EDGEWELL PERSONAL CARE CO Management’s discussion and analysis of the financial position and results of operations. (form 10-K)

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(in millions, except per share data)
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our Consolidated Financial
Statements and the accompanying notes included in this Annual Report on Form
10-K. The following discussion may contain forward-looking statements that
reflect our plans, estimates and beliefs and involve risks, uncertainties and
assumptions. Our actual results could differ materially from those discussed in
these forward-looking statements. Factors that could cause or contribute to
these differences include those discussed in Item 1A. Risk Factors and
"Forward-Looking Statements" included within this Annual Report on Form 10-K.
Non-GAAP Financial Measures
While we report financial results in accordance with GAAP, this discussion also
includes non-GAAP measures. These non-GAAP measures are referred to as
"adjusted" or "organic" and exclude items such as restructuring charges,
acquisition and integration costs, cost of early debt retirement, UK tax rate
increase, impairment charges, COVID-19 pandemic expenses, advisory expenses in
connection with the evaluation of the Feminine and Infant Care businesses, Sun
Care reformulation costs, investor settlement expenses, the disposition of the
Infant and Pet Care business, the related tax effects of these items and the
impact of the Tax Act. Reconciliations of non-GAAP measures are included within
this Management's Discussion and Analysis of Financial Condition and Results of
Operations.
This non-GAAP information is provided as a supplement to, not as a substitute
for, or as superior to, measures of financial performance prepared in accordance
with GAAP. We use this non-GAAP information internally to make operating
decisions and believe it is helpful to investors because it allows more
meaningful period-to-period comparisons of ongoing operating results. Given the
various significant events, including the Project Fuel restructuring and recent
acquisitions and divestitures, we view the use of non-GAAP measures that take
into account the impact of these unique events as particularly valuable in
understanding our underlying operational results and providing insights into
future performance. The information can also be used to perform trend analysis
and to better identify operating trends that may otherwise be masked or
distorted by the types of items that are excluded. This non-GAAP information is
also a component in determining management's incentive compensation. Finally, we
believe this information provides more transparency. The following provides
additional detail on our non-GAAP measures:
•We analyze our net sales and segment profit on an organic basis to better
measure the comparability of results between periods. Organic net sales and
organic segment profit exclude the impact of changes in foreign currency,
acquisitions, and divestitures. This information is provided because these types
of fluctuations can distort the underlying change in net sales and segment
profit either positively or negatively.
•We utilize "adjusted" non-GAAP measures including gross profit, SG&A, operating
income, income taxes, net earnings, and diluted earnings per share internally to
make operating decisions. The following items are excluded when analyzing
non-GAAP measures: restructuring charges, acquisition and integration costs,
cost of early debt retirement, UK tax rate increase, impairment charges,
COVID-19 pandemic expenses, advisory expenses in connection with the evaluation
of the Feminine and Infant Care businesses, Sun Care reformulation costs,
investor settlement expenses, the disposition of the Infant and Pet Care
business, and the impact of the Tax Act.
All comparisons are with the same period in the prior year, unless otherwise
noted.

Impact of COVID-19
On March 11, 2020, the World Health Organization declared the novel coronavirus
2019 ("COVID-19") a worldwide pandemic, which has impacted individuals,
families, companies and economies around the world. Throughout the pandemic, we
have taken and continue to take significant measures to protect our employees
and business, while remaining in compliance with local guidelines and
requirements.
The Company's top priority during this time continues to be ensuring the health
and welfare of our employees and additional measures have been put in place at
all of our manufacturing locations. To date, we have not experienced any
material operational disruptions across our manufacturing or distribution
facilities.
The prolonged COVID-19 environment has resulted in increased supply chain
challenges across product procurement and distribution. The continued duration
and severity of COVID-19 may cause further disruptions related to our key
suppliers, increase procurement costs and impact our ability to hire and retain
employees, which may result in higher labor costs going forward. However, the
impact, timing and severity of potential disruptions cannot be reasonably
estimated at this time.
We expect to maintain adequate liquidity during these uncertain times and we
will continue to assess the impact that COVID-19 has on our liquidity needs and
current economic market conditions. As noted within "Liquidity and Capital
Resources" below,
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COVID-19 has not had a significant impact on our liquidity, cash flows or
capital resources, including our ability to enter into the unsecured indenture
agreement for 4.125% Senior Notes in the amount of $500 due April 1, 2029 ("2029
Notes").

Significant Events
Acquisitions
On September 2, 2020, we completed the acquisition of Cremo, a premier men's
grooming company in the U.S, in an all-cash transaction at a purchase price of
$233.9. As a result of the acquisition, Cremo became a wholly owned subsidiary
of the Company. Refer to Note 3 of Notes to Condensed Consolidated Financial
Statements for further discussion on the Cremo acquisition.

Assignment

On December 17, 2019, we completed the sale of our Infant and Pet Care business
included in the All Other segment for $122.5 which included consideration for
providing services for up to one year under a transition services agreement. For
further information on the divestiture of the Infant and Pet Care business,
refer to Note 3 of Notes to Condensed Consolidated Financial Statements.

Goodwill and Intangible Asset Impairment
The Company performs an annual test for impairment of goodwill and
indefinite-lived intangible assets. The annual test performed in the fourth
quarter of fiscal 2021 and 2020, respectively, did not indicate that the
Company's goodwill and intangible assets had a fair value below the carrying
value.
During the third quarter of fiscal 2019, we determined a triggering event had
occurred following a decline in our market capitalization and share price. We
performed an interim impairment analysis on all long-lived assets, including
definite-lived intangibles, goodwill, and indefinite-lived intangible assets,
using financial information through June 30, 2019 and forecasts for cash flows
developed using our three-year strategic plan. The interim impairment review was
performed. The results of the impairment review indicated the carrying value of
the goodwill of the Wet Shave, Infant Care, and Skin Care reporting units were
greater than their respective fair values, resulting in a non-cash goodwill
impairment of $369.0, $37.0, and $2.0, respectively. Additionally, the carrying
value of the Wet Ones and Diaper Genie trade names were greater than the fair
values and resulted in non-cash impairments of the indefinite-lived intangible
assets of $87.0 and $75.0, respectively. We performed an assessment in the
fourth quarter of fiscal 2019 to determine if any significant events or changes
in circumstances had occurred that would be considered a potential triggering
event. We did not identify any indication of a triggering event that would
indicate the existence of additional impairment of the reporting units,
indefinite-lived intangible assets, and definite-lived intangible assets.
Refer to Notes 2 and 7 of Notes to Consolidated Financial Statements for further
discussion on the annual impairment test.

Project Fuel
Project Fuel was an enterprise-wide transformational initiative that was
launched in the second fiscal quarter of 2018, to address all aspects of our
business and cost structure, simplifying and transforming the organization,
structure and key processes. Project Fuel facilitated further re-investment in
our growth strategy while enabling us to achieve our desired future state
operations.
Fiscal 2021 Project Fuel related gross savings were approximately $68, bringing
final cumulative gross savings for the program to approximately $280. The
savings generated during the project are being used to fuel investments and
brand building in strategic growth initiatives, mitigate operational cost
headwinds from inflation and other rising input costs and improve the overall
profitability and cash flow of the Company.
Restructuring and related charges were $30.1 for fiscal 2021, bringing final
cumulative charges to $163.7 for the project.
Capital expenditures for Project Fuel were $13.6 for fiscal 2021 bringing
cumulative capital expenditures to $71.7 for the project.
For further information on our restructuring projects, refer to Note 4 of Notes
to Condensed Consolidated Financial Statements.
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Executive Summary
Following is a summary of key results for fiscal 2021, 2020 and 2019. Net
earnings and diluted earnings per share ("EPS") for the time periods presented
were impacted by restructuring charges, acquisition and integration costs, cost
of early debt retirement, UK tax rate increase, impairment charges, COVID-19
pandemic expenses, advisory expenses in connection with the evaluation of the
Feminine and Infant Care businesses, Sun Care reformulation costs, investor
settlement expenses, the disposition of the Infant and Pet Care business, the
related tax effects of these items and the impact of the Tax Act. The impact of
these items on reported net earnings and EPS are provided below as a
reconciliation of net earnings and EPS to adjusted net earnings and adjusted
diluted EPS, which are non-GAAP measures.

