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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2022
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. 001-40293
https://cdn.kscope.io/6dad84428f9187760391e2ae95579370-dsey-20220331_g1.jpg
DIVERSEY HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
Cayman Islands
2842
Not applicable
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
1300 Altura Road, Suite 12529708
Fort Mill, South Carolina
(Address of registrant's principal executive offices)(Zip Code)
(803) 746-2200
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:    
Title of each class
Trading Symbol
Name of the exchange on which registered
Ordinary Shares, par value $0.0001
DSEY
The 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer    ☐    Accelerated filer    ☐    Non-accelerated filer    ☒    Smaller reporting company        Emerging growth company    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

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

As of April 30, 2022, there were 324,190,738 shares of the registrant's ordinary shares outstanding.





DIVERSEY HOLDINGS, LTD.
FORM 10-Q
For the Three Months Ended March 31, 2022

TABLE OF CONTENTS


Page Number







PART I
FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Diversey Holdings, Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions except per share amounts)March 31, 2022December 31, 2021
Assets
   Current assets:
Cash and cash equivalents$216.2 $207.6 
Trade receivables, net of allowance for doubtful accounts of $23.7 and $23.5
410.2 414.3 
Other receivables64.2 59.3 
Inventories378.2 337.6 
Prepaid expenses and other current assets 85.0 69.4 
     Total current assets1,153.8 1,088.2 
     Property and equipment, net 218.4 210.7 
     Goodwill 482.6 471.5 
     Intangible assets, net2,106.0 2,147.3 
     Other non-current assets 389.7 382.3 
     Total assets$4,350.5 $4,300.0 
Liabilities and stockholders' equity
   Current liabilities:
Short-term borrowings$3.5 $10.7 
Current portion of long-term debt 10.9 10.9 
Accounts payable500.5 434.3 
Accrued restructuring costs 15.4 16.7 
Other current liabilities396.8 384.5 
     Total current liabilities927.1 857.1 
     Long-term debt, less current portion 1,970.6 1,973.0 
     Deferred taxes 171.4 164.3 
     Other non-current liabilities 506.4 520.0 
     Total liabilities3,575.5 3,514.4 
     Commitments and contingencies
   Stockholders' equity:
Ordinary shares, $0.01 par value per share, 1,000,000,000 shares authorized, 324,190,738 and 324,369,517 shares outstanding in 2022 and 2021
  
Preferred shares, $0.0001 par value per share, 200,000,000 shares authorized, 0 shares outstanding in 2022 and 2021
  
Additional paid-in capital1,677.8 1,662.7 
Accumulated deficit(759.2)(720.1)
Accumulated other comprehensive loss(143.6)(157.0)
    Total stockholders' equity775.0 785.6 
Total liabilities and stockholders' equity$4,350.5 $4,300.0 

The accompanying notes are an integral part of the condensed consolidated financial statements.
1


Diversey Holdings, Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)
(in millions except per share amounts)Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Net sales$660.0 $631.5 
Cost of sales423.9 385.1 
   Gross profit236.1 246.4 
Selling, general and administrative expenses213.7 243.1 
Transaction and integration costs4.5 13.3 
Management fee  19.4 
Amortization of intangible assets24.2 24.3 
Restructuring and exit costs 9.8 2.6 
Operating loss(16.1)(56.3)
Interest expense30.3 43.7 
Foreign currency gain related to Argentina subsidiaries(0.3)(2.0)
Other (income) expense, net (8.9)0.1 
Loss before income tax provision (benefit)(37.2)(98.1)
Income tax provision (benefit)1.9 (2.4)
Net loss$(39.1)$(95.7)
Basic and diluted loss per share$(0.12)$(0.39)
Basic and diluted weighted average shares outstanding
319.6247.3

The accompanying notes are an integral part of the condensed consolidated financial statements.
2


Diversey Holdings, Ltd.
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
(in millions)Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Net loss$(39.1)$(95.7)
Other comprehensive income (loss):
Pension plans and post-employment benefits, net of taxes of $0.1 and $0.0
(0.5) 
Cash flow hedging activities, net of taxes of $(6.6) and $(1.0)
17.8 4.0 
Foreign currency translation adjustments(3.9)32.6 
Other comprehensive income13.4 36.6 
Comprehensive loss$(25.7)$(59.1)

The accompanying notes are an integral part of the condensed consolidated financial statements.
3


Diversey Holdings, Ltd.
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)
(in millions)Common StockOrdinary SharesAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal
Balance as of December 31, 2021$ $— $1,662.7 $(720.1)$(157.0)$785.6 
Share-based compensation— — 15.1 — — 15.1 
Pension and post-employment benefits— — — — (0.5)(0.5)
Cash flow hedging activities, net of tax— — — — 17.8 17.8 
Foreign currency translation adjustments— — — — (3.9)(3.9)
Net loss— — — (39.1)— (39.1)
Balance as of March 31, 2022$ $— $1,677.8 $(759.2)$(143.6)$775.0 
Balance as of December 31, 2020$2.2 $— $247.2 $(545.3)$(212.7)$(508.6)
Effect of reorganization transactions(2.2)— (39.6)— — (41.8)
Issuance of ordinary shares sold in IPO, net of offering costs— — 654.3 — — 654.3 
Exchange of preferred equity certificates for ordinary shares— — 620.9 — — 620.9 
Conversion of share-based awards— — 68.1 — — 68.1 
Share-based compensation— — 37.5 — — 37.5 
Tax receivable agreement— — (255.7)— — (255.7)
Cash flow hedging activities, net of tax
— — — — 4.0 4.0 
Foreign currency translation adjustments— — — — 32.6 32.6 
Net loss— — — (95.7)— (95.7)
Balance as of March 31, 2021$ $— $1,332.7 $(641.0)$(176.1)$515.6 

The accompanying notes are an integral part of the condensed consolidated financial statements.

