Commitments, Contingencies and Guarantees

12 Months Ended

Dec. 31, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments, Contingencies and Guarantees

15. Commitments, Contingencies and Guarantees

Commitments

 a. The Company has a partnership with a supplier of raw materials that mines and processes sodium-based mineral deposits.  The Company purchases the majority of its sodium-based raw material requirements from the partnership.  The partnership agreement terminates upon two years’ written notice by either partner.  Under the partnership agreement, the Company has an annual commitment to purchase 240,000 tons of sodium-based raw materials at the prevailing market price.  The Company is not engaged in any other material transactions with the partnership or the partner supplier.  

b. As of December 31, 2020, the Company had commitments of approximately $300.4.  These commitments include the purchase of raw materials, packaging supplies and services from its vendors at market prices to enable the Company to respond quickly to changes in customer orders or requirements, as well as costs associated with licensing and promotion agreements.  

c. As of December 31, 2020, the Company had various guarantees and letters of credit totaling $4.6.     

d. In connection with the Company’s acquisition of Agro BioSciences, Inc. on January 17, 2017, the Company was obligated to pay an additional amount of up to $25.0 based on sales performance in 2019. The initial fair value of this business acquisition liability was $17.8, which was established in the purchase price allocation.  In December 2019, the liability was lowered to $14.2 based on 2019 sales.  The reduction was recorded in SG&A in the SPD segment.  In April 2020, a payment of $14.5 was paid to settle the liability.  

In connection with the Passport Acquisition, the Company was obligated to pay an additional amount of up to $25.0 based on sales performance through 2020.  The initial fair value of this business acquisition liability was $7.3, which was established in the purchase price allocation.  During the second quarter of 2019, the Company recorded a reduction in fair value of the entire $7.3 Passport business acquisition liability based on the revised valuation due to updated sales forecasts.  The reduction was recorded in SG&A in the SPD segment.  

The business acquisition liability was reassessed at each balance sheet date leading up to December 31, 2020 with no additional changes to the fair value.

In connection with the Flawless Acquisition, the Company is obligated to pay an additional amount of up to $425.0 based on sales performance through 2021.  The initial fair value of this business acquisition liability was $182.0.  That amount was established in the purchase price allocation.  During the years ended December 31, 2020 and 2019, the Company decreased the fair value of the business acquisition liability by $94.0 and increased the fair value of the business acquisition liability by $10.0, respectively, based on updated sales forecasts.  As a result of these adjustments, the fair value of this business acquisition liability was $98.0 as of December 31, 2020.  The change in fair value was recorded within the Consumer Domestic and Consumer International segments.  The business acquisition liability will be reassessed at each balance sheet date until the completion of the earn-out period.  The liability is expected to be paid in the first half of 2022.  

In connection with the Zicam Acquisition, the Company deferred an additional cash payment of $20.0 related to certain indemnifications provided by the seller.  The additional amount is payable five years from the closing.

Legal proceedings

 e. In addition, in conjunction with the Company’s acquisition and divestiture activities, the Company entered into select guarantees and indemnifications of performance with respect to the fulfillment of the Company’s commitments under applicable purchase and sale agreements.  The arrangements generally indemnify the buyer or seller for damages associated with breach of contract, inaccuracies in representations and warranties surviving the closing date and satisfaction of liabilities and commitments retained under the applicable contract.  Representations and warranties that survive the closing date generally survive for periods up to five years or the expiration of the applicable statutes of limitations.  Potential losses under the indemnifications are generally limited to a portion of the original transaction price, or to other lesser specific dollar amounts for select provisions.  With respect to sale transactions, the Company also routinely enters into non-competition agreements for varying periods of time.  Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on the Company’s financial condition, results of operations and cash flows.

f. In addition to the matters described above, from time to time in the ordinary course of its business the Company is the subject of, or party to, various pending or threatened legal, regulatory or governmental actions or other proceedings, including, without limitation, those relating to, intellectual property, commercial transactions, product liability, purported consumer class actions, employment matters, antitrust, environmental, health, safety and other compliance related matters.  Such proceedings are generally subject to considerable uncertainty and their outcomes, and any related damages, may not be reasonably predictable or estimable.   Any such proceedings could result in an adverse outcome on the Company’s business, financial condition, results of operations or cash flows.