XML 45 R16.htm IDEA: XBRL DOCUMENT
v3.22.2.2

DIVESTITURES | 12 Months Ended
--- | ---
Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract] |
DIVESTITURES | DIVESTITURES The following table summarizes the components of Income from Discontinued Operations, Net of Tax in the accompanying Consolidated Statement of Income for the years ended September 30, 2022, 2021, and 2020:
(in millions) |  | 2022 |  | 2021 |  | 2020
Income from discontinued operations before income taxes - HHI |  | $ | 253.3 |  |  | $ | 288.2 |  |  | $ | 227.8 |
(Loss) income from discontinued operations before income taxes - Other |  | (3.8) |  |  | (7.3) |  |  | 4.1 |
Interest on corporate debt allocated to discontinued operations |  | 46.4 |  |  | 44.5 |  |  | 47.3 |
Income from discontinued operations before income taxes |  | 203.1 |  |  | 236.4 |  |  | 184.6 |
Income tax expense from discontinued operations |  | 53.4 |  |  | 62.1 |  |  | 33.7 |
Income from discontinued operations, net of tax |  | 149.7 |  |  | 174.3 |  |  | 150.9 |
Income (loss) from discontinued operations, net of tax attributable to noncontrolling interest |  | 0.9 |  |  | (0.2) |  |  | 0.4 |
Income from discontinued operations, net of tax attributable to controlling interest |  | $ | 148.8 |  |  | $ | 174.5 |  |  | $ | 150.5 |
Interest from corporate debt allocated to discontinued operations includes interest on Term Loans required to be paid down using proceeds received on disposal on sale of a business, and interest expense from corporate debt not directly attributable to or related to other operations based on the ratio of net assets of the disposal group held for sale to the consolidated net assets plus consolidated debt, excluding debt assumed in transaction, required to be repaid, or directly attributable to other operations of the Company. Corporate debt, including Term Loans, are not classified as held for sale as they are not directly attributable to the identified disposal groups. Hardware and Home Improvement ("HHI") On September 8, 2021, the Company entered into a definitive Asset and Stock Purchase Agreement (the "ASPA") with ASSA ABLOY AB ("ASSA") to sell its HHI segment for cash proceeds of $4.3 billion, subject to customary purchase price adjustments. The Company's assets and liabilities associated with the HHI disposal group has been classified as held for sale and the respective operations have been classified as discontinued operations and reported separately for all periods presented. The ASPA provides that ASSA will purchase the equity of certain subsidiaries of the Company, and acquire certain assets and assume certain liabilities of other subsidiaries used or held for the purpose of the HHI business. The Company and ASSA have made customary representations and warranties and have agreed to customary covenants relating to the acquisition. Among other things, prior to the consummation of the acquisition, the Company will be subject to certain business conduct restrictions with respect to its operation of the HHI business. The Company and ASSA have agreed to indemnify each other for losses arising from certain breaches of the ASPA and for certain other matters. In particular, the Company has agreed to indemnify ASSA for certain liabilities relating to the assets retained by the Company, and ASSA has agreed to indemnify the Company for certain liabilities assumed by ASSA, in each case as described in the ASPA. The Company and ASSA have agreed to enter into related agreements ancillary to the acquisition that will become effective upon the consummation of the acquisition, including a customary transition services agreement and reverse transition services agreement. The consummation of the acquisition is subject to certain customary conditions, including, among other things, (i) the absence of a material adverse effect on HHI, (ii) the expiration or termination of required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) the receipt of certain other antitrust approvals in certain specified foreign jurisdictions (the conditions contained in (ii) and (iii) together, the “Antitrust Conditions”), (iv) the accuracy of the representations and warranties of the parties generally subject to a customary material adverse effect standard (as described in the ASPA) or other customary materiality qualifications), (v) the absence of governmental restrictions on the consummation of the acquisition in certain jurisdictions, and (vi) material compliance by the parties with their respective covenants and agreements under the ASPA. The consummation of the transaction is not subject to any financing condition. The ASPA also contains certain termination rights, including the right of either party to terminate the ASPA if the consummation of the acquisition has not occurred on or before December 8, 2022 (the “Termination Date”). Further, if