4


Diversey Holdings, Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in millions)Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Operating activities:
Net loss$(39.1)$(95.7)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
   Depreciation and amortization47.4 47.1 
   Amortization of deferred financing costs and original issue discount1.8 14.9 
   Gain on cash flow hedges1.1 0.2 
   Deferred taxes(3.5)0.8 
   Unrealized foreign exchange (gain) loss(1.1)5.9 
   Share-based compensation15.1 37.5 
   Impact of highly inflationary economy - Argentina(0.3)(2.0)
   Provision for bad debts1.9 2.0 
   Provision for slow moving inventory0.4 3.0 
Non-cash pension benefit(3.6)(3.7)
   Changes in operating assets and liabilities:
      Trade receivables, net3.0 (28.0)
      Inventories, net(39.9)(41.2)
      Accounts payable68.3 46.5 
      Income taxes, net(4.6)(11.6)
      Other assets and liabilities, net(1.0)(54.4)
Cash provided by (used in) operating activities45.9 (78.7)
Investing activities:
Business acquired in purchase transactions, net of cash acquired(41.4) 
Dosing and dispensing equipment(17.3)(12.0)
Capital expenditures(10.0)(6.4)
Collection of deferred factored receivables 24.4 
Cash provided by (used in) investing activities(68.7)6.0 
Financing activities:
Contingent consideration payments (0.1)
Proceeds from (payments on) short-term borrowings(7.2)0.4 
Proceeds from revolving credit facility50.0  
Payments on revolving credit facility(50.0) 
Payments on long-term borrowings(4.3)(656.0)
Payment of deferred financing costs (2.5)
Issuance of ordinary shares sold in IPO, net of offering costs 654.3 
Proceeds from termination of derivatives45.3  
Cash provided by (used in) financing activities33.8 (3.9)
Exchange rate changes on cash, cash equivalents and restricted cash(2.4)(3.9)
Decrease in cash, cash equivalents and restricted cash8.6 (80.5)
Cash, cash equivalents and restricted cash at beginning of period(a)
208.2 201.7 
Cash, cash equivalents and restricted cash at end of period(b)
$216.8 $121.2 
Supplemental Cash Flow Information:
Interest payments$25.3 $49.0 
Income tax payments$9.8 $8.4 
Non-cash conversion of preferred equity certificates to equity$ $620.9 
Beneficial interest obtained in exchange for factored receivables$ $6.9 

5


Restricted cash (which includes compensating balance deposits) is recorded in Prepaid expenses and other current assets and Other non-current assets on the Condensed Consolidated Balance Sheets.

(a) Restricted cash was $0.6 million and $14.0 million as of December 31, 2021 and December 31, 2020, respectively.

(b) Restricted cash was $0.6 million and $8.2 million as of March 31, 2022 and March 31, 2021, respectively.

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION

Description of Business

Diversey Holdings, Ltd. (hereafter the "Company", “we”, “us”, and “our”) is a leading provider of hygiene, infection prevention and cleaning solutions. We develop mission-critical products, services and technologies that save lives and protect our environment. We were formed as an exempted company incorporated under the laws of the Cayman Islands with limited liability on November 3, 2020 for the purpose of completing a public offering and related transactions and in order to carry on the business of our indirect wholly-owned operating subsidiaries.

On March 29, 2021, we completed an initial public offering of 46,153,846 Ordinary Shares at a public offering price of $15.00 per Ordinary Share (the "IPO"), receiving $654.3 million in net proceeds, after deducting the underwriting discount and offering expenses. On April 9, 2021, we issued and sold an additional 5,000,000 Ordinary Shares pursuant to the underwriters' partial exercise of their option to purchase additional shares, receiving an incremental $71.4 million in net proceeds, after deducting the underwriting discount and offering expenses. Our Ordinary Shares trade on The Nasdaq Global Select Market under the ticker symbol "DSEY".

On November 15, 2021, we issued and sold 15,000,000 Ordinary Shares at a public offering price of $15.00 per Ordinary Share, receiving $214.4 million in net proceeds, after deducting the underwriting discount and offering expenses.

Prior to the formation of Diversey Holdings, Ltd., the organizational structure consisted of Constellation (BC) 2 S.à r.l ("Constellation"), which was incorporated on June 30, 2017, and organized under the laws of Luxembourg as a Société à Responsabilité Limitée for an unlimited period under the direction of Bain Capital, LP (“Bain Capital”). Diamond (BC) B.V., an indirect wholly-owned subsidiary of Constellation, was formed on March 15, 2017 for the purpose of consummating the acquisition of the Diversey Care division and the food hygiene and cleaning business of Sealed Air Corporation (“Sealed Air”) (together, the “Diversey Business”), including certain assets and all the capital stock of certain entities engaged in the Diversey Business (the “Diversey Acquisition”), which acquisition closed on September 6, 2017.

