NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except per share data)
Note 1 - Background and Basis of Presentation
Background
Edgewell Personal Care Company, and its subsidiaries (collectively, "Edgewell" or the "Company"), is one of the world's largest manufacturers and marketers of personal care products in the wet shave, sun and skin care, feminine care and infant care categories. Edgewell has a portfolio of over
25
brands and a global footprint in more than
50
countries.
The Company conducts its business in the following four segments:
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•
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Wet Shave
consists of products sold under the Schick®, Wilkinson Sword®, Edge®, Skintimate®, Shave Guard and Personna® brands, as well as non-branded products. Our wet shave products include razor handles and refillable blades, disposable shave products and shaving gels and creams.
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•
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Sun and Skin Care
consists of Banana Boat® and Hawaiian Tropic® sun care products, Bulldog® and Jack Black® men's skin care products, Wet Ones® wipes and Playtex® household gloves until the sale of the gloves business in October 2017. Refer to Note 2 for additional details regarding the acquisition of Jack Black, L.L.C. ("Jack Black") and Note 3 for additional details on the sale of the Playtex household gloves business.
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•
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Feminine Care
includes tampons, pads and liners sold under the Playtex Gentle Glide® and Sport®, Stayfree®, Carefree® and o.b.® brands.
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•
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All Other
includes infant care products, such as bottles, cups and pacifiers, sold under the Playtex®, OrthoPro® and Binky® brand names, as well as the Diaper Genie® and Litter Genie® disposal systems.
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Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries and have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP"), under the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results may differ materially from those estimates. All intercompany balances and transactions have been eliminated in consolidation and, in the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in the interim results reported. The fiscal year-end balance sheet data was derived from audited consolidated financial statements, but do not include all of the annual disclosures required by GAAP; accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited annual consolidated financial statements included in its Annual Report on Form 10-K filed with the SEC on November 20, 2017.
Acquisition of Jack Black.
On March 1, 2018, the Company completed the acquisition of Jack Black, a luxury men's skincare products company based in the United States. The results of Jack Black for the post-acquisition period are included within the Company's results since the acquisition date. For more information on the acquisition, see Note 2 of Notes to Condensed Consolidated Financial Statements.
Recently Adopted Accounting Pronouncements.
In August 2014, the Financial Accounting Standards Board ("FASB") issued a new Accounting Standards Update ("ASU") which requires management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The adoption of this guidance as of October 1, 2017 did not have an impact on the Company's financial statements or the related disclosures.
In July 2015, the FASB issued a new ASU which aligns the measurement of inventory under GAAP more closely with International Financial Reporting Standards. Under the new guidance, an entity that measures inventory using FIFO or average cost should measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.
The adoption of this guidance on a prospective basis as of
October 1, 201
7 did not have a material impact on the Company's financial statements or the related disclosures.
In March 2016, the FASB issued an ASU which simplifies several aspects of the accounting for share-based payment transactions, including requiring excess tax benefits and tax deficiencies to be recognized as income tax benefits or expenses in the consolidated statement of earnings. The standard requires cash flows from excess tax benefits and deficiencies, previously classified as a financing activity, to be classified as an operating activity in the consolidated statement of cash flows. The Company adopted these provisions of the guidance prospectively in the first nine months of fiscal 2018. As a result, the Company recognized tax deficiencies of
$0.7
through income taxes during the first nine months of fiscal 2018 rather than additional paid-in capital. The tax deficiencies were recorded as an operating activity in the Condensed Consolidated Statement of Cash Flows during the first nine months of fiscal 2018. Also, as part of the adoption, a
$9.7
adjustment was recorded to increase retained earnings and deferred tax assets to recognize the cumulative amount of previously unrecognized excess tax benefits as of October 1, 2017. Additionally, the ASU requires the presentation of employee taxes paid when an employer withholds shares for tax withholding purposes to be presented as a financing activity in the statement of cash flows as opposed to as an operating activity. This aspect of the new guidance was required to be adopted retrospectively. As such,
$15.6
of cash outflows for tax withholding payments were reclassified from an operating activity to a financing activity in the Condensed Consolidated Statement of Cash Flows for the first nine months of fiscal 2017. Finally, under the ASU, the Company elected to record forfeitures as they occur. This election did not have a material impact on the Company's financial statements.
In January 2017, the FASB issued new guidance which simplifies the subsequent measurement of goodwill by eliminating step 2 from the goodwill impairment test. Under existing guidance, an entity performs procedures to determine the fair value at the impairment testing date of its assets and liabilities following the same procedures required when determining the fair value of assets acquired and liabilities assumed in a business combination. The amended guidance requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge to the extent the carrying amount exceeds the fair value and does not exceed the total amount of goodwill allocated to the reporting unit. The Company elected to adopt this standard in the third quarter of fiscal 2018 in conjunction with the Company's interim test for goodwill impairment. Refer to Note 7 for discussion on the interim impairment test for goodwill and intangible assets.
In March 2018, the FASB issued an ASU which amends the accounting standards codification to reflect the guidance related to the enactment of the Tax Cuts and Jobs Act (the "Tax Act") issued in the SEC Staff Accounting Bulletin No. 118. The Company adopted this standard in the second quarter of fiscal 2018. Refer to Note 5 for disclosures related to the Tax Act.
Recently Issued Accounting Pronouncements.
In May 2014, the FASB issued an ASU which provides a single comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries and across capital markets. During 2016, the FASB issued three ASUs clarifying the revenue recognition implementation guidance on various topics included within the original ASU. The new guidance will be effective for the Company beginning October 1, 2018, with the option of using either a full retrospective or modified retrospective method.
During fiscal 2017, the Company established a cross-functional implementation team, including representatives from all of its businesses globally, to analyze the current processes in place for the recognition of revenue and identify potential differences that would result from application of the new guidance. This initial assessment includes analysis of significant types of arrangements, processes and systems, and reviews of representative contracts. Additionally, the Company has begun reviewing the enhanced disclosure requirements under the new standard. Revenues are primarily generated from the sale of finished products to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer. While the assessment is not complete, the timing of revenue recognition is not expected to be materially impacted by the new standard. The Company will adopt the revenue standard using the modified retrospective method in the first quarter of fiscal 2019.
In August 2016, the FASB issued an ASU intended to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on specific cash flow issues, including debt prepayment or debt extinguishment costs, the sale of accounts receivable, contingent consideration payments on business combinations, proceeds from the settlement of insurance claims and distributions received from equity method investees, among others. The update will be effective for the Company beginning October 1, 2018, with early adoption permitted. The Company noted that the adoption of the standard will reclassify certain operating cash inflows associated with the $150 uncommitted master accounts receivable purchase agreement entered into with The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the purchaser on September 15, 2017 (the “Accounts Receivable Facility”) to investing cash inflows in the Condensed Consolidated Statement of Cash Flows by an amount yet to be determined.
In February 2018, the FASB issued an ASU which addresses the recently enacted Tax Act. Specifically, the guidance allows the Company to elect to reclassify any "stranded tax" created as a result of the Tax Act from Accumulated Other Comprehensive Loss to Retained Earnings. The new guidance will be effective for the Company beginning October 1, 2018, with early adoption permitted. The Company plans to adopt this standard in the fourth quarter of fiscal 2018. The Company is still assessing the effect of the standard on its consolidated financial statements and disclosures but does not expect the impact to be material. Refer to Note 5 for further disclosures regarding the Tax Act.
In June 2018, the FASB issued an ASU which simplifies the treatment of share-based payment transactions used in acquiring goods and services from non employees. The amendments note that measurement of share-based payments used to acquire goods or services should be valued at the grant-date fair value. The grant date is defined as the date at which the grantor and grantee reach a mutual understanding of the terms and conditions of the award. Finally, any awards containing a performance condition should be valued considering the probability of satisfying the necessary performance conditions consistent with employee share-based awards. The update will be effective for the Company beginning October 1, 2019, with early adoption permitted. The Company is in the process of evaluating the impact the guidance will have on its financial statements but does not expect the impact to be material.
Note 2 - Acquisition
Jack Black, L.L.C.
On
March 1, 2018
, the Company completed the acquisition of Jack Black, a men's luxury skincare products company based in the U.S., for
$90.2
, net of cash acquired. The acquisition creates opportunities to expand Edgewell's personal care portfolio into a growing global category where it can leverage its international geographic footprint. The acquisition was financed through available operating cash.
The Company has recognized the assets and liabilities of Jack Black based on preliminary estimates of their acquisition date fair values. The determination of the fair values of the acquired assets and assumed liabilities, including goodwill and other intangible assets, requires significant judgment. The Company is in the process of finalizing the analysis of its deferred tax positions; as such, this valuation analysis was not complete as of June 30, 2018. The Company will complete the final fair value determination during the fourth quarter of fiscal 2018.
As of June 30, 2018, the opening balance sheet for Jack Black included net assets acquired of
$93.9
and consisted of working capital and other net assets of
$11.9
(including cash of
$3.7
), other intangible assets of
$47.7
and goodwill of
$34.3
, representing the value of expansion into new markets. Goodwill is expected to be deductible for tax purposes. The intangible assets acquired consisted primarily of the Jack Black trade name, customer relationships and product formulations with a weighted average useful life of
16.6
years. All assets are included in the Company's Sun and Skin Care segment.
Acquisition and integration costs related to Jack Black totaling
$0.5
and
$3.1
in the third quarter and nine months ending June 30, 2018, respectively, were included in Selling, general and administrative expense. Additionally, acquisition and integration costs of
$1.8
were included in Cost of products sold in the third quarter of fiscal 2018.
