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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________ 
FORM 10-Q
___________________________________________ 
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2023
or
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the transition period from                      to                     
Commission File No. 0-22818
___________________________________________ 
https://cdn.kscope.io/b6b231632d723e4ddea51458ea17f172-HainCelestial-Logo-FullColor-RGB.jpg
THE HAIN CELESTIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
___________________________________________ 
Delaware22-3240619
(State or other jurisdiction
of incorporation)
(I.R.S. Employer Identification No.)

221 River Street, Hoboken, NJ 07030
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (516587-5000
4600 Sleepytime Drive, Boulder, CO 80301
(Former name, former address and former fiscal year, if changed since last report)
___________________________________________ 


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Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per shareHAINThe Nasdaq Stock Market LLC

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ý    No  ¨

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

Large accelerated filerAccelerated filer¨
Non-accelerated filer¨Smaller reporting companyEmerging growth company

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

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

As of October 31, 2023, there were 89,709,018 shares outstanding of the registrant’s Common Stock, par value $.01 per share.


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THE HAIN CELESTIAL GROUP, INC.
Index
  
Part I - Financial InformationPage
Item 1.
Item 2.
Item 3.
Item 4.
Part II - Other Information
Items 3, and 4 are not applicable
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.

 
1

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Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (the “Form 10-Q”) contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of The Hain Celestial Group, Inc. (collectively with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”) may differ materially from those expressed or implied by such forward-looking statements. The words “believe,” “expect,” “anticipate,” “may,” “should,” “plan,” “intend,” “potential,” “will” and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include, among other things: our beliefs or expectations relating to our future performance, results of operations and financial condition; our strategic initiatives (including statements related to Hain Reimagined and our related investments in our business); our business strategy; our supply chain, including the availability and pricing of raw materials; our brand portfolio; pricing actions and product performance; inflation rates; and current or future macroeconomic trends.

Risks and uncertainties that may cause actual results to differ materially from forward-looking statements include: challenges and uncertainty resulting from the impact of competition; our ability to manage our supply chain effectively; input cost inflation, including with respect to freight and other distribution costs; disruption of operations at our manufacturing facilities; reliance on independent contract manufacturers; changes to consumer preferences; customer concentration; reliance on independent distributors; risks associated with operating internationally; pending and future litigation, including litigation relating to Earth’s Best® baby food products; the reputation of our Company and our brands; compliance with our credit agreement; foreign currency exchange risk; the availability of organic ingredients; risks associated with outsourcing arrangements; our ability to execute our cost reduction initiatives and related strategic initiatives; risks associated with conflicts in Eastern Europe and the Middle East and other geopolitical events; our ability to identify and complete acquisitions or divestitures and our level of success in integrating acquisitions; our reliance on independent certification for a number of our products; our ability to use and protect trademarks; general economic conditions; cybersecurity incidents; disruptions to information technology systems; changing rules, public disclosure regulations and stakeholder expectations on ESG-related matters; the impact of climate change; liabilities, claims or regulatory change with respect to environmental matters; potential liability if our products cause illness or physical harm; the highly regulated environment in which we operate; compliance with data privacy laws; our ability to issue preferred stock; the adequacy of our insurance coverage; impairments in the carrying value of goodwill or other intangible assets; and other risks and matters described in our most recent Annual Report on Form 10-K, this Form 10-Q and other reports that we file in the future.

We undertake no obligation to update forward-looking statements to reflect actual results or changes in assumptions or circumstances, except as required by applicable law.



2

Table of Contents
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 2023 AND JUNE 30, 2023
(In thousands, except par values)
September 30,June 30,
20232023
ASSETS
Current assets:
Cash and cash equivalents$38,280 $53,364 
Accounts receivable, less allowance for doubtful accounts of $3,018 and $2,750, respectively
158,094 160,948 
Inventories313,335 310,341 
Prepaid expenses and other current assets56,044 66,378 
Total current assets565,753 591,031 
Property, plant and equipment, net285,972 296,325 
Goodwill928,375 938,640 
Trademarks and other intangible assets, net290,867 298,105 
Investments and joint ventures12,298 12,798 
Operating lease right-of-use assets, net102,540 95,894 
Other assets31,091 25,846 
Total assets$2,216,896 $2,258,639 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$142,291 $134,780 
Accrued expenses and other current liabilities96,731 88,520 
Current portion of long-term debt7,568 7,567 
Total current liabilities246,590 230,867 
Long-term debt, less current portion807,401 821,181 
Deferred income taxes61,006 72,086 
Operating lease liabilities, noncurrent portion97,165 90,014 
Other noncurrent liabilities23,740 26,584 
Total liabilities1,235,902 1,240,732 
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock - $.01 par value, authorized 5,000 shares; issued and outstanding: none
  
Common stock - $.01 par value, authorized 150,000 shares; issued: 111,578 and 111,339 shares, respectively; outstanding: 89,628 and 89,475 shares, respectively
1,116 1,113 
Additional paid-in capital1,221,291 1,217,549 
Retained earnings642,185 652,561 
Accumulated other comprehensive loss(155,623)(126,216)
1,708,969 1,745,007 
Less: Treasury stock, at cost, 21,950 and 21,864 shares, respectively
(727,975)(727,100)
Total stockholders’ equity980,994 1,017,907 
Total liabilities and stockholders’ equity$2,216,896 $2,258,639 
See notes to consolidated financial statements.
3

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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(In thousands, except per share amounts) 
 Three Months Ended September 30,
 20232022
Net sales$425,029 $439,351 
Cost of sales341,086 345,016 
Gross profit83,943 94,335 
Selling, general and administrative expenses77,169 74,951 
Productivity and transformation costs
6,403 773 
Amortization of acquired intangible assets1,955 2,788 
Long-lived asset impairment694  
Operating (loss) income(2,278)15,823 
Interest and other financing expense, net13,244 7,677 
Other income, net(265)(1,790)
(Loss) income from operations before income taxes and equity in net loss of equity-method investees(15,257)9,936 
(Benefit) provision for income taxes(5,379)2,631 
Equity in net loss of equity-method investees498 382 
Net (loss) income$(10,376)$6,923 
Net (loss) income per common share:
Basic$(0.12)$0.08 
Diluted$(0.12)$0.08 
Shares used in the calculation of net (loss) income per common share:
Basic89,512 89,307 
Diluted89,512 89,493 

See notes to consolidated financial statements.
4

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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(In thousands)
 Three Months Ended
September 30, 2023September 30, 2022
 Pretax
amount
Tax (expense) benefitAfter tax amountPretax
amount
Tax (expense) benefitAfter tax amount
Net (loss) income$(10,376)$6,923 
Other comprehensive loss:
Foreign currency translation adjustments before reclassifications(32,933) (32,933)(67,149) (67,149)
Change in deferred gains on cash flow hedging instruments
3,238 (794)2,444 14,231 (3,638)10,593 
Change in deferred losses on fair value hedging instruments
(381)94 (287)(272)69 (203)
Change in deferred gains on net investment hedging instruments
1,821 (452)1,369 5,773 (1,476)4,297 
Total other comprehensive loss
$(28,255)$(1,152)$(29,407)$(47,417)$(5,045)$(52,462)
Total comprehensive loss$(39,783)$(45,539)
See notes to consolidated financial statements.
5

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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023
(In thousands, except par values)
 Common StockAdditional   
Accumulated
Other
 
