we expect to continue to have, a significant amount of indebtedness. See Note 12 - Debt to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail .
See Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail .
Further consolidation, store closures and bankruptcies could have a material adverse effect on our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities. 11 Table of Conten t s Consolidation of retailers and our dependence on a small number of key customers for a significant percentage of our sales may negatively affect our business, financial condition and results of operations.
Further consolidation, store closures and bankruptcies could have a material adverse effect on our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities.
With the possibility of continued widespread infection in the U.S. and abroad, there exists the potential for substantial commercial impact. National, state, and local authorities recommended social distancing and imposed, or considered imposing quarantine and isolation measures, on large portions of the population, including mandatory business closures.
National, state, and local authorities recommended social distancing and imposed, or considered imposing quarantine and isolation measures, on large portions of the population, including mandatory business closures.
We do not control the operations of these third parties and are dependent on them to execute our orders and deliver our products in a timely and efficient way. The failure of these third parties to fulfill all of their obligations to us could result in lost sales, penalties and other adverse effects on our business.
The failure of these third parties to fulfill all of their obligations to us could result in lost sales, penalties and other adverse effects on our business.
Our debt agreements each restrict, among other things, asset dispositions, mergers and acquisitions, dividends, stock repurchases and redemptions, other restricted payments, indebtedness and preferred stock, loans and investments, liens and affiliate transactions. Our debt agreements also contain customary events of default and covenants imposing operating and financial restrictions on our business.
Restrictive covenants in our debt agreements may restrict our ability to pursue our business strategies. Our debt agreements each restrict, among other things, asset dispositions, mergers and acquisitions, dividends, stock repurchases and redemptions, other restricted payments, indebtedness and preferred stock, loans and investments, liens and affiliate transactions.
Our inability to execute, or timely execute these efforts, has resulted in us being unable to supply, or timely supply, our products to our customers or incurring higher costs and reductions in revenues, incurring penalties imposed by our customers, or may disrupt our business operations.
Our inability to execute, or timely execute these efforts, has resulted in us being unable to supply, or timely supply, our products to our customers or incurring higher costs and reductions in revenues, incurring penalties imposed by our customers, or may disrupt our business operations. 13 Table of Contents Furthermore, our raw materials are sourced from industries characterized by a limited supply base, and their cost can fluctuate substantially.
We rely on third parties, including suppliers, distributors, alliances with other companies, and third-party service providers, for selected aspects of product development, manufacture, commercialization, support for information technology systems, product distribution, and certain financial transactional processes. Additionally, we have outsourced certain functions to third-party service providers to leverage leading specialized capabilities and achieve cost efficiencies.
Risks Related to our Business Operations Reliance on third-party relationships and outsourcing arrangements could adversely affect our business. We rely on third parties, including suppliers, distributors, alliances with other companies, and third-party service providers, for selected aspects of product development, manufacture, commercialization, support for information technology systems, product distribution, and certain financial transactional processes.
Our growth strategy is based in part on growth through strategic initiatives including both acquisitions and divestitures, which poses a number of risks.
Our strategic initiatives including acquisitions and divestitures may not be successful and may divert our management’s attention away from operations and could create general customer uncertainty. Our growth strategy is based in part on growth through strategic initiatives including both acquisitions and divestitures, which poses a number of risks.
A portion of goods and materials may be sourced by vendors and by us outside of the United States.
We are subject to risks associated with importing goods and materials from foreign countries. A portion of goods and materials may be sourced by vendors and by us outside of the United States.
Additionally, any disruption, such as a government shutdown, war, natural disaster or global pandemic (including the current COVID-19 pandemic), could affect the ability of our third-party service providers to meet their contractual obligations to us.
Additionally, any disruption, such as a government shutdown, war, natural disaster or global pandemic, could affect the ability of our third-party service providers to meet their contractual obligations to us. Failure of these third parties to meet their contractual, regulatory, confidentiality or other obligations to us could result in material financial loss, higher costs, regulatory actions, and reputational harm.
Moreover, we have transitioned our third-party logistics service provider at our existing Edwardsville, IL distribution center and increased our warehouse capacity nearby. These efforts require incorporating a new service provider into our distribution capabilities and adding another distribution center into our operations.
Moreover, we have transitioned our third-party logistics service provider at our existing Edwardsville, IL distribution center. These efforts require incorporating a new service provider into our distribution capabilities and are complicated and require coordination among a number of our stakeholders, including our suppliers and transportation and logistics handlers.
Alternatively, if a court were to find the choice of forum provision contained in our restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition. 24 Table of Conten t s Certain provisions of our charter, bylaws, and of the Delaware General Corporation Law (the “DGCL”) have anti-takeover effects and could delay, discourage, defer or prevent a tender offer or takeover attempt that a stockholder might consider to be in the stockholder’s best interests.
Alternatively, if a court were to find the choice of forum provision contained in our restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
Any such matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business. 16 Table of Conten t s Risks Related to our Indebtedness and Financing Activities Our substantial indebtedness may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our substantial indebtedness.
Risks Related to our Indebtedness and Financing Activities Our substantial indebtedness may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our indebtedness. We have, and we expect to continue to have, substantial indebtedness.
Consideration received in a divestiture could be used to pay down indebtedness, repurchase shares, invest in future acquisitions or expansions, including capital investments, operating development and efficiency. The execution of our strategic initiatives could entail repositioning or similar actions that in turn require us to record impairments, restructuring and other charges. Any such charges would reduce our earnings.
The execution of our strategic initiatives could entail repositioning or similar actions that in turn require us to record impairments, restructuring and other charges. Any such charges would reduce our earnings. We cannot guarantee that any future business acquisitions or divestitures will be pursued or that any acquisitions or divestitures that are pursued will be consummated.
The acquisition of a business or the rights to market specific products or use specific product names may involve a financial commitment by us, either in the form of cash or equity consideration. In the case of a new license, such commitments are usually in the form of prepaid royalties and future minimum royalty payments.
We may also acquire partial or full ownership in businesses or may acquire rights to market and distribute particular products or lines of products. The acquisition of a business or the rights to market specific products or use specific product names may involve a financial commitment by us, either in the form of cash or equity consideration.
Our business, financial condition and results of operations could be materially adversely affected if we lose any of these persons and are unable to attract and retain qualified replacements. Additionally, the agreements that we sign as a result of business acquisitions could affect our current and prospective employees due to uncertainty about their future roles.
Additionally, the agreements that we sign as a result of business acquisitions could affect our current and prospective employees due to uncertainty about their future roles. This uncertainty may adversely affect our ability to attract and retain key management, sales, marketing and technical personnel.
Failure of these third parties to meet their contractual, regulatory, confidentiality or other obligations to us could result in material financial loss, higher costs, regulatory actions, and reputational harm. Uncertain global economic conditions may adversely impact demand for our products or cause our customers and other business partners to suffer financial hardship, which could adversely impact our business.
Uncertain global economic conditions may adversely impact demand for our products or cause our customers and other business partners to suffer financial hardship, which could adversely impact our business.
Changes to state conformity to the provisions of the Tax Reform Act could have a material impact on the valuation allowance recorded on U.S. state net operating losses. If we are unable to fully utilize our NOLs to offset taxable income generated in the future, our future cash taxes could be materially and negatively impacted.
Changes to state conformity to the provisions of the Tax Reform Act could have a material impact on the valuation allowance recorded on U.S. state net operating losses.
For further discussion on the Company’s federal and state NOLs, credits, and applicable valuation allowance as of September 30, 2022, see Note 16 – Income Taxes to the Consolidated Financial Statements included elsewhere in this Annual Report. 14 Table of Conten t s Our strategic initiatives including acquisitions and divestitures may not be successful and may divert our management’s attention away from operations and could create general customer uncertainty.
For further discussion on the Company’s federal and state NOLs, credits, and applicable valuation allowance as of September 30, 2023, see Note 16 – Income Taxes in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.
The diversion of management’s attention, and any difficulties encountered in the transition process, could harm our business, financial condition, and operating results. Moreover, our customers may, in response to the announcement or consummation of a transaction, delay or defer purchasing decisions.
Moreover, our customers may, in response to the announcement or consummation of a transaction, delay or defer purchasing decisions.
While it is too early to predict the full extent of the impact of these actions on our business, the imposition of tariffs on products imported by us from China have in some cases required us to increase prices to our customers or and/or resulted in lowering our gross margin on products sold.
For instance, a large percentage of our products that we sell in the United States are manufactured or sourced in China. The imposition of tariffs on products imported by us from China have in some cases required us to increase prices to our customers or and/or resulted in lowering our gross margin on products sold.
Under our senior credit agreement governing our secured facilities and the indentures governing our senior notes (together, our “debt agreements”), we may incur additional indebtedness. If new debt is added to our existing debt levels, the related risks that we now face would increase. Furthermore, a portion of our debt bears interest at variable rates.
If new debt is added to our existing debt levels, the related risks that we now face would increase. 16 Table of Contents Furthermore, our credit agreement and borrowings under the Revolver Facility are subject to variable interest rates.
If these estimates and assumptions are incorrect, experience delays, or if other unforeseen events occur, our business and results of operation could be adversely affected. Refer to Note 5 - Restructuring Charges to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail over restructuring related activity.
If these estimates and assumptions are incorrect, experience delays, or if other unforeseen events occur, our business and results of operation could be adversely affected.
We may not be able to retain key personnel or recruit additional qualified personnel, which could materially affect our business and require us to incur substantial additional costs to recruit replacement personnel. We are highly dependent on the continuing efforts of our senior management team and other key personnel.
To the extent such liabilities are not identified by us or to the extent the indemnifications obtained from third parties are insufficient to cover such liabilities, these liabilities could have a material adverse effect on our business. 15 Table of Contents We may not be able to retain key personnel or recruit additional qualified personnel, which could materially affect our business and require us to incur substantial additional costs to recruit replacement personnel.
