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Post Holdings, Inc. (POST) SEC Filing 10-Q Quarterly Report for the period ending Wednesday, June 30, 2021

SEC Filings

Post Holdings, Inc.

CIK: 1530950 Ticker: POST

Exhibit 99.1
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Post Holdings Reports Results for the Third Quarter of Fiscal Year 2021
St. Louis - August 5, 2021
- Post Holdings, Inc. (NYSE:POST), a consumer packaged goods holding company, today reported results for the third fiscal quarter ended June 30, 2021.
Highlights:
Third quarter net sales of $1.6 billion
Operating profit of $206.5 million; net loss of $54.3 million; Adjusted EBITDA of $302.6 million
Completed the private label cereal and Egg Beaters acquisitions and the initial public offering of Post Holdings Partnering Corporation
Second half fiscal year 2021 Adjusted EBITDA (non-GAAP) expected to range between $590-$610 million
Third Quarter Consolidated Operating Results
Net sales were $1,589.8 million, an increase of 19.0%, or $253.4 million, compared to $1,336.4 million in the prior year period, and included $78.5 million in net sales from acquisitions made in fiscal years 2021 and 2020. More information on these acquisitions is discussed later in this release. Net sales growth in Foodservice, BellRing Brands and Weetabix was partially offset by declines in Post Consumer Brands and Refrigerated Retail. Gross profit was $479.4 million, or 30.2% of net sales, an increase of 9.8%, or $42.6 million, compared to the prior year period gross profit of $436.8 million, or 32.7% of net sales.
Selling, general and administrative (“SG&A”) expenses were $231.9 million, or 14.6% of net sales, an increase of $7.7 million compared to $224.2 million, or 16.8% of net sales, in the prior year period. Operating profit was $206.5 million, an increase of 20.0%, or $34.4 million, compared to $172.1 million in the prior year period, and included a gain on bargain purchase of $12.7 million and $11.8 million of accelerated amortization, both of which were treated as adjustments for non-GAAP measures.
Net loss was $54.3 million, a decrease of 250.8%, or $90.3 million, compared to net earnings of $36.0 million in the prior year period. Net loss/earnings included the following:
Three Months Ended June 30,
(in millions)
20212020
Expense on swaps, net (1)
$121.6 $29.2 
United Kingdom (“U.K.”) tax reform expense (1)
39.3 — 
Equity method losses, net of tax11.6 4.2 
Net earnings attributable to noncontrolling interest (2)
10.0 4.4 
(1) Discussed later in this release and were treated as adjustments for non-GAAP measures.
(2) Primarily reflected the allocation of 28.8% and 69.0% of BellRing Brands, Inc.’s (“BellRing”) and Post Holdings Partnering Corporation’s (“PHPC”), respectively, consolidated net earnings/loss to noncontrolling interest.
Diluted loss per common share was $0.95, compared to the prior year period diluted earnings per common share of $0.52. Adjusted net earnings were $60.4 million, or $0.93 per adjusted diluted common share, compared to $51.9 million, or $0.75 per diluted common share, in the prior year period.
Adjusted EBITDA was $302.6 million, an increase of 11.7%, or $31.7 million, compared to $270.9 million in the prior year period. Adjusted EBITDA in the third quarter of 2021 and 2020 included an adjustment of $9.4 million and $4.0 million, respectively, primarily for the portion of BellRing’s consolidated net earnings which was allocated to noncontrolling interest, resulting in Adjusted EBITDA including 100% of the consolidated Adjusted EBITDA of BellRing.
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The following information was filed by Post Holdings, Inc. (POST) on Thursday, August 5, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 10-Q
__________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
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: 1-35305
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Post Holdings, Inc.
(Exact name of registrant as specified in its charter)
Missouri45-3355106
(State or other jurisdiction of
 incorporation or organization)
(I.R.S. Employer Identification No.)
2503 S. Hanley Road
St. Louis, Missouri 63144
(Address of principal executive offices) (Zip Code)
(314) 644-7600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per sharePOSTNew York Stock Exchange
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 No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Common Stock, $0.01 par value per share – 63,707,265 shares as of August 2, 2021


POST HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 6.
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PART I.     FINANCIAL INFORMATION.
ITEM 1.    FINANCIAL STATEMENTS (UNAUDITED).

POST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share data)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Net Sales$1,589.8 $1,336.4 $4,531.1 $4,287.4 
Cost of goods sold1,110.4 899.6 3,145.3 2,940.3 
Gross Profit479.4 436.8 1,385.8 1,347.1 
Selling, general and administrative expenses231.9 224.2 732.4 704.5 
Amortization of intangible assets53.7 40.1 152.8 120.2 
Other operating (income) expenses, net(12.7)0.4 (17.3)0.8 
Operating Profit206.5 172.1 517.9 521.6 
Interest expense, net91.9 96.4 283.3 293.3 
Loss on extinguishment and refinancing of debt, net0.1 — 94.8 72.9 
Expense (income) on swaps, net121.6 29.2 (105.6)192.4 
Other income, net(2.9)(3.1)(19.8)(9.6)
(Loss) Earnings before Income Taxes and Equity Method Loss(4.2)49.6 265.2 (27.4)
Income tax expense (benefit)28.5 5.0 81.2 (11.7)
Equity method loss, net of tax11.6 4.2 26.5 22.6 
Net (Loss) Earnings Including Noncontrolling Interests(44.3)40.4 157.5 (38.3)
Less: Net earnings attributable to noncontrolling interests10.0 4.4 20.7 17.9 
Net (Loss) Earnings $(54.3)$36.0 $136.8 $(56.2)
(Loss) Earnings per Common Share:
Basic$(0.95)$0.53 $2.02 $(0.81)
Diluted$(0.95)$0.52 $1.99 $(0.81)
Weighted-Average Common Shares Outstanding:
Basic63.7 68.1 64.5 69.4 
Diluted63.7 69.2 65.6 69.4 
 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
 


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POST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)
(in millions)

Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Net (Loss) Earnings Including Noncontrolling Interests$(44.3)$40.4 $157.5 $(38.3)
Pension and postretirement benefits adjustments:
Reclassifications to net (loss) earnings (0.1)(0.6)(0.5)(1.6)
Hedging adjustments:
Net gain on derivatives — — — 22.5 
Reclassifications to net (loss) earnings0.6 0.6 1.7 7.6 
Foreign currency translation adjustments:
Unrealized foreign currency translation adjustments10.8 (4.7)126.4 0.9 
Tax (expense) benefit on other comprehensive income:
Pension and postretirement benefits adjustments:
Reclassifications to net (loss) earnings0.1 0.3 0.3 0.5 
Hedging adjustments:
Net gain on derivatives — — — (5.4)
Reclassifications to net (loss) earnings(0.2)(0.1)(0.4)(1.7)
Total Other Comprehensive Income (Loss) Including Noncontrolling Interests11.2 (4.5)127.5 22.8 
Less: Comprehensive income attributable to noncontrolling interests10.4 4.5 21.3 15.0 
Total Comprehensive (Loss) Income $(43.5)$31.4 $263.7 $(30.5)

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).


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POST HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)  
June 30,
2021
September 30,
2020
ASSETS
Current Assets
Cash and cash equivalents$775.9 $1,187.9 
Restricted cash6.4 5.5 
Receivables, net562.9 441.6 
Inventories670.1 599.4 
Prepaid expenses and other current assets83.9 53.4 
Total Current Assets2,099.2 2,287.8 
Property, net1,846.3 1,779.7 
Goodwill4,597.1 4,438.6 
Other intangible assets, net3,197.9 3,197.5 
Equity method investments88.2 114.1 
Investments held in trust345.0 — 
Other assets388.7 329.0 
Total Assets$12,562.4 $12,146.7 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt$115.6 $64.9 
Accounts payable440.9 367.9 
Other current liabilities374.4 541.6 
Total Current Liabilities930.9 974.4 
Long-term debt6,932.1 6,959.0 
Deferred income taxes879.2 784.5 
Other liabilities682.4 599.8 
Total Liabilities9,424.6 9,317.7 
Redeemable noncontrolling interest305.0 — 
Shareholders’ Equity
Common stock0.8 0.8 
Additional paid-in capital4,249.2 4,182.9 
Retained earnings310.1 208.6 
Accumulated other comprehensive income (loss)97.6 (29.3)
Treasury stock, at cost(1,823.8)(1,508.5)
Total Shareholders’ Equity Excluding Noncontrolling Interests2,833.9 2,854.5 
Noncontrolling interests(1.1)(25.5)
Total Shareholders’ Equity2,832.8 2,829.0 
Total Liabilities and Shareholders’ Equity$12,562.4 $12,146.7 
 See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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POST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Nine Months Ended
June 30,
20212020
Cash Flows from Operating Activities
Net Earnings (Loss) Including Noncontrolling Interests$157.5 $(38.3)
Adjustments to reconcile net earnings (loss) including noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization316.9 274.5 
Unrealized (gain) loss on interest rate swaps, foreign exchange contracts and warrant liabilities, net(136.6)155.1 
Loss on extinguishment and refinancing of debt, net94.8 72.9 
Non-cash stock-based compensation expense41.9 37.2 
Equity method loss, net of tax26.5 22.6 
Deferred income taxes67.7 (61.8)
Other, net(14.6)7.4 
Other changes in operating assets and liabilities, net of business acquisitions:
(Increase) decrease in receivables, net(120.0)31.5 
Increase in inventories(19.0)(30.1)
Increase in prepaid expenses and other current assets(44.5)(7.6)
Increase in other assets(11.5)(17.5)
Increase (decrease) in accounts payable and other current liabilities18.8 (43.9)
Increase in non-current liabilities17.4 6.4 
Net Cash Provided by Operating Activities395.3 408.4 
Cash Flows from Investing Activities
Business acquisitions, net of cash acquired(290.3)— 
Additions to property(142.7)(160.0)
Proceeds from sale of property and assets held for sale19.0 2.5 
Insurance proceeds on property losses9.5 10.0 
Purchases of equity securities(5.0)— 
Sale of equity securities34.2 — 
Investments in partnerships(17.1)— 
Investment of subsidiary initial public offering proceeds into trust account(345.0)— 
Cross-currency swap cash settlements— 52.7 
Net Cash Used in Investing Activities(737.4)(94.8)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt1,820.0 3,848.0 
Repayments of long-term debt(1,803.3)(4,130.3)
Payments to appraisal rights holders— (3.8)
Purchases of treasury stock(322.7)(469.0)
Proceeds from initial public offering305.0 524.4 
Payment of initial public offering costs(7.1)— 
Payments of debt issuance costs and deferred financing fees(16.8)(40.8)
Refund of debt issuance costs— 15.3 
Payments of debt premiums and refinancing fees(75.9)(49.8)
Cash received from share repurchase contracts47.5 — 
Other, net(21.9)(7.9)
Net Cash Used in Financing Activities(75.2)(313.9)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash6.2 0.5 
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash(411.1)0.2 
Cash, Cash Equivalents and Restricted Cash, Beginning of Year1,193.4 1,054.5 
Cash, Cash Equivalents and Restricted Cash, End of Period$782.3 $1,054.7 
    
 See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). 