Note 3 - Divestiture
The Company completed the sale of its Playtex gloves business to a household products company for
$19.0
on October 26, 2017. The sale allows the Company to better focus and utilize its resources on its other product lines. Total assets sold were approximately
$3.7
, resulting in a pre-tax gain on sale of
$15.3
.
Note 4 - Restructuring Charges
Project Fuel
In February 2018, the Company announced Project Fuel, an enterprise-wide transformational initiative that is designed to address all aspects of the Company's business and cost structure. The project will incorporate the Company's Zero Based Spending and global productivity initiatives, and will include a new global restructuring initiative. Initial costs for Project Fuel relate to efforts to fully define the scope and reach of the project. In addition, the Company has incurred severance costs related to the reduction of overhead at some of the Company’s manufacturing facilities. While the Company is incurring costs for Project Fuel in fiscal 2018, the majority of costs and savings under Project Fuel are expected to take place during fiscal 2019 through fiscal 2021.
In addition to the expected cost savings and improved profitability, Project Fuel is designed to strengthen the Company's challenger culture and reinforce its consumer-centric organizational focus. It is also designed to simplify the organization and streamline ways of working in order to increase competitiveness, speed and agility, and ensure the Company has the skills, capabilities and investments needed to compete in a rapidly changing world.
The Company incurred restructuring charges of
$15.9
and
$19.6
related to Project Fuel in the three and nine months ended June 30, 2018, respectively.
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Three Months Ended June 30, 2018
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Wet
Shave
|
|
Sun and Skin Care
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Feminine Care
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All Other
|
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Corporate
|
|
Total
|
|
Restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and related benefit costs
|
$
|
1.6
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|
|
$
|
0.2
|
|
|
$
|
1.0
|
|
|
$
|
0.1
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|
|
$
|
—
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|
|
$
|
2.9
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|
Consulting, project implementation and management and other exit costs
|
2.0
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|
|
0.2
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|
|
—
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|
|
—
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|
|
10.8
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|
|
13.0
|
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|
Total Restructuring
|
$
|
3.6
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|
|
$
|
0.4
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|
|
$
|
1.0
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|
$
|
0.1
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|
|
$
|
10.8
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|
|
$
|
15.9
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Nine Months Ended June 30, 2018
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Wet
Shave
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Sun and Skin Care
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Feminine Care
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All Other
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Corporate
|
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Total
|
|
Restructuring
|
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|
|
|
|
|
|
|
|
|
|
|
Severance and related benefit costs
|
$
|
3.1
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|
|
$
|
0.9
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|
|
$
|
1.1
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|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
5.2
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Consulting, project implementation and management and other exit costs
|
2.0
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|
|
0.2
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|
|
—
|
|
|
—
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|
|
12.2
|
|
|
14.4
|
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|
Total Restructuring
|
$
|
5.1
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|
|
$
|
1.1
|
|
|
$
|
1.1
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|
|
$
|
0.1
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|
|
$
|
12.2
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|
|
$
|
19.6
|
|
In addition, pre-tax Selling, general and administrative expense of
$0.5
for the three and nine months ended June 30, 2018, associated with certain information technology enablement expenses related to Project Fuel were included in Consulting, project implementation and management and other exit costs.
2013 Restructuring
In November 2012, the Company's Board of Directors (the "Board") authorized an enterprise-wide restructuring plan (the "2013 Restructuring"). The 2013 Restructuring originally included several initiatives focused on reducing costs in general and administrative functions, as well as reducing manufacturing and operating costs associated with the Company's discontinued operations. In January 2014, the Board authorized an expansion of scope of the previously announced 2013 Restructuring, which included rationalization and streamlining of the Edgewell operating facilities and other cost saving initiatives. Restructuring charges have primarily related to plant closure, accelerated depreciation charges, severance and related benefit costs. Costs under this plan totaled
$170.1
. Due to an increase in Wet Shave footprint costs and a delay in the transition of manufacturing in the Company's Feminine Care segment from Montreal to Dover, Delaware, some anticipated savings are not expected to be realized until fiscal 2019. The Company does not expect costs related to the 2013 Restructuring program to be material in fiscal 2018 or in future periods.
Expenses incurred under the 2013 Restructuring are reflected below, including the estimated impact of allocating such charges to segment results. 2013 Restructuring charges were only allocated to the Company's Wet Shave, Sun and Skin Care and Feminine Care segments for the three and nine months ended June 30, 2017. The Company does not include restructuring costs in the results of its reportable segments.
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|
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Three Months Ended June 30, 2017
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Wet
Shave
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Sun and Skin Care
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Feminine Care
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Total
|
|
2013 Restructuring
|
|
|
|
|
|
|
|
|
Severance and related benefit costs
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
2.0
|
|
|
$
|
2.4
|
|
|
Asset impairment and accelerated depreciation
|
—
|
|
|
—
|
|
|
3.6
|
|
|
3.6
|
|
|
Consulting, project implementation and management and other exit costs
|
2.9
|
|
|
—
|
|
|
3.6
|
|
|
6.5
|
|
|
Total 2013 Restructuring
|
$
|
3.3
|
|
|
$
|
—
|
|
|
$
|
9.2
|
|
|
$
|
12.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2017
|
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|
Wet
Shave
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|
Sun and Skin Care
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|
Feminine Care
|
|
Total
|
|
2013 Restructuring
|
|
|
|
|
|
|
|
|
Severance and related benefit costs
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
4.4
|
|
|
$
|
5.5
|
|
|
Asset impairment and accelerated depreciation
|
—
|
|
|
—
|
|
|
6.4
|
|
|
6.4
|
|
|
Consulting, project implementation and management and other exit costs
|
6.8
|
|
|
0.1
|
|
|
6.1
|
|
|
13.0
|
|
|
Total 2013 Restructuring
|
$
|
7.9
|
|
|
$
|
0.1
|
|
|
$
|
16.9
|
|
|
$
|
24.9
|
|
In addition, pre-tax costs of
$0.3
and
$0.7
for the three and nine months ended June 30, 2017, respectively, associated with obsolescence charges related to the exit of certain non-core product lines as part of the 2013 Restructuring, were included in Cost of products sold.
Restructuring Reserves
The following table summarizes Project Fuel and 2013 Restructuring activities and related accruals (excluding certain obsolescence charges related to the 2013 Restructuring):
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|
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|
|
|
|
|
|
|
|
|
Utilized
|
|
|
|
|
October 1, 2017
|
|
Charge to
Income
|
|
Other
(1)
|
|
Cash
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|
Non-Cash
|
|
June 30, 2018
|
|
Restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and termination related costs
|
$
|
2.4
|
|
|
$
|
5.2
|
|
|
$
|
—
|
|
|
$
|
(4.6
|
)
|
|
$
|
—
|
|
|
$
|
3.0
|
|
|
Other related costs
|
—
|
|
|
14.4
|
|
|
—
|
|
|
(7.3
|
)
|
|
—
|
|
|
7.1
|
|
|
Total Restructuring
|
$
|
2.4
|
|
|
$
|
19.6
|
|
|
$
|
—
|
|
|
$
|
(11.9
|
)
|
|
$
|
—
|
|
|
$
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilized
|
|
|
|
|
October 1, 2016
|
|
Charge to
Income
|
|
Other
(1)
|
|
Cash
|
|
Non-Cash
|
|
September 30,
2017
|
|
Restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and termination related costs
|
$
|
16.7
|
|
|
$
|
6.5
|
|
|
$
|
(0.3
|
)
|
|
$
|
(20.5
|
)
|
|
$
|
—
|
|
|
$
|
2.4
|
|
|
Asset impairment and accelerated depreciation
|
—
|
|
|
6.9
|
|
|
—
|
|
|
—
|
|
|
(6.9
|
)
|
|
—
|
|
|
Other related costs
|
—
|
|
|
16.2
|
|
|
—
|
|
|
(16.2
|
)
|
|
—
|
|
|
—
|
|
|
Total Restructuring
|
$
|
16.7
|
|
|
$
|
29.6
|
|
|
$
|
(0.3
|
)
|
|
$
|
(36.7
|
)
|
|
$
|
(6.9
|
)
|
|
$
|
2.4
|
|
|
|
|
|
(1)
|
Includes the impact of currency translation.
|
Note 5 - Income Taxes
For the three and nine months ended June 30, 2018, the Company had income tax expense of
$9.3
and
$56.4
, respectively, on Earnings before income taxes of
$21.4
and
$140.3
, respectively. The effective tax rate for the three and
nine months ended June 30, 2018
was
42.9%
and
40.2%
, respectively. The difference between the federal statutory rate and the effective rate for the nine months ended June 30, 2018 is primarily due to a
$17.4
net transitional charge resulting from the enactment of the Tax Act, as discussed below, and the impact of the goodwill impairment.
For the three and nine months ended June 30, 2017, the Company had an income tax expense of
$10.6
and
$45.8
, respectively, on Earnings before income taxes of
$65.5
and
$199.9
, respectively. The effective tax rate for the three and nine months ended June 30, 2017 was
16.2%
and
22.9%
, respectively. The difference between the federal statutory rate and the effective rate for both periods is due to a higher mix of earnings in lower tax rate jurisdictions and was favorably impacted by restructuring charges in higher tax rate jurisdictions.
U.S. Tax Reform
On December 22, 2017, the U.S. government enacted the Tax Act. This new comprehensive tax legislation reduces the U.S. federal corporate tax rate from
35%
to
21%
but also limits and/or eliminates certain deductions while creating new taxes on certain foreign sourced earnings. Since the Company has a September 30 fiscal year end, the lower U.S. corporate income tax rate will be phased in, resulting in a blended U.S. statutory federal rate of approximately
24.5%
for the fiscal year ending September 30, 2018 and
21%
for subsequent fiscal years. The reduction in the U.S. corporate tax rate requires the Company to remeasure its U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which can be
24.5%
or
21%
. The Tax Act also imposed a one-time transition tax on historical earnings of certain foreign subsidiaries that were not previously taxed by the U.S.