Fiscal year 2021

•Net sales were $2,087.3, an increase of 7.1% from fiscal 2020, inclusive of a
2.9% increase due to the acquisition of Cremo, a 1.4% decrease due to the sale
of the Infant and Pet Care business and a 1.9% increase due to currency
movements. Organic net sales increased 3.7% for fiscal 2021 as compared to the
prior year period, as growth in Wet Shave and Sun and Skin Care were partially
offset by slight declines in Feminine Care.
•Net earnings for fiscal 2021 was $117.0, as compared to net earnings of $67.6
in the prior fiscal year. On an adjusted basis, as illustrated in the table
below, net earnings for fiscal 2021 increased 12.0% to $166.7. The increase was
primarily driven by higher net sales attributable to a rebound from prior year
COVID-19 declines. Increased net sales were offset by higher Advertising and
sales promotion expense ("A&P") in support of investments in critical commercial
efforts compared to the prior year.
•Net earnings per diluted share during fiscal 2021 was $2.12 compared to
earnings of $1.24 in the prior fiscal year. On an adjusted basis, as illustrated
in the table below, net earnings per diluted share during fiscal 2021 were $3.02
compared to $2.73 in the prior year.

                                                                            

Year ended September 30, 2021

Operating

                              Gross Profit           SG&A             Income                EBIT               Income taxes          Net Earnings          Diluted EPS
GAAP - Reported              $     950.1          $ 391.2          $  238.8           $     146.0             $       29.0          $     117.0          $       2.12
Restructuring and related
costs                                0.6              8.7              30.1                  30.1                      7.5                 22.6         

0.41

Acquisition and integration
costs                                1.3              7.1               8.4                   8.4                      2.1                  6.3         

0.12

Sun Care reformulation costs         1.1                -               1.1                   1.1                      0.3                  0.8         

0.01

Cost of early retirement of
long-term debt                         -                -                 -                  26.1                      6.4                 19.7                  0.36
UK tax rate increase                   -                -                 -                     -                     (0.3)                 0.3                     -
Total Adjusted Non-GAAP      $     953.1          $ 375.4          $  278.4           $     211.7             $       45.0          $     166.7          $       3.02

GAAP as a percent of net
sales                               45.5  %          18.7  %           11.4   %                             GAAP effective tax rate        19.8  %
Adjusted as a percent of net
sales                               45.7  %          18.0  %           13.3   %                         Adjusted effective tax rate        21.2  %



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Year ended September 30, 2020

Operating

                              Gross Profit           SG&A             Income                EBIT               Income Taxes          Net Earnings          Diluted EPS
GAAP - Reported              $     880.9          $ 408.8          $  176.0           $      87.3             $       19.7          $      67.6          $       1.24
Restructuring and related
charges                              0.2             13.3              38.1                  38.1                      8.7                 29.4         

0.54

Acquisition and integration
costs                                0.6             39.2              39.8                  39.8                      9.7                 30.1                  0.56
COVID-19 expenses                    4.3                -               4.3                   4.3                      1.1                  3.2                  0.06
Feminine and Infant Care
evaluation costs                       -              0.3               0.3                   0.3                      0.1                  0.2                     -
Cost of early retirement of
long-term debt                         -                -                 -                  26.2                      6.4                 19.8         

0.36

Gain on sale of Infant and
Pet Care business                      -                -                 -                  (4.1)                    (2.6)                (1.5)        

(0.03)

Non-GAAP adjusted total $ 886.0 $ 356.0 $ 258.5

           $     191.9             $       43.1          $     148.8         

$ 2.73

GAAP as a percent of net
sales                               45.2  %          21.0  %            9.0   %                             GAAP effective tax rate        22.6  %
Adjusted as a percent of net
sales                               45.4  %          18.3  %           13.3   %                         Adjusted effective tax rate        22.5  %



                                                                                       Year Ended September 30, 2019
                                                                     Operating
                               Gross Profit           SG&A             Income                 EBIT                 Income Taxes          Net Earnings           Diluted EPS
GAAP - Reported               $     966.6          $ 372.0          $  243.8           $      (390.3)            $       (18.1)         $     (372.2)         $      (6.88)
Impairment charges                      -                -                 -                   570.0                      65.3                 504.7                  9.33
Restructuring and related
charges                               0.6              8.6              55.6                    55.6                      12.4                  43.2                  0.80
Acquisition and integration
costs                                   -              6.7               6.7                     6.7                       1.6                   5.1                  0.09
Sun Care reformulation costs          2.8                -               2.8                     2.8                       0.7                   2.1                  0.04
Feminine and Infant Care
evaluation costs                        -              2.1               2.1                     2.1                       0.5                   1.6                  0.03
Investor settlement expense             -              0.9               0.9                     0.9                       0.2                   0.7                  0.01
Impact of dilutive shares               -                -                 -                       -                         -                     -                 (0.01)
Income tax reform                       -                -                 -                       -                      (3.6)                  3.6                  0.07

Non-GAAP adjusted total $ 970.0 $ 353.7 $ 311.9

           $       247.8             $        59.0          $      

188.8 $ 3.48

GAAP as a percent of net
sales                                45.1  %          17.4  %           11.4   %                                GAAP effective tax rate          4.6  %
Adjusted as a percent of net
sales                                45.3  %          16.5  %           14.6   %                            Adjusted effective tax rate         23.8  %



Operating Results
The following table presents changes in net sales for fiscal 2021 and 2020, as
compared to the corresponding prior year period, and provides a reconciliation
of organic net sales to reported amounts.
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Net sales

        Net Sales - Total Company
        For the Years Ended September 30,
                                                2021          %Chg         2020          %Chg
        Net sales - prior year               $ 1,949.7                  $

2,141.0

        Organic                                   72.1        3.7  %        

(94.9) (4.4)%

Impact of the sale of infant and pet care products (26.8) (1.4)% (93.4) ​​(4.4)%

        Impact of Cremo acquisition               56.0        2.9  %        

4.5 0.2%

        Impact of currency                        36.3        1.9  %         (7.5)      (0.3) %
           Net sales - current year          $ 2,087.3        7.1  %    $ 1,949.7       (8.9) %


For fiscal 2021, net sales increased 7.1% on a reported basis. Organic net sales
increased 3.7% versus the prior year. The increase in organic net sales was
largely driven by improving consumption across all categories and strong growth
in Sun Care, Women's Shave and Men's Grooming. Organic net sales increased in
North America by 5.2% while International organic net sales increased by 1.4%.
For further discussion regarding net sales, including a summary of reported
versus organic changes, see "Segment Results."

Gross Profit
Gross profit was $950.1 in fiscal 2021, as compared to $880.9 in fiscal 2020.
Gross margin as a percent of net sales for fiscal 2021 was 45.5%, up 30 basis
points as compared to fiscal 2020. Adjusted gross margin as a percent of sales
increased by 30 basis points compared to fiscal 2020, driven by Project Fuel
related savings and favorable pricing and promotion, partially offset by
increased commodity and labor costs.