Prior to closing of the IPO, we effected a series of transactions (the "Reorganization Transactions") pursuant to which:

(i) Constellation (BC) PoolCo SCA (“Poolco”), an entity incorporated for the purpose of pooling the interests of our employees, directors and officers in Constellation (BC) S.à r.l (“Topco”), a direct subsidiary of Constellation, repurchased shares from certain equity holders in exchange for a note receivable;

(ii) all other equity holders of Poolco contributed their shares of Poolco to Constellation in exchange for new shares of Constellation; and

(iii) the equity holders of Constellation, including Bain Capital and the individuals referred to in the foregoing clause (ii), contributed a portion of their shares of Constellation to the Company, and the equity holders referred to in the foregoing clause (i) contributed a portion of their note receivable to the Company, in each case, in exchange for ordinary shares of the Company (in which the Company withheld a portion of the ordinary shares otherwise issuable solely to the extent necessary to satisfy (y) any outstanding loans owned by such employee equity holders and (z) any tax consequences resulting to the equity holders from the repurchase, and the aggregate fair market value of such withheld ordinary shares will be paid by the Company or a subsidiary thereof to satisfy such tax consequence) and the equity holders of Constellation, including Bain Capital and the individuals referred to in the foregoing clause (ii), contributed the remaining portion of their shares of Constellation to one of our subsidiaries, and the equity holders referred to in the foregoing clause (i) contributed the remaining portion of their note receivable to one of our subsidiaries, in each case, in exchange for payments to be made under the Tax Receivable Agreement entered into in connection with the IPO and certain other consideration.

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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The Reorganization Transactions resulted in the Company becoming the ultimate parent company of Constellation and its subsidiaries, and Bain Capital and all other equity holders of Constellation and Poolco becoming shareholders of the Company. In order to simplify our corporate structure, we merged or liquidated certain of our wholly-owned subsidiaries, including Constellation, Poolco and Topco, prior to December 31, 2021. The Reorganization Transactions were considered transactions between entities under common control. As a result, the financial statements for periods prior to the IPO and the Reorganization Transactions have been adjusted to combine the previously separate entities for presentation purposes.

Nature of Operations

We are a leading global provider of high performance hygiene, infection prevention, and cleaning solutions for the Institutional and Food & Beverage markets. In addition, we offer a wide range of value added services, including food safety and application training and consulting, as well as auditing of hygiene and water management. Our Institutional business provides solutions serving end-users such as healthcare facilities, food service providers, retail and grocery outlets, educational institutions, hospitality establishments, and building service contractors. Our Food & Beverage business provides solutions serving manufacturers in the brewing, beverage, dairy, processed foods, pharmaceutical, and agricultural markets. Although our cleaning products represent only a small portion of our customers’ total cleaning costs, they are typically viewed as being non discretionary because they can have a meaningful impact on the efficacy of food safety, operational excellence, and sustainability. The COVID-19 pandemic has further reinforced the essential nature of our solutions and increased hygiene, infection prevention, and cleaning standards across all markets.

The product range of Diversey®-branded solutions includes fully integrated lines of products and dispensing systems for hard surface cleaning, disinfecting and sanitizing, hand washing, deodorizing, mechanical and manual ware washing, hard surface and carpeted floor cleaning systems, cleaning tools and utensils, fabric care for professional laundry applications comprising detergents, stain removers, bleaches and a broad range of dispensing equipment for process control and management information systems. Floor care machines are commercialized under the well-established Taski® brand.

We are globally operated with manufacturing facilities, sales centers, administrative offices and warehouses located throughout the world, and we have a global team of approximately 8,700 employees as of March 31, 2022.

Basis of Presentation

Our Condensed Consolidated Financial Statements include all of the accounts of the Company and our subsidiaries. These Condensed Consolidated Financial Statements reflect our financial position, results of operations, cash flows and changes in stockholders' equity in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated. All amounts are in US Dollar denominated millions, except per share amounts and unless otherwise noted, and are approximate due to rounding.

The accompanying unaudited financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited interim financial statements should be read in conjunction with the annual audited financial statements of the Company and notes thereto for the year ended December 31, 2021 included in the Company's Annual Report on Form 10-K. Certain amounts within Transaction and integration costs (formerly described as "Transition and transformation costs") in the prior year's Condensed Consolidated Statement of Operations have been reclassified into Restructuring and exit costs to conform to the current year presentation, with no impact on net loss or accumulated deficit.


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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods. These estimates include, among other items, purchase price accounting, assessing the collectability of receivables, the use and recoverability of inventory, the estimation of the fair value of financial instruments, useful lives and recoverability of tangible and intangible assets and impairment of goodwill, assumptions used in our defined benefit pension plans and other post-employment benefit plans, fair value measurement of assets, rebate costs, costs for incentive compensation, the valuation allowance on deferred tax assets and accruals for commitments and contingencies. Management reviews these estimates and assumptions periodically and reflects the effects of any revisions in the Condensed Consolidated Financial Statements in the period management determines any revisions to be necessary. Actual results could differ materially from these estimates.

New Accounting Guidance

We consider the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB"). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements.