the acquisition has not been consummated by the Termination Date and all conditions precedent to ASSA's obligation to consummate the acquisition have otherwise been satisfied except for one or more of the Antitrust Conditions, then ASSA would be required to pay the Company a termination fee of $350 million. On July 14, 2022, the parties entered into an amendment to the ASPA (the “Amendment”) pursuant to which the Termination Date was extended to June 30, 2023. Except for the foregoing amendment to the Termination Date, the ASPA remains in full force and effect as written, including with respect to the termination fee of $350 million. The Company continues to engage with antitrust regulators in the regulatory review of the HHI transaction and the extension is intended to provide the parties with additional time (to the extent needed) to satisfy the conditions related to receipt of governmental clearances. On September 15, 2022, the Department of Justice ("DOJ") filed a complaint seeking to enjoin the transaction and block the acquisition of the HHI division by ASSA. Both the Company and ASSA have stated their disagreement with the DOJ's concerns. The Company expects that the trial will occur in April 2023. The Company and ASSA will jointly defend the transaction in the litigation. ASSA has also announced that, to resolve all the alleged competitive concerns surrounding the acquisition of HHI, it has initiated a process to sell its Emtek and its smart residential business in the U.S. and Canada. The Company continues to recognize the HHI division as held for sale and as a component of our discontinued operations. The parties are committed to closing the HHI transaction and the Company and ASSA both continue to expect that they will obtain all the required governmental clearances and will close the HHI transaction. The following table summarizes the assets and liabilities of the HHI disposal group classified as held for sale as of September 30, 2022 and 2021:
(in millions) |  | 2022 |  | 2021
Assets |  |  |  |
Trade receivables, net |  | $ | 135.5 |  |  | $ | 130.2 |
Other receivables |  | 6.7 |  |  | 12.1 |
Inventories |  | 327.1 |  |  | 332.2 |
Prepaid expenses and other current assets |  | 33.1 |  |  | 39.1 |
Property, plant and equipment, net |  | 166.6 |  |  | 143.5 |
Operating lease assets |  | 63.6 |  |  | 55.5 |
Deferred charges and other |  | 11.7 |  |  | 11.7 |
Goodwill |  | 698.6 |  |  | 710.9 |
Intangible assets, net |  | 373.8 |  |  | 374.8 |
Total assets of business held for sale |  | $ | 1,816.7 |  |  | $ | 1,810.0 |
Liabilities |  |  |  |
Current portion of long-term debt |  | $ | 1.4 |  |  | $ | 1.5 |
Accounts payable |  | 224.7 |  |  | 206.6 |
Accrued wages and salaries |  | 32.7 |  |  | 41.7 |
Other current liabilities |  | 79.9 |  |  | 75.9 |
Long-term debt, net of current portion |  | 54.6 |  |  | 54.4 |
Long-term operating lease liabilities |  | 46.9 |  |  | 48.6 |
Deferred income taxes |  | 10.1 |  |  | 7.8 |
Other long-term liabilities |  | 13.4 |  |  | 17.8 |
Total liabilities of business held for sale |  | $ | 463.7 |  |  | $ | 454.3 |
The following table summarizes the components of income from discontinued operations before income taxes associated with the HHI divestiture in the accompanying Consolidated Statements of Operations for the years ended September 30, 2022, 2021 and 2020:
(in millions) |  | 2022 |  | 2021 |  | 2020
Net sales |  | $ | 1,652.3 |  |  | $ | 1,615.8 |  |  | $ | 1,342.1 |
Cost of goods sold |  | 1,096.3 |  |  | 1,025.3 |  |  | 850.3 |
Gross profit |  | 556.0 |  |  | 590.5 |  |  | 491.8 |
Operating expenses |  | 298.0 |  |  | 293.1 |  |  | 257.1 |
Operating income |  | 258.0 |  |  | 297.4 |  |  | 234.7 |
Interest expense |  | 3.4 |  |  | 3.4 |  |  | 3.5 |
Other non-operating expense, net |  | 1.3 |  |  | 5.8 |  |  | 3.4 |
Income from discontinued operations before income taxes |  | $ | 253.3 |  |  | $ | 288.2 |  |  | $ | 227.8 |
Beginning in September 2021, the Company ceased the recognition of depreciation and amortization of long-lived assets associated with the HHI disposal group classified as held for sale. Interest expense consists of interest from debt directly attributable to HHI operations that primarily consist of interest from finance leases. No impairment loss was recognized on the asset held for sale as the purchase price of the business less estimated cost to sell is more than its carrying value. The following table presents significant non-cash items and capital expenditures of discontinued operations from the HHI divestiture:
(in millions) |  | 2022 |  | 2021 |  | 2020
Depreciation and amortization |  | $ | — |  |  | $ | 31.1 |  |  | $ | 33.9 |
Share and incentive based compensation |  | $ | 5.3 |  |  | $ | 0.8 |  |  | $ | 6.0 |
Purchases of property, plant and equipment |  | $ | 23.9 |  |  | $ | 22.8 |  |  | $ | 16.9 |