Due to the Company’s fiscal year end, certain tax provisions of the new Tax Act will impact the Company in fiscal 2018 while others will be effective in subsequent years. For the nine months ended June 30, 2018, the estimated impact of the one-time transition tax on foreign earnings was
$94.2
, offset by the estimated benefit of remeasurement of U.S. deferred tax assets and
liabilities of
$76.8
. The net impact of these transitional provisions resulted in a net charge of
$17.4
for the year, which was included as a component of income tax expense. The Company has tax loss carryforwards and tax credits, a portion of which are expected be used to partially offset amounts payable over eight years related to the one-time transition tax on foreign earnings.
The tax law changes included in the Tax Act are broad and complex. The final impact may differ from the Company's estimates, possibly materially, due to, among other things, changes in interpretation of the Tax Act, legislative action to address questions that arise because of the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or updates or changes to estimates the Company used to calculate the transition impacts, including impacts from changes to earnings estimates, foreign income tax estimates and foreign exchange rates. The Securities and Exchange Committee ("SEC") has issued rules under Staff Accounting Bulletin 118 that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. As of June 30, 2018, amounts recorded for the Tax Act remain provisional for the transition tax, remeasurement of deferred taxes and reassessment of permanently reinvested earnings.
On August 1, 2018, proposed Treasury Regulations were issued under Section 965 providing additional guidance and clarification on many of the provisions associated with the one-time transition tax, enacted in connection with the Tax Act. The Company has not yet evaluated these proposed regulations nor the impact they may have on the provisional amounts recorded for the transition tax as of June 30, 2018.
Note 6 - Earnings per Share
Basic earnings per share is based on the average number of common shares outstanding during the period. Diluted earnings per share is based on the average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of share options and restricted share equivalent ("RSE") awards.
Following is the reconciliation between the number of weighted-average shares used in the basic and diluted earnings per share calculation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Basic weighted-average shares outstanding
|
54.0
|
|
|
57.2
|
|
|
54.5
|
|
|
57.4
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
RSE awards
|
0.1
|
|
|
0.3
|
|
|
0.1
|
|
|
0.3
|
|
|
Total dilutive securities
|
0.1
|
|
|
0.3
|
|
|
0.1
|
|
|
0.3
|
|
|
Diluted weighted-average shares outstanding
|
54.1
|
|
|
57.5
|
|
|
54.6
|
|
|
57.7
|
|
For the three and
nine months ended June 30, 2018
, the calculation of diluted weighted-average shares outstanding excludes
0.5
of share options because the effect of including these awards was anti-dilutive. For the three and
nine months ended June 30, 2018
, the calculation of diluted weighted-average shares outstanding excludes
0.1
of RSE awards because the effect of these awards was anti-dilutive. For the three and nine months ended June 30, 2017, the calculation of diluted weighted-average shares outstanding excludes
0.6
of share options because the effect of including these awards was anti-dilutive.
Note 7 - Goodwill and Intangible Assets
The following table sets forth goodwill by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
|
Balance at October 1, 2017
|
$
|
971.2
|
|
|
$
|
195.6
|
|
|
$
|
209.5
|
|
|
$
|
69.6
|
|
|
$
|
1,445.9
|
|
|
Acquisition of Jack Black
|
—
|
|
|
34.3
|
|
|
—
|
|
|
—
|
|
|
34.3
|
|
|
Cumulative translation adjustment
|
(2.6
|
)
|
|
(0.3
|
)
|
|
(2.2
|
)
|
|
—
|
|
|
(5.1
|
)
|
|
Impairment charge
|
—
|
|
|
—
|
|
|
—
|
|
|
(24.4
|
)
|
|
(24.4
|
)
|
|
Balance at June 30, 2018
|
$
|
968.6
|
|
|
$
|
229.6
|
|
|
$
|
207.3
|
|
|
$
|
45.2
|
|
|
$
|
1,450.7
|
|
Accumulated goodwill impairment losses totaled
$24.4
at June 30, 2018 in the All Other segment.
Total amortizable intangible assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
September 30, 2017
|
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Trade names and brands
|
$
|
206.7
|
|
|
$
|
23.0
|
|
|
$
|
183.7
|
|
|
$
|
188.6
|
|
|
$
|
16.0
|
|
|
$
|
172.6
|
|
|
Technology and patents
|
79.0
|
|
|
75.7
|
|
|
3.3
|
|
|
77.9
|
|
|
74.4
|
|
|
3.5
|
|
|
Customer related and other
|
179.7
|
|
|
94.5
|
|
|
85.2
|
|
|
151.5
|
|
|
89.8
|
|
|
61.7
|
|
|
Total amortizable intangible assets
|
$
|
465.4
|
|
|
$
|
193.2
|
|
|
$
|
272.2
|
|
|
$
|
418.0
|
|
|
$
|
180.2
|
|
|
$
|
237.8
|
|
Amortization expense was
$4.6
and
$13.2
for the three and
nine months ended June 30, 2018
, respectively, and
$4.0
and
$12.1
for the three and nine months ended June 30, 2017, respectively. Estimated amortization expense for amortizable intangible assets for the remainder of fiscal 2018 and for fiscal 2019, 2020, 2021, 2022 and 2023 is approximately
$4.5
,
$17.8
,
$17.2
,
$16.6
,
$16.4
and
$16.4
, respectively, and
$183.5
thereafter. Amortizable intangible assets include
$17.5
of trade names and brands,
$1.2
of technology and patents,
$0.5
of non-compete agreements, and
$28.5
of customer related intangibles from the Jack Black acquisition. See Note 2 of the Notes to Condensed Consolidated Financial Statements for more information on the Jack Black acquisition.
The Company had indefinite-lived intangible assets of
$832.0
(
$182.2
in Wet Shave,
$476.1
in Sun and Skin Care,
$29.9
in Feminine Care and
$143.8
in All Other) at
June 30, 2018
,
a decrease
of
$1.9
from
September 30, 2017
related to foreign currency translation rates.
Goodwill and intangible assets deemed to have an indefinite life are not amortized, but reviewed annually during the fourth fiscal quarter for impairment of value or when indicators of a potential impairment are present. The Company continuously monitors events which could trigger an interim impairment analysis, such as changing business conditions and environmental factors. The Company experienced a sustained decline in market capitalization during the third quarter of fiscal 2018, leading to the determination that a triggering event had occurred for all reporting units.
The Company performed an interim impairment analysis using financial information through June 30, 2018 and forecasts for cash flows developed using the Company's three year strategic plan. The interim impairment analysis was performed in a manner consistent with the annual impairment test using both the market and income approaches and weighting them based on their application to the reporting units. The interim impairment review was performed across all reporting units and indefinite lived intangible assets. The interim impairment analysis required an increase in discount rates across all reporting units to align with market-based assumptions and company specific risks. The analysis indicated that the carrying amount of the goodwill for the Infant Care reporting unit was greater than its fair value. The impairment of the Infant Care reporting unit was calculated as the difference between its fair value, determined in the interim impairment review, and the carrying value. As a result, the Company recorded an impairment charge on the goodwill of the Infant Care reporting unit totaling
$24.4
as of June 30, 2018. The valuation of the Infant Care reporting unit decreased compared to the prior year because of the higher discount rates in conjunction with lower forecasted revenue growth rates and earnings margins, resulting in lower projected long-term future cash flows. In addition to the impairment of the Infant Care reporting unit, the fair values of the Skin Care and Feminine Care reporting units were between
104%
and
106%
of their carrying values, respectively. Key assumptions used in valuing the reporting units include the weighted average cost of capital of
10.2%
and
9.7%
for Skin Care and Feminine Care, respectively. The long term revenue growth rates applied to the valuation models were
2.00%
for Skin Care and
0.50%
for Feminine Care. The fair value of the Wet Ones indefinite lived intangible asset was
103%
of its carrying value. Key assumptions used in the valuation of the Wet Ones intangible asset were a
9.75%
discount rate and a
1.25%
long term revenue growth rate. Unfavorable fluctuations in the discount rate or declines in forecasted sales and margins could result in impairment of these reporting units and intangible assets. The Company will continue to evaluate the fair value of goodwill and intangible assets through the fourth quarter of fiscal 2018 for potential impairment.
During fiscal 2017, the Company recorded impairment charges of
$312.0
and
$7.0
on its Playtex and Edge brand names, respectively. The impairment of Playtex and Edge in fiscal 2017 was the result of intense competition in the Feminine Care and Wet Shave segments which resulted in decreased market share. Based on the impairment taken and continued competitive pressure on the Playtex and Edge brands, the intangible assets associated with the brand names were converted to definite-lived assets as of July 1, 2017 and assigned a useful life of
20 years
. The conversion of the Playtex and Edge brand names to definite-lived intangible assets increased amortization expense by
$1.8
and
$5.4
for the three and nine months ended June 30, 2018, respectively.