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POST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
(in millions)
 As Of and For The Three Months Ended
June 30,
 As Of and For The Nine Months Ended
June 30,
2021202020212020
Common Stock
Beginning and end of period$0.8 $0.8 $0.8 $0.8 
Additional Paid-in Capital
Beginning of period4,237.7 4,207.0 4,182.9 3,734.8 
Activity under stock and deferred compensation plans(1.5)(0.9)(19.7)(7.9)
Non-cash stock-based compensation expense13.0 11.9 38.5 35.5 
Cash received from share repurchase contracts— — 47.5 — 
Initial public offering, net of tax— — — 455.6 
End of period4,249.2 4,218.0 4,249.2 4,218.0 
Retained Earnings
Beginning of period399.7 115.6 208.6 207.8 
Net (loss) earnings(54.3)36.0 136.8 (56.2)
Post Holdings Partnering Corporation deemed dividend(35.3)— (35.3)— 
End of period310.1 151.6 310.1 151.6 
Accumulated Other Comprehensive Loss
Retirement Benefit Adjustments, net of tax
Beginning of period
(4.5)25.8 (4.3)26.6 
Net change in retirement benefits, net of tax
— (0.3)(0.2)(1.1)
End of period
(4.5)25.5 (4.5)25.5 
Hedging Adjustments, net of tax
Beginning of period
70.9 69.8 70.3 44.5 
Net change in hedges, net of tax
0.2 0.3 0.8 25.6 
End of period
71.1 70.1 71.1 70.1 
Foreign Currency Translation Adjustments
Beginning of period
20.4 (162.1)(95.3)(167.9)
Foreign currency translation adjustments
10.6 (4.6)126.3 1.2 
End of period
31.0 (166.7)31.0 (166.7)
Treasury Stock
Beginning of period(1,823.8)(1,349.8)(1,508.5)(920.7)
Purchases of treasury stock— (33.2)(315.3)(462.3)
End of period(1,823.8)(1,383.0)(1,823.8)(1,383.0)
Total Shareholders’ Equity Excluding Noncontrolling Interests2,833.9 2,916.3 2,833.9 2,916.3 
Noncontrolling Interests
Beginning of period(14.2)(41.9)(25.5)11.4 
Initial public offering— — — (64.9)
Net earnings attributable to noncontrolling interests11.5 4.4 22.2 17.9 
Activity under stock and deferred compensation plans— 0.1 (0.8)0.1 
Distribution to noncontrolling interest— — (1.0)— 
Non-cash stock-based compensation expense1.2 0.6 3.4 1.7 
Net change in hedges, net of tax0.2 0.2 0.5 (2.6)
Foreign currency translation adjustments0.2 (0.1)0.1 (0.3)
End of period(1.1)(36.7)(1.1)(36.7)
Total Shareholders’ Equity$2,832.8 $2,879.6 $2,832.8 $2,879.6 
 See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). 
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POST HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in millions, except per share information and where indicated otherwise)
NOTE 1 — BASIS OF PRESENTATION
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), under the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (the “SEC”), and on a basis substantially consistent with the audited consolidated financial statements of Post Holdings, Inc. (herein referred to as “Post,” “the Company,” “us,” “our” or “we,” and unless otherwise stated or context otherwise indicates, all such references herein mean Post Holdings, Inc. and its consolidated subsidiaries) as of and for the fiscal year ended September 30, 2020. These unaudited condensed consolidated financial statements should be read in conjunction with such audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020, filed with the SEC on November 20, 2020.
These unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair statement of the Company’s results of operations, comprehensive income, financial condition, cash flows and shareholders’ equity for the interim periods presented. Interim results are not necessarily indicative of the results for any other interim period or for the entire fiscal year.
The Company completed its acquisitions of the Egg Beaters brand (“Egg Beaters”) and the Peter Pan nut butter brand (“Peter Pan”) on May 27, 2021 and January 25, 2021, respectively. The quarter close date for both Egg Beaters and Peter Pan was June 27, 2021. As the amounts associated with the additional three days are immaterial, results of these entities have not been adjusted to conform with Post’s fiscal calendar.
NOTE 2 — RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS
The Company has considered all new accounting pronouncements and has concluded there are no new pronouncements (other than the ones described below) that had or will have a material impact on the Company’s results of operations, comprehensive income, financial condition, cash flows, shareholders’ equity or related disclosures based on current information.
Recently Issued
In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by this ASU do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. This ASU is elective and effective for all entities as of March 12, 2020, the date this ASU was issued. An entity may elect to apply the amendments for contract modifications provided by this ASU as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020. Once elected, this ASU must be applied prospectively for all eligible contract modifications. The Company is currently evaluating the impact of this ASU as it relates to its debt and hedging relationships.
Recently Adopted
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU provides guidance on the measurement of credit losses for most financial assets and certain other instruments. This ASU replaced the prior incurred loss impairment approach with a methodology to reflect expected credit losses and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The Company adopted this ASU on October 1, 2020. In conjunction with the adoption of this ASU, the Company updated its methodology for calculating its allowance for doubtful accounts. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.
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NOTE 3 — NONCONTROLLING INTERESTS, EQUITY INTERESTS AND RELATED PARTY TRANSACTIONS
Post Holdings Partnering Corporation
On May 28, 2021, the Company and Post Holdings Partnering Corporation, a newly formed special purpose acquisition company incorporated as a Delaware corporation (“PHPC”), consummated the initial public offering of 30.0 units of PHPC (the “PHPC Units”). On June 3, 2021, PHPC issued an additional 4.5 PHPC Units pursuant to the underwriters’ exercise in full of their over-allotment option. The term “PHPC IPO” as used herein generally refers to the consummation of the initial public offering on May 28, 2021 and the underwriters’ exercise in full of their over-allotment option on June 3, 2021. Each PHPC Unit consists of one share of Series A common stock of PHPC, par value $0.0001 per share (“PHPC Series A Common Stock”), and one-third of one redeemable warrant of PHPC, each whole warrant entitling the holder thereof to purchase one share of PHPC Series A Common Stock at an exercise price of $11.50 per share (the “PHPC Warrants”). The PHPC Units were sold at a price of $10.00 per PHPC Unit, generating gross proceeds to PHPC of $345.0. PHPC Sponsor, LLC, a wholly owned subsidiary of the Company (“PHPC Sponsor”), purchased 4.0 of the 30.0 PHPC Units in the initial public offering on May 28, 2021 for $40.0. The PHPC Units began trading on the New York Stock Exchange (the “NYSE”) under the ticker symbol “PSPC.U” on May 26, 2021. As of July 16, 2021, holders of the PHPC Units may elect to separately trade their shares of PHPC Series A Common Stock and PHPC Warrants, with the shares of PHPC Series A Common Stock and the PHPC Warrants listed on the NYSE under the symbols “PSPC” and “PSPC WS”, respectively. Under the terms of the PHPC IPO, PHPC is required to consummate a partnering transaction within 24 months (or 27 months under certain circumstances) of the completion of the PHPC IPO.
Substantially concurrently with the closing of the initial public offering on May 28, 2021, PHPC completed the private sale of 1.0 units of PHPC (the “PHPC Private Placement Units”), at a purchase price of $10.00 per PHPC Private Placement Unit, to PHPC Sponsor, and in connection with the underwriters’ exercise in full of their option to purchase additional PHPC Units, PHPC Sponsor purchased an additional 0.1 PHPC Private Placement Units, generating proceeds to PHPC of $10.9 (the “PHPC Private Placement”). The PHPC Private Placement Units sold in the PHPC Private Placement are identical to the PHPC Units sold in the PHPC IPO, except that, with respect to the warrants underlying the PHPC Private Placement Units (the “PHPC Private Placement Warrants”) that are held by PHPC Sponsor or its permitted transferees, such PHPC Private Placement Warrants (i) may be exercised for cash or on a cashless basis, (ii) are not subject to being called for redemption (except in certain circumstances when the PHPC Warrants are called for redemption and a certain price per share of PHPC Series A Common Stock threshold is met) and (iii) subject to certain limited exceptions, will be subject to transfer restrictions until 30 days following the consummation of PHPC’s partnering transaction. If the PHPC Private Placement Warrants are held by holders other than PHPC Sponsor or its permitted transferees, the PHPC Private Placement Warrants will be redeemable by PHPC in all redemption scenarios and exercisable by holders on the same basis as the PHPC Warrants.
In addition, the Company, through PHPC Sponsor’s ownership of 8.6 shares of Series F common stock of PHPC, par value $0.0001 per share, has certain governance rights in PHPC.
In connection with the completion of the initial public offering on May 28, 2021, PHPC also entered into a forward purchase agreement with PHPC Sponsor (the “Forward Purchase Agreement”), providing for the purchase by PHPC Sponsor, at the election of PHPC, of up to 10.0 units of PHPC (the “PHPC Forward Purchase Units”), subject to the terms and conditions of the Forward Purchase Agreement, with each PHPC Forward Purchase Unit consisting of one share of PHPC’s Series B common stock, par value of $0.0001 per share, and one-third of one warrant to purchase one share of PHPC Series A Common Stock, for a purchase price of $10.00 per PHPC Forward Purchase Unit, in an aggregate amount of up to $100.0 in a private placement to occur concurrently with the closing of PHPC’s partnering transaction.
In determining the accounting treatment of the Company’s equity interest in PHPC, management concluded that PHPC is a variable interest entity (“VIE”) as defined by Accounting Standards Codification (“ASC”) Topic 810, “Consolidation.” A VIE is an entity in which equity investors at risk lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, the party who has both the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, as well as the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the entity. PHPC Sponsor is the primary beneficiary of PHPC as it has, through its equity interest, the right to receive benefits or the obligation to absorb losses from PHPC, as well as the power to direct a majority of the activities that significantly impact PHPC’s economic performance, including target identification. As such, PHPC is fully consolidated into the Company’s financial statements.
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Proceeds of $345.0 were deposited in a trust account established for the benefit of PHPC’s public stockholders consisting of certain proceeds from the PHPC IPO and certain proceeds from the PHPC Private Placement, net of underwriters’ discounts and commissions and other costs and expenses. A minimum balance of $345.0, representing the number of PHPC Units sold at the offering price of $10.00 per PHPC Unit, is required by the underwriting agreement to be maintained in the trust account. These proceeds will be invested only in U.S. treasury securities. In connection with the trust account, the Company reported “Investments held in trust” of $345.0 on the Condensed Consolidated Balance Sheet at June 30, 2021 and “Investment of subsidiary initial public offering proceeds into trust account” on the Condensed Consolidated Statement of Cash Flows for the nine months ended June 30, 2021.
