# Post Holdings, Inc. (POST) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Post Holdings, Inc.'s 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1530950/000153095021000383/post-20210930.htm
Accession: 0001530950-21-000383
Filing date: 2021-11-19
Report date: 2021-09-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/POST/
All MD&A years: /company/POST/mda/
Next year: /company/POST/mda/fy2022/ (FY 2022)

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and capital resources of Post Holdings, Inc. This discussion should be read in conjunction with the financial statements under Item 8 of this report and the “Cautionary Statement on Forward-Looking Statements” on page 1 of this report.

OVERVIEW

We are a consumer packaged goods holding company, operating in five reportable segments: Post Consumer Brands, Weetabix, Foodservice, Refrigerated Retail and BellRing Brands. Our products are sold through a variety of channels, including grocery, club and drug stores, mass merchandisers, foodservice, food ingredient and eCommerce.

At September 30, 2021, our reportable segments were as follows:

•Post Consumer Brands: North American ready-to-eat (“RTE”) cereal and Peter Pan nut butters;

•Weetabix: primarily United Kingdom (the “U.K.”) RTE cereal and muesli;

•Foodservice: primarily egg and potato products;

•Refrigerated Retail: primarily side dish, egg, cheese and sausage products; and

•BellRing Brands: ready-to-drink (“RTD”) protein shakes, other RTD beverages, powders and nutrition bars.

Transactions

Initial Public Offering of Post Holdings Partnering Corporation

On May 28, 2021, we 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 million units of PHPC (the “PHPC Units”). On June 3, 2021, PHPC issued an additional 4.5 million 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, $0.0001 par value 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 million. PHPC Sponsor, LLC, our wholly-owned subsidiary (“PHPC Sponsor”), purchased 4.0 million of the 30.0 million PHPC Units in the initial public offering on May 28, 2021 for $40.0 million. 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 could 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 million 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 million PHPC Private Placement Units, generating proceeds to PHPC of $10.9 million (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, we, through PHPC Sponsor’s ownership of 8.6 million shares of Series F common stock of PHPC, $0.0001 par value per share, have certain governance rights in PHPC relating to the election of PHPC directors and voting rights on amendments to PHPC’s certificate of incorporation.

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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 million 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, of $0.0001 par value 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 million in a private placement to occur concurrently with the closing of PHPC’s partnering transaction.

In determining the accounting treatment of our 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 partnering transaction target identification. As such, PHPC is fully consolidated into our financial statements.

As of September 30, 2021, we beneficially owned 31.0% of the equity of PHPC and the net income and net assets of PHPC were consolidated within our 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 noncontrolling interest (“NCI”). All transactions between PHPC and PHPC Sponsor, as well as related financial statement impacts, eliminate in consolidation.

Initial Public Offering of BellRing Brands, Inc.

On October 21, 2019, BellRing Brands, Inc. (“BellRing”), our subsidiary, closed its initial public offering (the “BellRing IPO”) of 39.4 million 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 million, 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 its non-voting membership units (the “BellRing LLC units”) with us 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 we and our 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 us control over BellRing’s board of directors and results in the full consolidation of BellRing and its subsidiaries into our financial statements. BellRing LLC is the holding company for our historical active nutrition business, reported herein as the BellRing Brands segment and reported historically as the Active Nutrition segment. 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.

As of September 30, 2021 and 2020, we and our affiliates (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 our 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 noncontrolling interest. For additional information, see Notes 4 and 17 within “Notes to Consolidated Financial Statements.”

Capitalization of 8th Avenue Food & Provisions, Inc.

On October 1, 2018, 8th Avenue Food & Provisions, Inc. (“8th Avenue”) was separately capitalized by us and third parties through a series of transactions (the “8th Avenue Transactions”), and 8th Avenue became the holding company for our historical private brands business, reported historically as our Private Brands segment. We retained shares of common stock equal to 60.5% of the common equity in 8th Avenue. 8th Avenue is no longer consolidated in our financial statements and the 60.5% common equity retained interest in 8th Avenue is accounted for using the equity method. For additional information, see Notes 4 and 7 within “Notes to Consolidated Financial Statements.”

Acquisitions

We completed the following acquisitions during the reporting period:

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Fiscal 2021

•Private label RTE cereal business of TreeHouse Foods, Inc. (the “PL RTE Cereal Business”), acquired on June 1, 2021 and reported in our Post Consumer Brands segment;

•Egg Beaters liquid egg brand (“Egg Beaters”), acquired on May 27, 2021 and reported in our Refrigerated Retail segment;

•Almark Foods business and related assets (“Almark”), acquired on February 1, 2021 and reported in our Foodservice and Refrigerated Retail segments; and

•Peter Pan nut butter brand (“Peter Pan”), acquired on January 25, 2021 and reported in our Post Consumer Brands segment.

Fiscal 2020

•Henningsen Foods, Inc. (“Henningsen”) acquired July 1, 2020 and reported in our Foodservice segment.

COVID-19

The COVID-19 pandemic has caused and continues to cause global economic disruption and uncertainty, including in our business. We continue to closely monitor the impact of the COVID-19 pandemic and developments related thereto and are taking, or have taken, necessary actions to ensure our ability to safeguard the health of our employees, including their economic health, maintain the continuity of our supply chain to serve customers and consumers and preserve financial liquidity to navigate the uncertainty caused by the pandemic. Examples of actions we have taken in response to the pandemic include:

•reinforcing manufacturing facilities with adequate supplies, staffing and support;

•enhancing facility safety measures and working closely with public health officials to follow additional health and safety guidelines;

•in fiscal 2020, drawing $500.0 million of our $750.0 million revolving credit facility (the “Revolving Credit Facility”) and $65.0 million of BellRing’s revolving credit facility (the “BellRing Revolving Credit Facility”) to further enhance liquidity in March 2020. Borrowings under both credit facilities were repaid prior to the end of fiscal 2020;

•in fiscal 2020, temporarily suspending our share repurchase program, which we resumed in May 2020; and

•in fiscal 2020 and in the first half of fiscal 2021, actively managing our foodservice egg supply, including taking measures to reduce internal production, delivering contract suspension notices invoking force majeure clauses with respect to certain of our suppliers in the second quarter of fiscal 2020 (these contract suspensions were provisionally lifted on July 1, 2020) and repurposing product into our retail channel.

Our products sold through retail channels generally experienced an uplift in sales starting in March 2020 and continuing through the first half of fiscal 2021 driven by increased at-home consumption in reaction to the COVID-19 pandemic. In addition, most of our retail categories exhibited a mix shift to premium products. In the second half of fiscal 2021, most of our retail channel product categories trended toward growth rates in line with their pre-pandemic levels.

At the onset of the COVID-19 pandemic, our foodservice business was significantly impacted by lower away-from-home demand resulting from the impact of the COVID-19 pandemic on various channels, including full service restaurants, quick service restaurants, education and travel and lodging. Since then, the recovery of our foodservice volumes has been closely tracking with changes in the degree of restrictions on mobility and gathering. Volumes have nearly fully recovered to pre-pandemic levels in certain channels and product categories, and volumes in other channels impacted by the COVID-19 pandemic have recovered from low levels experienced at the height of the pandemic, but have recently plateaued at levels below pre-pandemic levels. In the aggregate, our overall foodservice business volumes remain below pre-pandemic levels.

As the overall economy continues to recover from the impact of the COVID-19 pandemic, labor shortages, input and freight inflation and other supply chain disruptions, including input availability, are pressuring our supply chains in all segments, resulting in missed sales and higher manufacturing costs, most notably in our Foodservice and Refrigerated Retail segments. Per unit product costs escalated as throughput declined and fixed cost absorption worsened. Service levels and fill rates remain below normal levels, and inventories are low, resulting in the placement of certain products on allocation. These factors are expected to persist into fiscal 2022 and are dependent upon our ability to adequately hire, train and retain manufacturing staff, maintain sufficient supplies of ingredients and packaging and rebuild inventory levels.

Volume and profit recovery in our Foodservice segment is dependent on both changes in the degree of restrictions on mobility and gathering and on the ability to navigate supply chain disruptions. We expect our Foodservice segment to return to pre-pandemic profitability in fiscal 2023. Volume growth in our Refrigerated Retail segment, most notably for side dish products, is expected to be constrained until supply chain performance has stabilized.

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BellRing’s primary categories returned to growth rates in line with their pre-pandemic levels in the fourth quarter of fiscal 2020 and have remained strong in subsequent periods. As the overall economy continues to recover from the impact of the COVID-19 pandemic, input and freight inflation, equipment delays and input and labor availability are pressuring BellRing’s supply chain. Lower than anticipated production and delays in capacity expansion across the broader third party shake contract manufacturer network have resulted in low inventories and missed sales. Service levels and fill rates remain below normal levels, and certain products have been placed on allocation. These factors are expected to improve but persist throughout fiscal 2022 and are dependent upon BellRing’s contract manufacturer partners’ ability to deliver committed volumes, add capacity on expected timelines, retain manufacturing staff and rebuild inventory levels.

For additional discussion, refer to “Liquidity and Capital Resources” within this section, as well as “Cautionary Statement on Forward-Looking Statements” on page 1 of this report and “Risk Factors” in Item 1A of this report.

