Guarantor Statements - SB/RH | NOTE 20 - GUARANTOR STATEMENTS – SB/RH Spectrum Brands, Inc. (“SBI”) with SB/RH as a parent guarantor (collectively, the “Parent”), with SBI’s domestic subsidiaries as subsidiary guarantors, has issued the 6.625% Notes under the 2020/22 Indenture, 6.125% Notes under the 2024 Indenture, the 5.75% Notes under the 2025 Indenture and the 4.00% Notes under the 2026 Indenture. The following consolidating financial statements illustrate the components of the consolidated financial statements of SB/RH. The ‘Parent’ consists of the financial statements of SBI as the debt issuer, with SB/RH as a parent guarantor, without consolidated entities. SB/RH financial information is not presented separately as there are no independent assets or operations and is therefore determined not to be material. Investments in subsidiaries are accounted for using the equity method for purposes of illustrating the consolidating presentation. The elimination entries presented herein eliminate investments in subsidiaries and intercompany balances and transactions. Statement of Financial Position Guarantor Nonguarantor As of July 1, 2018 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Cash and cash equivalents $ 2.4 $ 0.8 $ 143.7 $ — $ 146.9 Trade receivables, net 132.0 176.8 75.4 — 384.2 Intercompany receivables — 1,414.2 323.7 (1,737.9) — Other receivables 48.3 6.1 14.5 (11.2) 57.7 Inventories 166.9 246.4 151.7 (18.3) 546.7 Prepaid expenses and other 43.1 9.5 15.5 — 68.1 Current assets of business held for sale 1,052.2 83.9 781.1 (4.1) 1,913.1 Total current assets 1,444.9 1,937.7 1,505.6 (1,771.5) 3,116.7 Property, plant and equipment, net 174.5 177.3 142.4 — 494.2 Long-term intercompany receivables 310.4 80.0 11.7 (402.1) — Deferred charges and other 154.7 2.5 34.4 (147.9) 43.7 Goodwill 568.6 1,463.4 237.4 — 2,269.4 Intangible assets, net 392.7 997.6 174.5 — 1,564.8 Investments in subsidiaries 5,044.6 1,382.4 (2.8) (6,424.2) — Total assets $ 8,090.4 $ 6,040.9 $ 2,103.2 $ (8,745.7) $ 7,488.8 Liabilities and Shareholder's Equity Current portion of long-term debt $ 14.8 $ 4.3 $ 1.8 $ (0.1) $ 20.8 Accounts payable 88.0 154.1 105.9 — 348.0 Intercompany accounts payable 1,738.9 — 1.0 (1,739.9) — Accrued wages and salaries 21.8 3.4 16.0 — 41.2 Accrued interest 43.3 — — — 43.3 Other current liabilities 64.0 24.2 46.9 (11.2) 123.9 Current liabilities of business held for sale 164.6 1.4 359.3 — 525.3 Total current liabilities 2,135.4 187.4 530.9 (1,751.2) 1,102.5 Long-term debt, net of current portion 4,156.9 89.5 7.1 — 4,253.5 Long-term intercompany debt 11.7 290.9 97.3 (399.9) — Deferred income taxes — 422.3 46.5 (153.7) 315.1 Other long-term liabilities 68.0 6.2 39.0 — 113.2 Total liabilities 6,372.0 996.3 720.8 (2,304.8) 5,784.3 Shareholder's equity: Other capital 2,095.2 787.6 (1,378.5) 567.1 2,071.4 Accumulated (deficit) earnings (153.3) 4,452.3 2,940.1 (7,392.4) (153.3) Accumulated other comprehensive loss (223.5) (195.3) (189.1) 384.4 (223.5) Total shareholder's equity 1,718.4 5,044.6 1,372.5 (6,440.9) 1,694.6 Non-controlling interest — — 9.9 — 9.9 Total equity 1,718.4 5,044.6 1,382.4 (6,440.9) 1,704.5 Total liabilities and equity $ 8,090.4 $ 6,040.9 $ 2,103.2 $ (8,745.7) $ 7,488.8 NOTE 20 - GUARANTOR STATEMENTS – SB/RH (continued) Statement of Financial Position Guarantor Nonguarantor As of September 30, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Cash and cash equivalents $ 6.0 $ 4.8 $ 157.4 $ — $ 168.2 Trade receivables, net 85.4 102.4 78.2 — 266.0 Intercompany receivables 0.7 1,288.1 335.4 (1,624.2) — Other receivables 4.4 4.7 10.6 (1.0) 18.7 Inventories 184.7 205.6 126.4 (20.4) 496.3 Prepaid expenses and other 30.9 8.6 14.6 0.1 54.2 Current assets of business held for sale 228.7 0.2 378.4 (4.3) 603.0 Total current assets 540.8 1,614.4 1,101.0 (1,649.8) 1,606.4 Property, plant and equipment, net 182.2 178.9 142.0 — 503.1 Long-term intercompany receivables 317.2 96.6 12.5 (426.3) — Deferred charges and other 244.2 3.0 35.6 (254.4) 28.4 Goodwill 568.6 1,463.4 245.1 — 2,277.1 Intangible assets, net 401.4 1,027.7 182.9 — 1,612.0 Investments in subsidiaries 4,730.1 1,290.3 — (6,020.4) — Noncurrent assets of business held for sale 814.3 124.4 438.2 — 1,376.9 Total assets $ 7,798.8 $ 5,798.7 $ 2,157.3 $ (8,350.9) $ 7,403.9 Liabilities and Shareholder's Equity Current portion of long-term debt $ 13.8 $ 4.3 $ 5.2 $ (3.9) $ 19.4 Accounts payable 122.2 108.3 141.1 — 371.6 Intercompany accounts payable 1,629.6 — — (1,629.6) — Accrued wages and salaries 27.5 2.3 20.1 — 49.9 Accrued interest 48.5 — — — 48.5 Other current liabilities 50.1 25.6 44.2 (1.0) 118.9 Current liabilities of business held for sale 177.3 0.9 322.4 — 500.6 Total current liabilities 2,069.0 141.4 533.0 (1,634.5) 1,108.9 Long-term debt, net of current portion 3,650.8 92.1 9.4 — 3,752.3 Long-term intercompany debt 12.6 302.1 102.4 (417.1) — Deferred income taxes 177.9 523.5 52.0 (260.2) 493.2 Other long-term liabilities 11.5 6.1 40.4 — 58.0 Noncurrent liabilities of business held for sale 22.8 3.4 129.9 — 156.1 Total liabilities 5,944.6 1,068.6 867.1 (2,311.8) 5,568.5 Shareholder's equity: Other capital 2,107.1 1,089.9 (1,075.0) (43.0) 2,079.0 Accumulated (deficit) earnings (42.8) 3,814.1 2,521.6 (6,335.7) (42.8) Accumulated other comprehensive loss (210.1) (173.9) (165.2) 339.6 (209.6) Total shareholder's equity 1,854.2 4,730.1 1,281.4 (6,039.1) 1,826.6 Non-controlling interest — — 8.8 — 8.8 Total equity 1,854.2 4,730.1 1,290.2 (6,039.1) 1,835.4 Total liabilities and equity $ 7,798.8 $ 5,798.7 $ 2,157.3 $ (8,350.9) $ 7,403.9 NOTE 20 - GUARANTOR STATEMENTS – SB/RH (continued) Statement of Income Guarantor Nonguarantor Three month period ended July 1, 2018 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 378.7 $ 851.4 $ 290.6 $ (575.2) $ 945.5 Cost of goods sold 277.5 649.0 234.1 (574.6) 586.0 Restructuring and related charges — 3.2 1.7 — 4.9 Gross profit 101.2 199.2 54.8 (0.6) 354.6 Selling 40.7 50.7 32.7 (0.2) 123.9 General and administrative 28.9 31.0 6.7 — 66.6 Research and development 1.8 2.9 2.2 — 6.9 Acquisition and integration related charges 0.9 0.7 0.7 — 2.3 Restructuring and related charges 