Acquisition

9 Months Ended

Jun. 30, 2020

AcquisitionsFormulations Acquisition - During the first quarter of fiscal 2021, the Company entered into an agreement with Green Global Holdings, LLC to acquire a North Carolina-based company that specializes in developing formulations for cleaning tasks (Formulations Acquisition). On December 1, 2020, the Formulations Acquisition was completed for a cash purchase price of $51.2, subject to post-closing working capital adjustments. The product formulations

are both sold to customers directly and licensed to manufacturers. This acquisition is expected to bring significant innovation capabilities in formulations to the Company.

The acquisition is being accounted for as a business combination using the acquisition method of accounting which requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. The preliminary fair value of proprietary technology acquired and customer relationships were determined by applying the multi-period excess earnings method under the income approach.

The following table outlines the preliminary purchase price allocation as of the date of acquisition:



Trade receivables	$	1.8
Inventories	0.1


Goodwill	29.2
Other intangible assets, net	20.5
Operating lease assets	0.5
Accounts payable	(0.2)
Current operating lease liabilities	(0.2)
Other current liabilities	(0.2)
Operating lease liabilities	(0.3)
Net assets acquired	$	51.2

The table below identifies the initial estimate for purchased intangible assets of $20.5:


	Total		Weighted Average Useful Lives
Proprietary technology	$	19.5	7
Customer relationships	1.0		15

Total Other intangible assets, net	$	20.5

The Company will continue to review its allocation of fair value to assets acquired and liabilities assumed for this acquisition, including income tax considerations. The goodwill acquired in this acquisition is attributable to the value the Company expects to achieve from the significant innovation capabilities in formulations that the acquired company will bring to our organization, as well as the workforce acquired. The goodwill has been allocated to the Americas segment. The goodwill is deductible for tax purposes.

In conjunction with the acquisition, the Company entered into incentive compensation agreements with certain key personnel. These agreements allow for potential earn out payments of up to $35.0 based on the achievement of a combination of financial and product development and commercialization performance targets and continued employment with the Company. These agreements are not considered a component of the acquisition purchase price but rather as employee compensation arrangements. The Company has recognized $2.3 of the total potential payments based on estimated earn out achieved at June 30, 2021. This was recorded on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income in Selling, general and administrative expense and in Other current liabilities on the Consolidated (Condensed) Balance Sheet.

FDK Indonesia Acquisition - During fourth quarter of fiscal 2020, the Company entered into an agreement with FDK Corporation to acquire its subsidiary PT FDK Indonesia, a battery manufacturing facility (FDK Indonesia Acquisition). On October 1, 2020, the Company completed the acquisition for a contractual purchase price of $18.2. After contractual and working capital adjustments, the Company initially paid cash of $16.9 and paid $0.7 for a working capital adjustment during the nine months ending June 30, 2021. The acquisition of the FDK Indonesia facility increased the Company's alkaline battery production capacity and allows for the avoidance of future planned capital expenditures.

The FDK Indonesia Acquisition is being accounted for as a business combination using the acquisition method of accounting which requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. The fair value of the Property, plant and equipment were estimated using the cost approach. After

determining the fair value of the real property acquired, allocation of purchase price for the acquisition resulted in no intangible assets or goodwill.

The following table outlines the purchase price allocation as of the date of acquisition:


Cash and cash equivalents	$	1.7
Trade receivables	4.3
Inventories	8.3
Other current assets	0.6
Property, plant and equipment, net	19.6


Other assets	0.7
Accounts payable	(10.0)
Other current liabilities	(1.2)
Other liabilities	(6.4)
Net assets acquired	$	17.6

The Company will continue to review its allocation of fair value to assets acquired and liabilities assumed for this acquisition, including income tax considerations.

Custom Accessories Europe Acquisition - On January 31, 2020, the Company entered into a share purchase agreement to acquire Custom Accessories Europe Group International Limited (CAE) for $1.9 in cash. CAE is a well-established marketer of branded automotive accessories throughout the United Kingdom and Europe. CAE partners with major automotive accessory brand owners to identify and develop complimentary brand extensions supported by sourcing and distribution activities. The purchase agreement has earn out payments that could increase the purchase price up to $9.9 if certain financial metrics are achieved over the next three years. During the first quarter of fiscal 2021, the Company determined that it is likely the full earn out payment will be met over the next three years and increased the purchase price to $9.9. The Company has allocated the purchase price to the assets acquired and liabilities assumed, resulting in identified intangible assets for vendor relationships of approximately $8.0, which will be amortized over the three-year lives of the vendor agreements.

During the second quarter of fiscal 2021, CAE achieved the next earn out threshold under the share purchase agreement, which resulted in a cash payment of $3.9. Subsequent to June 30, 2021, it was determined that CAE achieved the full earn out payment under the agreement. The Company expects to make the final earn out payment of $2.9 during the fourth quarter of fiscal 2021.

Pro Forma Financial Information- Pro forma results for the Formulations Acquisition, FDK Indonesia Acquisition and CAE acquisition were not considered material and, as such, are not included.

Acquisition and Integration Costs- Acquisition and integration costs incurred during fiscal year 2021 and 2020 relate to the FDK Indonesia Acquisition, Formulations Acquisition, and the Battery and Auto Care Acquisitions which occurred in fiscal year 2019. The Company incurred pre-tax acquisition and integration costs of $19.5 and $54.6 in the quarter and nine months ended June 30, 2021, respectively, and $11.4 and $47.6 for the quarter and nine months ended June 30, 2020, respectively, related to these acquisitions.

Pre-tax costs recorded in Costs of products sold were $9.6 and $24.6 for the quarter and nine months ended June 30, 2021, respectively, and $5.5 and $20.7 for the quarter and nine months ended June 30, 2020, respectively, primarily related to the facility exit and restructuring related costs, discussed in Note 5, Restructuring.

Pre-tax acquisition and integration costs recorded in Selling, general and administrative expense (SG&A) were $9.7 and $28.7 for the quarter and nine months ended June 30, 2021, respectively, related to the integration of the Battery and Auto Care acquisitions, including costs of integrating the auto care information technology systems of the businesses and consulting costs associated with the 2020 restructuring program discussed in Note 5, Restructuring, and legal fees incurred for the fiscal year 2021 acquisitions. Pre-tax acquisition and integration costs recorded in SG&A were $6.1 and $25.3 for the quarter and nine months ended June 30, 2020, respectively, related

to the integration of the Battery and Auto Care Acquisitions, including consulting fees and costs of integrating both the battery and auto care information technology systems of the business.

For the quarter and nine months ended June 30, 2021, the Company recorded $0.1 and $1.1, respectively, of acquisition and integration related costs in research and development. For the quarter and nine months ended June 30, 2020, the Company recorded $0.2 and $1.2, respectively, in research and development.

Included in Other items, net for the quarter and nine months ended June 30, 2021 was $0.1 and $0.2 of acquisition and integration costs, respectively. Other items, net for the quarter and nine months ended June 30, 2020 included pre-tax income of $0.4 and expense of $0.4, respectively. The prior year pre-tax expense included a $2.2 loss related to the hedge contract on the proceeds from the Varta Divestiture, offset by a $1.0 gain on the sale of assets and $0.8 of transition services income.