  AmountPaid-inRetainedTreasury StockComprehensive 
 Shares
at $.01
CapitalEarningsSharesAmountLoss Total
Balance at June 30, 2023111,339 $1,113 $1,217,549 $652,561 21,864 $(727,100)$(126,216)$1,017,907 
Net loss(10,376)(10,376)
Other comprehensive loss(29,407)(29,407)
Issuance of common stock pursuant to stock-based compensation plans
239 3 3 
Employee shares withheld for taxes
86 (875)(875)
Stock-based compensation expense3,742 3,742 
Balance at September 30, 2023111,578 $1,116 $1,221,291 $642,185 21,950 $(727,975)$(155,623)$980,994 

See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022
(In thousands, except par values)
 Common StockAdditional   
Accumulated
Other
 
  AmountPaid-inRetainedTreasury StockComprehensive 
 Shares
at $.01
CapitalEarningsSharesAmountLossTotal
Balance at June 30, 2022111,090 $1,111 $1,203,126 $769,098 21,788 $(725,685)$(164,482)$1,083,168 
Net income6,923 6,923 
Other comprehensive loss(52,462)(52,462)
Issuance of common stock pursuant to stock-based compensation plans
24 1 1 
Employee shares withheld for taxes
10 (229)(229)
Stock-based compensation expense3,994 3,994 
Balance at September 30, 2022111,114 $1,112 $1,207,120 $776,021 21,798 $(725,914)$(216,944)$1,041,395 

See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(In thousands)
 Three Months Ended September 30,
 20232022
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income$(10,376)$6,923 
Adjustments to reconcile net (loss) income from operations to net cash provided by (used in) operating activities:
Depreciation and amortization12,305 11,970 
Deferred income taxes(11,269)(1,497)
Equity in net loss of equity-method investees498 382 
Stock-based compensation, net3,742 3,994 
Long-lived asset impairment694  
Loss (gain) on sale of assets62 (60)
Other non-cash items, net(556)(1,457)
(Decrease) increase in cash attributable to changes in operating assets and liabilities:
Accounts receivable(1,150)(9,589)
Inventories(7,423)(16,907)
Other current assets8,761 2,541 
Other assets and liabilities(3,198)1,348 
Accounts payable and accrued expenses21,940 (2,764)
Net cash provided by (used in) operating activities14,030 (5,116)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment(6,906)(7,215)
Investments and joint ventures, net 191 
Proceeds from sale of assets1,257 96 
Net cash used in investing activities
(5,649)(6,928)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under bank revolving credit facility46,000 80,000 
Repayments under bank revolving credit facility(57,000)(68,000)
Repayments under term loan(1,875)(1,875)
Payments of other debt, net(3,834)(72)
Employee shares withheld for taxes
(875)(229)
Net cash (used in) provided by financing activities
(17,584)9,824 
Effect of exchange rate changes on cash(5,881)(11,498)
Net decrease in cash and cash equivalents(15,084)(13,718)
Cash and cash equivalents at beginning of period53,364 65,512 
Cash and cash equivalents at end of period$38,280 $51,794 

See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in thousands, except par values and per share data)

1.    BUSINESS

The Hain Celestial Group, Inc., a Delaware corporation (collectively with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”), was founded in 1993 and is headquartered in Hoboken, New Jersey. The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet. The Company continues to be a leading marketer, manufacturer, and seller of organic and natural, “better-for-you” products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience. The Company is committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes. Hain Celestial sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, drug, and convenience stores worldwide. The Company operates under two reportable segments: North America and International.

2.    BASIS OF PRESENTATION

The Company’s unaudited consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Investments in affiliated companies in which the Company exerts significant influence, but which it does not control, are accounted for under the equity method of accounting. As such, consolidated net loss includes the Company's equity in the current earnings or losses of such companies.

The Company's unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP and should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (the “Form 10-K”). The amounts as of and for the periods ended June 30, 2023 are derived from the Company’s audited annual financial statements. The unaudited consolidated financial statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair presentation for interim periods. Operating results for the three months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024. Please refer to the Notes to the Consolidated Financial Statements as of June 30, 2023 and for the fiscal year then ended included in the Form 10-K for information not included in these condensed notes.

All amounts in the unaudited consolidated financial statements, notes and tables have been rounded to the nearest thousands, except par values and per share amounts, unless otherwise indicated.

Significant Accounting Policies

The Company's significant accounting policies are described in Note 2, Summary of Significant Accounting Policies and Practices, in the Notes to the Consolidated Financial Statements in the Form 10-K. Included herein are certain updates to those policies.

Transfer of Financial Assets

The Company accounts for transfers of financial assets, such as non-recourse accounts receivable financing arrangements, when the Company has surrendered control over the related assets. Determining whether control has transferred requires an evaluation of relevant legal considerations, an assessment of the nature and extent of the Company’s continuing involvement with the assets transferred and any other relevant considerations. The Company has non-recourse financing arrangements in which eligible receivables are sold to third-party buyers in exchange for cash. The Company transferred accounts receivable in their entirety to the buyers and satisfied all of the conditions to report the transfer of financial assets in their entirety as a sale. The principal amount of receivables sold under these arrangements was $86,506 and $83,659 during the three months ended September 30, 2023 and 2022, respectively. The incremental cost of financing receivables under these arrangements is included in selling, general and administrative expenses on the Company’s Consolidated Statements of Operations. The proceeds from the sale of receivables are included in cash provided by operating activities on the Consolidated Statements of Cash Flows.


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Recently Adopted Accounting Pronouncements

In July 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-03, “Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)”, to amend various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The Company adopted this conforming guidance upon issuance, which had no material impact on its condensed consolidated financial statements and related disclosures.

3.    (LOSS) EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net (loss) income per share on the Consolidated Statements of Operations:
 Three Months Ended September 30,
 20232022
Numerator:
Net (loss) income$(10,376)$6,923 
Denominator:
Basic weighted average shares outstanding
89,512 89,307 
Effect of dilutive stock options, unvested restricted stock and unvested restricted share units
 186 
Diluted weighted average shares outstanding
89,512 89,493 
Basic net (loss) income per common share$(0.12)$0.08 
Diluted net (loss) income per common share$(0.12)$0.08 

Due to the incurred net loss in the three months ended September 30, 2023, all common stock equivalents such as stock options and unvested restricted stock awards have been excluded from the computation of diluted net loss per share because the effect would have been anti-dilutive to the computations.

There were 489 restricted stock awards excluded from the calculation of diluted net income per share for the three months ended September 30, 2022, as such awards were anti-dilutive. Additionally, for the three months ended September 30, 2023 and 2022 there were 372 and 298, stock-based awards outstanding, that were contingently issuable based on market conditions, and such conditions had not been achieved during the respective periods.

4.    INVENTORIES

Inventories consisted of the following:
September 30,
2023
June 30,
2023
Finished goods$199,043 $192,007 
Raw materials, work-in-progress, and packaging114,292 118,334 
$313,335 $310,341 
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5.    PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:
September 30,
2023
June 30,
2023
Land$11,202 $11,453 
Buildings and improvements53,926 55,354 
Machinery and equipment327,790 335,912 
Computer hardware and software53,658 54,192 
Furniture and fixtures20,301 20,722 
Leasehold improvements48,834 49,394 
Construction in progress13,889 10,816 
529,600 537,843 
Less: Accumulated depreciation and impairment243,628 241,518 
$285,972 $296,325 

Depreciation expense for the three months ended September 30, 2023 and 2022 was $9,826 and $8,067, respectively.

During the three months ended September 30, 2023, the Company completed the sale of a facility in the United States for total cash proceeds of $1,182, net of brokerage and other fees, resulting in a loss in the amount of $68, which is included as a component of other income, net on the Consolidated Statement of Operations. The facility was held for sale as of June 30, 2023 with a net carrying amount of $1,250.

6.    LEASES
The Company leases office space, warehouse and distribution facilities, manufacturing equipment and vehicles primarily in North America and Europe. The Company determines if an arrangement is or contains a lease at inception. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company’s lease agreements generally do not contain residual value guarantees or material restrictive covenants.
Some of the Company’s leases contain variable lease payments, which are expensed as incurred unless those payments are based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement and included in the measurement of the lease liability; thereafter, changes to lease payments due to rate or index changes are recorded as variable lease expense in the period incurred. The Company does not have any related party leases, and sublease transactions are de minimis.
The components of lease expenses for the three months ended September 30, 2023 and 2022 were as follows:
Three Months Ended
September 30, 2023September 30, 2022
Operating lease expenses$4,578 $4,975 
Finance lease expenses37 69 
Variable lease expenses182 180 
Short-term lease expenses395 496 
Total lease expenses$5,192 $5,720 
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Supplemental balance sheet information related to leases was as follows:
LeasesClassification September 30, 2023June 30, 2023
Assets
Operating lease ROU assets, netOperating lease right-of-use assets, net$102,540 $95,894 
Finance lease ROU assets, netProperty, plant and equipment, net268289 
Total leased assets$102,808 $96,183 
Liabilities
Current
OperatingAccrued expenses and other current liabilities$10,152 $10,489 
FinanceCurrent portion of long-term debt84 83 
Non-current
Operating Operating lease liabilities, noncurrent portion97,165 90,014 
FinanceLong-term debt, less current portion200 222 
Total lease liabilities $107,601 $100,808 

Additional information related to leases is as follows:
Three Months Ended
September 30, 2023September 30, 2022
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$4,215 $3,968 
Operating cash flows from finance leases$3 $4 
Financing cash flows from finance leases$19 $52 
ROU assets obtained in exchange for lease obligations:
Operating leases$10,986 $7,143 
Finance leases$ $26 
Weighted average remaining lease term:
Operating leases10.3 years10.2 years
Finance leases3.6 years4.1 years
Weighted average discount rate:
Operating leases5.1 %4.5 %
Finance leases4.5 %4.3 %

Maturities of lease liabilities as of September 30, 2023 were as follows:
Fiscal YearOperating leasesFinance leasesTotal
2024 (remainder of year)$11,808 $71 $11,879 
202514,261 93 14,354 
202613,605 68 13,673 
202713,307 53 13,360 
202813,390 25 13,415 
Thereafter74,979  74,979 
Total lease payments141,350 310 141,660 
Less: Imputed interest34,033 26 34,059 
Total lease liabilities$107,317 $284 $107,601 

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7.    GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The following table provides the changes in the carrying value of goodwill by reportable segment:
North AmericaInternationalTotal
Balance as of June 30, 2023$697,053 $241,587 $938,640 
  Translation(1,001)(9,264)(10,265)
Balance as of September 30, 2023
$696,052 $232,323 $928,375 
There were no events or circumstances that warranted an interim impairment test for goodwill during the three months ended September 30, 2023 or 2022.

Other Intangible Assets

The following table includes the gross carrying amount and accumulated amortization, where applicable, for intangible assets, excluding goodwill:
September 30,
2023
June 30,
2023
Non-amortized intangible assets:
Trademarks and tradenames(1)
$246,529 $250,860 
Amortized intangible assets:
Other intangibles(2)
157,764 161,874 
Less: Accumulated amortization(113,426)(114,629)
Net amortized intangible assets44,338 47,245 
Net other intangible assets$290,867 $298,105 

(1) The gross carrying value of trademarks and tradenames is reflected net of $223,981 of accumulated impairment charges as of September 30, 2023 and June 30, 2023.
(2) The reduction in carrying value of other intangible assets as of June 30, 2023 reflected a non-cash impairment charge of $45,798 recognized in the fiscal year ended June 30, 2023.

There were no events or circumstances that warranted an interim impairment test for indefinite-lived intangible assets during the three months ended September 30, 2023 or 2022.

Amortized intangible assets, which are deemed to have a finite life, primarily consist of customer relationships, trademarks and tradenames and are amortized over their estimated useful lives of 7 to 25 years. Amortization expense included in the Consolidated Statements of Operations was as follows:
Three Months Ended September 30,
 20232022
Amortization of acquired intangibles$1,955 $2,788 

Expected amortization expense over the next five fiscal years is as follows:

Fiscal Year Ending June 30,
2024 (remainder of year)2025202620272028
Estimated amortization expense$4,454 $5,505 $5,082 $5,010 $3,870 

The weighted average remaining amortization period of amortized intangible assets is 10.9 years.

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8.    DEBT AND BORROWINGS

Debt and borrowings consisted of the following:
September 30,
2023
June 30,
2023
Revolving credit facility$530,000 $541,000 
Term loans286,875 288,750 
Less: Unamortized issuance costs(2,190)(1,307)
Other borrowings(1)
284 305 
814,969 828,748 
Short-term borrowings and current portion of long-term debt(2)
7,568 7,567 
Long-term debt, less current portion$807,401 $821,181 

(1) Includes $284 (June 30, 2023: $305) of finance lease obligations as discussed in Note 6, Leases.
(2) Includes $84 (June 30, 2023: $83) of short-term finance lease obligations as discussed in Note 6, Leases.

Amended and Restated Credit Agreement

On August 22, 2023, the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement (as amended by a First Amendment dated December 16, 2022, the “Credit Agreement”). The Credit Agreement provides for senior secured financing of $1,100 million in the aggregate, consisting of (1) $300 million in aggregate principal amount of term loans (the “Term Loans”) and (2) an $800 million senior secured revolving credit facility (which includes borrowing capacity available for letters of credit, and is comprised of a $440 million U.S. revolving credit facility and $360 million global revolving credit facility) (the “Revolver”). Both the Revolver and the Term Loans mature on December 22, 2026.

During the Second Amendment Period, loans under the Credit Agreement will bear interest at (a) Term SOFR plus 2.5% per annum or (b) the Base Rate plus 1.5% per annum. Following the Second Amendment Period, Loans will bear interest at rates based on (a) Term SOFR plus a rate ranging from 1.125% to 2.0% per annum or (b) the Base Rate plus a rate ranging from 0.125% to 1.0% per annum, the relevant rate in each case being the Applicable Rate. The Applicable Rate following the Second Amendment Period will be determined in accordance with a leverage-based pricing grid, as set forth in the Credit Agreement as amended by the Second Amendment. Excluding hedge impact, the weighted average interest rate on outstanding borrowings under the Credit Agreement at September 30, 2023 was 7.86%. Additionally, the Credit Agreement contains a Commitment Fee (as defined in the Credit Agreement) on the amount unused under the Credit Agreement ranging from 0.15% to 0.25% per annum, and such Commitment Fee is determined in accordance with a leverage-based pricing grid.

The Credit Agreement includes financial covenants that require compliance with a consolidated interest coverage ratio, a consolidated leverage ratio and a consolidated secured leverage ratio. Pursuant to the Second Amendment, the Company’s maximum consolidated secured leverage ratio was amended to be 5.00:1.00 until September 30, 2023, 5.25:1.00 until December 31, 2023 and 5.00:1.00 until December 31, 2024 (the period of time during which such maximum consolidated secured leverage ratios are in effect, the “Second Amendment Period,” which the Company may elect to end early). Following the Second Amendment Period, the maximum consolidated secured leverage ratio will be 4.25:1.00, subject to possible temporary increase following certain corporate acquisitions. Pursuant to the Second Amendment, the Company’s minimum interest coverage ratio was amended to be 2.50:1.00.