Customers may also suffer financial hardships due to economic conditions such that their accounts become uncollectible or are subject to longer collection cycles. In addition, if we are unable to generate sufficient income and cash flow, it could affect the Company’s ability to achieve expected share repurchase and dividend payments.
Customers may also suffer financial hardships due to economic conditions such that their accounts become uncollectible or are subject to longer collection cycles.
The overall combination of our businesses may also result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer and other business relationships.
Most recently, the Company disposed of certain inventory and products associated with the Tristar Business’ brand after assessing, among other things, performance and quality standards. The overall combination of our businesses has, and may continue to, result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer and other business relationships.
There is no guarantee that we will acquire businesses or product distribution rights that will contribute positively to our earnings. Anticipated synergies may not materialize, cost savings may be less than expected, sales of products may not meet expectations and acquired businesses may carry unexpected liabilities.
Anticipated synergies may not materialize, cost savings may be less than expected, sales of products may not meet expectations and acquired businesses may carry unexpected liabilities. In addition, in connection with business acquisitions, we have assumed, and may assume in connection with future acquisitions, certain potential liabilities.
We cannot guarantee that any future business acquisitions or divestitures will be pursued or that any acquisitions or divestitures that are pursued will be consummated. Additionally, successful integration and separation of operations, products and personnel may place a significant burden on our management and other internal resources.
Additionally, successful integration and separation of operations, products and personnel may place a significant burden on our management and other internal resources. The diversion of management’s attention, and any difficulties encountered in the transition process, could harm our business, financial condition, and operating results.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocations Ballymount, Ireland Commercial Operations Leased Barcelona, Spain Commercial Operations Leased Bogota, Colombia Commercial Operations Leased Borgholzhausen, Germany GPC - Distribution Leased Bucharest, Romania Commercial Operations Leased Buenos Aires, Argentina Commercial Operations Leased Coevorden, Netherlands GPC - Distribution Leased El Dorado, Panama Commercial Operations Leased Guatemala, Guatemala Commercial Operations Leased Istanbul, Turkey Commercial Operations Leased Lisbon, Portugal Commercial Operations Leased Manchester, UK HPC - UK Operations Owned Mechelen, Belgium Commercial Operations Leased Melle, Germany GPC - Manufacturing Owned Mentone, Australia APAC Shared Operations & Distribution Leased Mexico City, Mexico Commercial Operations Leased Milan, Italy Commercial Operations Leased Moscow, Russia Commercial Operations Leased Nottingham, UK GPC - UK Operations Owned Nuremberg, Germany HPC - Distribution Leased Paris, France Commercial Operations Leased Penrose, New Zealand Commercial Operations Leased San Jose, Costa Rica Commercial Operations Leased San Salvador, El Salvador Commercial Operations Leased 26 Table of Conten t s Location Function / Use Owned / Leased Santa Domingo, Dominican Republic Commercial Operations Leased Shenzhen, China APAC Shared Operations & Distribution Leased Singapore, Singapore Commercial Operations Leased Stockholm, Sweden Commercial Operations Leased Sulzbach, Germany EMEA Shared Operations Leased Tegucigalpa, Honduras Commercial Operations Leased Utrecht, Netherlands Commercial Operations Leased Vantaa, Finland Commercial Operations Leased Warsaw, Poland Commercial Operations Leased West Byfleet, UK Commercial Operations Leased Wombourne, UK Distribution Leased Xiamen, China Commercial Operations Leased Yokohama, Japan Commercial Operations Leased We also contract with third parties to operate distribution centers, sales and other administrative offices throughout the world in support of our business.
Biggest changeLocations Ballymount, Ireland HPC - Commercial Operations Leased Barcelona, Spain HPC - Commercial Operations Leased Bogota, Colombia Shared - Commercial Operations Leased Borgholzhausen, Germany GPC - Distribution Leased Bucharest, Romania HPC - Commercial Operations Leased Buenos Aires, Argentina HPC - Commercial Operations Leased Coevorden, Netherlands GPC - Distribution Leased El Dorado, Panama HPC - Commercial Operations Leased Guatemala, Guatemala HPC - Commercial Operations Leased Istanbul, Turkey HPC - Commercial Operations Leased Manchester, UK Shared - UK Operations Owned Melle, Germany GPC - Manufacturing Owned Mentone, Australia HPC - Operations & Distribution Leased Mexico City, Mexico Shared - Commercial Operations Leased Milan, Italy Shared - Commercial Operations Leased Nuremberg, Germany HPC - Distribution Leased Penrose, New Zealand HPC - Commercial Operations Leased San Jose, Costa Rica HPC - Commercial Operations Leased San Salvador, El Salvador HPC - Commercial Operations Leased Santa Domingo, Dominican Republic HPC - Commercial Operations Leased Shanghai, China HPC - Commercial Operations Leased Shenzhen, China APAC Shared Operations & Distribution Leased Singapore, Singapore Shared Commercial Operations Leased Sofia, Bulgaria HPC - Commercial Operations Leased Stockholm, Sweden HPC - Commercial Operations Leased Sulzbach, Germany EMEA Shared Operations Leased Tegucigalpa, Honduras HPC - Commercial Operations Leased Utrecht, Netherlands HPC - Commercial Operations Leased Vantaa, Finland HPC - Commercial Operations Leased Warsaw, Poland Shared - Commercial Operations Leased Wombourne, UK HPC - Distribution Leased Xiamen, China Shared - Commercial Operations Leased Yokohama, Japan GPC Commercial Operations Leased We also contract with third parties to operate distribution centers, sales and other administrative offices throughout the world in support of our business.
ITEM 2. PROPERTIES The following lists our principal owned or leased administrative, manufacturing, packaging, and distribution facilities at September 30, 2022 Location Function / Use Owned / Leased U.S.
ITEM 2. PROPERTIES The following lists our principal owned or leased administrative, manufacturing, packaging, and distribution facilities at September 30, 2023 Location Function / Use Owned / Leased U.S.
Locations Alpharetta, Georgia Commercial Operations Leased Bentonville, Arkansas Commercial Operations Leased Blacksburg, Virginia GPC - Research & Development Leased Blacksburg, Virginia GPC - Manufacturing Owned Bridgeton, Missouri GPC - Manufacturing Leased DeForest, Wisconsin HPC - Commercial Operations Leased Earth City, Missouri GPC Headquarters, H&G Headquarters and NA Shared Operations Leased Edwardsville, Illinois GPC - Distribution Leased Edwardsville, Illinois H&G - Distribution Leased Meriden, Connecticut HPC - Distribution Leased Middleton, Wisconsin Corporate Headquarters, HPC Headquarters and NA Shared Operations Leased Minneapolis, Minnesota Commercial Operations Leased Miramar, Florida LATAM Shared Operations Leased Mooresville, North Carolina Commercial Operations Leased Moorpark, California Commercial Operations Leased New Britain, Connecticut HPC - Distribution Leased Noblesville, Indiana GPC - Manufacturing Owned Pontoon Beach, Illinois GPC - Distribution Leased Palmas Catano, Puerto Rico Commercial Operations & Distribution Leased Redlands, California HPC - Distribution Leased Reno, Nevada HPC - Distribution Leased Riverview, Florida GPC - Research & Development Owned Sparks, Nevada HPC - Distribution Leased St.
Locations Bentonville, Arkansas Shared Commercial Operations Leased Blacksburg, Virginia GPC - Research & Development Leased Blacksburg, Virginia GPC - Manufacturing Owned Bridgeton, Missouri GPC - Manufacturing Leased Earth City, Missouri GPC Headquarters, H&G Headquarters and NA Shared Operations Leased Edwardsville, Illinois GPC - Distribution Leased Edwardsville, Illinois H&G - Distribution Leased Fairfield, New Jersey HPC - Commercial Operations Leased Meriden, Connecticut HPC - Distribution Leased Middleton, Wisconsin Corporate Headquarters, HPC Headquarters and NA Shared Operations Leased Miramar, Florida HPC -Commercial Operations Leased Mooresville, North Carolina H&G - Commercial Operations Leased Moorpark, California GPC - Commercial Operations Leased New Britain, Connecticut HPC - Distribution Leased Noblesville, Indiana GPC - Manufacturing Owned Redlands, California HPC - Distribution Leased Reno, Nevada HPC - Distribution Leased Riverview, Florida GPC - Research & Development Owned St.
Louis, Missouri H&G - Manufacturing Leased Wyomissing, Pennsylvania HPC - Commercial Operations Leased Non-U.S.
Louis, Missouri H&G - Manufacturing Leased 26 Table of Contents Location Function / Use Owned / Leased Non-U.S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail.
Biggest changeSee Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail. ITEM 4. MINE SAFETY DISCLOSURES Not applicable 27 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following summarizes the activity of common stock repurchases under the program in the fourth quarter of the year ended September 30, 2022: Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Plan Approximate Dollar Value of Shares that may Yet Be Purchased As of July 4, 2022 2,239,367 $ 95.72 2,239,367 $ 785,647,294 July 5, 2022 to July 31, 2022 — — — 785,647,294 August 1, 2022 to August 28, 2022 — — — 785,647,294 August 29, 2022 to September 30, 2022 — — — 785,647,294 As of September 30, 2022 2,239,367 $ 95.72 2,239,367 $ 785,647,294 The repurchase of additional shares in the future will depend upon many factors, including the Company’s financial condition, liquidity and legal requirements, and may use funds received from its divestitures to support the common stock repurchase program.
Biggest changeThe following summarizes the activity of common stock repurchases under the program in the fourth quarter of the year ended September 30, 2023: Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Plan Approximate Dollar Value of Shares that may Yet Be Purchased July 3, 2023 to July 30, 2023 — $ — — $ 500,000,000 July 31, 2023 to August 27, 2023 34,107 82.81 34,107 497,175,050 August 28, 2023 to September 30, 2023 391,287 81.50 391,287 465,286,924 As of September 30, 2023 5,768,702 5,768,702 $ 465,286,924 The repurchase of additional shares in the future will depend upon many factors, including the Company’s financial condition, liquidity and legal requirements, and may use funds received from its divestitures to support the common stock repurchase program.