Lease Accounting

On October 1, 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842),” and ASU 2018-11, “Leases (Topic 842): Targeted Improvements.” At adoption, we recognized right-of-use (“ROU”) assets and lease liabilities of $158.1 million and $168.2 million, respectively, on the balance sheet at October 1, 2019. For additional information regarding these ASUs, refer to Notes 3 and 16 within “Notes to Consolidated Financial Statements."

Revenue from Contracts with Customers

On October 1, 2018, we adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which superseded all previously existing revenue recognition guidance under accounting principles generally accepted in the United States of America (“GAAP”). As a result of the adoption, we reclassified certain payments to customers from “Selling, general, and administrative expenses” to “Net Sales” and recognized revenue that was previously deferred in “Net Sales” in the Consolidated Statement of Operations for the year ended September 30, 2019. For additional information regarding ASU 2014-09, refer to Note 2 within “Notes to Consolidated Financial Statements.” The following table presents the impact on net sales resulting from the adoption of ASU 2014-09 by segment.

[[GREPCENT_TABLE]]
[["dollars in millions","Year Ended September 30, 2019"],["Post Consumer Brands","$","(7.6)"],["Weetabix","\u2014"],["Foodservice","(5.2)"],["Refrigerated Retail","(3.3)"],["BellRing Brands","(8.8)"],["","$","(24.9)"]]
[[/GREPCENT_TABLE]]

Announcements Subsequent to Period End

In October 2021, we, along with BellRing, entered into a transaction agreement related to our previously announced plan to distribute a significant portion of our interest in BellRing to our shareholders. We expect the distribution to be completed in the first calendar quarter of 2022, subject to certain customary conditions. See Note 23 within “Notes to Consolidated Financial Statements” for additional information on the announcement.

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RESULTS OF OPERATIONS

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

Net Sales

Fiscal 2021 compared to 2020

Net sales increased $528.0 million, or 9%, during the year ended September 30, 2021. This increase was due to growth in our BellRing Brands, Foodservice, Weetabix and Refrigerated Retail segments, as well as incremental contributions from our current and prior year acquisitions. These positive impacts were partially offset by a decline in our Post Consumer Brands segment. For further discussion, refer to “Segment Results” within this section.

Fiscal 2020 compared to 2019

Net sales increased $17.6 million, or less than 1%, during the year ended September 30, 2020. This increase was due to growth in our BellRing Brands, Post Consumer Brands, Refrigerated Retail and Weetabix segments, as well as the inclusion of incremental contributions from our acquisition of Henningsen. These positive impacts were partially offset by a decline in our Foodservice segment. For further discussion, refer to “Segment Results” within this section.

Operating Profit

Fiscal 2021 compared to 2020

Operating profit decreased $44.8 million, or 6%, for the year ended September 30, 2021. This decrease was primarily due to lower segment profit within our Post Consumer Brands and Refrigerated Retail segments, partially offset by increased segment profit within our Foodservice, BellRing Brands and Weetabix segments, as well as decreased general corporate expenses and other. For further discussion, refer to “Segment Results” within this section.

Fiscal 2020 compared to 2019

Operating profit decreased $80.5 million, or 10%, for the year ended September 30, 2020. In the year ended September 30, 2019, operating profit was impacted by losses related to the impairment of goodwill and other intangible assets of $63.3 million and by a gain on sale of business of $126.6 million related to the 8th Avenue Transactions. Excluding these impacts in fiscal 2019, operating profit decreased $17.2 million, or 2%, primarily due to lower segment profit within our Foodservice and BellRing Brands segments, partially offset by increased segment profit within our Post Consumer Brands, Refrigerated Retail and Weetabix segments, as well as decreased general corporate expenses and other. For further discussion, refer to “Segment Results” within this section.

Interest Expense, net

Interest expense decreased $12.8 million, or 3%, for the year ended September 30, 2021, compared to the prior year. The decrease was driven by decreased losses of $7.5 million on our interest rate swap contracts, a lower weighted-average interest

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rate when compared to the prior year period, decreased amortization of debt issuance costs, deferred financing fees and debt discount of $1.9 million and increased amortization of debt premium of $1.7 million. These positive impacts were partially offset by lower interest income of $5.7 million on our cash balances. Our weighted-average interest rate on our total outstanding debt was 5.1% and 5.3% for the years ended September 30, 2021 and 2020, respectively. This decrease in our weighted-average interest rate was driven by refinancing debt at lower interest rates.

Interest expense increased $66.2 million, or 21%, for the year ended September 30, 2020, compared to the prior year. The increase was driven by increased losses (compared to gains in fiscal 2019) of $41.0 million on our interest rate swap contracts. Additionally, interest expense increased from the impact of senior notes issued in fiscal 2020 and fiscal 2019 and debt entered into in connection with the BellRing IPO on October 21, 2019, partially offset by reduced interest expense of $56.6 million as a result of the repayment of our previously outstanding term loan in the first quarter of fiscal 2020. Our weighted-average interest rate on our total outstanding debt was 5.3% and 5.2% for the years ended September 30, 2020 and 2019, respectively. This increase in our weighted-average interest rate was driven by a change in the mix of debt outstanding. During the year ended September 30, 2019, we recorded $5.9 million of interest expense related to amounts owed to former holders of shares of Bob Evans common stock who demanded appraisal of their shares of Bob Evans common stock under Delaware law. No such interest expense was recorded during the year ended September 30, 2020.

For additional information on our interest rate swaps, refer to Note 14 within “Notes to Consolidated Financial Statements.” For additional information on our debt, refer to Note 17 within “Notes to Consolidated Financial Statements” and “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of this report.

Loss on Extinguishment and Refinancing of Debt, net

During the years ended September 30, 2021, 2020 and 2019, we recognized net losses of $94.8 million, $72.9 million and $6.1 million, respectively, related to the extinguishment of debt.

For the year ended September 30, 2021, the losses related to the repayment of the outstanding principal balance of our 5.00% senior notes, as well as BellRing’s amendment of its credit agreement (as amended, restated or amended and restated, the “BellRing Credit Agreement”). The loss included debt premiums and refinancing fees paid of $75.9 million and write-offs of debt issuance costs of $18.9 million.

For the year ended September 30, 2020, the losses related to repayments of the outstanding principal balances of our 2020 bridge loan, our previously outstanding term loan, our 5.50% senior notes maturing in March 2025 and our 8.00% senior notes, as well as the amendment and restatement of our credit agreement (as amended, restated or amended and restated, the “Credit Agreement”). The loss included premiums paid of $49.8 million and write-offs of debt issuance costs of $23.1 million.

For the year ended September 30, 2019, the net loss related to the repayment of a portion of our term loan, the assumption of our 2018 bridge loan by 8th Avenue in connection with the 8th Avenue Transactions (the “2018 Bridge Loan”) and the repurchase and retirement of portions of the principal balances of our 5.75% senior notes, 5.625% senior notes and 5.00% senior notes. The net loss included write-off of debt issuance costs of $10.8 million, partially offset by gains realized on debt repurchased at a discount of $4.0 million and the write-off of an unamortized debt premium of $0.7 million.

For additional information on our debt, refer to Note 17 within “Notes to Consolidated Financial Statements.”

(Income) Expense on Swaps, net

During the years ended September 30, 2021, 2020 and 2019, we recognized net (gains) losses of $(122.8) million, $187.1 million and $306.6 million, respectively, related to mark-to-market adjustments on our interest rate swaps that were not designated as hedging instruments. For additional information on our interest rate swaps, refer to Note 14 within “Notes to Consolidated Financial Statements” and “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of this report.

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Income Tax Expense (Benefit)

Our effective income tax rate for fiscal 2021 was 25.7% compared to 5.5% for fiscal 2020 and (2.5)% for fiscal 2019. A reconciliation of income tax expense (benefit) with amounts computed at the statutory federal rate follows:

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[[/GREPCENT_TABLE]]

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted and signed into law. Certain provisions of the CARES Act impacted our accounting for income taxes, such as modifications to the limitation of business interest expense deductibility for tax years beginning in 2019 and 2020.

In fiscal 2021, our effective income tax rate was impacted by enacted tax law changes in 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 year ended September 30, 2021, we remeasured our existing deferred tax assets and liabilities considering the 25% U.K. corporate income tax rate for future periods and recorded tax expense of $40.0 million. Other changes made to the U.K.’s tax law did not have a material impact on our financial statements during the year ended September 30, 2021. Additionally, in fiscal 2020, our effective income tax rate was impacted by enacted tax law changes in the U.K., which included a provision to increase the U.K.’s corporate income tax rate from 17% to 19%. During the year ended September 30, 2020, we remeasured our existing deferred tax assets and liabilities considering the 19% U.K. corporate income tax rate for future periods and recorded tax expense of $13.0 million.

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SEGMENT RESULTS

We evaluate each segment’s performance based on its segment profit, which for all segments excluding BellRing Brands is its earnings/loss before income taxes and equity method earnings/loss before impairment of property, goodwill and other intangible assets, facility closure related costs, restructuring expenses, gain/loss on assets and liabilities held for sale, gain/loss on sales of businesses and facilities, gain on/adjustment to bargain purchase, interest expense and other unallocated corporate income and expenses. Segment profit for BellRing Brands, as it is a publicly-traded company, is its operating profit.