As of September 30, 2023, there were $530,000 of loans under the Revolver, $286,875 of Term Loans, and $4,468 of letters of credit outstanding under the Credit Agreement. As of September 30, 2023, $265,532 was available under the Credit Agreement, subject to compliance with the financial covenants. As of September 30, 2023, the Company was in compliance with all associated covenants.

Credit Agreement Issuance Costs

In connection with the First Amendment to its Credit Agreement during the second quarter of fiscal year 2023, the Company incurred debt issuance costs of approximately $1,987, of which $1,916 was deferred. Of the total deferred costs, $1,396 were associated with the Revolver and are being amortized on a straight-line basis within Other assets on the Consolidated Balance Sheets, and $520 are being amortized on a straight-line basis, which approximates the effective interest method, as an adjustment to the carrying amount of the Term Loans as a component of Interest and other financing expense, net over the term of the Credit Agreement.

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In connection with the Second Amendment to its Credit Agreement, the Company incurred debt issuance costs of approximately $3,854, of which $3,813 was deferred. Of the total deferred costs, $2,802 were associated with the Revolver and are being amortized on a straight-line basis within Other assets on the Consolidated Balance Sheets, and $1,011 are being recorded as an adjustment to the carrying amount of the Term Loans as a component of Interest and other financing expense, net over the term of the Credit Agreement utilizing the effective interest rate method.

Interest paid during the three months ended September 30, 2023 and September 30, 2022 was $11,432 and $6,688, respectively.

9.    INCOME TAXES

In general, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability on the effective tax rates from quarter to quarter. The Company’s effective tax rate may change from period-to-period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes and tax audit settlements.

The effective income tax rate was a benefit of 35.3% and an expense of 26.5% for the three months ended September 30, 2023 and 2022, respectively. The effective income tax rate for the three months ended September 30, 2023 increased due to tax expense related to stock-based compensation, global intangible low-taxed income (“GILTI”), and limitations on the deductibility of executive compensation. The effective income tax rates in each period were also impacted by the geographical mix of earnings and state income taxes.

10.     ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in accumulated other comprehensive loss (“AOCL”):

Foreign Currency Translation Adjustment, NetDeferred Gains on Cash Flow Hedging Instruments, NetDeferred Gains on Fair Value Hedging Instruments, NetDeferred Gains on Net Investment Hedging Instruments, NetTotal
Balance at June 30, 2022$(168,225)$519 $500 $2,724 $(164,482)
Other comprehensive (loss) income before reclassifications (67,149)11,360 1,145 4,666 (49,978)
Amounts reclassified into income (767)(1,348)(369)(2,484)
Net change in accumulated other comprehensive (loss) income for the three months ended September 30, 2022(1)
(67,149)10,593 (203)4,297 (52,462)
Balance at September 30, 2022$(235,374)$11,112 $297 $7,021 $(216,944)
Balance at June 30, 2023$(138,028)$10,898 $685 $229 $(126,216)
Other comprehensive (loss) income before reclassifications(32,933)4,159 430 1,741 (26,603)
Amounts reclassified into income (1,715)(717)(372)(2,804)
Net change in accumulated other comprehensive (loss) income for the three months ended September 30, 2023(1)
(32,933)2,444 (287)1,369 (29,407)
Balance at September 30, 2023$(170,961)$13,342 $398 $1,598 $(155,623)

(1)See Note 14, Derivatives and Hedging Activities, for the amounts reclassified into income for deferred gains on hedging instruments recorded in the Consolidated Statements of Operations during the three months ended September 30, 2023 and 2022.
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11.    STOCK-BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS

Under the Company's Amended and Restated 2002 Long-Term Incentive and Stock Award Plan (the “2002 Plan”), the Company historically granted equity-based awards to its officers, senior management, other key employees, consultants, and directors. The Company currently utilizes a stockholder-approved plan, The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan (the “2022 Plan”) which was approved at the Company’s 2022 Annual Meeting of Stockholders held on November 17, 2022. The 2022 Plan permits the Company to continue making equity-based and other incentive awards in a manner intended to properly incentivize its employees, directors, consultants and other service providers by aligning their interests with the interests of the Company’s stockholders. The Company also historically granted shares under its 2019 Equity Inducement Award Program (the “2019 Inducement Program”) to induce selected individuals to become employees of the Company. The 2002 Plan, the 2022 Plan and the 2019 Inducement Program are collectively referred to as the “Stock Award Plans.” In conjunction with the Stock Award Plans, the Company maintains a long-term incentive program (the “LTI Program” or “LTIP”) that provides for equity awards, including performance and market-based equity awards that can be earned over defined performance periods. The Company's LTIP plans, with the exception of the 2023 - 2025 LTIP described below, are described in Note 13, Stock-Based Compensation and Incentive Performance Plans, in the Notes to the Consolidated Financial Statements in the Form 10-K.

Compensation cost and related income tax benefits recognized in the Consolidated Statements of Operations for stock-based compensation plans were as follows:
  Three Months Ended September 30,
 20232022
Selling, general and administrative expense
$3,742 $3,994 
Related income tax benefit$456 $402 

Restricted Stock

Awards of restricted stock are either restricted stock awards (“RSAs”) or restricted stock units (“RSUs”) that are issued at no cost to the recipient. Performance-based or market-based RSUs are issued in the form of performance share units (“PSUs”). A summary of the restricted stock activity (including all RSAs, RSUs and PSUs) for the three months ended September 30, 2023 is as follows:
Number of Shares
and Units
Weighted
Average Grant
Date Fair 
Value (per share)
Non-vested RSAs, RSUs and PSUs outstanding at June 30, 20231,288 $26.37 
Granted $ 
Vested(239)$23.08 
Forfeited(23)$29.74 
Non-vested RSAs, RSUs and PSUs outstanding at September 30, 20231,026 $26.17 

Vested shares during the three months ended September 30, 2023 include a total of 15 shares related to certain performance-based metrics being met and a total of 224 shares related to service-based RSUs. There were 86 shares surrendered for payment of employee payroll taxes due on shares issued under stock-based compensation plans at an average price of $10.17 per share. There are market-based PSU awards outstanding under both the 2023 – 2025 LTIP and the 2022 – 2024 LTIP. At September 30, 2023, 311 of such shares were outstanding under the 2023 – 2025 LTIP while 61 shares were outstanding under the 2022 – 2024 LTIP. The fair value of RSAs, RSUs and PSUs granted and of shares vested, and the tax benefit recognized from restricted shares vesting was as follows:
Three Months Ended September 30,
20232022
Fair value of RSAs, RSUs and PSUs granted$ $19,839 
Fair value of shares vested$2,422 $576 
Tax benefit recognized from restricted shares vesting$281 $78 

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At September 30, 2023, there was $13,677 of unrecognized stock-based compensation expense related to non-vested restricted stock awards which is expected to be recognized over a weighted average period of 1.66 years.