The public stockholders’ ownership of PHPC equity represents a noncontrolling interest (“NCI”) to the Company, which is classified outside of permanent shareholders’ equity as the PHPC Series A Common Stock is redeemable at the option of the public stockholders in certain circumstances. The carrying amount of the redeemable NCI is equal to the greater of (i) the initial carrying amount, increased or decreased for the redeemable NCI’s share of PHPC’s net income or loss, other comprehensive income or loss (“OCI”) and distributions or (ii) the redemption value. The public stockholders of PHPC Series A Common Stock will be entitled in certain circumstances to redeem their shares of PHPC Series A Common Stock for a pro rata portion of the amount in the trust account at $10.00 per share of PHPC Series A Common Stock held, plus any pro rata interest earned on the funds held in the trust account and not previously released to PHPC to pay income taxes. As of June 30, 2021, the carrying amount of the redeemable NCI was recorded at its redemption value of $305.0. Remeasurements to the redemption value of the redeemable NCI are recognized as a deemed dividend and are recorded to “Retained earnings” on the Condensed Consolidated Balance Sheet.
In connection with the PHPC IPO, PHPC incurred offering costs of $17.9, of which $16.9 was recorded to the redeemable NCI and $1.0 was reported in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2021. Of the $17.9 offering costs incurred, $10.7 were deferred underwriting commissions that will become payable to the underwriters solely in the event that PHPC completes a partnering transaction and were included in “Other liabilities” on the Condensed Consolidated Balance Sheet at June 30, 2021. Additionally, the initial valuation of the PHPC Warrants of $16.9 was also recorded to redeemable NCI. For additional information on the financial statement impacts of the PHPC Warrants, see Notes 13 and 14.
As of June 30, 2021, the Company beneficially owned 31.0% of the equity of PHPC and the net income and net assets of PHPC were consolidated within the Company’s financial statements. The remaining 69.0% of the consolidated net income and net assets of PHPC, representing the percentage of economic interest in PHPC held by the public stockholders of PHPC through their ownership of PHPC equity, were allocated to redeemable NCI. All transactions between PHPC and PHPC Sponsor, as well as related financial statement impacts, eliminate in consolidation.
The following table summarizes the effects of changes in ownership of PHPC on the Company’s equity:
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
PHPC IPO offering costs$(16.9)$— $(16.9)$— 
Initial valuation of PHPC Warrants(16.9)— (16.9)— 
Net loss attributable to redeemable NCI(1.5)— (1.5)— 
PHPC deemed dividend$(35.3)$— $(35.3)$— 
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The following table summarizes the changes to the Company’s redeemable NCI. The period as of and for the nine months ended June 30, 2021 represents the period beginning May 28, 2021, the effective date of the PHPC IPO, and ending June 30, 2021.
 As Of and For The Three Months Ended
June 30,
 As Of and For The Nine Months Ended
June 30,
20212021
Beginning of period$— $— 
Impact of PHPC IPO (a)271.2 271.2 
Net loss(1.5)(1.5)
PHPC deemed dividend35.3 35.3 
End of period$305.0 $305.0 
(a)For the three and nine months ended June 30, 2021, the impact of the PHPC IPO includes the value of PHPC Units owned by public stockholders of $305.0 less offering costs of $16.9 and the initial valuation of PHPC Warrants of $16.9.
BellRing
On October 21, 2019, BellRing Brands, Inc. (“BellRing”), a subsidiary of the Company, closed its initial public offering (the “BellRing IPO”) of 39.4 shares of its Class A common stock, $0.01 par value per share (the “BellRing Class A Common Stock”). BellRing received net proceeds from the BellRing IPO of $524.4, after deducting underwriting discounts and commissions. As a result of the BellRing IPO and certain other transactions completed in connection with the BellRing IPO, BellRing became a publicly-traded company with the BellRing Class A Common Stock being traded on the NYSE under the ticker symbol “BRBR” and the holding company of BellRing Brands, LLC, a Delaware limited liability company (“BellRing LLC”), owning 28.8% of BellRing LLC’s non-voting membership units (the “BellRing LLC units”), with Post owning 71.2% of the BellRing LLC units and one share of BellRing’s Class B common stock, $0.01 par value per share (the “BellRing Class B Common Stock” and, collectively with the BellRing Class A Common Stock, the “BellRing Common Stock”). The BellRing Class B Common Stock has voting rights but no rights to dividends or other economic rights. For so long as Post or its affiliates (other than BellRing and its subsidiaries) directly own more than 50% of the BellRing LLC units, the BellRing Class B Common Stock represents 67% of the combined voting power of the BellRing Common Stock, which provides the Company control over BellRing’s board of directors and results in the full consolidation of BellRing and its subsidiaries into the Company’s financial statements. The BellRing LLC units held by the Company include a redemption feature that allows the Company to, at BellRing LLC’s option (as determined by its board of managers), redeem BellRing LLC units for either (i) BellRing Class A Common Stock of BellRing or (ii) cash equal to the market value of the BellRing Class A Common Stock at the time of redemption. BellRing LLC is the holding company for the Company’s historical active nutrition business. The term “BellRing” as used herein generally refers to BellRing Brands, Inc.; however, in discussions related to debt facilities, the term “BellRing” refers to BellRing Brands, LLC. BellRing and its subsidiaries are reported herein as the BellRing Brands segment.
In the event the Company (other than BellRing and its subsidiaries) holds 50% or less of the BellRing LLC units, the holder of the share of BellRing Class B Common Stock will be entitled to a number of votes equal to the number of BellRing LLC units held by all persons other than BellRing and its subsidiaries. In such situation, the Company, as the holder of the share of BellRing Class B Common Stock, will only be entitled to cast a number of votes equal to the number of BellRing LLC units held by the Company (other than BellRing and its subsidiaries). Also, in such situation, if any BellRing LLC units are held by persons other than the Company, then the Company, as the holder of the share of BellRing Class B Common Stock, will cast the remainder of votes to which the share of BellRing Class B Common Stock is entitled only in accordance with the instructions and directions from such other holders of the BellRing LLC units.
As of June 30, 2021 and September 30, 2020, the Company (other than BellRing and its subsidiaries) owned 71.2% of the BellRing LLC units and the net income and net assets of BellRing and its subsidiaries were consolidated within the Company’s financial statements, and the remaining 28.8% of the consolidated net income and net assets of BellRing and its subsidiaries, representing the percentage of economic interest in BellRing LLC held by BellRing (and therefore indirectly held by the public stockholders of BellRing through their ownership of the BellRing Class A Common Stock), were allocated to NCI.
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The following table summarizes the effects of changes in ownership of BellRing on the Company’s equity:
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Increase in additional paid-in capital related to net proceeds from BellRing IPO$— $— $— $524.4 
Increase in additional paid-in capital related to establishment of NCI— — — 64.9 
Decrease in additional paid-in capital related to tax effects of BellRing IPO— — — (133.7)
Net transfers from NCI$— $— $— $455.6 
8th Avenue
The Company has a 60.5% common equity interest in 8th Avenue Food & Provisions, Inc. (“8th Avenue”) that is accounted for using the equity method. In determining the accounting treatment of the common equity interest, management concluded that 8th Avenue was not a variable interest entity as defined by ASC Topic 810 and, as such, was evaluated under the voting interest model. Based on the terms of 8th Avenue’s governing documents, management determined that the Company does not have a controlling voting interest in 8th Avenue due to substantive participating rights held by third parties associated with the governance of 8th Avenue. However, Post does retain significant influence, and therefore, the use of the equity method of accounting is required.
The following table presents the calculation of the Company’s equity method loss attributable to 8th Avenue:
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
8th Avenue’s net loss available to 8th Avenue’s common shareholders$(16.3)$(4.3)$(35.0)$(28.2)
60.5 %60.5 %60.5 %60.5 %
Equity method loss available to Post$(9.9)$(2.6)$(21.2)$(17.1)
Less: Amortization of basis difference, net of tax (a)1.7 1.7 5.1 5.1 
Equity method loss, net of tax$(11.6)$(4.3)$(26.3)$(22.2)
(a)The Company adjusted the historical basis of 8th Avenue’s assets and liabilities to fair value and recognized a basis difference of $70.3. The basis difference related to property, plant and equipment and other intangible assets is being amortized over the weighted average useful lives of the assets. At June 30, 2021 and September 30, 2020, the remaining basis difference to be amortized was $49.5 and $54.6, respectively.
Summarized financial information of 8th Avenue is presented in the following table.
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Net sales $214.8 $243.7 $664.5 $695.2 
Gross profit$31.5 $45.0 $101.2 $124.6 
Net (loss) earnings$(7.1)$3.9 $(8.2)$(4.2)
Less: Preferred stock dividend9.2 8.2 26.8 24.0 
Net Loss Available to 8th Avenue Common Shareholders$(16.3)$(4.3)$(35.0)$(28.2)
The Company provides services to 8th Avenue under a master services agreement (the “MSA”), as well as certain advisory services for a fee. The Company recorded MSA and advisory income of $0.9 and $2.5 during the three and nine months ended June 30, 2021, respectively, and $1.0 and $3.0 during the three and nine months ended June 30, 2020, respectively, which were recorded in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations.
During the three and nine months ended June 30, 2021, the Company had net sales to 8th Avenue of $1.4 and $5.4, respectively, and purchases from and royalties paid to 8th Avenue of $19.5 and $37.1, respectively. During the three and nine months ended June 30, 2020, the Company had net sales to 8th Avenue of $1.5 and $4.7, respectively, and purchases from and royalties paid to 8th Avenue of $2.2 and $7.4, respectively. Sales and purchases between the Company and 8th Avenue were all made at arm’s-length. The investment in 8th Avenue was $83.8 and $110.1 at June 30, 2021 and September 30, 2020, respectively, and was included in “Equity method investments” on the Condensed Consolidated Balance Sheets. The Company
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had current receivables, current payables and a long-term liability with 8th Avenue of $4.9, $6.2 and $0.7, respectively, at June 30, 2021 and current receivables, current payables and a long-term liability of $3.2, $0.6 and $0.7, respectively, at September 30, 2020. The current receivables, current payables and long-term liability, which related to the separation of 8th Avenue from the Company, MSA fees, pass through charges owed by 8th Avenue to the Company and related party sales and purchases, were included in “Receivables, net,” “Accounts payable” and “Other liabilities,” respectively, on the Condensed Consolidated Balance Sheets.
Alpen and Weetabix East Africa
The Company holds an equity interest in two legal entities, Alpen Food Company South Africa (Pty) Limited (“Alpen”) and Weetabix East Africa Limited (“Weetabix East Africa”).