Selling, General and Administrative Expense
SG&A was $391.2 in fiscal 2021, or 18.7% of net sales, as compared to $408.8 in
fiscal 2020, or 21.0% of net sales. Adjusted SG&A as a percent of net sales
decreased 30 basis points compared to fiscal 2020 as stronger cost control and
the benefit of sales leverage more than offset investments made in increased
talent and capabilities and unfavorable foreign currency fluctuations.

Advertising and Sales Promotion Expense
For fiscal 2021, A&P was $241.5, up $25.3 as compared to fiscal 2020. A&P as a
percent of net sales was 11.6% for fiscal 2021, compared with 11.1% in fiscal
2020. The increase in A&P was the result of investments in and focus on critical
commercial efforts supporting the Schick Hydro relaunch, Schick Stubble Eraser®
product launch, Skintimate campaign, Men's systems development in Japan,
increased support for the Sun Care business and the inclusion of Cremo brand
investments. Fiscal 2020 had reduced A&P expense as a result of the COVID-19
pandemic.

Research and development costs Research and development costs (“R&D”) increased to $ 57.8 during fiscal year 2021, compared to $ 55.3 in fiscal 2020. As a percentage of net sales, R&D was approximately 2.8% in fiscal 2021 and fiscal 2020.

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Interest Expense Associated with Debt
Interest expense associated with debt for fiscal 2021 was $67.9, an increase of
$6.7 as compared to fiscal 2020. The increase in interest expense was the result
of higher average outstanding debt and a higher weighted interest rate,
primarily as a result of the issuance of the 5.5% $750 Senior Notes due 2028
issued in May 2020 (the "2028 Notes").
In addition to the interest expense associated with debt, we incurred $26.1 of
costs for the early retirement of the $500 Senior Notes due 2022 in fiscal 2021.

Other (Income) Expense, Net
Other (income) expense, net was income of $1.2 in fiscal 2021 compared to
expense of $5.4 in fiscal 2020. The favorable movement was largely related to
foreign currency movements and lower pension benefit expense, partially offset
by unfavorable hedge settlements.

Income Tax Provision (Benefit)
Income taxes, which include federal, state and foreign taxes, were 19.8%, 22.6%
and 4.6% of Earnings (loss) before income taxes in fiscal 2021, 2020 and 2019,
respectively.
The effective income tax rate for fiscal 2021 for operations was 19.8% as
compared to 22.6% in the prior year. On an adjusted basis, the effective tax
rate for fiscal 2021 was 21.2% compared to 22.5% in the prior year. The fiscal
2021 effective tax rate reflects a more favorable mix of foreign earnings while
fiscal 2020 includes the unfavorable impact of the sale of the Infant and Pet
Care business.

                                                            2021
                                                                          Adjusted
                                        Reported       Adjustments       (Non-GAAP)
Earnings before income taxes           $  146.0       $       65.7      $    211.7
Income tax provision                       29.0               16.0            45.0
Net earnings                           $  117.0       $       49.7      $    166.7

Effective tax rate                         19.8  %                            21.2  %

                                                            2020
                                                                          Adjusted
                                        Reported       Adjustments       (Non-GAAP)
Earnings before income taxes           $   87.3       $      104.6      $    191.9
Income tax provision                       19.7               23.4            43.1
Net earnings                           $   67.6       $       81.2      $    148.8

Effective tax rate                         22.6  %                            22.5  %

                                                            2019
                                                                          Adjusted
                                        Reported       Adjustments       (Non-GAAP)

(Loss) profit before income taxes $ (390.3) $ 638.1 $

247.8

Income tax (benefit) provision            (18.1)              77.1            59.0
Net (loss) earnings                    $ (372.2)      $      561.0      $    188.8

Effective tax rate                          4.6  %                            23.8  %


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Our effective tax rate is highly sensitive to the mix of countries from which
earnings or losses are derived. Declines in earnings in lower tax rate
jurisdictions, earnings increases in higher tax rate jurisdictions, or
repatriation of foreign earnings or operating losses in the future could
increase future tax rates. Additionally, adjustments to prior year tax provision
estimates could increase or decrease future tax provisions.

Segment Results
Segment performance is evaluated based on segment profit, exclusive of general
corporate expenses, share-based compensation costs, costs associated with
restructuring charges, acquisition and integration costs, cost of early debt
retirement, COVID-19 pandemic expenses, impairment charges, advisory expenses in
connection with the evaluation of the Feminine and Infant Care businesses, Sun
Care reformulation costs, investor settlement expenses, the disposition of the
Infant and Pet Care business and the amortization and impairment of intangible
assets. The exclusion of such changes from segment results reflects management's
view on how it evaluates segment performance. Financial items, such as interest
income and expense, are managed on a global basis at the corporate level.
Our 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. We apply a
fully allocated cost basis, in which shared business functions are allocated
between the segments on a percentage of net sales basis. Such allocations are
estimates and do not represent the costs of such services if performed on a
stand-alone basis.
The following tables present changes in segment net sales and segment profit for
fiscal 2021 and 2020, as compared to the corresponding prior year periods, and
also provide a reconciliation of organic segment net sales and organic segment
profit to reported amounts. For a reconciliation of Segment profit to Earnings
(loss) before income taxes, see Note 18 of Notes to Consolidated Financial
Statements.

Wet shave

         Net Sales - Wet Shave
         For the Years Ended September 30,
                                                2021         %Chg         2020          %Chg
         Net sales - prior year              $ 1,162.3                 $ 1,250.1
         Organic                                  26.6       2.3  %        (83.2)      (6.7) %
         Impact of currency                       27.0       2.3  %         (4.6)      (0.3) %
            Net sales - current year         $ 1,215.9       4.6  %    $ 1,162.3       (7.0) %


Wet Shave net sales for fiscal 2021 increased 4.6%, inclusive of a 2.3% increase
due to currency movements. Organic net sales increased $26.6, or 2.3%, primarily
driven by significantly higher volumes and slightly favorable price mix. The
increase in organic net sales was driven by growth in Women's systems, partially
offset by declines in Men's systems and Shave Preps. Women's systems growth
included increases in Intuition, Skintimate and Hydro Silk, while Men's systems
saw growth in Hydro and Bulldog, partially mitigating declines in other brands.
By region, North America and International organic net sales both increased by
2.3%.

Segment Profit - Wet Shave
For the Years Ended September 30,
                                      2021        %Chg        2020         

% Chg

Segment profit - prior year         $ 206.2                 $ 246.5
Organic                                 8.9       4.3  %      (37.9)      (15.4) %
Impact of currency                      5.9       2.9  %       (2.4)       

(0.9)%

Segment profit – current year $ 221.0 7.2% $ 206.2 (16.3)%


Wet Shave segment profit for fiscal 2021 was $221.0, up $14.8 or 7.2%, inclusive
of the impact of currency movements. Organic segment profit increased $8.9, or
4.3%. The increase in segment profit was driven by higher volumes, particularly
in Women's systems and disposables, partially offset by higher A&P in support of
Men's Hydro and Women's Skintimate razors and unfavorable operating costs driven
by higher freight and commodity prices.
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Sun and Skin Care
Net Sales - Sun and Skin Care
For the Years Ended September 30,
                                      2021         %Chg        2020         %Chg
Net sales - prior year              $ 462.0                  $ 463.1
Organic                                59.0       12.8  %       (3.1)      (0.7) %
Impact of Cremo acquisition            56.0       12.1  %        4.5        1.0  %
Impact of currency                      8.3        1.8  %       (2.5)      

(0.5)%

Net sales – current year $ 585.3 26.7% $ 462.0 (0.2)%


Sun and Skin Care net sales for fiscal 2021 increased 26.7%, inclusive of a
12.1% increase from the Cremo acquisition and a 1.8% increase due to currency
movements. Organic net sales increased $59.0, or 12.8%, primarily due to
increased Sun Care sales as Banana Boat and Hawaiian Tropic both had double
digit growth, rebounding from declines in the prior year due to the COVID-19
pandemic, which resulted in travel disruption during the summer vacation season.
Organic growth in Men's grooming of 14.8% was driven by favorable volumes in
Jack Black and Bulldog. Wet Ones sales grew as a result of price, with volumes
flat compared to the prior year.
Segment Profit - Sun and Skin Care
For the Years Ended September 30,
                                         2021        %Chg        2020       

% Chg

Segment profit - prior year            $ 69.1                  $ 80.4
Organic                                  19.2       27.8  %     (11.7)      (14.6) %
Impact of Cremo acquisition               8.9       12.9  %       1.1         1.4  %
Impact of currency                        1.5        2.1  %      (0.7)      

(0.9)%

Segment profit – current year $ 98.7 42.8% $ 69.1 (14.1)%


Sun and Skin Care segment profit for fiscal 2021 was $98.7, an increase of 42.8%
compared to the prior year, inclusive of a 12.9% increase from the Cremo
acquisition and a 2.1% increase from currency movements. Organic segment profit
increased $19.2, or 27.8% driven by increased net sales and gross margin from
favorable volumes of Sun Care products and pricing for Sun Care and Wet Ones,
partially offset by higher freight and materials costs.

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Feminine Care
Net Sales - Feminine Care
For the Years Ended September 30,
                                      2021         %Chg        2020         %Chg
Net sales - prior year              $ 298.6                  $ 308.1
Organic                               (13.5)      (4.5) %       (9.1)      (3.0) %
Impact of currency                      1.0        0.3  %       (0.4)      (0.1) %

Net sales – current year $ 286.1 (4.2)% $ 298.6 (3.1)%


Feminine Care net sales for fiscal 2021 decreased $12.5, or 4.2%, inclusive of a
0.3% increase due to currency movements. Organic segment net sales decreased
$13.5, or 4.5%, driven by overall category declines, lost distribution, and the
impact of the prior year pantry loading.
Segment Profit - Feminine Care
For the Years Ended September 30,
                                      2021        %Chg         2020        %Chg
Segment profit - prior year         $ 52.3                   $ 48.3
Organic                              (15.7)      (30.0) %       4.1        8.5  %
Impact of currency                     0.6         1.1  %      (0.1)      (0.2) %

Segment profit – current year $ 37.2 (28.9)% $ 52.3 8.3%

The profit of the Feminine Care segment for the financial year 2021 was $ 37.2, a decrease in $ 15.1, or 28.9%, including currency effects. The decrease is mainly due to an unfavorable gross margin due to lower sales volumes for all products, an unfavorable cost mix due to higher material costs and higher warehousing and distribution costs.

All Other
The Infant and Pet Care business divestiture, completed in December 2019,
disposed of the entirety of the operations of the All Other segment. The results
below represent the impact of the divestiture to segment performance:

Net sales – All the others

For the past years September 30,

                                                     2021         %Chg         2020         %Chg
   Net sales - prior year                          $ 26.8                    $ 119.7
   Organic                                              -            -  %        0.5         0.4  %

Impact of the sale of Infant and Pet Care activities (26.8) (100.0)%

(93.4) ​​(78.0)%

   Impact of currency                                   -            -  %          -           -  %
      Net sales - current year                     $    -       (100.0) %  
 $  26.8       (77.6) %



Segment Profit - All Other
For the Years Ended September 30,
                                                 2021         %Chg         2020        %Chg
Segment profit - prior year                     $ 3.1                    $ 11.7
Organic                                             -            -  %       0.5         4.3  %
Impact of Infant and Pet Care business sale      (3.1)      (100.0) %      (9.1)      (77.8) %
Impact of currency                                  -            -  %         -           -  %
   Segment profit - current year                $   -       (100.0) %    $  3.1       (73.5) %



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General business and other expenses

                                                            Fiscal Year
                                                  2021          2020        

2019

General corporate and other expenses           $  56.5       $  54.9       $  57.3
Restructuring and related costs                   30.1          38.1        

55.6

Cost of early repayment of long-term debt 26.1 26.2

Acquisition and integration planning costs 8.4 39.8

6.7

Sun Care reformulation costs                       1.1             -        

2.8

Feminine and Infant Care evaluation costs            -           0.3        

2.1

COVID-19 expenses                                    -           4.3        

Capital gain on the sale of the Infant and Pet Care activity – (4.1)

     -
Impairment charges                                   -             -         570.0
Investor settlement expense                          -             -           0.9

Company overheads and others $ 122.2 $ 159.5 $ 695.4
% of net sales

                                     5.9  %        8.2  %       32.5  %


For fiscal 2021, general corporate expenses were $56.5, an increase of $1.6 as
compared to fiscal 2020. Fiscal 2020 general corporate expenses decreased $2.4
when compared to fiscal 2019. The increase in general corporate expenses in
fiscal 2021 relates to additional benefit and incentive payments, partially
offset by savings from Project Fuel and reduced consulting and legal fees.
The Company incurred expenses associated with the early retirement of the $500
Senior Notes due 2022 and $600 Senior Notes due 2021, including the recognition
of remaining debt issuance costs and interest expense in the second quarter of
fiscal 2021 and third quarter of fiscal 2020, respectively. Acquisition and
integration costs incurred in fiscal 2021 and the fourth quarter of fiscal 2020
were related to the acquisition of Cremo, which was completed in September 2020.
Additionally, the Company incurred expenses, primarily legal, consulting and
financing costs, associated with the termination of the Harry's acquisition in
the first half of fiscal 2020.

Liquidity and Capital Resources
To date, COVID-19 has not had a significant impact on our liquidity or capital
resources. However, the ongoing COVID-19 pandemic has led to disruption and
volatility in the global capital markets, which, depending on future
developments, could impact our capital resources and liquidity in the future.
At September 30, 2021, a portion of our cash balances were located outside the
U.S. Given our extensive international operations, a significant portion of our
cash is denominated in foreign currencies. We manage our worldwide cash
requirements by reviewing available funds among the many subsidiaries through
which we conduct business and the cost effectiveness with which those funds can
be accessed. We generally repatriate a portion of current year earnings from
select non-U.S. subsidiaries only if the economic cost of the repatriation is
not considered material.
Our cash is deposited with multiple counterparties which consist of major
financial institutions. We consistently monitor positions with, and credit
ratings of, counterparties both internally and by using outside ratings
agencies.
Our total borrowings were $1,276.5 at September 30, 2021, including $26.5 tied
to variable interest rates. Our total borrowings at September 30, 2020 were
$1,271.1. We had outstanding international borrowings, recorded within Notes
payable, of $26.5 and $21.1 as of September 30, 2021 and September 30, 2020,
respectively.
Historically, we have generated and expect to continue to generate positive cash
flows from operations. Our cash flows are affected by the seasonality of our Sun
Care products, typically resulting in higher net sales and increased cash
generation in the second and third quarter of each fiscal year. While we cannot
reasonably estimate the full impact COVID-19 will have on our cash flows, we
believe our cash on hand, cash flows from operations and borrowing capacity
under our U.S. Revolving Credit Facility due 2025 (the "Revolving Credit
Facility") will be sufficient to satisfy our future working capital
requirements, interest payments, R&D activities, capital expenditures, and other
financing requirements for at least the next 12 months. We will continue to
monitor our cash flows, spending, and liquidity needs.
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Short-term financing needs primarily consist of working capital requirements and
principal and interest payments on our long-term debt. Long-term financing needs
will depend largely on potential growth opportunities, including acquisition
activity and repayment or refinancing of our long-term debt obligations. We may,
from time-to-time, seek to repurchase shares of our common stock. Such
repurchases, if any, will depend on prevailing market conditions, our liquidity
requirements, contractual restrictions and other factors. Our long-term
liquidity may be influenced by our ability to borrow additional funds,
renegotiate existing debt, and raise equity under terms that are favorable to
us.
In fiscal 2022, we expect our total capital expenditures to be in the range of
$60 to $70 primarily related to both maintenance of and productivity efforts
across manufacturing facilities, new product development and information
technology system enhancements. While we intend to fund these capital
expenditures with cash generated from operations, we may also utilize our
borrowing facilities.
During fiscal 2021, we contributed $4.9 to our pension and postretirement plans.
Due to the election of certain terms of the American Rescue Plan Act, we are not
required to make any cash contributions to our pension and postretirement plans
in fiscal 2022.

Debt Covenants
The Revolving Credit Facility governing our outstanding debt at September 30,
2021 contains certain customary representations and warranties, financial
covenants, covenants restricting our ability to take certain actions,
affirmative covenants, and provisions relating to events of default. Under the
terms of the Revolving Credit Facility, the ratio of our indebtedness to our
earnings before interest, taxes, depreciation and amortization ("EBITDA"), as
defined in the agreement and detailed below, cannot be greater than 4.0 to 1.0.
In addition, under the Revolving Credit Facility, the ratio of our EBITDA to
total interest expense must exceed 3.0 to 1.0. If we fail to comply with these
covenants or with other requirements of the Revolving Credit Facility, the
lenders may have the right to accelerate the maturity of the debt. Acceleration
under one of our facilities would trigger cross-defaults on our other
borrowings. Under the Revolving Credit Facility, EBITDA is defined as net
earnings, as adjusted to add-back interest expense, income taxes, depreciation
and amortization, all of which are determined in accordance with GAAP. In
addition, the Revolving Credit Facility allows certain non-cash charges such as
stock award amortization and asset write-offs including, but not limited to,
impairment and accelerated depreciation, and operating expense reductions or
synergies to be "added-back" in determining EBITDA for purposes of the
indebtedness ratio. Total debt and interest expense are calculated in accordance
with GAAP.
As of September 30, 2021, we were in compliance with the provisions and
covenants associated with the Revolving Credit Facility.

Cash Flows
A summary of our cash flow from operating, investing and financing activities is
provided in the following table:
                                                                     Fiscal Year
                                                           2021         2020         2019
Net cash from (used by):
Operating activities                                     $ 229.0      $ 232.6      $ 190.6
Investing activities                                       (48.7)      (196.4)       (45.5)
Financing activities                                       (65.4)       (18.7)       (63.8)
Effect of exchange rate changes on cash                     (0.4)         

5.6 (6.1) Net increase (decrease) in cash and cash equivalents $ 114.5 $ 23.1 $ 75.2



Operating Activities
Cash flow from operating activities was $229.0 in fiscal 2021, as compared to
$232.6 in fiscal 2020. The slight decrease in fiscal 2021 was primarily a result
of net cash outflow from working capital in the current period compared to an
inflow from working capital changes in the prior year period, partially offset
by improved earnings compared to the prior year period.

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Investing Activities
Cash flow used by investing activities was $48.7 in fiscal 2021 as compared to
$196.4 in fiscal 2020. During fiscal 2021, we collected $7.5 of proceeds from
the sale of the Infant and Pet Care business, compared to $95.8 in the prior
year. Capital expenditures were $56.8 and $47.7 during fiscal 2021 and 2020,
respectively. Additionally, other investing cash inflows related to the
collection of receivables from our $150 uncommitted master accounts receivable
purchase agreement with The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch,
as the purchaser (the "Accounts Receivable Facility") totaled $2.6 and $4.3
during fiscal 2021 and 2020, respectively, as a result of collections on the
deferred purchase price of accounts receivables sold. During fiscal 2020, we
completed the acquisition of Cremo for $233.6 and a minority investment of a
direct-to-consumer company totaling $13.8.

Financing Activities
Net cash used by financing activities was $65.4 in fiscal 2021 as compared to
$18.7 in fiscal 2020. During fiscal 2021, we repurchased $9.2 of our common
stock under our 2018 Board authorization to repurchase our common stock. The
Company repaid its 2022 Senior Notes with the proceeds received from the
issuance of the 2029 Senior Notes, together with cash on hand. Additional
financing cash outflows incurred were related to costs of early debt retirement
of the 2022 Senior Notes totaling $26.1 and debt issuance costs of $6.5.
Dividend payments totaled $25.6 in fiscal 2021. Additionally, cash flows
associated with the Accounts Receivable Facility were inflows of $2.4 during
fiscal 2021 compared to financing outflows of $11.2 in the prior year period. In
the prior year period, the Company replaced its 2021 Senior Notes in the amount
of $600 with the 2028 Senior Notes in the amount of $750. Early debt retirement
costs incurred in connection with the repayment of the 2021 Senior Notes totaled
$26.2 and debt issuance costs totaling $11.7. The Company had net repayments of
its Revolving Credit Facility during fiscal 2020 totaling $117.0.

Share Repurchases
In January 2018, our Board approved an authorization to repurchase up to 10.0
shares of our common stock. This authorization replaced a prior share repurchase
authorization from May 2015. During fiscal 2021, we repurchased 0.3 shares of
our common stock for $9.2. We have 9.7 shares remaining available for purchase
under the January 2018 Board authorization. As a part of our capital allocation
strategy, we plan to implement a more consistent approach to share repurchases
and intend to repurchase approximately $300 in shares of our common stock over
the next three fiscal years. Additionally, we intend to enter into a Rule 10b5-1
trading plan to facilitate the repurchase of our common shares in accordance
with this share repurchase program.
During fiscal 2021, 0.1 shares were purchased related to the surrender of shares
of common stock to satisfy tax withholding obligations in connection with the
vesting of restricted stock equivalent awards.
Since November 15, 2021, we repurchased 0.2 shares of common stock on the open
market for $7.4. We have 9.6 shares remaining available for purchase under the
January 2018 Board authorization.

Dividends

On August 5, 2021, the Company's Board of Directors (the "Board") declared a
cash dividend of $0.15 per share of common stock outstanding. The dividend was
paid on October 5, 2021 to holders of record as of the close of business on
September 9, 2021. Dividends declared during fiscal 2021 totaled $33.7. Payments
made for dividends during fiscal 2021 totaled $25.6.
On November 4, 2021, the Board declared a quarterly cash dividend of $0.15 per
common stock outstanding for the fourth fiscal quarter. The dividend is payable
January 6, 2022 to stockholders of record as of the close of business on
December 3, 2021.

Inflation

Management recognizes that inflationary pressures may have an adverse effect on
our company through higher material, labor and transportation costs, asset
replacement costs and related depreciation, healthcare and other costs. In
general, we have been able to offset or minimize inflation effects through a
variety of methods including pricing actions, cost reductions and productivity
improvements. We can provide no assurance that such mitigation will be available
in the future.

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Seasonality

Customer orders for sun care products within our Sun and Skin Care segment are
highly seasonal. This has historically resulted in higher sun care sales to
retailers during the late winter through mid-summer months. Within our Wet Shave
segment, sales of women's products are moderately seasonal, with increased
consumer demand in the spring and summer months. See "Our business is subject to
seasonal volatility" in Item 1A. Risk Factors.

Foreign Currency
Certain net sales and costs of our international operations are denominated in
the local currency of the respective countries. As such, sales and profits from
these subsidiaries may be impacted by fluctuations in the value of these local
currencies relative to the U.S. dollar. We also have significant intercompany
financing arrangements that may result in gains and losses in our results of
operations. In an effort to mitigate the impact of currency exchange rate
effects, we may hedge certain operational and intercompany transactions;
however, our hedging strategies may not fully offset gains and losses recognized
in our results of operations.
On June 23, 2016, the U.K held a referendum in which voters approved an exit
from the E.U., commonly referred to as "Brexit." The U.K. officially exited the
E.U. on January 31, 2020, however, negotiations between the U.K. and E.U.
regarding the separation remain ongoing. On December 24, 2020, the E.U. and the
U.K. agreed on the final terms of a trade and cooperation agreement related to
their relationship following Brexit. Future impacts on our U.K. operations and
financial results will depend, in part, on the outcome of tariff, trade,
regulatory and other negotiations.
Generally, a weaker British pound as compared to the U.S. dollar during a
reporting period causes the local currency results of our U.K. operations to be
translated into fewer U.S. dollars. Historically, our hedging strategy has
included hedging a portion of our exposure to the British pound, thereby
reducing our currency risk. We routinely monitor and evaluate this strategy
based on risk and will adjust as necessary to minimize exposure to fluctuations
in exchange rates related to our U.K. operations. For fiscal 2021, net sales of
our U.K. operations were 4% of our consolidated net sales.

Commitments and Contingencies
Contractual Obligations
We have significant contractual obligations to fulfill our business operations
including the repayment of short and long term debt, periodic interest payments,
minimum levels of pension funding, and other obligations including payments for
various leases of real estate, vehicles, and equipment, and minimum fixed costs
to be paid to third party logistics vendors. We are also party to various
service and supply contracts that generally extend one to three months. These
arrangements are primarily individual, short-term purchase orders for routine
goods and services at market prices, which are part of our normal operations and
are reflected in historical operating cash flow trends. These contracts can
generally be canceled at our option at any time. We do not believe such
arrangements will adversely affect our liquidity position. In addition, we have
various commitments related to service and supply contracts that contain penalty
provisions for early termination. Because of the short period between order and
shipment date (generally less than one month) for most of our orders, the dollar
amount of current backlog is not material and is not considered to be a reliable
indicator of future sales volume. Generally, sales to our top customers are made
pursuant to purchase orders and we do not have supply agreements or guarantees
of minimum purchases from them. As a result, these customers may cancel their
purchase orders or reschedule or decrease their level of purchases from us at
any time. As of September 30, 2021, we do not believe such purchase arrangements
or termination penalties will have a significant effect on our results of
operations, financial position or liquidity position in the future.

Environmental Matters
Our operations, like those of other companies, are subject to various federal,
state, local and foreign laws and regulations intended to protect public health
and the environment. These regulations relate primarily to worker safety, air
and water quality, underground fuel storage tanks, and waste handling and
disposal. Accrued environmental costs at September 30, 2021 were $11.8. It is
difficult to quantify with reasonable certainty the cost of environmental
matters, particularly remediation and future capital expenditures for
environmental control equipment. Total environmental capital expenditures and
operating expenses are not expected to have a material effect on our total
capital and operating expenditures, consolidated earnings or competitive
position. However, current environmental spending estimates could be modified as
a result of changes in our plans or our understanding of underlying facts,
changes in legal requirements, including any requirements related to global
climate change, or other factors.

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Critical Accounting Policies
The methods, estimates and judgments we use in applying our most critical
accounting policies have a significant impact on the results we report in our
consolidated financial statements. Specific areas, among others, requiring the
application of management's estimates and judgment include assumptions
pertaining to accruals for consumer and trade promotion programs, pension and
postretirement benefit costs, share-based compensation, future cash flows
associated with impairment testing of goodwill and other long-lived assets,
uncertain tax positions, the reinvestment of undistributed foreign earnings and
tax valuation allowances. On an ongoing basis, we evaluate our estimates, but
actual results could differ materially from those estimates.
Our most critical accounting policies are revenue recognition, pension and other
postretirement benefits, the valuation of long-lived assets (including property,
plant and equipment), income taxes (including uncertain tax positions) and the
carrying value of intangible assets (and the related impairment testing of
goodwill and other indefinite-lived intangible assets). A summary of our
significant accounting policies is contained in Note 2 of Notes to Consolidated
Financial Statements. This listing is not intended to be a comprehensive list of
all of our accounting policies.

Revenue Recognition
We derive revenue from the sale of our products. Revenue is recognized when the
customer obtains control of the goods, which occurs when the ability to use and
obtain benefits from the goods are passed to the customer, most commonly upon
the delivery of the goods,. Discounts are offered to customers for early
payment, and an estimate of the discounts is recorded as a reduction of Net
sales in the same period as the sale. Our standard sales terms are final and
returns or exchanges are not permitted with the exception of end of season
returns for Sun Care products, as detailed below. Reserves are established and
recorded in cases where the right of return does exist for a particular sale.
We assess the contractual obligations in customers' purchase orders and identify
performance obligations related to the transferred goods (or a bundle of goods)
that are distinct. To identify the performance obligations, we consider all the
goods promised, whether explicitly stated or implied based on customary business
practices. Our purchase orders are short term in nature, lasting less than one
year, and contain a single delivery element. For a purchase order that has more
than one performance obligation, we allocate the total consideration to each
distinct performance obligation on a relative stand-alone selling price basis.
We do not exclude variable consideration in determining the remaining value of
performance obligations.
We record sales at the time that control of goods passes to the customer. The
terms of these sales vary, but, in all instances, the following conditions are
met: (1) the sales arrangement is evidenced by purchase orders submitted by
customers; (2) the selling price is fixed or determinable; (3) title to the
product has transferred; (4) there is an obligation to pay at a specified date
without any additional conditions or actions required by us; and (5)
collectability is reasonably assured. Simultaneously with the sale, we reduce
Net sales and Cost of products sold and reserve amounts on the Consolidated
Balance Sheet for anticipated returns based upon an estimated return level in
accordance with GAAP. Customers are required to pay for the Sun Care product
purchased during the season under the required terms. Under certain
circumstances, we allow customers to return Sun Care products that have not been
sold by the end of the Sun Care season, which is normal practice in the Sun Care
industry. The timing of returns of Sun Care products can vary in different
regions, based on climate and other factors. However, the majority of returns
occur in the U.S. from September through January, following the summer Sun Care
season. We estimate the level of Sun Care returns as the Sun Care season
progresses, using a variety of inputs including historical experience,
consumption trends during the Sun Care season, obsolescence factors including
expiration dates and inventory positions at key retailers. We monitor shipment
activity and inventory levels at key retailers during the season in an effort to
more accurately estimate potential returns. This allows us to manage shipment
activity to our customers, especially in the latter stages of the Sun Care
season, to reduce the potential for returned product. The level of returns may
fluctuate from our estimates due to several factors, including weather
conditions, customer inventory levels and competitive activity. Based on our
fiscal 2021 Sun Care shipments, each percentage point change in our returns rate
would have impacted our reported net sales by $3.4 and our reported operating
income by $3.2. At September 30, 2021 and 2020, our reserve on the Consolidated
Balance Sheet for returns was $52.7 and $44.8, respectively.
                                       37
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We offer a variety of programs, primarily to our retail customers, designed to
promote sales of our products. Such programs require periodic payments and
allowances based on estimated results of specific programs and are recorded as a
reduction to net sales. We accrue, at the time of sale, the estimated total
payments and allowances associated with each transaction. Additionally, we offer
programs directly to consumers to promote the sale of our products. Promotions
which reduce the ultimate consumer sale prices are recorded as a reduction of
net sales at the time the promotional offer is made, generally using estimated
redemption and participation levels. Taxes we collect on behalf of governmental
authorities, which are generally included in the price to the customer, are also
recorded as a reduction of net sales.
We continually assess the adequacy of accruals for customer and consumer
promotional program costs not yet paid. To the extent total program payments
differ from estimates, adjustments may be necessary. Historically, these
adjustments have not been material to annual results.

Pension Plans and Other Postretirement Benefits
The determination of our obligation and expense for pension and other
postretirement benefits is dependent on certain assumptions developed by us and
used by actuaries in calculating such amounts. Assumptions include, among
others, the discount rate, the expected long-term rate of return on plan assets,
and future salary increases, where applicable. Actual results that differ from
assumptions made are recognized on the balance sheet and subsequently amortized
to earnings over future periods. Significant differences in actual experience or
significant changes in macroeconomic conditions resulting in changes to
assumptions may materially affect pension and other postretirement obligations.
In determining the discount rate, we use the yield on high-quality bonds that
coincide with the cash flows of our plans' estimated payouts. For our U.S.
plans, which represent our most significant obligations, we use the Mercer yield
curve in determining the discount rates.
We utilize a spot discount rate approach to estimate service and interest
components of net periodic benefit cost for our pension benefits. The spot
discount rate approach applies the specific spot rates along the yield curve
used in the determination of the benefit obligation to the relevant projected
cash flows and is a more precise application of the yield curve spot rates used
in the traditional single discount rate approach.
Of the assumptions listed above, changes in the expected long-term rate of
return on plan assets and changes in the discount rate used in developing plan
obligations will likely have the most significant impact on our annual earnings,
prospectively. Based on plan assets at September 30, 2021, a one percentage
point decrease or increase in expected asset returns would increase or decrease
our pension expense by approximately $5.1. In addition, it may increase and
accelerate the rate of required pension contributions in the future. Uncertainty
related to economic markets and the availability of credit may produce changes
in the yields on corporate bonds rated as high-quality. As a result, discount
rates based on high-quality corporate bonds may increase or decrease, leading to
lower or higher pension obligations, respectively. A one percentage point
decrease in the discount rate would increase pension obligations by
approximately $82.5 at September 30, 2021.
As allowed under GAAP, our U.S. qualified pension plan uses market related
value, which recognizes market appreciation or depreciation in the portfolio
over five years, thereby reducing the short-term impact of market fluctuations.
We have historically provided defined benefit pension plans to our eligible
employees, former employees and retirees. We fund our pension plans in
compliance with the Employee Retirement Income Security Act of 1974 or local
funding requirements.
Further detail on our pension and other postretirement benefit plans is included
in Note 12 of Notes to Consolidated Financial Statements.

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Share-Based Compensation
We award restricted stock equivalents ("RSE"), which generally vest over two to
four years. The fair value of each grant is estimated on the date of grant based
on the current market price of our shares of common stock.
We also award performance restricted stock equivalents ("PRSE") which may
provide for the issuance of common stock to certain managerial staff and
executive management if specified performance or market targets are achieved.
The recipient of the PRSE award may earn a total award ranging from 0% to 200%
of the target award.
For PRSE awards with performance conditions, the fair value of each grant is
estimated on the date of grant based on the current market price of our shares
of common stock. The total amount of compensation expense recognized reflects
the initial assumption that target performance goals will be achieved.
Compensation expense may be adjusted during the life of the performance grant
based on management's assessment of the probability that performance goals will
be achieved. If such goals are not met or it is determined that achievement of
performance goals is not probable, compensation expense is adjusted to reflect
the reduced expected payout level. If it is determined that the performance
goals will be exceeded, additional compensation expense is recognized.
For PRSE awards based on market conditions, the fair value is estimated on the
grant date using a Monte Carlo simulation. The payout for PRSE awards with
market conditions are assessed by comparing our total shareholder return ("TSR")
during a certain three year period to the respective TSRs of companies in a
selected performance peer group.
Non-qualified stock options ("share options") are granted at the market price of
our common stock on the grant date and generally vest ratably over three years.
We calculate the fair value of total share-based compensation for share options
using the Black-Scholes option pricing model, which utilizes certain assumptions
and estimates that have a material impact on the amount of total compensation
cost recognized in our consolidated financial statements, including the expected
term, expected stock price volatility, risk-free interest rate and expected
dividends. The original estimate of the grant date fair value is not
subsequently revised unless the awards are modified or there is a change in the
number of awards expected to forfeit prior to vesting.
Further detail on Share-Based Payments is included in Note 13 of Notes to
Consolidated Financial Statements.

Valuation of Long-Lived Assets
We periodically evaluate our long-lived assets, including property, plant and
equipment, goodwill, and intangible assets, for potential impairment indicators.
Judgments regarding the existence of impairment indicators, including lower than
expected cash flows from acquired businesses, are based on legal factors, market
conditions and operational performance. Future events could cause us to conclude
that impairment indicators exist. We estimate fair value using valuation
techniques such as discounted cash flows. This requires management to make
assumptions regarding future income, working capital, and discount rates, which
would affect the impairment calculation.
Income Taxes
Our annual effective income tax rate is determined based on our income,
statutory tax rates and the tax impacts of items treated differently for tax
purposes than for financial reporting purposes. Tax law requires certain items
to be included in the tax return at different times than the items reflected in
the financial statements. Some of these differences are permanent, such as
expenses that are not deductible in our tax return, and some differences are
temporary, reversing over time, such as depreciation expense. These temporary
differences create deferred tax assets and liabilities.
Deferred tax assets generally represent the tax effect of items that can be used
as a tax deduction or credit in future years for which we have already recorded
the tax benefit in our income statement. Deferred tax liabilities generally
represent tax expense recognized in our financial statements for which payment
has been deferred, the tax effect of expenditures for which a deduction has
already been taken in our tax return but has not yet been recognized in our
financial statements, or assets recorded at estimated fair value in business
combinations for which there was no corresponding tax basis adjustment.
We estimate income taxes and the effective income tax rate in each jurisdiction
that we operate. This involves estimating taxable earnings, specific taxable and
deductible items, the likelihood of generating sufficient future taxable income
to utilize deferred tax assets, the portion of the income of foreign
subsidiaries that is expected to be remitted to the U.S. and be taxable and
possible exposures related to future tax audits. Deferred tax assets are
evaluated on a subsidiary by subsidiary basis to ensure that the asset will be
realized. Valuation allowances are established when the realization is not
deemed to be more likely than not. Future performance is monitored, and when
objectively measurable operating trends change, adjustments are made to the
valuation allowances accordingly. To the extent the estimates described above
change, adjustments to income taxes are made in the period in which the estimate
is changed.
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We operate in multiple jurisdictions with complex tax and regulatory
environments, which are subject to differing interpretations by the taxpayer and
the taxing authorities. At times, we may take positions that management believes
are supportable, but are potentially subject to successful challenges by the
appropriate taxing authority. We evaluate our tax positions and establish
liabilities in accordance with guidance governing accounting for uncertainty in
income taxes. We review these tax uncertainties in light of the changing facts
and circumstances, such as the progress of tax audits, and adjust them
accordingly.
Further detail on Income Taxes is included in Note 5 of Notes to Consolidated
Financial Statements.

