Edgar Filing: EDGEWELL PERSONAL CARE Co

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________

FORM 10-Q

_______________________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number: 001-15401

____________________________________________________________________________________________________________

EDGEWELL PERSONAL CARE COMPANY

(Exact name of registrant as specified in its charter)



Missouri	43-1863181
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)

1350 Timberlake Manor Parkway
Chesterfield, Missouri	63017
(Address of principal executive offices)	(Zip Code)

(314) 594-1900
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x		Accelerated filer	o

Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o

			Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Common shares, $0.01 par value - 56,971,319 shares as of July 31, 2017.

EDGEWELL PERSONAL CARE COMPANY

INDEX TO FORM 10-Q



PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited).
	Condensed Consolidated Statements of Earnings and Comprehensive Income for the three and nine months ended June 30, 2017 and 2016.	3
	Condensed Consolidated Balance Sheets as of June 30, 2017 and September 30, 2016.	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2017 and 2016.	5
	Notes to Condensed Consolidated Financial Statements.	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	45
Item 4.	Controls and Procedures.	45

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings.	45
Item 1A.	Risk Factors.	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	46
Item 3.	Defaults Upon Senior Securities.	46
Item 4.	Mine Safety Disclosures.	46
Item 5.	Other Information.	46
Item 6.	Exhibits.	46

SIGNATURES		47

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

EDGEWELL PERSONAL CARE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

(unaudited, in millions, except per share data)



	Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2017			2016
Net sales	$	637.5		$	645.1		$	1,733.5		$	1,751.4
Cost of products sold	315.4			333.9			873.8			901.6
Gross profit	322.1			311.2			859.7			849.8

Selling, general and administrative expense	97.5			104.8			295.2			304.9
Advertising and sales promotion expense	114.2			122.5			247.3			254.1
Research and development expense	16.4			17.5			50.2			50.2
Restructuring charges	12.5			5.8			24.9			29.3
Industrial sale charges	—			—			—			0.2
Interest expense associated with debt	17.6			18.3			52.3			53.8
Other (income) expense, net	(1.6		)	8.2			(10.1		)	1.2
Earnings before income taxes	65.5			34.1			199.9			156.1
Income tax provision (benefit)	10.6			(2.6		)	45.8			29.6
Net earnings	$	54.9		$	36.7		$	154.1		$	126.5

Earnings per share:
Basic net earnings per share	$	0.96		$	0.62		$	2.68		$	2.13
Diluted net earnings per share	0.95			0.61			2.67			2.11

Statement of Comprehensive Income:
Net earnings	$	54.9		$	36.7		$	154.1		$	126.5
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	43.8			(8.0		)	15.1			(0.7		)
Pension and postretirement activity, net of tax of $0.6, $0.4, $1.7 and $1.1	(1.4		)	3.4			3.1			(2.6		)
Deferred (loss) gain on hedging activity, net of tax of $0.8, $0.5, ($1.5) and $3.4	(1.8		)	(0.3		)	2.7			(6.5		)
Total other comprehensive income (loss), net of tax	40.6			(4.9		)	20.9			(9.8		)
Total comprehensive income	$	95.5		$	31.8		$	175.0		$	116.7

See accompanying Notes to Condensed Consolidated Financial Statements.

EDGEWELL PERSONAL CARE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions, except share data)



	June 30, 2017			September 30, 2016
Assets
Current assets
Cash and cash equivalents	$	454.9		$	738.9
Trade receivables, less allowance for doubtful accounts of $5.8 and $4.9	312.9			260.7
Inventories	343.1			309.2
Other current assets	125.1			143.2
Total current assets	1,236.0			1,452.0
Property, plant and equipment, net	458.4			486.1
Goodwill	1,439.4			1,420.3
Other intangible assets, net	1,393.1			1,385.1
Other assets	28.9			28.0
Total assets	$	4,555.8		$	4,771.5

Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt	$	—		$	281.8
Notes payable	17.7			18.5
Accounts payable	236.9			196.5
Other current liabilities	289.7			371.4
Total current liabilities	544.3			868.2
Long-term debt	1,580.1			1,544.2
Deferred income tax liabilities	254.8			255.3
Other liabilities	262.7			274.8
Total liabilities	2,641.9			2,942.5
Shareholders' equity
Preferred shares, $0.01 par value, 10,000,000 authorized; none issued or outstanding	—			—
Common shares, $0.01 par value, 300,000,000 authorized; 65,251,989 issued; 56,921,785 and 57,914,448 outstanding	0.7			0.7
Additional paid-in capital	1,625.2			1,642.5
Retained earnings	1,101.2			946.0
Common shares in treasury at cost, 8,330,204 and 7,337,541	(636.9		)	(563.0		)
Accumulated other comprehensive loss	(176.3		)	(197.2		)
Total shareholders' equity	1,913.9			1,829.0
Total liabilities and shareholders' equity	$	4,555.8		$	4,771.5

See accompanying Notes to Condensed Consolidated Financial Statements.

EDGEWELL PERSONAL CARE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)



	Nine Months Ended June 30,
	2017			2016
Cash Flow from Operating Activities
Net earnings	$	154.1		$	126.5
Non-cash restructuring costs	6.4			2.2
Depreciation and amortization	70.3			69.2
Deferred compensation payments	(27.6		)	(7.3		)
Share-based compensation expense	16.6			20.0
International pension funding	—			(100.5		)
Other, net	(12.2		)	(18.9		)
Changes in current assets and liabilities used in operations	(88.2		)	(87.1		)
Net cash from operating activities	119.4			4.1

Cash Flow from Investing Activities
Capital expenditures	(45.4		)	(50.9		)
Acquisitions, net of cash acquired	(34.0		)	—
Proceeds from sale of assets	5.9			—
Net cash used by investing activities	(73.5		)	(50.9		)

Cash Flow from Financing Activities
Cash proceeds from debt with original maturities greater than 90 days	181.0			656.3
Cash payments on debt with original maturities greater than 90 days	(423.0		)	(501.0		)
Net increase (decrease) in debt with original maturities of 90 days or less	0.1			(15.5		)
Common shares purchased	(94.6		)	(114.5		)
Other, net	1.9			(0.6		)
Net cash (used by) from financing activities	(334.6		)	24.7

Effect of exchange rate changes on cash	4.7			1.5

Net decrease in cash and cash equivalents	(284.0		)	(20.6		)
Cash and cash equivalents, beginning of period	738.9			712.1
Cash and cash equivalents, end of period	$	454.9		$	691.5

See accompanying Notes to Condensed Consolidated Financial Statements.