Other Loss from discontinued operations before income taxes – other includes incremental pre-tax loss for changes to tax and legal indemnifications and other agreed-upon funding under the acquisition agreements for the sale and divestiture of the Global Batteries & Lighting ("GBL") and Global Auto Care ("GAC") divisions to Energizer Holdings, Inc. ("Energizer") during the year ended September 30, 2019. The Company and Energizer agreed to indemnify each other for losses arising from certain breaches of the acquisition agreement and for certain other matters. The Company has agreed to indemnify for certain liabilities relating to the assets retained, and Energizer agreed to indemnify the Company for certain liabilities assumed, in each case as described in the acquisition agreements. Subsequently, effective January 2, 2020, Energizer closed its divestitures of the European based Varta® consumer battery business in the EMEA region to Varta AG and transferred all respective rights and indemnifications attributable to the Varta® consumer battery business provided by the GBL sale to Varta AG. As of September 30, 2022 and 2021, the Company recognized $22.3 million and $36.5 million respectively, related to indemnification payables in accordance with the acquisition agreements, including $7.0 million and $17.3 million within Other Current Liabilities, respectively, and $15.3 million and $19.2 million, within Other Long-Term Liabilities, respectively, on the Company’s Consolidated Statements of Financial Position, primarily attributable to income tax indemnifications associated with previously recognized uncertain tax benefits. The Company entered into a series of transition services agreements ("TSAs") and reverse TSAs with Energizer to support various shared back office administrative functions including finance, sales and marketing, information technology, human resources, real estate and supply chain, customer service and procurement. TSAs associated with the Varta® consumer battery business were transferred to Varta AG as part of the subsequent divestiture by Energizer. Charges associated with TSAs were recognized as bundled service costs under a fixed fee structure by the respective service or function and geographic location, including one-time pass-through charges for warehousing, freight, amongst others, with variable expiration dates up to 24 months. Charges associated with TSAs and reverse TSAs are recognized as a reduction to or increase in the respective costs, as a component of operating expense or cost of goods sold, depending upon the functions supported by or provided to the Company. Additionally, due to the commingled nature of the shared administrative functions, cash would be received or paid on behalf of the respective counterparty's operations, resulting in cash flow being commingled with operating cash flow of the Company which would settle on a net basis with TSA charges. The Company had exited all outstanding TSAs with Energizer and Varta by January 2021. The following table summarizes the TSA income and expenses during the years ended September 30, 2021 and 2020:
(in millions) |  |  |  | 2021 |  | 2020
TSA income |  |  |  | $ | 0.9 |  |  | $ | 9.6 |
TSA expense |  |  |  | 2.6 |  |  | 13.5 |
Net TSA (loss) income |  |  |  | $ | (1.7) |  |  | $ | (3.9) |
Coevorden Operations On March 29, 2020, the Company completed its sale of the dog and cat food (“DCF”) production facility and distribution center in Coevorden, Netherlands (“Coevorden Operations”) pursuant to an agreement with United Petfood Producers NV (“UPP”) for total cash proceeds of $29.0 million. The divestiture does not constitute a strategic shift for the Company and therefore is not considered discontinued operations. The divestiture of the Coevorden Operations was defined as a disposal of a business and a component of the GPC segment and reporting unit, resulting in the allocation of $10.6 million of GPC goodwill to the disposal group based upon a relative fair-value allocation. The Company realized a loss on assets held for sale of $26.8 million during the year ended September 30, 2020. The Company and UPP entered into related agreements ancillary to the acquisition that became effective upon the consummation of the acquisition, including a TSA. The Company will continue to operate its commercial DCF business following the divestiture of the Coevorden Operations and entered into a manufacturing agreement with UPP to supply the continuing DCF business, subject to an incremental tolling charge.

X
- References No definition available. + Details
Name: | us-gaap_DiscontinuedOperationsAndDisposalGroupsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI https://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 + Details
Name: | us-gaap_DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration