8-K

As filed with the Securities and Exchange Commission on April 15, 2020

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): April 15, 2020

Energizer Holdings, Inc.

(Exact name of registrant as specified in its charter)

Missouri	1-36837	36-4802442
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

533 Maryville University Drive

St. Louis, Missouri 63141

(Address of principal executive offices)

(314) 985-2000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	ENR	New York Stock Exchange
Series A Mandatory Convertible Preferred Stock, par value $.01 per share	ENR PRA	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company  ☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

ITEM  2.02. Results of Operations and Financial Condition

On April 15, 2020, Energizer Holdings, Inc. (the “Company”) issued a press release providing preliminary, unaudited results for the quarter ended March 31, 2020. The press release is furnished as Exhibit 99.1.

In addition, in connection with the offering of the Notes (as defined below) described in Item 8.01 below, the Company is disclosing in a confidential preliminary offering memorandum dated April 15, 2020 (the “Preliminary Offering Memorandum”) business updates related to the impact of the coronavirus (COVID-19) pandemic, including effects of such pandemic on the Company’s fiscal quarter ended March 31, 2020. This information is set forth under the heading “Recent Developments” in Exhibit 99.2 attached hereto and incorporated herein by reference. The full impact of COVID-19 on the Company’s financial and operating performance will depend significantly on the duration and severity of the outbreak, the actions taken to contain or mitigate its impact, disruption to the Company’s global supply chain, and the pace with which customers and consumers return to more normalized purchasing behavior, among other factors beyond the Company’s knowledge or control. Due to the uncertainties in this rapidly changing environment, including the possible impact of the pandemic on the global economy and consumer demand, the Company is withdrawing its previously disclosed full year outlook.

The preliminary financial data and other information incorporated by reference in this Item 2.02 is subject to the completion of the Company’s financial closing procedures, any adjustments or revisions that may result from the completion of the quarterly review and other developments that may arise between the date of this Report and the time the financial results for the second quarter are finalized. Therefore, this data represents management estimates that constitute forward-looking statements subject to risks and uncertainties. As a result, the preliminary financial data and other information described above may materially differ from the actual results that will be reflected in the Company’s consolidated financial statements for the quarter when they are completed and publicly disclosed. In addition, preliminary results for the second quarter are not necessarily indicative of operating results for any future quarter or results for the full year.

The information furnished pursuant to this Item 2.02, including the information set forth under the heading “Recent Developments” in Exhibit 99.2, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of the Exchange Act, nor shall such information or exhibit be deemed incorporated by reference into any filing by the Company with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), the rules and regulations of the SEC thereunder, the Exchange Act, as amended, or the rules and regulations of the SEC thereunder, except as shall be expressly set forth by specific reference in such a filing.

Item  7.01. Regulation FD Disclosure

The information contained above under Item 2.02 and the information set forth in Exhibit 99.2 in its entirety, is incorporated by reference into this Item 7.01. The information furnished pursuant to this Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of the Exchange Act, or otherwise subject to the liabilities of the Exchange Act, nor shall such information or exhibit be deemed incorporated by reference into any filing by the Company with the SEC under the Securities Act, the rules and regulations of the SEC thereunder, the Exchange Act, as amended, or the rules and regulations of the SEC thereunder, except as shall be expressly set forth by specific reference in such a filing.

Item 8.01 Other Events.

On April 15, 2020, the Company, announced the commencement of a $200 million Add-on offering to the 6.375% senior notes due 2026 (the “Notes”) in a private offering pursuant to Preliminary Offering Memorandum to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act, subject to market and other customary conditions. The Company’s press release announcing the commencement of the Notes offering is attached hereto as Exhibit 99.3 and is incorporated herein by reference.

In addition, the Company is filing on this Current Report on Form 8-K the unaudited interim condensed combined financial statements of the Spectrum Brands Global Batteries and Lights Division of Spectrum Brands Holdings, Inc. (“GBL”), as of December 30, 2018 and for the three month periods ended December 30, 2018 and December 31, 2017 as Exhibit 99.4 hereto, and the unaudited interim condensed combined financial statements of the Spectrum Brands Global Auto Care Division of Spectrum Brands Holdings, Inc. (“GAC”), as of December 30, 2018 and for the three month periods ended December 30, 2018 and December 31, 2017 as Exhibit 99.5 hereto. The Company completed (i) its acquisition of GBL on January 2, 2019 and (ii) its acquisition of GAC on January 28, 2019. On January 14, 2019, the Company filed an Amendment on Form 8-K/A under which it filed, among other information, the audited annual combined financial statements as of September 30, 2018 and 2017 and for the fiscal years ended September 30, 2018, 2017 and 2016 of GBL and GAC.

Exhibits 99.4 and 99.5 are incorporated herein by reference.

Cautionary Note regarding Forward-Looking Statements

This Form 8-K disclosure contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact should be considered to be forward-looking statements, including statements about the Company’s completion of the offering of Notes. The offering of the Notes is subject to market and other conditions and there can be no assurance as to whether or when the offering of the Notes will be completed or as to the actual size or terms of the offering of Notes. Any such forward-looking statements are made based on information currently known and are subject to various risks and uncertainties, including those described in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in its Form 10-K filed with the Securities and Exchange Commission on November 19, 2019, as amended in this Report, including the information incorporated by reference herein. These reports, as well as the other documents filed by the Company with the SEC, are available free of charge at the SEC’s website at www.sec.gov. The Company does not assume any obligation to update or revise any forward-looking statements to reflect new events or circumstances.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are filed herewith:

Exhibit No.		Description of Exhibit
	99.1	Press Release dated April 15, 2020, relating to preliminary, unaudited results.
	99.2	Excerpt from the Preliminary Offering Memorandum dated April 15, 2020 in connection with a proposed Notes offering.
	99.3	Press Release dated April 15, 2020, relating to offering of the Notes.
	99.4	Unaudited interim condensed combined financial statements of the Spectrum Brands Global Batteries and Lights Division of Spectrum Brands Holdings, Inc., as of December 30, 2018 and for the three month periods ended December 30, 2018 and December 31, 2017.
	99.5	Unaudited interim condensed combined financial statements of the Spectrum Brands Global Auto Care Division of Spectrum Brands Holdings, Inc., as of December 30, 2018 and for the three month periods ended December 30, 2018 and December 31, 2017.
	101	Pursuant to Rule 406 of Regulation S-T, the cover page information is formatted in iXBRL (Inline eXtensible Business Reporting Language).
	104	Cover Page Interactive Data File (formatted in iXBRL in Exhibit 101).

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

ENERGIZER HOLDINGS, INC.
By:	/s/ Timothy W. Gorman
Name:	Timothy W. Gorman
Title:	Executive Vice President and Chief Financial Officer

Dated: April 15, 2020

3

EX-99.1

Exhibit 99.1

	Energizer Holdings, Inc. 533 Maryville University Dr. St. Louis, MO 63141
FOR IMMEDIATE RELEASE
April 15, 2020	Company Contact Jacqueline E. Burwitz             Vice President, Investor Relations     314-985-2169     Jacqueline.E.Burwitz@energizer.com

Energizer Holdings, Inc. Announces Preliminary Results for the

Second Fiscal Quarter of 2020 and Withdraws its Outlook for the Fiscal Year 2020

• Announced preliminary results for the second fiscal quarter of 2020 with organic revenue expected to be up 2.7 percent and adjusted EBITDA in the range of $120 to $125 million.¹

• Withdrew its outlook for fiscal year 2020 due to the uncertainty caused by COVID-19 pandemic over the balance of the year.

• Provided an update on Energizer’s COVID-19 response and stability of its global supply chain.

St. Louis, Missouri, April 15, 2020– Energizer Holdings, Inc. (NYSE: ENR) announced preliminary results for its second fiscal quarter of 2020 ended March 31, 2020. The Company expects to report net sales of approximately $587 million, compared to $556 million in the prior year, driven in part by organic sales growth of approximately 2.7 percent, and adjusted EBITDA in the range of $120 to $125 million, compared to $101 million. These results reflect strong battery category growth in the month of March driven in part by strong consumer demand associated with the global COVID-19 outbreak.

“While our business continues to sustain high operating levels during the unprecedented environment brought about by COVID-19, we are taking the prudent steps to strengthen our financial liquidity to weather any potential uncertainties that may lie ahead,” said Alan Hoskins, Chief Executive Officer. “During these challenging times, Energizer continues to operate with two enduring principles—ensuring the health and safety of our colleagues and providing our customers and consumers with essential products when they need them most. We remain well-positioned because of the tremendous efforts by our colleagues to collectively deliver on these guiding principles.”

1) See Supplemental Schedules - Non - GAAP Reconciliations regarding non-GAAP financial measures.

Business Performance

On a preliminary basis, Energizer expects fiscal second quarter net sales to be approximately $587 million, with organic sales growth of approximately 2.7 percent, and adjusted EBITDA of $120 to $125 million. The company has been able to operate effectively thus far in the environment relating to the COVID-19 pandemic and continues to move forward with its integration efforts for the acquired battery and auto care businesses, with expected synergy realization remaining unchanged. However, due to the uncertainties in this rapidly changing environment, including the possible impact of the pandemic on the global economy and consumer demand, Energizer is withdrawing its previously disclosed full year outlook.

The company will provide more details on May 7, 2020, with the release of its second quarter fiscal 2020 results before the market opens. Alan Hoskins, Chief Executive Officer, Mark LaVigne, President and Chief Operating Officer, and Tim Gorman, Chief Financial Officer, will host a conference call on the same day at 10 am EDT (https://www.webcaster4.com/Webcast/Page/1192/33754).

Energizer’s Response to COVID-19

Energizer’s top priorities are the safety and health of colleagues and maintaining business continuity to meet the needs of its customers and consumers. Given the criticality of Energizer’s products to the medical community and general preparedness needs, Energizer colleagues have worked diligently to support the integrity of the company’s supply chain in order to keep its global manufacturing footprint and network of suppliers operating effectively to serve the needs of customers and consumers.

In order to operate in the safest manner possible, the company is working closely with the appropriate public health officials to follow stated health and safety guidelines in the cities and countries where Energizer operates. All of the company’s manufacturing, distribution, and other facilities are operating under these guidelines while maintaining global fill rates above 90 percent throughout this crisis.

To increase its liquidity position in the event future developments related to the COVID-19 pandemic negatively impact business operations and working capital, the Company has fully drawn its Revolving Credit Facility, resulting in current cash and cash equivalents held globally of approximately $484 million.

About Energizer:

Energizer Holdings, Inc. (“Energizer”, NYSE: ENR), headquartered in St. Louis, Missouri, is one of the world’s largest manufacturers and distributors of primary batteries, portable lights, and auto care appearance, performance, refrigerant, and fragrance products. Our portfolio of globally recognized brands include Energizer^®, Armor All^®, Eveready^®, Rayovac^®, STP^®, Varta^®, A/C Pro^®, Refresh Your Car!^®, California Scents^®, Driven^®, Bahama & Co.^®, LEXOL^®, Eagle One^®, Nu Finish^®, Scratch Doctor^®, and Tuff Stuff^®. As a global branded consumer products company, Energizer’s mission is to lead the charge to deliver value to our customers and consumers better than anyone else. Visit www.energizerholdings.com for more details.

# # #

Preliminary Information

The preliminary financial data and other information provided above are subject to the completion of the company’s financial closing procedures, final adjustments and any other developments that may arise between now and the time the financial results for the second quarter are finalized. Therefore, this data represents management estimates that constitute forward-looking statements subject to risks and uncertainties. As a result, the preliminary financial data and other information described above may materially differ from the actual results that will be reflected in the consolidated financial statements for the quarter when they are completed and publicly disclosed. In addition, preliminary results for the second quarter are not necessarily indicative of operating results for any future quarter or results for the full year.

Forward-Looking Statements

This document contains both historical and forward-looking statements. Forward-looking statements are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, the future sales, gross margins, costs, earnings, cash flows, tax rates and performance of the Company. These statements generally can be identified by the use of forward-looking words or phrases such as “believe,” “expect,” “expectation,” “anticipate,” “may,” “could,” “intend,” “belief,” “estimate,” “plan,” “target,” “predict,” “likely,” “should,” “forecast,” “outlook,” or other similar words or phrases. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this document are only made as of the date of this document and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation:

• market and economic conditions;

• market trends in the categories in which we compete;

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

• our ability to integrate businesses, to realize the projected results of the acquired businesses, and to obtain expected cost savings, synergies and other anticipated benefits of the acquired businesses within the expected timeframe, or at all;

• the impact of the acquired businesses on our business operations;

• the success of new products and the ability to continually develop and market new products;

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

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

• our ability to timely execute strategic initiatives, including restructurings, and international go-to-market changes in a manner that will positively impact our financial condition and results of operations and does not disrupt our business operations;

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

• our ability to maintain and improve market share in the categories in which we operate despite heightened competitive pressure;

• financial strength of distributors and suppliers;

• our ability to improve operations and realize cost savings;

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

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

• the impact of adverse or unexpected weather conditions;

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

• the impact of raw materials and other commodity costs;

• the impact of legislative changes or regulatory determinations or changes by federal, state and local, and foreign authorities, including customs and tariff determinations, as well as the impact of potential changes to tax laws, policies and regulations;

• costs and reputational damage associated with cyber-attacks or information security breaches or other events;

• the impact of advertising and product liability claims and other litigation; and

• compliance with debt covenants and maintenance of credit ratings as well as the impact of interest and principal repayment of our existing and any future debt.

In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of any such forward-looking statements. The list of factors above is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Additional risks and uncertainties include those detailed from time to time in our publicly filed documents, including those described under the heading “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on November 19, 2019, as amended in our Current Report on Form 8-K, filed with the SEC on April 15, 2020.

ENERGIZER HOLDINGS, INC.

Supplemental Schedules

Introduction to the Reconciliation of GAAP and Non-GAAP Measures

For the Quarter and Six Months ended March 31, 2020

The Company reports its financial results in accordance with accounting principles generally accepted in the U.S. (“GAAP”). However, management believes that certain non-GAAP financial measures provide users with additional meaningful comparisons to the corresponding historical or future period. These non-GAAP financial measures exclude items that are not reflective of the Company’s on-going operating performance, such as acquisition and integration costs and related items, settlement loss on pension plan terminations, loss on extinguishment of debt, and the one-time impact of the new U.S. tax legislation. In addition, these measures help investors to analyze year over year comparability when excluding currency fluctuations, acquisition activity as well as other company initiatives that are not on-going. We believe these non-GAAP financial measures are an enhancement to assist investors in understanding our business and in performing analysis consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or superior to, the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items being adjusted.

We provide the following non-GAAP measures and calculations, as well as the corresponding reconciliation to the closest GAAP measure in the following supplemental schedules:

Organic. This is the non-GAAP financial measurement of the change in revenue or segment profit that excludes or otherwise adjusts for the impact of acquisitions, change in Argentina operations and impact of currency from the changes in foreign currency exchange rates as defined below:

Impact of acquisition. Energizer completed the Auto Care Acquisition on January 28, 2019 and the Battery Acquisition on January 2, 2019. These adjustments include the impact of the acquisitions’ ongoing operations contributed to each respective income statement caption for the first year’s operations directly after the acquisition date. This does not include the impact of acquisition and integration costs associated with any acquisition.

Change in Argentina operations. The Company is presenting separately all changes in sales and segment profit from our Argentina affiliate due to the designation of the economy as highly inflationary as of July 1, 2018.

Impact of currency. The Company evaluates the operating performance of our Company on a currency neutral basis. The impact of currency is the difference between the value of current year foreign operations at the current period ending USD exchange rate, compared to the value of the current year foreign operations at the prior period ending USD exchange rate.

EBITDA and Adjusted EBITDA. EBITDA is defined as net earnings before income tax provision, interest and depreciation and amortization. Adjusted EBITDA further excludes the impact of the costs related to acquisition and integration, settlement loss on pension plan termination, the direct impact of COVID-19 costs, and share based payments.

Energizer Holdings, Inc.