Post Consumer Brands

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

Fiscal 2021 compared to 2020

Net sales for the Post Consumer Brands segment decreased $33.8 million, or 2%, for the year ended September 30, 2021. Net sales for the year ended September 30, 2021 were positively impacted by the inclusion of incremental net sales of $121.8 million attributable to our current year acquisitions of Peter Pan and the PL RTE Cereal Business. Excluding this impact, net sales decreased $155.6 million or 8%, primarily due to 11% lower volume. This decrease in volume was primarily due to the lapping of increased purchases in the prior year driven by consumer pantry loading and increased at-home consumption in reaction to the COVID-19 pandemic, broader softness across value and private label cereal products and the decision to exit certain low-margin private label business. Volume declines in private label cereal, Malt-O-Meal bag cereal, Honey Bunches of Oats and licensed and adult classic brands were partially offset by increased Pebbles volume and incremental volumes from new product innovations. Average net selling prices increased when compared to the prior year as a result of a favorable product mix, partially offset by increased trade spending. Additionally, net sales for the year ended September 30, 2021 were negatively impacted by an estimated $9.8 million in lost revenue, resulting from COVID-19 related production shutdowns and employee absences at our Battle Creek, Michigan RTE cereal facility.

Segment profit for the year ended September 30, 2021 decreased $76.9 million, or 20%, compared to the prior year. Segment profit for the year ended September 30, 2021 was negatively impacted by the inclusion of a net incremental segment loss of $3.0 million attributable to our current year acquisitions of Peter Pan and the PL RTE Cereal Business. Excluding this impact, segment profit decreased $73.9 million, or 19%, primarily driven by lower net sales, as previously discussed, higher manufacturing costs of $44.2 million (primarily due to unfavorable fixed cost absorption resulting from lower volume, partially offset by other manufacturing cost efficiencies), increased freight costs of $19.3 million (excluding volume-driven impacts), a provision for legal settlement of $15.0 million and increased raw materials costs of $5.4 million. These negative impacts were partially offset by lower advertising and consumer spending of $5.9 million, gains on sale of property of $4.0 million and lower employee-related expenses. Additionally, segment profit for the year ended September 30, 2021 was negatively impacted by lost revenue at our Battle Creek, Michigan RTE cereal facility, as previously discussed, resulting in an estimated $5.6 million in lost profit contribution.

Fiscal 2020 compared to 2019

Net sales for the Post Consumer Brands segment increased $73.2 million, or 4%, for the year ended September 30, 2020, primarily driven by 3% higher volume. This increase in volume was largely due to an increase in consumer purchases in response to the COVID-19 pandemic. At the product level, volume gains were primarily driven by gains in private label cereal, Pebbles, Malt-O-Meal bag cereal, Honey Bunches of Oats and adult and kid classic brands, partially offset by volume declines in natural and organic cereal, licensed products and government bid business. Average net selling prices increased when compared to the prior year resulting from targeted price increases and a lower promotional trade rate.

Segment profit for the year ended September 30, 2020 increased $56.4 million, or 17%, compared to the prior year. This increase was primarily due to higher net sales, as previously discussed, lower manufacturing costs of $26.6 million (driven by manufacturing cost efficiencies and favorable fixed cost leverage on increased volumes, partially offset by increased COVID-19 related expenses), reduced freight costs of $13.1 million and decreased integration expenses of $6.6 million. These positive impacts were partially offset by increased employee-related expenses, higher product donations of $4.4 million, increased advertising and consumer spending of $3.5 million and higher warehousing costs of $2.6 million.

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Weetabix

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[[/GREPCENT_TABLE]]

Fiscal 2021 compared to 2020

Net sales for the Weetabix segment increased $37.1 million, or 8%, for the year ended September 30, 2021, primarily due to improved average net selling prices and favorable foreign exchange rates. Excluding the impact of favorable exchange rates, net sales increased $4.5 million or 1%, on 1% lower volume. The decrease in volume was driven by declines in RTE cereal products as a result of the lapping of increased purchases in the prior year driven by consumer pantry loading and increased at-home consumption in reaction to the COVID-19 pandemic, partially offset by private label distribution gains and new product innovations. Average net selling prices increased primarily due to targeted price increases that went into effect in March 2020 and a favorable product mix.

Segment profit increased $3.1 million, or 3%, for the year ended September 30, 2021. This increase was driven by favorable foreign exchange rates, higher average net selling prices and lower employee-related expenses, partially offset by unfavorable input costs of $5.7 million and higher advertising and consumer spending of $2.0 million.

Fiscal 2020 compared to 2019

Net sales for the Weetabix segment increased $22.2 million, or 5%, for the year ended September 30, 2020, due to improved average net selling prices and 2% higher volume. Average net selling prices increased primarily due to targeted price increases, reduced trade spending and a favorable product mix. Volume increases were largely due to an increase in consumer purchases in response to the COVID-19 pandemic, primarily driven by gains in at-home consumption of biscuit cereal products, partially offset by declines in consumption of Weetabix On The Go drinks and bars, as well as reduced extruded product volume due to the start-up of a new manufacturing line at our Corby, United Kingdom manufacturing facility in fiscal 2020.

Segment profit increased $17.5 million, or 18%, for the year ended September 30, 2020. This increase was driven by higher net sales, as previously discussed, and favorable manufacturing and raw materials costs of $7.4 million, partially offset by higher advertising and consumer spending of $5.9 million and increased employee-related expenses.

Foodservice

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[["","Fiscal 2021 compared to 2020","","Fiscal 2020 compared to 2019"],["","","","","","favorable/(unfavorable)","","","","","","favorable/(unfavorable)"],["dollars in millions","2021","","2020","","$ Change","","% Change","","2020","","2019","","$ Change","","% Change"],["Net Sales","$","1,615.6","","","$","1,361.8","","","$","253.8","","","19","%","","$","1,361.8","","","$","1,627.4","","","$","(265.6)","","","(16)","%"],["Segment Profit","$","61.7","","","$","25.6","","","$","36.1","","","141","%","","$","25.6","","","$","198.4","","","$","(172.8)","","","(87)","%"],["Segment Profit Margin","4","%","","2","%","","","","","","2","%","","12","%"]]
[[/GREPCENT_TABLE]]

Fiscal 2021 compared to 2020

Net sales for the Foodservice segment increased $253.8 million, or 19%, for the year ended September 30, 2021. Net sales for the year ended September 30, 2021 were positively impacted by the inclusion of incremental net sales of $45.8 million attributable to our current year acquisition of Almark. Excluding this impact, net sales increased $208.0 million, or 15%, on 5% higher volume. Volume growth was negatively impacted in the current year by reduced service levels (driven by labor shortages). Egg product sales were up $174.8 million, or 15%, with volume up 5%, driven by higher average net selling prices resulting from the pass-through of higher input costs due to increased grain markets. Egg volumes increased primarily due to increased foodservice product demand compared to the prior year as a result of the partial recovery from the COVID-19 pandemic and incremental volumes attributable to our prior year acquisition of Henningsen. Sales of side dishes were up $8.7 million, or 6%, with volume up 2%, driven by increased product demand compared to the prior year as a result of the partial recovery from the COVID-19 pandemic and higher average net selling prices resulting from targeted price increases. Sausage sales were up $6.3 million, or 41%, driven by 27% higher volume and higher average net selling prices resulting from the pass-through of higher input costs due to increased sow costs. Other product sales were up $18.2 million, or 75%, with volume up 33%, primarily due to the inclusion of incremental results attributable to our prior year acquisition of Henningsen and higher average net selling prices resulting from the decision to exit certain low-margin business.

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Segment profit increased $36.1 million, or 141%, for the year ended September 30, 2021, driven by higher net sales, as previously discussed, and an insurance recovery of $6.1 million related to previously incurred business interruption losses as a result of a fire at our Bloomfield, Nebraska laying facility in the second quarter of fiscal 2020, partially offset by higher raw materials costs of $80.5 million (primarily driven by higher egg input costs due to increased grain markets), a $6.0 million loss on the disposal of certain assets related to our wastewater facility never put into service in Chaska, Minnesota, higher freight costs of $13.6 million (excluding volume-driven impacts) and increased employee-related costs. Prior year segment profit was negatively impacted by a $2.5 million insurance deductible and $0.4 million of repair and clean-up expenses due to the Bloomfield fire.

Fiscal 2020 compared to 2019

Net sales for the Foodservice segment decreased $265.6 million, or 16%, for the year ended September 30, 2020. Net sales for the year ended September 30, 2020 were positively impacted by the inclusion of incremental net sales attributable to our July 1, 2020 acquisition of Henningsen. Excluding net sales attributable to Henningsen, net sales decreased $277.9 million, or 17%, driven by 17% lower volume. The volume decline was due to lower foodservice product demand as a result of the COVID-19 pandemic. Egg product sales were down $245.5 million, or 23%, with volume down 22%, driven by 21% lower volume in the foodservice channel and lower average net selling prices in the food ingredient channel, partially offset by 4% higher volume in the food ingredient channel. Food ingredient average net selling prices decreased primarily due to lower market-based raw and liquid egg prices and short-term price reductions used to move excess inventory created by lower product demand as a result of the COVID-19 pandemic. Sales of side dishes were down $24.0 million, or 14%, with volume down 18%. Sausage sales were down $4.0 million, or 21%, with volume down 19%. Other product sales were down $4.4 million, or 20%, with volume down 20%.