EDGEWELL PERSONAL CARE COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, in millions, except per share data)

Note 1 - Background and Basis of Presentation

Background

Edgewell Personal Care Company, and its subsidiaries (collectively, "Edgewell" or the "Company"), is one of the world's largest manufacturers and marketers of personal care products in the wet shave, sun and skin care, feminine care and infant care categories. Edgewell has a portfolio of over 25 brands and a global footprint in more than 50 countries.

The Company conducts its business in the following four segments:


•	Wet Shave consists of products sold under the Schick®, Wilkinson Sword®, Edge®, Skintimate®, Shave Guard and Personna® brands, as well as non-branded products. The Company's wet shave products include razor handles and refillable blades, disposable shave products and shaving gels and creams.


•	Sun and Skin Care consists of Banana Boat® and Hawaiian Tropic® sun care products and Bulldog® men's skin care products, as well as Wet Ones® wipes and Playtex® household gloves.


•	Feminine Care includes tampons, pads and liners sold under the Playtex® Sport®, Stayfree®, Carefree® and o.b.® brands, as well as personal cleansing wipes under the Playtex® brand.


•	All Other includes infant care products, such as bottles, cups and pacifiers, under the Playtex®, OrthoPro® and Binky® brand names, as well as the Diaper Genie® and Litter Genie® disposal systems.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries and have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP"), under the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results may differ materially from those estimates. All intercompany balances and transactions have been eliminated in consolidation and, in the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in the interim results reported. The fiscal year-end balance sheet data was derived from audited consolidated financial statements, but do not include all of the annual disclosures required by GAAP; accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited annual consolidated financial statements included in its Annual Report on Form 10-K filed with the SEC on November 18, 2016.

Acquisition of Bulldog Skincare. On October 31, 2016, the Company completed the acquisition of Bulldog Skincare Holdings Limited ("Bulldog"), a men's grooming and skincare products company based in the United Kingdom ("U.K."). The results of Bulldog for the post-acquisition period are included within the Company's results for the three and nine months ended June 30, 2017. For more information on the acquisition, see Note 2 of Notes to Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU"), which provides a single comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries and across capital markets. During 2016, the FASB issued three ASUs, clarifying the revenue recognition implementation guidance on various topics included within the original ASU. The new guidance will be effective for the Company beginning October 1, 2018, with the option of using either a full retrospective or modified retrospective method. The Company expects to determine the method of adoption once the initial assessment of the impact of the new guidance has been completed.

During fiscal 2017, the Company established a cross-functional implementation team, including representatives from all of its businesses globally, to analyze the current processes in place for the recognition of revenue and identify potential differences that would result from application of the new guidance. This initial assessment includes analysis of significant types of arrangements, processes and systems, and reviews of representative contracts. As this assessment is not yet complete, the Company has not been able to determine the impact that the new guidance will have on its financial statements.

In July 2015, the FASB issued a new ASU, which aligns the measurement of inventory under GAAP more closely with International Financial Reporting Standards. Under the new guidance, an entity that measures inventory using FIFO or average cost should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new guidance will be effective for the Company beginning October 1, 2017. The Company has evaluated the impact of adopting the new guidance, and does not expect that the impact on its financial statements will be material.

In March 2016, the FASB issued an ASU designed to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The amendments will be effective for the Company beginning October 1, 2017. The Company has evaluated the impact to the financial statements and does not believe the impact of adoption will be material. The most notable impacts will be to Income tax provision (benefit) and Diluted earnings per share, as well as reclassifications between operating and financing activities on the Condensed Consolidated Statements of Cash Flows.

In November 2016, the FASB issued an ASU which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. These amounts should be included within cash and cash equivalents when reconciling the beginning and ending balances for the periods shown on the statement of cash flows. The ASU requires retrospective application, and will be effective for the Company beginning October 1, 2018, with early adoption permitted. The Company does not expect to early adopt this guidance and the impact on the financial statements is not expected to be material.

In January 2017, the FASB issued new guidance clarifying the definition of a business, reducing the number of transactions that need to be further evaluated and providing a framework to assist entities in evaluating whether both an input and a substantive process are present. The amendments in the ASU specify that when the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not a business. The guidance also requires that an integrated set of assets and activities must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output to be considered a business, and removes the evaluation of whether a market participant could replace the missing elements. The ASU will be effective for transactions occurring after October 1, 2018, with early adoption permitted.

In January 2017, the FASB issued new guidance which simplifies the subsequent measurement of goodwill by eliminating step 2 from the goodwill impairment test. Under existing guidance, an entity performs procedures to determine the fair value at the impairment testing date of its assets and liabilities following the same procedures required when determining the fair value of assets acquired and liabilities assumed in a business combination. The amended guidance requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge to the extent the carrying amount exceeds the fair value and does not exceed the total amount of goodwill allocated to the reporting unit. The ASU will be effective for the Company beginning October 1, 2020, with early adoption permitted, and should be applied prospectively. The Company is in the process of determining what impact, if any, the new guidance will have on its annual impairment testing and if it will early adopt the new guidance.

In March 2017, the FASB issued new guidance to improve the presentation of net periodic pension and postretirement benefit cost. Under existing guidance, the components of net periodic pension and postretirement benefit cost are aggregated and reported in the same line item as other compensation costs arising from services rendered by the applicable employees during the period. The amendments change these requirements so that only the service cost component is recorded in the same line item as other compensation costs for the applicable employees, and all other components of net periodic pension and postretirement benefit cost are recorded on a separate line item outside of income from operations. The amendments also specify that only the service cost component is eligible for capitalization. The ASU will be effective for the Company beginning October 1, 2018, with early adoption permitted October 1, 2017, and will be applied retrospectively for the presentation of the cost components and prospectively for the capitalization of the service cost component. The Company expects that the retrospective impact of adoption on its Consolidated Statement of Operations for the year ended September 30, 2016 will be an increase in Cost of products sold, Selling, general and administrative expense and Other income, net of $3.3, $1.2 and $4.5, respectively.

In May 2017, the FASB issued new guidance that clarifies the scope of accounting for modifications of share-based payment awards. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The ASU will be effective for the Company beginning October 1, 2018, with early adoption permitted. The Company has not determined if it will early adopt the new guidance, but does not expect the impact on its financial statements will be material.

Note 2 - Acquisition

Bulldog Skincare Holdings Limited

On October 31, 2016, the Company completed the acquisition of Bulldog, a men's grooming and skincare products company based in the U.K., for £27.8, or $34.0, net of cash acquired. The acquisition created opportunities to expand Edgewell's personal care portfolio into a growing global category where it can leverage its international geographic footprint. The acquisition was financed through available foreign cash.