Supplemental Schedules - Non-GAAP reconciliations

For the Quarter and Six Months ended March 31, 2020

(In millions, Unaudited)

Net sales	Q1’20			% Chg			Q2’20			% Chg			Six Months ‘20			% Chg
							Preliminary
Net sales - prior year	$	571.9					$	556.4					$	1,128.3
Organic		(19.7	)		(3.4	)%		15.0			2.7	%	$	(4.7	)		(0.4	)%
Impact of Battery Acquisition		125.5			21.9	%		—			—	%	$	125.5			11.1	%
Impact of Auto Care Acquisition		61.4			10.7	%		23.7			4.3	%	$	85.1			7.5	%
Change in Argentina operations		0.2			—	%		(0.7	)		(0.1	)%	$	(0.5	)		—	%
Impact of currency		(2.5	)		21.5	%		(7.4	)		(1.4	)%	$	(9.9	)		10.2	%
Net sales - current year	$	736.8			28.8	%	$	587.0			5.5	%	$	1,323.8			17.3	%

Reconciliation for EBITDA and Adjusted EBITDA

	For the Quarters Ended								For the Trailing Twelve Months Ended March 31, 2020		For the Quarter Ended March 31, 2019
	March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019
	Preliminary								Preliminary
Earnings before income taxes from continuing operations	$	17.4 - $22.4	$	58.7	$	47.7	$	9.4	$	133.2 - $138.2	$	(74.0	)
Interest expense		47.2		51.0		48.7		51.9		198.8		77.2
Depreciation & amortization		28.5		27.6		22.0		30.8		108.9		28.4
EBITDA	$	93.1 - $98.1	$	137.3	$	118.4	$	92.1	$	440.9 - $445.9	$	31.6
Adjustments:
Acquisition and integration costs		17.0		19.3		28.5		28.0		92.8		62.2
Settlement loss on pension plan terminations		—		—		3.7		—		3.7		—
COVID-19 related Costs		1.2		—		—		—		1.2		—
Share-based payments		8.7		7.2		6.3		6.7		28.9		7.6
Adjusted EBITDA	$	120.0 - $125.0	$	163.8	$	156.9	$	126.8	$	567.5 - $572.5	$	101.4

EX-99.2

Exhibit 99.2

Excerpts from the Preliminary Offering Memorandum dated April 15, 2020

Recent Developments

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the United States and globally. The COVID-19 health crisis poses significant and widespread risks to the Company’s business as well as to the business environment and the markets in which the Company operates.

During these challenging times, Energizer is operating with two enduring principles - ensuring the health of our colleagues and business continuity. We are following the guidelines issued by the U.S. Center for Disease Control and Prevention and the World Health Organization and have instituted work from home for the majority of our office locations. We have also instituted additional measures at our production facilities, including temperature monitoring, enhanced facility cleaning, visual cues to aid in social distancing, and staggered shifts to minimize the number of colleagues on-site at any given time. We track and monitor suspected and confirmed cases of COVID-19, and we encourage colleagues to stay home if they or their family members are ill.

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

For the quarter ended March 31, 2020, we expect to report Net Sales of approximately $587.0 million, compared to $556.4 million in the prior year, driven in part by Organic sales growth of approximately 2.7 percent. In addition, we expect Earnings before income taxes from continuing operations in the range of $17.4 to $22.4 million compared to a Loss before income taxes from continuing operations of $74.0 million in the prior year period, and adjusted EBITDA in the range of $120.0 to $125.0 million compared to $101.4 million in the prior year period. These results reflect strong battery category growth in the month of March driven in part by strong consumer demand associated with the global COVID-19 outbreak. We also secured new distribution and increased shelf space earlier this year with existing U.S. customers, the results of which we expect to begin to realize in the third and fourth fiscal quarters of 2020. Auto care products are more discretionary by nature, and COVID-19 has negatively impacted our sales of these products and may continue to do so as we expect an overall reduction in travel due to shelter-in-place orders, work and travel restrictions, and other similar measures to try to contain the COVID-19 virus. However, we expect consumers to focus on wipes and cleaning products and during recessions consumers often turn to Do It Yourself versus Do It For Me services. Additionally, we have experienced softness in Latin America and Asia across both the batteries and auto care businesses, as well as modest incremental operating costs, as a result of the social distancing measures enacted to combat COVID-19. There can be no assurance these trends will continue at the same pace or to the same magnitude as experienced in the second fiscal quarter of 2020.

As of April 2, 2020, and following the Revolving Facility Drawdown and changes in the ordinary course of business, we had approximately $483.7 million of cash and cash equivalents. While the full impact of COVID-19 is uncertain, our core batteries business in North America and EMEA performed strongly in the second fiscal quarter of 2020, and we have multiple options to further mitigate the liquidity impact of the COVID-19 pandemic and preserve our financial flexibility in light of current uncertainty in the global markets, including the deferral or reduction of capital expenditures and reduction or delay of overhead expenses and other expenditures. Such delays could delay our growth or impact business plan. The full impact of COVID-19 on our financial and operating performance will depend significantly on the duration and severity of the outbreak, the actions taken to contain or mitigate its impact, disruption to our global supply chain, and the pace with which customers and consumers return to more normalized purchasing behavior, among others factors beyond our knowledge or control. See “Risk Factors—Risks Relating to our Business—We must successfully manage the demand, supply, and operational challenges brought about by the COVID-19 pandemic and any other disease outbreak, including epidemics, pandemics, or similar widespread public health concerns.”

For reconciliations of preliminary non-GAAP financial measures to preliminary GAAP financial measures, see “Summary Historical and Pro Forma Financial Data—Reconciliation of Selected Preliminary Data.”

The preliminary financial data and other information provided above is subject to the completion of our financial closing procedures, any adjustments or revisions that may result from the completion of the quarterly review and other developments that may arise between the date of this offering memorandum and the time the financial results for the second quarter are finalized. Therefore, this data represents management estimates that constitute forward-looking statements subject to risks and uncertainties. As a result, the preliminary financial data and other information described above may materially differ from the actual results that will be reflected in our consolidated financial statements for the quarter when they are completed and publicly disclosed. In addition, preliminary results for the second quarter are not necessarily indicative of operating results for any future quarter or results for the full year.

The preliminary financial data included in this offering memorandum has been prepared by, and is the responsibility of, Energizer’s management. PricewaterhouseCoopers LLP has not audited, reviewed, compiled, or applied agreed-upon procedures with respect to the preliminary financial data. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.

Subsequent to December 31, 2019 the Company borrowed an additional $372.7 million under its Revolving Facility, representing all of the remaining capacity available under such Revolving Facility (the “Revolving Facility Drawdown”) and, as of the date of this offering memorandum, has $392.7 million of borrowings outstanding thereunder. Taking into account $7.3 million of letters of credit outstanding under the Revolving Facility, no additional amounts were available to be drawn under the Revolving Facility as of the date of this offering memorandum. After the offering of the notes and the application of the proceeds thereof, the Company will have additional borrowing capacity under the Revolving Facility in an amount equal to the net proceeds used to repay indebtedness outstanding under the Revolving Facility. While the Company believes that it had sufficient liquidity prior to taking this action to fund its operations and meet its obligations, the Company has further increased its cash position as a precautionary measure in order to preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 pandemic. The current interest rate for borrowings under the Revolving Facility is approximately 3.25%.

Reconciliation of Selected Preliminary Financial Data

The preliminary financial data for the three-month period ended March 31, 2020 provided in this offering memorandum is subject to the completion of our financial closing procedures, any adjustments or revisions that may result from the completion of the quarterly review and other developments that may arise between the date of this offering memorandum and the time the financial results for the second quarter are finalized. Therefore, this data represents management estimates that constitute forward-looking statements subject to risks and uncertainties. As a result, the preliminary financial data described under “Recent Developments” and reconciled below may materially differ from the actual results that will be reflected in our consolidated financial statements for the quarter when they are completed and publicly disclosed. In addition, preliminary results for the second quarter are not necessarily indicative of operating results for any future quarter or results for the full year.

The preliminary financial data included in this offering memorandum has been prepared by, and is the responsibility of, Energizer’s management. PricewaterhouseCoopers LLP has not audited, reviewed, compiled, or applied agreed-upon procedures with respect to the preliminary financial data. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.

The following table sets forth a reconciliation of the Company’s earnings before income taxes to EBITDA and Adjusted EBITDA for the periods presented:

Energizer Reconciliation for EBITDA and Adjusted EBITDA

	For the Quarter Ended								For the Trailing Twelve Months Ended March 31, 2020		For the Quarter Ended March 31, 2019
	March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019
	Preliminary								Preliminary
Earnings before income taxes		$17.4 - $22.4	$	58.7	$	47.7	$	9.4	$	133.2 - $138.2	$	(74.0	)
Interest expense		47.2		51.0		48.7		51.9		198.8		77.2
Depreciation & amortization		28.5		27.6		22.0		30.8		108.9		28.4
EBITDA	$	93.1 - $98.1	$	137.3	$	118.4	$	92.1	$	440.9 - $445.9	$	31.6
Adjustments:
Acquisition and integration costs		17.0		19.3		28.5		28.0		92.8		62.2
Settlement loss on pension plan terminations		—		—		3.7		—		3.7		—
COVID-19 related Costs		1.2		—		—		—		1.2		—
Share-based payments		8.7		7.2		6.3		6.7		28.9		7.6
Adjusted EBITDA		$120.0 - $125.0	$	163.8	$	156.9	$	126.8	$	567.5 - $572.5	$	101.4

The following table includes our reconciliation of Organic sales for the three month period ended March 31, 2020:

Energizer Net Sales to Organic Net Sales Reconciliation

	Three Months Ended March 31,
Net sales	2020			% Chg
($ in millions)	Preliminary
Net sales - prior year	$	556.4
Organic		15.0			2.7	%
Impact of Battery Acquisition		—			—	%
Impact of Auto Care Acquisition		23.7			4.3	%
Change in Argentina operations		(0.7	)		(0.1	)%
Impact of currency		(7.4	)		(1.4	)%
Net sales - current year	$	587.0			5.5	%

Risks Relating to our Business

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

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

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

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

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

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

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

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

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

• Inability to meet our customers’ needs due to disruptions in our manufacturing and supply chain arrangements caused by the loss or disruption of essential manufacturing and supply chain elements, such as raw materials or other finished product components, transportation, workforce, or other manufacturing and distribution capability. In addition, we may incur higher costs for transportation, workforce and distribution capability in order maintain the surety of supplying product to our customers;

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

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

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

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

In addition, we cannot predict the impact that COVID-19 will have on our customers, suppliers, vendors and other business partners, and each of their financial conditions; however, any material effect on these parties could adversely impact us. The impact of COVID-19 may also exacerbate other risks discussed in this “Risk Factors” section as well as in Item 1A. Risk Factors in our Annual Report on Form 10-K, any of which could have a material effect on us, including risks such as those relating to our high level of indebtedness, our need to generate sufficient cash flows to service our indebtedness and our ability to comply with the covenants contained in the agreements that govern our indebtedness. This situation is changing rapidly and additional impacts may arise that we are not aware of currently. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts to our business as a result of the virus’s global economic impact, including the availability of credit, adverse impacts on our liquidity and the impacts of any recession that has occurred or may occur in the future.

Capitalization

The following table sets forth our unaudited cash and cash equivalents and consolidated debt and capitalization as of December 31, 2019:

• on an actual basis;

• as adjusted to give effect to the Varta Divestment and the Revolving Facility Drawdown; and

• as further adjusted to give effect to the completion of this offering and the application of the proceeds of the offering to (i) fund repayment of $197 million of indebtedness outstanding under our Revolving Facility and (ii) pay fees and expenses related to this offering.

This table should be read in conjunction with our consolidated financial statements and related notes thereto, incorporated by reference in this offering memorandum and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended September 30, 2019 and our Quarterly Report on Form 10-Q for the quarter ended December 31, 2019, which are incorporated by reference into this offering memorandum.

	December 31, 2019
	Actual		As Adjusted(c)(d)			As Further Adjusted
($ and € in millions)	(Unaudited, in millions)
Cash and cash equivalents	$	293.5	$	633.2	(e)	$	633.2
Debt Outstanding:
2019 Senior Secured Term Loan A Facility		365.0		365.0			365.0
Revolving Credit Facility		20.0		392.7			195.7	(f)
Term Loan B		660.0		314.2			314.2
5.500% Senior Notes Due 2025		600.0		600.0			600.0
6.375% Senior Notes Due 2026		500.0		500.0			700.0
4.625% Senior Notes Due 2026 (€650.0 principal amount)		728.8		728.8			728.8
7.750% Senior Notes Due 2027		600.0		600.0			600.0
Other Debt		54.9		54.9			54.9
Total Debt (a)	$	3,528.7	$	3,555.6		$	3,558.6
Total Equity(b)	$	587.5	$	477.5		$	477.5
Total Capitalization	$	4,116.2	$	4,033.1		$	4,036.1

(a) Includes (i) current portion of long-term debt in the amount of $70.1 million as of December 31, 2019 and (ii) excludes unamortized debt discount and issuance fees of $46.9 million and $50.9 million on an actual and pro forma basis, respectively, as of December 31, 2019.

(b) The change in Total Equity reflects the Company’s estimate of the pre-tax loss that it expects to incur with its divestment of the Varta Divestment Business. This estimate is an initial estimate that does not reflect the potential effects of taxes and is subject to further adjustment in connection with, among other things, contractual purchase price adjustments related to the Varta Divestment.

(c) Subsequent to December 31, 2019, Energizer received approximately $345.8 million of proceeds from the divestment of the Varta Divestment Business and related hedging arrangement, which proceeds were used to repay indebtedness outstanding under our term loan B facility. Cash and cash equivalents was reduced by $33.0 million as the result of a contractual purchase price adjustment in connection with the closing of the Varta Divestment.

(d) Subsequent to December 31, 2019 the Company borrowed an additional $372.7 million under its Revolving Facility, representing all of the remaining capacity available under such Revolving Facility.

(e) As of April 2, 2020, our unaudited cash & cash equivalents after giving effect to the Varta Divestment, the Revolving Facility Drawdown and changes in the ordinary course of business, was $483.7 million. See “Summary—Recent Developments.”

(f) After giving effect to the completion of this offering and the application of the proceeds of the offering as set forth above and under “Use of Proceeds,” the Company will have an additional $197.0 million available for borrowing under the Credit Agreement, excluding letters of credit totaling approximately $7.3 million.

EX-99.3

Exhibit 99.3

	Energizer Holdings, Inc. 533 Maryville University Dr. St. Louis, MO 63141
FOR IMMEDIATE RELEASE	Company Contact
April 15, 2020	Jacqueline Burwitz Investor Relations 314-985-2169 JacquelineE.Burwitz@energizer.com

Energizer Holdings, Inc. Announces Commencement of Offering of $200 Million Senior Notes

ST. LOUIS, April 15, 2020 /PRNewswire/ — Energizer Holdings, Inc. (NYSE: ENR) (the “Company”) today announced the commencement of a $200 million Add-on offering to the 6.375% senior notes due 2026 (the “Notes”) in a private offering, subject to market and other customary conditions. The Notes will be guaranteed, jointly and severally, on an unsecured basis, by certain of the Company’s domestic restricted subsidiaries. The notes will bear an interest rate of 6.375% and the offering price will be determined at the time of pricing of the offering.

The Company intends to use the net proceeds from the offering of the Notes to fund repayment of $197.0 million of indebtedness outstanding under its revolving credit facility and to pay fees and expenses related to the offering.

The Notes and related guarantees are being offered for sale to qualified institutional buyers in an offering of senior notes exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons outside the United States in compliance with Regulation S under the Securities Act. No assurance can be given that the offering of the Notes will be completed, or, if completed, as to the terms on which it is completed.

The Notes and related guarantees have not been registered under the Securities Act, or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

About Energizer Holdings, Inc.

Energizer Holdings, Inc. (NYSE: ENR), headquartered in St. Louis, Missouri, is one of the world’s largest manufacturers and distributors of primary batteries, portable lights, and auto care appearance, performance, refrigerant, and fragrance products. Our portfolio of globally recognized brands include Energizer^®, Armor All^®, Eveready^®, Rayovac^®, STP^®, Varta^®, A/C Pro^®, Refresh Your Car! ^®, California Scents^®, Driven^®, Bahama & Co. ^®, LEXOL^®,

Eagle One^®, Nu Finish^®, Scratch Doctor^®, and Tuff Stuff^®. As a global branded consumer products company, Energizer’s mission is to lead the charge to deliver value to our customers and consumers better than anyone else. Visit www.energizerholdings.com for more details.