Segment profit decreased $172.8 million, or 87%, for the year ended September 30, 2020, primarily due to lower foodservice volumes, as previously discussed, increased net product costs and other negative impacts related to the COVID-19 pandemic. The impact of the COVID-19 pandemic resulted in lower volume and short-term price reductions, as previously discussed, unfavorable fixed cost absorption as we reduced our egg supply and production in our plants to match lower demand and increased inventory write-offs of $12.3 million, mainly due to increased expense for donated and obsolete inventory on short-dated products, due to the decline in foodservice product demand, as well as increased expenses attributable to the COVID-19 pandemic, including increased employee wages and paid absences, COVID-19 screening expenses and additional sanitizing costs. Additionally, net product costs were negatively impacted by (i) start-up costs of $14.2 million related to our new precooked egg facility in Norwalk, Iowa, (ii) manufacturing inefficiencies at certain facilities, (iii) higher freight costs of $5.7 million despite lower volumes, due to load factor and other inefficiencies in our transportation network, (iv) increased losses related to commodity and energy hedges of $8.2 million, (v) a $2.5 million insurance deductible and $0.4 million of repair and clean-up expenses due to a fire at our Bloomfield, Nebraska laying facility in the second quarter of fiscal 2020 and (vi) $4.7 million of insurance proceeds received in fiscal 2019 in connection with a fire that occurred at our Klingerstown, Pennsylvania facility in the third quarter of fiscal 2018.

Refrigerated Retail

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[[/GREPCENT_TABLE]]

Fiscal 2021 compared to 2020

Net sales for the Refrigerated Retail segment increased $13.3 million, or 1%, for the year ended September 30, 2021. Net sales for the year ended September 30, 2021 were positively impacted by the inclusion of incremental net sales of $29.5 million attributable to our current year acquisitions of Almark and Egg Beaters. Excluding this impact, net sales decreased $16.2 million or 2%, with volume down 3%. Sales of side dishes increased $29.7 million, or 8%, driven by increased average net selling prices and 2% higher volume. The increase in average net selling prices was primarily due to targeted price increases and a favorable product mix. The increase in volume was driven by higher branded dinner and breakfast sides volume, partially offset by lower private label dinner sides volume resulting from the decision to exit certain low-margin business and reduced service levels (driven by labor shortage). Sausage sales decreased $8.4 million, or 6%, with volume down 8%, driven by the lapping of increased purchases in the prior year driven by increased at-home consumption in response to the COVID-19 pandemic and reduced service levels (driven by labor shortages). Cheese and other dairy case product sales were down $30.2 million, or 12%, with volume down 13%, driven by the lapping of increased purchases in the prior year driven by increased at-

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home consumption in response to the COVID-19 pandemic. Egg product sales were down $1.9 million, or 1%, with volume down 2%, driven by the decision to exit certain low-margin business. Sales of other products were down $5.4 million.

Segment profit decreased $49.7 million, or 40%, for the year ended September 30, 2021. This decrease was driven by higher raw materials costs of $45.9 million for sows, cheese and eggs, increased manufacturing costs of $13.9 million and higher freight costs of $8.6 million (excluding volume-driven impacts). These negative impacts were partially offset by lower consulting fees and decreased advertising and consumer spending of $0.6 million.

Fiscal 2020 compared to 2019

Net sales for the Refrigerated Retail segment increased $53.9 million, or 6%, for the year ended September 30, 2020. Sales of side dishes increased $41.1 million, or 12%, driven by increased average net selling prices and 3% higher volume. The increase in average net selling prices was primarily due to targeted price increases, a favorable product mix and lower trade spending. Volume increases were driven by higher branded dinner sides volume, partially offset by lower deli sides and private label dinner sides volume. Sausage sales increased $22.4 million, or 17%, driven by 12% higher volume and higher average net selling prices as a result of reduced trade spending. Cheese and other dairy case product sales were up $20.7 million, or 9%, with volume up 1%, primarily due to higher average net selling prices as a result of targeted price increases and lower trade spending. Branded dinner sides, sausage and cheese and other dairy case products volumes were positively impacted by an increase in consumer purchases in response to the COVID-19 pandemic. Egg product sales were down $30.3 million, or 18%, with volume down 16%, due to declines in deli products resulting from deli closures as a result of the COVID-19 pandemic and the decision to exit certain low-margin business, as well as losses in branded liquid egg product volume. Sales of other products were flat with volume down 11%.

Segment profit increased $30.5 million, or 32%, for the year ended September 30, 2020, primarily due to higher net sales, as previously discussed, and lower raw materials costs of $6.7 million (primarily due to lower sow costs, partially offset by higher cheese input costs), partially offset by increased employee-related expenses, higher manufacturing costs of $9.5 million and higher freight costs of $3.4 million.

BellRing Brands

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[[/GREPCENT_TABLE]]

Fiscal 2021 compared to 2020

Net sales for the BellRing Brands segment increased $258.8 million, or 26%, for the year ended September 30, 2021. Sales of Premier Protein products were up $207.8 million, or 25%, with volume up 24%. Volume increases were driven by higher RTD protein shake product volumes which primarily related to distribution gains for both existing and new products and strong velocities driven by promotional activity and continued category momentum. Sales of Dymatize products were up $47.4 million, or 43%, with volume up 29%. Volume increases were primarily driven by distribution gains for both existing and new products and strong velocities driven by continued category momentum and lower international and specialty channel volumes in the prior year, largely resulting from consumer reaction to the COVID-19 pandemic. Average net selling prices increased during the year ended September 30, 2021 due to a favorable product mix. Sales of all other products were up $3.6 million.

Segment profit increased $4.0 million, or 2%, for the year ended September 30, 2021. This increase was primarily driven by higher net sales, as previously discussed, and lower BellRing separation-related transaction costs of $1.7 million. These positive impacts were partially offset by higher net product costs of $38.9 million due to unfavorable raw materials, freight and manufacturing costs, accelerated amortization expense of $29.9 million related to the discontinuance of the Supreme Protein brand, restructuring and facility closure costs, including accelerated depreciation, of $5.6 million, increased advertising and promotional spending of $6.1 million and higher employee-related costs.

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Fiscal 2020 compared to 2019

Net sales for the BellRing Brands segment increased $133.9 million, or 16%, for the year ended September 30, 2020. Sales of Premier Protein products were up $148.2 million, or 22%, with volume up 23%. Volume increases were driven by higher RTD protein shake product volumes which primarily related to distribution gains, lapping short-term capacity constraints in fiscal 2019, incremental promotional activity and new product introductions, partially offset by lower other RTD beverage volumes. Sales of Dymatize products were down $4.0 million, or 4%, with volume down 1%. Volumes decreased primarily due to lower international and specialty channel volumes, largely resulting from consumer reaction to the COVID-19 pandemic, partially offset by higher eCommerce volumes. Sales of all other products were down $10.3 million.

Segment profit decreased $11.1 million, or 6%, for the year ended September 30, 2020. This decrease was primarily driven by higher net product costs of $17.4 million (driven by unfavorable raw materials costs, partially offset by lower freight and manufacturing costs), increased advertising and consumer spending of $13.1 million, incremental public company costs of $8.4 million, higher employee-related expenses (including stock-based compensation expense of $6.5 million), higher warehousing costs of $3.7 million and increased BellRing separation-related transaction costs of $1.5 million. These negative impacts were partially offset by higher net sales, as previously discussed.

Other Items

General Corporate Expenses and Other

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[[/GREPCENT_TABLE]]

Fiscal 2021 compared to 2020

General corporate expenses and other decreased $56.4 million, or 52%, during the year ended September 30, 2021, primarily driven by increased net gains related to mark-to-market adjustments on commodity and foreign currency hedges and warrant liabilities of $65.4 million (compared to losses in the prior year), gains related to mark-to-market adjustments on equity securities of $9.6 million and a $3.2 million net gain related to assets held for sale (compared to losses in the prior year). These positive impacts were partially offset by increased losses related to mark-to-market adjustments on deferred compensation of $8.6 million (compared to gains in the prior year), higher stock-based compensation of $6.4 million and increased third party transaction costs of $5.5 million.

Fiscal 2020 compared to 2019

General corporate expenses and other decreased $60.6 million, or 36%, during the year ended September 30, 2020, primarily driven by decreased third party transaction costs of $20.7 million, lower restructuring and facility closure costs of $18.2 million (including lower accelerated depreciation of $12.3 million), increased gains (compared to losses in fiscal 2019) related to mark-to-market adjustments on deferred compensation of $4.7 million and decreased losses on commodity and foreign currency hedges of $2.6 million. Additionally, general corporate expenses and other for the year ended September 30, 2020 were positively impacted by a gain on bargain purchase of $11.7 million related to the fiscal 2020 acquisition of Henningsen. These positive impacts were partially offset by higher stock-based compensation of $3.5 million and increased losses on assets held for sale (compared to gains in the prior year) of $3.3 million. General corporate expenses and other for the year ended September 30, 2019 were negatively impacted by costs of $1.3 million related to obtaining consents from holders of a majority of the aggregate principal amount of our outstanding 5.00% senior notes. For additional information on the consents obtained from holders of a majority of the aggregate principal amount of our outstanding 5.00% senior notes, see Note 17 within “Notes to Consolidated Financial Statements.”

Restructuring and Facility Closure

The table below shows the amount of restructuring and facility closure costs, including accelerated depreciation, attributable to each segment. These amounts are excluded from the measure of segment profit, except for the BellRing Brands segment, as it is a publicly-traded company, and are included in general corporate expenses and other. For additional information on restructuring costs, refer to Note 6 within “Notes to Consolidated Financial Statements.”