Note 8 - Supplemental Balance Sheet Information
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018
|
|
September 30,
2017
|
|
Inventories
|
|
|
|
|
Raw materials and supplies
|
$
|
47.0
|
|
|
$
|
50.6
|
|
|
Work in process
|
60.4
|
|
|
60.9
|
|
|
Finished products
|
234.0
|
|
|
222.0
|
|
|
Total inventories
|
$
|
341.4
|
|
|
$
|
333.5
|
|
|
Other Current Assets
|
|
|
|
|
Miscellaneous receivables
|
$
|
15.2
|
|
|
$
|
16.9
|
|
|
Prepaid expenses
|
77.4
|
|
|
55.6
|
|
|
Value added tax collectible from customers
|
26.9
|
|
|
25.2
|
|
|
Income taxes receivable
|
11.0
|
|
|
24.7
|
|
|
Other
|
4.8
|
|
|
3.3
|
|
|
Total other current assets
|
$
|
135.3
|
|
|
$
|
125.7
|
|
|
Property, Plant and Equipment
|
|
|
|
|
Land
|
$
|
19.2
|
|
|
$
|
19.3
|
|
|
Buildings
|
142.4
|
|
|
139.1
|
|
|
Machinery and equipment
|
960.6
|
|
|
947.4
|
|
|
Capitalized software costs
|
48.3
|
|
|
42.3
|
|
|
Construction in progress
|
51.7
|
|
|
49.7
|
|
|
Total gross property
|
1,222.2
|
|
|
1,197.8
|
|
|
Accumulated depreciation
|
(794.7
|
)
|
|
(744.4
|
)
|
|
Total property, plant and equipment, net
|
$
|
427.5
|
|
|
$
|
453.4
|
|
|
Other Current Liabilities
|
|
|
|
|
Accrued advertising, sales promotion and allowances
|
$
|
49.4
|
|
|
$
|
32.2
|
|
|
Accrued trade allowances
|
24.7
|
|
|
24.6
|
|
|
Accrued salaries, vacations and incentive compensation
|
46.6
|
|
|
40.6
|
|
|
Income taxes payable
|
24.2
|
|
|
18.3
|
|
|
Returns reserve
|
49.8
|
|
|
53.3
|
|
|
Restructuring reserve
|
10.1
|
|
|
3.0
|
|
|
Value added tax payable
|
7.8
|
|
|
5.8
|
|
|
Deferred compensation
|
4.7
|
|
|
13.8
|
|
|
Other
|
79.7
|
|
|
89.8
|
|
|
Total other current liabilities
|
$
|
297.0
|
|
|
$
|
281.4
|
|
|
Other Liabilities
|
|
|
|
|
Pensions and other retirement benefits
|
$
|
97.2
|
|
|
$
|
109.4
|
|
|
Deferred compensation
|
43.0
|
|
|
47.3
|
|
|
Long-term income taxes payable
|
36.1
|
|
|
—
|
|
|
Other non-current liabilities
|
58.2
|
|
|
58.8
|
|
|
Total other liabilities
|
$
|
234.5
|
|
|
$
|
215.5
|
|
Note 9 - Accounts Receivable Facility
On September 15, 2017, the Company entered into a
$150
uncommitted master accounts receivable purchase agreement with The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the purchaser. Transfers under this agreement are accounted for as sales of receivables, resulting in the receivables being de-recognized from the consolidated balance sheet. As of June 30, 2018, the discount rate used to determine the purchase price for the subject receivables is based upon LIBOR plus a margin applicable to the specified obligor.
Account receivables sold under this agreement for the three and nine months ended June 30, 2018 were
$328.5
and
$820.1
, respectively. The trade receivables sold that remained outstanding under this agreement as of June 30, 2018 and September 30, 2017 were
$136.9
and
$81.7
, respectively. The dilution reserve, which represents the Company's retained interest in sold receivables, was
$13.7
and
$8.2
as of June 30, 2018 and September 30, 2017, respectively, and was recognized on the Consolidated Balance Sheets as a receivable. The difference between the carrying amount of the trade receivables sold and the sum of the cash received was recorded as a loss on sale of receivables in Other expense (income), net in the Consolidated Statement of Earnings. For the three and nine months ended June 30, 2018, the loss on sale of trade receivables was
$0.8
and
$1.8
, respectively.
Note 10 - Debt
The detail of long-term debt was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018
|
|
September 30,
2017
|
|
Senior notes, fixed interest rate of 4.7%, due 2021, net
(1)
|
$
|
598.6
|
|
|
$
|
598.3
|
|
|
Senior notes, fixed interest rate of 4.7%, due 2022, net
(1) (2)
|
497.9
|
|
|
497.4
|
|
|
U.S. revolving credit facility due 2020
|
—
|
|
|
245.0
|
|
|
Term loan, due 2019, net
(1)
|
184.9
|
|
|
184.7
|
|
|
Total long-term debt, including current maturities
|
1,281.4
|
|
|
1,525.4
|
|
|
Less current portion
|
184.9
|
|
|
—
|
|
|
Total long-term debt
|
$
|
1,096.5
|
|
|
$
|
1,525.4
|
|
|
|
|
|
(1)
|
At June 30, 2018
, the balance for the senior notes due 2021, the senior notes due 2022 and the term loan are reflected net of debt issuance costs of
$1.4
,
$1.6
and
$0.1
, respectively. At September 30, 2017, the balance for the senior notes due 2021, the senior notes due 2022 and the term loan are reflected net of debt issuance costs of
$1.7
,
$1.9
and
$0.3
, respectively.
|
|
|
|
|
(2)
|
At June 30, 2018
and September 30, 2017, the balance for the senior notes due 2022 is reflected net of discounts of
$0.5
and
$0.7
, respectively.
|
The Company had outstanding international borrowings, recorded in Notes payable, of
$20.9
and
$19.4
as of June 30, 2018
and
September 30, 2017
, respectively.
Note 11 - Retirement Plans
The Company has several defined benefit pension plans covering employees in the U.S. and certain employees in other countries, which are included in the information presented below. The plans provide retirement benefits based on years of service and earnings. The Company also sponsors or participates in a number of other non-U.S. pension and postretirement arrangements, including various retirement and termination benefit plans, some of which are required by local law or coordinated with government-sponsored plans, which are not significant in the aggregate and, therefore, are not included in the information presented below.
The Company's net periodic pension and postretirement benefit (credit) cost for these plans was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Service cost
|
$
|
1.5
|
|
|
$
|
1.8
|
|
|
$
|
4.6
|
|
|
$
|
5.5
|
|
|
Interest cost
|
4.3
|
|
|
3.7
|
|
|
12.9
|
|
|
11.2
|
|
|
Expected return on plan assets
|
(7.9
|
)
|
|
(7.9
|
)
|
|
(23.8
|
)
|
|
(23.8
|
)
|
|
Recognized net actuarial loss
|
1.1
|
|
|
1.6
|
|
|
3.4
|
|
|
4.6
|
|
|
Settlement loss recognized
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
Net periodic benefit (credit) cost
|
$
|
(1.0
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
(2.9
|
)
|
|
$
|
(2.2
|
)
|
Note 12 - Shareholders' Equity
During the
nine months ended June 30, 2018
, the Company repurchased
2.1
shares of its common stock for
$124.4
, all of which were purchased under the Board authorization from May 2015. In January 2018, the Board approved an authorization to repurchase up to
10.0
shares of the Company's common stock, replacing the previous stock repurchase authorization from May 2015. The Company has
10.0
shares remaining under the January 2018 Board authorization to repurchase its common shares in the future. Future share repurchases, if any, would be made in the open market, privately negotiated transactions or otherwise, in such amounts and at such times as the Company deems appropriate based upon prevailing market conditions, business needs and other factors.
During the
nine months ended June 30, 2018
, the Company paid
$0.1
in cash dividends related to the vesting of RSE awards, which had been declared and accrued during prior fiscal years. The Company has not declared any dividends since the third quarter of fiscal 2015, and does not currently intend to declare dividends in the foreseeable future.
Note 13 - Accumulated Other Comprehensive Loss
The following table presents the changes in accumulated other comprehensive loss ("AOCI"), net of tax, by component:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
Currency
Translation
Adjustments
|
|
Pension and
Post-retirement
Activity
|
|
Hedging
Activity
|
|
Total
|
|
Balance at October 1, 2017
|
$
|
(29.0
|
)
|
|
$
|
(101.3
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(131.4
|
)
|
|
OCI before reclassifications
(1)
|
(10.4
|
)
|
|
0.2
|
|
|
1.2
|
|
|
(9.0
|
)
|
|
Reclassifications to earnings
|
—
|
|
|
2.4
|
|
|
1.7
|
|
|
4.1
|
|
|
Balance at June 30, 2018
|
$
|
(39.4
|
)
|
|
$
|
(98.7
|
)
|
|
$
|
1.8
|
|
|
$
|
(136.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
Currency
Translation
Adjustments
|
|
Pension and
Post-retirement
Activity
|
|
Hedging
Activity
|
|
Total
|
|
Balance at October 1, 2016
|
$
|
(68.1
|
)
|
|
$
|
(126.3
|
)
|
|
$
|
(2.8
|
)
|
|
$
|
(197.2
|
)
|
|
OCI before reclassifications
(1)
|
15.1
|
|
|
(0.1
|
)
|
|
4.3
|
|
|
19.3
|
|
|
Reclassifications to earnings
|
—
|
|
|
3.2
|
|
|
(1.6
|
)
|
|
1.6
|
|
|
Balance at June 30, 2017
|
$
|
(53.0
|
)
|
|
$
|
(123.2
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(176.3
|
)
|
|
|
|
|
(1)
|
OCI is defined as other comprehensive income (loss).