Forward-Looking Statements

This document contains both historical and forward-looking statements. Forward-looking statements are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, the future sales, gross margins, costs, earnings, cash flows, tax rates and performance of the Company. These statements generally can be identified by the use of forward-looking words or phrases such as “believe,” “expect,” “expectation,” “anticipate,” “may,” “could,” “intend,” “belief,” “estimate,” “plan,” “target,” “predict,” “likely,” “should,” “forecast,” “outlook,” or other similar words or phrases. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this document are only made as of the date of this document and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation:

• market and economic conditions;

• market trends in the categories in which we compete;

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

• our ability to integrate businesses, to realize the projected results of the acquired businesses, and to obtain expected cost savings, synergies and other anticipated benefits of the acquired businesses within the expected timeframe, or at all;

• the impact of the acquired businesses on our business operations;

• the success of new products and the ability to continually develop and market new products;

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

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

• our ability to timely execute strategic initiatives, including restructurings, and international go-to-market changes in a manner that will positively impact our financial condition and results of operations and does not disrupt our business operations;

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

• our ability to maintain and improve market share in the categories in which we operate despite heightened competitive pressure;

• financial strength of distributors and suppliers;

• our ability to improve operations and realize cost savings;

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

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

• the impact of adverse or unexpected weather conditions;

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

• the impact of raw materials and other commodity costs;

• the impact of legislative changes or regulatory determinations or changes by federal, state and local, and foreign authorities, including customs and tariff determinations, as well as the impact of potential changes to tax laws, policies and regulations;

• costs and reputational damage associated with cyber-attacks or information security breaches or other events;

• the impact of advertising and product liability claims and other litigation; and

• compliance with debt covenants and maintenance of credit ratings as well as the impact of interest and principal repayment of our existing and any future debt.

In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of any such forward-looking statements. The list of factors above is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Additional risks and uncertainties include those detailed from time to time in our publicly filed documents, including those described under the heading “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on November 19, 2019, as amended in our Current Report on Form 8-K, filed with the SEC on April 15, 2020.

EX-99.4

Exhibit 99.4

SPECTRUM BRANDS GLOBAL BATTERIES AND LIGHTS DIVISION

(Combined Carve-Out Financial Statements of Global Batteries & Lights Division of Spectrum Brands Holdings,

Inc.)

INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

As of December 30, 2018 and for the three month periods ended December 30, 2018 and December 31, 2017 (Unaudited)

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

(Combined Carve-Out Financial Statements of Global Batteries & Lights Division of Spectrum Brands Holdings, Inc.)

TABLE OF CONTENTS

	Page
Condensed Combined Balance Sheets		1
Condensed Combined Statements of Income		2
Condensed Combined Statements of Comprehensive Income		2
Condensed Combined Statements of Net Parent Investment		3
Condensed Combined Statements of Cash Flows		4
Notes to Condensed Combined Financial Statements		5

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

Condensed Combined Balance Sheets

As of December 30, 2018 (unaudited), and as of September 30, 2018 (audited)

	December 30,			September 30,
(in millions)	2018			2018
Assets
Trade receivables, net	$	117.6		$	98.5
Other receivables		17.8			23.0
Inventories		105.3			127.8
Prepaid expenses and other current assets		25.0			28.5
Total current assets		265.7			277.8
Property, plant and equipment, net		138.8			142.9
Deferred charges and other		10.3			9.5
Deferred income taxes		2.3			2.3
Goodwill		193.9			195.5
Intangible assets, net		265.5			269.5
Total assets	$	876.5		$	897.5
Liabilities and Net Parent Investment
Current portion of capital lease obligations	$	6.2		$	5.9
Accounts payable		73.6			131.5
Accrued wages and salaries		27.3			24.5
Other current liabilities		83.0			37.7
Total current liabilities		190.1			199.6
Capital lease obligations, net of current portion		38.2			39.5
Deferred income taxes		53.1			62.0
Other long-term liabilities		15.9			16.5
Total liabilities		297.3			317.6
Net parent investment		650.6			637.7
Accumulated other comprehensive loss		(71.4	)		(57.8	)
Total net parent investment		579.2			579.9
Total liabilities and net parent investment	$	876.5		$	897.5

See accompanying notes to the condensed combined financial statements.

1

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

Condensed Combined Statements of Income

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

	For the three month periods ended
(in millions)	December 30, 2018		December 31, 2017
Net sales	$	249.0	$	261.2
Cost of goods sold		164.6		170.2
Gross profit		84.4		91.0
Selling		17.1		17.0
General and administrative		36.8		34.2
Research and development		2.9		2.9
Total operating expenses		56.8		54.1
Operating income		27.6		36.9
Interest expense		0.4		0.6
Other non-operating expense (income), net		0.5		0.1
Income before income taxes		26.7		36.2
Income tax expense (benefit)		8.1		(4.7	)
Net income	$	18.6	$	40.9

See accompanying notes to the condensed combined financial statements.

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

Condensed Combined Statements of Comprehensive Income

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

	For the three month periods ended
(in millions)	December 30, 2018			December 31, 2017
Net Income	$	18.6		$	40.9
Other comprehensive income (loss)
Foreign currency translation gain (loss)		(15.7	)		(7.2	)
Unrealized gain (loss) on derivative instruments
Unrealized gain (loss) on hedging activity before reclassification		0.5			0.7
Loss (gain) on hedging activity reclassified from accumulated other comprehensive income		2.1			0.5
Unrealized gain (loss) on hedging instruments after reclassification		2.6			1.2
Deferred tax effect		0.5			0.2
Net unrealized gain (loss) on hedging derivative instruments		2.1			1.0
Net change in comprehensive income		(13.6	)		(6.2	)
Comprehensive income	$	5.0		$	34.7

See accompanying notes to the condensed combined financial statements.

2

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHT DIVISION

Condensed Combined Statement of Net Parent Investment

For the three month period ended December 30, 2018

(unaudited)

(in millions)	Net Parent Investment			Accumulated Other Comprehensive Income			Total
Three month period ended September 30, 2018	$	637.7		$	(57.8	)	$	579.9
Net income		18.6			—			18.6
Foreign currency translation loss					(15.7	)		(15.7	)
Unrealized gain on hedging activity					2.1			2.1
Net transfer to Parent		(5.7	)					(5.7	)
Balances at December 30, 2018	$	650.6		$	(71.4	)	$	579.2

See accompanying notes to the condensed combined financial statements.

3

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

Condensed Combined Statements of Cash Flows

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

	For the three month periods ended
(in millions)	As of December 30, 2018			As of December 31, 2017
Cash flows from operating activities
Net income	$	18.6		$	40.9
Adjustments to reconcile net income to net cash from operating activities:
Depreciation on property plant and equipment		5.5			5.7
Amortization of intangible assets		2.7			2.5
Share based compensation		2.3			0.7
Deferred tax (benefit) expense		(8.9	)		(21.0	)
Net changes in operating assets and liabilities:
Receivables		(15.0	)		(20.5	)
Inventories		22.5			14.3
Prepaid expenses and other current assets		3.5			1.5
Accounts payable and accrued liabilities		(30.3	)		(52.2	)
Income taxes and other		25.1			11.6
Net cash provided by (used by) operating activities		26.0			(16.5	)
Cash flows from investing activities
Purchases of property, plant and equipment		(2.8	)		(3.2	)
Proceeds from sale of assets		—			—
Net cash used by investing activities		(2.8	)		(3.2	)
Cash flows from financing activities
Net transfer to Parent		(21.6	)		20.0
Payment of capital lease obligations		(1.6	)		(0.3	)
Net cash (used by) / provided by financing activities		(23.2	)		19.7
Net change in cash and cash equivalents		—			—
Cash and cash equivalents, beginning of period		—			—
Cash and cash equivalents, end of period	$	—		$	—
Non cash investing activities
Acquisition of property, plant and equipment through capital leases	$	0.1		$	0.2

See accompany notes to the condensed combined financial statements.

4

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 1 - DESCRIPTION OF BUSINESS

The accompanying condensed combined financial statements include the historical accounts of Spectrum Global Batteries & Lights Division (“GBL”) of Spectrum Brands Holdings, Inc. (“SBH” or “Parent”). GBL consists of consumer batteries and battery-powered portable lighting products. Consumer batteries consists of alkaline batteries, zinc carbon batteries, nickel metal hydride (NiMH) rechargeable batteries and battery chargers primarily under the Rayovac® and VARTA® brands. Additionally, GBL manufactures alkaline batteries for third parties who sell under their own private labels. GBL also offers a broad line of battery-powered portable lighting products including flashlights and lanterns under the Rayovac® and VARTA® brands, and other proprietary brand names pursuant to licensing arrangements with third parties.

GBL manufactures and sells hearing aid batteries under several brand names and private labels for many major hearing aid device manufacturers. Other specialty battery products include keyless entry batteries, portable chargers and coin cells for use in watches, cameras, calculators, communications equipment, and medical instruments.

Energizer Holdings, Inc.

On January 15, 2018, SBH entered into a definitive Acquisition Agreement (“Agreement”) with Energizer Holdings, Inc. (“Energizer”) on January 15, 2018, where Energizer will acquire from SBH the GBL business for an aggregate purchase price of $2.0 billion in cash, subject to customary purchase price adjustments. The Agreement provides that Energizer will purchase the equity of certain subsidiaries of SBH and acquire certain assets and assume certain liabilities of other subsidiaries used or held for the purpose of the GBL business. In the Agreement, SBH and Energizer 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, SBH will be subject to certain business conduct restrictions with respect to its operation of the GBL business. SBH and Energizer have agreed to indemnify each other for losses arising from certain breaches of the Agreement and for certain other matters. In particular, SBH has agreed to indemnify Energizer for certain liabilities relating to the assets retained by SBH, and Energizer has agreed to indemnify SBH for certain liabilities assumed by Energizer, in each case as described in the Agreement. SBH and Energizer 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 GBL, (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 Agreement) 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 Agreement. The consummation of the transaction is not subject to any financing condition. On March 29, 2018, the Federal Trade Commission allowed the expiration of the 30-day Hart-Scott-Rodino waiting period, which in effect provides US regulatory approval of the sale. Refer to Note 14 – Subsequent Events for further development over the Energizer acquisition and other required regulatory approvals subsequent to December 30, 2018.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

Basis of Presentation

The accompanying condensed combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) from the combined financial statements and accounting records of SBH using the historical results of GBL segment operations and historical cost basis of the assets and liabilities that comprise GBL. These financial statements have been prepared solely to demonstrate its historical results of operations, financial position, and cash flows for the indicated periods under SBH’s management. All intercompany balances and transactions within GBL have been eliminated. Transactions and balances between GBL and SBH and its subsidiaries are reflected as related party transactions and are considered to be effectively settled at the time the transaction is incurred, therefore no intercompany balances are reflected as outstanding on the condensed combined financial statements. Discrete financial information was not available for GBL within certain legal entities of SBH with shared operations including the operations of GBL and other SBH businesses. Certain transactions of SBH are not recorded by GBL but at the legal entity level of the Parent or its subsidiary. For shared entities for which discrete financial information was not available, allocation methodologies were applied to certain accounts to allocate amounts to GBL discussed further in Note 13 – Related Parties.

Certain costs related to the GBL have been allocated from the Parent. Those costs are derived from multiple levels of the organization including geographic business unit expenses, product line expenses, shared corporate expenses, and fees from the Parent. GBL receives service and support functions from SBH and its subsidiaries and are dependent upon SBH and its subsidiaries’ ability to perform these services and support functions. The costs associated with these services and support functions have been allocated to GBL using the most meaningful respective allocation methodologies which were primarily based on proportionate sales, headcount, direct labor costs or other measures of GBL or its Parent. These allocated costs are primarily related to corporate administrative expenses, employee related costs including pensions and other benefits for corporate and shared employees, and rental and usage fees for shared assets for the functional groups such as accounting and finance services, human resources, information technology, facilities, legal services and contract support, tax and treasury management, corporate compliance and risk management, and other corporate and other corporate and infrastructural services.

5

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

The assets and liabilities related to GBL are primarily specifically identified as assets and liabilities of the business. In some instances, assets and liabilities may be considered shared with GBL other businesses of the Parent or its subsidiary, where they are allocated based upon an allocation methodology that is primarily based on proportionate sales, headcount or other measures of GBL or its Parent. In particular, property plant and equipment not specifically identified as a component of GBL operations, but shared with GBL and other businesses of the Parent or its subsidiary, are allocated to the predominant user of the facility, if one can be determined. Shared assets consist of corporate headquarters, shared service facilities, shared distribution centers, and sales offices, among others. Predominant user is based upon the proportionate net sales, headcount, square footage, and other measures deemed reasonable to define usage of the assets. When GBL is recognized as the predominant user of the assets, the asset is recognized as property plant and equipment on the condensed combined balance sheet, a usage charge is assessed on the other businesses of SBH for use of the asset and recognized as a reduction to general & administrative expenses on the condensed combined statement of income. When GBL is not recognized as the predominant user of the asset, the asset is not recognized on the condensed combined balance sheet.

SBH uses a centralized approach to cash management and financing its operations. As a result, substantially all cash is commingled with corporate funds and is not specifically identifiable to GBL. The net results of these transactions between GBL and SBH are reflected as net parent investment in the condensed combined balance sheets. In addition, the net parent investment represents SBH’s interest in the net assets of GBL and the cumulative net investment by SBH in GBL through the dates presented. Outside of certain capital leases of GBL operations, there is no debt that is specifically identified or attributable to GBL and therefore not recognized on the condensed combined balance sheet.

Management believes the assumptions and allocations underlying the condensed combined financial statements are reasonable and appropriate under the circumstances. The expenses and cost allocations have been determined on a basis considered by SBH to be a reasonable reflection of the utilization of services provided to or the benefit received by the GBL during the periods presented relative to the total costs incurred by SBH. However, the amounts recorded for these transactions and allocations are not necessarily representative of the amount that would have been reflected in the financial statements had GBL been an entity that operated independently of SBH. Actual costs that would have been incurred if GBL has been a stand-alone company would depend upon multiple factors, including organization structure and strategic decision made in various areas, including information technology and infrastructure. Consequently, future results of operations should the GBL be separated from SBH will include costs and expenses that may be materially different than historical results of operations, financial position, and cash flows. Accordingly, the financial statements for these periods are not indicative of the future results of operations, financial position, and cash flows.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Combination

All significant intercompany accounts and transactions within GBL have been eliminated in the preparation of the accompanying condensed combined financial statements. All significant intercompany transactions with SBH are deemed to have been paid in the period the cost was incurred.

Cash and Cash Equivalents

Treasury activities, including activities related to GBL, are centralized by SBH such that cash collections are distributed to SBH and reflected as net parent investment. As a result, GBL does not recognize cash on its condensed combined financial statements.

Receivables

Trade receivables are carried at net realizable value. GBL extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history, but generally does not require collateral. GBL monitors its customers’ credit and financial condition based on changing economic conditions and will make adjustments to credit policies as required. Provisions for losses on uncollectible trade receivables are determined based on ongoing evaluations of GBL’s receivables, principally on the basis of historical collection experience and evaluations of the risks of nonpayment or return for a given customer. The allowance for uncollectible receivables was $6.7 million as of December 30, 2018. The allowance for uncollectible receivables was $4.5 million as of September 30, 2018.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost of inventories is determined using the first-in, first out (FIFO) method. See Note 4 - Inventory for further detail.

6

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is calculated on the straight-line basis over the estimated useful lives of the assets. Property, plant and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset; such amortization is included in depreciation expense. GBL uses accelerated depreciation methods for income tax purposes. Useful lives for property, plant and equipment are as follows:

Asset Type	Range
Buildings and improvements	20 - 40 years
Machinery and equipment	2 - 15 years

Expenditures which substantially increase value or extend useful lives are capitalized. Expenditures for maintenance and repairs are charged to operations as incurred. Gains and losses are recorded on the disposition or retirement of property, plant and equipment based on the net book value and any proceeds received.

Long-lived fixed assets held and used are reviewed for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Circumstances such as the discontinuation of a product or product line, a sudden or consistent decline in the sales forecast for a product, changes in technology or in the way an asset is being used, a history of operating or cash flow losses or an adverse change in legal factors or in GBL climate, among others, may trigger an impairment review. If such indicators are present, GBL performs undiscounted cash flow analyses to determine if impairment exists. The asset value would be deemed impaired if the undiscounted cash flows generated did not exceed the carrying value of the asset. If impairment is determined to exist, any related impairment=loss is calculated based on fair value. There were no triggering events identified that necessitated an impairment test over property, plant and equipment. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. See Note 5 - Property, plant and equipment for further detail.