Alpen is a South African-based company that produces ready-to-eat (“RTE”) cereal and muesli. The Company owns 50% of Alpen’s common stock with no other indicators of control, and accordingly, the Company accounts for its investment in Alpen using the equity method. The Company’s equity method earnings (loss), net of tax, attributable to Alpen was zero and $(0.2) for the three and nine months ended June 30, 2021, respectively, and $0.1 and $(0.4) for the three and nine months ended June 30, 2020, respectively, and was included in “Equity method loss, net of tax” in the Condensed Consolidated Statements of Operations. The investment in Alpen was $4.4 and $4.0 at June 30, 2021 and September 30, 2020, respectively, and was included in “Equity method investments” on the Condensed Consolidated Balance Sheets. The Company had a note receivable balance with Alpen of $0.6 and $0.5 at June 30, 2021 and September 30, 2020, respectively, which was included in “Other assets” on the Condensed Consolidated Balance Sheets.
Weetabix East Africa is a Kenyan-based company that produces RTE cereal and muesli. The Company owns 50.1% of Weetabix East Africa and holds a controlling voting and financial interest through its appointment of management and representation on Weetabix East Africa’s board of directors. Accordingly, Weetabix East Africa is fully consolidated into the Company’s financial statements and its assets and results from operations are reported in the Weetabix segment (see Note 20). The remaining interest in the consolidated net income and net assets of Weetabix East Africa is allocated to NCI.
NOTE 4 — BUSINESS COMBINATIONS
The Company accounts for acquisitions using the acquisition method of accounting, whereby the results of operations are included in the financial statements from the date of acquisition. The purchase price is allocated to acquired assets and assumed liabilities based on their estimated fair values at the date of acquisition. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. Any excess of the estimated fair values of the identifiable net assets over the purchase price is recorded as a gain on bargain purchase. Goodwill represents the value the Company expects to achieve through the implementation of operational synergies, the expansion of the business into new or growing segments of the industry and the addition of new employees.
Fiscal 2021
On June 1, 2021, the Company completed its acquisition of the private label RTE cereal business from TreeHouse Foods, Inc. (the “PL RTE Cereal Business”) for $85.0, subject to inventory and other adjustments, resulting in a payment at closing of $88.0. The acquisition was completed using cash on hand. The PL RTE Cereal Business is reported in the Post Consumer Brands segment (see Note 20). Based on the preliminary purchase price allocation, the Company identified and recorded $100.7 of net assets, which exceeded the purchase price paid for the PL RTE Cereal Business. As a result, the Company recorded a gain of $12.7, which was reported as “Other operating (income) expenses, net” in the Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2021. Net sales and operating loss included in the Condensed Consolidated Statements of Operations attributable to the PL RTE Cereal Business was $16.6 and $2.0, respectively, for both the three and nine months ended June 30, 2021.
On May 27, 2021, the Company completed its acquisition of Egg Beaters from Conagra Brands, Inc. for $50.0, subject to working capital and other adjustments, resulting in a payment at closing of $50.6. The acquisition was completed using cash on hand. Egg Beaters is a retail liquid egg brand and is reported in the Refrigerated Retail segment (see Note 20). At June 30, 2021, the Company had recorded an estimated working capital payable of $0.1, which was included in “Other current liabilities” on the Condensed Consolidated Balance Sheet. Based on the preliminary purchase price allocation, the Company has recorded customer relationships and trademarks and brands of $26.0 and $9.0, respectively, both of which will be amortized over a weighted-average period of 15 years. Net sales and operating loss included in the Condensed Consolidated Statements of Operations attributable to Egg Beaters was $3.2 and zero, respectively, for both the three and nine months ended June 30, 2021.
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On February 1, 2021, the Company completed its acquisition of the Almark Foods business and related assets (“Almark”) for $52.0, subject to working capital and other adjustments, resulting in a payment at closing of $51.3. The acquisition was completed using cash on hand. Almark is a provider of hard-cooked and deviled egg products, offering conventional, organic and cage-free products, and distributes its products to foodservice distributors, as well as across retail outlets, including in the perimeter-of-the-store and the deli counter. Almark is reported in the Foodservice and Refrigerated Retail segments (see Note 20). At June 30, 2021, the Company had recorded an estimated working capital receivable of $3.0, which was included in “Receivables, net” on the Condensed Consolidated Balance Sheet. Based upon the preliminary purchase price allocation, the Company has recorded $19.5 of customer relationships to be amortized over a weighted-average period of 10 years. Net sales and operating loss included in the Condensed Consolidated Statements of Operations attributable to Almark were $24.0 and $2.7, respectively, for the three months ended June 30, 2021 and $38.4 and $2.6, respectively, for the nine months ended June 30, 2021.
On January 25, 2021, the Company completed its acquisition of Peter Pan from Conagra Brands, Inc. for $102.0, subject to working capital and other adjustments, resulting in a payment at closing of $103.4. The acquisition was completed using cash on hand. Peter Pan is a nationally recognized brand with a diversified customer base across key channels and is reported in the Post Consumer Brands segment (see Note 20). All Peter Pan nut butter products are currently co-manufactured by 8th Avenue, in which the Company has a 60.5% common equity interest (see Note 3). In April 2021, the Company reached a final settlement of net working capital, resulting in an amount received by the Company of $2.0. Based upon the preliminary purchase price allocation, the Company has recorded customer relationships and trademarks and brands of $12.0 and $55.0, respectively, both of which will be amortized over a weighted-average period of 20 years. Net sales and operating profit included in the Condensed Consolidated Statements of Operations attributable to Peter Pan were $21.8 and $2.1, respectively, for the three months ended June 30, 2021 and $39.2 and $5.6, respectively, for the nine months ended June 30, 2021.
Preliminary values of the fiscal 2021 acquisitions are not yet finalized pending the final purchase price allocations and are subject to change once additional information is obtained. The Company expects portions of the final fair values of goodwill related to the acquisitions of Peter Pan and Egg Beaters and the final fair value of goodwill related to the acquisition of Almark to be deductible for U.S. income tax purposes.
The following table provides the preliminary purchase price allocation related to the fiscal 2021 acquisitions based upon the fair values of assets and liabilities assumed, including the provisional amounts recognized related to the acquisitions, as of June 30, 2021.
PL RTE Cereal BusinessEgg BeatersAlmarkPeter Pan
Receivables$— $— $5.9 $— 
Inventories36.0 3.1 4.0 4.6 
Prepaid expenses and other current assets— — 0.1 — 
Property69.4 7.0 9.8 — 
Goodwill— 17.8 19.4 55.1 
Other intangible assets— 35.0 19.5 67.0 
Deferred tax asset— — 1.3 — 
Other assets0.2 — 27.7 — 
Accounts payable— (10.1)(6.4)(11.7)
Other current liabilities— — (1.2)— 
Deferred tax liability(4.2)(2.1)— (13.6)
Other liabilities(0.7)— (31.8)— 
Total acquisition cost$100.7 $50.7 $48.3 $101.4 
Fiscal 2020
On July 1, 2020, the Company completed its acquisition of Henningsen Foods, Inc. (“Henningsen”) from a subsidiary of Kewpie Corporation for $20.0, subject to working capital and other adjustments, resulting in a payment at closing of $22.7. The acquisition was completed using cash on hand. Henningsen is a producer of egg and meat products and is reported in the Foodservice segment (see Note 20). Based upon the preliminary purchase price allocation at September 30, 2020, the Company identified and recorded $32.6 of net assets, including cash of $2.8, which exceeded the purchase price paid for Henningsen. As a result, the Company recorded a gain of $11.7, which was reported as other operating income in the consolidated statement of operations for the year ended September 30, 2020. At September 30, 2020, the Company had recorded an estimated working capital settlement receivable of $1.8, which was included in “Receivables, net” on the Condensed Consolidated Balance Sheet.
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In the nine months ended June 30, 2021, the Company recorded measurement period adjustments related to inventory and deferred income taxes of $0.7 and reached a final settlement of net working capital, resulting in an amount received by the Company of $1.0. As a result of these adjustments, the Company recorded a loss of $0.1, which was included in “Other operating (income) expenses, net” in the Condensed Consolidated Statement of Operations for the nine months ended June 30, 2021.
Unaudited Pro Forma Information
The following unaudited pro forma information presents a summary of the results of operations of the Company combined with the results of the fiscal 2021 acquisitions for the periods presented as if these acquisitions had occurred on October 1, 2019, along with certain pro forma adjustments. These pro forma adjustments give effect to the amortization of certain definite-lived intangible assets, adjusted depreciation based upon fair value of assets acquired, inventory revaluation adjustments on acquired businesses, interest expense, transaction costs, gain on bargain purchase and related income taxes. The following unaudited pro forma information has been prepared for comparative purposes only and is not necessarily indicative of the results of operations as they would have been had the acquisitions occurred on the assumed dates, nor is it necessarily an indication of future operating results.
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Pro forma net sales$1,627.4 $1,471.3 $4,734.7 $4,663.4 
Pro forma net (loss) earnings$(64.3)$48.7 $131.9 $(39.5)
Pro forma basic (loss) earnings per common share$(1.11)$0.71 $1.95 $(0.57)
Pro forma diluted (loss) earnings per common share$(1.11)$0.70 $1.91 $(0.57)
NOTE 5 — RESTRUCTURING
In October 2020, BellRing announced its plan to strategically realign its business, resulting in the closing of its Dallas, Texas office and the downsizing of its Munich, Germany location (the “BellRing Restructuring”). These actions were substantially completed as of June 30, 2021.
Restructuring charges and the associated liabilities for employee-related costs are shown in the following table.
Balance, September 30, 2020$— 
Charge to expense4.7 
Cash payments(4.6)
Non-cash charges— 
Balance, June 30, 2021$0.1 
Total expected restructuring charges$4.8 
Cumulative restructuring charges incurred to date4.7 
Remaining expected restructuring charges$0.1 
During the three and nine months ended June 30, 2021, the Company incurred total restructuring charges of $(0.1) and $4.7, respectively, related to the BellRing Restructuring. No restructuring charges were incurred during the three or nine months ended June 30, 2020. Restructuring charges were included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations. These expenses are included in the measure of segment performance for BellRing Brands (see Note 20).
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NOTE 6 — AMOUNTS HELD FOR SALE
At September 30, 2020, the Company had a Post Consumer Brands RTE cereal manufacturing plant in Clinton, Massachusetts (the “Clinton Plant”) with a fair value of $3.4 classified as held for sale, land and a building at its Post Consumer Brands RTE cereal manufacturing facility in Asheboro, North Carolina (the “Asheboro Facility”) with a combined fair value of $1.4 classified as held for sale and land and a building at one of its Weetabix manufacturing facilities in Corby, United Kingdom (the “Corby Facility”) with a combined fair value of $2.5 classified as held for sale. These assets held for sale were reported as “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheet. The Company sold a portion of the Clinton Plant, the Asheboro Facility and the Corby Facility in November 2020 and the remaining portion of the Clinton Plant in February 2021.