Equity Plans Equity based incentive and performance compensation awards provided to employees, directors, officers and consultants were issued pursuant to the following awards plans: • Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan as approved and amended by the Spectrum Legacy stockholders. • Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan, as approved by the Spectrum stockholders.
Equity Plans Equity based incentive and performance compensation awards provided to employees, directors, officers and consultants were issued pursuant to the following awards plans: • Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan as approved and amended by the Spectrum Legacy stockholders. • Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan, as approved and amended by the Spectrum stockholders.
The share repurchase program permits shares to be repurchased in the open market or through privately negotiated transactions, including by direct purchases or purchases pursuant to derivative instruments or other transactions (including pursuant to accelerated share repurchase agreements, the writing and settlement of put options and the purchase and exercise of call options).
The share repurchase program permits shares to be repurchased in open market or through privately negotiated transactions, including by direct purchases or purchases pursuant to derivative instruments or other transactions including pursuant to accelerated share repurchase agreements, the writing and settlement of put options and the purchase and exercise of call options).
The following is a summary of the authorized and available shares per the respective plans: (number of shares, in millions) Authorized Available Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan 7.1 0.2 Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan 1.2 1.2 Refer to Note 18 – Share Based Compensation in Notes to our Consolidated Financial Statement included elsewhere in this Annual Report, for additional information.
The following is a summary of the authorized and available shares per the respective plans: (number of shares, in millions) Authorized Available Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan 7.1 0.2 Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan 2.6 2.1 Refer to Note 18 – Share Based Compensation in Notes to our Consolidated Financial Statement included elsewhere in this Annual Report, for additional information.
Recent Sales of Unregistered Securities None. 28 Table of Conten t s Stock Performance Graph The following graph compares the cumulative total stockholder return on our Common Stock to the cumulative total return of the Russell 1000 Financial Index and Spectrum Peer Group selected in good faith, which is composed of the following companies ( alphabetical order ): Allegion PLC, Central Garden and Pet Company, Church & Dwight Co., Inc., Edgewell Personal Care Company, Energizer Holdings, Inc., Fortune Brands Home & Security, Inc., Hamilton Beach Brands Holding Company, Helen of Troy Limited, Newell Brands, Inc., Nu Skin Enterprises, Inc., Stanley Black & Decker, Inc., The Clorox Company, and The Scotts Miracle-Gro Company.
Recent Sales of Unregistered Securities None. 28 Table of Contents Stock Performance Graph The following graph compares the cumulative total stockholder return on our Common Stock to the cumulative total return of the Russell 1000 Financial Index, the S&P 500 Household Products Index, and the Spectrum Peer Group selected in good faith, which is composed of the following companies ( alphabetical order ): Allegion PLC, Central Garden and Pet Company, Church & Dwight Co., Inc., Edgewell Personal Care Company, Energizer Holdings, Inc., Fortune Brands Home & Security, Inc., Hamilton Beach Brands Holding Company, Helen of Troy Limited, Newell Brands, Inc., Nu Skin Enterprises, Inc., Stanley Black & Decker, Inc., The Clorox Company, and The Scotts Miracle-Gro Company.
This number does not include the stockholders for whom shares are held in a “nominee” or “street” name. SB/RH is a wholly-owned subsidiary of SBH and accordingly, there is no established public trading market for its equity securities. As of November 18, 2022, there is only one record holder of its equity securities.
This number does not include the stockholders for whom shares are held in a “nominee” or “street” name. SB/RH is a wholly-owned subsidiary of SBH and accordingly, there is no established public trading market for its equity securities. As of November 15, 2023, there is only one record holder of its equity securities.
The comparison below assumes that $100 was invested in the common stock of SBH from September 30, 2017 until September 30, 2022. The comparison is based upon the closing price of the common stock, as applicable, and assumes the reinvestment of all dividends, if any.
The comparison below assumes that $100 was invested in the common stock of SBH from September 30, 2018 until September 30, 2023. The comparison is based upon the closing price of the common stock, as applicable, and assumes the reinvestment of all dividends, if any.
The stockholder return shown on the graph below is not necessarily indicative of future performance and will not make or endorse any predictions as to future stockholder returns. ITEM 6. RESERVED. 29 Table of Conten t s
The stockholder return shown on the graph below is not necessarily indicative of future performance and will not make or endorse any predictions as to future stockholder returns. ITEM 6. RESERVED. 29 Table of Contents
During the years ended September 30, 2022 and 2021, SB/RH paid dividends of $194.7 million and $192.3 million, respectively, to its parent company, SBH. Certain restrictive covenants within the Company’s debt facilities impose limitations on payment of dividends by SB/RH’s subsidiaries to SB/RH and to SBH.
During the years ended September 30, 2023 and 2022, SB/RH paid dividends of $305.1 million and $194.7 million, respectively, to its parent company, SBH. Certain restrictive covenants within the Company’s debt facilities impose limitations on payment of dividends by SB/RH’s subsidiaries to SBH.
The number of shares to be repurchased and the timing of any repurchases will depend on factors such as the share price, economic and market conditions, and corporate and regulatory requirements. The share repurchase program may be suspended, amended or discontinued at any time.
The number of shares to be repurchased, and the timing of any repurchases, will depend on factors such as the share price, economic and market conditions, and corporate and regulatory requirements.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On May 4, 2021, the Board of Directors approved a new share repurchase program authorizing the purchase of up to $1 billion of our common stock. The new share repurchase program commenced immediately and replaced the previous share repurchase program. The authorization is effective for 36 months.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On June 17, 2023, the Board of Directors approved a share repurchase program authorizing the purchase of up to $1 billion of common stock (the "Maximum Amount").
ITEM 5. MARKET FOR THE REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES SBH’s common stock trades on the New York Stock Exchange (the “NYSE”) under the symbol “SPB”. Effective July 13, 2018, SBH completed the planned Spectrum Merger.
ITEM 5. MARKET FOR THE REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES SBH’s common stock trades on the New York Stock Exchange (the “NYSE”) under the symbol “SPB”. As of November 15, 2023, there were approximately 1,123 holders of record based upon data provided by the transfer agent for the SBH’s common stock.
Removed
Prior to the Spectrum Merger, SBH was a holding company, doing business as HRG, conducting its operations principally through its majority owned subsidiaries, and trading on the NYSE under the symbol “HRG”. As of November 18, 2022, there were approximately 1,193 holders of record based upon data provided by the transfer agent for the SBH’s common stock.
Added
The share repurchase program will be in effect from June 17, 2023 until the earlier of the Maximum Amount being repurchased thereunder or the suspension, termination or replacement of the program by the Company's Board of Directors.
Added
During the year ended September 30, 2023, the Company entered into an accelerated share repurchase agreement (the "ASR Agreement") to repurchase an aggregate of $500.0 million of the Company's common stock under the Company's new share repurchase program.
Added
Pursuant to the agreement, the Company paid $500.0 million at inception and took delivery of 5.3 million shares which represented 80% of the total shares the Company expected to receive based on the market price at the time of the initial stock transaction.
Added
Upon settlement of the ASR agreement, the final number of shares to be delivered will be determined with reference to the volume weighted average price per share of our common stock over the term of the agreement, less a negotiated discount. The final settlement of the transaction under the agreement is expected to occur no later than December 20, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

132 edited+49 added−53 removed62 unchanged
Biggest change(in millions) HPC GPC H&G Corporate Consolidated Net income (loss) from continuing operations $ 46.1 $ 127.7 $ 83.7 $ (240.2) $ 17.3 Income tax benefit — — — (25.0) (25.0) Interest expense — — — 116.8 116.8 Depreciation 13.8 15.4 8.1 14.6 51.9 Amortization 30.2 23.8 11.1 — 65.1 EBITDA 90.1 166.9 102.9 (133.8) 226.1 Share and incentive based compensation — — — 27.7 27.7 Tristar Business acquisition — — — 0.1 0.1 Rejuvenate acquisition and integration — — 10.8 — 10.8 Armitage acquisition and integration — 10.9 — — 10.9 Omega production integration — 1.3 — — 1.3 HHI divestiture — — — 9.6 9.6 HPC separation initiatives — — — 14.2 14.2 Coevorden operations divestiture — 11.6 — — 11.6 Global ERP transformation — — — 4.3 4.3 GPC distribution center transition — 15.2 — — 15.2 Global productivity improvement program 8.0 2.4 0.4 10.4 21.2 Other project costs 4.5 0.4 — 2.5 7.4 Unallocated shared costs — — — 26.9 26.9 Non-cash purchase accounting adjustments — 3.4 3.9 — 7.3 Gain on Energizer investment — — — (6.9) (6.9) Legal and environmental — — 6.0 — 6.0 Other — — — 0.1 0.1 Adjusted EBITDA $ 102.6 $ 212.1 $ 124.0 $ (44.9) $ 393.8 Net Sales $ 1,260.1 $ 1,129.9 $ 608.1 $ — $ 2,998.1 Adjusted EBITDA Margin 8.1 % 18.8 % 20.4 % — 13.1 % 39 Table of Conten t s Consolidated Results of Operations The following section provides an analysis of our operations for the years ended September 30, 2022 and 2021.