The Company has recognized the assets and liabilities of Bulldog based on estimates of their acquisition date fair values. The determination of the fair values of the acquired assets and assumed liabilities, including goodwill and other intangible assets, requires significant judgment. The Company completed the fair value determinations during the third quarter of fiscal 2017, resulting in immaterial changes. The following presents the purchase price allocation:



Cash	$	1.2
Inventory	2.5
Other assets	3.8
Goodwill	16.4
Other intangible assets	18.0
Liabilities	(6.7		)
Net assets acquired	$	35.2

The intangible assets acquired consisted of customer relationships and product formulations, with a weighted-average useful life of 14 years, and the Bulldog trade name, which has been classified as an indefinite-lived intangible asset. The excess of the purchase price over net tangible and intangible assets acquired resulted in goodwill of $16.4, which represents the value of the expansion into new markets and the acquired workforce of Bulldog, and is not expected to be deductible for tax purposes. All assets are included in the Company's Sun and Skin Care segment.

Acquisition and integration costs related to the acquisition were not material.

Note 3 - Restructuring Charges

Spin Restructuring

The Company initiated certain restructuring activities related to the July 1, 2015 separation of its Household Products business into a separate, publicly-traded company (the "Spin") in order to prepare both businesses to operate as stand-alone entities. The restructuring activities included efforts to adapt the global go-to-market footprint to adjust to the future strategies and scale of each stand-alone business; centralize certain back-office functions to increase efficiencies; outsource certain non-core transactional activities; and reduce headcount to optimize the cost structures of each stand-alone business. As of June 30, 2017 and September 30, 2016, $0.7 and $5.2 of accrued Spin restructuring charges were included in Other current liabilities.

Restructuring

In November 2012, the Company's Board of Directors (the "Board") authorized an enterprise-wide restructuring plan (the "Restructuring"). The Restructuring originally included several initiatives focused on reducing costs in general and administrative functions, as well as reducing manufacturing and operating costs associated with the Company's discontinued operations. In January 2014, the Board authorized an expansion of scope of the previously announced Restructuring, which included rationalization and streamlining of the Edgewell operating facilities and other cost saving initiatives. Restructuring charges specific to Edgewell have primarily related to plant closure and accelerated depreciation charges and severance and related benefit costs. Project-to-date restructuring costs total $165.4. The Company now expects full year restructuring costs to total $28.0 to $30.0 for 2017. Due to an increase in Wet Shave footprint costs and a delay in the transition of manufacturing in the Company's Feminine Care segment from Montreal to Dover, Delaware, project costs have increased and some anticipated savings are expected to be realized in fiscal 2019. Additionally, the Company's year-to-date charges include a non-cash charge related to the disposition of real estate. The Company does not expect costs in future periods to be material.

Expenses incurred under the Restructuring plan are reflected below, including the estimated impact of allocating such charges to segment results. Restructuring charges were only allocated to the Company's Wet Shave, Sun and Skin Care and Feminine Care segments for the three and nine months ended June 30, 2017 and 2016. The Company does not include restructuring costs in the results of its reportable segments.



	Three Months Ended June 30, 2017
	Wet Shave		Sun and Skin Care		Feminine Care		Total
Restructuring
Severance and related benefit costs	$	0.4	$	—	$	2.0	$	2.4
Asset impairment and accelerated depreciation	—		—		3.6		3.6
Consulting, program management and other exit costs	2.9		—		3.6		6.5
Total Restructuring	$	3.3	$	—	$	9.2	$	12.5



	Nine Months Ended June 30, 2017
	Wet Shave		Sun and Skin Care		Feminine Care		Total
Restructuring
Severance and related benefit costs	$	1.1	$	—	$	4.4	$	5.5
Asset impairment and accelerated depreciation	—		—		6.4		6.4
Consulting, program management and other exit costs	6.8		0.1		6.1		13.0
Total Restructuring	$	7.9	$	0.1	$	16.9	$	24.9



	Three Months Ended June 30, 2016
	Wet Shave		Sun and Skin Care		Feminine Care		Total
Restructuring
Severance and related benefit costs	$	0.5	$	—	$	0.6	$	1.1
Asset impairment and accelerated depreciation	—		—		1.0		1.0
Consulting, program management and other exit costs	1.2		—		2.5		3.7
Total Restructuring	$	1.7	$	—	$	4.1	$	5.8



	Nine Months Ended June 30, 2016
	Wet Shave		Sun and Skin Care		Feminine Care		Total
Restructuring
Severance and related benefit costs	$	9.6	$	0.2	$	5.1	$	14.9
Asset impairment and accelerated depreciation	—		—		2.2		2.2
Consulting, program management and other exit costs	3.2		0.1		8.9		12.2
Total Restructuring	$	12.8	$	0.3	$	16.2	$	29.3

In addition, pre-tax costs of $0.3 and $0.7 for the three and nine months ended June 30, 2017, respectively, associated with obsolescence charges related to the exit of certain non-core product lines as part of the restructuring were included in Cost of products sold. Obsolescence charges of $0.1 were recorded during the nine months ended June 30, 2016.

The following table summarizes the Restructuring activities and related accrual (excluding certain obsolescence charges related to the restructuring) for the first nine months of fiscal 2017:



								Utilized
	October 1, 2016		Charge to Income		Other ⁽¹⁾			Cash			Non-Cash			June 30, 2017
Restructuring
Severance and termination related costs	$	16.7	$	5.5	$	(0.5	)	$	(18.3	)	$	—		$	3.4
Asset impairment and accelerated depreciation	—		6.4		—			—			(6.4		)	—
Other related costs	—		13.0		—			(13.0		)	—			—
Total Restructuring	$	16.7	$	24.9	$	(0.5	)	$	(31.3	)	$	(6.4	)	$	3.4


(1)	Includes the impact of currency translation.

The following table summarizes the Restructuring activities and related accrual (excluding certain obsolescence charges related to the restructuring) for fiscal 2016:



							Utilized
	October 1, 2015		Charge to Income		Other ⁽¹⁾		Cash			Non-Cash			September 30, 2016
Restructuring
Severance and termination related costs	$	13.7	$	17.0	$	0.6	$	(14.6	)	$	—		$	16.7
Asset impairment and accelerated depreciation	—		3.9		—		—			(3.9		)	—
Other related costs	—		16.1		—		(16.1		)	—			—
Total Restructuring	$	13.7	$	37.0	$	0.6	$	(30.7	)	$	(3.9	)	$	16.7


(1)	Includes the impact of currency translation.

