Related Party Transactions (Notes)

3 Months Ended

Dec. 31, 2021

Related Party Transactions [Abstract]

Related party transactions

RELATED PARTY TRANSACTIONS

The Company uses certain functions and services performed by Post. These functions and services include legal, finance, internal audit, treasury, information technology support, insurance and tax matters, the use of office and/or data center space, payroll processing services and tax compliance services. These functions and services are provided by Post under a master services agreement (the “MSA”). In addition to charges for these services, the Company also incurs certain pass-through charges from Post, primarily relating to stock-based compensation for employees participating in Post’s stock-based compensation plans. For the three months ended December 31, 2021, MSA fees were $0.6 and stock-based compensation expense related to Post’s stock-based compensation plans was $0.5. For the three months ended December 31, 2020, MSA fees were $0.6 and stock-based compensation expense related to Post’s stock-based compensation plans was $0.8. MSA fees and stock-based compensation expense were reported in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations.

The Company sells certain products to, purchases certain products from and licenses certain intellectual property to and from Post and its subsidiaries based upon pricing governed by agreements between the Company and Post and its subsidiaries, consistent with pricing of similar arm's-length transactions. During each of the three months ended December 31, 2021 and 2020, net sales to, purchases from and royalties paid to and received from Post and its subsidiaries were immaterial.

In the first quarter of fiscal 2022, Premier Nutrition Company, LLC (“Premier Nutrition”), a subsidiary of the Company, and Michael Foods, Inc. (“MFI”), a subsidiary of Post, entered into a reimbursement agreement relating to a proposed contract manufacturing relationship (the “Co-Man Arrangement”) between Premier Nutrition and MFI. Pursuant to the reimbursement agreement, prior to the execution of a definitive agreement governing the Co-Man Arrangement, Premier Nutrition will indemnify MFI for certain costs and expenses incurred in the evaluation and acquisition of property for the Co-Man Arrangement. For the three months ended December 31, 2021, Premier Nutrition did not reimburse MFI for any amounts under the reimbursement agreement.

The Company has a series of agreements with Post which are intended to govern the ongoing relationship between the Company and Post. These agreements include the amended and restated limited liability company agreement of BellRing LLC (the “BellRing LLC Agreement”), an employee matters agreement, an investor rights agreement, a tax matters agreement, a tax receivable agreement and the MSA, among others. Under certain of these agreements, the Company incurs expenses payable to Post in connection with certain administrative services provided for varying lengths of time. The Company had immaterial receivables with Post at both December 31, 2021 and September 30, 2021 related to sales with Post and its subsidiaries. The Company had $0.9 and $2.2 of payables with Post at December 31, 2021 and September 30, 2021, respectively, related to MSA fees and pass-through charges owed by the Company to Post, as well as related party purchases. The receivables and payables were included in “Receivables, net” and “Accounts payable,” respectively, on the Condensed Consolidated Balance Sheets. During the three months ended December 31, 2021, BellRing LLC paid $3.2 to Post related to quarterly tax distributions from BellRing LLC to Post made pursuant to the terms of the BellRing LLC Agreement and had immaterial payments for state corporate tax withholdings on behalf of Post. During the three months ended December 31, 2020, BellRing LLC paid $3.2 to Post related to quarterly tax distributions from BellRing LLC to Post made pursuant to the terms of the BellRing LLC Agreement and $0.4 for state corporate tax withholdings on behalf of Post.

Based on the provisions of the tax receivable agreement, BellRing Inc. must pay to Post (or certain of its transferees or other assignees) 85% of the amount of cash savings, if any, in U.S. federal income tax, as well as state and local income tax and franchise tax (using an assumed tax rate) and foreign tax that BellRing Inc. realizes (or, in some circumstances, is deemed to realize) as a result of (a) the increase in the tax basis of assets of BellRing LLC attributable to (i) the redemption of Post’s (or certain transferees’ or assignees’) BellRing LLC units for shares of Class A Common Stock or cash, (ii) deemed sales by Post (or certain of its transferees or assignees) of BellRing LLC units or assets to BellRing Inc., (iii) certain actual or deemed

distributions from BellRing LLC to Post (or certain transferees or assignees) and (iv) certain formation transactions, (b) disproportionate allocations of tax benefits to BellRing Inc. as a result of Section 704(c) of the Internal Revenue Code and (c) certain tax benefits (e.g., imputed interest, basis adjustments, etc.) attributable to payments under the tax receivable agreement.

Amounts payable to Post related to the tax receivable agreement of $0.3 and $10.2 were recorded in “Accounts Payable” and “Other liabilities,” respectively, on the Condensed Consolidated Balance Sheets at both December 31, 2021 and September 30, 2021.

In connection with completion of the Separation, Distribution and Merger transactions, the Company, New BellRing and Post will amend and restate the MSA and the employee matters agreement and will enter into a tax matters agreement. Further, the current investor rights agreement between the Company and Post will be terminated, and New BellRing and Post will enter into a registration rights agreement.