|
The following table presents the reclassifications out of AOCI:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
June 30,
|
|
For the Nine Months Ended
June 30,
|
|
Affected Line Item in the
Condensed Consolidated
Statements of Earnings
|
|
Details of AOCI Components
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(Loss) / gain on cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
$
|
(1.0
|
)
|
|
$
|
1.1
|
|
|
$
|
(2.5
|
)
|
|
$
|
2.5
|
|
|
Other expense (income), net
|
|
|
|
(1.0
|
)
|
|
1.1
|
|
|
(2.5
|
)
|
|
2.5
|
|
|
Total before tax
|
|
|
|
0.4
|
|
|
(0.4
|
)
|
|
0.8
|
|
|
(0.9
|
)
|
|
Tax expense
|
|
|
|
(0.6
|
)
|
|
0.7
|
|
|
(1.7
|
)
|
|
1.6
|
|
|
Net of tax
|
|
Amortization of defined benefit pension and postretirement items
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial losses
|
|
(1.1
|
)
|
|
(1.6
|
)
|
|
(3.4
|
)
|
|
(4.6
|
)
|
|
(1)
|
|
Settlement loss recognized
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
(1)
|
|
|
|
(1.1
|
)
|
|
(1.6
|
)
|
|
(3.4
|
)
|
|
(4.9
|
)
|
|
Total before tax
|
|
|
|
0.3
|
|
|
0.6
|
|
|
1.0
|
|
|
1.7
|
|
|
Tax expense
|
|
|
|
(0.8
|
)
|
|
(1.0
|
)
|
|
(2.4
|
)
|
|
(3.2
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period
|
|
$
|
(1.4
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(4.1
|
)
|
|
$
|
(1.6
|
)
|
|
Net of tax
|
|
|
|
|
(1)
|
These AOCI components are included in the computation of net periodic benefit cost. See Note 11 of Notes to Condensed Consolidated Financial Statements.
|
Note 14 - Financial Instruments and Risk Management
At times, the Company enters into contractual arrangements (derivatives) to reduce its exposure to foreign currency risk. The Company has master netting agreements with all of its counterparties that allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default. The Company manages counterparty risk through the utilization of investment grade commercial banks, diversification of counterparties and its counterparty netting arrangements. The section below outlines the types of derivatives that existed at
June 30, 2018
and
September 30, 2017
, as well as the Company's objectives and strategies for holding derivative instruments.
Foreign Currency Risk
A significant share of the Company's sales is tied to currencies other than the U.S. dollar, the Company's reporting currency. As such, a weakening of currencies relative to the U.S. dollar can have a negative impact on reported earnings. Conversely, strengthening of currencies relative to the U.S. dollar can improve reported results. The primary currencies to which the Company is exposed include the Euro, the Japanese Yen, the British Pound, the Canadian Dollar, the Czech Koruna and the Australian Dollar.
Additionally, the Company's foreign subsidiaries enter into internal and external transactions that create non-functional currency balance sheet positions at the foreign subsidiary level. These exposures are generally the result of intercompany purchases, intercompany loans and, to a lesser extent, external purchases, and are revalued in the foreign subsidiary's local currency at the end of each period. Changes in the value of the non-functional currency balance sheet positions in relation to the foreign subsidiary's local currency results in an exchange gain or loss recorded in Other expense (income), net. The primary currency to which the Company's foreign subsidiaries are exposed is the U.S. dollar.
Cash Flow Hedges
At June 30, 2018
, the Company maintained a cash flow hedging program related to foreign currency risk. These derivative instruments have a high correlation to the underlying exposure being hedged and have been deemed highly effective for accounting purposes in offsetting the associated risk.
The Company entered into a series of forward currency contracts to hedge cash flow uncertainty associated with currency fluctuations. These transactions are accounted for as cash flow hedges. The Company had an unrealized pre-tax gain of
$2.6
and an unrealized pre-tax loss of
$1.6
at
June 30, 2018
and
September 30, 2017
, respectively, on these forward currency contracts accounted for as cash flow hedges, which are included in AOCI. Assuming foreign exchange rates versus the U.S. dollar remain at
June 30, 2018
levels over the next 12 months, the majority of the pre-tax gain included in AOCI at
June 30, 2018
is expected to be included in Other expense (income), net. Contract maturities for these hedges extend into fiscal 2019. There were
64
open foreign currency contracts at
June 30, 2018
with a total notional value of
$137.8
.
Derivatives not Designated as Hedges
The Company entered into foreign currency derivative contracts which are not designated as cash flow hedges for accounting purposes to hedge balance sheet exposures. Any gains or losses on these contracts are expected to be offset by exchange gains or losses on the underlying exposures, thus they are not subject to significant market risk. The change in estimated fair value of the foreign currency contracts for the three and
nine months ended June 30, 2018
resulted in gains of
$3.0
and
$0.2
, respectively, and was recorded in Other expense (income), net. The change in estimated fair value of the foreign currency contracts for the three and nine months ended June 30, 2017 resulted in gains of
$1.6
and
$2.0
, respectively. There were
four
open foreign currency derivative contracts which were not designated as cash flow hedges at
June 30, 2018
, with a total notional value of
$48.0
.
The following table provides estimated fair values of derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value of Asset (Liability)
(1)
|
|
|
June 30,
2018
|
|
September 30,
2017
|
|
Derivatives designated as cash flow hedging relationships:
|
|
|
|
|
Foreign currency contracts
|
$
|
2.6
|
|
|
$
|
(1.6
|
)
|
|
Derivatives not designated as cash flow hedging relationships:
|
|
|
|
|
Foreign currency contracts
|
$
|
1.1
|
|
|
$
|
0.4
|
|
|
|
|
|
(1)
|
All derivative assets are presented in Other current assets or Other assets. All derivative liabilities are presented in Other current liabilities or Other liabilities.
|
The following table provides the amounts of gains and losses on derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Derivatives designated as cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
|
|
|
|
|
|
|
Gain (loss) recognized in OCI
(1)
|
$
|
5.4
|
|
|
$
|
(1.5
|
)
|
|
$
|
1.7
|
|
|
$
|
6.7
|
|
|
Gain (loss) reclassified from AOCI into income (effective portion)
(1) (2)
|
(1.0
|
)
|
|
1.1
|
|
|
(2.5
|
)
|
|
2.5
|
|
|
Derivatives not designated as cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
|
|
|
|
|
|
|
Gain (loss) recognized in income
(2)
|
$
|
3.0
|
|
|
$
|
1.6
|
|
|
$
|
0.2
|
|
|
$
|
2.0
|
|
|
|
|
|
(1)
|
Each of these derivative instruments had a high correlation to the underlying exposure being hedged for the periods indicated and had been deemed highly effective in offsetting associated risk.
|
|
|
|
|
(2)
|
Gain (loss) was recorded in Other expense (income), net.
|
The following table provides financial assets and liabilities for balance sheet offsetting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2018
|
|
At September 30, 2017
|
|
|
Assets
(1)
|
|
Liabilities
(2)
|
|
Assets
(1)
|
|
Liabilities
(2)
|
|
Foreign currency contracts
|
|
|
|
|
|
|
|
|
Gross amounts of recognized assets (liabilities)
|
$
|
4.0
|
|
|
$
|
—
|
|
|
$
|
2.5
|
|
|
$
|
(3.7
|
)
|
|
Gross amounts offset in the balance sheet
|
(0.3
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
Net amounts of assets (liabilities) presented in the balance sheet
|
$
|
3.7
|
|
|
$
|
—
|
|
|
$
|
2.4
|
|
|
$
|
(3.6
|
)
|
|
|
|
|
(1)
|
All derivative assets are presented in Other current assets or Other assets.
|
|
|
|
|
(2)
|
All derivative liabilities are presented in Other current liabilities or Other liabilities.
|
Fair Value Hierarchy
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs reflecting the reporting entity's own assumptions or external inputs from inactive markets.
Under the fair value accounting guidance hierarchy, an entity is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The following table sets forth the Company's financial assets and liabilities, which are carried at fair value and measured on a recurring basis during the period, all of which are classified as level 2 within the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018
|
|
September 30,
2017
|
|
Assets (Liabilities) at estimated fair value:
|
|
|
|
|
Deferred compensation
|
$
|
(47.6
|
)
|
|
$
|
(60.9
|
)
|
|
Derivatives - foreign currency contracts
|
3.7
|
|
|
(1.2
|
)
|
|
Net liabilities at estimated fair value
|
$
|
(43.9
|
)
|
|
$
|
(62.1
|
)
|
At June 30, 2018
and
September 30, 2017
, the Company had no level 1 or level 3 financial assets or liabilities, other than pension plan assets.
At June 30, 2018
and
September 30, 2017
, the fair market value of fixed rate long-term debt was
$1,059.5
and
$1,143.8
, respectively, compared to its carrying value of
$1,096.5
and $
1,095.7
, respectively. The estimated fair value of the long-term debt is estimated using yields obtained from independent pricing sources for similar types of borrowing arrangements. The estimated fair value of variable-rate debt, excluding revolving credit facilities, which consists of bank debt, was
$185.0
compared to its carrying value of
$184.9
and
$184.7
at June 30, 2018 and September 30, 2017, respectively. The estimated fair value is equal to the face value of the debt. The estimated fair value of long-term debt, excluding revolving credit facilities, has been determined based on level 2 inputs.
Due to the nature of cash and cash equivalents and short-term borrowings, including notes payable, carrying amounts on the balance sheets approximate fair value. Additionally, the carrying amounts of the Company's revolving credit facilities, which are classified as long-term debt on the balance sheet, approximate fair value due to the revolving nature of the balances. The estimated fair value of cash and cash equivalents, short-term borrowings and the revolving credit agreements have been determined based on level 2 inputs.
At June 30, 2018
, the estimated fair value of foreign currency contracts is the amount that the Company would receive or pay to terminate the contracts, considering first the quoted market prices of comparable agreements or, in the absence of quoted market prices, factors such as interest rates, currency exchange rates and remaining maturities. The estimated fair value of the deferred compensation liability is determined based upon the quoted market prices of the investment options that are offered under the plan.