Note 4 - Income Taxes

For the three and nine months ended June 30, 2017, the Company had income tax expense of $10.6 and $45.8, respectively, on Earnings before income taxes of $65.5 and $199.9, respectively. The effective tax rate for the three and nine months ended June 30, 2017 was 16.2% and 22.9%, respectively. The difference between the federal statutory rate and the effective rate for both periods is due to the mix of earnings in lower tax rate jurisdictions and $4.9 of favorable adjustments related to prior year provision estimates, as well as the effect of restructuring charges in higher tax rate jurisdictions.

For the three months ended June 30, 2016, the Company had an income tax benefit of $2.6 and for the nine months ended June 30, 2016, the Company had income tax expense of $29.6 on Earnings before income taxes of $34.1 and $156.1, respectively. The effective tax rate for the three and nine months ended June 30, 2016 was (7.6)% and 19.0%, respectively. The negative tax rate for the quarter was largely driven by $8.7 of favorable adjustments related to prior year provision estimates, which includes adjustments related to the Spin. In addition, the difference between the federal statutory rate and the effective rate for both periods is due to a higher mix of earnings in lower tax rate jurisdictions and was favorably impacted by Spin and restructuring charges in higher tax rate jurisdictions.

Note 5 - Earnings per Share

Basic earnings per share is based on the average number of common shares outstanding during the period. Diluted earnings per share is based on the average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of share options and restricted share equivalent ("RSE") awards.

Following is the reconciliation between the number of weighted-average shares used in the basic and diluted earnings per share calculation:



	Three Months Ended June 30,		Nine Months Ended June 30,
	2017	2016	2017	2016
Basic weighted-average shares outstanding	57.2	59.1	57.4	59.4
Effect of dilutive securities:
RSE awards	0.3	0.6	0.3	0.5
Total dilutive securities	0.3	0.6	0.3	0.5
Diluted weighted-average shares outstanding	57.5	59.7	57.7	59.9

For the three and nine months ended June 30, 2017, the calculation of diluted weighted-average shares outstanding excludes 0.6 of share options because the effect of including these awards was anti-dilutive. For the three and nine months ended June 30, 2016, the calculation of diluted weighted-average shares outstanding excludes 0.4 of share options because the effect of including these awards was anti-dilutive. For the three months ended June 30, 2016, the number of RSE awards considered anti-dilutive was immaterial. For the nine months ended June 30, 2016, the calculation of diluted weighted-average shares outstanding excludes 0.1 of RSE awards because the effect of these awards was anti-dilutive.

Note 6 - Goodwill and Intangible Assets

The following table sets forth goodwill by segment:



	Wet Shave		Sun and Skin Care		Feminine Care		All Other		Total
Balance at October 1, 2016	$	965.3	$	178.0	$	207.4	$	69.6	$	1,420.3
Acquisition of Bulldog	—		16.4		—		—		16.4
Cumulative translation adjustment	1.5		0.7		0.5		—		2.7
Balance at June 30, 2017	$	966.8	$	195.1	$	207.9	$	69.6	$	1,439.4

Total amortizable intangible assets were as follows:



	June 30, 2017						September 30, 2016
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Trade names and brands	$	45.6	$	13.6	$	32.0	$	14.6	$	12.2	$	2.4
Technology and patents	77.7		73.1		4.6		76.9		69.8		7.1
Customer related and other	150.6		87.1		63.5		141.8		79.6		62.2
Total amortizable intangible assets	$	273.9	$	173.8	$	100.1	$	233.3	$	161.6	$	71.7

Total amortizable intangible assets increased $8.9 with the acquisition of Bulldog, see Note 2 of Notes to Condensed Consolidated Financial Statements for more information. Amortization expense was $4.0 and $12.1 for the three and nine months ended June 30, 2017, respectively, and $3.6 and $10.8 for the three and nine months ended June 30, 2016, respectively. Estimated amortization expense for amortizable intangible assets for the remainder of fiscal 2017 and for fiscal 2018, 2019, 2020, 2021 and 2022 is approximately $4.0, $8.9, $7.6, $7.0, $6.4 and $6.3, respectively, and $59.9 thereafter.

The Company had indefinite-lived intangible assets of $1,293.0 ($228.6 in Wet Shave, $501.0 in Sun and Skin Care, $299.9 in Feminine Care and $263.5 in All Other) at June 30, 2017, a decrease of $20.4 from September 30, 2016. Indefinite-lived intangible assets decreased $30.9 due to the conversion of the Skintimate® brand name to a definite-lived intangible asset, as noted below, and changes in foreign currency translation rates, which were partially offset by the acquisition of the $9.1 indefinite-lived Bulldog tradename. See Note 2 of Notes to Condensed Consolidated Financial Statements for more information on the Bulldog acquisition.

Goodwill and intangible assets deemed to have an indefinite life are not amortized, but reviewed annually during the fourth fiscal quarter for impairment of value or when indicators of a potential impairment are present. The Company continuously monitors changing business conditions, which may indicate that the remaining useful life of goodwill and other intangible assets may warrant revision or carrying amounts may require adjustment. During fiscal 2016 and 2015, the Company recorded impairment charges of $6.5 and $29.6, respectively, on its Skintimate® brand name, which were primarily related to the introduction of competing products in the market, resulting in share and margin declines. Based on the impairments taken in the past two years and continued competitive pressure on this brand, as of October 1, 2016, the Skintimate® brand name was converted to a definite-lived asset and assigned a useful life of 20 years. This conversion to a definite-lived intangible asset increased amortization expense by $0.4 and $1.2 for the three and nine months ended June 30, 2017, respectively. During fiscal 2015, the Company also recorded impairment charges related to its Playtex® and Wet Ones® brand names. As such, the fair value of both brand names continues to be relatively close to the carrying value and these assets will continue to be sensitive in the future to changes in forecasted cash flows, as well as other assumptions used in an impairment analysis, including discount rates.