2023-2025 LTIP

At September 30, 2023, there are 311 such shares outstanding under the LTI Program. Such PSU awards will vest, if at all, pursuant to a defined calculation of either relative TSR or absolute TSR (as defined) over the period from September 6, 2022 through the earlier of (i) September 6, 2025; (ii) the date the participant’s employment is terminated due to death or Disability (as defined); or (iii) the effective date of a Change in Control (as defined) (the “2023 TSR Performance Period”). Vesting of 208 target shares of the outstanding PSU awards is pursuant to a defined calculation of relative TSR over the 2023 TSR Performance Period (the “2023 Relative TSR PSUs”). Vesting of 103 target shares of the outstanding PSU awards is pursuant to the achievement of pre-established three-year compound annual TSR targets over the 2023 TSR Performance Period (the “2023 Absolute TSR PSUs”). Total shares eligible to vest for both the 2023 Relative TSR PSUs and 2023 Absolute TSR PSUs range from zero to 200% of the target amount. Grant date fair values are calculated using a Monte Carlo simulation model with grant date fair values per target share and related valuation assumptions as follows for grants prior to January 1, 2023:

Absolute TSR PSUsRelative TSR PSUs
Grant date fair value (per target share)$20.18 $27.47 
Risk-free interest rate3.54 %3.54 %
Expected dividend yield
Expected volatility40.30 %26.60 %
Expected term3.00 years3.00 years

Grant date fair values are calculated using a Monte Carlo simulation model with grant date fair values per target share and related valuation assumptions as follows for grants on or subsequent to January 1, 2023:

Absolute TSR PSUsRelative TSR PSUs
Grant date fair value (per target share)$13.84 $19.54 
Risk-free interest rate4.28 %4.28 %
Expected dividend yield
Expected volatility40.70 %28.20 %
Expected term3.00 years3.00 years

12.    INVESTMENTS

On October 27, 2015, the Company acquired a minority equity interest in Chop’t Creative Salad Company LLC, predecessor to Founders Table Restaurant Group, LLC (“Founders Table”). Founders Table owns and operates the fast-casual restaurant chains Chop't Creative Salad Co. and Dos Toros Taqueria. The investment is being accounted for as an equity method investment due to the Company’s representation on the Board of Directors of Founders Table. At September 30, 2023 and June 30, 2023, the carrying value of the Company’s investment in Founders Table was $7,654 and $8,032, respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.

The Company also holds an investment in Hutchison Hain Organic Holdings Limited, a joint venture with HUTCHMED (China) Limited, accounted for under the equity method of accounting. The carrying value of its investment was $4,644 and $4,766 as of September 30, 2023 and June 30, 2023, respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.


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13.    FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE

The Company’s financial assets and liabilities measured at fair value are required to be grouped in one of three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following table presents assets and liabilities measured at fair value on a recurring basis as of September 30, 2023: 
Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets:
Derivative financial instruments$20,236 $ $20,236 $ 
Liabilities:
Derivative financial instruments$901  $901  
The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2023:
Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets:
Derivative financial instruments$16,988 $ $16,988 $ 
Liabilities:
Derivative financial instruments$3,160 $ $3,160 $ 

There were no transfers of financial instruments between the three levels of fair value hierarchy during the three months ended September 30, 2023 or 2022.

Derivative Instruments

The Company uses interest rate swaps to manage its interest rate risk and cross-currency swaps and foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency exchange rates. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The Company incorporates credit valuation adjustments to appropriately reflect both the Company’s nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of the Company’s derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

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Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the derivatives held as of September 30, 2023 and June 30, 2023 were classified as Level 2 of the fair value hierarchy.

Nonrecurring Fair Value Measurements

The Company measures certain non-financial assets at fair value on a nonrecurring basis including goodwill, intangible assets, property and equipment and right-of-use lease assets. These assets were initially measured and recognized at amounts equal to the fair value determined as of the date of acquisition or purchase subject to changes in value only for foreign currency translation. Periodically, these assets are tested for impairment by comparing their respective carrying values to the estimated fair value of the reporting unit or asset group in which they reside. In the event any of these assets were to become impaired, the Company would recognize an impairment expense equal to the amount by which the carrying value of the reporting unit, impaired asset or asset group exceeds its estimated fair value. For indefinite-lived intangible assets, the relief from royalty approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates in the category of intellectual property, discount rates and other variables. Fair value measurements of reporting units are estimated using an income approach involving discounted cash flow models that contain certain Level 3 inputs requiring significant management judgment, including projections of economic conditions, customer demand and changes in competition, revenue growth rates, gross profit margins, operating margins, capital expenditures, working capital requirements, terminal growth rates and discount rates. Fair value measurements of the reporting units associated with the Company's goodwill balances and its indefinite-lived intangible assets are estimated at least annually in the fourth quarter of each fiscal year for purposes of impairment testing if a quantitative analysis is performed. The Company bases its fair value estimates on assumptions its management believes to be reasonable, but which are unpredictable and inherently uncertain.

14.    DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposures to a wide variety of business and operational risks. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s receivables and borrowings.

Certain of the Company’s foreign operations expose the Company to fluctuations of foreign exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency. The Company enters into derivative financial instruments to protect the value or fix the amount of certain assets and liabilities in terms of its functional currency, the U.S. Dollar.Accordingly, the Company uses derivative financial instruments to manage and mitigate such risks. The Company does not use derivatives for speculative or trading purposes.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During the three months ended September 30, 2023 and 2022, such derivatives were used to hedge the variable cash flows associated with existing variable rate debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCL and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in AOCL related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt. During the remaining nine months of fiscal 2024, the Company estimates that an additional $6,967 will be reclassified as a decrease to interest expense.
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As of September 30, 2023, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate DerivativeNumber of InstrumentsNotional Amount
Interest rate swap4$400,000

Cash Flow Hedges of Foreign Exchange Risk

The Company is exposed to fluctuations in various foreign currencies against its functional currency, the U.S. Dollar. The Company uses foreign currency derivatives including cross-currency swaps to manage its exposure to fluctuations in the USD-EUR exchange rates. Cross-currency swaps involve exchanging fixed-rate interest payments for fixed-rate interest receipts, both of which will occur at the USD-EUR forward exchange rates in effect upon entering into the instrument. The Company, at times, also uses forward contracts to manage its exposure to fluctuations in the GBP-EUR exchange rates. The Company designates these derivatives as cash flow hedges of foreign exchange risk.

For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in AOCL and subsequently reclassified in the period(s) during which the hedged transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. During the remaining nine months of fiscal 2024, the Company estimates that no amount relating to the cross-currency swaps will be reclassified to interest expense. As of September 30, 2023, the Company had the following outstanding foreign currency derivatives that were used to hedge its foreign exchange risk.

Foreign Currency DerivativeNumber of InstrumentsNotional SoldNotional Purchased
Foreign currency forward contract4£3,4674,000

Net Investment Hedges

The Company is exposed to fluctuations in foreign exchange rates on investments it holds in its European foreign entities and their exposure to the Euro. The Company uses fixed-to-fixed cross-currency swaps to hedge its exposure to changes in the foreign exchange rate on its foreign investment in Europe. Currency forward agreements involve fixing the USD-EUR exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in U.S. Dollars for their fair value at or close to their settlement date. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency- fixed-rate payments over the life of the agreement.

For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in AOCL as part of the cumulative translation adjustment. Amounts are reclassified out of AOCL into earnings when the hedged net investment is either sold or substantially liquidated.