In the nine months ended June 30, 2021, a net gain on assets held for sale of $0.5 was recorded consisting of (i) a gain of $0.7 related to the sale of the Corby Facility in November 2020, (ii) a loss of $0.1 related to the sale of the Asheboro Facility in November 2020 and (iii) a loss of $0.1 related to the sale of the remaining portion of the Clinton Plant in February 2021. These held for sale adjustments were included in “Other operating (income) expenses, net” in the Condensed Consolidated Statement of Operations for the nine months ended June 30, 2021. There were no held for sale gains or losses recorded in the three months ended June 30, 2021 or in the three or nine months ended June 30, 2020.
NOTE 7 — INCOME TAXES
The effective income tax rate was (678.6)% and 30.6% for the three and nine months ended June 30, 2021, respectively. The effective income tax rates differed significantly from the statutory rates in both current year periods, primarily due to enacted tax law changes in the United Kingdom (the “U.K.”), which included a provision to increase the U.K.’s corporate income tax rate from 19% to 25%, effective April 1, 2023. During the three and nine months ended June 30, 2021, the Company remeasured its existing deferred tax assets and liabilities considering the 25% U.K. corporate income tax rate for future periods and recorded tax expense of $39.3. Other changes made to the U.K.’s tax law did not have a material impact on the Company’s financial statements during the three or nine months ended June 30, 2021.
The effective income tax rate was 10.1% and 42.7% for the three and nine months ended June 30, 2020, respectively. The effective income tax rates differed significantly from the statutory rates in both prior year periods, primarily due to a rate differential on foreign income and net discrete tax benefits of $3.9 and $8.7 in the three and nine months ended June 30, 2020, respectively, which largely related to the Company’s equity method investment in 8th Avenue.
NOTE 8 (LOSS) EARNINGS PER SHARE
Basic (loss) earnings per share is based on the average number of common shares outstanding during the period. Diluted (loss) earnings per share is based on the average number of shares used for the basic (loss) earnings per share calculation, adjusted for the dilutive effect of stock options, stock appreciation rights and restricted stock units using the “treasury stock” method. Remeasurements to the redemption value of the redeemable NCI are recognized as a deemed dividend (see Note 3). As allowed for within ASC Topic 480, “Distinguishing Liabilities from Equity,” the Company has made an election to treat the portion of the deemed dividend that exceeds fair value as a reduction of income available to common shareholders for basic and diluted (loss) earnings per share. In addition, “Net (loss) earnings for diluted (loss) earnings per share” in the table below has been adjusted for the Company’s share of BellRing’s consolidated net earnings for diluted earnings per share, to the extent it is dilutive.
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The following table sets forth the computation of basic and diluted (loss) earnings per share.
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Net (Loss) Earnings $(54.3)$36.0 $136.8 $(56.2)
Accretion of redeemable NCI6.4 — 6.4 — 
Net (loss) earnings for basic (loss) earnings per share$(60.7)$36.0 $130.4 $(56.2)
Dilutive impact of BellRing net earnings— — — — 
Net (loss) earnings for diluted (loss) earnings per share$(60.7)$36.0 $130.4 $(56.2)
Weighted-average shares for basic (loss) earnings per share63.7 68.1 64.5 69.4 
Effect of dilutive securities:
Stock options
— 0.5 0.6 — 
Stock appreciation rights
— 0.1 0.1 — 
Restricted stock units
— 0.4 0.3 — 
Performance-based restricted stock units— 0.1 0.1 — 
Total dilutive securities— 1.1 1.1 — 
Weighted-average shares for diluted (loss) earnings per share63.7 69.2 65.6 69.4 
Basic (loss) earnings per common share$(0.95)$0.53 $2.02 $(0.81)
Diluted (loss) earnings per common share$(0.95)$0.52 $1.99 $(0.81)
The following table details the securities that have been excluded from the calculation of weighted-average shares for diluted (loss) earnings per share as they were anti-dilutive.
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Stock options1.2 0.1 — 1.7 
Stock appreciation rights0.1 — — 0.1 
Restricted stock units0.8 0.1 — 0.9 
Performance-based restricted stock units0.3 0.1 — 0.2 
NOTE 9 — INVENTORIES
June 30,
2021
September 30,
2020
Raw materials and supplies$124.7 $118.1 
Work in process20.9 17.8 
Finished products485.3 429.4 
Flocks39.2 34.1 
$670.1 $599.4 
NOTE 10 — PROPERTY, NET
June 30,
2021
September 30,
2020
Property, at cost$3,198.6 $2,979.2 
Accumulated depreciation(1,352.3)(1,199.5)
$1,846.3 $1,779.7 
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NOTE 11 — GOODWILL
The changes in the carrying amount of goodwill by segment are noted in the following table.
Post Consumer BrandsWeetabixFoodserviceRefrigerated RetailBellRing BrandsTotal
Balance, September 30, 2020
Goodwill (gross)$2,011.8 $889.5 $1,335.6 $793.6 $180.7 $5,211.2 
Accumulated impairment losses(609.1)— — (48.7)(114.8)(772.6)
Goodwill (net)$1,402.7 $889.5 $1,335.6 $744.9 $65.9 $4,438.6 
Goodwill acquired55.1 — 19.4 17.8 — 92.3 
Currency translation adjustment0.3 65.9 — — — 66.2 
Balance, June 30, 2021
Goodwill (gross)$2,067.2 $955.4 $1,355.0 $811.4 $180.7 $5,369.7 
Accumulated impairment losses(609.1)— — (48.7)(114.8)(772.6)
Goodwill (net)$1,458.1 $955.4 $1,355.0 $762.7 $65.9 $4,597.1 
NOTE 12 — INTANGIBLE ASSETS, NET
    Total intangible assets are as follows:
June 30, 2021September 30, 2020
Carrying
Amount
Accumulated
Amortization
Net
Amount
Carrying
Amount
Accumulated
Amortization
Net
Amount
Subject to amortization:
Customer relationships$2,344.2 $(762.1)$1,582.1 $2,304.8 $(681.9)$1,622.9 
Trademarks and brands842.9 (293.0)549.9 795.0 (266.9)528.1 
Other intangible assets3.1 (3.1)— 3.1 (3.1)— 
3,190.2 (1,058.2)2,132.0 3,102.9 (951.9)2,151.0 
Not subject to amortization:
Trademarks and brands1,065.9 — 1,065.9 1,046.5 — 1,046.5 
$4,256.1 $(1,058.2)$3,197.9 $4,149.4 $(951.9)$3,197.5 
In December 2020, BellRing finalized its plan to discontinue the Supreme Protein brand and related sales of Supreme Protein products. In connection with the discontinuance, BellRing updated the useful lives of the customer relationships and trademarks associated with the Supreme Protein brand to reflect the remaining period in which BellRing continued to sell Supreme Protein product inventory. Accelerated amortization of $11.8 and $29.9 was recorded during the three and nine months ended June 30, 2021, respectively, resulting from the updated useful lives of the customer relationships and trademarks associated with the Supreme Protein brand, which were fully amortized and written off as of June 30, 2021.
NOTE 13 — DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
In the ordinary course of business, the Company is exposed to commodity price risks relating to the purchases of raw materials and supplies, interest rate risks relating to variable rate debt and foreign currency exchange rate risks. The Company utilizes derivative financial instruments, including (but not limited to) futures contracts, option contracts, forward contracts and swaps, to manage certain of these exposures by hedging when it is practical to do so. The Company does not hold or issue financial instruments for speculative or trading purposes.
At June 30, 2021, the Company’s derivative instruments, none of which were designated as hedging instruments under ASC Topic 815, “Derivatives and Hedging,” consisted of:
commodity and energy futures, swaps and option contracts, which relate to inputs that generally will be utilized within the next two years;
foreign currency forward contracts maturing in July 2021 that have the effect of hedging currency fluctuations between the U.S. Dollar and the Pound Sterling;
16

interest rate swaps that have the effect of hedging interest payments on debt expected to be issued but not yet priced, including:
a pay-fixed, receive-variable interest rate swap maturing in May 2024 that requires monthly settlements;
rate-lock interest rate swaps that require lump sum settlements with the first settlement occurring in July 2021 and the last in July 2026; and
interest rate swaps that mature in July 2021 and give the Company the option of pay-variable, receive-fixed lump sum settlements;
pay-fixed, receive-variable interest rate swaps maturing in December 2022 that require monthly settlements and have the effect of hedging forecasted interest payments on BellRing’s variable rate debt; and
the PHPC Warrants (see Note 3).
Interest rate swaps
In the nine months ended June 30, 2021, the Company restructured four of its rate-lock interest rate swap contracts, which contain non-cash, off-market financing elements. There were no cash settlements paid or received in connection with these restructurings.
In the first quarter of fiscal 2020, contemporaneously with the repayment of its term loan, the Company changed the designation of one of its interest rate swap contracts from a cash flow hedge to a non-designated hedging instrument. In connection with the de-designation, the Company reclassified losses previously recorded in accumulated OCI of $7.2 to “Interest expense, net” in the Condensed Consolidated Statement of Operations for the nine months ended June 30, 2020.
As of April 1, 2020, the Company changed the designation of its interest rate swap contracts that are used as hedges of forecasted interest payments on BellRing’s variable rate debt from cash flow hedges to non-designated hedging instruments as the swaps were no longer effective (as defined by ASC Topic 815). In connection with the de-designation, the Company started reclassifying losses previously recorded in accumulated OCI to “Interest expense, net” in the Condensed Consolidated Statements of Operations on a straight-line basis over the term of BellRing’s variable rate debt. Mark-to-market adjustments related to these swaps will also be included in “Interest expense, net” in the Condensed Consolidated Statements of Operations. At June 30, 2021 and September 30, 2020, the remaining net loss before taxes to be amortized was $7.7 and $9.4, respectively.
Cross-currency swaps
The Company terminated $448.7 notional value of its cross-currency swap contracts that were designated as hedging instruments during the second quarter of fiscal 2020. In connection with this termination, the Company received cash proceeds of $50.3 during the nine months ended June 30, 2020, which was recorded in accumulated OCI. Reclassification of amounts recorded in accumulated OCI into earnings will only occur in the event U.K.-based operations are substantially liquidated.
The following table shows the notional amounts of derivative instruments held.