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[[/GREPCENT_TABLE]]

Gain/Loss on Assets Held for Sale

The table below shows the amount of net losses (gains) on assets held for sale attributable to each segment. These amounts are excluded from the measure of segment profit and are included in general corporate expenses and other. In the year ended September 30, 2021, final adjustments to the fair values of our Clinton, Massachusetts manufacturing facility and certain assets at our Asheboro, North Carolina and our Corby, U.K. manufacturing facilities were recognized upon sale of the assets. In the year ended September 30, 2020, adjustments to the fair values of the Clinton, Massachusetts manufacturing facility and certain assets at our Asheboro, North Carolina manufacturing facility were recognized as a result of third party data. In the year ended September 30, 2019, final adjustments to the fair value of a portion of the Clinton, Massachusetts manufacturing facility were recognized upon the partial sale of the facility. For additional information on our assets and liabilities held for sale, refer to Note 7 within “Notes to Consolidated Financial Statements.”

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[[/GREPCENT_TABLE]]

(a)Amounts included are attributable to our Clinton, Massachusetts manufacturing facility and certain assets at our Asheboro, North Carolina manufacturing facility.

(b)Amounts included are attributable to our Corby, U.K. manufacturing facility.

Impairment of Goodwill and Other Intangible Assets

During the years ended September 30, 2021 and 2020, we did not record any non-cash impairment charges related to goodwill or other intangible assets. 

During the year ended September 30, 2019, we recorded a non-cash impairment charge of $63.3 million, of which $48.7 million related to the cheese reporting unit and $14.6 million related to the All Whites trademark, both of which are reported in our Refrigerated Retail segment.

For additional information on other intangible assets and goodwill, see Note 2 and Note 8, respectively, within “Notes to Consolidated Financial Statements.”

Gain on Sale of Business

During the year ended September 30, 2019, we recorded gains of $126.6 million related to the 8th Avenue Transactions, which included foreign exchange losses previously recorded in accumulated other comprehensive income of $42.1 million. For additional information on gain on sale of business, see Note 7 within “Notes to Consolidated Financial Statements.”

LIQUIDITY AND CAPITAL RESOURCES

We completed the following activities during the reporting period (for additional information, see Notes 4, 5, 7, 17 and 21 within “Notes to Consolidated Financial Statements”) impacting our liquidity and capital resources:

Fiscal 2021

•$1,800.0 million principal value issued of 4.50% senior notes;

•$1,697.3 million principal value repaid and $74.3 million premium payment made on the extinguishment of our 5.00% senior notes;

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•$393.7 million paid (including broker’s commissions and amounts settled subsequent to fiscal 2021) for the repurchase of 4.0 million shares of our common stock;

•$47.5 million received in connection with share repurchase contracts entered into in the fourth quarter of fiscal 2020;

•$63.8 million outstanding principal repaid by BellRing on its term loan (the “BellRing Term B Facility”);

•$20.0 million borrowed by BellRing under the BellRing Revolving Credit Facility;

•$50.0 million repaid by BellRing under the BellRing Revolving Credit Facility;

•BellRing entered into a second amendment to the BellRing Credit Agreement (the “BellRing Amendment”), which 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 London Interbank Offered Rate (“LIBOR”) (used to determine the interest rate for Euro-dollar rate loans) as a reference interest rate and (iv) provided that if on or before August 26, 2021 BellRing repaid 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 amended the BellRing Credit Agreement to reduce the effective interest rate applicable to the BellRing Term B Facility, BellRing would have paid a 1.00% premium on the amount repaid or subject to the interest rate reduction. BellRing did not repay the BellRing Term B Facility or further amend the BellRing Credit Agreement prior to August 26, 2021. In connection with the BellRing Amendment, BellRing paid $1.6 million of debt refinancing fees;

•our Revolving Credit Facility had outstanding letters of credit of $19.2 million, which reduced the available borrowing capacity under our Revolving Credit Facility to $730.8 million, at September 30, 2021; and

•amended our Credit Agreement to change the reference interest rate applicable to revolving loan borrowings in Pounds Sterling from a LIBOR-based rate to a rate based on the Sterling Overnight Index Average.

Fiscal 2020

•$1,650.0 million principal value issued of 4.625% senior notes, $22.0 million premium received;

•$1,000.0 million principal value repaid and $41.3 million premium payment made on the extinguishment of our 5.50% senior notes maturing in March 2025;

•$122.2 million principal value repaid and $8.5 million premium payment made on the extinguishment of our 8.00% senior notes;

•$1,309.5 million outstanding principal value repaid on our previously outstanding term loan;

•entered into the Credit Agreement providing for the Revolving Credit Facility in an aggregate principal amount of $750.0 million;

•$500.0 million borrowed under the Revolving Credit Facility;

•$500.0 million outstanding principal value repaid on the Revolving Credit Facility;

•$524.4 million net proceeds received by BellRing from the BellRing IPO, after deducting underwriting discounts and commissions;

•$1,225.0 million borrowed under our 2020 bridge facility agreement (the “2020 Bridge Loan”);

•$1,225.0 million principal value 2020 Bridge Loan assumed by BellRing in connection with the BellRing IPO, releasing us and our subsidiaries (other than BellRing and its subsidiaries) from any material obligations thereunder while we retained the proceeds from the 2020 Bridge Loan;

•$1,225.0 million outstanding principal value repaid by BellRing on the 2020 Bridge Loan;

•BellRing entered into the BellRing Credit Agreement providing for debt facilities consisting of a $700.0 million term B loan facility (the “BellRing Term B Facility”) and the $200.0 million BellRing Revolving Credit Facility;

•$700.0 million borrowed by BellRing under the BellRing Term B Facility;

•$195.0 million borrowed by BellRing under the BellRing Revolving Credit Facility;

•$165.0 million outstanding principal value repaid by BellRing on the BellRing Revolving Credit Facility;

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•$587.8 million paid (including broker’s commissions and amounts settled subsequent to fiscal 2020) for the repurchase of 6.1 million shares of our common stock; and

•$46.4 million paid for share repurchase contracts that settled in November 2020.

Fiscal 2019

•$625.0 million principal value 2018 Bridge Loan assumed by 8th Avenue in connection with the 8th Avenue Transactions, releasing us and our subsidiaries (other than 8th Avenue and its subsidiaries) from any material obligations thereunder while we retained the proceeds from the 2018 Bridge Loan;

•$250.0 million received from a third party as part of the 8th Avenue Transactions;

•$863.0 million principal value paid on our previously outstanding term loan using the $875.0 million of proceeds received from the 8th Avenue Transactions, net of debt issuance costs paid related to the 2018 Bridge Loan and other transaction costs;

•$60.0 million outstanding principal value repurchased and retired of our 5.625% senior notes, 5.75% senior notes and 5.00% senior notes;

•$330.8 million paid (including broker’s commissions and amounts settled subsequent to fiscal 2019) for the repurchase of 3.3 million shares of our common stock;

•$750.0 million principal value issued of 5.50% senior notes maturing in December 2029; and

•$257.4 million of payments, excluding interest, made in December 2018 and October 2019 (subsequent to the end of fiscal 2019) to former holders of shares of Bob Evans common stock who had demanded appraisal of their shares under Delaware law and had not yet been paid for their shares.

The following table shows cash flow data for fiscal 2021, 2020 and 2019, which is discussed below.

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Sources and Uses of Cash

Historically, we have generated and expect to continue to generate positive cash flows from operations. Our ability to generate positive cash flows from operations is dependent on general economic conditions, competitive pressures and other business risk factors. As a result of uncertainties in the near-term outlook for our business caused by the COVID-19 pandemic, we took steps across the organization to limit discretionary expenses and re-prioritize our capital projects and to focus on cash flow generation. We temporarily suspended our share repurchase program, and we and BellRing borrowed under our respective revolving credit facilities in order to increase our cash position and financial flexibility in the second quarter of fiscal 2020. As a result of our strong operating cash flows and our healthy liquidity position, in the third quarter of fiscal 2020, we were able to resume our share repurchase program in May 2020, and we and BellRing repaid such borrowings under our respective revolving credit facilities prior to the end of fiscal 2020. In addition, we resumed normal levels of capital investment. We believe that we have sufficient liquidity and cash on hand to satisfy our cash needs. Additionally, we expect to generate positive cash flows from the operations of our diverse businesses; however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity, navigate the uncertainty caused by the pandemic and ensure that our business can continue to operate during these uncertain times. If we are unable to generate sufficient cash flows from operations, or are otherwise unable to comply with the terms of our credit facilities, we may be required to seek additional financing alternatives, which may require waivers under our Credit Agreement and our indentures governing our senior notes, in order to generate additional cash. There can be no assurance that we would be able to obtain additional financing or any such waivers on terms acceptable to us or at all. For additional information on our debt, refer to Note 17 within “Notes to Consolidated Financial Statements.”

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Short-term financing needs primarily consist of working capital requirements and principal and interest payments on our long-term debt. Long-term financing needs will depend largely on potential growth opportunities, including acquisition activity and other strategic transactions and repayment or refinancing of our long-term debt obligations. We may, from time to time, seek to retire or purchase our outstanding debt through cash purchases in open market transactions, privately negotiated transactions or otherwise. Additionally, we may seek to repurchase shares of our common stock. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Obligations under our Credit Agreement are unconditionally guaranteed by our existing and subsequently acquired or organized domestic subsidiaries (other than immaterial subsidiaries, certain excluded subsidiaries and subsidiaries we designate 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 our assets and the assets of our subsidiary guarantors, but excluding, in each case, real property.