Note 7 - Supplemental Balance Sheet Information



	June 30, 2017			September 30, 2016
Inventories
Raw materials and supplies	$	50.9		$	50.8
Work in process	61.7			43.9
Finished products	230.5			214.5
Total inventories	$	343.1		$	309.2
Other Current Assets
Miscellaneous receivables	$	15.4		$	29.1
Prepaid expenses	63.8			49.0
Value added tax collectible from customers	25.5			22.4
Income taxes receivable	16.1			39.3
Other	4.3			3.4
Total other current assets	$	125.1		$	143.2
Property, Plant and Equipment
Land	$	23.8		$	27.8
Buildings	145.1			146.0
Machinery and equipment	918.5			913.7
Capitalized software costs	41.1			38.4
Construction in progress	61.5			36.2
Total gross property	1,190.0			1,162.1
Accumulated depreciation	(731.6		)	(676.0		)
Total property, plant and equipment, net	$	458.4		$	486.1
Other Current Liabilities
Accrued advertising, sales promotion and allowances	$	55.3		$	46.8
Accrued trade allowances	27.1			30.1
Accrued salaries, vacations and incentive compensation	41.4			56.0
Income taxes payable	25.3			19.7
Returns reserve	48.7			49.9
Restructuring reserve	4.1			21.9
Value added tax payable	8.6			25.0
Deferred compensation	5.7			26.1
Other	73.5			95.9
Total other current liabilities	$	289.7		$	371.4
Other Liabilities
Pensions and other retirement benefits	$	145.0		$	154.9
Deferred compensation	54.9			58.6
Other non-current liabilities	62.8			61.3
Total other liabilities	$	262.7		$	274.8

Note 8 - Debt

The detail of long-term debt was as follows:



	June 30, 2017		September 30, 2016
Senior notes, fixed interest rate of 4.7%, due 2021, net ⁽¹⁾	$	598.1	$	597.8
Senior notes, fixed interest rate of 4.7%, due 2022, net ^{(1) (2)}	497.3		496.9
U.S. revolving credit facility due 2020	300.0		265.0
Netherlands revolving credit facility due 2017	—		281.8
Term loan, due 2019, net ⁽¹⁾	184.7		184.5
Total long-term debt, including current maturities	1,580.1		1,826.0
Less current portion	—		281.8
Total long-term debt	$	1,580.1	$	1,544.2


(1)	At June 30, 2017, the balance for the senior notes due 2021, the senior notes due 2022 and the term loan are reflected net of debt issuance costs of $1.9, $2.0 and $0.3, respectively. At September 30, 2016, the balance for the senior notes due 2021, the senior notes due 2022 and the term loan are reflected net of debt issuance costs of $2.2, $2.3 and $0.5, respectively.


(2)	At June 30, 2017 and September 30, 2016, the balance for the senior notes due 2022 is reflected net of discount of $0.7 and $0.8, respectively.

The Company had outstanding international borrowings, recorded in Notes payable, of $17.7 and $18.5 as of June 30, 2017 and September 30, 2016, respectively.

Netherlands Revolving Credit Facility

On October 20, 2016, the Company terminated its commitments under the Netherlands revolving credit facility and repaid all outstanding loans and other obligations in full, in the amount of €251.3, or approximately $277.0.

U.S. Revolving Credit Facility

On March 13, 2017, the Company, along with its wholly-owned subsidiary, Edgewell Personal Care Brands, LLC ("Brands"), entered into Amendment No. 3 to the Credit Agreement (the "Amendment"), amending the Credit Agreement dated June 1, 2015 (as amended, the "Credit Agreement"), and an Increasing Lender Support Supplement to the Credit Agreement (the "Supplement"). The Amendment and the Supplement provide for an increase of $75.0 (from $650.0 to $725.0) in the revolving loans available to the Company and Brands. Additionally, certain other changes were made to the Credit Agreement, including allowing the Company to enter into receivables sales facilities for up to $150.0.

Note 9 - Retirement Plans

The Company has several defined benefit pension plans covering employees in the U.S. and certain employees in other countries, which are included in the information presented below. The plans provide retirement benefits based on years of service and earnings. The Company also sponsors or participates in a number of other non-U.S. pension and postretirement arrangements, including various retirement and termination benefit plans, some of which are required by local law or coordinated with government-sponsored plans, which are not significant in the aggregate and, therefore, are not included in the information presented below.

The Company's net periodic pension and postretirement benefit (credit) cost for these plans was as follows:



	Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2017			2016
Service cost	$	1.8		$	1.3		$	5.5		$	3.9
Interest cost	3.7			5.6			11.2			16.7
Expected return on plan assets	(7.9		)	(8.2		)	(23.8		)	(22.8		)
Recognized net actuarial loss	1.6			1.1			4.6			3.1
Settlement loss recognized	—			—			0.3			—
Net periodic benefit (credit) cost	$	(0.8	)	$	(0.2	)	$	(2.2	)	$	0.9

In fiscal 2017, the Company changed the methodology used to estimate the service and interest components of net periodic benefit (credit) cost for its pension and postretirement benefits, which will result in a decrease in expense of approximately $4 during fiscal 2017. The Company believes the spot discount rate approach, which applies the specific spot rates along the yield curve used in the determination of the benefit obligations to the relevant cash flows, is a more precise application of the yield curve spot rates used in the traditional single discount rate approach. The change was accounted for prospectively as a change in accounting estimate.

Note 10 - Shareholders' Equity

In May 2015, the Board approved an authorization to repurchase up to 10.0 shares of the Company's common stock. This authorization replaced a prior share repurchase authorization. During the nine months ended June 30, 2017, the Company repurchased 1.3 shares of its common stock for $94.6, all of which were purchased under this authorization. The Company has 4.2 shares remaining under the Board authorization to repurchase its common shares in the future. Future share repurchases, if any, would be made in the open market, privately negotiated transactions or otherwise, in such amounts and at such times as the Company deems appropriate based upon prevailing market conditions, business needs and other factors.

During the nine months ended June 30, 2017, 0.2 shares were purchased related to the surrender of shares of common stock to satisfy tax withholding obligations in connection with the vesting of RSE awards.

During the nine months ended June 30, 2017, the Company paid $1.6 cash dividends related to the vesting of RSE awards, which had been declared and accrued during prior fiscal years. The Company has not declared any dividends since the third quarter of fiscal 2015, and does not currently intend to declare dividends in the foreseeable future.

Note 11 - Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss ("AOCI"), net of tax, by component:



	Foreign Currency Translation Adjustments			Pension and Post-retirement Activity			Hedging Activity			Total
Balance at October 1, 2016	$	(68.1	)	$	(126.3	)	$	(2.8	)	$	(197.2	)
OCI before reclassifications ⁽¹⁾	15.1			(0.1		)	1.1			16.1
Reclassifications to earnings	—			3.2			1.6			4.8
Balance at June 30, 2017	$	(53.0	)	$	(123.2	)	$	(0.1	)	$	(176.3	)



	Foreign Currency Translation Adjustments			Pension and Post-retirement Activity			Hedging Activity			Total
Balance at October 1, 2015	$	(69.1	)	$	(105.7	)	$	3.3		$	(171.5	)
OCI before reclassifications ⁽¹⁾	(0.7		)	(4.6		)	(8.8		)	(14.1		)
Reclassifications to earnings	—			2.0			2.3			4.3
Balance at June 30, 2016	$	(69.8	)	$	(108.3	)	$	(3.2	)	$	(181.3	)


(1)	OCI is defined as other comprehensive income (loss).

