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DIVESTITURES | 3 Months Ended
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Dec. 31, 2023
Discontinued Operations and Disposal Groups [Abstract] |
DIVESTITURES | DIVESTITURES The following table summarizes the components of Income from Discontinued Operations, Net of Tax in the Condensed Consolidated Statements of Income for the three month periods ended December 31, 2023 and January 1, 2023:
|  | Three Month Periods Ended |  |
(in millions) |  | December 31, 2023 |  | January 1, 2023 |  |  |  |
Income from discontinued operations before income taxes – HHI |  | $ | — |  |  | $ | 45.0 |  |  |  |  |
Income (loss) from discontinued operations before income taxes – Other |  | 10.3 |  |  | (0.6) |  |  |  |  |
Interest expense on corporate debt allocated to discontinued operations |  | — |  |  | 16.3 |  |  |  |  |
Income from discontinued operations before income taxes |  | 10.3 |  |  | 28.1 |  |  |  |  |
Income tax (benefit) expense from discontinued operations |  | (1.4) |  |  | 8.6 |  |  |  |  |
Income from discontinued operations, net of tax |  | 11.7 |  |  | 19.5 |  |  |  |  |
Income from discontinued operations attributable to noncontrolling interest, net of tax |  | — |  |  | 0.1 |  |  |  |  |
Income from discontinued operations attributable to controlling interest, net of tax |  | $ | 11.7 |  |  | $ | 19.4 |  |  |  |  |
Interest from corporate debt allocated to discontinued operations in the prior year includes interest expense from Term Loans, which was paid down following the close of the HHI divestiture on June 20, 2023, 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 of the Company plus consolidated debt, excluding debt assumed in the transaction, required to be repaid, or directly attributable to other operations of the Company. 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 its divestiture of its HHI segment. 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 Purchase Agreement 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 Purchase Agreement. The Company and ASSA have agreed to enter into related agreements ancillary to the acquisition that became effective upon the consummation of the acquisition, including a customary transition services agreements ("TSA") and providing for both forward and reverse transition services. The consummation of the acquisition was not subject to any financing condition. The following table summarizes the components of income from discontinued operations before income taxes associated with the HHI divestiture for the three month period ended January 1, 2023:
(in millions) |  |  |  | January 1, 2023 |  |  |  |
Net sales |  |  |  | $ | 362.9 |  |  |  |  |
Cost of goods sold |  |  |  | 244.8 |  |  |  |  |
Gross profit |  |  |  | 118.1 |  |  |  |  |
Operating expenses |  |  |  | 71.1 |  |  |  |  |
Operating income |  |  |  | 47.0 |  |  |  |  |
Interest expense |  |  |  | 0.8 |  |  |  |  |
Other non-operating expense, net |  |  |  | 1.2 |  |  |  |  |
Income from discontinued operations before income taxes |  |  |  | $ | 45.0 |  |  |  |  |
Interest expense consists of interest from debt directly attributable to HHI operations that primarily consist of interest from finance leases. The following table presents significant non-cash items and capital expenditures of discontinued operations from the HHI divestiture for the three month period ended January 1, 2023:
(in millions) |  |  |  | January 1, 2023 |  |  |  |
Share based compensation |  |  |  | $ | 0.9 |  |  |  |  |
Purchases of property, plant and equipment |  |  |  | 3.6 |  |  |  |  |
The Company and ASSA entered into customary TSAs that became effective upon the consummation of the transaction. The TSA 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 three month period ended December 31, 2023 the Company recognized a net income of $7.9 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 December 31, 2023 and September 30, 2023, the Company had a net receivable of $7.0 million and $4.0 million, respectively, included in Other Receivables on the Company's Condensed 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 for outstanding settlements associated with the purchase agreement, including tax indemnifications for outstanding settlements with tax authorities and uncertain tax benefit obligations, among others. As of December 31, 2023, the Company recognized $26.9 million, included within Accounts Payable, and $2.6 million, included within Other Long-Term Liabilities, on the Company’s Condensed Consolidated Statements of Financial Position. 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 Income 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, 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. During the three month period ended December 31, 2023, the Company realized gain within the income from discontinued operations from the reversal of certain tax indemnification liabilities following the receipt of audit results and other tax settlements associated with entities transferred as part of the GBL divestiture and for periods prior to the sale for which the Company has indemnified. As of December 31, 2023 and September 30, 2023, the Company recognized $14.8 million and $25.3 million, respectively, related to indemnification payables in accordance with the acquisition agreements, primarily attributable to uncertain tax benefit obligations and outstanding settlements with tax authorities that were transferred and indemnified in accordance with the acquisition agreement, including $14.2 million and $8.6 million within Other Current Liabilities, respectively, and $0.6 million and $16.7 million, within Other Long-Term Liabilities, respectively, on the Company’s Condensed Consolidated Statements of Financial Position.

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- 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 -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//360/tableOfContent + Details
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