As of September 30, 2023, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations:

Foreign Currency DerivativeNumber of InstrumentsNotional SoldNotional Purchased
Cross-currency swap4100,300$105,804

Fair Value Hedges

The Company is exposed to changes in the fair value of certain of its foreign denominated intercompany loans due to changes in foreign exchange spot rates. The Company uses fixed-to-fixed cross-currency swaps to hedge its exposure to changes in foreign exchange rates affecting gains and losses on intercompany loan principal and interest. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency-fixed-rate payments over the life of the agreement.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest and other financing expense, net.
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Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company’s accounting policy election. The earnings recognition of excluded components is presented in the same income statement line item as the earnings effect of the hedged transaction. During the remaining nine months of fiscal 2024, the Company estimates that an additional $359 relating to cross currency swaps will be reclassified as a decrease to interest expense.

As of September 30, 2023, the Company had the following outstanding foreign currency derivatives that were used to hedge changes in fair value attributable to foreign exchange risk:

Foreign Currency DerivativeNumber of InstrumentsNotional SoldNotional Purchased
Cross-currency swap124,700$26,021
As of September 30, 2023 and June 30, 2023, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges:
Carrying Amount of the Hedged AssetCumulative Amount of Fair Value Hedge Adjustment Included in the Carrying Amount of the Hedged Asset
September 30,
2023
June 30,
2023
September 30,
2023
June 30,
2023
Intercompany loan receivable$26,115 $26,945 $830 $924 

Designated Hedges

The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of September 30, 2023:

Asset DerivativesLiability Derivatives
Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as hedging instruments:
Interest rate swapsPrepaid expenses and other current assets$8,964 Accrued expenses and other current liabilities$ 
Interest rate swapsOther noncurrent assets8,855 Other noncurrent liabilities 
Cross-currency swapsPrepaid expenses and other current assets2,376 Accrued expenses and other current liabilities 
Cross-currency swapsOther noncurrent assets Other noncurrent liabilities901 
Foreign currency forward contractsPrepaid expenses and other current assets41 Other noncurrent liabilities 
Total derivatives designated as hedging instruments$20,236 $901 

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The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of June 30, 2023:

Asset DerivativesLiability Derivatives
Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as hedging instruments:
Interest rate swapsPrepaid expenses and other current assets$8,649 Accrued expenses and other current liabilities$ 
Interest rate swapsOther noncurrent assets5,974 Other noncurrent liabilities 
Cross-currency swapsPrepaid expenses and other current assets2,365 Accrued expenses and other current liabilities 
Cross-currency swapsOther noncurrent assets Other noncurrent liabilities3,160 
Total derivatives designated as hedging instruments$16,988 $3,160 

The following table presents the pre-tax effect of cash flow hedge accounting on AOCL for the three months ended September 30, 2023 and 2022:

Derivatives in Cash Flow Hedging RelationshipsAmount of Gain Recognized in AOCL on DerivativesLocation of Gain (Loss) Reclassified from AOCL into Income (Expense)Amount of Gain (Loss) Reclassified from AOCL into Income (Expense)
Three Months Ended September 30,Three Months Ended September 30,
2023202220232022
Interest rate swaps$5,478 $15,262 Interest and other financing expense, net$2,281 $1,146 
Cross-currency swaps  Interest and other financing expense, net / Other (income) expense, net (115)
Foreign currency forward contracts41  Cost of sales  
$5,519 $15,262 $2,281 $1,031 

The following table presents the pre-tax effect of the Company’s derivative financial instruments electing cash flow hedge accounting on the Consolidated Statements of Operations for the three months ended of September 30, 2023 and 2022:
Location and Amount of Gain (Loss) Recognized in the Consolidated Statements of Operations on Cash Flow Hedging Relationships
Three Months Ended September 30, 2023Three Months Ended September 30, 2022
Cost of salesInterest and other financing expense, netCost of salesInterest and other financing expense, net
The effects of cash flow hedging:
Gain (Loss) on cash flow hedging relationships
Interest rate swaps
Amount of gain reclassified from AOCL into income$ $2,281 $ $1,146 
Cross-currency swaps
Amount of loss reclassified from AOCL into income$— $— $— $(115)
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The following table presents the pre-tax effect of fair value hedge accounting on AOCL for the three months ended September 30, 2023 and 2022:

Derivatives in Fair value Hedging RelationshipsAmount of Gain Recognized in AOCL on DerivativesLocation of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing)
Amount of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing)
Three Months Ended September 30,Three Months Ended September 30,
2023202220232022
Cross-currency swaps$572 $1,539 Interest and other financing expense, net$123 $123 
$572 $1,539 $123 $123 

The following table presents the pre-tax effect of the Company’s derivative financial instruments electing fair value hedge accounting on the Consolidated Statements of Operations as of September 30, 2023 and 2022:

Location and Amount of Gain Recognized in the Consolidated Statements of Operations on Fair Value Hedging Relationships
Three Months Ended September 30, 2023Three Months Ended September 30, 2022
Cost of salesInterest and other financing expense, netOther expense (income), netCost of salesInterest and other financing expense, netOther expense (income), net
The effects of fair value hedging:
Gain on fair value hedging relationships
Cross-currency swaps
Amount of gain reclassified from AOCL into income$ $953 $ $ $123 $1,688 

The following table presents the pre-tax effect of the Company’s net investment hedges on AOCL and the Consolidated Statements of Operations for the three months ended September 30, 2023 and 2022:

Derivatives in Net Investment Hedging RelationshipsAmount of Gain Recognized in AOCL on DerivativesLocation of Gain (Loss) Recognized in Income (Expense) on Derivatives (Amount Excluded from Effectiveness Testing)Amount of Gain (Loss) Recognized in Income (Expense) on Derivatives (Amount Excluded from Effectiveness Testing)
Three Months Ended September 30,Three Months Ended September 30,
2023202220232022
Cross-currency swaps$2,316 $6,268 Interest and other financing expense, net$495 $(495)

Credit-Risk-Related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a cross-default provision upon certain defaults by the Company on any of its indebtedness.

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15.    TRANSFORMATION PROGRAM

During the first quarter of fiscal year 2024, we initiated a multi-year growth and transformation program (the “Hain Reimagined Program”). The program is intended to optimize the Company’s portfolio, improve underlying profitability and increase its flexibility to invest in targeted growth initiatives, brand building and other capabilities critical to delivering future growth. The savings initiatives are expected to impact the Company’s reportable segments and Corporate and Other.

Implementation of the Hain Reimagined Program is expected to be completed by the end of the 2027 fiscal year and comprised of: contract termination costs, asset write-downs, employee-related costs and other transformation-related expenses.

For the three months ended September 30, 2023, expenses associated with the Company’s restructuring program in the amount of $6,403 and $3,320, respectively, were recorded in Productivity and transformation costs and Cost of sales on the Consolidated Statements of Operations and impacted reportable segments and Corporate and Other as follows:
Three Months Ended September 30, 2023
Corporate and Other$5,770 
North America3,358 
International595 
$9,723 

The Company expects to pay the remaining accrued restructuring costs during the next 12 months. The following table displays the activities and liability balances relating to the restructuring program for the period ended as of September 30, 2023:

ChargesAmounts Paid
Non-cash settlements/Adjustments2
Balance at September 30, 2023
Employee-related costs1
$1,115 $(46) $1,069 
Contract termination costs1,799 (1,528) 271 
Asset write-downs2
1,521  (1,521) 
Other transformation-related expenses3
5,288 (16) 5,272 
$9,723 $(1,590)$(1,521)$6,612 
1Employee-related expenses include $491 severance related to executive officer succession.
2Represents non-cash asset write-downs, including accelerated depreciation and asset impairment.
3Other transformation-related expenses primarily include consultancy charges.