All of our senior notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing and subsequently acquired or organized domestic subsidiaries, other than immaterial subsidiaries, certain excluded subsidiaries and subsidiaries we designate as unrestricted subsidiaries, which include 8th Avenue and its subsidiaries, BellRing Brands, Inc. and its subsidiaries, PHPC and PHPC Sponsor. These guarantees are subject to release in certain circumstances.

8th Avenue and its subsidiaries, BellRing Brands, Inc. and its subsidiaries, PHPC and PHPC Sponsor are not obligors or guarantors under our Credit Agreement or our senior notes.

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. We and our subsidiaries (other than BellRing and certain of its subsidiaries) are not obligors or guarantors under the BellRing Credit Agreement.

Cash Requirements

Our cash requirements within the next twelve months include working capital requirements, current maturities of long-term debt, interest payments, research and development activities and capital expenditures. We believe our cash on hand, cash flows from operations and current and possible future credit facilities will be sufficient to satisfy these future requirements.

Our cash requirements under our various contractual obligations and commitments include:

•    Debt and interest obligations – See Note 17 within “Notes to Consolidated Financial Statements” for information on our debt and the timing of future principal and interest payments. For information on our interest rate swaps that require monthly or lump sum settlements, see Note 14 within “Notes to Consolidated Financial Statements.”

•    Purchase obligations – Purchase obligations are legally binding agreements to purchase goods, services or equipment that specify all significant terms, including: fixed or minimum quantities to be purchased and/or penalties imposed for failing to meet contracted minimum purchase quantities (such as “take-or-pay” contracts); fixed, minimum or variable price provisions; and the approximate timing of the transaction. The Company has long-term ingredient, packaging, utility and IT commitments used to support our various businesses for periods up to fiscal 2034. Minimum amounts committed to as of September 30, 2021 were $3,567.5 (with $1,382.8 due in fiscal 2022), primarily related to long-term egg contracts, dairy protein commitments, open purchase orders, share repurchases and accrued capital expenditures.

•    Leases – See Note 16 within “Notes to Consolidated Financial Statements” for information on our lease obligations and the amount and timing of future payments.

•    Pension and other postretirement benefit obligations – See Note 19 within “Notes to Consolidated Financial Statements” for information on our pension and other postretirement benefit obligations and the amount and timing of future payments.

•    Other liabilities – Other liabilities include obligations associated with certain employee benefit programs, payments for workers compensation, general liability and auto liability claim losses, unrecognized tax benefits and various other long-term liabilities, all of which have some inherent uncertainty as to the amount and timing of payments and were reflected on our Consolidated Balance Sheet as of September 30, 2021.

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Operating Activities

Fiscal 2021 compared to 2020

Cash provided by operating activities for the year ended September 30, 2021 decreased by $37.4 million compared to the year ended September 30, 2020, primarily driven by unfavorable changes related to the fluctuations in the timing of sales and collections of trade receivables within our Foodservice, Refrigerated Retail and Post Consumer Brands segments, higher interest payments of $35.1 million and purchases of equity securities of $31.7 million. These cash outflows were partially offset by a decrease in the current year inventory balance within our BellRing Brands segment due to higher net sales outpacing production levels, favorable changes in the timing of payments of trade accounts payables within our Foodservice, BellRing Brands and Post Consumer Brands segments and lower payments on our interest rate swaps of $26.6 million.

Fiscal 2020 compared to 2019

Cash provided by operating activities for the year ended September 30, 2020 decreased by $62.4 million compared to the year ended September 30, 2019, primarily due to an increase in cash settlements and premiums paid (compared to cash settlements received in fiscal 2019) of $110.7 million related to our interest rate swaps, lower segment profit driven by our Foodservice and BellRing Brands segments, increased payments of employee incentives, higher advertising and promotional spending and higher interest payments of $4.4 million. These negative impacts were partially offset by favorable changes in working capital of $15.1 million, primarily related to higher cash outflows for inventory in fiscal 2019 due to inventory builds in our BellRing Brands, Foodservice and Weetabix segments, partially offset by unfavorable fluctuations in the timing of purchases and payments of trade payables, as well as lower income tax payments (net of refunds) of $10.6 million.

Investing Activities

Fiscal 2021

Cash used in investing activities for the year ended September 30, 2021 was $793.6 million. The cash outflow during the year ended September 30, 2021 was driven by the deposit of $345.0 million of proceeds received by PHPC from the PHPC IPO and the PHPC Private Placement into a trust account, net cash paid for acquisitions of $290.3 million primarily driven by our current year acquisitions of the PL RTE Cereal Business, Egg Beaters, Peter Pan and Almark, capital expenditures of $192.5 million and cash paid related to investment in partnerships of $22.1 million. These cash outflows were partially offset by proceeds from the sale of equity securities and property and assets held for sale of $34.2 million and $19.4 million, respectively. The largest individual capital expenditure project in fiscal 2021 related to to the re-construction of a building that was destroyed in a fire at our Bloomfield, Nebraska laying facility in the second quarter of fiscal 2020.

Fiscal 2020

Cash used in investing activities for the year ended September 30, 2020 was $218.5 million. The cash outflow during the year ended September 30, 2020 was driven by capital expenditures of $234.6 million, purchases of equity securities of $29.2 million and cash payments of $19.9 million related to our acquisition of Henningsen. These negative impacts were partially offset by cross-currency swap settlement proceeds received of $52.7 million largely resulting from the termination of $448.7 million notional value of cross-currency swaps that were designated as hedging instruments and insurance proceeds received of $10.0 million related to a fire at our Bloomfield, Nebraska layer facility. The largest individual capital expenditure project in fiscal 2020 related to the purchase of a previously leased manufacturing plant in Sulphur Springs, Texas.

Fiscal 2019

Cash provided by investing activities for the year ended September 30, 2019 was $26.7 million. The cash inflow during the year ended September 30, 2019 was driven by proceeds received of $266.8 million related to the 8th Avenue Transactions and cross-currency swap settlement proceeds received of $31.7 million that were designated as hedging instruments, partially offset by capital expenditures of $273.9 million. The largest individual capital expenditure project in fiscal 2019 was the construction of a new precooked egg facility in Norwalk, Iowa.

Financing Activities

Fiscal 2021

Cash used in financing activities was $167.5 million for the year ended September 30, 2021. We received proceeds of $1,800.0 million from the issuance of our 4.50% senior notes. BellRing borrowed $20.0 million under the BellRing Revolving Credit Facility. These issuances and borrowings resulted in total proceeds from the issuance of long-term debt of $1,820.0 million. In connection with the 4.50% senior notes issuance, we paid $16.8 million in debt issuance costs. We repaid the outstanding principal balance under our 5.00% senior notes and made a principal payment on a municipal bond. BellRing repaid $63.8 million of outstanding principal under the BellRing Term B Facility and repaid $50.0 million of outstanding principal under the BellRing Revolving Credit Facility, which resulted in total repayments of long-term debt of $1,812.1 million. In connection with the repayment of the 5.00% senior notes and the BellRing Amendment (discussed above), we paid

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$75.9 million in debt premiums and refinancing fees. We paid $397.1 million, including broker’s commissions, for the repurchase of shares of our common stock, which included repurchases of common stock that were accrued at September 30, 2020 and did not settle until fiscal 2021. We received $47.5 million related to the settlement of share repurchase contracts that were entered into in fiscal 2020 and did not settle until fiscal 2021. PHPC received $345.0 million gross proceeds from the PHPC IPO and PHPC Sponsor purchased $40.0 million in PHPC Units in the PHPC IPO, which resulted in proceeds received from the PHPC IPO of $305.0 million. In connection with the PHPC IPO, PHPC incurred offering costs of $7.1 million.

Fiscal 2020

Cash used in financing activities was $272.0 million for the year ended September 30, 2020. BellRing Brands, Inc. received $524.4 million net proceeds from the BellRing IPO, after deducting underwriting discounts and commissions. We received proceeds of $1,650.0 million from the issuance of our 4.625% senior notes, borrowed $1,225.0 million under the 2020 Bridge Loan and borrowed $500.0 million under the Revolving Credit Facility. BellRing borrowed $700.0 million under the BellRing Term B Facility, at a discount of $14.0 million, and borrowed $195.0 million under the BellRing Revolving Credit Facility. These issuances and borrowings, combined with proceeds received of $2.2 million from a municipal bond, resulted in total proceeds from the issuance of long-term debt of $4,258.2 million. Additionally, we received a premium of $22.0 million related to the issuance of additional 4.625% senior notes in August 2020. In connection with the senior note issuances, borrowings and our entry into the Credit Agreement, we paid $45.3 million in debt issuance costs and deferred financing fees. We repaid the outstanding principal balances of our previously outstanding term loan, our 5.50% senior notes maturing in March 2025 and our 8.00% senior notes, repaid $500.0 million of outstanding principal borrowings on our Revolving Credit Facility and made a principal payment on the municipal bond. BellRing repaid the outstanding principal balance on the 2020 Bridge Loan, repaid $165.0 million of outstanding principal borrowings on the BellRing Revolving Credit Facility and made principal payments on the BellRing Term B Facility, which resulted in total repayments of long-term debt of $4,349.1 million. We paid premiums of $49.8 million related to the early extinguishment of our 5.50% senior notes maturing in March 2025 and our 8.00% senior notes. In connection with the BellRing IPO, we were refunded $15.3 million of debt issuance costs paid in connection with the 2020 Bridge Loan. We paid $589.1 million, including broker’s commissions, for the repurchase of shares of our common stock, which included repurchases of our common stock that were accrued at September 30, 2019 and did not settle until fiscal 2020, as well as a premium paid of $46.4 million for share repurchase contracts that settled in November 2020.