The following table presents the reclassifications out of AOCI:



	For the Three Months Ended June 30,						For the Nine Months Ended June 30,						Affected Line Item in the Condensed Consolidated Statements of Earnings
Details of AOCI Components	2017			2016			2017			2016
Gains and losses on cash flow hedges
Foreign exchange contracts	$	1.1		$	(1.4	)	$	2.5		$	3.2		Other (income) expense, net
	1.1			(1.4		)	2.5			3.2			Total before tax
	(0.4		)	0.5			(0.9		)	(0.9		)	Tax expense
	0.7			(0.9		)	1.6			2.3			Net of tax
Amortization of defined benefit pension and postretirement items
Actuarial losses	1.6			1.1			4.6			3.1			(1)
Settlement loss recognized	—			—			0.3			—			(1)
	1.6			1.1			4.9			3.1			Total before tax
	(0.6		)	(0.4		)	(1.7		)	(1.1		)	Tax expense
	1.0			0.7			3.2			2.0			Net of tax

Total reclassifications for the period	$	1.7		$	(0.2	)	$	4.8		$	4.3		Net of tax


(1)	These AOCI components are included in the computation of net periodic benefit (credit) cost. See Note 9 of Notes to Condensed Consolidated Financial Statements.

Note 12 - Financial Instruments and Risk Management

At times, the Company enters into contractual arrangements (derivatives) to reduce its exposure to foreign currency and interest rate risks. The section below outlines the types of derivatives that existed at June 30, 2017 and September 30, 2016, as well as the Company's objectives and strategies for holding derivative instruments.

Foreign Currency Risk

A significant share of the Company's sales are tied to currencies other than the U.S. dollar, the Company's reporting currency. As such, a weakening of currencies relative to the U.S. dollar can have a negative impact to reported earnings. Conversely, strengthening of currencies relative to the U.S. dollar can improve reported results. The primary currencies to which the Company is exposed include the Euro, the Japanese Yen, the British Pound, the Canadian Dollar and the Australian Dollar.

Additionally, the Company's foreign subsidiaries enter into internal and external transactions that create non-functional currency balance sheet positions at the foreign subsidiary level. These exposures are generally the result of intercompany purchases, intercompany loans and, to a lesser extent, external purchases, and are revalued in the foreign subsidiary's local currency at the end of each period. Changes in the value of the non-functional currency balance sheet positions in relation to the foreign subsidiary's local currency results in an exchange gain or loss recorded in Other (income) expense, net. The primary currency to which the Company's foreign subsidiaries are exposed is the U.S. dollar.

Interest Rate Risk

The Company has interest rate risk with respect to interest expense on variable rate debt. At June 30, 2017, the Company had $484.7 of variable rate debt outstanding, which consisted of outstanding borrowings under the Company's revolving credit facility in the U.S. and term loan.

Cash Flow Hedges

At June 30, 2017, the Company maintained a cash flow hedging program related to foreign currency risk. These derivative instruments have a high correlation to the underlying exposure being hedged and have been deemed highly effective for accounting purposes in offsetting the associated risk.

The Company entered into a series of forward currency contracts to hedge cash flow uncertainty associated with currency fluctuations. These transactions are accounted for as cash flow hedges. The Company had an unrealized pre-tax losses of $0.1 and $4.3 at June 30, 2017 and September 30, 2016, respectively, on these forward currency contracts accounted for as cash flow hedges, which are included in AOCI. Assuming foreign exchange rates versus the U.S. dollar remain at June 30, 2017 levels over the next twelve months, the majority of the pre-tax loss included in AOCI at June 30, 2017 is expected to be included in Other (income) expense, net. Contract maturities for these hedges extend into fiscal 2019. There were 66 open foreign currency contracts at June 30, 2017 with a total notional value of $132.0.

Derivatives not Designated as Hedges

The Company entered into foreign currency derivative contracts which are not designated as cash flow hedges for accounting purposes to hedge balance sheet exposures. Any gains or losses on these contracts are expected to be offset by exchange gains or losses on the underlying exposures, thus they are not subject to significant market risk. The change in estimated fair value of the foreign currency contracts for the three and nine months ended June 30, 2017 resulted in gains of $1.6 and $2.0, respectively, and were recorded in Other (income) expense, net. The change in estimated fair value of the foreign currency contracts for the three and nine months ended June 30, 2016 resulted in losses of $6.5 and $10.8, respectively. There were six open foreign currency derivative contracts, which were not designated as cash flow hedges at June 30, 2017, with a total notional value of $99.0.

The following table provides estimated fair values of derivative instruments:



	Fair Value of Asset (Liability) ⁽¹⁾
	June 30, 2017			September 30, 2016
Derivatives designated as cash flow hedging relationships:
Foreign currency contracts	$	(0.1	)	$	(4.3	)
Derivatives not designated as cash flow hedging relationships:
Foreign currency contracts	$	1.1		$	(1.3	)


(1)	All derivative assets are presented in Other current assets or Other assets. All derivative liabilities are presented in Other current liabilities or Other liabilities.

The following table provides the amounts of gains and losses on derivative instruments:



	Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2017		2016
Derivatives designated as cash flow hedging relationships:
Foreign currency contracts
(Loss) gain recognized in OCI ⁽¹⁾	$	(1.5	)	$	(2.2	)	$	6.7	$	(6.7	)
Gain (loss) reclassified from AOCI into income (effective portion) ^{(1) (2)}	1.1			(1.4		)	2.5		3.2
Derivatives not designated as cash flow hedging relationships:
Foreign currency contracts
Gain (loss) recognized in income ⁽²⁾	$	1.6		$	(6.5	)	$	2.0	$	(10.8	)


(1)	Each of these derivative instruments had a high correlation to the underlying exposure being hedged for the periods indicated and had been deemed highly effective in offsetting associated risk.


(2)	Gain (loss) was recorded in Other (income) expense, net.

The following table provides financial assets and liabilities for balance sheet offsetting:



	At June 30, 2017						At September 30, 2016
	Assets ⁽¹⁾			Liabilities ⁽²⁾			Assets ⁽¹⁾		Liabilities ⁽²⁾
Foreign currency contracts
Gross amounts of recognized assets (liabilities)	$	3.7		$	(2.5	)	$	1.7	$	(6.2	)
Gross amounts offset in the balance sheet	(0.2		)	—			—		0.2
Net amounts of assets (liabilities) presented in the balance sheet	$	3.5		$	(2.5	)	$	1.7	$	(6.0	)


(1)	All derivative assets are presented in Other current assets or Other assets.


(2)	All derivative liabilities are presented in Other current liabilities or Other liabilities.

Fair Value Hierarchy

Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs reflecting the reporting entity's own assumptions or external inputs from inactive markets.