June 30,
2021
September 30,
2020
Commodity contracts $76.2 $24.7 
Energy contracts57.6 87.1 
Foreign exchange contracts - Forward contracts10.5 28.9 
Interest rate swaps550.0 621.7 
Interest rate swaps - Rate-lock swaps1,572.7 1,666.0 
Interest rate swaps - Options433.3 433.3 
PHPC Warrants16.9 — 
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The following table presents the balance sheet location and fair value of the Company’s derivative instruments. The Company does not offset derivative assets and liabilities within the Condensed Consolidated Balance Sheets.
Balance Sheet LocationJune 30,
2021
September 30,
2020
Asset Derivatives:
Commodity contractsPrepaid expenses and other current assets$21.6 $5.0 
Energy contractsPrepaid expenses and other current assets13.8 1.8 
Commodity contractsOther assets7.8 0.1 
Energy contractsOther assets4.2 0.9 
Foreign exchange contractsPrepaid expenses and other current assets— 0.1 
Interest rate swapsPrepaid expenses and other current assets— 6.8 
Interest rate swapsOther assets20.7 — 
$68.1 $14.7 
Liability Derivatives:
Commodity contractsOther current liabilities$2.7 $1.4 
Energy contractsOther current liabilities— 10.1 
Energy contractsOther liabilities— 3.9 
Foreign exchange contractsOther current liabilities0.6 — 
Interest rate swapsOther current liabilities15.9 176.4 
Interest rate swapsOther liabilities385.2 351.3 
PHPC WarrantsOther liabilities18.4 — 
$422.8 $543.1 
The following tables present the effects of the Company’s derivative instruments on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended June 30, 2021 and 2020.
Derivatives Not Designated as Hedging InstrumentsStatement of Operations Location(Gain) Loss Recognized in Statement of Operations
20212020
Commodity contractsCost of goods sold$(11.9)$0.8 
Energy contractsCost of goods sold(12.4)(2.8)
Foreign exchange contractsSelling, general and administrative expenses(0.5)0.1 
Interest rate swapsInterest expense, net0.7 2.1 
Interest rate swapsExpense (income) on swaps, net121.6 29.2 
PHPC WarrantsOther income, net1.5 — 
Derivatives Designated as Hedging InstrumentsLoss (Gain) Recognized in OCI including NCILoss Reclassified from Accumulated OCI including NCI into Earnings (a)Statement of Operations Location
2021202020212020
Interest rate swaps$— $— $0.6 $0.6 Interest expense, net
Cross-currency swaps— — — — Expense (income) on swaps, net
(a)For the three months ended June 30, 2021 and 2020, these amounts include the amortization of previously unrealized losses on BellRing’s interest rate swaps that were de-designated as hedging instruments as of April 1, 2020.
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The following table presents the components of the Company’s net hedging (gains) losses on interest rate swaps, as well as cash settlements paid (received) during the periods presented.
Three Months Ended
June 30,
Statement of Operations LocationMark-to-Market Loss, netNet Loss Reclassified from Accumulated OCI including NCI (a)Total Net Hedging LossCash Settlements Paid, Net
Interest expense, net$0.1 $0.6 $0.7 $1.2 
Expense (income) on swaps, net121.6 — 121.6 16.2 
2021Total$121.7 $0.6 $122.3 $17.4 
Interest expense, net$1.5 $0.6 $2.1 $0.9 
Expense (income) on swaps, net29.2 — 29.2 26.2 
2020Total$30.7 $0.6 $31.3 $27.1 
(a)Includes the amortization of previously unrealized losses on BellRing’s interest rate swaps over the term of the related debt that were de-designated as hedging instruments.
The following tables present the effects of the Company’s derivative instruments on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive (Loss) Income for the nine months ended June 30, 2021 and 2020.
Derivatives Not Designated as Hedging InstrumentsStatement of Operations Location(Gain) Loss Recognized in Statement of Operations
20212020
Commodity contractsCost of goods sold$(21.6)$6.9 
Energy contractsCost of goods sold(31.7)20.7 
Foreign exchange contractsSelling, general and administrative expenses0.7 — 
Interest rate swapsInterest expense, net1.7 2.1 
Interest rate swapsExpense (income) on swaps, net(105.6)192.4 
PHPC WarrantsOther income, net1.5 — 
Derivatives Designated as Hedging InstrumentsLoss (Gain) Recognized in OCI including NCILoss Reclassified from Accumulated OCI including NCI into Earnings (a)Statement of Operations Location
2021202020212020
Interest rate swaps$— $9.7 $1.7 $7.6 Interest expense, net
Cross-currency swaps— (32.2)— — Expense (income) on swaps, net
(a)For the nine months ended June 30, 2021, this amount includes the amortization of previously unrealized losses on BellRing’s interest rate swaps that were de-designated as hedging instruments as of April 1, 2020. For the nine months ended June 30, 2020, this amount includes the amortization of previously unrealized losses on interest rate swaps that were de-designated as hedging instruments in the first quarter of fiscal 2020, as well as the amortization of previously unrealized losses on BellRing’s interest rate swaps that were de-designated as hedging instruments as of April 1, 2020.
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The following table presents the components of the Company’s net hedging (gains) losses on interest rate swaps, as well as cash settlements paid (received) during the periods presented.
Nine Months Ended
June 30,
Statement of Operations LocationMark-to-Market (Gain) Loss, netNet Loss Reclassified from Accumulated OCI including NCI (a)Total Net Hedging Loss (Gain)Cash Settlements Paid, Net
Interest expense, net$— $1.7 $1.7 $3.6 
Expense (income) on swaps, net(105.6)— (105.6)31.3 
2021Total$(105.6)$1.7 $(103.9)$34.9 
Interest expense, net$1.3 $7.8 $9.1 $0.7 
Expense (income) on swaps, net192.4 — 192.4 45.7 
2020Total$193.7 $7.8 $201.5 $46.4 
(a)Includes the amortization of previously unrealized losses on BellRing’s interest rate swaps over the term of the related debt that were de-designated as hedging instruments, as well as the reclassification of previously unrealized losses on interest rate swaps that were de-designated as hedging instruments.
Accumulated OCI, including amounts reported as NCI, included a $91.9 net gain on hedging instruments before taxes ($69.2 after taxes) at June 30, 2021, compared to a $90.2 net gain before taxes ($67.9 after taxes) at September 30, 2020. Approximately $2.3 of the net hedging losses reported in accumulated OCI at June 30, 2021 are expected to be reclassified into earnings within the next 12 months. Accumulated OCI included settlements of and previously unrealized gains on cross-currency swaps of $99.5 at both June 30, 2021 and September 30, 2020. In connection with the settlements of cross-currency swaps, the Company recognized gains in accumulated OCI of $63.0 during the nine months ended June 30, 2020. Reclassification of amounts recorded in accumulated OCI into earnings will only occur in the event U.K.-based operations are substantially liquidated.
At June 30, 2021 and September 30, 2020, the Company had pledged collateral of $5.7 and $4.9, respectively, related to its commodity and energy contracts. These amounts are classified as “Restricted cash” on the Condensed Consolidated Balance Sheets.
NOTE 14 — FAIR VALUE MEASUREMENTS
The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis and the basis for that measurement according to the levels in the fair value hierarchy in ASC Topic 820, “Fair Value Measurement.”
June 30, 2021September 30, 2020
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets:
Deferred compensation investments$15.7 $15.7 $— $— $12.8 $12.8 $— $— 
Derivative assets68.1 — 68.1 — 14.7 — 14.7 — 
Equity securities— — — — 27.9 27.9 — — 
$83.8 $15.7 $68.1 $— $55.4 $40.7 $14.7 $— 
Liabilities:
Deferred compensation liabilities$35.7 $— $35.7 $— $29.7 $— $29.7 $— 
Derivative liabilities422.8 — 404.4 18.4 543.1 — 543.1 — 
$458.5 $— $440.1 $18.4 $572.8 $— $572.8 $— 
The deferred compensation investments are primarily invested in mutual funds, and the fair value is measured using the market approach. These investments are in the same funds, or funds that employ a similar investment strategy, and are purchased in substantially the same amounts, as the participants’ selected investment options (excluding Post common stock equivalents), which represent the underlying liabilities to participants in the Company’s deferred compensation plans. Deferred compensation liabilities are recorded at amounts due to participants in cash, based on the fair value of participants’ selected investment options (excluding certain Post common stock equivalents to be distributed in shares) using the market approach.
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The Company utilizes the income approach to measure fair value for its commodity and energy derivatives. The income approach uses pricing models that rely on market observable inputs such as yield curves and forward prices. Foreign exchange contracts are valued using the spot rate less the forward rate multiplied by the notional amount. The Company’s calculation of the fair value of interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve. Refer to Note 13 for the classification of changes in fair value of derivative assets and liabilities measured at fair value on a recurring basis within the Condensed Consolidated Statements of Operations.
Investments held in trust are invested in a fund consisting entirely of U.S. treasury securities (see Note 3). The fund is valued at net asset value per share (“NAV”), and as such, in accordance with ASC Topic 820-10, the investments have not been classified in the fair value hierarchy. Investments held in trust are reported at fair value on the Condensed Consolidated Balance Sheet (see Note 3).
The fair value of liabilities associated with the PHPC Warrants was measured on recurring basis using the Monte Carlo Option Pricing Method. The fair value measurement was categorized as Level 3, as the fair values utilize significant unobservable inputs. For additional information on the PHPC Warrants, see Notes 3 and 13. The following table summarizes the Level 3 activity measured on a recurring basis.
Balance, September 30, 2020$— 
Initial valuation of PHPC Warrants16.9 
Mark-to-market loss on PHPC Warrants1.5 
Balance, June 30, 2021$18.4 
The fair value of each warrant was estimated on the date of grant using the Monte Carlo Option Pricing Method. Inherent in the Monte Carlo Option Pricing Method are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. PHPC estimates the volatility of the PHPC Warrants based on implied volatility from historical volatility of select peer companies’ common stock that matches the expected remaining life of the PHPC Warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve for a maturity similar to the expected remaining life of the PHPC Warrants. The expected life of the PHPC Warrants is assumed to be equivalent to their remaining contractual term. PHPC anticipates the dividend rate will remain at zero.
The following table presents the assumptions used for the initial measurement of the PHPC Warrants on May 28, 2021 and to remeasure the fair value of outstanding PHPC Warrant liabilities as of June 30, 2021.
May 28,
2021
June 30,
2021
Expected term (in years)5.05.0
Exercise price$11.50$11.50
Stock price$9.45$9.79
Expected stock price volatility27.0%28.0%
Risk-free interest rate1.21%1.20%
Expected dividends0%0%
Fair value (per PHPC Warrant)$1.66$1.81
The Company uses the market approach to measure the fair value of its equity securities.