The liability balance as of September 30, 2023 is included within Accrued expenses and other current liabilities on the Company’s Consolidated Balance Sheets.

16.    COMMITMENTS AND CONTINGENCIES

Securities Class Actions Filed in Federal Court

On August 17, 2016, three securities class action complaints were filed in the Eastern District of New York (the “District Court”) against the Company alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The three complaints are: (1) Flora v. The Hain Celestial Group, Inc., et al. (the “Flora Complaint”); (2) Lynn v. The Hain Celestial Group, Inc., et al. (the “Lynn Complaint”); and (3) Spadola v. The Hain Celestial Group, Inc., et al. (the “Spadola Complaint” and, together with the Flora and Lynn Complaints, the “Securities Complaints”). On June 5, 2017, the District Court issued an order for consolidation, appointment of Co-Lead Plaintiffs and approval of selection of co-lead counsel. Pursuant to this order, the Securities Complaints were consolidated under the caption In re The Hain Celestial Group, Inc. Securities Litigation (the “Consolidated Securities Action”), and Rosewood Funeral Home and Salamon Gimpel were appointed as Co-Lead Plaintiffs. On June 21, 2017, the Company received notice that plaintiff Spadola voluntarily dismissed his claims without prejudice to his ability to participate in the Consolidated Securities Action as an absent class member. The Co-Lead Plaintiffs in the Consolidated Securities Action filed a Consolidated Amended Complaint on August 4, 2017 and a Corrected Consolidated Amended Complaint on September 7, 2017 on behalf of a purported class consisting of all persons who purchased or otherwise acquired Hain Celestial securities between November 5, 2013 and February 10, 2017 (the “Amended Complaint”). The
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Amended Complaint named as defendants the Company and certain of its former officers (collectively, “Defendants”) and asserted violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results and internal controls. Defendants filed a motion to dismiss the Amended Complaint on October 3, 2017 which the District Court granted on March 29, 2019, dismissing the case in its entirety, without prejudice to replead. Co-Lead Plaintiffs filed a Second Amended Consolidated Class Action Complaint on May 6, 2019 (the “Second Amended Complaint”). The Second Amended Complaint again named as defendants the Company and certain of its former officers and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegations similar to those in the Amended Complaint, including materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results, and internal controls. Defendants filed a motion to dismiss the Second Amended Complaint on June 20, 2019. On April 6, 2020, the District Court granted Defendants’ motion to dismiss the Second Amended Complaint in its entirety, with prejudice. Co-Lead Plaintiffs appealed the District Court’s decision dismissing the Second Amended Complaint to the United States Court of Appeals for the Second Circuit (the "Second Circuit"). By decision dated December 17, 2021, the Second Circuit vacated the District Court’s judgment and remanded the case for further proceedings. On April 6, 2022, the District Court issued an order directing the parties to submit position papers outlining their views regarding: (a) the scope of the Court's reconsideration of Defendants’ Motion to Dismiss the Second Amended Complaint; and (b) the appropriate procedure the Court should follow in light of the Second Circuit's opinion. On April 14, 2022, the District Court entered an order setting the schedule for, and determining the scope of, supplemental briefing on Defendants’ Motion to Dismiss the Second Amended Complaint. The parties submitted supplemental briefing between May 12, 2022 and June 23, 2022. In June 2022, the District Court referred Defendants’ Motion to Dismiss the Second Amended Complaint to a United States Magistrate Judge (the “Magistrate Judge”) for a Report and Recommendation. On November 4, 2022, the Magistrate Judge issued a Report and Recommendation recommending that the District Court grant Defendants’ Motion to Dismiss the Second Amended Complaint with prejudice. Plaintiffs filed Objections to Magistrate Judge’s November 4, 2022 Report and Recommendation on December 7, 2022, and Defendants filed their Opposition to Plaintiffs’ Objections to Magistrate Judge’s November 4, 2022 Report and Recommendation on January 9, 2023. On September 29, 2023, the District Court granted Defendants’ Motion to Dismiss the Second Amended Complaint. Plaintiffs filed notice of appeal on October 26, 2023.

Additional Stockholder Class Action and Derivative Complaints Filed in Federal Court

On April 19, 2017 and April 26, 2017, two class action and stockholder derivative complaints were filed in the Eastern District of New York against the former Board of Directors and certain former officers of the Company under the captions Silva v. Simon, et al. (the “Silva Complaint”) and Barnes v. Simon, et al. (the “Barnes Complaint”), respectively. Both the Silva Complaint and the Barnes Complaint allege violation of securities law, breach of fiduciary duty, waste of corporate assets and unjust enrichment.

On May 23, 2017, an additional stockholder filed a complaint under seal in the Eastern District of New York against the former Board of Directors and certain former officers of the Company. The complaint alleged that the Company’s former directors and certain former officers made materially false and misleading statements in press releases and SEC filings regarding the Company’s business, prospects and financial results. The complaint also alleged that the Company violated its by-laws and Delaware law by failing to hold its 2016 Annual Stockholders Meeting and includes claims for breach of fiduciary duty, unjust enrichment and corporate waste. On August 9, 2017, the District Court granted an order to unseal this case and reveal Gary Merenstein as the plaintiff (the “Merenstein Complaint”).

On August 10, 2017, the District Court granted the parties' stipulation to consolidate the Barnes Complaint, the Silva Complaint and the Merenstein Complaint under the caption In re The Hain Celestial Group, Inc. Stockholder Class and Derivative Litigation (the “Consolidated Stockholder Class and Derivative Action”) and to appoint Robbins Arroyo LLP and Scott+Scott as Co-Lead Counsel, with the Law Offices of Thomas G. Amon as Liaison Counsel for Plaintiffs. On September 14, 2017, a related complaint was filed under the caption Oliver v. Berke, et al. (the “Oliver Complaint”), and on October 6, 2017, the Oliver Complaint was consolidated with the Consolidated Stockholder Class and Derivative Action. The Plaintiffs filed their consolidated amended complaint under seal on October 26, 2017. On December 20, 2017, the parties agreed to stay Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint through and including 30 days after a decision was rendered on the motion to dismiss the Amended Complaint in the Consolidated Securities Action, described above.

On March 29, 2019, the District Court in the Consolidated Securities Action granted Defendants’ motion, dismissing the Amended Complaint in its entirety, without prejudice to replead. Co-Lead Plaintiffs in the Consolidated Securities Action filed the Second Amended Complaint on May 6, 2019. The parties to the Consolidated Stockholder Class and Derivative Action agreed to continue the stay of Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint
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through 30 days after a decision on Defendants' motion to dismiss the Second Amended Complaint in the Consolidated Securities Action.

On April 6, 2020, the District Court granted Defendants’ motion to dismiss the Second Amended Complaint in the Consolidated Securities Action, with prejudice. Pursuant to the terms of the stay, Defendants in the Consolidated Stockholder Class and Derivative Action had until May 6, 2020 to answer, move, or otherwise respond to the complaint in this matter. This deadline was extended, and Defendants moved to dismiss the Consolidated Stockholder Class and Derivative Action Complaint on June 23, 2020, with Plaintiffs’ opposition due August 7, 2020.