Biggest change(in millions) GPC H&G HPC Corporate Consolidated Net income (loss) from continuing operations $ 134.0 $ (5.0) $ (215.8) $ (146.9) $ (233.7) Income tax benefit — — — (56.5) (56.5) Interest expense — — — 127.0 127.0 Depreciation 15.2 7.3 11.8 14.6 48.9 Amortization 22.2 11.5 8.6 — 42.3 EBITDA 171.4 13.8 (195.4) (61.8) (72.0) Share based compensation — — — 17.2 17.2 Tristar Business integration — — 11.5 — 11.5 HHI divestiture — — — 8.4 8.4 HPC separation initiatives — — — 4.2 4.2 Coevorden operations divestiture 2.7 — — — 2.7 Fiscal 2023 restructuring initiatives 3.0 — 4.4 — 7.4 Fiscal 2022 restructuring initiatives (0.3) 0.2 — 0.5 0.4 Global ERP transformation — — — 11.4 11.4 Russia closing initiatives — — 3.2 — 3.2 HPC brand portfolio transitions — — 2.5 — 2.5 Other project costs 1.3 2.5 2.3 5.1 11.2 Impairment of equipment and operating lease assets 9.0 0.1 1.7 — 10.8 Impairment of goodwill — — 111.1 — 111.1 Impairment of intangible assets — 56.0 64.7 — 120.7 Unallocated shared costs — — — 18.0 18.0 Non-cash purchase accounting adjustments — — 1.9 — 1.9 Gain from remeasurement of contingent consideration liability — — (1.5) — (1.5) Gain from debt repurchase — — — (7.9) (7.9) Legal and environmental — (0.2) 3.2 — 3.0 Early settlement of foreign currency cash flow hedges — — 4.9 — 4.9 HPC product disposal — — 20.6 — 20.6 HPC product recall — — 7.7 — 7.7 Salus and other adjustments 3.5 0.1 0.3 1.7 5.6 Adjusted EBITDA $ 190.6 $ 72.5 $ 43.1 $ (3.2) $ 303.0 Net sales $ 1,139.0 $ 536.5 $ 1,243.3 $ — $ 2,918.8 Adjusted EBITDA Margin 16.7 % 13.5 % 3.5 % — 10.4 % 36 Table of Contents The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for SBH and its segments for the year ended September 30, 2022.
Refer to Item 1 - Business and Note 1 – Description of Business in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for an overview of our business.
Refer to Item 1 - Business and Note 1 – Description of Business in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for an overview of our business.
See Note 3 - Divestitures included in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail.
See Note 3 - Divestitures in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail.
See Note 3 - Divestitures in Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail.
See Note 3 - Divestitures in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail.
We maintain a capital structure that we believe provides us with sufficient access to credit markets. When combined with strong levels of cash flow from operations, our capital structure has provided the flexibility necessary to pursue strategic growth opportunities and return value to our shareholders.
We maintain a capital structure that we believe provides us with sufficient access to credit and capital markets. When combined with strong levels of cash flow from operations, our capital structure has provided the flexibility necessary to pursue strategic growth opportunities and return value to our shareholders.
See Note 21 - Segment Information of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion of operating and reporting segments. The Company evaluates qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.
See Note 21 - Segment Information in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion of operating and reporting segments. The Company evaluates qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.
These amounts are excluded from our ongoing performance metrics as they are reflective of incremental investment by the Company towards significant initiatives controlled by management, incremental costs directly attributable to such initiatives, indirect impact or disruption to operating performance during implementation, and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments; • Unallocated shared costs associated with discontinued operations from certain shared and center-led administrative functions supporting the Company's business units excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations.
These amounts are excluded from our ongoing performance metrics as they are reflective of incremental investment by the Company towards significant initiatives controlled by management, incremental costs directly attributable to such initiatives, indirect impact or disruption to operating performance during implementation, and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments; • Unallocated shared costs associated with discontinued operations from certain shared and center-led administrative functions the Company's business units excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations.
In addition to the transaction costs of $13.5 million to effect the close of the transaction, recognized during the year ended September 30, 2022, the Company incurred incremental costs to combine and integrate the acquired business with the HPC segment, primarily towards the integration of systems and processes, merger of commercial operations and supply chain, professional fees to facilitate in the consolidation of financial records, plus incremental retention costs for personnel supporting the transition and integration efforts.
In addition to the transaction costs of $13.5 million to effect the close of the transaction, recognized during the year ended September 30, 2022, the Company has incurred incremental costs to combine and integrate the acquired business with the HPC segment, primarily towards the integration of systems and processes, merger of commercial operations and supply chain, professional fees to facilitate in the consolidation of financial records, plus incremental retention costs for personnel supporting the transition and integration efforts.
See Note 15 - Employee Benefit Plans of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail included projected payments towards the future obligation for the following 5 years and thereafter. The Company anticipates that benefit obligations will be predominantly paid through dedicated plan assets.
See Note 15 - Employee Benefit Plans in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail included projected payments towards the future obligation for the following 5 years and thereafter. The Company anticipates that benefit obligations will be predominantly paid through dedicated plan assets.
See Note 16 - Income Taxes of the Notes to the Consolidated Financial Statements elsewhere included in this Annual Report. New Accounting Pronouncements See Note 2 – Significant Accounting Policies and Practices of Notes to the Consolidated Financial Statements elsewhere included in this Annual Report for information about recent accounting pronouncements not yet adopted.
See Note 16 - Income Taxes in the Notes to the Consolidated Financial Statements elsewhere included in this Annual Report. New Accounting Pronouncements See Note 2 – Significant Accounting Policies and Practices in the Notes to the Consolidated Financial Statements elsewhere included in this Annual Report for information about recent accounting pronouncements not yet adopted.
We do not anticipate that these assets will be subject to future impairment based upon our projections and forecasts used in evaluating the current market value but cannot guarantee that no future impairment will be realized.
We do not anticipate that these assets will be subject to further impairment based upon our projections and forecasts used in evaluating the current market value but cannot guarantee that no future impairment will be realized.
Liquidity Outlook Our ability to generate significant cash flow from operating activities coupled with our expected ability to access the credit markets, enables us to execute our growth strategies and return value to our shareholders.
Liquidity Outlook Our ability to generate cash flow from operating activities coupled with our expected ability to access the credit markets, enables us to execute our growth strategies and return value to our shareholders.
See Note 16 – Income Taxes of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional discussion on uncertain tax positions.
See Note 16 – Income Taxes in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional discussion on uncertain tax positions.
The Company incurred incremental costs to combine and integrate the acquired business within the GPC segment, primarily towards the integration of systems and process, transfer of inventory and production to an existing GPC facility, including related exit and disposal costs of the assumed leased facility, related start-up costs and operational inefficiencies attributable to the transferred production, plus retention costs for personnel supporting the transition and integration after the transaction date.
The Company incurred incremental costs to combine and integrate the acquired business within the GPC segment, primarily towards the integration of systems and processes, transfer of inventory and production to an existing GPC facility, including related exit and disposal costs of the assumed leased facility, related start-up costs and operational inefficiencies attributable to the transferred production, plus retention costs for personnel supporting the transition and integration after the transaction date.
We define organic net sales as net sales excluding the effect of changes in foreign currency exchange rates and/or impact from acquisitions (where applicable). We believe this non-GAAP measure provides useful information to investors because it reflects regional and segment performance from our activities without the effect of changes in currency exchange rate and/or acquisitions.
We define organic net sales as net sales excluding the effect of changes in foreign currency exchange rates and/or impact from acquisitions (where applicable). We believe this non-GAAP measure provides useful information to investors because it reflects regional and operating segment performance from our activities without the effect of changes in currency exchange rates and acquisitions.
The initiative included review of global processes and organization design and structures, headcount reductions and transfers, and rightsizing the Company’s shared operations and commercial business strategy and exit of certain internal production to third-party suppliers, among others, resulting in the recognition of severance benefits and other exit and disposal costs to facilitate such activity.
The initiative includes review of global processes and organization design and structures, headcount reductions and transfers, and rightsizing the Company’s shared operations and commercial business strategy and exit of certain internal production to third-party suppliers, among others, resulting in the recognition of severance benefits and other exit and disposal costs to facilitate such activity.
This seasonality requires the Company to ship large quantities of product ahead of peak consumer buying season that can impact cash flow demands to meet manufacturing and inventory requirements earlier in the fiscal year, as well as extended credit terms and/or promotional discounts throughout the peak season.
This seasonality requires the Company to ship large quantities of products ahead of peak consumer buying season that can impact cash flow demands to meet manufacturing and inventory requirements earlier in the fiscal year, as well as extended credit terms and/or promotional discounts throughout the peak season.
Business Overview The following section provides a general description of our business as well as recent developments for the years ended September 30, 2022 and 2021, which we believe are important to understanding our results of operations, financial condition, and understanding anticipated future trends.
Business Overview The following section provides a general description of our business as well as recent developments for the years ended September 30, 2023 and 2022, which we believe are important to understanding our results of operations, financial condition, and understanding anticipated future trends.
For a discussion of our fiscal 2020 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2021 filed with the SEC on November 23, 2021.
For a discussion of our fiscal 2021 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 23, 2021.
See Note 16 - Income Taxes of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.
See Note 16 - Income Taxes in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.
With the Company’s divestitures of GBL and GAC during the year ended September 30, 2019, the project focus included the transition of the Company’s continuing operations in a post-divestiture environment and exiting of TSAs, which were fully exited in January 2022.
With the Company’s divestitures of GBL and GAC during the year ended September 30, 2019, the project focus includes the transition of the Company’s continuing operations in a post-divestiture environment and exiting of TSAs, which were fully exited in January 2022.
The Company also reviews other definite-lived intangible assets and tangible fixed assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.
The Company also reviews other definite-lived intangible assets, tangible fixed assets and operating lease assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.
The effect of changes in currency exchange rates is determined by translating the period’s net sales using the currency exchange rates that were in effect during the prior comparative period. Net sales are attributed to the geographic regions based on the country of destination.
The effect of changes in currency exchange rates is determined by translating the current period net sales using the currency exchange rates that were in effect during the prior comparative period. Net sales are attributed to the geographic regions based on the country of destination.
