NOTE 19 - SEGMENT INFORMATION

The Company identifies its segments based upon the internal organization that is used by management for making operating decisions and assessing performance as the source of its reportable segments. As a result of the GBL and GAC planned divestitures, and changes to the Company’s plan to sell its HPC division, the manner in which management views its business activities and the reportable segments changed. Spectrum had historically recognized GBL and HPC as components to Global Batteries and Appliances (GBA) as a separate reportable segment. Effective December 29, 2017, the Company had an approved a plan to sell its GBA segment and had classified it as held for sale up and excluded it from segment reporting until November 2018, when the decision was made to change its plan to sell HPC and recognize it as a component of continuing operations. See Note 3 – Divestitures for further details on GBL and GAC divestitures, and the change in plan to sell HPC. HPC has been recognized as a component of continuing operations and as a separate operating and reportable segment.

Spectrum manages its continuing operations in vertically integrated, product-focused reporting segments: (i) HHI, which consists of the Spectrum’s worldwide hardware, security and plumbing business; (ii) PET, which consists of the Spectrum’s worldwide pet supplies business; (iii) H&G, which consists of the Spectrum’s home and garden and insect control business and (iv) HPC, which consists of the Spectrum’s small kitchen and personal care appliances businesses. Global strategic initiatives and financial objectives for each reportable segment are determined at the corporate level. Each segment is responsible for implementing defined strategic initiatives and achieving certain financial objectives and has a president or general manager responsible for the sales and marketing initiatives and financial results for product lines within the segment. Net sales relating to the segments for the three month periods ended December 30, 2018 and December 31, 2017 are as follows:


	Three month periods ended
(in millions)	December 30, 2018		December 31, 2017
HHI	$	305.1	$	325.9
HPC		317.2		342.0
PET		204.7		202.4
H&G		47.6		49.3
Net sales	$	874.6	$	919.6

The Chief Operating Decision Maker of the Company uses Adjusted EBITDA as the primary operating metric in evaluating the business and making operating decisions. EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from net income. Adjusted EBITDA further excludes:

Stock based and other incentive compensation costs that consist of costs associated with long-term compensation arrangements and other equity based compensation based upon achievement of long-term performance metrics; and generally consist of non-cash, stock-based compensation. During the three month period ended December 30, 2018, the Company issued certain incentive bridge awards due to changes in the Company’s long-term compensation plans that allow for cash based payment upon employee election, which are included in the adjustment, but would not qualify for shared-based compensation. See Note 15 - Share Based Compensation for further discussion;

Acquisition, divestiture and integration related charges that consist of transaction costs from qualifying acquisition transactions during the period, or subsequent integration related project costs directly associated with an acquired business;

Restructuring and related charges, which consist of project costs associated with restructuring initiatives across the segments, see Note 5 - Restructuring and Related Charges in Notes to the Condensed Consolidated Financial Statements, included elsewhere within this Quarterly Report for further details;

Divestiture related transaction costs that are recognized in continuing operations due to the change in plan to cease marketing and selling of the HPC business;

Non-cash purchase accounting inventory adjustments recognized in earnings from continuing operations subsequent to an acquisition (when applicable);

Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations (when applicable);

Incremental costs associated with a safety recall in PET.

Transactions costs directly associated with the Spectrum Merger during the three month period ended December 31, 2017;

Non-recurring HRG net operating costs during the period ended December 31, 2017, considered to be redundant or duplicative as a result of the Spectrum Merger and not considered a component of the continuing commercial products company post-merger, including compensation and benefits, directors fees, professional fees, insurance, public company costs, amongst others, and including interest and other non-recurring income that will ultimately be eliminated following the transaction; and

Other adjustments primarily consisting of incremental costs for separation of key senior executives, costs attributable to flood damage at the Company’s facilities in Middleton, Wisconsin, and certain fines and penalties from customers for delayed shipments following the closure of a PET distribution center consolidation in EMEA for the three month period ended December 30, 2018.

Segment Adjusted EBITDA for the reportable segments for SBH for the three month periods ended December 30, 2018 and December 31, 2017 are as follows:


	Three month periods ended
SBH (in millions)	December 30, 2018		December 31, 2017
HHI	$	55.6	$	60.0
HPC		35.0		41.7
PET		29.1		34.1
H&G		3.1		5.4
Total Segment Adjusted EBITDA		122.8		141.2
Corporate expenses		7.5		8.5
Interest expense		57.0		75.4
Depreciation and amortization		66.0		38.5
Share-based compensation		6.0		4.5
Acquisition and integration related charges		1.6		5.3
Restructuring and related charges		9.1		17.1
HPC divestiture related charges		4.7		—
Inventory acquisition step-up		—		0.8
Pet safety recall		0.6		7.3
Spectrum merger related transaction charges		—		2.8
Non-recurring HRG operating costs		—		4.3
Other		3.2		—
Loss from operations before income taxes	$	(32.9)	$	(23.3)

NOTE 19 - SEGMENT INFORMATION (continued)

Segment Adjusted EBITDA for reportable segments for SB/RH for the three month periods ended December 30, 2018 and December 31, 2017 are as follows:


	Three month periods ended
SB/RH (in millions)	December 30, 2018		December 31, 2017
HHI	$	55.6	$	60.0
PET		35.0		41.7
H&G		29.1		34.1
HPC		3.1		5.4
Total Segment Adjusted EBITDA		122.8		141.2
Corporate expenses		6.6		8.3
Interest expense		43.2		38.5
Depreciation and amortization		66.0		38.4
Share-based compensation		5.6		3.5
Acquisition and integration related charges		1.6		5.3
Restructuring and related charges		9.1		17.1
HPC divestiture related charges		4.7		—
Inventory acquisition step-up		—		0.8
Pet safety recall		0.6		7.3
Other		3.2		—
(Loss) Income from continuing operations before income taxes	$	(17.8)	$	22.0