Goodwill

Goodwill reflects the excess of acquisition cost over the aggregate fair value assigned to identifiable net assets acquired. Goodwill is not amortized, but instead is assessed for impairment at least annually and as triggering events or indicators of potential impairment are identified. Goodwill has been assigned to reporting units for purposes of impairment testing based upon the relative fair value of the asset to reporting unit. GBL consist of a single reporting unit.

An annual impairment test is performed in the fourth quarter of its fiscal year. The Company may first perform a qualitative assessment to determine if it is more likely than not that an impairment exists to necessitate the need for a quantitative assessment. When a qualitative assessment is performed and an impairment is determined to be more likely than not, the quantitative assessment is performed by comparing the fair value of the business to its carrying value, including goodwill. In estimating the fair value, we use a discounted cash flow methodology, which requires us to estimate future revenues, expenses, and capital expenditures and make assumptions about our weighted average cost of capital and perpetuity growth rate, among other variables. If the fair value of a reporting unit is less than its carrying value, an impairment loss would be recognized equal to that excess; however the loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. See Note 6 - Goodwill and Intangible Assets for further detail.

Intangible Assets

Intangible assets are recorded at cost or at estimated fair value if acquired in a business combination. Customer lists, proprietary technology and certain trade name intangibles are amortized, using the straight-line method, over their estimated useful lives. The range and weighted average useful lives for definite-lived intangibles assets are as follows:

Asset Type	Range	Weighted Average
Customer relationships	15 - 20 years	20 years
Technology assets	17 years	17 years

Definite-lived intangible assets held and used are reviewed for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be recoverable. If indicators of potential impairment are identified, GBL performs an undiscounted cash flow analysis to determine if impairment exists. The asset value would be deemed impaired if the undiscounted cash flows expected to be generated by the asset did not exceed its carrying value. If impairment is determined to exist, any related impairment loss is calculated based on fair value. There were no triggering events that necessitated an impairment test of definite-lived intangible assets.

Certain trade name intangible assets have an indefinite life and are not amortized; but instead are assessed for impairment at least annually and as triggering events or indicators of potential impairment are identified. GBL performs its annual impairment test in the fourth quarter of its fiscal year. Impairment of indefinite lived intangible assets is assessed by comparing the estimated fair value of the identified trade names to their carrying value to determine if potential impairment exists. If the fair value is less than the carrying value, an impairment loss is recorded for the excess. 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. See Note 6 - Goodwill and Intangible Assets for further detail.

Financial Instruments

GBL participates in the Parent’s foreign currency exchange rate and raw material price exposure hedging program to reduce earnings and cash flow volatility associated with foreign currency exchange rate changes and changes in raw material pricing. Derivative financial instruments are used by the Parent principally in the management of its interest rate, foreign currency exchange rate and raw material price exposures.

The Parent does not hold or issue derivative financial instruments for trading or speculative purposes. Derivative assets and liabilities are reported at fair value in the Condensed Combined Balance Sheets. When hedge accounting is elected at inception, the Parent formally designates the financial instrument as a hedge of a specific underlying exposure and documents both the risk management objectives and strategies for undertaking the hedge. Depending on the nature of derivatives designated as hedging instruments, changes in fair value are either offset against the change in fair value of the hedged assets or liability through earnings, or recognized in equity through other comprehensive income until the hedged item is recognized. Any ineffective portion of a financial instrument’s change in fair value is recognized in earnings. For derivatives that do not qualify for hedge accounting treatment, the change in the fair value is recognized in earnings. See Note 8 - Derivatives for further detail.

7

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

Revenue Recognition

Refer to Recently Issued Accounting Standards in Note 2 for a further description of the revenue recognition policies applied by GBL.

GBL has a broad range of customers including many large retail outlet chains, one of which accounts for a significant percentage of its sales volume. This major customers represented approximately 12% and 11% of net sales for the three month periods ended December 30, 2018 and December 31, 2017, respectively.

The Company generates all of its revenue from contracts with customers. The following table disaggregates our revenue by the GBL’s key revenue streams and geographic region (based upon destination):

(in millions)	As of December 30, 2018 (unaudited)
North America	$	92.7
EMEA		125.1
LATAM		24.5
APAC		6.7
Total	$	249.0

Shipping and Handling Costs

Shipping and handling costs include costs incurred with GBL third-party carriers to transport products to customers and salaries and overhead costs related to activities to prepare GBL’s products for shipment at distribution facilities. Shipping and handling costs are included in Selling Expenses in the Condensed Combined Statements of Income.

Advertising Costs

Advertising costs include agency fees and other costs to create advertisements, as well as costs paid to third parties to print or broadcast advertisements and are expensed as incurred. Advertising costs are included in Selling Expenses in the Condensed Combined Statements of Income.

Research and Development Costs

Research and development costs are charged to expense in the period they are incurred.

Environmental Expenditures

Environmental expenditures that relate to current operations or to conditions caused by past operations are expensed or capitalized as appropriate. GBL determines its liability for environmental matters on a site-by-site basis and records a liability at the time when it is probable that a liability has been incurred and such liability can be reasonably estimated. The estimated liability is not reduced for possible recoveries from insurance carriers. Estimated environmental remediation expenditures are included in the determination of the net realizable value recorded for assets held for sale. See Note 12 - Commitments and Contingencies for further detail.

Employee Benefits

GBL participates in various defined benefit plans sponsored by the Parent or its subsidiary that is shared amongst its businesses, including GBL. For shared plans, the participation of these plans is reflected in these condensed combined financial statements as though GBL participates in a multi-employer plan with the other businesses of SBH and a proportionate share of the cost is reflected in the condensed combined statements of income, while the asset and liabilities of such plans are retained by SBH. A liability for shared plans would be recognized by GBL to the extent there is any unpaid contributions to the multi-employer plan. In certain jurisdictions, the Parent or its subsidiary sponsors a plan that is solely or predominantly for employees attributable to GBL operations. For plans directly attributable to GBL operations, the plans are recognized under a single employer method in these condensed combined financial statements. See Note 9 - Employee Benefit Plans for further information.

8

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

Income Taxes

Income taxes as presented herein attribute current and deferred income taxes of SBH to the GBL stand-alone financial statements in a manner that is systematic, rational, and consistent with the asset and liability method prescribed by ASC 740. Accordingly, GBL income tax provision was prepared following the separate return method. The separate return method applies ASC 740 to the stand-alone financial statements of each member of the condensed combined group as if the group member were a separate taxpayer and a stand-alone enterprise. As a result, actual tax transactions included in the condensed combined financial statements of SBH may not be included in the separate condensed combined financial statements of GBL. Similarly, the tax treatment of certain items reflected in the separate condensed combined financial statements of GBL may not be reflected in the condensed combined financial statements and tax return of SBH; therefore, such items as net operating losses, credit carryforwards, and valuation allowances may exist in the stand-alone financial statements that may or may not exist in the SBH consolidated financial statements.

The breadth of GBL’s operations and the global complexity of tax regulations require assessments of uncertainties and judgements in estimating the taxes that GBL will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcome of tax litigation and resolution of disputes arising from federal, state and international tax audits in the normal course of business.

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of GBL assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. It is the Parent’s policy to include accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes.

In general, the taxable income (loss) of U.S. GBL entities was included in SBH’s U.S. tax returns and, where applicable, in certain jurisdictions around the world. As such, separate income tax returns were not prepared for many GBL entities. Consequently, income taxes currently payable are deemed to be payable to SBH in the period the liability arose and income taxes currently receivable are deemed to be receivable from SBH in the period that a refund could have been recognized by GBL had GBL been a separate taxpayer.

Foreign Currency Translation

For foreign entities where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-period exchange rates and the resulting translation adjustments are reported, net of their related tax effects, as a component of Net Parent Investment. Assets and liabilities denominated in other than the functional currency are re-measured into the functional currency prior to translation into USD and the resultant exchange gains or losses are included in income in the period in which they occur. Income and expenses are translated into USD at average exchange rates in effect during the period. Foreign currency transaction gains and losses for transactions denominated in a currency other than the functional currency are recorded in Other Non-Operating Expense (Income), Net on the Condensed Combined Statements of Income.

Net Parent Investment

GBL equity on the Condensed Combined Balance Sheet represents the Parent’s net investment in GBL and is presented as Net Parent Investment in lieu of stockholders’ equity. The Statement of Changes in Net Parent Investment account includes assets and liabilities incurred by the Parent on behalf of GBL such as accrued liabilities related to corporate allocations including administrative expenses for legal, accounting, treasury, information technology, human resources and other services. Other assets and liabilities recorded by Parent, whose related expenses have been pushed down to GBL, are also included in Net Parent Investment.

All transactions reflected in Net Parent Investment in the accompanying Condensed Combined Balance Sheet have been considered cash receipts and payments for purposes of the Condensed Combined Statements of Cash Flows and are reflected in financing activities in the accompanying Condensed Combined Statements of Cash Flows.

Earnings per share data has not been presented in the accompanying condensed combined financial statements because GBL does not operate as a separate legal entity with its own capital structure.

9

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU requires revenue recognition to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue recognition model requires identifying the contract and performance obligations, determining the transaction price, allocating the transaction price to performance obligations and recognizing the revenue upon satisfaction of performance obligations. GBL adopted ASU 2014-09 and all the related amendments on October 1, 2018, using the modified retrospective transition method. GBL recognized the cumulative effect of applying the new revenue standard as an increase of $ 0.1 million, net of tax, to the opening balance of Accumulated Earnings at the beginning of the fiscal year 2019. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. GBL does not expect the adoption of Topic 606 to have a material impact to its period revenue or net income on an ongoing basis.

GBL’s revenue recognition accounting policies are as follows:

Product Sales

Our customers mostly consist of retailers, wholesalers and distributors, and construction companies with the intention to sell and distribute to an end consumer. Spectrum recognizes revenue from the sale of products upon transfer of control to the customer. For the majority of our product sales, the transfer of control is recognized when we ship the product from our facilities to the customer. Timing of revenue recognition for a majority of GBL’s sales continues to be consistent. Previously, GBL deferred recognition of revenue if title and risk of loss were retained upon shipment, but the customer arranged and paid for freight such that they had physical possession and control. Under Topic 606, GBL recognizes revenue at the time of shipment for these transactions. This change did not have a material impact on GBL’s adoption on October 1, 2018 or comparability to revenue in prior periods.

Licensing Revenue

GBL also sells licenses of its brands to third-party sellers and manufacturers for the development, production, sales & distribution of products that are not directly managed or offered by GBL. GBL maintains all right of ownership over the intellectual property and contracts with its customer over the use of the intellectual property in their operations. Under ASC 606, revenue derived from the right-to-access licenses is recognized using the over time revenue recognition method. We elected to recognize revenue under the ‘as-invoiced’ practical expedient method at the amount we are able to bill using a time-elapsed measure of progress. GBL has assessed that recognizing revenue based on a time-elapsed measure of progress, taking into consideration any minimum guarantee provisions under the contract, appropriately depicts its performance of providing access to GBL’s brands, trade names, logos, etc. This change did not have a material impact on GBL’s adoption of the new standard on October 1, 2018 and comparability to revenue recognition in prior periods.

Variable Consideration and Cash Paid to Customers

GBL measures revenue as the amount of consideration for which it expects to be entitled in exchange for transferring goods or providing services. Certain retailers and/or end customers may receive cash or non-cash incentives such as rebates, volume or trade discounts, cooperative advertising, price protection, service level penalties, and other customer-related programs, which are accounted for as variable consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of revenue recognized will not occur when the uncertainty is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available. The estimated liability for sales discounts and other programs and allowances is calculated using the expected value method or most likely amount and recorded at the time of sale as a reduction of net sales.

GBL also enters into various arrangements, primarily with retail customers, which require GBL to make upfront cash payments to secure the right to distribute through such customers. GBL capitalizes these payments, provided they are supported by a volume-based arrangement with the retailer with a period of 12 months or longer, and amortizes the associated payment over the appropriate time or volume-based term of the arrangement. Capitalized payments are recognized as a contract asset and are reported in the Consolidated Statements of Financial Position as Deferred Charges and Other Assets and related amortization is treated as a reduction in Net Sales.

Product returns

In the normal course of business, GBL business may allow customers to return product per the provisions in a sale agreement. Estimated product returns are recorded as a reduction in reported revenues at the time of sale based upon historical product return experience, adjusted for known trends, to arrive at the amount of consideration expected to receive. For the anticipated value of the returns, the adoption of Topic 606 resulted in the recognition of a return asset included in the Other Current Assets and the returns liability recognized in Other Current Liabilities. GBL recognized an expected returns liability of $0.9 million as of December 30, 2018, most of which GBL does not expect or anticipate a returned asset. Prior to the adoption of Topic 606, the reserve for product returns was recognized net of anticipated value of returned product as a reduction to Trade Receivable, Net on GBL’s Condensed Consolidated Statement of Financial Position and was $0.9 million as of September 30, 2018.

Practical Expedients and Exemptions

• GBL accounts for shipping and handling activities which occur after control of the related goods transfers as fulfillment activities instead of assessing such activities as performance obligations. The use of the practical expedient did not impact the accounting for the adoption of Topic 606.

• GBL does not adjust the promised amount of consideration for the effects of a significant financing component, as the period between the transfer of a promised good or service to a customer and the customer’s payment for the good or service will be one year or less.

• GBL does not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer.

• GBL does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period is immaterial.

• GBL generally expenses sales commissions and other contract and fulfillment costs when the incurred amortization period would have been less than one year. GBL records these costs within selling, general and administrative expenses. For costs amortized over a period longer than one year, such as fixtures which are much more permanent in nature, GBL will continue to defer and amortize over the supportable period based upon historical assumptions and analysis. The

10

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

• costs for permanent displays are incorporated into the pricing of product sold to customer.

• GBL excludes all sales taxes that are assessed by a governmental authority from the transaction price.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which supersedes the lease requirements in ASC 840, Leases. This ASU requires lessees to recognize lease assets and liabilities on the balance sheet, as well as disclosing key information about leasing arrangements. Although the new ASU requires both operating and finance leases to be disclosed on the balance sheet, a distinction between the two types still exists as the economics of leases can vary. The ASU can be applied using a modified retrospective approach, with a number of optional practical expedients relating to the identification and classification of leases that commenced before the effective date, along with the ability to use hindsight in the evaluation of lease decisions, that entities may elect to apply. As a result, the ASU will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020, with early adoption applicable. We have not measured the impact of adoption at this point in our assessment and have not concluded on the overall materiality of the impact of adoption to the condensed combined financial statements or determined the method and timing of adoption.

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815), which changes the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The amendments in this update make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP, better aligning the entity’s risk management activities and financial reporting for hedging relationships. The ASU can only be applied prospectively and will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020, with early adoption available, based upon the Parent’s effective date requirements as a public company. We are currently assessing the impact this pronouncement will have on the condensed combined financial statements of GBL and have not yet concluded on the materiality or timing of the adoption.

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which addresses diversity in practice with the classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update address the classification within the statement of cash flow for debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent payments made after a business combination, proceeds from the settlement of insurance claims and corporate-owned life insurance policies, distributions received from equity method investees, and beneficial interests in securitization transactions, among other separately identifiable cash flows when applying the predominance principle. The Company retrospectively adopted ASU 2016 -15 on October 1, 2018. The adoption of this standard did not have a material impact on the consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, which addresses diversity in practice with the classification and presentation of restricted cash in the statement of cash flow, classifying transfers between cash and restricted cash as operating, investing, or financing activities, or as a combination of those activities, in the statement of cash flows. The amendment requires the statement of cash flows to explain the change during the period in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents; and include with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statement of cash flows. The Company retrospectively adopted ASU 2016-18 on October 1, 2018.

In March 2017, the FASB issued ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires an employer to disaggregate the service cost component from the other components of net periodic pension costs within the statement of income. The amendment provides guidance requiring the service cost component to be recognized consistent with other compensation costs arising from service rendered by employees during the period, and all other components to be recognized separately outside of the subtotal of income from operations. Due to the adoption of ASU No. 2017-07, the components of net periodic benefit cost other than the service cost component are recognized as Other Non-Operating (Income) Expense, Net on the Statement of Income. The adoption of ASU No. 2017-07 requires a retrospective restatement of prior periods, which was inconsequential to the Company’s Condensed Consolidated Statement of Income.