Recently Issued Accounting Standards

Facilitation of the Effects of rate reform

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. The Company can elect to apply the amendments in this update as of March 12, 2020 through December 31, 2022, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The Company continues to evaluate this new standard update and the impact of this guidance on the Condensed Consolidated Financial Statements.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which explicitly clarifies which contracts, hedging relationships, and other transactions are within the scope of the optional expedients and exceptions allowed under Topic 848. The Company has not utilized any of the optional expedients or exceptions available under Topic 848. The Company continues to assess whether this ASU is applicable throughout the effective period, in conjunction with our assessment of ASU 2020-4.

NOTE 3 - REVENUE RECOGNITION

Description of Revenue Generating Activities

We provide high-performance cleaning, infection prevention and hygiene products for the food safety and service, food and beverage plant operations, healthcare, floor care, housekeeping and room care, laundry and hand care markets. In addition, we offer a wide range of value-added solutions, including food safety and application training and consulting, as well as auditing of hygiene and water management. Many of our products are sold through distributors who then sell the product to end users.

We recognize revenue based on the expected amount of consideration to be received for the provided goods or services, taking into account the expected value of variable consideration. Our variable considerations include, but
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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
are not limited to, rebates, prebates, discounts, and returns. The amount of variable consideration is estimated at contract inception by using the most likely amount method pending on the nature of the variable consideration. Such variable consideration is re-evaluated each reporting period, and accruals are booked based on the re-evaluated estimates and variable consideration recognized to date.

Charges for rebates and other allowances are recognized as a deduction from revenue on an accrual basis in the period in which the associated revenue is recorded. When we estimate our rebate accruals, we consider customer-specific contractual commitments including stated rebate rates and history of actual rebates paid. Our rebate accruals are reviewed at each reporting period and adjusted to reflect data available at that time. We adjust the accruals to reflect any differences between estimated and actual amounts. These adjustments impact the amount of net sales recognized by us in the corresponding period of adjustment. Charges for rebates and other allowances were 24.9% and 24.5% of gross sales for the three months ended March 31, 2022 and March 31, 2021, respectively.

Disaggregated Revenue

Revenues from contracts with customers summarized by region were as follows:
(in millions)Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Europe$291.6 $232.9 
North America169.3 219.2 
Asia Pacific83.8 79.1 
Middle East and Africa61.5 52.8 
Latin America48.8 42.1 
Revenue from contracts with customers655.0 626.1 
Other revenue (Leasing: Sales-type and Operating)5.0 5.4 
Total revenue$660.0 $631.5 

Assets Recognized For the Costs to Obtain a Contract

In certain instances, we incur incremental direct costs of a transaction, such as prebates, equipment provided free on loan, or other related expenses in the contract negotiation phase. Because these costs are likely incurred to transition to a new relationship or part of a negotiated renewal of a long-term relationship, these costs are considered costs to obtain a contract and are deferred and amortized over the period in which revenue is recognized, provided that unamortized deferred costs are considered recoverable. These amounts are recorded within Other non-current assets on our Condensed Consolidated Balance Sheets.

NOTE 4 - ACQUISITIONS

We make business acquisitions that align with its strategic business objectives. The assets and liabilities of acquired businesses are recorded in the Condensed Consolidated Balance Sheet at fair value as of their acquisition date. The purchase price allocation is based on estimates of the fair value of assets acquired, liabilities assumed and consideration paid. Purchase consideration is reduced by the amount of cash or cash equivalents acquired. Acquisitions during 2022 were not significant to our condensed consolidated financial statements; therefore, pro forma financial information is not presented. No acquisitions occurred during the first quarter of 2021. Costs incurred related to acquisitions are included as part of Transaction and integration costs in the Condensed Consolidated Statements of Operations.

On January 24, 2022, we acquired Shorrock Trichem Ltd, a distributor of cleaning and hygiene solutions and services based in northwest England. Certain valuation estimates and net asset adjustments are not yet finalized and are subject to change, but are expected to be finalized in the second quarter of 2022.

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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In the first quarter of 2022, we recorded purchase accounting adjustments associated with our 2021 acquisition of Birko Corporation. As a result, the acquisition related net assets increased by $1.6 million, goodwill decreased by $1.7 million, and we paid $0.1 million in additional consideration related a net working capital adjustment.

The following table summarizes the fair values of the net assets acquired during 2022:

(in millions)Three Months Ended March 31, 2022
Cash and cash equivalents$10.7 
Trade receivables7.1 
Inventories3.9 
Prepaid expenses and other current assets1.8 
Property, plant and equipment6.3 
Intangible assets19.7 
Accounts payable(4.1)
Other current liabilities(5.0)
Other non-current liabilities(0.1)
Deferred taxes(5.6)
Net assets acquired before goodwill on acquisition34.7 
Goodwill on acquisition17.4 
Net cash paid for acquisitions$52.1 

NOTE 5 - FINANCIAL STATEMENT DETAILS

Inventories

Our net inventory balances were:
(in millions)March 31, 2022December 31, 2021
Raw materials$82.4 $74.2 
Work in process3.5 2.8 
Finished goods292.3 260.6 
 $378.2 $337.6 

Factoring of trade receivables

On October 25, 2021, we terminated our Master Agreement with Factofrance, S.A. (“Factofrance”) to sell certain trade receivables, without recourse, of eight Diversey companies located in the United Kingdom, Spain, France, Netherlands, Poland, Germany, Italy and Portugal under individually executed Receivable Purchase Agreements (“RPAs”).