Note 15 - Commitments and Contingencies
The Company and its affiliates are subject to a number of legal proceedings in various jurisdictions arising out of its operations during the ordinary course of business. Many of these legal matters are in preliminary stages and involve complex issues of law and fact, and may proceed for protracted periods of time. The amount of liability, if any, from these proceedings cannot be determined with certainty. The Company reviews its legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for those contingencies when the incurrence of a loss is probable and can be reasonably estimated, and discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for its financial statements to not be misleading. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, if the amount cannot be reasonably estimated. Based upon present information, the Company believes that its liability, if any, arising from such pending legal proceedings, asserted legal claims and known potential legal claims, which are likely to be asserted, is not reasonably likely to be material to the Company's financial position, results of operations or cash flows, taking into account established accruals for estimated liabilities.
Note 16 - Segment Data
Segment performance is evaluated based on segment profit, exclusive of general corporate expenses, share-based compensation costs, impairment charges, Jack Black acquisition and integration costs, costs associated with restructuring initiatives, the gain on the sale of the Playtex gloves business and the amortization of intangible assets. Financial items, such as interest income and expense, are managed on a global basis at the corporate level. The exclusion of such charges from segment results reflects management's view on how it evaluates segment performance.
The Company's operating model includes some shared business functions across the segments, including product warehousing and distribution, transaction processing functions and in most cases a combined sales force and management teams. The Company applies a fully allocated cost basis, in which shared business functions are allocated between the segments. Such allocations are estimates, and do not represent the costs of such services if performed on a stand-alone basis.
Segment net sales and profitability are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net Sales
|
|
|
|
|
|
|
|
|
Wet Shave
|
$
|
341.1
|
|
|
$
|
358.5
|
|
|
$
|
980.4
|
|
|
$
|
1,007.3
|
|
|
Sun and Skin Care
|
162.8
|
|
|
161.1
|
|
|
374.2
|
|
|
369.3
|
|
|
Feminine Care
|
84.1
|
|
|
86.4
|
|
|
247.0
|
|
|
258.7
|
|
|
All Other
|
32.6
|
|
|
31.5
|
|
|
95.4
|
|
|
98.2
|
|
|
Total net sales
|
$
|
620.6
|
|
|
$
|
637.5
|
|
|
$
|
1,697.0
|
|
|
$
|
1,733.5
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
|
|
|
|
|
|
|
|
|
Wet Shave
|
$
|
56.0
|
|
|
$
|
59.8
|
|
|
$
|
180.5
|
|
|
$
|
205.0
|
|
|
Sun and Skin Care
|
34.1
|
|
|
42.4
|
|
|
76.9
|
|
|
94.1
|
|
|
Feminine Care
|
11.1
|
|
|
7.6
|
|
|
26.2
|
|
|
17.5
|
|
|
All Other
|
5.5
|
|
|
6.7
|
|
|
17.0
|
|
|
21.3
|
|
|
Total segment profit
|
106.7
|
|
|
116.5
|
|
|
300.6
|
|
|
337.9
|
|
|
|
|
|
|
|
|
|
|
|
General corporate and other expenses
|
(17.5
|
)
|
|
(18.2
|
)
|
|
(54.7
|
)
|
|
(58.1
|
)
|
|
Impairment charge
|
(24.4
|
)
|
|
—
|
|
|
(24.4
|
)
|
|
—
|
|
|
Restructuring and related costs
(1)
|
(15.9
|
)
|
|
(12.8
|
)
|
|
(19.6
|
)
|
|
(25.6
|
)
|
|
Jack Black integration costs
|
(2.3
|
)
|
|
—
|
|
|
(4.9
|
)
|
|
—
|
|
|
Sale of Playtex gloves
|
(0.6
|
)
|
|
—
|
|
|
15.3
|
|
|
—
|
|
|
Amortization of intangibles
|
(4.6
|
)
|
|
(4.0
|
)
|
|
(13.2
|
)
|
|
(12.1
|
)
|
|
Interest and other expense, net
|
(20.0
|
)
|
|
(16.0
|
)
|
|
(58.8
|
)
|
|
(42.2
|
)
|
|
Total earnings before income taxes
|
$
|
21.4
|
|
|
$
|
65.5
|
|
|
$
|
140.3
|
|
|
$
|
199.9
|
|
|
|
|
|
(1)
|
Includes pre-tax Selling, general and administrative expense of
$0.5
for the three and nine months ended June 30, 2018, associated with certain information technology enablement expenses related to Project Fuel. Includes pre-tax Cost of products sold of
$0.3
and
$0.7
for the three and nine months ended June 30, 2017, respectively, associated with obsolescence charges related to the exit of certain non-core product lines as a part of the 2013 Restructuring.
|
Supplemental product information is presented below for net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Razors and blades
|
$
|
304.6
|
|
|
$
|
319.3
|
|
|
$
|
877.5
|
|
|
$
|
896.2
|
|
|
Sun care products
|
132.1
|
|
|
136.9
|
|
|
297.5
|
|
|
305.8
|
|
|
Tampons, pads and liners
|
84.1
|
|
|
86.4
|
|
|
247.0
|
|
|
258.7
|
|
|
Shaving gels and creams
|
36.5
|
|
|
39.2
|
|
|
102.9
|
|
|
111.1
|
|
|
Infant care and other
|
32.6
|
|
|
31.5
|
|
|
95.4
|
|
|
98.2
|
|
|
Skin care products
|
30.7
|
|
|
24.2
|
|
|
76.7
|
|
|
63.5
|
|
|
Total net sales
|
$
|
620.6
|
|
|
$
|
637.5
|
|
|
$
|
1,697.0
|
|
|
$
|
1,733.5
|
|
Note 17 - Guarantor and Non-Guarantor Financial Information
The Company's senior notes issued in May 2011 and May 2012 (collectively, the "Notes") are fully and unconditionally guaranteed on a joint and several basis by the Company's existing and future direct and indirect domestic subsidiaries that are guarantors of any of the Company's credit agreements or other indebtedness for borrowed money (the "Guarantors"). The Guarantors are 100% owned either directly or indirectly by the Company and jointly and severally guarantee the Company's obligations under the Notes and substantially all of the Company's other outstanding indebtedness. The Company's subsidiaries organized outside of the U.S. and certain domestic subsidiaries which are not guarantors of any of the Company's other indebtedness (collectively, the "Non-Guarantors"), do not guarantee the Notes. The subsidiary guarantee with respect to the Notes is subject to release upon sale of all of the capital stock of the Subsidiary Guarantor; if the guarantee under the Company's credit agreements and other indebtedness for borrowed money is released or discharged (other than due to payment under such guarantee); or when the requirements for legal defeasance are satisfied or the obligations are discharged in accordance with the indenture.
Set forth below are the condensed consolidating financial statements presenting the results of operations, financial position and cash flows of Edgewell Personal Care Company (the “Parent Company”), the Guarantors on a combined basis, the Non-Guarantors on a combined basis and eliminations necessary to arrive at the information for the Company, as reported on a consolidated basis. Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among the Parent Company, the Guarantors and the Non-Guarantors.
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
Three Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
|
Net sales
|
$
|
—
|
|
|
$
|
425.1
|
|
|
$
|
278.0
|
|
|
$
|
(82.5
|
)
|
|
$
|
620.6
|
|
|
Cost of products sold
|
—
|
|
|
236.9
|
|
|
163.5
|
|
|
(82.5
|
)
|
|
317.9
|
|
|
Gross profit
|
—
|
|
|
188.2
|
|
|
114.5
|
|
|
—
|
|
|
302.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense
|
—
|
|
|
61.2
|
|
|
39.5
|
|
|
—
|
|
|
100.7
|
|
|
Advertising and sales promotion expense
|
—
|
|
|
70.0
|
|
|
35.3
|
|
|
—
|
|
|
105.3
|
|
|
Research and development expense
|
—
|
|
|
14.9
|
|
|
—
|
|
|
—
|
|
|
14.9
|
|
|
Impairment charge
|
—
|
|
|
24.4
|
|
|
—
|
|
|
—
|
|
|
24.4
|
|
|
Restructuring charges
|
—
|
|
|
13.4
|
|
|
2.0
|
|
|
—
|
|
|
15.4
|
|
|
Sale of Playtex gloves
|
—
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
Interest expense associated with debt
|
13.4
|
|
|
2.8
|
|
|
0.3
|
|
|
—
|
|
|
16.5
|
|
|
Other expense, net
|
—
|
|
|
0.8
|
|
|
2.7
|
|
|
—
|
|
|
3.5
|
|
|
Intercompany service fees
|
—
|
|
|
(3.5
|
)
|
|
3.5
|
|
|
—
|
|
|
—
|
|
|
Equity in earnings of subsidiaries