In January 2016, the FASB issued ASU No. 2016-01 Financial Instruments-Overall. This new standard enhances the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. The provisions of this ASU are effective for annual reporting periods beginning after December 15, 2017, and interim reporting periods within those annual periods. This ASU is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company adopted this ASU in the first quarter of fiscal 2019. The adoption of this ASU did not have a material impact on the Combined financial statements.

In October 2016, the FASB issued ASU No. 2016-16 “Intra-Entity Transfers of Assets Other Than Inventory”, which eliminates the exception of recognizing, at the time of transfer, current and deferred income taxes for intra-entity asset transfers other than inventory. Upon adoption of ASU 2016-16, the Company will recognize the tax expense from the sale of that asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. The cumulative-effect adjustment, if any, would consist of the net impact from (1) the write-off of any unamortized tax expense previously deferred and (2) recognition of any previously unrecognized deferred tax assets, net of any necessary valuation allowances. The Company implemented this ASU on October 1, 2018. The Company adopted this ASU in the first quarter of fiscal 2019. The adoption of this ASU did not have a material impact on the Combined financial statements.

In August 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815), which changes the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The amendments in this update make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP, better aligning the entity’s risk management activities and financial reporting for hedging relationships. The ASU can only be applied prospectively, and will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020; with early adoption available. We are currently assessing the impact this pronouncement will have on the consolidated financial statements of the Company and have not yet concluded on the materiality or timing of the adoption.

11

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of the GBL’s financial assets and liabilities are defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Fair value measurements are classified using a fair value hierarchy that is based upon the observability of inputs used in measuring fair value. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed assumptions about hypothetical transactions in the absence of market data. Fair value measurements are classified under the following hierarchy:

• Level 1 - Unadjusted quoted prices for identical instruments in active markets.

• Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

• Level 3 - Significant inputs to the valuation model are unobservable.

GBL utilizes valuation techniques that attempt to maximize the use of observable inputs and minimize the use of unobservable inputs. GBL’s derivatives are valued on a recurring basis using internal models, which are based on market observable inputs including both forward and spot prices for currencies and commodities, which are generally based on quoted or observed market prices (Level 2). The fair value of certain derivative financial instruments is estimated using pricing models based on contracts with similar terms and risks. Modeling techniques assume market correlation and volatility, such as using prices of one delivery point to calculate the price of the contract’s different delivery point. In addition, by applying a credit reserve which is calculated based on credit default swaps or published default probabilities for the actual and potential asset value, the fair value of GBL’s derivative financial instrument assets reflects the risk that the counterparties to these contracts may default on the obligations. Likewise, by assessing the requirements of a reserve for non-performance which is calculated based on the probability of default by GBL, GBL adjusts its derivative contract liabilities to reflect the price at which a potential market participant would be willing to assume GBL’s liabilities. GBL has not changed the valuation techniques used in measuring the fair value of any financial assets and liabilities during the year. The fair values of derivative instruments are as follows. See Note 8 – Derivatives for additional detail:

	As of December 30, 2018				As of September 30, 2018
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Derivative Assets	$	0.4	$	0.4	$	0.6	$	0.6
Derivative Liabilities	$	3.5	$	3.5	$	3.7	$	3.7

The carrying values of receivables, payables and accrued expenses approximate fair value based on the short-term nature of these assets and liabilities. The carrying value of capital lease obligations approximate fair value. The carrying values of goodwill, intangible assets and other long-lived assets are tested annually or more frequently if an event occurs that indicates an impairment loss may have been incurred, using fair value measurements with unobservable inputs.

NOTE 4 - INVENTORY

Inventory consists of the following:

(in millions)	As of December 30, 2018		As of September 30, 2018
Raw materials	$	32.8	$	33.9
Work-in-process		19.8		21.7
Finished goods		52.7		72.2
	$	105.3	$	127.8

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

(in millions)	As of December 30, 2018			As of September 30, 2018
Land, buildings and improvements	$	36.8		$	34.6
Machinery, equipment and other		182.2			180.6
Capital leases		53.3			55.6
Construction in progress		16.1			17.1
Property, plant and equipment	$	287.9		$	287.9
Accumulated depreciation		(149.1	)		(145.0	)
Property, plant and equipment, net	$	138.8		$	142.9

Depreciation expense from property plant and equipment for the three month periods ended December 30, 2018 and December 31, 2017 was $5.5 million and $5.7 million, respectively.

12

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 6 - GOODWILL AND INTANGIBLE ASSETS

Goodwill consists of the following:

(in millions)	As of December 30, 2018			As of September 30, 2018
Goodwill - beginning balance	$	195.5		$	197.8
Foreign currency impact		(1.6	)		(2.3	)
Goodwill - ending balance	$	193.9		$	195.5

Certain tradename intangible assets have an indefinite life and are not amortized. Indefinite-lived intangible assets were $164.2 million as of December 30, 2018. Indefinite-lived intangible assets were $165.1 million as of September 30, 2018. The carrying value and accumulated amortization for definite lived intangible assets subject to amortization are as follows:

	As of December 30, 2018							As of September 30, 2018
(in millions)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	$	167.2	$	(77.9	)	$	89.3	$	168.5	$	(76.4	)	$	92.1
Technology assets		26.5		(14.5	)		12.0		26.5		(14.2	)		12.3
Total	$	193.7	$	(92.4	)	$	101.3	$	195.0	$	(90.6	)	$	104.4

Amortization expense from intangible assets was $2.7 million and $2.5 million for the three month periods ended December 30, 2018 and December 31, 2017, respectively. Excluding the impact of any future acquisitions or changes in foreign currency, GBL anticipates the annual amortization expense of intangible assets for the next five fiscal years will be as follows:

(in millions)	Amortization
2019	$	10.0
2020		10.0
2021		10.0
2022		10.0
2023		10.0

NOTE 7 - LEASES

Operating Leases

Leases primarily pertain to land, buildings and equipment that expire at various times through July 2026. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the leases

NOTE 8 - DERIVATIVES

Derivative financial instruments are used by GBL principally in the management of its foreign currency exchange rate and raw material price exposures. GBL does not hold or issue derivative financial instruments for trading purposes. For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the effective portion of the derivative is reported as a component of Other Comprehensive Income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Cash Flow Hedges

Commodity Swaps. GBL is exposed to risk from fluctuating prices for raw materials, specifically zinc used in its manufacturing processes. GBL hedges a portion of the risk associated with the purchase of these materials through the use of commodity swaps. The hedge contracts are designated as cash flow hedges with the fair value changes recorded in Other Comprehensive Income and as a hedge asset or liability, as applicable. The unrecognized changes in fair value of the hedge contracts are reclassified from AOCI into earnings when the hedged purchase of raw materials also affects earnings. The swaps effectively fix the floating price on a specified quantity of raw materials through a specified date. GBL had the following commodity swap contracts outstanding as at December 30, 2018 and September 30, 2018 of:

	As of December 30, 2018				As of September 30, 2018
(in millions, except notional)	Notional Amount		Contract Value		Notional Amount		Contract Value
Zinc swap contracts		6.3 Tons	$	18.8		7.4 Tons	$	22.6

Foreign exchange contracts. GBL periodically enters into forward foreign exchange contracts to hedge the risk from forecasted foreign currency denominated third party and intercompany sales or payments. These obligations generally require GBL to exchange foreign currencies for Euros. These foreign exchange contracts are cash flow hedges of fluctuating foreign exchange rates related to material purchases. Until the purchase is recognized, the fair value of the related hedge is recorded in Other Comprehensive Income and as a hedge asset or liability, as applicable. At the time the purchase is recognized, the fair value of the related hedge is reclassified as an adjustment to purchase price variance in Cost of Goods Sold on the Condensed Combined Statements of Income.

Derivative Contracts Not Designated As Hedges for Accounting Purposes

Commodity Swaps. GBL periodically enters into commodity swap contracts to economically hedge the risk from fluctuating prices for raw materials, specifically the pass-through of market prices for silver used in manufacturing purchased watch batteries. GBL hedges a portion of the risk associated with these materials through the use of commodity swaps. The swap contracts are designated as economic hedges with the unrealized gain or loss recorded in earnings and as an asset or liability at each period

13

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 8 - DERIVATIVES (continued)

end. The unrecognized changes in fair value of the hedge contracts are adjusted through earnings when the realized gains or losses affect earnings upon settlement of the hedges. At December 30, 2018, GBL had a series of commodity swaps outstanding through February 2020. GBL had the following outstanding commodity swap contracts outstanding as of December 30, 2018 and of September 30, 2018, respectively:

	As of December 30, 2018				As of September 30, 2018
(in millions, except notional)	Notional Amount		Contract Value		Notional Amount		Contract Value
Silver		21.7 troy oz.	$	0.4		30.4 troy oz.	$	0.5

Fair Value of Derivative Instruments

The fair value of outstanding derivative instruments is as follows:

(in millions)	Line Item	As of December 30, 2018		As of September 30, 2018
Derivative Assets
Commodity swaps - designated as hedge	Other receivables	$	—	$	0.1
Commodity swaps - designated as hedge	Deferred charges and other		—		—
Foreign exchange contracts - designated as hedge	Other receivables		0.4		0.5
Total Derivative Assets		$	0.4	$	0.6
Derivative Liabilities
Commodity swaps - designated as hedge	Accounts payable	$	3.4	$	3.3
Commodity swaps - designated as hedge	Other long-term liabilities		0.1		0.4
Foreign exchange contracts - designated as hedge	Accounts payable		—		—
Foreign exchange contracts - designated as hedge	Other long-term liabilities		—		—
Total Derivative Liabilities		$	3.5	$	3.7

GBL is exposed to the risk of default by the counterparties with which it transacts and generally does not require collateral or other security to support financial instruments subject to credit risk. GBL monitors counterparty credit risk on an individual basis by periodically assessing each such counterparty’s credit rating exposure. The maximum loss due to credit risk equals the fair value of the gross asset derivatives that are concentrated with certain domestic and foreign financial institution counterparties. GBL considers these exposures when measuring its credit reserves on its derivative assets, which was less than $0.1 million for the three month period ended December 30, 2018 and the year ended September 30, 2018.

GBL standard contracts do not contain credit risk related contingent features whereby GBL would be required to post additional cash collateral as a result of a credit event. However, GBL is typically required to post collateral in the normal course of business to offset its liability positions. As of December 30, 2018 and September 30, 2018, there was $1.1 million of posted cash collateral and no posted standby letters of credit related to such liability positions.

The following table summarizes the impact of the effective and ineffective portions of designated hedges and the gain (loss) recognized in the Condensed Combined Statement of Income for the three month periods ended December 30, 2018 and December 31, 2017.

	Effective Portion
For three month periods ended December 30, 2018 (in millions)	Gain (Loss) in OCI			Reclassified to Earnings					Ineffective portion
				Line Item		Gain (Loss)			Line Item		Gain (Loss)
Commodity swaps	$	(0.8	)		Cost of goods sold	$	(1.0	)		Cost of goods sold	$	(1.6	)
Foreign exchange contracts		1.3			Cost of goods sold		1.2			Cost of goods sold		—
Total	$	0.5				$	0.2				$	(1.6	)
	Effective Portion
For three month periods ended December 31, 2017 (in millions)	Gain (Loss) in OCI			Reclassified to Earnings					Ineffective portion
				Line Item		Gain (Loss)			Line Item		Gain (Loss)
Commodity swaps	$	1.2			Cost of goods sold	$	1.2			Cost of goods sold	$	—
Foreign exchange contracts		(0.5	)		Cost of goods sold		(1.7	)		Cost of goods sold		—
Total	$	0.7				$	(0.5	)			$	—

14

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 9 - EMPLOYEE BENEFIT PLANS

Shared Plans

GBL participates in U.S. and Non-U.S. defined benefit pension plans as though they are participants in a multi-employer plan with the other businesses of SBH. The proportionate share of cost for these plans is allocated based on active employee headcount. The following is a summary of costs reflected in the Condensed Combined Statements of Income. These figures do not represent cash payment to the parent company or its plans.

	For three month periods ended
(in millions)	December 30, 2018			December 31, 2017
US Plan		(0.2	)		—
Non-US Plan		0.5			0.5
		0.3			0.5

The following table contains the components of net periodic benefit cost for GBL’s single employer plans for the three month periods ended December 30, 2018 and December 31, 2017.

	For three month periods ended
(in millions)	December 30, 2018		December 31, 2017
Service cost	$	—	$	—
Interest cost		0.1		0.1
Recognized net actuarial loss		—		—
Net periodic benefit cost	$	0.1	$	0.1
Weighted average assumptions
Discount rate		10.22 - 13.20%		13.50 - 13.81%
Rate of compensation increase		5.50%		5.50%

The discount rate is used to calculate the projected benefit obligation. The discount rate used is based on the rate of return on government bonds as well as current market conditions of the respective countries where the plans are established. There are no dedicated plan assets in single employer plans.

NOTE 10 - INCOME TAXES

Three Month Periods Ended December 30, 2018 and December 31, 2017 (unaudited)

The effective tax rate for the three month periods ended December 30, 2018 and December 31, 2017 was 30.3% and -12.9% respectively.

The estimated annual effective tax rate applied to the three month period ended December 30, 2018 differs from the U.S. federal statutory rate principally due to income earned outside the U.S. that is subject to the U.S. tax on global intangible income (“GILTI”), nondeductible expenses, and net operating losses outside the U.S. that are not more-likely-than-not to result in a net tax benefit.

The Tax Cuts and Jobs Act of December 22, 2017 (the “Tax Reform Act”) reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% effective January 1, 2018. The Tax Reform Act also provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”), payable in installments over 8 years. During the three month period ended December 30, 2017, GBL recorded a $23.3 million tax benefit from revaluing its ending net U.S. deferred tax liabilities as a result of the reduction in the U.S. corporate income tax rate from 35% to 21%, and recognized $7.9 million of income tax expense for GBL’s share of the tax from the one-time deemed mandatory repatriation.

In response to the enactment of the Tax Reform Act, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. SAB 118 allows registrants to record provisional amounts during a one year measurement period in a manner similar to accounting for business combinations. The measurement period ended December 30, 2018 and the Company did not recognize changes to the provisional tax impacts during the three month period ended December 30, 2018. Portions of the Tax Reform Act are unclear or have not yet been clarified and interpretations and regulations continued to be issued, which could have a material impact on what the Company has recorded to date.

NOTE 11 – SHARE BASED COMPENSATION

GBL participates in the Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Award Plan (the “Equity Plan”) of the Parent through the use of time based and performance-based Restricted Stock Units (“RSUs”). Compensation expense of its RSUs is measured based on the fair value of the award as determined by the market price of SBH shares of common stock on the grant date; and recognizes those costs on a straight-line basis over the requisite period of the awards. Certain RSUs are performance-based awards that are dependent upon achieving specified financial metrics of the consolidated SBH group over a designated period of time. SBH also provides for a portion of its annual management incentive compensation plan to be paid in common stock of SBH, in lieu of cash payment. In addition to stock compensation for employees directly attributable to GBL, stock compensation for employees attributable to corporate and shared operations were allocated on a proportional basis of combined sales and headcount.

Share based compensation expense recognized by GBL for the three month periods ended December 30, 2018 and December 31, 2017 were $2.3 million and $0.7 million, respectively. The remaining unrecognized pre-tax compensation cost for GBL is not material.

15

SPECTRUM BRANDS GLOBAL BATTERIES & LIGHTS DIVISION

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 12 - COMMITMENTS AND CONTINGENCIES

GBL is a defendant in various litigation matters generally arising out of the ordinary course of business. GBL does not believe that any of the matters or proceedings presently pending will have a material adverse effect on its results of operations, financial condition, liquidity, or cash flows.

GBL has provided for the estimated costs of $0.6 million as of December 30, 2018 and $0.6 million as of September 30, 2018, respectively, associated with environmental remediation activities at some of its current and former manufacturing sites. GBL believes that any additional liability in excess of the amounts provided that may result from resolution of these matters, will not have a material adverse effect on the combined financial condition, results of operations or cash flows of GBL.