Under the fair value accounting guidance hierarchy, an entity is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The following table sets forth the Company's financial assets and liabilities, which are carried at fair value and measured on a recurring basis during the period, all of which are classified as level 2 within the fair value hierarchy:



	June 30, 2017			September 30, 2016
Assets (Liabilities) at estimated fair value:
Deferred compensation	$	(60.4	)	$	(84.5	)
Derivatives - foreign currency contracts	1.0			(5.6		)
Net liabilities at estimated fair value	$	(59.4	)	$	(90.1	)

At June 30, 2017 and September 30, 2016, the Company had no level 1 or level 3 financial assets or liabilities, other than pension plan assets.

At June 30, 2017 and September 30, 2016, the fair market value of fixed rate long-term debt was $1,153.1 and $1,106.2, respectively, compared to its carrying value of $1,095.4 and $1,094.7, respectively. The estimated fair value of the long-term debt is estimated using yields obtained from independent pricing sources for similar types of borrowing arrangements. The estimated fair value of variable-rate debt, excluding revolving credit facilities, which consists of bank debt, was $185.0 compared to its carrying value of $184.7 and $184.5 at June 30, 2017 and September 30, 2016, respectively. The estimated fair value is equal to the face value of the debt. The estimated fair value of long-term debt, excluding revolving credit facilities, have been determined based on level 2 inputs.

Due to the nature of cash and cash equivalents and short-term borrowings, including notes payable, carrying amounts on the balance sheets approximate fair value. Additionally, the carrying amounts of the Company's revolving credit facilities, which are classified as long-term debt on the balance sheet, approximate fair value due to the revolving nature of the balances. The estimated fair value of cash and cash equivalents, short-term borrowings and the revolving credit agreements have been determined based on level 2 inputs.

At June 30, 2017, the estimated fair value of foreign currency contracts is the amount that the Company would receive or pay to terminate the contracts, considering first the quoted market prices of comparable agreements or, in the absence of quoted market prices, factors such as interest rates, currency exchange rates and remaining maturities. The estimated fair value of the deferred compensation liability is determined based upon the quoted market prices of the investment options that are offered under the plan.

Note 13 - Commitments and Contingencies

The Company and its affiliates are subject to a number of legal proceedings in various jurisdictions arising out of its operations during the ordinary course of business. Many of these legal matters are in preliminary stages and involve complex issues of law and fact, and may proceed for protracted periods of time. The amount of liability, if any, from these proceedings cannot be determined with certainty. The Company reviews its legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for those contingencies when the incurrence of a loss is probable and can be reasonably estimated, and discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for its financial statements to not be misleading. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, if the amount cannot be reasonably estimated. Based upon present information, the Company believes that its liability, if any, arising from such pending legal proceedings, asserted legal claims and known potential legal claims, which are likely to be asserted, is not reasonably likely to be material to the Company's financial position, results of operations or cash flows, taking into account established accruals for estimated liabilities.

Note 14 - Segment Data

The Company conducts its business in the following four segments:


•	Wet Shave consists of products sold under the Schick®, Wilkinson Sword®, Edge®, Skintimate®, Shave Guard and Personna® brands, as well as non-branded products. The Company's wet shave products include razor handles and refillable blades, disposable shave products and shaving gels and creams.


•	Sun and Skin Care consists of Banana Boat® and Hawaiian Tropic® sun care products and Bulldog® men's skin care products, as well as Wet Ones® wipes and Playtex® household gloves.


•	Feminine Care includes tampons, pads and liners sold under the Playtex® Sport®, Stayfree®, Carefree® and o.b.® brands, as well as personal cleansing wipes under the Playtex® brand.


•	All Other includes infant care products, such as bottles, cups and pacifiers, under the Playtex®, OrthoPro® and Binky® brand names, as well as the Diaper Genie® and Litter Genie® disposal systems.

Segment performance is evaluated based on segment profit, exclusive of general corporate expenses, share-based compensation costs, costs associated with restructuring initiatives, the sale of the industrial blade business and the amortization of intangible assets. Financial items, such as interest income and expense, are managed on a global basis at the corporate level. The exclusion of such charges from segment results reflects management's view on how it evaluates segment performance.

The Company's 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. The Company applies a fully allocated cost basis, in which shared business functions are allocated between the segments. Such allocations are estimates, and do not represent the costs of such services if performed on a stand-alone basis.

Segment net sales and profitability are presented below:



	Three Months Ended June 30,						Nine Months Ended June 30,
	2017			2016			2017			2016
Net Sales
Wet Shave	$	358.5		$	364.6		$	1,007.3		$	1,034.3
Sun and Skin Care	161.1			151.3			369.3			337.3
Feminine Care	86.4			97.1			258.7			281.2
All Other	31.5			32.1			98.2			98.6
Total net sales	$	637.5		$	645.1		$	1,733.5		$	1,751.4

Segment Profit
Wet Shave	$	59.8		$	45.5		$	205.0		$	190.0
Sun and Skin Care	42.4			34.3			94.1			75.2
Feminine Care	7.6			7.4			17.5			35.5
All Other	6.7			6.1			21.3			21.3
Total segment profit	116.5			93.3			337.9			322.0

General corporate and other expenses	(18.2		)	(20.5		)	(58.1		)	(58.5		)
Spin costs ⁽¹⁾	—			(2.8		)	—			(12.0		)
Restructuring and related costs ⁽²⁾	(12.8		)	(5.8		)	(25.6		)	(29.4		)
Industrial sale charges	—			—			—			(0.2		)
Amortization of intangibles	(4.0		)	(3.6		)	(12.1		)	(10.8		)
Interest and other expense, net	(16.0		)	(26.5		)	(42.2		)	(55.0		)
Total earnings before income taxes	$	65.5		$	34.1		$	199.9		$	156.1


(1)	Includes pre-tax Selling, general and administrative expense of $2.8 and $11.8 for the three and nine months ended June 30, 2016, respectively, and pre-tax Cost of products sold of $0.2 for the nine months ended June 30, 2016 related to the Spin.


(2)	Includes pre-tax Cost of products sold of $0.3 and $0.7 for the three and nine months ended June 30, 2017, respectively, and $0.1 for the nine months ended June 30, 2016 associated with obsolescence charges related to the exit of certain non-core product lines as a part of restructuring.