|
(21.9
|
)
|
|
(25.7
|
)
|
|
—
|
|
|
47.6
|
|
|
—
|
|
|
Earnings before income taxes
|
8.5
|
|
|
29.3
|
|
|
31.2
|
|
|
(47.6
|
)
|
|
21.4
|
|
|
Income tax (benefit) provision
|
(3.6
|
)
|
|
7.4
|
|
|
5.5
|
|
|
—
|
|
|
9.3
|
|
|
Net earnings
|
$
|
12.1
|
|
|
$
|
21.9
|
|
|
$
|
25.7
|
|
|
$
|
(47.6
|
)
|
|
$
|
12.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
12.1
|
|
|
$
|
21.9
|
|
|
$
|
25.7
|
|
|
$
|
(47.6
|
)
|
|
$
|
12.1
|
|
|
Other comprehensive loss, net of tax
|
(30.0
|
)
|
|
(30.0
|
)
|
|
(30.5
|
)
|
|
60.5
|
|
|
(30.0
|
)
|
|
Total comprehensive loss
|
$
|
(17.9
|
)
|
|
$
|
(8.1
|
)
|
|
$
|
(4.8
|
)
|
|
$
|
12.9
|
|
|
$
|
(17.9
|
)
|
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
Nine Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
|
Net sales
|
$
|
—
|
|
|
$
|
1,143.9
|
|
|
$
|
788.5
|
|
|
$
|
(235.4
|
)
|
|
$
|
1,697.0
|
|
|
Cost of products sold
|
—
|
|
|
661.9
|
|
|
465.4
|
|
|
(235.4
|
)
|
|
891.9
|
|
|
Gross profit
|
—
|
|
|
482.0
|
|
|
323.1
|
|
|
—
|
|
|
805.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense
|
—
|
|
|
187.9
|
|
|
113.5
|
|
|
—
|
|
|
301.4
|
|
|
Advertising and sales promotion expense
|
—
|
|
|
139.3
|
|
|
90.6
|
|
|
—
|
|
|
229.9
|
|
|
Research and development expense
|
—
|
|
|
46.5
|
|
|
—
|
|
|
—
|
|
|
46.5
|
|
|
Impairment charge
|
—
|
|
|
24.4
|
|
|
—
|
|
|
—
|
|
|
24.4
|
|
|
Restructuring charges
|
—
|
|
|
15.8
|
|
|
3.3
|
|
|
—
|
|
|
19.1
|
|
|
Sale of Playtex gloves
|
—
|
|
|
(15.3
|
)
|
|
—
|
|
|
—
|
|
|
(15.3
|
)
|
|
Interest expense associated with debt
|
40.1
|
|
|
11.6
|
|
|
0.8
|
|
|
—
|
|
|
52.5
|
|
|
Other expense, net
|
—
|
|
|
1.8
|
|
|
4.5
|
|
|
—
|
|
|
6.3
|
|
|
Intercompany service fees
|
—
|
|
|
(14.6
|
)
|
|
14.6
|
|
|
—
|
|
|
—
|
|
|
Equity in earnings of subsidiaries
|
(113.2
|
)
|
|
(79.1
|
)
|
|
—
|
|
|
192.3
|
|
|
—
|
|
|
Earnings before income taxes
|
73.1
|
|
|
163.7
|
|
|
95.8
|
|
|
(192.3
|
)
|
|
140.3
|
|
|
Income tax (benefit) provision
|
(10.8
|
)
|
|
50.5
|
|
|
16.7
|
|
|
—
|
|
|
56.4
|
|
|
Net earnings
|
$
|
83.9
|
|
|
$
|
113.2
|
|
|
$
|
79.1
|
|
|
$
|
(192.3
|
)
|
|
$
|
83.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
83.9
|
|
|
$
|
113.2
|
|
|
$
|
79.1
|
|
|
$
|
(192.3
|
)
|
|
$
|
83.9
|
|
|
Other comprehensive loss, net of tax
|
(4.9
|
)
|
|
(4.9
|
)
|
|
(6.5
|
)
|
|
11.4
|
|
|
(4.9
|
)
|
|
Total comprehensive income
|
$
|
79.0
|
|
|
$
|
108.3
|
|
|
$
|
72.6
|
|
|
$
|
(180.9
|
)
|
|
$
|
79.0
|
|
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
Three Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
|
Net sales
|
$
|
—
|
|
|
$
|
447.8
|
|
|
$
|
291.4
|
|
|
$
|
(101.7
|
)
|
|
$
|
637.5
|
|
|
Cost of products sold
|
—
|
|
|
247.6
|
|
|
169.5
|
|
|
(101.7
|
)
|
|
315.4
|
|
|
Gross profit
|
—
|
|
|
200.2
|
|
|
121.9
|
|
|
—
|
|
|
322.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense
|
—
|
|
|
63.6
|
|
|
33.9
|
|
|
—
|
|
|
97.5
|
|
|
Advertising and sales promotion expense
|
—
|
|
|
76.9
|
|
|
37.3
|
|
|
—
|
|
|
114.2
|
|
|
Research and development expense
|
—
|
|
|
16.3
|
|
|
0.1
|
|
|
—
|
|
|
16.4
|
|
|
Restructuring charges
|
—
|
|
|
2.5
|
|
|
10.0
|
|
|
—
|
|
|
12.5
|
|
|
Interest expense associated with debt
|
13.4
|
|
|
4.0
|
|
|
0.2
|
|
|
—
|
|
|
17.6
|
|
|
Other income, net
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
(1.6
|
)
|
|
Intercompany service fees
|
—
|
|
|
(4.7
|
)
|
|
4.7
|
|
|
—
|
|
|
—
|
|
|
Equity in earnings of subsidiaries
|
(64.1
|
)
|
|
(31.5
|
)
|
|
—
|
|
|
95.6
|
|
|
—
|
|
|
Earnings before income taxes
|
50.7
|
|
|
73.1
|
|
|
37.3
|
|
|
(95.6
|
)
|
|
65.5
|
|
|
Income tax (benefit) provision
|
(4.2
|
)
|
|
9.0
|
|
|
5.8
|
|
|
—
|
|
|
10.6
|
|
|
Net earnings
|
$
|
54.9
|
|
|
$
|
64.1
|
|
|
$
|
31.5
|
|
|
$
|
(95.6
|
)
|
|
$
|
54.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
54.9
|
|
|
64.1
|
|
|
31.5
|
|
|
(95.6
|
)
|
|
54.9
|
|
|
Other comprehensive income, net of tax
|
40.6
|
|
|
40.6
|
|
|
40.2
|
|
|
(80.8
|
)
|
|
40.6
|
|
|
Total comprehensive income
|
$
|
95.5
|
|
|
$
|
104.7
|
|
|
$
|
71.7
|
|
|
$
|
(176.4
|
)
|
|
$
|
95.5
|
|
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
Nine Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
|
Net sales
|
$
|
—
|
|
|
$
|
1,224.1
|
|
|
$
|
799.3
|
|
|
$
|
(289.9
|
)
|
|
$
|
1,733.5
|
|
|
Cost of products sold
|
—
|
|
|
689.1
|
|
|
474.6
|
|
|
(289.9
|
)
|
|
873.8
|
|
|
Gross profit
|
—
|
|
|
535.0
|
|
|
324.7
|
|
|
—
|
|
|
859.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense
|
—
|
|
|
192.2
|
|
|
103.0
|
|
|
—
|
|
|
295.2
|
|
|
Advertising and sales promotion expense
|
—
|
|
|
159.8
|
|
|
87.5
|
|
|
—
|
|
|
247.3
|
|
|
Research and development expense
|
—
|
|
|
49.6
|
|
|
0.6
|
|
|
—
|
|
|
50.2
|
|
|
Restructuring charges
|
—
|
|
|
7.4
|
|
|
17.5
|
|
|
—
|
|
|
24.9
|
|
|
Interest expense associated with debt
|
40.1
|
|
|
11.1
|
|
|
1.1
|
|
|
—
|
|
|
52.3
|
|
|
Other income, net
|
—
|
|
|
—
|
|
|
(10.1
|
)
|
|
—
|
|
|
(10.1
|
)
|
|
Intercompany service fees
|
—
|
|
|
(17.2
|
)
|
|
17.2
|
|
|
—
|
|
|
—
|
|
|
Equity in earnings of subsidiaries
|
(180.1
|
)
|
|
(88.9
|
)
|
|
—
|
|
|
269.0
|
|
|
—
|
|
|
Earnings before income taxes
|
140.0
|
|
|
221.0
|
|
|
107.9
|
|
|
(269.0
|
)
|
|
199.9
|
|
|
Income tax (benefit) provision
|
(14.1
|
)
|
|
40.9
|
|
|
19.0
|
|
|
—
|
|
|
45.8
|
|
|
Net earnings
|
$
|
154.1
|
|
|
$
|
180.1
|
|
|
$
|
88.9
|
|
|
$
|
(269.0
|
)
|
|
$
|
154.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
154.1
|
|
|
180.1
|
|
|
88.9
|
|
|
(269.0
|
)
|
|
154.1
|
|
|
Other comprehensive income, net of tax
|
20.9
|
|
|
20.9
|
|
|
19.1
|
|
|
(40.0
|
)
|
|
20.9
|
|
|
Total comprehensive income
|
$
|
175.0
|
|
|
$
|
201.0
|
|
|
$
|
108.0
|
|
|
$
|
(309.0
|
)
|
|
$
|
175.0
|
|
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATING BALANCE SHEETS
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
5.6
|
|
|
$
|
212.9
|
|
|
$
|
—
|
|
|
$
|
218.5
|
|
|
Trade receivables, net
|
—
|
|
|
46.5
|
|
|
179.1
|
|
|
—
|
|
|
225.6
|
|
|
Inventories
|
—
|
|
|
191.3
|
|
|
150.1
|
|
|
—
|
|
|
341.4
|
|
|
Other current assets
|
—
|
|
|
49.6
|
|
|
85.7
|
|
|
—
|
|
|
135.3
|
|
|
Total current assets
|
—
|
|
|
293.0
|
|
|
627.8
|
|
|
—
|
|
|
920.8
|
|
|
Investment in subsidiaries
|
3,725.5
|
|
|
1,179.5
|
|
|
—
|
|
|
(4,905.0
|
)
|
|
—
|
|
|
Intercompany receivables, net
(1)
|
—
|
|
|
849.0
|
|
|
56.8
|
|
|
(905.8
|
)
|
|
—
|
|
|
Property, plant and equipment, net
|
—
|
|
|
319.2
|
|
|
108.3
|
|
|
—
|
|
|
427.5
|
|
|
Goodwill
|
—
|
|
|
1,037.5
|
|
|
413.2
|
|
|
—
|
|
|
1,450.7
|
|
|
Other intangible assets, net
|
—
|
|
|
889.8
|
|
|
214.4
|
|
|
—
|
|
|
1,104.2
|
|
|
Other assets
|
1.1
|
|
|
0.1
|
|
|
32.2
|
|
|
—
|
|
|
33.4
|
|
|
Total assets
|
$
|
3,726.6
|
|
|
$
|
4,568.1
|
|
|
$
|
1,452.7
|
|
|
$
|
(5,810.8
|
)
|
|
$
|
3,936.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
$
|
6.4
|
|
|
$
|
506.3
|
|
|
$
|
224.0
|
|
|
$
|
—
|
|
|
$
|
736.7
|
|
|
Intercompany payables, net
(1)
|
905.8
|
|
|
—
|
|
|
—
|
|
|
(905.8
|
)
|
|
—
|
|
|
Long-term debt
|
1,096.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,096.5
|
|
|
Deferred income tax liabilities
|
—
|
|
|
115.9
|
|
|
35.1
|
|
|
—
|
|
|
151.0
|
|
|
Other liabilities
|
—
|
|
|
220.4
|
|
|
14.1
|
|
|
—
|
|
|
234.5
|
|
|
Total liabilities
|
2,008.7
|
|
|
842.6
|
|
|
273.2
|
|
|
(905.8
|
)
|
|
2,218.7
|
|
|
Total shareholders' equity
|
1,717.9
|
|
|
3,725.5
|
|
|
1,179.5
|
|
|
(4,905.0
|
)
|
|
1,717.9
|
|
|
Total liabilities and shareholders' equity
|
$
|
3,726.6
|
|
|
$
|
4,568.1
|
|
|
$
|
1,452.7
|
|
|
$
|
(5,810.8
|
)
|
|
$
|
3,936.6
|
|
|
|
|
|
(1)
|
Intercompany activities include product purchases between Guarantors and Non-Guarantors, charges for services provided by the Parent Company and various subsidiaries to other affiliates within the consolidated entity and other intercompany activities in the normal course of business.