We accounted for transfers of receivables pursuant to the RPAs as a sale and removed them from our Condensed Consolidated Balance Sheets. We maintained a “beneficial interest,” or a right to collect cash, in the sold receivables in which we do not immediately collect cash. Cash receipts from the beneficial interests on sold receivables (which are cash receipts on the underlying trade receivables that have already been sold in these agreements) are classified as investing activities and presented as cash receipts on sold receivables on our Condensed Consolidated Statements of Cash Flows.

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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We sold $142.6 million of receivables to Factofrance and received cash from Factofrance of $158.3 million during the three months ended March 31, 2021. We collected from our customers and remitted to Factofrance $184.1 million during the three months ended March 31, 2021.

Securitization of trade receivables

We sell certain North American and European customer receivables to PNC Bank ("PNC") without recourse on a revolving basis. This arrangement provided for maximum funding of up to $100.0 million for receivables sold. As customers pay their balances, we transfer additional receivables into the program. The transferred receivables are fully guaranteed by a bankruptcy-remote wholly owned subsidiary of the Company, which holds additional receivables in the amount of $95.3 million as of March 31, 2022 that are pledged as collateral under this agreement.

Fees associated with the arrangement were $0.5 million for each of the three months ended March 31, 2022 and March 31, 2021.

We transferred and derecognized $272.8 million of receivables and collected $253.3 million in connection with our arrangement with PNC during the three months ended March 31, 2022.

We transferred and derecognized $149.5 million of receivables and collected $152.9 million in connection with our arrangement with PNC during the three months ended March 31, 2021.

Credit losses

Our allowance for expected credit losses on trade and lease receivables is assessed at the end of each quarter based on an analysis of historical losses and assessment of future expected losses. We continue to monitor the impact that COVID-19 may have on outstanding receivables.

The following represents the activity in our allowance for credit losses for trade and lease receivables:

(in millions)Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Balance, beginning of period$44.2 $35.1 
Provision for bad debts1.9 2.0 
Write-offs(3.6)(1.1)
Balance, end of period$42.5 $36.0 

Prepaid expenses and other current assets

The components of prepaid expenses and other current assets were as follows:
(in millions)March 31, 2022December 31, 2021
Prepaid expenses$40.5 $36.1 
Income tax receivables24.9 20.2 
Derivatives17.6 11.3 
Other current assets2.0 1.8 
$85.0 $69.4 
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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Other non-current assets

The components of other non-current assets were as follows:
(in millions)March 31, 2022December 31, 2021
Dosing and dispensing equipment$141.3 $142.0 
Operating lease right-of-use assets, net92.2 94.6 
Deferred taxes50.2 51.8 
Derivatives39.7 25.9 
Tax indemnification asset17.9 17.8 
Lease receivables16.3 18.0 
Customer prebates15.1 16.6 
Finance lease right-of-use assets, net3.9 4.3 
Other non-current assets13.1 11.3 
$389.7 $382.3 

Depreciation expense for our dosing and dispensing equipment was $17.3 million and $17.4 million for the three months ended March 31, 2022 and March 31, 2021, respectively.

Other Current and Non-current Liabilities

The components of other current liabilities were as follows:
(in millions)March 31, 2022December 31, 2021
Accrued customer volume rebates$136.4 $138.1 
Accrued salaries, wages and related costs97.9 86.2 
Value added, general and sales tax payable32.3 25.3 
Operating lease liability20.7 21.4 
Accrued interest payable12.4 11.0 
Derivatives8.8 8.2 
Income taxes payable7.1 8.4 
Accrued share-based compensation5.8 5.4 
Contingent consideration4.6 4.4 
Other accrued liabilities70.8 76.1 
$396.8 $384.5 

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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The components of other non-current liabilities were as follows:
(in millions)March 31, 2022December 31, 2021
Tax receivable agreement $224.9 $238.1 
Defined benefit pension plan liability119.0 127.3 
Operating lease liability75.9 72.5 
Uncertain tax positions45.0 44.5 
Derivatives11.2 4.9 
Asset retirement obligations6.4 6.4 
Accrued share-based compensation3.6 6.0 
Other post-employment benefit plan liability2.1 2.1 
Other non-current liabilities18.3 18.2 
$506.4 $520.0 

Other (Income) Expense, net

The following table provides details of our Other (Income) Expense, net:
(in millions)Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Interest income$(0.7)$(0.9)
Unrealized foreign exchange (gain) loss (1.1)5.9 
Realized foreign exchange (gain) loss1.2 (0.3)
Non-cash pension and other post-employment benefit plan(3.6)(3.8)
Adjustment for tax indemnification asset(0.1) 
Factoring and securitization fees0.9 1.0 
Tax receivable agreement adjustments(6.4) 
Other, net0.9 (1.8)
 $(8.9)$0.1 

NOTE 6 - PROPERTY AND EQUIPMENT, NET

Our property and equipment and accumulated depreciation balances were as follows:
(in millions)March 31, 2022December 31, 2021
Land and improvements$42.2 $41.3 
Buildings58.2 55.4 
Machinery and equipment106.6 95.4 
Other property and equipment52.3 51.6 
Construction-in-progress55.6 49.4 
Property and equipment, gross
314.9 293.1 
Less: Accumulated depreciation(96.5)(82.4)
Property and equipment, net
$218.4 $210.7 

Depreciation expense was $5.8 million and $5.4 million for the three months ended March 31, 2022 and March 31, 2021, respectively.