NOTE 13 - RELATED PARTIES

GBL does not sell or purchase product from other businesses of SBH. The Condensed Combined Statements of Income include allocations for certain support functions that are provided on a centralized basis by the Parent and subsequently recorded at the business unit level, such as expenses related to employee benefits, finance, human resources, risk management, information technology, facilities, legal, tax and treasury management, corporate compliance and risk management, among others. These expenses have been allocated to GBL on the basis of direct usage when identifiable, with the remainder allocated on a proportional basis of combined sales, headcount or other measures of GBL or its Parent. Management believes the assumptions underlying the condensed combined financial statements, including the assumptions regarding allocating general corporate expenses from the Parent, are reasonable. Nevertheless, the condensed combined financial statements may not include all actual expense that would have been incurred by GBL and may not reflect the combined results of operations, financial position and cash flows had it been a stand-alone company during the periods presented. Actual costs that would have been incurred if GBL had been a stand-alone company would depend upon multiple factors, including organization structure and strategic decisions made in various areas, including information technology and infrastructure. For the three month periods ended December 30, 2018 and December 31, 2017, general corporate expenses allocated to GBL were $1.8 million and $2.1 million, respectively. General corporate expenses are recognized as General & Administrative Expenses on the Combine Statements of Income.

SBH has shared assets that consist of shared service facilities, shared distribution centers, and sales offices, among others, that are used for SBH operations including the operations of GBL. The property, plant and equipment for shared assets predominantly used by GBL are recognized in the Condensed Combined Balance Sheets and the cost for usage by other business of SBH was recognized as a reduction to General & Administrative Expenses on the Condensed Combined Statements of Income. For the three month periods ended December 30, 2018 and December 31, 2017, charges to other SBH businesses for shared assets were $0.6 million and $0.6 million respectively.

GBL also uses corporate facilities and technology infrastructure at SBH corporate headquarters as its global headquarters and research and development labs. There were no individual businesses of SBH that are considered a predominant user of the SBH corporate headquarters; and therefore a proportionate share of the costs for the corporate headquarters was allocated to GBL for rent and use of shared assets. Shared asset cost for the use of the SBH headquarters is recognized as General & Administrative Expenses on the Condensed Combined Statements of Income. For the three month periods ended December 30, 2018 and December 31, 2017, the shared asset cost was $1.7 million and $2.2 million, respectively.

GBL participates in a centralized cash management and financing programs of SBH. Disbursements are made through centralized accounts payables which are operated by SBH. Cash receipts are transferred to centralized accounts, also maintained by SBH. As cash is disbursed and received by SBH, it is accounted for by GBL through SBH Net Parent Investment. All short and long-term debt is financed by SBH and financing decisions for subsidiaries is determined by centralized SBH treasury operations, with the exception of certain capital lease obligations directly attributable to GBL operations that are recognized on the Condensed Combined Balance Sheets.

NOTE 14 – SUBSEQUENT EVENTS

In connection with the preparation of the condensed combined financial statements, GBL evaluated subsequent events through February 24, 2020 the date the unaudited condensed combined financial statements were available to be issued.

On January 2, 2019 Spectrum Brands Holdings, Inc., a Delaware corporation (the “Company”), completed its previously announced disposition of the Company’s global battery, lighting and portable power business (the “GBL Business”) to Energizer Holdings, Inc., a Missouri corporation (“Energizer”), pursuant to the Amended and Restated Acquisition Agreement, dated as of November 15, 2018 (the “GBL Agreement”), by and between the Company and Energizer (the “GBL Transaction”).

Pursuant to the terms and conditions of the GBL Agreement, (i) Energizer agreed that it would, to the extent required to obtain regulatory approval of the GBL Transaction, divest the Varta consumer battery business, including manufacturing and distribution facilities in Germany, of the GBL Business (the “Varta Business”), and (ii) Spectrum agreed to share in any decline in value on the divestiture of the Varta Business below the targeted sale price, up to a maximum of USD $200 million.

On May 29, 2019, Energizer entered into an agreement to sell the Varta Business and, in accordance with the terms and conditions of the GBL Agreement, Spectrum was obliged to contribute USD $197 million to Energizer in connection with the sale of the Varta Business. The sale transaction was completed on January 2, 2020.

16

EX-99.5

Exhibit 99.5

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

(Combined Carve-Out Financial Statements of Global Auto Care Division of Spectrum Brands Holdings, Inc.)

INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

As of December 30, 2018 and for the three month periods ended December 30, 2018 and December 31, 2017 (Unaudited)

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

(Condensed Combined Carve-Out Financial Statements of Global Auto Care Division of Spectrum Brands Holdings, Inc.)

TABLE OF CONTENTS

	Page
Condensed Combined Balance Sheets		1
Condensed Combined Statements of Income		2
Condensed Combined Statements of Comprehensive Income		2
Condensed Combined Statements of Net Parent Investment		3
Condensed Combined Statements of Cash Flows		4
Notes to Condensed Combined Financial Statements		5

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

Condensed Combined Balance Sheets

As of December 30, 2018 (unaudited) and September 30, 2018 (audited)

	As of December 30,			As of September 30,
(in millions)	2018			2018
Assets
Trade receivables, net	$	37.6		$	55.3
Other receivables		4.4			4.6
Inventories		78.9			74.4
Prepaid expenses and other current assets		2.9			3.9
Total current assets		123.8			138.2
Property, plant and equipment, net		59.3			58.2
Deferred charges and other		1.8			1.8
Goodwill		734.3			841.8
Intangible assets, net		381.6			384.4
Total assets	$	1,300.8		$	1,424.4
Liabilities and Net Parent Investment
Current portion of capital lease obligations	$	0.3		$	0.4
Accounts payable		29.6			54.6
Accrued wages and salaries		3.0			3.7
Accrued expenses and other		9.7			16.4
Total current liabilities		42.6			75.1
Capital lease obligations, net of current portion		31.8			32.3
Deferred income taxes		71.2			72.4
Other long-term liabilities		2.1			2.1
Total liabilities		147.7			181.9
Net parent investment		1,164.0			1,248.8
Accumulated other comprehensive loss		(10.9	)		(6.3	)
Total net parent investment		1,153.1			1,242.5
Total liabilities and net parent investment	$	1,300.8		$	1,424.4

See accompanying notes to the interim condensed combined financial statements.

1

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

Condensed Combined Statements of Income

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

	For the three months period ended
(in millions)	December 30, 2018			December 31, 2017
Net sales		65.5			68.9
Cost of goods sold		38.8			35.8
Restructuring and related charges		—			1.7
Gross profit		26.7			31.4
Selling		4.6			4.5
General and administrative		19.3			17.5
Research and development		1.1			1.1
Restructuring and related charges		—			2.4
Write-off for impairment of goodwill		107.2			—
Total operating expenses		132.2			25.5
Operating (loss) income		(105.5	)		5.9
Interest expense		0.5			0.6
(Loss) income before income taxes		(106.0	)		5.3
Income tax (benefit) expense		0.3			(35.0	)
Net (loss) income		(106.3	)		40.3

See accompanying notes to the interim condensed combined financial statements.

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

Condensed Combined Statements of Comprehensive Income

For the three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

	For the three month periods ended
(in millions)	December 30, 2018			December 31, 2017
Net (loss) income		(106.3	)		40.3
Other comprehensive (loss) income
Foreign currency translation (loss) income		(5.0	)		—
Unrealized (loss) gain on derivative instruments
Unrealized gain on hedging activity before reclassification		0.6			0.3
(Loss) gain on hedging activity reclassified from accumulated other comprehensive income		(0.1	)		0.1
Unrealized gain on hedging instruments after reclassification		0.5			0.4
Deferred tax effect		0.1			0.1
Net unrealized gain on hedging derivative instruments		0.4			0.3
Net change in comprehensive (loss) income		(4.6	)		0.3
Comprehensive (loss) income		(110.9	)		40.6

See accompanying notes to the interim condensed combined financial statements.

2

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

Condensed Combined Statement of Net Parent Investment

Three month period ended December 30, 2018

(unaudited)

(in millions)	Net Parent Investment			Accumulated Other Comprehensive Loss			Total
Balances as of September 30, 2018	$	1,248.8		$	(6.3	)	$	1,242.5
Net loss		(106.3	)		—			(106.3	)
Foreign currency translation loss		—			(5.0	)		(5.0	)
Unrealized loss on hedging activity		—			0.4			0.4
Net transfer to Parent		21.5			—			21.5
Balances as of December 30, 2018	$	1,164.0		$	(10.9	)	$	1,153.1

See accompanying notes to the interim condensed combined financial statements.

3

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

Condensed Combined Statements of Cash Flows

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

	For the three month periods ended
(in millions)	December 30, 2018			December 31, 2017
Cash flows from operating activities
Net (loss) income	$	(106.3	)	$	40.3
Adjustments to reconcile net income to net cash from operating activities:
Depreciation on property plant and equipment		1.7			1.3
Amortization of intangible assets		2.6			2.6
Share based compensation		0.4			0.5
Write-off for impairment of goodwill		107.2			—
Deferred tax benefit		(1.2	)		(39.9	)
Net changes in operating assets and liabilities:
Receivables		17.4			8.9
Inventories		(4.5	)		(23.3	)
Prepaid expenses and other current assets		1.0			1.5
Accounts payable and accrued liabilities		(29.3	)		1.6
Other		(3.0	)		(4.7	)
Net cash (used) provided by operating activities		(14.0	)		(11.2	)
Cash flows from investing activities
Purchases of property, plant and equipment		(2.2	)		(1.8	)
Other investing activities		—			—
Net cash used by investing activities		(2.2	)		(1.8	)
Cash flows from financing activities
Net transfer to Parent		16.4			13.0
Payment of capital lease obligations		(0.2	)		—
Net cash (used) provided by financing activities		16.2			13.0
Net change in cash and cash equivalents		—			—
Cash and cash equivalents, beginning of period		—			—
Cash and cash equivalents, end of period	$	—		$	—
Non cash investing activities
Acquisition of property, plant and equipment through capital leases	$	0.7		$	—

See accompany notes to the interim condensed combined financial statements

.

4

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

NOTES TO THE INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 1 - DESCRIPTION OF BUSINESS

The accompanying interim condensed combined financial statements include the historical accounts of Spectrum Global Auto Care Division (“GAC”) of Spectrum Brands Holdings, Inc. (“SBH” or “Parent”). GAC consists of auto appearance, performance, and A/C recharge products sold primarily to big-box auto, auto specialty retail, mass retailers, food and drug retailers, and small regional and convenience store retailers. Auto appearance products include protectants, wipes, tire and wheel care products, glass cleaners, leather care products, air fresheners and washes designated to clear, shine, refresh and protect interior and exterior automobile surfaces under the brand name Armor All®. Auto performance products include STP® branded fuel and oil additives, functional fluids and automotive appearance products. A/C recharge products include do-it-yourself automotive air conditioner recharge products under the A/C Pro® brand name, along with other refrigerant and oil recharge kits, sealants and accessories.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

Basis of Presentation

The accompanying interim condensed combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) from the interim condensed combined financial statements and accounting records of SBH using the historical results of GAC segment operations and historical cost basis of the assets and liabilities that comprise GAC. These financial statements have been prepared solely to demonstrate its historical results of operations, financial position, and cash flows for the indicated periods under SBH’s management. All intercompany balances and transactions within GAC have been eliminated. Transactions and balances between GAC and SBH and its subsidiaries are reflected as related party transactions and are considered to be effectively settled at the time the transaction is incurred, therefore no intercompany balances are reflected as outstanding on the interim condensed combined financial statements. Discrete financial information was not available for GAC within certain legal entities of SBH with shared operations including the operations of GAC and other SBH businesses. Certain transactions of SBH are not recorded by GAC but at the legal entity level of the Parent or its subsidiary. For shared entities for which discrete financial information was not available, allocation methodologies were applied to certain accounts to allocate amount to GAC discussed further in Note 13 – Related Parties.

Certain costs related to GAC have been allocated from the Parent. Those costs are derived from multiple levels of the organization including geographic business unit expenses, product line expenses, shared corporate expenses, and fees from the Parent. Costs incurred by the Parent for the acquisition and integration of the GAC business have been excluded from the interim condensed combined statements if they did not benefit the operations of GAC. GAC receives service and support functions from SBH and its subsidiaries and are dependent upon SBH and its subsidiaries’ ability to perform these services and support functions. The costs associated with these services and support functions have been allocated to GAC using the most meaningful respective allocation methodologies which were primarily based on proportionate sales, headcount, direct labor costs or other measures of GAC or its Parent. These allocated costs are primarily related to corporate administrative expenses, employee related costs including pensions and other benefits for corporate and shared employees, and rental and usage fees for shared assets for the functional groups such as accounting and finance services, human resources, information technology, facilities, legal services and contract support, tax and treasury management, corporate compliance and risk management, and other corporate and other corporate and infrastructural services.

The assets and liabilities related to GAC are primarily specifically identified as assets and liabilities of the business. In some instances, assets and liabilities may be considered shared with GAC other businesses of the Parent or its subsidiary, where they are allocated based upon an allocation methodology that is primarily based on proportionate sales, headcount or other measures of GAC or its Parent. In particular, property plant and equipment not specifically identified as a component of GAC operations, but shared with GAC and other businesses of the Parent or its subsidiary, are allocated to the predominant user of the facility, if one can be determined. Shared assets consist of corporate headquarters, shared service facilities, shared distribution centers, and sales offices, among others. Predominant user is based upon the proportionate net sales, headcount, square footage, and other measures deemed reasonable to define usage of the assets. When GAC is recognized as the predominant user of the assets, the asset is recognized as property plant and equipment on the Condensed Combined Balance Sheet, a usage charge is assessed on the other businesses of SBH for use of the asset and recognized as a reduction to general & administrative expenses on the Condensed Combined Statement of Income. When GAC is not recognized as the predominant user of the asset, the asset is not recognized on the Condensed Combined Balance Sheet.

SBH uses a centralized approach to cash management and financing its operations. As a result, substantially all cash is commingled with corporate funds and is not specifically identifiable to GAC. The net results of these transactions between GAC and SBH are reflected as net parent investment in the Condensed Combined Balance Sheets. In addition, the net parent investment represents SBH’s interest in the net assets of GAC and the cumulative net investment by SBH in GAC through the dates presented. Outside of certain capital leases of GAC operations, there is no debt that is specifically identified or attributable to GAC and therefore not recognized on the Condensed Combined Balance Sheet.

Management believes the assumptions and allocations underlying the interim condensed combined financial statements are reasonable and appropriate under the circumstances. The expenses and cost allocations have been determined on a basis considered by SBH to be a reasonable reflection of the utilization of services provided to or the benefit received by the GAC during the periods presented relative to the total costs incurred by SBH. However, the amounts recorded for these transactions and allocations are not necessarily representative of the amount that would have been reflected in the financial statements had GAC been an entity that operated independently of SBH. Actual costs that would have been incurred if the Company has been a stand-alone company would depend upon multiple factors, including organization structure and strategic decision made in various areas, including information technology and infrastructure. Consequently, future results of operations should the GAC be separated from SBH will include costs and expenses that may be materially different than historical results of operations, financial position, and cash flows. Accordingly, the financial statements for these periods are not indicative of the future results of operations, financial position, and cash flows.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Combination

All significant intercompany accounts and transactions within GAC have been eliminated in the preparation of the accompanying interim condensed combined financial statements. All significant intercompany transactions with SBH are deemed to have been paid in the period the cost was incurred.

5

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

NOTES TO THE INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

Cash and Cash Equivalents

Treasury activities, including activities related to GAC, are centralized by SBH such that cash collections are distributed to SBH and reflected as net parent investment. As a result, GAC does not recognize cash on its interim condensed combined financial statements.

Receivables

Trade receivables are carried at net realizable value. GAC extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history, but generally does not require collateral. GAC monitors its customers’ credit and financial condition based on changing economic conditions and will make adjustments to credit policies as required. Provisions for losses on uncollectible trade receivables are determined based on ongoing evaluations of GAC’s receivables, principally on the basis of historical collection experience and evaluations of the risks of nonpayment or return for a given customer. The allowance for uncollectible receivables was $1.3 million as of December 30, 2018 and $1.0 million as of September 30, 2018.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost of inventories is determined using the first-in, first out (FIFO) method. See Note 5 - Inventory for further detail.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is calculated on the straight-line basis over the estimated useful lives of the assets. Property, plant and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset; such amortization is included in depreciation expense. GAC uses accelerated depreciation methods for income tax purposes. Useful lives for property, plant and equipment are as follows:

Asset Type	Range
Buildings and improvements	20 - 40 years
Machinery and equipment	2 - 15 years

Expenditures which substantially increase value or extend useful lives are capitalized. Expenditures for maintenance and repairs are charged to operations as incurred. Gains and losses are recorded on the disposition or retirement of property, plant and equipment based on the net book value and any proceeds received.

