DIVESTITURES

12 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

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, 2023, 2022, and 2021:


(in millions)	2023		2022		2021
Income from discontinued operations before income taxes - HHI	$	136.9	$	253.3	$	288.2
Gain on sale of discontinued operations before income taxes – HHI	2,824.2		—		—
Loss from discontinued operations before income taxes - Other	(2.4)		(3.8)		(7.3)
Interest on corporate debt allocated to discontinued operations	49.4		46.4		44.5
Income from discontinued operations before income taxes	2,909.3		203.1		236.4
Income tax expense from discontinued operations	873.7		53.4		62.1
Income from discontinued operations, net of tax	2,035.6		149.7		174.3
Income (loss) from discontinued operations, net of tax attributable to noncontrolling interest	0.3		0.9		(0.2)
Income from discontinued operations, net of tax attributable to controlling interest	$	2,035.3	$	148.8	$	174.5

Interest on 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, is not classified as held for sale as it is 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 "Purchase Agreement") with ASSA ABLOY AB ("ASSA") to sell its HHI segment for cash proceeds of $4.3 billion, subject to customary purchase price adjustments. On June 20, 2023, the Company completed the divestiture 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. The Company's assets and liabilities associated with the HHI disposal group prior to the transaction close were classified as held for sale and the respective operations were classified as discontinued operations and reported separately during the year ended September 30, 2023 through the transaction close.

In accordance with the ASPA, ASSA purchased the equity of certain subsidiaries of the Company, and acquired certain assets and assumed 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. 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. Further, the Company and ASSA entered into related agreements ancillary to the acquisition that became effective upon the consummation of the acquisition, including a customary transition services agreement agreement.

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


(in millions)	2022
Assets
Trade receivables, net	$	135.5
Other receivables	6.7
Inventories	327.1
Prepaid expenses and other current assets	33.1
Property, plant and equipment, net	166.6
Operating lease assets	63.6
Deferred charges and other	11.7
Goodwill	698.6
Intangible assets, net	373.8
Total assets of business held for sale	$	1,816.7
Liabilities
Current portion of long-term debt	$	1.4
Accounts payable	224.7
Accrued wages and salaries	32.7
Other current liabilities	79.9
Long-term debt, net of current portion	54.6
Long-term operating lease liabilities	46.9
Deferred income taxes	10.1
Other long-term liabilities	13.4
Total liabilities of business held for sale	$	463.7

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 Income for the years ended September 30, 2023, 2022 and 2021, through the date of disposal:


(in millions)	2023		2022		2021
Net sales	$	1,042.5	$	1,652.3	$	1,615.8
Cost of goods sold	701.6		1,096.3		1,025.3

Gross profit	340.9		556.0		590.5
Operating expenses	199.4		298.0		293.1
Operating income	141.5		258.0		297.4
Interest expense	2.4		3.4		3.4
Other non-operating expense, net	2.2		1.3		5.8
Income from discontinued operations before income taxes	$	136.9	$	253.3	$	288.2

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 for the years ended September 30, 2023, 2022 and 2021, through the date of disposal:


(in millions)	2023		2022		2021
Depreciation and amortization	$	—	$	—	$	31.1
Share based compensation	$	1.5	$	5.3	$	0.8
Purchases of property, plant and equipment	$	11.9	$	23.9	$	22.8

The Company and ASSA entered into customary transition services agreement ("TSA") that became effective upon the consummation of the transaction that supports various shared back office administrative functions, including finance, sales and marketing, information technology, human resources, real estate and supply chain, customer service and procurement; supporting both the transferred HHI operations and the continuing operations of the Company. Charges associated with TSAs are recognized as bundled service costs under a fixed fee structure by the respective service or function and also include one time pass-through charges including warehousing, freight, among others. TSA charges are settled periodically between the Company and ASSA on a net basis. Charges to ASSA are recognized as a reduction of the respective operating expense incurred and charges from ASSA are recognized as an operating expense depending upon the function supported by ASSA. The TSA has an overall expected time period of 12 months following the close of the transaction with variability in expiration dependent upon the completed transition of the respective service or function, and may provide up to 12 additional months for a total duration of up to 24 months. During the year ended September 30, 2023, the Company recognized income of $9.2 million associated with TSA charges. Additionally, the Company and ASSA will receive cash and make payments on behalf of the respective counterparty's operations as part of the shared administrative functions, resulting in cash flow being commingled with the operating cash flow of the Company. The Company recognizes a net payable or receivable with ASSA for any outstanding TSA charges and net working capital attributable to commingled cash flow. As of September 30, 2023, the Company has a net receivable of $4.0 million included in Other Receivables on the Company's Consolidated Statement of Financial Position consisting of amounts due from ASSA for cash flow settlement from commingled operations and net TSA charges including amounts subject to repayment by the Company.

Further, the Company has recognized payables to ASSA related to indemnifications in accordance with the purchase agreement, primarily attributable to outstanding settlements with tax authorities, uncertain tax benefit obligations and our purchase price settlement. As of September 30, 2023, the Company recognized $27.3 million, included within Accounts Payable, and $2.6 million, included within Other Long-Term Liabilities, on the Company’s Consolidated Statements of Financial Position.

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, 2023 and 2022, the Company recognized $25.3 million and $22.3 million respectively, related to indemnification payables in accordance with the acquisition agreements, including $8.6 million and $7.0 million within Other Current Liabilities, respectively, and $16.7 million and $15.3 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.