(in millions) 2022 2021 Tristar Business acquisition and integration $ 24.3 $ 0.1 Rejuvenate acquisition and integration 6.8 10.8 Armitage acquisition and integration 1.4 10.9 Omega integration 4.6 1.3 HHI divestiture 6.3 9.6 HPC separation initiatives 19.1 14.2 Coevorden operations separation 8.8 11.6 Other project costs 1.0 5.4 Total $ 72.3 $ 63.9 Reported as: Net sales $ 0.7 $ — Cost of goods sold 9.4 6.9 General & administrative expense 57.9 57.0 Other non-operating expense, net 4.3 — Restructuring and Optimization Initiatives We continually seek and develop operating strategies to improve our operational efficiency, match our capacity and product costs to market demand and better utilize our manufacturing and distribution resources in order to reduce costs, increase revenues, and maintain or increase our current profit margins.
(in millions) 2023 2022 Tristar Business acquisition and integration $ 11.5 $ 24.3 HHI divestiture and separation 8.4 6.3 HPC separation initiatives 4.2 19.1 Coevorden operations separation 2.7 8.8 Rejuvenate acquisition and integration — 6.8 Armitage acquisition and integration — 1.4 Omega integration — 4.6 Other project costs 0.7 1.0 Total $ 27.5 $ 72.3 Reported as: Net sales $ — $ 0.7 Cost of goods sold 2.7 9.4 General & administrative expense 24.8 57.9 Other non-operating expense, net — 4.3 Restructuring and Optimization Initiatives We continually seek and develop operating strategies to improve our operational efficiency, match our capacity and product costs to market demand and better utilize our manufacturing and distribution resources in order to reduce costs, increase revenues, and maintain or increase our current profit margins.
This section also provides a discussion of our contractual operations and other commercial commitments as well as our ability to fund future commitments and operating activities through sources of capital as of September 30, 2022.
This section also provides a discussion of our contractual operations and other commercial commitments as well as our ability to fund future commitments and operating activities through sources of capital as of September 30, 2023.
Costs are primarily attributable to legal and professional fees incurred to assess strategic opportunities, evaluate transaction considerations for a potential separation, including tax and compliance implications to the consolidated group, costs directly attributable to the legal entity separation and transfer of net assets of the HPC operations from commingled operations of the Company, plus the segregation of systems and processes.
Costs are primarily attributable to legal and professional fees incurred to assess opportunities, evaluate transaction considerations for a separation, including potential tax and compliance implications, costs directly attributable to the legal entity separation and transfer of net assets of the HPC operations from commingled operations of the Company, plus the segregation of systems and processes.
The net assets and results of operations of Omega are included in the Consolidated Financial Statements and reported within GPC segment as of and for the years ended September 30, 2022 and 2021.
The net assets and results of operations of Omega are included in the Consolidated Financial Statements and reported within GPC segment as of and for the years ended September 30, 2023 and 2022.
(in millions) HPC GPC H&G Corporate Consolidated Net income (loss) from continuing operations $ 25.4 $ 75.2 $ 57.2 $ (234.8) $ (77.0) Income tax benefit — — — (13.3) (13.3) Interest expense — — — 99.4 99.4 Depreciation 12.4 14.8 7.2 14.6 49.0 Amortization 16.3 22.6 11.4 — 50.3 EBITDA 54.1 112.6 75.8 (134.1) 108.4 Share and incentive based compensation — — — 10.2 10.2 Tristar Business acquisition and integration 24.3 — — — 24.3 Rejuvenate integration — — 6.8 — 6.8 Armitage integration — 1.4 — — 1.4 Omega production integration — 4.6 — — 4.6 HHI divestiture — — — 6.3 6.3 HPC separation initiatives — — — 19.1 19.1 Coevorden operations divestiture — 8.8 — — 8.8 Fiscal 2022 restructuring initiatives 4.9 3.6 0.7 0.6 9.8 Global ERP transformation — — — 13.1 13.1 GPC distribution center transition — 35.8 — — 35.8 Global productivity improvement program 2.4 0.8 — 1.9 5.1 Russia closing initiatives 1.9 — — — 1.9 HPC brand portfolio transitions 1.3 — — — 1.3 Other project costs 0.5 0.1 — 11.5 12.1 Unallocated shared costs — — — 27.6 27.6 Non-cash purchase accounting adjustments 8.3 — — — 8.3 Gain from remeasurement of contingent consideration liability (28.5) — — — (28.5) Legal and environmental — — 1.5 — 1.5 Early settlement of foreign currency cash flow hedges (5.1) — — — (5.1) HPC product recall 5.5 — — — 5.5 Salus and other adjustments — 0.9 1.4 2.5 4.8 Adjusted EBITDA $ 69.6 $ 168.6 $ 86.2 $ (41.3) $ 283.1 Net Sales $ 1,370.1 $ 1,175.3 $ 587.1 $ — $ 3,132.5 Adjusted EBITDA Margin 5.1 % 14.3 % 14.7 % — 9.0 % 36 Table of Conten t s The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for SBH and its segments for the year ended September 30, 2021.
(in millions) GPC H&G HPC Corporate Consolidated Net income (loss) from continuing operations $ 75.2 $ 57.2 $ 25.4 $ (234.8) $ (77.0) Income tax benefit — — — (13.3) (13.3) Interest expense — — — 99.4 99.4 Depreciation 14.8 7.2 12.4 14.6 49.0 Amortization 22.6 11.4 16.3 — 50.3 EBITDA 112.6 75.8 54.1 (134.1) 108.4 Share based compensation — — — 10.2 10.2 Tristar Business acquisition and integration — — 24.3 — 24.3 Rejuvenate integration — 6.8 — — 6.8 Armitage integration 1.4 — — — 1.4 Omega production integration 4.6 — — — 4.6 HHI divestiture — — — 6.3 6.3 HPC separation initiatives — — — 19.1 19.1 Coevorden operations divestiture 8.8 — — — 8.8 Fiscal 2022 restructuring initiatives 3.6 0.7 4.9 0.6 9.8 Global ERP transformation — — — 13.1 13.1 GPC distribution center transition 35.8 — — — 35.8 Global productivity improvement program 0.8 — 2.4 1.9 5.1 Russia closing initiatives — — 1.9 — 1.9 HPC brand portfolio transitions — — 1.3 — 1.3 Other project costs 0.1 — 0.5 11.5 12.1 Legal and environmental — 1.5 — — 1.5 Gain from remeasurement of contingent consideration liability — — (28.5) — (28.5) Unallocated shared costs — — — 27.6 27.6 Early settlement of foreign currency cash flow hedges — — (5.1) — (5.1) HPC product recall — — 5.5 — 5.5 Non-cash purchase accounting adjustments — — 8.3 — 8.3 Salus and other adjustments 0.9 1.4 — 2.5 4.8 Adjusted EBITDA $ 168.6 $ 86.2 $ 69.6 $ (41.3) $ 283.1 Net sales $ 1,175.3 $ 587.1 $ 1,370.1 $ — $ 3,132.5 Adjusted EBITDA Margin 14.3 % 14.7 % 5.1 % 9.0 % 37 Table of Contents The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for SB/RH and its segments for the year ended September 30, 2023.
Based upon our current level of operations, existing cash balances, the anticipated proceeds from HHI divestitures and availability under our credit facility, we expect cash flows from operations to be sufficient to meet our operating and capital expenditure requirements for at least the next 12 months.
Based upon our current and anticipated level of operations, existing cash balances, and availability under our credit facility, we expect cash flows from operations to be sufficient to meet our operating and capital expenditure requirements for at least the next 12 months.
The following is a summary of net sales by segment for the years ended September 30, 2022 and 2021 and the principal components of changes in net sales for the respective periods.
The following is a summary of net sales by segment for the years ended September 30, 2023 and 2022 and the principal components of changes in net sales for the respective periods.
For those income tax positions where it is more likely than not that a tax benefit will not be sustained, the Company did not recognize a tax benefit. As of September 30, 2022, the total amount of unrecognized tax benefits, including interest and penalties, that if not recognized would affect the effective tax rate in future periods was $100.9 million.
For those income tax positions where it is more likely than not that a tax benefit will not be sustained, the Company did not recognize a tax benefit. As of September 30, 2023, the total amount of unrecognized tax benefits, including interest and penalties, that if not recognized would affect the effective tax rate in future periods was $100.2 million.
In addition to the projects and initiatives discussed above, the Company regularly incurs cost and engages in less significant restructuring initiatives and optimization engagements that individually are not substantial and occur over a shorter time period (generally less than 12 months).
In addition to the projects and initiatives discussed above, the Company regularly incurs costs and engages in less significant restructuring and optimization initiatives that individually are not substantial and occur over a shorter time period (generally less than 12 months).
Segment Financial Data This section provides an analysis of our results of reportable segments for the years ended September 30, 2022 and 2021.
Segment Financial Data This section provides an analysis of our results of reportable segments for the years ended September 30, 2023 and 2022.
The net assets and operating results of the Tristar Business are included in the Consolidated Financial Statements and reported within the HPC reporting segment as of and for the year ended September 30, 2022, effective as of the transaction date.
The net assets and operating results of the Tristar Business are included in the Consolidated Financial Statements and reported within the HPC reporting segment as of and for the years ended September 30, 2023 and 2022, effective as of the transaction date.
Adjusted EBITDA further excludes: • Stock based compensation costs consists of costs associated with long-term compensation arrangements that generally consist of non-cash stock based compensation.
Adjusted EBITDA further excludes: • Share based compensation costs consist of costs associated with long-term compensation arrangements that generally consist of non-cash, stock-based compensation.
It also facilitates comparisons between peer companies since interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA is also used for determining compliance with the Company’s debt covenants.
They also facilitate comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA is also used for determining compliance with the Company’s debt covenants.
As of September 30, 2022, we have provided no significant residual U.S. taxes on earnings not yet taxed in the U.S. As of September 30, 2022, we project $2.0 million of additional tax from non-U.S. withholding and other taxes expected to be incurred on repatriation of foreign earnings.
As of September 30, 2023, we have provided no significant residual U.S. taxes on earnings not yet taxed in the U.S. As of September 30, 2023, we project $1.2 million of additional tax from non-U.S. withholding and other taxes expected to be incurred on repatriation of foreign earnings.
For a discussion of our fiscal 2020 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2021 filed with the SEC on November 23, 2021.
For a discussion of our fiscal 2021 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 22, 2022.
For a discussion of our fiscal 2020 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2021 filed with the SEC on November 23, 2021.
For a discussion of our fiscal 2021 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 22, 2022.
For a discussion of our fiscal 2020 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2021 filed with the SEC on November 23, 2021.
For a discussion of our fiscal 2021 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 22, 2022.
At September 30, 2022, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 5.75% Notes due July 15, 2025, the 4.00% Notes due October 1, 2026, the 5.00% Notes due October 1, 2029, the 5.50% Notes due July 15, 2030, and the 3.875% Notes due March 15, 2031.
At September 30, 2023, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 4.00% Notes due October 1, 2026, the 5.00% Notes due October 1, 2029, the 5.50% Notes due July 15, 2030, and the 3.875% Notes due March 15, 2031.
We estimate that $154.4 million of valuation allowance related to domestic deferred tax assets cannot be released regardless of the amount of domestic operating income generated due to prior period ownership changes that limit the amount of NOLs and credits we can use.
We estimate that $149.7 million of valuation allowance related to domestic deferred tax assets cannot be released regardless of the amount of domestic operating income generated due to prior period ownership changes that limit the amount of NOLs and credits we can use.
Costs attributable to the initiative are substantially complete as of September 30, 2022. • Global Productivity Improvement Program - During the year ended September 30, 2019, the Company initiated a company-wide, multi-year program, consisting of various restructuring related initiatives to redirect resources and spending to drive growth, identify cost savings and pricing opportunities through standardization and optimization, develop organizational and operating optimization, and reduce overall operational complexity across the Company.
Costs attributable to the initiative were completed during the year ended September 30, 2022. • Global Productivity Improvement Program - During the year ended September 30, 2019, the Company initiated a company-wide, multi-year program, consisting of various restructuring related initiatives to redirect resources and spending to drive growth, identify cost savings and pricing opportunities through standardization and optimization, develop organizational and operating optimization, and reduce overall operational complexity across the Company.
The project will require incremental costs to facilitate potential transitions of branded product offerings on global basis, including investment with our supply base and retail partners to manage inventory and transition new branded products to market.
The project included incremental costs to facilitate transitions of branded product offerings on global basis, including investment with our supply base and retail partners to manage inventory and transition new branded products to market.
See Note 3 – Divestitures of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report. 44 Table of Conten t s Guarantor Statements - SB/RH SBI has issued the 5.75% Notes under the 2025 Indenture, the 4.00% Notes under the 2026 Indenture, the 5.00% Notes under the 2029 Indenture, the 5.50% Notes under the 2030 Indenture, and the 3.875% Notes under the 2031 Indentures (collectively, the “Notes”).
See Note 3 – Divestitures in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report. 44 Table of Contents Guarantor Statements - SB/RH SBI has issued the 4.00% Notes under the 2026 Indenture, the 5.00% Notes under the 2029 Indenture, the 5.50% Notes under the 2030 Indenture, and the 3.875% Notes under the 2031 Indentures (collectively, the “Notes”).
Following the separation of the Coevorden Operations, the Company has incurred incremental costs attributable to a tolling charge for the continued production of DCF products through a three-year manufacturing agreement with the buyer entered into concurrently with the sale, rent charges associated with the transferred warehouse operated by the Company during an 18-month transition period following the sale, plus costs to facilitate the transfer of the warehouse operations to the buyer and the movement of inventory and distribution center operations from the Coevorden facility to a new distribution center supporting GPC operations in EMEA.
Following the separation of the Coevorden Operations, the Company incurred incremental costs attributable to a tolling charge for the continued production of DCF products through a three-year manufacturing agreement with the buyer entered into concurrently with the sale, rent charges associated with the transferred warehouse operated by the Company during an 18-month transition period, plus costs to facilitate the transfer of the warehouse operations to the buyer and the movement of inventory and distribution center operations.
Income from discontinued operations is attributable to SBH previously discussed. The effective tax rate was 14.6% for the year ended September 30, 2022 compared to 324.7% for the year ended September 30, 2021. The change in tax rate is primarily attributable to the changes in SBH previously discussed.
Income from discontinued operations is attributable to SBH previously discussed. The effective tax rate was 19.6% for the year ended September 30, 2023 compared to 14.6% for the year ended September 30, 2022. The change in tax rate is primarily attributable to the changes in SBH previously discussed.
(in millions) HPC GPC H&G Corporate Consolidated Net income (loss) from continuing operations $ 25.4 $ 75.2 $ 57.2 $ (232.8) $ (75.0) Income tax benefit — — — (12.9) (12.9) Interest expense — — — 99.8 99.8 Depreciation 12.4 14.8 7.2 14.6 49.0 Amortization 16.3 22.6 11.4 — 50.3 EBITDA 54.1 112.6 75.8 (131.3) 111.2 Share and incentive based compensation — — — 9.1 9.1 Tristar Business acquisition and integration 24.3 — — — 24.3 Rejuvenate integration — — 6.8 — 6.8 Armitage integration — 1.4 — — 1.4 Omega production integration — 4.6 — — 4.6 HHI divestiture — — — 6.3 6.3 HPC separation initiatives — — — 19.1 19.1 Coevorden operations divestiture — 8.8 — — 8.8 Fiscal 2022 restructuring initiatives 4.9 3.6 0.7 0.6 9.8 Global ERP transformation — — — 13.1 13.1 GPC distribution center transition — 35.8 — — 35.8 Global productivity improvement program 2.4 0.8 — 1.9 5.1 Russia closing initiatives 1.9 — — — 1.9 HPC brand portfolio transitions 1.3 — — — 1.3 Other project costs 0.5 0.1 — 11.5 12.1 Unallocated shared costs — — — 27.6 27.6 Non-cash purchase accounting adjustments 8.3 — — — 8.3 Gain from remeasurement of contingent consideration liability (28.5) — — — (28.5) Legal and environmental — — 1.5 — 1.5 Early settlement of foreign currency cash flow hedges (5.1) — — — (5.1) HPC product recall 5.5 — — — 5.5 Other — 0.9 1.4 2.2 4.5 Adjusted EBITDA $ 69.6 $ 168.6 $ 86.2 $ (39.9) $ 284.5 Net Sales $ 1,370.1 $ 1,175.3 $ 587.1 $ — $ 3,132.5 Adjusted EBITDA Margin 5.1 % 14.3 % 14.7 % — 9.1 % 38 Table of Conten t s The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for SB/RH and its segments for the year ended September 30, 2021.
(in millions) GPC H&G HPC Corporate Consolidated Net income (loss) from continuing operations $ 75.2 $ 57.2 $ 25.4 $ (232.8) $ (75.0) Income tax benefit — — — (12.9) (12.9) Interest expense — — — 99.8 99.8 Depreciation 14.8 7.2 12.4 14.6 49.0 Amortization 22.6 11.4 16.3 — 50.3 EBITDA 112.6 75.8 54.1 (131.3) 111.2 Share based compensation — — — 9.1 9.1 Tristar Business acquisition and integration — — 24.3 — 24.3 Rejuvenate integration — 6.8 — — 6.8 Armitage integration 1.4 — — — 1.4 Omega production integration 4.6 — — — 4.6 HHI divestiture — — — 6.3 6.3 HPC separation initiatives — — — 19.1 19.1 Coevorden operations divestiture 8.8 — — — 8.8 Fiscal 2022 restructuring initiatives 3.6 0.7 4.9 0.6 9.8 Global ERP transformation — — — 13.1 13.1 GPC distribution center transition 35.8 — — — 35.8 Global productivity improvement program 0.8 — 2.4 1.9 5.1 Other project costs 0.1 — 0.5 11.5 12.1 Unallocated shared costs — — — 27.6 27.6 Gain from remeasurement of contingent consideration liability — — (28.5) — (28.5) Russia closing initiatives — — 1.9 — 1.9 Early settlement of foreign currency cash flow hedges — — (5.1) — (5.1) HPC brand portfolio transitions — — 1.3 — 1.3 Non-cash purchase accounting adjustments — — 8.3 — 8.3 Legal and environmental — 1.5 — — 1.5 HPC product recall — — 5.5 — 5.5 Other adjustments 0.9 1.4 — 2.2 4.5 Adjusted EBITDA $ 168.6 $ 86.2 $ 69.6 $ (39.9) $ 284.5 Net sales $ 1,175.3 $ 587.1 $ 1,370.1 $ — $ 3,132.5 Adjusted EBITDA Margin 14.3 % 14.7 % 5.1 % — 9.1 % 39 Table of Contents Consolidated Results of Operations The following section provides an analysis of our operations for the years ended September 30, 2023 and 2022.
The net assets and operating results of FLP are included in the Consolidated Financial Statements and reported within the H&G reporting segment as of and for the years ended September 30, 2022 and 2021, effective as of the transaction date.
The net assets and operating results of FLP are included in the Consolidated Financial Statements and reported within the H&G reporting segment as of and for the years ended September 30, 2023 and 2022.
The net assets and results of operations of Armitage are included in the Consolidated Financial Statements and reported within the GPC reporting segment as of and for the years ended September 30, 2022 and 2021, effective as of the transaction date.
The net assets and results of operations of Armitage are included in the Consolidated Financial Statements and reported within the GPC reporting segment as of and for the years ended September 30, 2023 and 2022.
If we determine that it is more likely than not the carrying value is greater than the fair value of an indefinite lived intangible asset, a quantitative assessment is performed to determine the fair value and measure the impairment. If the fair value is less than its carrying value, an impairment loss is recorded for the excess.
If we determine that it is more likely than not the carrying value is greater than the fair value of an indefinite lived intangible asset, a quantitative assessment is performed to determine the fair value and measure the impairment.
See Note 4 - Acquisitions in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further detail.
See Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail.