Long-lived fixed assets held and used are reviewed for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Circumstances such as the discontinuation of a product or product line, a sudden or consistent decline in the sales forecast for a product, changes in technology or in the way an asset is being used, a history of operating or cash flow losses or an adverse change in legal factors or in GAC climate, among others, may trigger an impairment review. If such indicators are present, GAC performs undiscounted cash flow analyses to determine if impairment exists. The asset value would be deemed impaired if the undiscounted cash flows generated did not exceed the carrying value of the asset. If impairment is determined to exist, any related impairment loss is calculated based on fair value. There were no triggering events identified that necessitated an impairment test over property, plant and equipment other than the recognition of an impairment on goodwill. There was no impairment loss recognized on property, plant and equipment. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. See Note 6 - Property, plant and equipment for further detail.

Derivative Financial Instruments

Derivative financial instruments are used by GAC principally in the management of its foreign currency exchange rate exposures. GAC does not hold or issue derivative financial instruments for trading purposes. For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the effective portion of the derivative is reported as a component of Other Comprehensive Income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. See Note 9 – Derivatives for further detail.

Goodwill

Goodwill reflects the excess of acquisition cost over the aggregate fair value assigned to identifiable net assets acquired. Goodwill is not amortized, but instead is assessed for impairment at least annually and as triggering events or indicators of potential impairment are identified. Goodwill has been assigned to reporting units for purposes of impairment testing based upon the relative fair value of the asset to reporting unit. GAC consist of a single reporting unit.

An annual impairment test is performed in the fourth quarter of its fiscal year. The Company may first perform a qualitative assessment to determine if it is more likely than not that an impairment exists to necessitate the need for a quantitative assessment. When a qualitative assessment is performed and an impairment is determined to be more likely than not, the quantitative assessment is performed by comparing the fair value of the business to its carrying value, including goodwill. In estimating the fair value, we use a discounted cash flow methodology, which requires us to estimate future revenues, expenses, and capital expenditures and make assumptions about our weighted average cost of capital and perpetuity growth rate, among other variables. If the fair value of a reporting unit is less than its carrying value, an impairment loss would be recognized equal to that excess; however the loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. See Note 7 - Goodwill and Intangible Assets for further detail.

6

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

NOTES TO THE INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

Intangible Assets

Intangible assets are recorded at cost or at estimated fair value if acquired in a business combination. Customer lists, proprietary technology and certain trade name intangibles are amortized, using the straight-line method, over their estimated useful lives. The range and weighted average useful lives for definite-lived intangibles assets are as follows:

Asset Type	Range		Weighted Average
Customer relationships		10 - 15 years		14 years
Technology assets		8 - 10 years		10 years

Definite-lived intangible assets held and used are reviewed for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be recoverable. If indicators of potential impairment are identified, GAC performs an undiscounted cash flow analysis to determine if impairment exists. The asset value would be deemed impaired if the undiscounted cash flows expected to be generated by the asset did not exceed its carrying value. If impairment is determined to exist, any related impairment loss is calculated based on fair value. There were no triggering events that necessitated an impairment test of definite-lived intangible assets other than the recognition of an impairment on goodwill. There was no impairment loss recognized on definite-lived intangible assets.

Certain trade name intangible assets have an indefinite life and are not amortized; but instead are assessed for impairment at least annually and as triggering events or indicators of potential impairment are identified. GAC performs its annual impairment test in the fourth quarter of its fiscal year. Impairment of indefinite lived intangible assets is assessed by comparing the estimated fair value of the identified trade names to their carrying value to determine if potential impairment exists. If the fair value is less than the carrying value, an impairment loss is recorded for the excess. 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. See Note 7 - Goodwill and Intangible Assets for further detail.

Revenue Recognition

Refer to Recently Issued Accounting Standards in Note 2 for a further description of the revenue recognition policies applied by GAC.

GAC has a broad range of customers including many large retail outlet chains and automotive specialty stores, three of which accounts for a percentage of its sales volume exceeding 10% individually. This major customer represented approximately 24% and 22% of net sales for the three month periods ended December 30, 2018 and December 31, 2017, respectively.

The Company generates all of its revenue from contracts with customers. The following table disaggregates our revenue by the GAC’s key revenue streams and geographic region (based upon destination):

(in millions)	As of December 30, 2018
North America	$	48.9
EMEA		5.0
LATAM		4.8
APAC		6.8
Total	$	65.5

Shipping and Handling Costs

Shipping and handling costs include costs incurred with GAC third-party carriers to transport products to customers and salaries and overhead costs related to activities to prepare GAC’s products for shipment at distribution facilities. Shipping and handling costs are included in Selling Expenses in the Condensed Combined Statements of Income.

Advertising Costs

Advertising costs include agency fees and other costs to create advertisements, as well as costs paid to third parties to print or broadcast advertisements and are expensed as incurred. Advertising costs are included in Selling Expenses in the Condensed Combined Statements of Income.

Research and Development Costs

Research and development costs are charged to expense in the period they are incurred.

7

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

NOTES TO THE INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

Income Taxes

Income taxes as presented herein attribute current and deferred income taxes of SBH to the GAC stand-alone financial statements in a manner that is systematic, rational, and consistent with the asset and liability method prescribed by ASC 740. Accordingly, GAC income tax provision was prepared following the separate return method. The separate return method applies ASC 740 to the stand-alone financial statements of each member of the combined group as if the group member were a separate taxpayer and a stand-alone enterprise. As a result, actual tax transactions included in the interim condensed combined financial statements of SBH may not be included in the separate Combined Financial Statements of GAC. Similarly, the tax treatment of certain items reflected in the separate Combined Financial Statements of GAC may not be reflected in the interim condensed combined financial statements and tax return of SBH; therefore, such items as net operating losses, credit carryforwards, and valuation allowances may exist in the stand-alone financial statements that may or may not exist in the SBH consolidated financial statements.

The breadth of GAC’s operations and the global complexity of tax regulations require assessments of uncertainties and judgements in estimating the taxes that GAC will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcome of tax litigation and resolution of disputes arising from federal, state and international tax audits in the normal course of business.

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of GAC assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. It is the Parent’s policy to include accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes.

In general, the taxable income (loss) of U.S. GAC entities was included in SBH’s U.S. tax returns and, where applicable, in certain jurisdictions around the world. As such, separate income tax returns were not prepared for many GAC entities. Consequently, income taxes currently payable are deemed to be payable to SBH in the period the liability arose and income taxes currently receivable are deemed to receivable from SBH in the period that a refund could have been recognized by GAC had GAC been a separate taxpayer.

Foreign Currency Translation

For foreign entities where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-period exchange rates and the resulting translation adjustments are reported, net of their related tax effects, as a component of Net Parent Investment. Assets and liabilities denominated in other than the functional currency are re-measured into the functional currency prior to translation into USD and the resultant exchange gains or losses are included in income in the period in which they occur. Income and expenses are translated into USD at average exchange rates in effect during the period. Foreign currency transaction gains and losses for transactions denominated in a currency other than the functional currency are recorded in Other Non-Operating Expense, Net on the Combined Statements of Income.

Net Parent Investment

GAC equity on the Combined Balance Sheet represents the Parent’s net investment in GAC and is presented as Net Parent Investment in lieu of stockholders’ equity. The Statement of Changes in Net Parent Investment account includes assets and liabilities incurred by the Parent on behalf of GAC such as accrued liabilities related to corporate allocations including administrative expenses for legal, accounting, treasury, information technology, human resources and other services. Other assets and liabilities recorded by Parent, whose related expenses have been pushed down to GAC, are also included in Net Parent Investment.

All transactions reflected in Net Parent Investment in the accompanying Combined Balance Sheet have been considered cash receipts and payments for purposes of the Combined Statements of Cash Flows and are reflected in financing activities in the accompanying Combined Statements of Cash Flows.

Earnings per share data has not been presented in the accompanying interim condensed combined Financial Statements because GAC does not operate as a separate legal entity with its own capital structure.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU requires revenue recognition to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue recognition model requires identifying the contract and performance obligations, determining the transaction price, allocating the transaction price to performance obligations and recognizing the revenue upon satisfaction of performance obligations. GAC adopted ASU 2014-09 and all the related amendments on October 1, 2018, using the modified retrospective transition method. GAC recognized the cumulative effect of applying the new revenue standard as a reduction of $ 0.5 million, net of tax, to the opening balance of Accumulated Earnings at the beginning of the fiscal year 2019. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. GAC does not expect the adoption of Topic 606 to have a material impact to its period revenue or net income on an ongoing basis.

The following are changes to GAC’s revenue recognition accounting policies from those previous disclosed in Note 2 – Significant Accounting Policies and Practices to the interim condensed combined financial statements for the three month period ended December 30, 2018.

Product Sales

Our customers mostly consist of retailers, wholesalers and distributors, and construction companies with the intention to sell and distribute to an end consumer. Spectrum recognizes revenue from the sale of products upon transfer of control to the customer. For the majority of our product sales, the transfer of control is recognized when we ship the product from our facilities to the customer. Timing of revenue recognition for a majority of GAC’s sales continues to be consistent. Previously, GAC deferred recognition of revenue if title and risk of loss were retained upon shipment, but the customer arranged and paid for freight such that they had physical possession and control. Under Topic 606, GAC recognizes revenue at the time of shipment for these transactions. This change did not have a material impact on GAC’s adoption on October 1, 2018 or comparability to revenue in prior periods.

8

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

NOTES TO THE INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

Licensing Revenue

GAC also sells licenses of its brands to third-party sellers and manufacturers for the development, production, sales & distribution of products that are not directly managed or offered by GAC. GAC maintains all right of ownership over the intellectual property and contracts with its customer over the use of the intellectual property in their operations. Under ASC 606, revenue derived from the right-to-access licenses is recognized using the over time revenue recognition method. We elected to recognize revenue under the ‘as-invoiced’ practical expedient method at the amount we are able to bill using a time-elapsed measure of progress. GAC has assessed that recognizing revenue based on a time-elapsed measure of progress, taking into consideration any minimum guarantee provisions under the contract, appropriately depicts its performance of providing access to GAC’s brands, trade names, logos, etc. This change did not have a material impact on GAC’s adoption of the new standard on October 1, 2018 and comparability to revenue recognition in prior periods.

Variable Consideration and Cash Paid to Customers

GAC measures revenue as the amount of consideration for which it expects to be entitled in exchange for transferring goods or providing services. Certain retailers and/or end customers may receive cash or non-cash incentives such as rebates, volume or trade discounts, cooperative advertising, price protection, service level penalties, and other customer-related programs, which are accounted for as variable consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of revenue recognized will not occur when the uncertainty is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available. The estimated liability for sales discounts and other programs and allowances is calculated using the expected value method or most likely amount and recorded at the time of sale as a reduction of net sales.

GAC also enters into various arrangements, primarily with retail customers, which require GAC to make upfront cash payments to secure the right to distribute through such customers. GAC capitalizes these payments, provided they are supported by a volume-based arrangement with the retailer with a period of 12 months or longer, and amortizes the associated payment over the appropriate time or volume-based term of the arrangement. Capitalized payments are recognized as a contract asset and are reported in the Consolidated Statements of Financial Position as Deferred Charges and Other Assets and related amortization is treated as a reduction in Net Sales.

Product returns

In the normal course of business, GAC business may allow customers to return product per the provisions in a sale agreement. Estimated product returns are recorded as a reduction in reported revenues at the time of sale based upon historical product return experience, adjusted for known trends, to arrive at the amount of consideration expected to receive. For the anticipated value of the returns, the adoption of Topic 606 resulted in the recognition of a return asset included in the Other Current Assets and the returns liability recognized in Other Current Liabilities. GAC recognized an expected returns liability of $0.7 million as of December 30, 2018, most of which GAC does not expect or anticipate a returned asset.

Practical Expedients and Exemptions

• GAC accounts for shipping and handling activities which occur after control of the related goods transfers as fulfillment activities instead of assessing such activities as performance obligations. The use of the practical expedient did not impact the accounting for the adoption of Topic 606.

• GAC does not adjust the promised amount of consideration for the effects of a significant financing component, as the period between the transfer of a promised good or service to a customer and the customer’s payment for the good or service will be one year or less.

• GAC does not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer.

• GAC does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period is immaterial.

• GAC generally expenses sales commissions and other contract and fulfillment costs when the incurred amortization period would have been less than one year. GAC records these costs within selling, general and administrative expenses. For costs amortized over a period longer than one year, such as fixtures which are much more permanent in nature, GAC will continue to defer and amortize over the supportable period based upon historical assumptions and analysis. The costs for permanent displays are incorporated into the pricing of product sold to customer.

• GAC excludes all sales taxes that are assessed by a governmental authority from the transaction price.

In January 2017, the FASB issued ASU No. 2018-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the test for goodwill impairment by removing Step 2 from the goodwill impairment test. If goodwill impairment is realized, the amount recognized will be the amount by which the carrying amount exceeds the reporting unit’s fair value; however the loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. The ASU must be applied on a prospective basis and will become effective for us beginning in the first quarter of the year ended September 30, 2021, with early adoption available. We adopted the standard during the year ended September 30, 2017, with no impact to the interim condensed combined financial statements.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which supersedes the lease requirements in ASC 840, Leases. This ASU requires lessees to recognize lease assets and liabilities on the balance sheet, as well as disclosing key information about leasing arrangements. Although the new ASU requires both operating and finance leases to be disclosed on the balance sheet, a distinction between the two types still exists as the economics of leases can vary. The ASU can be applied using a modified retrospective approach, with a number of optional practical expedients relating to the identification and classification of leases that commenced before the effective date, along with the ability to use hindsight in the evaluation of lease decisions, that entities may elect to apply. As a result, the ASU will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020, with early adoption applicable. We have not measured the impact of adoption at this point in our assessment and have not concluded on the overall materiality of the impact of adoption to the condensed combined financial statements or determined the method and timing of adoption.

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815), which changes the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The amendments in this update make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP, better aligning the entity’s risk management activities and financial reporting for hedging relationships. The ASU can only be applied prospectively and will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020, with early adoption available, based upon the Parent’s effective date requirements as a public company. We are currently assessing the impact this pronouncement will have on the condensed combined financial statements of GAC and have not yet concluded on the materiality or timing of the adoption.

9

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

NOTES TO THE INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which addresses diversity in practice with the classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update address the classification within the statement of cash flow for debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent payments made after a business combination, proceeds from the settlement of insurance claims and corporate-owned life insurance policies, distributions received from equity method investees, and beneficial interests in securitization transactions, among other separately identifiable cash flows when applying the predominance principle. GAC retrospectively adopted ASU 2016 -15 on October 1, 2018. The adoption of this standard did not have a material impact on the consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, which addresses diversity in practice with the classification and presentation of restricted cash in the statement of cash flow, classifying transfers between cash and restricted cash as operating, investing, or financing activities, or as a combination of those activities, in the statement of cash flows. The amendment requires the statement of cash flows to explain the change during the period in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents; and include with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statement of cash flows. GAC retrospectively adopted ASU 2016-18 on October 1, 2018.

In March 2017, the FASB issued ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires an employer to disaggregate the service cost component from the other components of net periodic pension costs within the statement of income. The amendment provides guidance requiring the service cost component to be recognized consistent with other compensation costs arising from service rendered by employees during the period, and all other components to be recognized separately outside of the subtotal of income from operations. Due to the adoption of ASU No. 2017-07, the components of net periodic benefit cost other than the service cost component are recognized as Other Non-Operating (Income) Expense, Net on the Statement of Income. The adoption of ASU No. 2017-07 requires a retrospective restatement of prior periods, which was inconsequential to GAC’s Condensed Consolidated Statement of Income.

In January 2016, the FASB issued ASU No. 2016-01 Financial Instruments-Overall. This new standard enhances the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. The provisions of this ASU are effective for annual reporting periods beginning after December 15, 2017, and interim reporting periods within those annual periods. This ASU is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. GAC adopted this ASU in the first quarter of fiscal 2019. The adoption of this ASU did not have a material impact on the Combined financial statements.

