Divestment

6 Months Ended

Mar. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

As discussed in Note 1, Description of Business and Basis of Presentation, the Divestment Business was classified as discontinued operations in the accompanying Consolidated (Condensed) Statements of Earnings and Comprehensive Income and as held for sale in the accompanying Consolidated (Condensed) Balance Sheet as of September 30, 2019.

On May 29, 2019, the Company entered into a definitive purchase agreement with VARTA AG to sell the Divestment Business for €180.0, subject to approval by the European Commission and certain purchase price adjustments. On January 2, 2020, the Company sold the business to VARTA AG and received cash proceeds of $345.8 from Varta AG and Spectrum, together with proceeds from related hedging arrangements. Spectrum contributed proceeds pursuant to the terms of the Battery Acquisition agreement. The cash proceeds are subject to a working capital settlement and other contractual adjustments which is expected to be completed in the third fiscal quarter.

The Company has recorded a pre-tax loss of $137.6 for the divestment, which includes an estimate for the working capital settlement, contractual adjustments and recognition of tax and other indemnifications under the definitive purchase agreement. Under the definitive purchase agreement, the Company indemnified VARTA AG for certain tax liabilities that existed as of the divestment date. As previously disclosed, Spectrum has further indemnified the Company for those liabilities that arose from the tax years prior to the Company's acquisition of the Divestment Business. An indemnification asset and liability, where necessary, has been recorded to reflect these arrangements.

The following table summarizes the assets and liabilities of the Divestment Business classified as held for sale as of September 30, 2019:



	September 30, 2019
Assets
Trade receivables	$	50.9
Inventories	59.8
Other current assets	41.5
Property, plant and equipment, net	78.8
Goodwill	50.5
Other intangible assets, net	489.0
Other assets	21.2
Assets held for sale	$	791.7
Liabilities
Current portion of capital leases	$	5.3
Accounts payable	45.9
Notes payable	0.6
Other current liabilities	99.8
Long-term debt	23.5
Long term deferred tax liability	169.9
Other liabilities (1)	57.9
Liabilities held for sale	$	402.9

(1) Included in Other liabilities are pension liabilities of $42.4 related to the Divestment Business as of September 30, 2019, respectively.

The following table summarizes the components of Net loss from discontinued operations in the accompanying Consolidated (Condensed) Statement of Earnings and Comprehensive Income for the quarter and six months ended March 31, 2020 and 2019.



	For the Quarter Ended March 31,						For the Six Months Ended March 31,
	2020			2019			2020			2019
Net sales	$	—		$	80.2		$	115.8		$	80.2
Cost of products sold	—			69.8			88.2			69.8
Gross profit	—			10.4			27.6			10.4
Selling, general and administrative expense	0.6			21.1			18.0			21.1
Advertising and sales promotion expense	—			0.3			0.3			0.3
Research and development expense	—			—			0.8			—
Interest expense	6.9			6.7			12.1			6.7
TSA income	—			—			(3.8		)	—
Loss on sale of disposition	137.6			—			137.6			—
Other items, net	—			(3.8		)	(0.1		)	(3.8		)
Loss before income taxes	(145.1		)	(13.9		)	(137.3		)	(13.9		)
Income tax benefit	(13.7		)	(2.9		)	(6.2		)	(2.9		)
Net loss from discontinued operations	$	(131.4	)	$	(11.0	)	$	(131.1	)	$	(11.0	)

Included in the Net loss from discontinued operations for the quarter and six months ended March 31, 2020, are divestment related pre-tax costs of $0.6 and $1.7, respectively. Also included in the Net loss from discontinued operations for the quarter and six months ended March 31, 2020 is the write off of $6.9 of deferred financing fees related to the pre-payment of debt from the divestment proceeds. For the six months ended March 31, 2020 the Net loss from discontinued operations included $5.0 of allocated pre-tax interest expense.

Included in the Net loss from discontinued operations for the quarter and six months ended March 31, 2019, are the inventory fair value pre-tax adjustment of $11.2, divestment related pre-tax costs of $5.7 and allocated pre-tax interest expense of $6.2.