The Company’s financial assets and liabilities also include cash and cash equivalents, receivables and accounts payable for which the carrying value approximates fair value due to their short maturities (less than 12 months). The Company does not record its current portion of long-term debt and long-term debt at fair value on the Condensed Consolidated Balance Sheets. The fair values of any outstanding borrowings under the municipal bond and the BellRing Revolving Credit Facility (as defined in Note 17) as of June 30, 2021 and September 30, 2020 approximated their carrying values. Based on current market rates, the fair value of the Company’s debt, excluding any outstanding borrowings under the municipal bond and the BellRing Revolving Credit Facility (both of which are categorized as Level 2), was $7,257.9 and $7,277.8 as of June 30, 2021 and September 30, 2020, respectively.
Certain assets and liabilities, including property, plant and equipment, goodwill and other intangible assets and assets held for sale, are measured at fair value on a non-recurring basis.
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At September 30, 2020, the Company had land and buildings classified as assets held for sale related to the closures of the Company’s Clinton Plant, Asheboro Facility and Corby Facility. The Company sold the Asheboro Facility, the Corby Facility and a portion of the Clinton Plant in November 2020 and the remaining portion of the Clinton Plant in February 2021. The Clinton Plant and Asheboro Facility were both reported in the Post Consumer Brands segment, and the Corby Facility was reported in the Weetabix segment (see Note 20). For additional information on assets held for sale, see Note 6. The fair value of assets held for sale was measured on a non-recurring basis based on the lower of book value or third party valuations. When applicable, the fair value is adjusted to reflect an offer to purchase the assets. The fair value measurement was categorized as Level 3, as the fair values utilize significant unobservable inputs. The following table summarizes the Level 3 activity.
Balance, September 30, 2020$7.3 
Net gain related to assets held for sale0.5 
Proceeds from the sale of assets held for sale(7.9)
Currency translation adjustment0.1 
Balance, June 30, 2021$— 
NOTE 15 — COMMITMENTS AND CONTINGENCIES
Legal Proceedings
Antitrust Claims
In late 2008 and early 2009, approximately 22 class action lawsuits were filed in various federal courts against Michael Foods, Inc. (“MFI”), a wholly-owned subsidiary of the Company, and approximately 20 other defendants (producers of shell eggs and egg products and egg industry organizations), alleging violations of federal and state antitrust laws in connection with the production and sale of shell eggs and egg products, and seeking unspecified damages. All cases were transferred to the Eastern District of Pennsylvania for coordinated and/or consolidated pretrial proceedings.
The cases involved three plaintiff groups: (i) a nationwide class of direct purchasers of shell eggs (the “direct purchaser class”); (ii) individual companies (primarily large grocery chains and food companies that purchase considerable quantities of eggs) that opted out of various settlements and filed their own complaints related to their purchases of shell eggs and egg products (the “opt-out plaintiffs”); and (iii) indirect purchasers of shell eggs (the “indirect purchaser plaintiffs”).
Resolution of claims: To date, MFI has resolved the following claims, including all class claims: (i) in December 2016, MFI settled all claims asserted against it by the direct purchaser class for a payment of $75.0, which was approved by the district court in December 2017; (ii) in January 2017, MFI settled all claims asserted against it by opt-out plaintiffs related to shell egg purchases on confidential terms; (iii) in June 2018, MFI settled all claims asserted against it by indirect purchaser plaintiffs on confidential terms; and (iv) between June 2019 and September 2019, MFI individually settled on confidential terms egg product opt-out claims asserted against it by four separate opt-out plaintiffs. MFI has at all times denied liability in this matter, and no settlement contains any admission of liability by MFI.
Remaining portion of the cases: MFI remains a defendant only with respect to claims that seek damages based on purchases of egg products by three opt-out plaintiffs. The district court had granted summary judgment precluding any claims for egg products purchases by such opt-out plaintiffs, but the Third Circuit Court of Appeals reversed and remanded these claims for further pre-trial proceedings. Defendants filed a second motion for summary judgment seeking dismissal of the claims, which was denied in June 2019. The remaining opt-out plaintiffs have not yet been assigned trial dates.
Although the likelihood of a material adverse outcome in the egg antitrust litigation has been significantly reduced as a result of the MFI settlements described above, the remaining portion of the cases could still result in a material adverse outcome.
No expense was recorded in the Condensed Consolidated Statements of Operations related to these matters for the three or nine months ended June 30, 2021 or 2020. At both June 30, 2021 and September 30, 2020, the Company had $3.5 accrued for this matter, which was included in “Other current liabilities” on the Condensed Consolidated Balance Sheets. The Company records reserves for litigation losses in accordance with ASC Topic 450, “Contingencies.” Under ASC Topic 450, a loss contingency is recorded if a loss is probable and can be reasonably estimated. The Company records probable loss contingencies based on the best estimate of the loss. If a range of loss can be reasonably estimated, but no single amount within the range appears to be a better estimate than any other amount within the range, the minimum amount in the range is accrued. These estimates are often initially developed earlier than when the ultimate loss is known, and the estimates are adjusted if additional information becomes known. Although the Company believes its accruals for this matter are appropriate, the final amounts required to resolve such matter could differ materially from recorded estimates and the Company’s consolidated financial condition, results of operations and cash flows could be materially affected.
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Under current law, any settlement paid, including the settlements with the direct purchaser plaintiffs, the opt-out plaintiffs and the indirect purchaser plaintiffs, is deductible for federal income tax purposes.
Other
The Company is subject to various other legal proceedings and actions arising in the normal course of business. In the opinion of management, based upon the information presently known, the ultimate liability, if any, arising from such pending legal proceedings, as well as from asserted legal claims and known potential legal claims which are likely to be asserted, taking into account established accruals for estimated liabilities (if any), are not expected to be material individually or in the aggregate to the consolidated financial condition, results of operations or cash flows of the Company. In addition, although it is difficult to estimate the potential financial impact of actions regarding expenditures for compliance with regulatory matters, in the opinion of management, based upon the information currently available, the ultimate liability arising from such compliance matters is not expected to be material to the consolidated financial condition, results of operations or cash flows of the Company.
NOTE 16 — LEASES
The Company leases office space, certain warehouses and equipment primarily through operating lease agreements. The Company has no material finance lease agreements. Leases have remaining terms which range from less than 1 year to 56 years and most leases provide the Company with the option to exercise one or more renewal terms. The weighted average remaining lease term of the Company’s operating leases was approximately 9 years and 7 years as of June 30, 2021 and September 30, 2020, respectively, and the weighted average incremental borrowing rate was 4.64% and 4.40% at June 30, 2021 and September 30, 2020, respectively.
Right-of-use (“ROU”) assets are recorded as “Other assets” and lease liabilities are recorded as “Other current liabilities” and “Other liabilities” on the Condensed Consolidated Balance Sheets. Operating lease expense is recognized on a straight-line basis over the lease term and is included in either “Cost of goods sold” or “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations. Costs associated with finance leases and lease income do not have a material impact on the Company’s financial statements.
The following table presents the balance sheet location of the Company’s operating leases.
June 30,
2021
September 30,
2020
ROU assets:
   Other assets$131.1 $116.3 
Lease liabilities:
   Other current liabilities$26.2 $23.6 
   Other liabilities119.6 103.0 
      Total lease liabilities$145.8 $126.6 
The following table presents maturities of the Company’s operating lease liabilities.
June 30,
2021
Remaining Fiscal 2021$8.0 
Fiscal 202231.8 
Fiscal 202328.2 
Fiscal 202421.3 
Fiscal 202515.0 
Thereafter 79.6 
   Total future minimum payments$183.9 
   Less: Implied interest38.1 
      Total lease liabilities$145.8 
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The following table presents supplemental operations statement information related to the Company’s operating leases.
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Operating lease expense$10.8 $10.1 $32.2 $31.2 
Variable lease expense1.3 1.24.0 3.7
Short-term lease expense1.7 1.95.3 5.6
Operating cash flows for amounts included in the measurement of the Company’s operating lease liabilities were $23.4 and $20.6 for the nine months ended June 30, 2021 and 2020, respectively. ROU assets obtained in exchange for operating lease liabilities during the nine months ended June 30, 2021 and 2020 were $32.5 and $3.0, respectively. Of the $32.5 ROU assets obtained in exchange for operating lease liabilities during the nine months ended June 30, 2021, $27.7 related to the acquisition of Almark (see Note 4).
NOTE 17 — LONG-TERM DEBT
Long-term debt as of the dates indicated consisted of the following:
June 30,
2021
September 30,
2020
4.50% Senior Notes maturing September 2031$1,800.0 $— 
4.625% Senior Notes maturing April 20301,650.0 1,650.0 
5.50% Senior Notes maturing December 2029750.0 750.0 
5.625% Senior Notes maturing January 2028940.9 940.9 
5.75% Senior Notes maturing March 20271,299.3 1,299.3 
5.00% Senior Notes maturing August 2026— 1,697.3 
BellRing Term B Facility618.7 673.7 
BellRing Revolving Credit Facility— 30.0 
Municipal bond7.5 8.5 
$7,066.4 $7,049.7 
Less: Current portion of long-term debt115.6 64.9 
Debt issuance costs, net53.9 62.6 
Plus: Unamortized premium and discount, net35.2 36.8 
Total long-term debt$6,932.1 $6,959.0 
Senior Notes
On March 10, 2021, the Company issued $1,800.0 principal value of 4.50% senior notes maturing in September 2031. The 4.50% senior notes were issued at par, and the Company received $1,783.2 after incurring investment banking and other fees and expenses of $16.8, which will be deferred and amortized to interest expense over the term of the notes. Interest payments will be due semi-annually each March 15 and September 15, beginning on September 15, 2021. With the net proceeds received from the issuance, the Company redeemed the outstanding principal balance of the 5.00% senior notes. For additional information, see “Repayments of Long-Term Debt” below.
Credit Agreement
On March 18, 2020, the Company entered into a second amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement provides for a revolving credit facility in an aggregate principal amount of $750.0 (the “Revolving Credit Facility”), with the commitments thereunder to be made available to the Company in U.S. Dollars, Canadian Dollars, Euros or Pounds Sterling. Letters of credit are available under the Credit Agreement in an aggregate amount of up to $75.0. The Revolving Credit Facility has outstanding letters of credit of $19.2, which reduced the available borrowing capacity under the Revolving Credit Facility to $730.8 at June 30, 2021. Any outstanding amounts under the Revolving Credit Facility must be repaid on or before March 18, 2025.
The Credit Agreement provides for potential incremental revolving and term facilities at the request of the Company and at the discretion of the lenders or other persons providing such incremental facilities, in each case on terms to be determined, and
24

also permits the Company to incur other secured or unsecured debt, in all cases subject to conditions and limitations on the amount as specified in the Credit Agreement.