Supplemental product information is presented below for net sales:



	Three Months Ended June 30,				Nine Months Ended June 30,
	2017		2016		2017		2016
Razors and blades	$	319.3	$	323.7	$	896.2	$	913.5
Sun care products	136.9		129.7		305.8		281.5
Tampons, pads and liners	86.4		97.1		258.7		281.2
Shaving gels and creams	39.2		40.9		111.1		120.8
Infant care and other	31.5		32.1		98.2		98.6
Skin care products	24.2		21.6		63.5		55.8
Total net sales	$	637.5	$	645.1	$	1,733.5	$	1,751.4

Note 15 - Guarantor and Non-Guarantor Financial Information

The Company's senior notes issued in May 2011 and May 2012 (collectively, the "Notes") are fully and unconditionally guaranteed on a joint and several basis by the Company's existing and future direct and indirect domestic subsidiaries that are guarantors of any of the Company's credit agreements or other indebtedness for borrowed money (the "Guarantors"). The Guarantors are 100% owned either directly or indirectly by the Company and jointly and severally guarantee the Company's obligations under the Notes and substantially all of the Company's other outstanding indebtedness. The Company's subsidiaries organized outside of the U.S. and certain domestic subsidiaries which are not guarantors of any of the Company's other indebtedness (collectively, the "Non-Guarantors"), do not guarantee the Notes. The subsidiary guarantee with respect to the Notes is subject to release upon sale of all of the capital stock of the Subsidiary Guarantor; if the guarantee under the Company's credit agreements and other indebtedness for borrowed money is released or discharged (other than due to payment under such guarantee); or when the requirements for legal defeasance are satisfied or the obligations are discharged in accordance with the indenture.

Set forth below are the condensed consolidating financial statements presenting the results of operations, financial position and cash flows of the Parent Company, Edgewell Personal Care Company, the Guarantors on a combined basis, the Non-Guarantors on a combined basis and eliminations necessary to arrive at the information for the Company, as reported on a consolidated basis. Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among the Parent Company, the Guarantors and the Non-Guarantors.

EDGEWELL PERSONAL CARE COMPANY

CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

Three Months Ended June 30, 2017



	Parent Company			Guarantors			Non-Guarantors			Eliminations			Total
Net sales	$	—		$	447.8		$	291.4		$	(101.7	)	$	637.5
Cost of products sold	—			247.6			169.5			(101.7		)	315.4
Gross profit	—			200.2			121.9			—			322.1

Selling, general and administrative expense	—			63.6			33.9			—			97.5
Advertising and sales promotion expense	—			76.9			37.3			—			114.2
Research and development expense	—			16.3			0.1			—			16.4
Restructuring charges	—			2.5			10.0			—			12.5
Interest expense associated with debt	13.4			4.0			0.2			—			17.6
Other income, net	—			—			(1.6		)	—			(1.6		)
Intercompany service fees	—			(4.7		)	4.7			—			—
Equity in earnings of subsidiaries	(64.1		)	(31.5		)	—			95.6			—
Earnings before income taxes	50.7			73.1			37.3			(95.6		)	65.5
Income tax (benefit) provision	(4.2		)	9.0			5.8			—			10.6
Net earnings	$	54.9		$	64.1		$	31.5		$	(95.6	)	$	54.9

Statement of Comprehensive Income:
Net earnings	$	54.9		$	64.1		$	31.5		$	(95.6	)	$	54.9
Other comprehensive income, net of tax	40.6			40.6			40.2			(80.8		)	40.6
Total comprehensive income	$	95.5		$	104.7		$	71.7		$	(176.4	)	$	95.5

EDGEWELL PERSONAL CARE COMPANY

CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

Nine Months Ended June 30, 2017



	Parent Company			Guarantors			Non-Guarantors			Eliminations			Total
Net sales	$	—		$	1,224.1		$	799.3		$	(289.9	)	$	1,733.5
Cost of products sold	—			689.1			474.6			(289.9		)	873.8
Gross profit	—			535.0			324.7			—			859.7

Selling, general and administrative expense	—			192.2			103.0			—			295.2
Advertising and sales promotion expense	—			159.8			87.5			—			247.3
Research and development expense	—			49.6			0.6			—			50.2
Restructuring charges	—			7.4			17.5			—			24.9
Interest expense associated with debt	40.1			11.1			1.1			—			52.3
Other income, net	—			—			(10.1		)	—			(10.1		)
Intercompany service fees	—			(17.2		)	17.2			—			—
Equity in earnings of subsidiaries	(180.1		)	(88.9		)	—			269.0			—
Earnings before income taxes	140.0			221.0			107.9			(269.0		)	199.9
Income tax (benefit) provision	(14.1		)	40.9			19.0			—			45.8
Net earnings	$	154.1		$	180.1		$	88.9		$	(269.0	)	$	154.1

Statement of Comprehensive Income:
Net earnings	$	154.1		$	180.1		$	88.9		$	(269.0	)	$	154.1
Other comprehensive income, net of tax	20.9			20.9			19.1			(40.0		)	20.9
Total comprehensive income	$	175.0		$	201.0		$	108.0		$	(309.0	)	$	175.0

EDGEWELL PERSONAL CARE COMPANY

CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

Three Months Ended June 30, 2016



	Parent Company			Guarantors			Non-Guarantors			Eliminations			Total
Net sales	$	—		$	452.1		$	289.9		$	(96.9	)	$	645.1
Cost of products sold	—			257.1			173.4			(96.6		)	333.9
Gross profit	—			195.0			116.5			(0.3		)	311.2

Selling, general and administrative expense	1.4			66.2			37.2			—			104.8
Advertising and sales promotion expense	—			85.7			37.0			(0.2		)	122.5
Research and development expense	—			17.1			0.4			—			17.5
Restructuring charges	—			2.9			2.9			—			5.8
Industrial sale charges	—			—			—			—			—
Interest expense associated with debt	13.3			2.9			2.1			—			18.3
Other expense, net	—			5.5			2.7			—			8.2
Intercompany service fees	—			(4.7		)	4.7			—			—
Equity in earnings of subsidiaries	(45.9		)	(20.5		)	—			66.4			—
Earnings before income taxes	31.2			39.9			29.5			(66.5		)	34.1
Income tax (benefit) provision	(5.5		)	(2.2		)	5.2			(0.1		)	(2.6		)
Net earnings	$	36.7		$	42.1		$	24.3		$	(66.4	)	$	36.7

Statement of Comprehensive Income:
Net earnings	36.7			42.1			24.3			(66.4		)	36.7
Other comprehensive (loss) income, net of tax	(4.9		)	4.4			(4.5		)	0.1			(4.9		)
Total comprehensive income	$	31.8		$	46.5		$	19.8		$	(66.3	)	$	31.8

EDGEWELL PERSONAL CARE COMPANY

CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

Nine Months Ended June 30, 2016



	Parent Company		Guarantors		Non-Guarantors		Eliminations	Total
Net sales	$	—	$	1,229.0	$	848.6