Acquisitions, Goodwill and Intangible Assets
We allocate the cost of an acquired business to the assets acquired and
liabilities assumed based on their estimated fair values at the date of
acquisition. The excess value of the cost of an acquired business over the
estimated fair value of the assets acquired and liabilities assumed is
recognized as goodwill. The valuation of the acquired assets and liabilities
will impact the determination of future operating results. We use a variety of
information sources to determine the value of acquired assets and liabilities,
including: third-party appraisers for the values and lives of property,
identifiable intangibles and inventories; actuaries for defined benefit
retirement plans; and legal counsel or other experts to assess the obligations
associated with legal, environmental or other claims.
During fiscal 2020, the Company used variations of the income approach in
determining the fair value of intangible assets acquired in the acquisition of
Cremo Holding Company, LLC. Specifically, we utilized the multi-period excess
earnings method to determine the fair value of the definite lived customer
relationships acquired and the relief from royalty method to determine the fair
value of the definite lived trade name and proprietary technology that we
acquired.
Our determination of the fair value of customer relationships acquired involved
significant estimates and assumptions related to revenue growth rates, discount
rates, and customer attrition rates. The determination of the fair value of
trade names and proprietary technology acquired involved the use of significant
estimates and assumptions related to revenue growth rates, royalty rates and
discount rates. We believe that the fair value assigned to the assets acquired
and liabilities assumed are based on reasonable assumptions and estimates that
marketplace participants would use.
The recorded value of goodwill and intangible assets from recently acquired
businesses are derived from more recent business operating plans and
macroeconomic environmental conditions and, therefore, are likely more
susceptible to an adverse change that could require an impairment charge. As
such, significant judgment is required in estimating the fair value of goodwill
and intangible assets. Additionally, significant judgment is needed when
assigning a useful life to intangible assets. Certain intangible assets are
expected to have determinable useful lives. Our assessment of intangible assets
that have a determinable life is based on a number of factors including the
competitive environment, market share, brand history, underlying product life
cycles, operating plans and the macroeconomic environment. The costs of
determinable-lived intangible assets are amortized to expense over the estimated
useful life. The value of residual goodwill is not amortized, but is tested at
least annually for impairment. See Note 7 of Notes to Consolidated Financial
Statements.
However, future changes in the judgments, assumptions and estimates that are
used in our acquisition valuations and intangible asset and goodwill impairment
testing, including discount rates or future operating results and related cash
flow projections, could result in significantly different estimates of the fair
values in the future. An increase in discount rates, a reduction in projected
cash flows or a combination of the two could lead to a reduction in the
estimated fair values, which may result in impairment charges that could
materially affect our financial statements in any given year.
During the fourth quarter of fiscal 2021, we performed an annual test for
impairment of goodwill on each of our reporting units. We elected to perform a
qualitative test of goodwill impairment for the Feminine Care reporting unit.
Taking into account the excess fair value over carrying value in the prior
valuation, as well as macroeconomic factors, industry conditions and actual
results relative to the amounts projected in the prior quantitative test, we
determined it was not more likely than not that the fair value of the reporting
unit is less than the carrying amount. For the Wet Shave, Sun Care, and Skin
Care reporting units, we elected to perform a quantitative impairment test in
fiscal 2021. As part of the quantitative goodwill impairment test, we estimated
the fair value of each reporting unit using both market and income approaches of
valuation. The income approach utilizes the discounted cash flow method and
incorporates significant estimates and assumptions, including long-term
projections of future cash flows, market conditions, and discount rates
reflecting the risk inherent in future cash flows. The projections for future
cash flows are generated using our company's strategic plan to determine a
five-year period of forecasted cash flows and operating data. The market
approach uses the guideline public company method to calculate the value of each
reporting unit based on the operating data of similar assets from competing
publicly traded companies. Multiples derived from guideline companies provide an
indication of how much a knowledgeable investor in the marketplace would be
willing to pay for a company. The multiples are adjusted given the specific
characteristics of the reporting unit including its position in the market
relative to the guideline companies and applied to the reporting unit's
operating data to arrive at an indication of value.
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The income and market approaches are weighted based on circumstances specific to
each reporting unit and combined are used to calculate fair value.
Determining the fair value of a reporting unit requires the use of significant
judgment, estimates and assumptions. While we believe that the estimates and
assumptions underlying the valuation methodology are reasonable, these estimates
and assumptions could have a significant impact on whether an impairment charge
is recognized, and also on the magnitude of any such charge. The results of an
impairment analysis are as of a point in time. There is no assurance that actual
future earnings or cash flows of the reporting units will not decline
significantly from these projections. We will monitor any changes to these
assumptions and will evaluate goodwill as deemed warranted during future
periods.
The key assumptions for the market and income approaches used to determine fair
value of the reporting units are updated at least annually. Those assumptions
and estimates include market data and market multiples, discount rates and
terminal growth rates, as well as future levels of revenue growth and operating
margins based upon our strategic plan. The assumptions used for the annual
goodwill impairment test for fiscal year 2021 include terminal growth rates
ranging from 0.25% to 2.50% and a weighted-average cost of capital of 9.0%.
Our annual impairment testing date was July 1, 2021, and the valuation indicated
there was no impairment of the goodwill of the tested reporting units. The
results of the valuation indicated that all reporting units had a fair value
that exceeded its carrying value by more than 30%.
We evaluate the fair value of indefinite-lived intangible assets annually in
conjunction with the goodwill impairment test. Our assessment of intangible
assets that have an indefinite life is based on a number of factors including
the competitive environment, market share, brand history, underlying product
life cycles, operating plans and the macroeconomic environment.
During the fourth quarter of fiscal 2021, we elected to complete a qualitative
assessment for impairment of indefinite lived trade names, except for the Banana
Boat trade name, for which we completed a quantitative assessment. There were no
significant events nor adverse trends that indicated any of the indefinite lived
intangible assets were impaired during the fourth quarter of fiscal 2021.
We tested the Banana Boat trade name for impairment by performing a quantitative
assessment to estimate the fair value. The estimated fair value was determined
using the multi-period excess earnings method, which requires significant
assumptions, including estimates regarding future revenue and operating margin
growth, and discount rates. Revenue and operating margin growth assumptions are
based on historical trends and management's expectations for future growth by
brand. The discount rates were based on a weighted-average cost of capital
utilizing industry market data of similar companies, in addition to estimated
returns on the assets utilized in the operations of the applicable reporting
unit, including net working capital, fixed assets and intangible assets.
The valuation of the Banana Boat trade name had no indication of impairment as
of the annual testing date on July 1, 2021. The impairment analysis performed in
fiscal 2021 indicated that the Banana Boat trade name had a fair value that
exceeded its carrying value by greater than 40%.
Future changes in the judgment, assumptions and estimates that are used in our
impairment testing could result in significantly different estimates of the fair
values in the future. An increase in discount rates, a reduction in projected
cash flows or a combination of the two could lead to a reduction in the
estimated fair values, which may result in impairment charges that could
materially affect our financial statements in any given year. The assumptions
used for the annual valuation for indefinite-lived intangible assets for fiscal
year 2021 include a terminal growth rate of 2.50% and a weighted-average cost of
capital of 9.5%.
The annual impairment analysis performed in fiscal 2021 did not indicate that
impairment existed in the reporting units or indefinite lived trade names.

Recently Issued Accounting Standards
Refer to Note 2 of Notes to Consolidated Financial Statements for a discussion
regarding recently issued accounting standards and their estimated impact on our
financial statements.

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