13.3 4.8 2.4 — 20.5 Total operating expense 85.6 90.1 44.7 (0.2) 220.2 Operating income 15.6 109.1 10.1 (0.4) 134.4 Interest expense 37.7 5.4 0.5 — 43.6 Other non-operating (income) expense, net (82.7) (12.1) 0.5 95.0 0.7 Income from operations before income taxes 60.6 115.8 9.1 (95.4) 90.1 Income tax (benefit) expense (9.2) 29.3 0.5 (0.1) 20.5 Net income from continuing operations 69.8 86.5 8.6 (95.3) 69.6 Income from discontinued operations, net of tax (10.2) 16.3 17.1 (32.7) (9.5) Net income 59.6 102.8 25.7 (128.0) 60.1 Net income attributable to non-controlling interest — — 0.2 — 0.2 Net income attributable to controlling interest $ 59.6 $ 102.8 $ 25.5 $ (128.0) $ 59.9 Statement of Income Guarantor Nonguarantor Nine Month Period Ended July 1, 2018 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 1,026.8 $ 1,873.9 $ 877.6 $ (1,420.2) $ 2,358.1 Cost of goods sold 764.2 1,453.3 688.9 (1,421.9) 1,484.5 Restructuring and related charges — 6.5 3.4 — 9.9 Gross profit 262.6 414.1 185.3 1.7 863.7 Selling 131.8 132.0 100.4 (0.4) 363.8 General and administrative 74.0 81.3 25.2 0.1 180.6 Research and development 5.5 8.7 6.9 — 21.1 Acquisition and integration related charges 5.2 3.8 3.0 — 12.0 Restructuring and related charges 45.1 9.5 4.5 — 59.1 Total operating expense 261.6 235.3 140.0 (0.3) 636.6 Operating income 1.0 178.8 45.3 2.0 227.1 Interest expense 107.8 15.6 0.9 (0.1) 124.2 Other non-operating (income) expense, net (308.6) (49.3) — 361.4 3.5 Income from operations before income taxes 201.8 212.5 44.4 (359.3) 99.4 Income tax benefit (6.6) (98.6) (5.9) 0.1 (111.0) Net income from continuing operations 208.4 311.1 50.3 (359.4) 210.4 Income from discontinued operations, net of tax 31.9 75.8 77.9 (153.6) 32.0 Net income 240.3 386.9 128.2 (513.0) 242.4 Net income attributable to non-controlling interest — — 1.0 — 1.0 Net income attributable to controlling interest $ 240.3 $ 386.9 $ 127.2 $ (513.0) $ 241.4 NOTE 20 - GUARANTOR STATEMENTS – SB/RH (continued) Statement of Income Guarantor Nonguarantor Three month period ended July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 299.1 $ 668.5 $ 276.1 $ (380.8) $ 862.9 Cost of goods sold 205.1 489.0 216.2 (378.8) 531.5 Restructuring and related charges — 11.2 — — 11.2 Gross profit 94.0 168.3 59.9 (2.0) 320.2 Selling 42.5 53.9 31.9 (0.4) 127.9 General and administrative 26.3 23.7 7.8 — 57.8 Research and development 2.1 2.6 2.5 — 7.2 Acquisition and integration related charges 4.6 0.1 0.5 — 5.2 Restructuring and related charges 7.8 1.9 0.3 — 10.0 Total operating expense 83.3 82.2 43.0 (0.4) 208.1 Operating income 10.7 86.1 16.9 (1.6) 112.1 Interest expense 33.0 5.9 0.9 — 39.8 Other non-operating (income) expense, net (68.4) (14.8) 0.8 83.8 1.4 Income from operations before income taxes 46.1 95.0 15.2 (85.4) 70.9 Income tax (benefit) expense (6.8) 26.4 — 0.2 19.8 Net income from continuing operations 52.9 68.6 15.2 (85.6) 51.1 Income from discontinued operations, net of tax 28.5 22.3 23.9 (46.4) 28.3 Net income 81.4 90.9 39.1 (132.0) 79.4 Net income attributable to non-controlling interest — — 