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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 7 - GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS

Goodwill
The following table represents a roll forward of our goodwill balances by reportable segments:

(in millions)InstitutionalFood & BeverageTotal
Balance at December 31, 2021$330.4 $141.1 $471.5 
Acquisitions17.4  17.4 
Acquisition adjustments(1)
 (1.7)(1.7)
Foreign currency translation(3.5)(1.1)(4.6)
Balance at March 31, 2022$344.3 $138.3 $482.6 

(1) Represents measurement period adjustments related to the acquisition of Birko Corporation.

Identifiable Intangible Assets

The following table summarizes the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class with definite and indefinite lives at March 31, 2022:

(in millions)Gross Carrying ValueAccumulated AmortizationAccumulated ImpairmentNet Book Value
Customer relationships$926.5 $(189.8)$— $736.7 
Brand name597.3 (136.0)— 461.3 
Capitalized software85.6 (72.6)— 13.0 
Intellectual property44.7 (7.8)— 36.9 
Trademarks27.0 (7.1)— 19.9 
Non-compete agreements8.8 (8.2)— 0.6 
Favorable leases4.4 (3.3)— 1.1 
Total intangible assets with definite lives1,694.3 (424.8)— 1,269.5 
Trade name with indefinite life836.5 — — 836.5 
Total identifiable intangible assets$2,530.8 $(424.8)$— $2,106.0 

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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class with definite and indefinite lives at December 31, 2021:
(in millions)Gross Carrying ValueAccumulated AmortizationAccumulated ImpairmentNet Book Value
Customer relationships$920.6 $(181.0)$— $739.6 
Brand name610.4 (131.4)— 479.0 
Capitalized software84.2 (70.1)— 14.1 
Intellectual property44.5 (6.7)— 37.8 
Trademarks27.7 (7.5)— 20.2 
Non-compete agreements8.8 (8.2)— 0.6 
Favorable leases4.4 (3.1)— 1.3 
Total intangible assets with definite lives1,700.6 (408.0)— 1,292.6 
Trade name with indefinite life854.7 — — 854.7 
Total identifiable intangible assets$2,555.3 $(408.0)$— $2,147.3 

Amortization expense for acquired intangibles was $24.2 million and $24.3 million for three months ended March 31, 2022 and March 31, 2021, respectively.

NOTE 8 - DEBT AND CREDIT FACILITIES

The components of debt and credit facilities were as follows:
(in millions)March 31, 2022December 31, 2021
Senior Secured Credit Facilities
2021 U.S. Dollar Term Loan$1,496.3 $1,500.0 
Revolving Credit Facility
  
2021 Senior Notes500.0 500.0 
Short-term borrowings3.5 10.7 
Finance lease obligations4.0 4.4 
Financing obligations23.2 23.1 
Unamortized deferred financing costs(34.0)(35.3)
Unamortized original issue discount(8.0)(8.3)
Total debt
1,985.0 1,994.6 
Less: Current portion of long-term debt(10.9)(10.9)
   Short-term borrowings
(3.5)(10.7)
Long-term debt
$1,970.6 $1,973.0 

Senior Secured Credit Facilities

On September 29, 2021, the Company entered into an amendment to its Senior Secured Credit Facilities, which provided for a new $1,500.0 million senior secured U.S. dollar denominated term loan (the “2021 U.S. Dollar Term Loan”) in addition to the existing $450.0 million revolving credit facility (the “Revolving Credit Facility", and together with the 2021 U.S. Dollar Term Loan, the “New Senior Secured Credit Facilities”). The 2021 U.S. Dollar Term Loan matures on September 29, 2028, while the Revolving Credit Facility matures on March 28, 2026.

The interest rate under the 2021 U.S. Dollar Term Loan is equal to (i) the Adjusted LIBOR rate (as defined in the New Senior Secured Credit Facilities), with a LIBOR floor of 0.50%, plus 3.00%, or (ii) ABR (as defined in the
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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
New Senior Secured Credit Facilities) plus 2.00%; provided that, such percentages per annum shall permanently step-down to 2.75% and 1.75%, respectively, if on the later of (x) the date of delivery of a compliance certificate to the administrative agent for the fiscal quarter ending December 31, 2021 and (y) the first date of delivery of a compliance certificate to the administrative agent, in either case, demonstrating that the Total Net Leverage Ratio (as defined in the New Senior Secured Credit Facilities) as of the last day of a fiscal quarter is less than or equal to 4.50 to 1.00. As of December 31, 2021, our Total Net Leverage Ratio was less than 4.50 to 1.00, and the interest rate step-downs noted above were effective during the fiscal quarter ending March 31, 2022. As of March 31, 2022, the interest rate for the 2021 U.S. Dollar Term Loan is 3.25%.

As of March 31, 2022, the Company had no borrowings outstanding under the Revolving Credit Facility and $7.7 million of letters of credit outstanding, which reduced the available borrowing capacity thereunder to approximately $442.3 million.

As of December 31, 2021, the Company had no borrowings outstanding under the Revolving Credit Facility and $7.9 million of letters of credit outstanding, which reduced the available borrowing capacity thereunder to approximately $442.1 million.