See Note 7 – Fair Value of Financial Instruments in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further details; • Incremental reserves for non-recurring litigation or environmental remediation activity including the proposed settlement on outstanding litigation matters at our H&G division attributable to significant and unusual nonrecurring claims with no previous history or precedent recognized during the years ended September 30, 2022 and 2021.
See Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further details; • Incremental reserves for non-recurring litigation or environmental remediation activity including the proposed settlement of outstanding litigation at our H&G and HPC segments attributable to significant and unusual nonrecurring matters with no previous history or precedent recognized during the years ended September 30, 2023 and 2022.
Costs attributable to the integration of the Tristar Business were initiated with the close of the transaction and are projecting to continue through the year ending September 30, 2023. • Rejuvenate Acquisition - On May 28, 2021, the Company acquired 100% of the membership interests in For Life Products, LLC ("FLP"), a manufacturer of household cleaning, maintenance, and restoration products sold under the Rejuvenate® brand.
Costs attributable to the integration of the Tristar Business were initiated with the close of the transaction and were substantial complete and recognized as of September 30, 2023. • Rejuvenate Acquisition - During the year ended September 30, 2021, on May 28, 2021, the Company acquired 100% of the membership interests in For Life Products, LLC ("FLP"), a manufacturer of household cleaning, maintenance, and restoration products sold under the Rejuvenate® brand.
Incremental costs are expected to be incurred through the consummation of the pending transaction to support TSA processes and mitigation following the close of the sale, which are expected to be incurred for a transition period of approximately 12-24 months following the close of the transaction. • HPC Separation - The Company has entered into various initiatives to facilitate a strategic separation of the Company's ownership in the HPC segment in the most advantageous way to realize value for both the HPC business through a spin, merger or other strategic transaction and the retained GPC and H&G businesses of the Company.
Incremental costs are expected to be incurred following consummation of the transaction to support TSA processes and mitigation following the close of the sale are expected to be incurred for a transition period of approximately 12-24 months following the close of the transaction. • HPC Separation - The Company has initiated projects to facilitate a strategic separation of the Company's ownership in the HPC segment in the most advantageous way to realize value for both the HPC business as a standalone appliance business either through a spin, merger or other strategic transaction, and the retained GPC and H&G businesses of the consolidated group.
Costs are anticipated to be incurred through various deployments expected through September 30, 2024. • GPC Distribution Transition - During the year ended September 30, 2021, the GPC segment entered into an initiative to update its supply chain and distribution operations within the U.S. to address capacity needs, optimize and improve fill rates attributable to recent growth in the business and consumer demand, and improve overall operational effectiveness and throughput.
Costs attributable to the initiative were completed during the year ended September 30, 2023. • GPC Distribution Transition - During the year ended September 30, 2021, the GPC segment entered into an initiative to update its supply chain and distribution operations within the U.S. to address capacity needs, optimize and improve fill rates attributable to recent growth in the business and consumer demand, and improve overall operational effectiveness and throughput.
Costs attributable to the integration of the Rejuvenate business have been substantially complete. • Armitage Acquisition - On October 26, 2020, the Company completed the acquisition of Armitage Pet Care Ltd ("Armitage"), a pet treats and toys business in Nottingham, UK including a portfolio of brands that include the dog treats brand, Good Boy®, cat treats brand, Meowee!®, and Wildbird® bird feed products, among others, that are predominantly sold within the UK.
Costs attributable to the integration of the Rejuvenate business were completed as of September 30, 2022. • Armitage Acquisition - During the year ended September 30, 2021, on October 26, 2020, the Company completed the acquisition of Armitage Pet Care Ltd ("Armitage"), a pet treats and toys business in Nottingham, UK including a portfolio of brands that include the dog treats brand, Good Boy®, cat treats brand, Meowee!®, and Wildbird® bird feed products, among others, that are predominantly sold within the UK.
On an annual basis, during the Company’s fourth quarter, or more frequently if triggering events occur, the Company tests for impairment by either performing a qualitative assessment or quantitative test for some or all indefinite-lived intangible assets.
In addition to goodwill, the Company has indefinite-lived intangible assets that consist of acquired tradenames. On an annual basis, during the Company’s fourth quarter, or more frequently if triggering events occur, the Company tests for impairment by either performing a qualitative assessment or quantitative test for some or all indefinite-lived intangible assets.
See Note 3 - Divestitures in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further details; • Non-cash purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value and the incremental value in operating lease assets with below market rent, among others; • Non-cash gain from the remeasurement of the contingent consideration liability recognized during the year ended September 30, 2022, associated with the Tristar Business acquisition.
See Note 3 – Divestitures in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further details; • Non-cash purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value and the incremental value in operating lease assets with below market rent, among others; • Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets; See Note 10 - Property, Plant and Equipment, Note 11 - Goodwill and intangible Assets and Note 13 - Leases in Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further details; • Non-cash gain from the remeasurement of the contingent consideration liability associated with the Tristar Business acquisition, recognized during the years ended September 30, 2023 and 2022.
See Note 20 - Commitments and Contingencies in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further details; and • Other adjustments primarily attributable to (1) costs associated with Salus operations as they are not considered a components of the continuing commercial products company and (2) other key executive severance related costs (3) asset write-off for exit of certain GPC brands within China during year ended September 30, 2022, and (4) write-off of cost based investment previously held by the GPC segment during the year ended September 30, 2022. 35 Table of Conten t s The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for SBH and its segments for the year ended September 30, 2022.
See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further details; • Other adjustments primarily attributable to (1) costs associated with Salus as they are not considered a component of the continuing commercial products company; (2) key executive severance related costs; (3) asset write-off for exit of certain GPC brands within China during year ended September 30, 2022, and (4) write-off of cost based investment previously held by the GPC segment during the year ended September 30, 2022.
See Note 13 - Leases of Notes to the Consolidated Financial Statement included elsewhere in the Annual Report for further detail, including maturity schedule on outstanding finance and operating lease obligations for the following 5 years and thereafter, including imputed interest not reflected on the Consolidated Statements of Financial Position.
See Note 13 - Leases of the Notes to the Consolidated Financial Statement included elsewhere in the Annual Report for further detail, including maturity schedule on outstanding finance and operating lease obligations for the following 5 years and thereafter, including imputed interest not reflected on the Consolidated Statements of Financial Position, as well as additional disclosure on lease commitments that have not yet commenced and therefore not yet reflected as a obligation on the Consolidated Statements of Financial Position..
Additionally, we believe the availability under our credit facility and access to capital markets are sufficient to achieve our longer-term strategic plans. As of September 30, 2022, the Company had borrowing availability of $342.4 million, net of outstanding letters of credit of $17.6 million, under our credit facility.
Additionally, we believe the availability under our credit facility and access to capital markets are sufficient to achieve our longer-term strategic plans. As of September 30, 2023, the Company had borrowing availability of $586.9 million, net of outstanding letters of credit of $13.1 million, under our credit facility.
As of September 30, 2022, we have U.S. federal net operating loss carryforwards (“NOLs”) of $1,382.3 million, with a federal tax benefit of $290.3 million and future tax benefits related to state NOLs of $77.8 million. Our total valuation allowance for the tax benefit of deferred tax assets that may not be realized is $337.4 million at September 30, 2022.
As of September 30, 2023, we have U.S. federal net operating loss carryforwards (“NOLs”) of $640.9 million, with a federal tax benefit of $134.6 million and future tax benefits related to state NOLs of $41.3 million. Our total valuation allowance for the tax benefit of deferred tax assets that may not be realized is $333.4 million at September 30, 2023.
Adjusted EBITDA is a non-GAAP metric used by management that we believe provides useful information to investors because it reflects the ongoing operating performance and trends of our segments, excluding certain non-cash based expenses and/or non-recurring items during each of the comparable periods.
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metric used by management, which we believe provide useful information to investors because they reflect the ongoing operating performance and trends of our segments, excluding certain non-cash based expenses and/or non-recurring items during each of the comparable periods.
Interest on the notes is payable semi-annually in arrears and interest under the Term Loan and Revolver Facility is payable on various interest payment dates as provided in the Credit Agreement.
Interest on the notes is payable semi-annually in arrears and interest on borrowings under the Revolver Facility, if any, would be payable on various interest payment dates as provided in the Credit Agreement.
The following is a summary of impact to operating results attributable to restructuring initiatives and other optimization projects, incurred for the respective projects during the years ended September 30, 2022 and 2021.
Costs attributable to the initiative were completed during the year ended September 30, 2022. The following is a summary of impacts to operating results attributable to restructuring initiatives and other optimization projects incurred for the respective projects during the years ended September 30, 2023 and 2022.
The counterparties that hold our deposits consist of major financial institutions. At September 30, 2022, we believe there is approximately $40-60 million of foreign cash available for repatriation. The majority of our business is not considered seasonal with a year round selling cycle that is overall consistent during the fiscal year with the exception of our H&G segment.
At September 30, 2023, we believe there is approximately $40-50 million of foreign cash available for repatriation. 43 Table of Contents The majority of our business is not considered seasonal with a year round selling cycle that is overall consistent during the fiscal year with the exception of our H&G segment.
Costs attributable to the initiative are substantially complete as of September 30, 2022. 31 Table of Conten t s • Global ERP Transformation - During the year ended September 30, 2021, the Company entered into a SAP S/4 HANA ERP transformation project to upgrade and implement our enterprise-wide operating systems to SAP S/4 HANA on a global basis.
Substantially all costs associated with the initiative has been recognized and accrued as of September 30, 2023. 31 Table of Contents • Global ERP Transformation - During the year ended September 30, 2021, the Company entered into a SAP S/4 HANA ERP transformation project to upgrade and implement our enterprise-wide operating systems to SAP S/4 HANA on a global basis.
The following initiatives have been considered as having a significant impact on the comparability of the financial results on the consolidated financial statements and segment financial information. • Fiscal 2022 Restructuring - During the year ended September 30, 2022, the Company entered into a new initiative in response to changes observed within consumer products and retail markets, continued inflationary cost pressures and headwinds, resulting in the realization of a headcount reduction.