1.7 — 1.7 Net income attributable to controlling interest $ 81.4 $ 90.9 $ 37.4 $ (132.0) $ 77.7 Statement of Income Guarantor Nonguarantor Nine Month Period Ended July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 841.0 $ 1,510.4 $ 784.1 $ (913.9) $ 2,221.6 Cost of goods sold 559.9 1,073.5 614.3 (908.5) 1,339.2 Restructuring and related charges — 16.4 — — 16.4 Gross profit 281.1 420.5 169.8 (5.4) 866.0 Selling 127.0 132.8 95.3 (1.2) 353.9 General and administrative 96.6 57.6 27.5 — 181.7 Research and development 6.1 8.4 6.4 — 20.9 Acquisition and integration related charges 9.9 0.4 1.3 — 11.6 Restructuring and related charges 9.4 4.9 0.6 — 14.9 Total operating expense 249.0 204.1 131.1 (1.2) 583.0 Operating income 32.1 216.4 38.7 (4.2) 283.0 Interest expense 104.2 14.0 3.8 — 122.0 Other non-operating (income) expense, net (186.9) (38.0) (0.7) 227.9 2.3 Income from operations before income taxes 114.8 240.4 35.6 (232.1) 158.7 Income tax expense (benefit) 5.4 54.3 (6.2) (0.2) 53.3 Net income from continuing operations 109.4 186.1 41.8 (231.9) 105.4 Income from discontinued operations, net of tax 100.0 78.6 82.6 (161.4) 99.8 Net income 209.4 264.7 124.4 (393.3) 205.2 Net income attributable to non-controlling interest — — 1.5 — 1.5 Net income attributable to controlling interest $ 209.4 $ 264.7 $ 122.9 $ (393.3) $ 203.7 NOTE 20 - GUARANTOR STATEMENTS – SB/RH (continued) Statement of Comprehensive Income Guarantor Nonguarantor Three month period ended July 1, 2018 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income $ 59.6 $ 102.8 $ 25.7 $ (128.0) $ 60.1 Other comprehensive income (loss), net of tax: Net unrealized loss on foreign currency translation (59.2) (59.2) (62.4) 121.7 (59.1) Unrealized gain on hedging derivative instruments 30.4 9.2 9.2 (18.4) 30.4 Defined benefit pension gain 2.9 2.4 2.4 (4.8) 2.9 Other comprehensive (loss) income (25.9) (47.6) (50.8) 98.5 (25.8) Comprehensive income (loss) 33.7 55.2 (25.1) (29.5) 34.3 Comprehensive loss attributable to non-controlling interest — — (0.6) — (0.6) Comprehensive income (loss) attributable to controlling interest $ 33.7 $ 55.2 $ (24.5) $ (29.5) $ 34.9 Statement of Comprehensive Income Guarantor Nonguarantor Nine Month Period Ended July 1, 2018 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income $ 240.3 $ 386.9 $ 128.2 $ (513.0) $ 242.4 Other comprehensive income (loss), net of tax: Foreign currency translation loss (37.0) (37.0) (39.4) 76.5 (36.9) Unrealized gain on derivative instruments 20.6 13.4 13.4 (26.8) 20.6 Defined benefit pension gain 2.5 1.7 1.7 (3.4) 2.5 Other comprehensive income (13.9) (21.9) (24.3) 46.3 (13.8) Comprehensive income 226.4 365.0 103.9 (466.7) 228.6 Comprehensive loss attributable to non-controlling interest — — (0.1) — (0.1) Comprehensive income attributable to controlling interest $ 226.4 $ 365.0 $ 104.0 $ (466.7) $ 228.7 Statement of Comprehensive Income Guarantor Nonguarantor Three month period ended July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income $ 81.4 $ 90.9 $ 39.1 $ (132.0) $ 79.4 Other comprehensive income (loss), net