|
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATING BALANCE SHEETS
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
6.4
|
|
|
$
|
496.5
|
|
|
$
|
—
|
|
|
$
|
502.9
|
|
|
Trade receivables, net
|
—
|
|
|
34.4
|
|
|
189.7
|
|
|
—
|
|
|
224.1
|
|
|
Inventories
|
—
|
|
|
198.7
|
|
|
134.8
|
|
|
—
|
|
|
333.5
|
|
|
Other current assets
|
—
|
|
|
46.3
|
|
|
79.4
|
|
|
—
|
|
|
125.7
|
|
|
Total current assets
|
—
|
|
|
285.8
|
|
|
900.4
|
|
|
—
|
|
|
1,186.2
|
|
|
Investment in subsidiaries
|
3,554.1
|
|
|
1,363.2
|
|
|
—
|
|
|
(4,917.3
|
)
|
|
—
|
|
|
Intercompany receivables, net
(1)
|
—
|
|
|
644.2
|
|
|
54.7
|
|
|
(698.9
|
)
|
|
—
|
|
|
Property, plant and equipment, net
|
—
|
|
|
335.7
|
|
|
117.7
|
|
|
—
|
|
|
453.4
|
|
|
Goodwill
|
—
|
|
|
1,061.9
|
|
|
384.0
|
|
|
—
|
|
|
1,445.9
|
|
|
Other intangible assets, net
|
—
|
|
|
900.3
|
|
|
171.4
|
|
|
—
|
|
|
1,071.7
|
|
|
Other assets
|
1.6
|
|
|
0.1
|
|
|
29.9
|
|
|
—
|
|
|
31.6
|
|
|
Total assets
|
$
|
3,555.7
|
|
|
$
|
4,591.2
|
|
|
$
|
1,658.1
|
|
|
$
|
(5,616.2
|
)
|
|
$
|
4,188.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
$
|
19.3
|
|
|
$
|
259.8
|
|
|
$
|
245.3
|
|
|
$
|
—
|
|
|
$
|
524.4
|
|
|
Intercompany payables, net
(1)
|
698.9
|
|
|
—
|
|
|
—
|
|
|
(698.9
|
)
|
|
—
|
|
|
Long-term debt
|
1,095.4
|
|
|
430.0
|
|
|
—
|
|
|
—
|
|
|
1,525.4
|
|
|
Deferred income tax liabilities
|
—
|
|
|
147.6
|
|
|
34.2
|
|
|
—
|
|
|
181.8
|
|
|
Other liabilities
|
0.4
|
|
|
199.7
|
|
|
15.4
|
|
|
—
|
|
|
215.5
|
|
|
Total liabilities
|
1,814.0
|
|
|
1,037.1
|
|
|
294.9
|
|
|
(698.9
|
)
|
|
2,447.1
|
|
|
Total shareholders' equity
|
1,741.7
|
|
|
3,554.1
|
|
|
1,363.2
|
|
|
(4,917.3
|
)
|
|
1,741.7
|
|
|
Total liabilities and shareholders' equity
|
$
|
3,555.7
|
|
|
$
|
4,591.2
|
|
|
$
|
1,658.1
|
|
|
$
|
(5,616.2
|
)
|
|
$
|
4,188.8
|
|
|
|
|
|
(1)
|
Intercompany activities include product purchases between Guarantors and Non-Guarantors, charges for services provided by the Parent Company and various subsidiaries to other affiliates within the consolidated entity and other intercompany activities in the normal course of business.
|
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Nine Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
|
Net cash flow from operations
|
$
|
126.6
|
|
|
$
|
343.2
|
|
|
$
|
73.7
|
|
|
$
|
(350.2
|
)
|
|
$
|
193.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
(31.3
|
)
|
|
(10.5
|
)
|
|
—
|
|
|
(41.8
|
)
|
|
Acquisitions, net of cash acquired
|
—
|
|
|
(90.2
|
)
|
|
—
|
|
|
—
|
|
|
(90.2
|
)
|
|
Playtex glove sale
|
—
|
|
|
19.0
|
|
|
—
|
|
|
—
|
|
|
19.0
|
|
|
Proceeds from sale of assets
|
—
|
|
|
4.7
|
|
|
—
|
|
|
—
|
|
|
4.7
|
|
|
Net cash used by investing activities
|
—
|
|
|
(97.8
|
)
|
|
(10.5
|
)
|
|
—
|
|
|
(108.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Cash proceeds from debt with original maturities greater than 90 days
|
—
|
|
|
477.0
|
|
|
—
|
|
|
—
|
|
|
477.0
|
|
|
Cash payments on debt with original maturities greater than 90 days
|
—
|
|
|
(722.0
|
)
|
|
—
|
|
|
—
|
|
|
(722.0
|
)
|
|
Net (decrease) increase in debt with original maturities of 90 days or less
|
—
|
|
|
(1.2
|
)
|
|
1.4
|
|
|
—
|
|
|
0.2
|
|
|
Common shares purchased
|
(124.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(124.4
|
)
|
|
Intercompany dividend
|
—
|
|
|
—
|
|
|
(350.2
|
)
|
|
350.2
|
|
|
—
|
|
|
Employee shares withheld for taxes
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
|
Net cash used by financing activities
|
(126.6
|
)
|
|
(246.2
|
)
|
|
(348.8
|
)
|
|
350.2
|
|
|
(371.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
—
|
|
|
(0.8
|
)
|
|
(283.6
|
)
|
|
—
|
|
|
(284.4
|
)
|
|
Cash and cash equivalents, beginning of period
|
—
|
|
|
6.4
|
|
|
496.5
|
|
|
—
|
|
|
502.9
|
|
|
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
5.6
|
|
|
$
|
212.9
|
|
|
$
|
—
|
|
|
$
|
218.5
|
|
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Nine Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
|
Net cash flow from operations
|
$
|
108.3
|
|
|
$
|
8.3
|
|
|
$
|
88.4
|
|
|
$
|
(70.0
|
)
|
|
$
|
135.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
(36.0
|
)
|
|
(9.4
|
)
|
|
—
|
|
|
(45.4
|
)
|
|
Acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
(34.0
|
)
|
|
—
|
|
|
(34.0
|
)
|
|
Proceeds from sale of assets
|
—
|
|
|
5.9
|
|
|
—
|
|
|
—
|
|
|
5.9
|
|
|
Net cash used by investing activities
|
—
|
|
|
(30.1
|
)
|
|
(43.4
|
)
|
|
—
|
|
|
(73.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Cash proceeds from debt with original maturities greater than 90 days
|
—
|
|
|
181.0
|
|
|
—
|
|
|
—
|
|
|
181.0
|
|
|
Cash payments on debt with original maturities greater than 90 days
|
—
|
|
|
(146.0
|
)
|
|
(277.0
|
)
|
|
—
|
|
|
(423.0
|
)
|
|
Net increase (decrease) in debt with original maturities of 90 days or less
|
—
|
|
|
0.7
|
|
|
(0.6
|
)
|
|
—
|
|
|
0.1
|
|
|
Common shares purchased
|
(94.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(94.6
|
)
|
|
Intercompany dividends
|
—
|
|
|
—
|
|
|
(70.0
|
)
|
|
70.0
|
|
|
—
|
|
|
Employee shares withheld for taxes
|
(15.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.6
|
)
|
|
Excess tax benefits from share-based payments
|
1.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|
Net cash (used by) from financing activities
|
(108.3
|
)
|
|
35.7
|
|
|
(347.6
|
)
|
|
70.0
|
|
|
(350.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
4.7
|
|
|
—
|
|
|
4.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
—
|
|
|
13.9
|
|
|
(297.9
|
)
|
|
—
|
|
|
(284.0
|
)
|
|
Cash and cash equivalents, beginning of period
|
—
|
|
|
5.8
|
|
|
733.1
|
|
|
—
|
|
|
738.9
|
|
|
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
19.7
|
|
|
$
|
435.2
|
|
|
$
|
—
|
|
|
$
|
454.9
|
|