The Credit Agreement permits the Company to designate certain of its subsidiaries as unrestricted subsidiaries and once so designated, permits the disposition of (and authorizes the release of liens on) the assets of, and the equity interests in, such unrestricted subsidiaries and permits the release of such unrestricted subsidiaries as guarantors under the Credit Agreement. The Company’s obligations under the Credit Agreement are unconditionally guaranteed by its existing and subsequently acquired or organized domestic subsidiaries (other than immaterial subsidiaries, certain excluded subsidiaries and subsidiaries the Company designates as unrestricted subsidiaries, which include 8th Avenue and its subsidiaries, BellRing Brands, Inc. and its subsidiaries, PHPC and PHPC Sponsor) and are secured by security interests in substantially all of the Company’s assets and the assets of its subsidiary guarantors, but excluding, in each case, real property.
Borrowings under the Revolving Credit Facility bear interest, at the option of the Company, at an annual rate equal to either (a) the Eurodollar rate or (b) the base rate determined by reference to the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month Eurodollar rate plus 1.00% per annum, in each case plus an applicable margin, which initially were 1.50% for Eurodollar rate-based loans and 0.50% for base rate-based loans, and thereafter, will be determined by reference to the secured net leverage ratio (as defined in the Credit Agreement), with the applicable margin for Eurodollar rate loans and base rate loans being (i) 2.00% and 1.00%, respectively, if the secured net leverage ratio is greater than or equal to 3.00:1.00, (ii) 1.75% and 0.75%, respectively, if the secured net leverage ratio is less than 3.00:1.00 and greater than or equal to 1.50:1.00 or (iii) 1.50% and 0.50%, respectively, if the secured net leverage ratio is less than 1.50:1.00. Commitment fees on the daily unused amount of commitments under the Revolving Credit Facility initially accrued at the rate of 0.25%, and thereafter, will accrue at a rate of 0.375% if the Company’s secured net leverage ratio is greater than 3.00:1.00, and will accrue at a rate of 0.25% if the Company’s secured net leverage ratio is less than or equal to 3.00:1.00.
The Credit Agreement provides for customary events of default, including material breach of representations and warranties, failure to make required payments, failure to comply with certain agreements or covenants, failure to pay or default under certain other indebtedness in excess of $100.0, certain events of bankruptcy and insolvency, inability to pay debts, the occurrence of one or more unstayed or undischarged judgments in excess of $100.0, attachments issued against all or any material part of the Company’s property, certain events under the Employee Retirement Income Security Act of 1974 (“ERISA”), a change of control (as defined in the Credit Agreement), the invalidity of any loan document and the failure of the collateral documents to create a valid and perfected first priority lien (subject to certain permitted liens). Upon the occurrence and during the continuance of an event of default, the maturity of the loans under the Credit Agreement may accelerate and the agent and lenders under the Credit Agreement may exercise other rights and remedies available at law or under the loan documents, including with respect to the collateral and guarantees of the Company’s obligations under the Credit Agreement.
Municipal Bond
In connection with the ongoing construction of a filtration system at the Company’s potato plant in Chaska, Minnesota, the Company continues to incur debt that guarantees the repayment of certain industrial revenue bonds used to finance the construction of the project. Principal payments are due annually on March 1, and interest payments are due semi-annually each March 1 and September 1. The debt matures on March 1, 2028.
BellRing’s Credit Agreement and Senior Debt Facilities
On October 21, 2019, BellRing entered into a credit agreement (as subsequently amended, the “BellRing Credit Agreement”), which provides for a term B loan facility in an aggregate principal amount of $700.0 (the “BellRing Term B Facility”) and a revolving credit facility in an aggregate principal amount of $200.0 (the “BellRing Revolving Credit Facility”), with the commitments under the BellRing Revolving Credit Facility to be made available to BellRing in U.S. Dollars, Euros or Pounds Sterling. Letters of credit are available under the BellRing Credit Agreement in an aggregate amount of up to $20.0. Any outstanding amounts under the BellRing Revolving Credit Facility and BellRing Term B Facility must be repaid on or before October 21, 2024.
On February 26, 2021, BellRing entered into a second amendment to the BellRing Credit Agreement (the “BellRing Amendment”). The BellRing Amendment provided for the refinancing of the BellRing Term B Facility on substantially the same terms as in effect prior to the BellRing Amendment, except that it (i) reduced the interest rate margin by 100 basis points, resulting in (A) for Eurodollar rate loans, an interest rate of the Eurodollar rate plus a margin of 4.00% and (B) for base rate loans, an interest rate of the base rate plus a margin of 3.00%, (ii) reduced the floor for the Eurodollar rate to 0.75%, (iii) modified the BellRing Credit Agreement to address the anticipated unavailability of LIBOR as a reference interest rate and (iv) provided that if on or before August 26, 2021 BellRing repays the BellRing Term B Facility in whole or in part with the proceeds of new or replacement debt at a lower effective interest rate, or further amends the BellRing Credit Agreement to reduce the effective interest rate applicable to the BellRing Term B Facility, BellRing must pay a 1.00% premium on the amount repaid or subject to the interest rate reduction. In connection with the BellRing Amendment, BellRing paid debt
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refinancing fees of $0.1 and $1.6 in the three and nine months ended June 30, 2021, respectively, which were included in “Loss on extinguishment and refinancing of debt, net” in the Condensed Consolidated Statements of Operations.
Subsequent to the BellRing Amendment, borrowings under the BellRing Term B Facility bear interest, at the option of BellRing, at an annual rate equal to either (a) the Eurodollar rate or (b) the base rate determined by reference to the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.50% per annum and (iii) the one-month Eurodollar rate plus 1.00% per annum, in each case plus an applicable margin of 4.00% for Eurodollar rate-based loans and 3.00% for base rate-based loans.
The BellRing Term B Facility requires quarterly scheduled amortization payments of $8.75, which began on March 31, 2020, with the balance to be paid at maturity on October 21, 2024. Interest was paid on each Interest Payment Date (as defined in the BellRing Credit Agreement) during each of the nine months ended June 30, 2021 and 2020. The BellRing Term B Facility contains customary mandatory prepayment provisions, including provisions for mandatory prepayment (a) from the net cash proceeds of certain asset sales and (b) of 75% of consolidated excess cash flow (as defined in the BellRing Credit Agreement) (which percentage will be reduced to 50% if the secured net leverage ratio (as defined in the BellRing Credit Agreement) is less than or equal to 3.35:1.00 as of a fiscal year end). During the nine months ended June 30, 2021, BellRing repaid $28.8 on the BellRing Term B Facility as a mandatory prepayment from fiscal 2020 excess cash flow, which was in addition to the scheduled amortization payments. The Company classified $79.5 related to the estimated mandatory prepayment of fiscal 2021 excess cash flow in “Current portion of long-term debt” on the Condensed Consolidated Balance Sheet at June 30, 2021. BellRing may prepay the BellRing Term B Facility at its option without penalty or premium, except as provided in the BellRing Amendment. The interest rate on the BellRing Term B Facility was 4.75% and 6.00% as of June 30, 2021 and September 30, 2020, respectively.
Borrowings under the BellRing Revolving Credit Facility bear interest, at the option of BellRing, at an annual rate equal to either the Eurodollar rate or the base rate (determined as described above) plus a margin, which initially was 4.25% for Eurodollar rate-based loans and 3.25% for base rate-based loans, and thereafter, will be determined by reference to the secured net leverage ratio, with the applicable margin for Eurodollar rate-based loans and base rate-based loans being (i) 4.25% and 3.25%, respectively, if the secured net leverage ratio is greater than or equal to 3.50:1.00, (ii) 4.00% and 3.00%, respectively, if the secured net leverage ratio is less than 3.50:1.00 and greater than or equal to 2.50:1.00 or (iii) 3.75% and 2.75%, respectively, if the secured net leverage ratio is less than 2.50:1.00. Facility fees on the daily unused amount of commitments under the BellRing Revolving Credit Facility initially accrued at the rate of 0.50% per annum, and thereafter, depending on BellRing’s secured net leverage ratio, will accrue at rates ranging from 0.25% to 0.50% per annum. There were no amounts drawn under the BellRing Revolving Credit Facility as of June 30, 2021. The interest rate on the drawn portion of the BellRing Revolving Credit Facility was 5.25% as of September 30, 2020.
During the nine months ended June 30, 2021 and 2020, BellRing borrowed $20.0 and $185.0, respectively, under the BellRing Revolving Credit Facility and repaid $50.0 and $130.0, respectively, on the BellRing Revolving Credit Facility. The available borrowing capacity under the BellRing Revolving Credit Facility was $200.0 and $170.0 as of June 30, 2021 and September 30, 2020, respectively. There were no outstanding letters of credit as of June 30, 2021 or September 30, 2020.
The BellRing Credit Agreement provides for incremental revolving and term facilities, and also permits other secured or unsecured debt, if, among other conditions, certain financial ratios are met, as defined and specified in the BellRing Credit Agreement.
The BellRing Credit Agreement provides for customary events of default, including material breach of representations and warranties, failure to make required payments, failure to comply with certain agreements or covenants, failure to pay or default under certain other material indebtedness, certain events of bankruptcy and insolvency, inability to pay debts, the occurrence of one or more unstayed or undischarged judgments in excess of $65.0, certain events under ERISA, the invalidity of any loan document, a change in control and the failure of the collateral documents to create a valid and perfected first priority lien. Upon the occurrence and during the continuance of an event of default, the maturity of the loans under the BellRing Credit Agreement may accelerate and the agent and lenders under the BellRing Credit Agreement may exercise other rights and remedies available at law or under the loan documents, including with respect to the collateral and guarantees of BellRing’s obligations under the BellRing Credit Agreement.
Obligations under the BellRing Credit Agreement are unconditionally guaranteed by the existing and subsequently acquired or organized domestic subsidiaries of BellRing (other than immaterial subsidiaries, certain excluded subsidiaries and subsidiaries of BellRing it designates as unrestricted subsidiaries) and are secured by security interests in substantially all of the assets of BellRing and the assets of its subsidiary guarantors (other than real property), subject to limited exceptions. The Company and its subsidiaries (other than BellRing and certain of its subsidiaries) are not obligors or guarantors under the BellRing debt facilities.
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Repayments of Long-Term Debt
The following tables show the Company’s repayments of long-term debt and associated gain or loss included in “Loss on extinguishment and refinancing of debt, net” in the Condensed Consolidated Statements of Operations.
Three Months Ended
June 30,
Repayments of Long-Term DebtLoss on Extinguishment and Refinancing of Debt, net
Issuance or BorrowingPrincipal Amount RepaidDebt Premiums and Refinancing Fees PaidWrite-off of Debt Issuance Costs and Deferred Financing Fees
BellRing Term B Facility$8.7 $— $— 
BellRing Credit Agreement (a)— 0.1 — 
2021Total$8.7 $0.1 $— 
Revolving Credit Facility$325.0