Fiscal 2019

Cash used in financing activities was $652.4 million for the year ended September 30, 2019. During the year ended September 30, 2019, we received proceeds of $750.0 million from the issuance of our 5.50% senior notes maturing in December 2029. In connection with this senior notes issuance and the receipt of consents from holders of a majority of the aggregate principal amount of our outstanding 5.00% senior notes (see Note 17 within “Notes to Consolidated Financial Statements”), we paid $16.3 million in debt issuance and modification costs. We repaid $863.0 million outstanding principal value of our previously outstanding term loan, and we repurchased and retired $60.0 million principal value of our 5.625% senior notes, 5.75% senior notes and 5.00% senior notes, at a $4.0 million discount. These repayments and repurchases, combined with payments related to our capital lease, resulted in total net repayments of long-term debt of $919.1 million. Additionally, payments of $253.6 million, excluding interest, were made to former holders of shares of Bob Evans common stock who had demanded appraisal and, who at the time, had not yet been paid for their shares of Bob Evans common stock. We also paid $322.1 million, including broker’s commissions, for the repurchase of shares of our common stock and we received proceeds from the exercises of stock awards of $112.6 million.

Debt Covenants

Credit Agreement

Under the terms of our Credit Agreement, we are required to comply with a financial covenant consisting of a secured net leverage ratio (as defined in the Credit Agreement) not to exceed 4.25 to 1.00, measured as of the last day of any fiscal quarter, if, as of the last day of such fiscal quarter, the aggregate outstanding amount of all revolving credit loans, swing line loans and letter of credit obligations (subject to certain exceptions specified in the Credit Agreement) exceeds 30% of our revolving credit commitments. As of September 30, 2021, we were not required to comply with such financial covenant as the aggregate amount of the aforementioned obligations did not exceed 30% of our revolving credit commitments. We do not believe non-compliance is reasonably likely in the foreseeable future.

Our Credit Agreement provides for incremental revolving and term loan facilities, and also permits other secured or unsecured debt, if, among other conditions, certain financial ratios are met, as defined and specified in the Credit Agreement.

BellRing Credit Agreement

Under the terms of the BellRing Credit Agreement, BellRing is required to comply with a financial covenant requiring BellRing to maintain a total net leverage ratio (as defined in the BellRing Credit Agreement) not to exceed 6.00 to 1.00,

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measured as of the last day of each fiscal quarter. The total net leverage ratio of BellRing did not exceed this threshold as of September 30, 2021. We do not believe non-compliance is reasonably likely in the foreseeable future.

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.

COMMODITY TRENDS AND SEASONALITY

Our Company is exposed to price fluctuations primarily from purchases of raw materials, including ingredients and packaging materials, energy and other inputs. Primary exposures include wheat, oats, rice, corn, other grain products, eggs, sows, pork, pasta, potatoes, cheese, milk, butter, vegetable oils, dairy- and vegetable-based proteins, sugar and other sweeteners, fruit, nuts, natural gas, propane, electricity, diesel fuel, carbon dioxide, folding cartons, corrugated boxes, flexible and rigid plastic film, trays and containers, beverage packaging, and aseptic foil and plastic lined cartonboard. These costs have been volatile in recent years and future changes in such costs may cause our results of operations and our operating margins to fluctuate significantly. We manage the impact of cost increases, wherever possible, on commercially reasonable terms, by locking in prices on the quantities required to meet our anticipated production requirements. In addition, we may offset the effect of increased costs by raising prices to our customers. However, for competitive reasons, we may not be able to pass along the full effect of increases in raw materials and other input costs as we incur them. Inflationary pressures also can have an adverse effect on us through higher raw material and energy costs. Inflation has accelerated during the year ended September 30, 2021, however we do not believe that inflation has had a material adverse impact on our operations for the years ended September 30, 2021, 2020 and 2019. If inflation continues to accelerate, it could have a material impact in the future if inflation rates were to significantly exceed our ability to achieve price increases.

Demand for certain of our products may be influenced by holidays, changes in seasons or other events, which may impact customer and consumer spending patterns and the timing of promotional activities. For example, demand for our egg products, potatoes, sausage, side dishes, butter and cheese tends to increase during the Thanksgiving, Christmas, Easter and other holiday seasons, which may result in increased net sales during the first and third quarters of our fiscal year. Demand for our Malt-O-Meal hot wheat, Better Oats oatmeal and Ready Brek hot oats cereals also tends to be seasonably skewed towards the colder winter season. Demand for various products in our BellRing Brands segment tends to be lower during our first fiscal quarter as a result of the holiday season. However, on a consolidated basis our revenues and results of operations generally are distributed relatively evenly over the quarters of our fiscal year.

CURRENCY

Certain sales and costs of our foreign operations were denominated in Pounds Sterling, Canadian Dollars, Euros, South African Rand, Kenyan Shillings, Chinese Yuan and United Arab Emirates Dirhams. Consequently, profits from these businesses can be impacted by fluctuations in the value of these currencies relative to the U.S. Dollar.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with GAAP requires the use of judgment, estimates and assumptions. We make these subjective determinations after considering our historical performance, management’s experience, current economic trends and events and information from outside sources. Inherent in this process is the possibility that actual results could differ from these estimates and assumptions for any particular period.

Our significant accounting policies are described in Note 2 within “Notes to Consolidated Financial Statements.” Our critical accounting estimates are those that have a meaningful impact on the reporting of our financial condition and results of operations.

Revenue Recognition - We recognize revenue when performance obligations have been satisfied by transferring control of our goods to customers. Control is generally transferred upon delivery of the goods to the customer. At the time of delivery, the customer is invoiced using previously agreed-upon credit terms. Shipping and/or handling costs that occur before the customer obtains control of the goods are deemed fulfillment activities and are accounted for as fulfillment costs. Our contracts with customers generally contain one performance obligation.

Many of our contracts with customers include some form of variable consideration. The most common forms of variable consideration are trade promotions, rebates and discounts. Variable consideration is treated as a reduction of revenue at the time product revenue is recognized. Depending on the nature of the variable consideration, we use either the “expected value” or the “most likely amount” method to determine variable consideration. We do not believe that there will be significant changes to our estimates of variable consideration when any uncertainties are resolved with customers. We review and update estimates of variable consideration quarterly. Uncertainties related to the estimates of variable consideration are resolved in a short time frame and do not require any additional constraint on variable consideration.

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Our products are sold with no right of return, except in the case of goods which do not meet product specifications or are damaged. No services beyond this assurance-type warranty are provided to customers. Customer remedies include either a cash refund or an exchange of the product. As a result, the right of return and related refund liability is estimated and recorded as a reduction of revenue based on historical sales return experience.

Business Combinations - We use the acquisition method of accounting for acquired businesses. Under the acquisition method, our financial statements reflect the operations of an acquired business starting from the completion of the acquisition. The assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of the 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. Significant judgment is often required in estimating the fair value of assets acquired, particularly intangible assets. As a result, in the case of significant acquisitions, we normally obtain the assistance of a third party valuation specialist in estimating fair values of tangible and intangible assets. The fair value estimates are based on available historical information and on expectations and assumptions about the future, considering the perspective of marketplace participants. While we believe those expectations and assumptions are reasonable, they are inherently uncertain. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions.

Long-Lived Assets - We review long-lived assets, including leasehold improvements, property and equipment, amortized intangible assets and ROU assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value less the cost to sell. Recoverability of assets held for sale is measured by a comparison of the carrying amount of an asset or asset group to its fair value less estimated costs to sell. Estimating future cash flows and calculating the fair value of assets requires significant estimates and assumptions by management.

At September 30, 2019, we recorded an impairment charge of $14.6 million for the All Whites trademark to adjust its carrying value to zero. The impairment charge for the All Whites trademark is the result of a strategic decision made by Refrigerated Retail management in the fourth quarter of fiscal 2019 to discontinue use of the brand name. All products previously sold under the All Whites brand name are now being marketed and sold under the Bob Evans Egg Whites brand name. No impairments of long-lived assets were recorded in the years ended September 30, 2021 or 2020.

Indefinite Lived Assets - Trademarks with indefinite lives are reviewed for impairment during the fourth quarter of each fiscal year following the annual forecasting process, or more frequently if facts and circumstances indicate the trademark may be impaired. In assessing other intangible assets not subject to amortization for impairment, we have the option to perform a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of such an intangible asset is less than its carrying amount. If we determine that it is not more likely than not that the fair value of such an intangible asset is less than its carrying amount, then we are not required to perform any additional tests for assessing intangible assets for impairment. However, if we conclude otherwise or elect not to perform the qualitative assessment, then we are required to perform a quantitative impairment test that involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

In fiscal 2021, 2020 and 2019, we elected not to perform a qualitative assessment and instead performed a quantitative impairment test. The estimated fair value is determined using an income-based approach (the relief-from-royalty method), which requires significant assumptions for each brand, including estimates regarding future revenue growth, discount rates and appropriate royalty rates. We estimated royalty rates based on consideration of several factors for each brand, including profit levels, research of external royalty rates by third party experts and the relative importance of each brand to the Company. Revenue growth assumptions are based on historical trends and management’s expectations for future growth by brand. The discount rates are based on a weighted-average cost of capital utilizing industry market data of similar companies.