In October 2016, the FASB issued ASU No. 2016-16“Intra-Entity Transfers of Assets Other Than Inventory”, which eliminates the exception of recognizing, at the time of transfer, current and deferred income taxes for intra-entity asset transfers other than inventory. Upon adoption of ASU 2016-16, GAC will recognize the tax expense from the sale of that asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. The cumulative-effect adjustment, if any, would consist of the net impact from (1) the write-off of any unamortized tax expense previously deferred and (2) recognition of any previously unrecognized deferred tax assets, net of any necessary valuation allowances. GAC implemented this ASU on October 1, 2018. GAC adopted this ASU in the first quarter of fiscal 2019. The adoption of this ASU did not have a material impact on the Interim Condensed Combined financial statements.

In August 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815), which changes the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The amendments in this update make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP, better aligning the entity’s risk management activities and financial reporting for hedging relationships. The ASU can only be applied prospectively, and will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020; with early adoption available. We are currently assessing the impact this pronouncement will have on the consolidated financial statements of GAC and have not yet concluded on the materiality or timing of the adoption.

NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of the GAC’s financial assets and liabilities are defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Fair value measurements are classified using a fair value hierarchy that is based upon the observability of inputs used in measuring fair value. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed assumptions about hypothetical transactions in the absence of market data. Fair value measurements are classified under the following hierarchy:

• Level 1 - Unadjusted quoted prices for identical instruments in active markets.

• Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

• Level 3 - Significant inputs to the valuation model are unobservable.

GAC utilizes valuation techniques that attempt to maximize the use of observable inputs and minimize the use of unobservable inputs. GAC’s derivatives are valued on a recurring basis using internal models, which are based on market observable inputs including both forward and spot prices for currencies and commodities, which are generally based on quoted or observed market prices (Level 2). The fair value of certain derivative financial instruments is estimated using pricing models based on contracts with similar terms and risks. Modeling techniques assume market correlation and volatility, such as using prices of one delivery point to calculate the price of the contract’s different delivery point. In addition, by applying a credit reserve which is calculated based on credit default swaps or published default probabilities for the actual and potential asset value, the fair value of GAC’s derivative financial instrument assets reflects the risk that the counterparties to these contracts may default on the obligations. Likewise, by assessing the requirements of a reserve for non-performance which is calculated based on the probability of default by GAC, GAC adjusts its derivative contract liabilities to reflect the price at which a potential market participant would be willing to assume GAC’s liabilities. GAC has not changed the valuation techniques used in measuring the fair value of any financial assets and liabilities during the year. The fair values of derivative instruments are as follows. See Note 9 – Derivatives for additional detail:

10

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

NOTES TO THE INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

	As of December 30, 2018				As of September 30, 2018
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Derivative Liabilities	$	0.1	$	0.1	$	0.1	$	0.1

The carrying values of receivables, payables and accrued expenses approximate fair value based on the short-term nature of these assets and liabilities. The carrying value of capital lease obligations approximate fair value. The carrying values of goodwill, intangible assets and other long-lived assets are tested annually or more frequently if an event occurs that indicates an impairment loss may have been incurred, using fair value measurements with unobservable inputs (Level 3).

NOTE 4 – RESTRUCTURING AND RELATED COSTS

During the third quarter of the year ended September 30, 2016, the Company implemented a series of initiatives to consolidate certain operations and reduce operating costs. These initiatives included headcount reductions and the exit of certain facilities. Total costs associated with these initiatives were $46.6 million to date and was considered completed as of December 30, 2018. The following summarizes restructuring costs for three month period ended December 31, 2017 and December 30, 2018, and cumulative costs of restructuring initiatives as of December 30, 2018 by cost type:

(in millions)	Termination Benefits			Other Costs		Total
For the three month period ended December 30, 2018		—			—		—
For the three month period ended December 31, 2017		(0.1	)		4.2		4.1
GAC business rationalization initiatives cumulative costs through December 30, 2018		1.7			44.9		46.6

The following is a roll forward of the accrual related to all restructuring and related activities, included within Other Current Liabilities, by cost type, for three month period ended December 30, 2018.

(in millions)	Termination Benefits			Other Costs			Total
Accrual balance at September 30, 2018	$	0.7		$	1.1		$	1.8
Provisions		—			—			—
Cash expenditures		(0.2	)		(0.9	)		(1.1	)
Accrual balance at December 30, 2018		0.5			0.2			0.7

Termination costs consist of involuntary employee termination benefits and severance pursuant to a one-time benefit arrangement recognized as part of a restructuring initiative. Other costs consist of non-termination type costs related to restructuring initiatives such as incremental costs to consolidate or close facilities, relocate employees, cost to retrain employees to use newly deployed assets or systems, lease termination costs, and redundant or incremental transition operating costs and customer fines and penalties during transition, among others.

NOTE 5 - INVENTORY

Inventory consists of the following:

	As of December 30,		As of September 30,
(in millions)	2018		2018
Raw materials	$	25.5	$	27.5
Work in process		1.6		2.5
Finished goods		51.8		44.4
	$	78.9	$	74.4

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	As of December 30,			As of September 30,
(in millions)	2018			2018
Land, buildings and improvements	$	4.4		$	4.4
Machinery, equipment and other		36.0			35.7
Capital leases		32.8			32.2
Construction in progress		2.9			1.0
Property, plant and equipment	$	76.1		$	73.3
Accumulated depreciation		(16.8	)		(15.1	)
Property, plant and equipment, net	$	59.3		$	58.2

Depreciation expense from property plant and equipment for the three month periods ended December 30, 2018 and December 31, 2017 was $1.7 million and $1.3 million, respectively.

11

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

NOTES TO THE INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 7 - GOODWILL AND INTANGIBLE ASSETS

Goodwill consists of the following:

	As of December 30,			As of September 30,
(in millions)	2018			2018
Goodwill - beginning balance	$	841.8		$	934.8
Impairment		(107.2	)		(92.5	)
Foreign currency impact		(0.3	)		(0.5	)
Goodwill - ending balance	$	734.3		$	841.8

During the three month period ended December 30, 2018, SPB recognized a $107.2 million write-down on net assets held for sale associated with the GAC divestiture attributable to the expected fair value to be realized from the sale, net estimated transaction costs, primarily driven by the change in value of stock consideration to be received as a component of the purchase price from Energizer. This write-down was recorded as an impairment of goodwill.

Certain tradename intangible assets have an indefinite life and are not amortized. Indefinite-lived intangible assets were $295.0 million as of December 30, 2018. There was no impairment loss on indefinite-lived trade names for the three month period ended December 30, 2018. The carrying value and accumulated amortization for definite lived intangible assets subject to amortization are as follows:

	As of December 30, 2018							As of September 30, 2018
(in millions)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	$	80.7	$	(21.6	)	$	59.1	$	80.9	$	(20.1	)	$	60.8
Technology assets		42.6		(15.1	)		27.5		42.6		(14.0	)		28.6
Total	$	123.3	$	(36.7	)	$	86.6	$	123.5	$	(34.1	)	$	89.4

Amortization expense from intangible assets was $2.6 million and $2.6 million for the three month periods ended December 30, 2018 and December 31, 2017, respectively. Excluding the impact of any future acquisitions or changes in foreign currency, GAC anticipates the annual amortization expense of intangible assets for the next five fiscal years will be as follows:

(in millions)	Amortization
2019	$	10.3
2020		10.3
2021		10.3
2022		10.3
2023		10.3

NOTE 8 - LEASES

Operating Leases

Leases primarily pertain to land, buildings and equipment that expire at various times through July 2026. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the leases.

NOTE 9 - DERIVATIVES

GAC periodically enters into forward foreign exchange contracts to hedge the risk from forecasted foreign currency denominated third party and intercompany sales or payments. These obligations generally require GAC to exchange foreign currencies for CAD. These foreign exchange contracts are cash flow hedges of fluctuating foreign exchange rates related to material purchases. Until the purchase is recognized, the fair value of the related hedge is recorded in Other Comprehensive Income and as a hedge asset or liability, as applicable. At the time the purchase is recognized, the fair value of the related hedge is reclassified as an adjustment to purchase price variance in Cost of Goods Sold on the Combined Statements of Income.

The fair value of outstanding derivative instruments is as follows:

(in millions)	Line Item	As of December 30,		As of September 30,
		2018		2018
Derivative Liabilities
Foreign exchange contracts	Accounts payable	$	0.1	$	0.1
Total Derivative Liabilities		$	0.1	$	0.1

GAC is exposed to the risk of default by the counterparties with which it transacts and generally does not require collateral or other security to support financial instruments subject to credit risk. GAC monitors counterparty credit risk on an individual basis by periodically assessing each such counterparty’s credit rating exposure. The maximum loss due to credit risk equals the fair value of the gross asset derivatives that are concentrated with certain domestic and foreign financial institution counterparties. GAC considers these exposures when measuring its credit reserves on its derivative assets, which was not material for the three month period ended December 30, 2018.

GAC standard contracts do not contain credit risk related contingent features whereby GAC would be required to post additional cash collateral as a result of a credit event. However, GAC is typically required to post collateral in the normal course of business to offset its liability positions. As of December 30, 2018 there was no cash collateral outstanding. As of December 30, 2018 GAC had no posted standby letters of credit related to such liability positions.

12

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

NOTES TO THE INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 9 - DERIVATIVES (continued)

The following table summarizes the impact of the effective and ineffective portions of designated hedges and the gain (loss) recognized in the Combined Statement of Income for the three month periods ended December 30, 2018 and December 31, 2017.

	Effective Portion
	Gain (Loss) in OCI		Reclassified to Earnings					Ineffective portion
(in millions)			Line Item		Gain (Loss)			Line Item		Gain (Loss)
Three month period ended December 30, 2018	$	0.6		Cost of goods sold	$	0.1			Cost of goods sold	$	—
Three month period ended December 31, 2017	$	0.3		Cost of goods sold	$	(0.1	)		Cost of goods sold	$	—

NOTE 10 - INCOME TAXES

The effective tax rate for the three month periods ended December 30, 2018 and December 31, 2017 was -0.3% and -660.4% respectively.

The effective tax rate for the three month period ended December 30, 2018 differs from the U.S. federal statutory rate principally due to nondeductible goodwill impairment expense.

The Tax Cuts and Jobs Act of December 22, 2017 (the “Tax Reform Act”) reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% effective January 1, 2018. The Tax Reform Act also provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”), payable in installments over 8 years. During the three month period ended December 30, 2017, GAC recorded a $38.4 million tax benefit from revaluing its ending net U.S. deferred tax liabilities as a result of the reduction in the U.S. corporate income tax rate from 35% to 21%, and recognized $1.9 million of income tax expense for GAC’s share of the tax from the one-time deemed mandatory repatriation.

In response to the enactment of the Tax Reform Act, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. SAB 118 allows registrants to record provisional amounts during a one year measurement period in a manner similar to accounting for business combinations. The measurement period ended December 30, 2018 and the Company did not recognize changes to the provisional tax impacts during the three month period ended December 30, 2018. Portions of the Tax Reform Act are unclear or have not yet been clarified and interpretations and regulations continued to be issued, which could have a material impact on what the Company has recorded to date.

NOTE 11 – SHARE BASED COMPENSATION

GAC participates in the Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Award Plan (the “Equity Plan”) of the Parent through the use of time based and performance-based Restricted Stock Units (“RSUs”). Compensation expense of its RSUs is measured based on the fair value of the award as determined by the market price of SBH shares of common stock on the grant date; and recognizes those costs on a straight-line basis over the requisite period of the awards. Certain RSUs are performance-based awards that are dependent upon achieving specified financial metrics of the consolidated SBH group over a designated period of time. SBH also provides for a portion of its annual management incentive compensation plan to be paid in common stock of SBH, in lieu of cash payment. In addition to stock compensation for employees directly attributable to GAC, stock compensation for employees attributable to corporate and shared operations were allocated on a proportional basis of combined sales and headcount.

Share based compensation expense recognized by GAC for the three month periods ended December 30, 2018 and December 31, 2017 were $0.4 million and $0.5 million, respectively. The remaining unrecognized pre-tax compensation cost for GAC is not material.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

The Company is a defendant in various litigation matters generally arising out of the ordinary course of business. GAC does not believe that any of the matters or proceedings presently pending will have a material adverse effect on its results of operations, financial condition, liquidity, or cash flows.

NOTE 13 - RELATED PARTIES

GAC does not sell or purchase product from other businesses of SBH. The Combined Statement of Income include allocations for certain support functions that are provided on a centralized basis by the Parent and subsequently recorded at the business unit level, such as expenses related to employee benefits, finance, human resources, risk management, information technology, facilities, legal, tax and treasury management, corporate compliance and risk management, among others. These expenses have been allocated to GAC on the basis of direct usage when identifiable, with the remainder allocated on a proportional basis of combined sales, headcount or other measures of GAC or its Parent. Management believes the assumptions underlying the interim condensed combined financial statements, including the assumptions regarding allocating general corporate expenses from the Parent, are reasonable. Nevertheless, the interim condensed combined financial statements may not include all actual expense that would have been incurred by the Company and may not reflect the combined results of operations, financial position and cash flows had it been a stand-alone company during the periods presented. Actual costs that would have been incurred if the Company had been a stand-alone company would depend upon multiple factors, including organization structure and strategic decisions made in various areas, including information technology and infrastructure. For the three month periods ended December 30, 2018 and December 31, 2017, general corporate expenses allocated to GAC were $0.3 million and $0.4 million, respectively. General corporate expenses are recognized as General & Administrative Expenses on the Combined Statements of Income.

GAC also uses the shared technology infrastructure with SBH. There were no individual businesses of SBH that are considered a predominant user and therefore a proportionate share of the costs for the shared technology infrastructure was allocated to GAC for use of shared assets. Shared asset cost for the use of the SBH headquarters is recognized as General & Administrative Expenses on the Combined Statements of Income. For the three month periods ended December 30, 2018 and December 31, 2017, charges to other SBH businesses for shared assets was $0.1 million and $0.1 million respectively.

13

SPECTRUM BRANDS GLOBAL AUTO CARE DIVISION

NOTES TO THE INTERIM CONDENSED COMBINED FINANCIAL STATEMENTS

Three month periods ended December 30, 2018 and December 31, 2017

(unaudited)

NOTE 13 - RELATED PARTIES (continued)

GAC participates in a centralized cash management and financing programs of SBH. Disbursements are made through centralized accounts payables which are operated by SBH. Cash receipts are transferred to centralized accounts, also maintained by SBH. As cash is disbursed and received by SBH, it is accounted for by GAC through SBH Net Parent Investment. All short and long-term debt is financed by SBH and financing decisions for subsidiaries is determined by centralized SBH treasury operations, with the exception of certain capital lease obligations directly attributable to GAC operations that are recognized on the Combined Balance Sheets.

NOTE 14 – SUBSEQUENT EVENTS

In connection with the preparation of the interim condensed combined financial statements, GAC evaluated subsequent events through February 24, 2020, the date the unaudited combined three financial statements were available to be issued.

On January 28, 2019, Spectrum completed the disposition of the GAC business to Energizer per the terms of the Agreement to sell the GAC business to Energizer for a $1.25 billion purchase price comprised of $937.5 million of cash and $312.5 million of Energizer equity.

The Agreement provided that Energizer would purchase the equity of certain subsidiaries of SBH, and acquire certain assets and assume certain liabilities of other subsidiaries used or held for the purpose of the GAC business. SBH and Energizer had made customary representations and warranties and had agreed to customary covenants relating to the acquisition. Among other things, prior to the consummation of the acquisition, SBH was subject to certain business conduct restrictions with respect to its operation of the GAC business. SBH and Energizer had agreed to indemnify each other for losses arising from certain breaches of the Agreement and for certain other matters. In particular, the SBH had agreed to indemnify Energizer for certain liabilities relating to the assets retained by SBH, and Energizer had agreed to indemnify SBH for certain liabilities assumed by Energizer, in each case as described in the Agreement. SBH and Energizer had agreed to enter into related agreements ancillary to the acquisition that would become effective upon the consummation of the acquisition, including a customary transition services agreement and reverse transition services agreement.

14

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Document Type	8-K
Document Period End Date	Apr. 15, 2020
Entity Registrant Name	Energizer Holdings, Inc.
Entity Incorporation State Country Code	MO
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