The New Senior Secured Credit Facilities contain normal and customary affirmative and negative covenants. Some of the more restrictive covenants are (a) limitations on our ability to pay dividends, (b) limitations on asset sales, and (c) limitations on our ability to incur additional indebtedness. The New Senior Secured Credit Facilities also contain various events of default, the occurrence of which could result in the acceleration of all obligations. As of March 31, 2022, we were in full compliance with the provisions contained within the covenants.

2021 Senior Notes

On September 29, 2021, the Company completed the sale of $500.0 million in aggregate principal amount of Senior Notes due 2029 (the “2021 Senior Notes”) in a private placement to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons (as defined in Regulation S) pursuant to Regulation S under the Securities Act. The Company used the net proceeds from the issuance of the 2021 Senior Notes, together with borrowings under its New Senior Secured Credit Facilities and cash on hand, to redeem all of the €450.0 million aggregate principal amount of 5.625% Senior Notes due 2025 (the “2017 Senior Notes”), pay fees and/or expenses incurred in connection with the issuance of the 2021 Senior Notes and for general corporate purposes. The 2021 Senior Notes mature on October 1, 2029, bear interest at 4.625%, and interest is payable semi-annually on April 1 and October 1 of each year, beginning on April 1, 2022.

The Company may redeem the 2021 Senior Notes, in whole or in part, at any time prior to October 1, 2024, at a price equal to 100% of the principal amount of the 2021 Senior Notes redeemed, plus additional amounts, if any, a make-whole premium and accrued and unpaid interest to, but excluding, the redemption date.

The Company may redeem the 2021 Senior Notes, in whole or in part, on or after October 1, 2024, at the redemption prices (expressed as percentages of principal amount) set forth in the indenture governing the 2021 Senior Notes, together with accrued and unpaid interest and additional amounts, if any, to, but excluding, the applicable redemption date:

YearPercentage
October 1, 2024 to September 30, 2025102.313%
October 1, 2025 to September 30, 2026101.156%
On or after October 1, 2026100.000%

Additionally, at any time on or before October 1, 2024, the Company may elect to redeem up to 40% of the aggregate principal amount of the 2021 Senior Notes at a redemption price equal to 104.625% of the principal amount thereof, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date, with the net cash proceeds received from one or more equity offerings of the Company.
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Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The indenture governing the 2021 Senior Notes contains covenants that limit the Company's ability to, among other things: (i) incur additional indebtedness, issue preferred equity and guarantee indebtedness; (ii) pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; (iii) prepay, redeem or repurchase certain material debt; (iv) make loans and investments; (v) sell or otherwise dispose of assets; (vi) sell stock of the Company’s subsidiaries; (vii) incur liens; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting the Company’s subsidiaries’ ability to pay dividends and (x) consolidate, merge or sell all or substantially all of the Company’s assets.

The 2021 Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by a subsidiary of the Company, BCPE Diamond Netherlands TopCo B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands, and the Company's existing and subsequently acquired or organized direct and indirect material wholly owned restricted subsidiaries that guarantee indebtedness under the New Senior Secured Credit Facilities (other than those organized in Italy).

Short-term Borrowings

Our short-term borrowings comprise primarily of bank overdrafts within our notional cash pooling system.

Sale-Leaseback Transactions

During March 2020, the Company completed sale-leaseback transactions under which it sold two properties to an unrelated third-party for a total of $22.9 million. Concurrent with this sale, the Company entered into agreements to lease the properties back from the purchaser over initial lease terms of 15 years. The leases for the two properties include an initial term of 15 years and fourfive-year renewal options and provides for the Company to evaluate each property individually upon certain events during the life of the lease, including individual renewal options.
The Company classified the leases as a financing obligation to be paid over 15 years. The current and non-current portions are included in Current portion of long-term debt and Long-term debt, less current portion, respectively, on the Consolidated Balance Sheets.
18

Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 9 - DERIVATIVES AND HEDGING ACTIVITIES

As a large global organization, we face exposure to market risks, such as fluctuations in foreign currency exchange rates and interest rates. To manage the volatility relating to these exposures, we enter into various derivative instruments from time to time under our risk management policies. We designate derivative instruments as hedges on a transactional basis to support hedge accounting. The changes in fair value of these hedging instruments offset in part or in whole corresponding changes in the fair value or cash flows of the underlying exposures being hedged. We assess the initial and ongoing effectiveness of our hedging relationships in accordance with our policy. We do not purchase, hold or sell derivative financial instruments for trading purposes. Our practice is to terminate derivative transactions if the underlying asset or liability matures or is sold or terminated, or if we determine the underlying forecasted transaction is no longer probable of occurring.
Derivative Positions Summary
The following table details the fair value of our derivative instruments, which are included as a part of our Other non-current assets, Other current liabilities and Other non-current liabilities in our Condensed Consolidated Balance Sheets.