For the year ended September 30, 2021, we conducted impairment reviews and concluded there was no impairment of indefinite-lived intangible assets. Estimated fair value of all indefinite-lived trademarks exceeded book value by 22% or greater at September 30, 2021. Changes in the assumptions used to estimate the fair value of our indefinite-lived intangible assets could result in additional impairment charges in future periods. Additionally, certain factors have the potential to create variances in the estimated fair values of our indefinite-lived intangible assets, which also could result in incremental impairment charges. These factors include (i) failure to achieve forecasted revenue growth rates as a result of impacts of the COVID-19 pandemic, among other impacts, (ii) increases in the discount rate or (iii) a significant change in profitability and the corresponding royalty rate.

For the year ended September 30, 2020, we conducted impairment reviews and concluded there was no impairment of indefinite-lived intangible assets. Estimated fair value of all indefinite-lived trademarks exceeded book value by 24% or greater at September 30, 2020.

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For the year ended September 30, 2019, we conducted impairment reviews and concluded there was no impairment of indefinite-lived intangible assets. Estimated fair value of all indefinite-lived trademarks exceeded book value by 31% or greater at September 30, 2019, with the exception of the Bob Evans trademark, which had a book value of $400.0 million, which exceeded book value by 13%.

Goodwill - Goodwill represents the excess of the purchase price of acquired businesses over the fair market value of their identifiable net assets. We conduct a goodwill impairment assessment during the fourth quarter of each fiscal year following the annual forecasting process, or more frequently if facts and circumstances indicate that goodwill may be impaired. The goodwill impairment assessment performed may be either qualitative or quantitative; however, if adverse qualitative trends are identified that could negatively impact the fair value of the business, a quantitative goodwill impairment test is performed. In fiscal 2021 and 2020, we elected not to perform a qualitative assessment and instead performed a quantitative impairment test for all reporting units, except for BellRing Brands. We performed a qualitative test for the BellRing Brands reporting unit, and determined there were no adverse trends that could negatively impact the fair value of the business. In fiscal 2019, we elected not to perform a qualitative assessment and instead performed a quantitative impairment test for all reporting units.

The quantitative goodwill impairment test requires an entity to compare the fair value of each reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount of goodwill exceeds the reporting unit’s fair value with the loss not exceeding the total amount of goodwill allocated to that reporting unit. The estimated fair values of each reporting unit were determined using a combined income and market approach with a greater weighting on the income approach (75% of the calculation for all reporting units). The income approach is based on discounted future cash flows and requires significant assumptions, including estimates regarding future revenue, profitability, capital requirements and discount rates. The market approach (25% of the calculation for all reporting units) is based on a market multiple (revenue and “EBITDA,” which stands for earnings before interest, income taxes, depreciation and amortization) and requires an estimate of appropriate multiples based on market data. Revenue growth assumptions (along with profitability and cash flow assumptions) were based on historical trends for the reporting units and management’s expectations for future growth. The discount rates were based on a risk adjusted weighted-average cost of capital utilizing industry market data of businesses similar to the reporting units and based upon management’s judgment. For the market approach, we used estimated EBITDA and revenue multiples based on industry market data.

We did not record a goodwill impairment charge at September 30, 2021, as all reporting units subjected to the quantitative test passed. At September 30, 2021, the estimated fair values of such reporting units exceeded their carrying values by at least 11% (the lowest of which was Foodservice; all others exceeded their carrying values by at least 15%). Variances between the actual performance of the businesses and the assumptions that were used in developing the estimates of fair value could result in impairment charges in future periods. Factors that could create variances in the estimated fair value of the reporting units include but are not limited to (i) fluctuations in forecasted sales volumes, which can be driven by external factors affecting demand such as changes in consumer preferences, including changes related to the COVID-19 pandemic, and consumer responses to marketing and pricing strategy, (ii) changes in product costs, including commodities, (iii) interest rate fluctuations and (iv) currency fluctuations.

We did not record a goodwill impairment charge at September 30, 2020, as all reporting units subjected to the quantitative test passed. At September 30, 2020, the estimated fair values of such reporting units exceeded their carrying values by at least 4% (the lowest of which was Foodservice; all others exceeded their carrying values by at least 13%).

For the year ended September 30, 2019, the Company recorded a charge of $48.7 million for the impairment of goodwill. The impairment charge related to the cheese reporting unit within the Refrigerated Retail segment and was primarily related to lost distribution with customers and a shift in supplier and consumer preferences to private label cheese products and away from branded cheese products. At September 30, 2019, the estimated fair values of all other reporting units exceeded their carrying values in all other cases by at least 11% (the lowest of which was Weetabix).

Pension and Other Postretirement Benefits - Pension assets and liabilities are determined on an actuarial basis and are affected by the estimated market-related value of plan assets, estimates of the expected return on plan assets, discount rates, future salary increases and other assumptions inherent in these valuations. We annually review the assumptions underlying the actuarial calculations and make changes to these assumptions, based on current market conditions and historical trends, as necessary. Differences between the actual returns on plan assets and the expected returns on plan assets and changes to projected future rates of return on plan assets will affect the amount of pension expense or income ultimately recognized. The other postretirement benefits liability (partially subsidized retiree health and life insurance) is also determined on an actuarial basis and is affected by assumptions including discount rates and expected trends in healthcare costs. Changes in the discount rates and differences between actual and expected healthcare costs will affect the recorded amount of other postretirement benefits expense. For both pensions and other postretirement benefit calculations, the assumed discount rates are determined by projecting the plans’ expected future benefit payments as defined for the projected benefit obligation or accumulated postretirement benefit obligation, discounting those expected payments using a theoretical zero-coupon spot yield curve derived from a universe of high-quality (rated AA or better by Moody’s Investor Service) corporate bonds as of the measurement date and solving for the single equivalent discount rate that results in the same present value. A 1% decrease in the assumed discount rates (from 3.05% to 2.05% for U.S. pension; from 2.89% to 1.89% for U.S. other postretirement benefits; from 3.32% to

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2.32% for Canadian pension; from 3.45% to 2.45% for Canadian other postretirement benefits and from 2.05% to 1.05% for other international pension) would have increased the recorded benefit obligations at September 30, 2021 by approximately $200 million for pensions and approximately $9 million for other postretirement benefits. The expected return on plan assets was determined based on historical and expected future returns of the various asset classes, using the target allocations of the plans. A 1% decrease in the assumed return on plan assets (from 5.40% to 4.40% for U.S.; from 5.25% to 4.25% for Canadian and from 2.38% to 1.38% for other international) would have increased the net periodic benefit cost for the pension plans by approximately $12 million. We expect to contribute $0.4 million to the combined pension plans in fiscal 2022. No contributions to our postretirement medical benefit plans are expected in fiscal 2022. Contributions beyond fiscal 2022 remain uncertain and will significantly depend on changes in actuarial assumptions, actual return on plan assets and any legislative or regulatory changes that may affect plan funding requirements. See Note 19 within “Notes to Consolidated Financial Statements” for more information about pension and other postretirement benefit assumptions.

Gain on Sale of Business - In order to calculate the total recorded gain related to the 8th Avenue Transactions of $126.6 million during the year ended September 30, 2019, we were required to estimate the fair value of our equity method investment in 8th Avenue. In making this estimate, we used an approach combining the estimated implied value from the 8th Avenue Transactions, an income approach and a market approach, in which the greatest value was placed on the implied value from the 8th Avenue Transactions. In order to calculate the fair value implied by the 8th Avenue Transactions, we estimated the value of the 8th Avenue equity. In making this estimate, we used a lattice model, which required significant assumptions, including estimates for the term, credit spread, yield volatility and risk free rates associated with 8th Avenue’s preferred stock. The income approach was based on discounted future cash flows and required significant assumptions, including estimates regarding future revenue, profitability and capital requirements. The market approach was based on a market multiple (revenue and EBITDA) and required an estimate of appropriate multiples based on the market data.

Income Tax - We estimate income tax expense based on taxes in each jurisdiction. We estimate current tax exposures together with temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These temporary differences result in deferred tax assets and liabilities. We believe that sufficient income will be generated in the future to realize the benefit of most of our deferred tax assets. Where there is not sufficient evidence that such income is likely to be generated, we establish a valuation allowance against the related deferred tax assets. We are subject to periodic audits by governmental tax authorities of our income tax returns. These audits generally include questions regarding our tax filing positions, including the amount and timing of deductions and the allocation of income among various tax jurisdictions. We evaluate our exposures associated with our tax filing positions, including state and local taxes, and record reserves for estimated exposures. See Note 9 within “Notes to Consolidated Financial Statements” for more information about estimates affecting income taxes.

RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

See Note 3 within “Notes to Consolidated Financial Statements” for a discussion regarding recently issued and adopted accounting standards.