The following initiatives have been considered as having a significant impact on the comparability of the financial results on the consolidated financial statements and segment financial information. • Fiscal 2023 Restructuring - During the year ended September 30, 2023, the Company entered into an initiative in response to the continuing pressures within the consumer products and retail markets and adjusted strategic initiatives within certain segments, resulting in the realization of further of headcount reductions.
As of September 30, 2022, there are $7.0 million of indemnification liabilities recognized as Other Current Accruals and $15.3 million recognized as Other Long-Term Liabilities on the Consolidated Statement of Financial Position.
As of September 30, 2023, there are $8.6 million of indemnification liabilities recognized as Other Current Liabilities and $19.3 million recognized as Other Long-Term Liabilities on the Consolidated Statement of Financial Position.
In addition to the transaction costs of $5.1 million to effect the close of the transaction recognized during the year ended September 30, 2021, the Company incurred incremental costs to combine and integrate the acquired business with the GPC segment, primarily towards the integration of systems and processes, transfer of inventory and integration to existing GPC supply chain and distribution centers within the EMEA region, plus retention costs for personnel supporting the transition and integration efforts.
The Company has incurred incremental costs to combine and integrate the acquired business with the GPC segment, primarily towards the integration of systems and processes, transfer of inventory and integration to existing GPC supply chain and distribution centers within the EMEA region, plus retention costs for personnel supporting the transition and integration efforts.
Our Term Loan Facility is subject to quarterly amortizing payments of $1.0 million. Refer to Note 12 - Debt in the notes to the Consolidated Financial Statements included elsewhere in this Annual Report for expiration dates and maturity schedules on outstanding debt obligations for the following 5 years and thereafter.
Refer to Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for expiration dates and maturity schedules on outstanding debt obligations for the following 5 years and thereafter.
The fair value of indefinite-lived intangible assets is determined using an income approach, the relief-from-royalty methodology, which requires us to make estimates and assumptions about future revenues, royalty rates, and the discount rate, among others. For the year ended September 30, 2022, we did not recognize an impairment of indefinite-lived intangible assets.
The fair value of indefinite-lived intangible assets is determined using an income approach, the relief-from-royalty methodology, which requires us to make estimates and assumptions about future revenues, royalty rates, and the discount rate, among others. If the fair value is less than its carrying value, an impairment loss is recorded for the excess.
Incremental costs attributable to the tolling arrangement are expected to be completed in March 2023. The following is a summary of costs attributable to strategic transactions and business development costs for the respective projects during the years ended September 30, 2022 and 2021.
Costs attributable to the integration of the Omega business were completed in the prior year. The following is a summary of costs attributable to strategic transactions and business development costs for the respective projects during the years ended September 30, 2023 and 2022.
See Note 12 - Debt in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail regarding debt and refinancing activity.
See Note 11 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail.
Of this amount, $257.5 million relates to U.S. net deferred tax assets and $79.9 million relates to foreign net deferred tax assets.
Of this amount, $244.7 million relates to U.S. net deferred tax assets and $88.7 million relates to foreign net deferred tax assets.
(in millions) 2022 Statement of Operations Data Third-party net sales $ 1,955.8 Intercompany net sales to non-guarantor subsidiaries 14.4 Total net sales 1,970.2 Gross profit 551.2 Operating loss (190.4) Net loss from continuing operations (263.2) Net loss (174.7) Net loss attributable to controlling interest (174.7) Statement of Financial Position Data Current Assets $ 2,634.4 Noncurrent Assets 2,169.9 Current Liabilities 1,634.1 Noncurrent Liabilities 3,423.4 The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of September 30, 2022 are as follows: (in millions) 2022 Statement of Financial Position Data Current receivables from non-guarantor subsidiaries $ 8.1 Long-term receivable from non-guarantor subsidiaries 74.6 Current payable to non-guarantor subsidiaries 311.2 Long-term debt with non-guarantor subsidiaries 2.0 45 Table of Conten t s Critical Accounting Policies and Estimates Our Consolidated Financial Statements have been prepared in accordance with GAAP and fairly present our financial position and results of operations.
(in millions) 2023 Statement of Operations Data Third-party net sales $ 1,842.1 Intercompany net sales to non-guarantor subsidiaries 11.1 Total net sales 1,853.2 Gross profit 542.1 Operating loss (322.5) Net income from continuing operations 0.1 Net income 2,006.3 Net income attributable to controlling interest 2,006.3 Statement of Financial Position Data Current Assets $ 2,773.6 Noncurrent Assets 1,974.9 Current Liabilities 1,398.6 Noncurrent Liabilities 1,868.2 The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of September 30, 2023 are as follows: (in millions) 2023 Statement of Financial Position Data Current receivables from non-guarantor subsidiaries $ 37.6 Long-term receivable from non-guarantor subsidiaries 104.0 Current payable to non-guarantor subsidiaries 283.1 Long-term debt with non-guarantor subsidiaries 2.0 45 Table of Contents Critical Accounting Policies and Estimates Our Consolidated Financial Statements have been prepared in accordance with GAAP and fairly present our financial position and results of operations.
The Company has incurred incremental costs attributable to the pending transaction, primarily consisting of legal and professional fees to effect the realization of the ASPA, facilitate antitrust or other governmental restrictions to consummate the transaction, preparation for separation of systems and processes supporting the divested business and enabling functions under a transition services agreement ("TSA"), plus incremental retention costs for personnel supporting the transition efforts.
The Company has incurred incremental costs attributable to the divestiture, consisting of legal and professional fees to effect the realization of the Purchase Agreement, preparation for separation of systems and processes supporting the divested business and enabling functions under a transition services agreement ("TSA").
Significant judgment is required in determining our worldwide provision for income taxes and recording the related deferred tax assets and liabilities. The Company assesses its income tax positions and records tax liabilities for all years subject to examination based upon management’s evaluation of the facts and circumstances and information available for reporting.
The Company assesses its income tax positions and records tax liabilities for all years subject to examination based upon management’s evaluation of the facts and circumstances and information available for reporting.
Borrowings under the incremental capacity are subject to a borrowing rate which is subject to SOFR plus margin ranging from 1.75% to 2.75%, per annum or base rate plus margin ranging from 0.75% to 1.75% per annum, with an increase by 25 basis points 270 days after the effective date of the third amendment and an additional 25 basis points on each 90 day anniversary of such date. • During the year ended September 30, 2021, the Company completed its offering of $500.0 million aggregate principal amount of its 3.875% Notes and entered into a new Term Loan Facility in the aggregate principal amount of $400.0 million on March 3, 2021.
Borrowings under the incremental capacity are subject to a borrowing rate which is subject to SOFR plus margin ranging from 1.75% to 2.75%, per annum or base rate plus margin ranging from 0.75% to 1.75% per annum, with an increase by 25 basis points 270 days after the effective date of the third amendment and an additional 25 basis points on each 90 day anniversary of such date.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−2 removed4 unchanged
Biggest changeA discussion of our accounting policies for derivative financial instruments is included in Note 14 - Derivatives of Notes to the Consolidated Financial Statements included elsewhere in this Annual Report. Interest Rate Risk Our Revolver Facility and Term Loan Facility have variable interest rates.
Biggest changeA discussion of our accounting policies for derivative financial instruments is included in Note 14 - Derivatives in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report. Interest Rate Risk Borrowings on our Revolver Facility are subject variable interest rates.
See Note 14 - Derivatives in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further discussion. At September 30, 2022, the potential change in fair value of outstanding foreign exchange derivative instruments, assuming a 10% unfavorable change in the underlying exchange rates, would be a loss of $73.6 million.
See Note 14 - Derivatives in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further discussion. At September 30, 2023, the potential change in fair value of outstanding foreign exchange derivative instruments, assuming a 10% unfavorable change in the underlying exchange rates, would be a loss of $101.4 million.
If market interest rates increase, the interest rate on our variable rate debt will increase and will create higher debt service requirements, which would adversely affect our cash flow and could adversely impact our results of operations. The general levels of U.S., European Union interest rates and LIBOR affect interest expense.
If market interest rates increase, the interest rate on our variable rate debt will increase and will create higher debt service requirements, which would adversely affect our cash flow and could adversely impact our results of operations. The general levels of SOFR, EURIBOR, CORRA and/or SONIA rates affect interest expense.
The related amounts payable to, or receivable from, the contract counter-parties are included in accounts payable or accounts receivable. At September 30, 2022, we had $425.6 million equivalent of debt denominated in foreign currencies, which consist primarily of the Euro-denominated 4.00% Notes to the equivalent of $417.1 million, which are recorded in a U.S.
The related amounts payable to, or receivable from, the contract counter-parties are included in accounts payable or accounts receivable. 47 Table of Contents At September 30, 2023, we had $456.2 million equivalent of debt denominated in foreign currencies, which consist primarily of the Euro-denominated 4.00% Notes to the equivalent of $448.8 million, which are recorded in a U.S.
The net impact on reported earnings, after also including the effect of the change in the underlying foreign currency-denominated exposures, would be a net gain of $38.9 million. 47 Table of Conten t s
The net impact on reported earnings, after also including the effect of the change in the underlying foreign currency-denominated exposures, would be a net gain of $17.1 million.
Removed
As of September 30, 2022, we had $1,134.0 million subject to variable interest rates, or 35.5% of total debt. Assuming an increase to market rates of 1% as of September 30, 2022, we would incur an increase to interest expense of $11.5 million.
Added
As of September 30, 2023, and following the completion of the HHI divestiture, repayment of the Term Loan borrowings and borrowings under the Revolver Facility, there are no substantive outstanding debt obligations subject to variable rate fluctuations.
Removed
Our Term Loan Facility and Revolver Facility allows for the LIBOR rate to be phased out and replaced with the Secured Overnight Financing Rate and therefore we do not anticipate a material impact by the expected upcoming LIBOR transition.

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