On July 24, 2020, Plaintiffs made a stockholder litigation demand on the current Board containing overlapping factual allegations to those set forth in the Consolidated Stockholder Class and Derivative Action. On August 10, 2020, the District Court vacated the briefing schedule on Defendants’ pending motion to dismiss in order to give the Board of Directors time to consider the demand. On each of September 8 and October 8, 2020, the District Court extended its stay of any applicable deadlines for 30 days to give the Board of Directors additional time to complete its evaluation of the demand. On November 3, 2020, Plaintiffs were informed that the Board of Directors had finished investigating and resolved, among other things, that the demand should be rejected. On November 6, 2020, Plaintiffs and Defendants notified the District Court that Plaintiffs were evaluating the rejection of the demand, sought certain additional information and were assessing next steps, and requested that the District Court extend the stay for an additional 30 days, to on or around December 7, 2020. The Parties then filed a number of additional joint status reports, requesting that the District Court continue the stay of applicable deadlines through December 30, 2021. In light of the Second Circuit vacating the District Court’s judgment in the Consolidated Securities Action referenced above and remanding the case for further proceedings, the Parties submitted a joint status report on December 29, 2021 requesting that the District Court continue the temporary stay pending the District Court’s reconsideration of the Defendants’ motion to dismiss the Second Amended Complaint in the Consolidated Securities Action. On November 3, 2023, the Parties filed a joint request to continue the temporary stay of the Derivative Action pending resolution of the Securities Class Action appeal and await a response from the Court.

Baby Food Litigation

Since February 2021, the Company has been named in numerous consumer class actions alleging that the Company’s Earth’s Best® baby food products (the “Products”) contain unsafe and undisclosed levels of various naturally occurring heavy metals, namely lead, arsenic, cadmium and mercury. Those actions have now been transferred and consolidated as a single lawsuit in the U.S. District Court for the Eastern District of New York captioned In re Hain Celestial Heavy Metals Baby Food Litigation, Case No. 2:21-cv-678 (the "Consolidated Proceeding"), which generally alleges that the Company violated various state consumer protection laws and asserts other state and common law warranty and unjust enrichment claims related to the alleged failure to disclose the presence of these metals, arguing that consumers would have either not purchased the Products or would have paid less for them had the Company made adequate disclosures. The Court appointed interim class counsel for Plaintiffs in the Consolidated Proceeding, and Plaintiffs filed a Consolidated Amended Class Action Complaint on March 18, 2022. The Company filed a motion to dismiss the Consolidated Class Action Complaint on November 7, 2022. The plaintiffs filed their opposition on December 22, 2022, and the Company filed its reply brief on January 20, 2023. On May 9, 2023, upon consent of the parties, the Court stayed this action pending the Second Circuit’s decision on appeal in In re Beech-Nut Nutrition Co. Baby Food Litigation, 21 Civ. 133 (N.D.N.Y.). Accordingly, the Court denied the Company’s motion to dismiss without prejudice to renew. One consumer class action is pending in New York Supreme Court, Nassau County, which the court has stayed in deference to the Consolidated Proceeding. The Company denies the allegations in these lawsuits and contends that its baby foods are safe and properly labeled.

The claims raised in these lawsuits were brought in the wake of a highly publicized report issued by the U.S. House of Representatives Subcommittee on Economic and Consumer Policy on Oversight and Reform, dated February 4, 2021 (the “House Report”), addressing the presence of heavy metals in baby foods made by certain manufacturers, including the Company. Since the publishing of the House Report, the Company has also received information requests with respect to the advertising and quality of its baby foods from certain governmental authorities, as such authorities investigate the claims made in the House Report. The Company is fully cooperating with these requests and is providing documents and other requested information. The Company has been named in one civil government enforcement action, State of New Mexico ex rel. Balderas v. Nurture, Inc., et al., which was filed by the New Mexico Attorney General against the Company and several other manufacturers based on the alleged presence of heavy metals in their baby food products. The Company and several other manufacturers moved to dismiss the New Mexico Attorney General’s lawsuit, which motion the Court denied. The Company filed its answer to the New Mexico Attorney General’s amended complaint on April 23, 2022. The Company denies the New Mexico Attorney General’s allegations and maintains that its baby foods are safe, properly labeled, and compliant with New Mexico law.

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In addition to the consumer class actions discussed above, the Company is currently named in seven lawsuits in state and federal courts alleging some form of personal injury from the ingestion of the Company’s Products, purportedly due to unsafe and undisclosed levels of various naturally occurring heavy metals. These lawsuits generally allege injuries related to neurological development disorders such as autism and attention deficit hyperactivity disorder.

In the matter Palmquist v. The Hain Celestial Group, Inc., a jury trial commenced on February 6, 2023 in the United States District Court for the Southern District of Texas. The Company moved for Directed Verdict at the close of Plaintiffs’ case. The Court granted the Company’s motion, finding no liability for the Company. The Court entered Final Judgment in the Company's favor on March 3, 2023. On April 3, 2023, Plaintiffs filed their Notice of Appeal in the Fifth Circuit. Plaintiffs filed their appellate brief on July 12, 2023. The Company filed its appellate brief on September 26, 2023. It is expected that the matter will be fully briefed this fall. No argument date has been set.

In NC v. The Hain Celestial Group, et al., pending in the Superior Court for the State of California, County of Los Angeles, as a result of successful defense pretrial motions, including the Company's motion for summary judgment, the Company expects that the case will be dismissed and judgment will soon be entered in the Company's favor.

In Watkins v. Plum, PBC, et al., currently pending in the United States District Court for the Eastern District of Louisiana, the Court has set the case for trial beginning on August 12, 2024. The parties are currently engaging in discovery.

On January 9, 2023, Plaintiffs in P.A. v. Hain Celestial Group, Inc., et al. filed their First Amended Complaint in the Circuit Court of the First Circuit, State of Hawai’i. On March 8, 2023, the Company filed its Answer to Plaintiff’s First Amended Complaint. The case is set for trial starting on January 23, 2025.

On February 3, 2023, Plaintiff in Pourdanesh v. Hain Celestial Group, Inc. et al. filed his Complaint in the Superior Court for the State of California, County of Los Angeles. Plaintiff filed an Amended Complaint on June 16, 2023. Defendants filed a Demurrer to the Amended Complaint on July 17, 2023, which was denied on October 5, 2023. The parties have begun to engage in discovery.

On July 25, 2023, Plaintiffs in DMP v. Beech-Nut Nutrition Company, Inc. et al., currently pending in the United States District Court for the District of Nevada, filed a Motion for Leave to Amend the Complaint. On October 24, 2023, the Court granted Plaintiffs’ Motion and Hain was added as a defendant to the case.

In September 2023, the two Nevada state court cases previously pending in Clark County District Court, Benitez v. Beech-Nut Nutrition Company, Inc., et al. and Buenaventura v. Beech-Nut Nutrition Company, Inc., were both voluntarily dismissed.

The Company denies that its Products led to any of the alleged injuries and will defend these cases vigorously. That said, additional lawsuits may be filed against the Company in the future, asserting similar or different legal theories and seeking similar or different types of damages and relief. Such lawsuits may be resolved in a manner adverse to us, and we may incur substantial costs or damages not covered by insurance, which could have a material adverse effect on our financial condition and business.

Other

In addition to the litigation described above, the Company is and may be a defendant in lawsuits from time to time in the normal course of business.

With respect to all litigation and related matters, the Company records a liability when the Company believes it is probable that a liability has been incurred and the amount can be reasonably estimated. As of the end of the period covered by this report, the Company has not recorded a liability for any of the matters disclosed in this note. It is possible that some matters could require the Company to pay damages, incur other costs or establish accruals in amounts that could not be reasonably estimated as of the end of the period covered by this report.


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17.    SEGMENT INFORMATION

The Company’s organizational str