(in millions)March 31, 2022December 31, 2021
Derivatives designated as hedging instruments:
Derivative assets
Foreign currency forward contracts$ $0.6 
Interest rate caps17.9 2.9 
Cross currency swaps28.9 32.6 
Total derivative assets$46.8 $36.1 
Derivative liabilities
Foreign currency forward contracts$(0.5)$ 
Interest rate caps (0.7)
Total derivative liabilities$(0.5)$(0.7)
Derivatives not designated as hedging instruments:
Derivative assets
Foreign currency forward contracts$2.2 $1.1 
Interest rate swaps8.3  
Total derivative assets$10.5 $1.1 
Derivative liabilities
Foreign currency forward contracts$(1.8)$(1.1)
Interest rate swaps(17.7)(11.3)
Total derivative liabilities$(19.5)$(12.4)










19

Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Our derivatives consist of the following:

(in millions)Notional AmountOriginal Maturity in Months
Floating to fixed interest rate swap(1) (2)
$720.0 60
Fixed to floating interest rate swap(1) (2)
$720.0 36
U.S. dollar to Euro currency swap$500.0 60
U.S. dollar floating to Euro fixed interest rate swap$500.0 54
U.S. dollar interest rate cap$650.0 36
U.S. dollar currency forward contracts$287.2 
1-12
(1) The notional amount is reduced to $315.0 million in July 2023.
(2) In connection with our debt refinancing in 2021, we entered into a fixed to floating interest rate swap to offset the existing floating to fixed interest rate swap.

Interest Rate Cap and Cross Currency Contracts Designated as Cash Flow or Fair Value Hedges

In connection with entering into the New Senior Secured Credit Facilities and issuing the 2021 Senior Notes, we also entered into a U.S. dollar floating to Euro fixed interest rate swap, a U.S. dollar interest rate cap, and a U.S. dollar to Euro currency swap, to manage the impacts of fluctuations in interest rates and currency exchange rates on a portion of the Company’s floating-rate and U.S. dollar denominated debt.
On March 31, 2022, we terminated our existing U.S. dollar floating to Euro fixed interest rate swap, receiving net proceeds of $45.3 million, and simultaneously entered into a new at-market U.S. dollar floating to Euro fixed interest rate swap with the same maturity date as the terminated swap. We have elected to classify the cash flows from the settlement to be consistent with the hedged debt instrument. As a result of this contract termination, the net unrealized after-tax derivative gain included in AOCI of $16.8 million at the date of contract termination will be amortized against Interest expense on the Condensed Consolidated Statement of Operations over the remaining life of the derivative contract.
We record gains and losses on these derivative instruments that qualify as cash flow hedges in other comprehensive income (loss), net of tax to the extent the hedges are effective and until we recognize the underlying transactions in net income (loss), at which time we recognize these gains and losses in Other (income) expense, net on our Condensed Consolidated Statements of Operations.
Net unrealized after-tax gain related to these contracts that were included in other comprehensive income was $38.9 million and $11.8 million for the three months ended March 31, 2022 and March 31, 2021, respectively. The unrealized amounts in other comprehensive income will fluctuate based on changes in the fair value of open contracts during each reporting period.
We estimate that $5.3 million of net unrealized after-tax derivative gain included in accumulated other comprehensive income ("AOCI") will be reclassified into Other (income) expense, net, on the Condensed Consolidated Statement of Operations within the next twelve months.
Interest Rate Swap Contracts Not Designated as Hedges

In connection with entering into the New Senior Secured Credit Facilities and issuing the 2021 Senior Notes, we entered into a fixed to floating interest rate swap to offset the existing floating to fixed interest rate swap, and the existing swap was also then de-designated as a cash flow hedge. As a result of the contract de-designation, the net unrealized after-tax derivative loss included in AOCI at the date of de-designation is being amortized into Interest expense on the Condensed Consolidated Statement of Operations over the remaining life of the derivative contract, and the unamortized loss in AOCI is $9.6 million as of March 31, 2022. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Therefore, changes in the value of these derivatives are recognized immediately in earnings.
20

Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Foreign Currency Forward Contracts

The primary purpose of our currency hedging activities is to manage the potential changes in value associated with the amounts receivable or payable on equipment and raw material purchases that are denominated in foreign currencies in order to minimize the impact of changes in foreign currencies. For those contracts that are designated as cash flow hedges, we record gains and losses on other comprehensive income (loss), net of tax to the extent the hedges are effective and until we recognize the underlying transactions in net income (loss), at which time we recognize these gains and losses in Other (income) expense, net on our Condensed Consolidated Statements of Operations. For those contracts that are not designated as cash flow hedges, the changes in the value of these derivatives are recognized immediately in earnings. These contracts generally have original maturities of less than 12 months.

Effect of all Derivative Instruments on Income

The following table details the (income) expense related to our derivative instruments on our Condensed Consolidated Statements of Operations, for which the amounts are included in Other (income) expense:
(in millions)Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Foreign currency forward contracts$(1.1)$ 
Interest rate swaps(0.2)2.2 
Interest rate caps(0.1) 
Cross currency swaps(32.3) 
     Total$(33.7)$2.2 

NOTE 10 - FAIR VALUE MEASUREMENTS AND OTHER FINANCIAL INSTRUMENTS
Fair Value Measurements
In determining the fair value of financial instruments, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and consider counterparty credit risk in our assessment of fair value. We determine the fair value of our financial instruments based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2 Inputs: Other than quoted prices included in Level 1 Inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

21

Diversey Holdings, Ltd.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table details the fair value hierarchy of our financial assets and liabilities, which are measured at fair value on a recurring basis:
March 31, 2022
(in millions)Total Fair ValueLevel 1Level 2Level 3
Cash equivalents$3.0 $3.0 $ $ 
Restricted cash and compensating balance deposits$0.6 $0.6 $ $ 
Cross currency swap, net asset$28.9 $ $28.9 $ 
Interest rate caps, net asset$17.9 $ $17.9 $ 
Foreign currency forward contracts, net liability$(0.1)$