of tax: Net unrealized gain on foreign currency translation 30.3 32.3 31.1 (63.4) 30.3 Unrealized loss on hedging derivative instruments (30.2) (9.1) (9.1) 18.2 (30.2) Defined benefit pension loss (2.3) (2.3) (2.3) 4.6 (2.3) Other comprehensive (loss) income (2.2) 20.9 19.7 (40.6) (2.2) Comprehensive income 79.2 111.8 58.8 (172.6) 77.2 Comprehensive loss attributable to non-controlling interest — — (0.2) — (0.2) Comprehensive income attributable to controlling interest $ 79.2 $ 111.8 $ 59.0 $ (172.6) $ 77.4 Statement of Comprehensive Income Guarantor Nonguarantor Nine Month Period Ended July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income $ 209.4 $ 264.7 $ 124.4 $ (393.3) $ 205.2 Other comprehensive income (loss), net of tax: Foreign currency translation gain 5.9 8.8 8.1 (16.9) 5.9 Unrealized loss on derivative instruments (15.7) (9.9) (9.9) 19.8 (15.7) Defined benefit pension gain 0.8 0.8 0.8 (1.7) 0.7 Other comprehensive loss (9.0) (0.3) (1.0) 1.2 (9.1) Comprehensive income 200.4 264.4 123.4 (392.1) 196.1 Comprehensive loss attributable to non-controlling interest — — (0.4) — (0.4) Comprehensive income attributable to controlling interest $ 200.4 $ 264.4 $ 123.8 $ (392.1) $ 196.5 NOTE 20 - GUARANTOR STATEMENTS – SB/RH (continued) Statement of Cash Flows Guarantor Nonguarantor Nine Month Period Ended July 1, 2018 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash (used) provided by operating activities from continuing operations $ (165.3) $ (25.8) $ 91.0 $ 7.6 $ (92.5) Net cash provided (used) by operating activities from discontinued operations 13.5 0.1 12.4 (31.0) (5.0) Net cash (used) provided by operating activities (151.8) (25.7) 103.4 (23.4) (97.5) Cash flows from investing activities . Purchases of property, plant and equipment (17.9) (13.0) (18.3) — (49.2) Proceeds from sales of property, plant and equipment 0.8 0.1 1.9 — 2.8 Other investing activity, net — (0.2) (0.2) — (0.4) Net cash used by investing activities from continuing operations (17.1) (13.1) (16.6) — (46.8) Net cash used by investing activities from discontinued operations (13.5) (0.1) (13.4) — (27.0) Net cash used by investing activities (30.6) (13.2) (30.0) — (73.8) Cash flows from financing activities Proceeds from issuance of debt 545.5 — 9.8 — 555.3 Payment of debt (35.4) — (15.6) — (51.0) Payment of debt issuance costs (0.4) — — — (0.4) Payment of cash dividends to parent (351.8) — — — (351.8) Advances related to intercompany transactions 20.9 34.9 (79.2) 23.4 — Net cash provided (used) by financing activities from continuing operations 178.8 34.9 (85.0) 23.4 152.1 Net cash provided by financing activities from discontinued operations — — 1.0 — 1.0 Net cash provided (used) by financing activities 178.8 34.9 (84.0) 23.4 153.1 Effect of exchange rate changes on cash and cash equivalents — — (3.1) — (3.1) Net decrease in cash and cash equivalents (3.6) (4.0) (13.7) — (21.3) Cash and cash equivalents, beginning of period 6.0 4.8 157.4 — 168.2 Cash and cash equivalents, end of period $ 2.4 $ 0.8 $ 143.7 $ — $ 146.9 Statement of Cash Flows Guarantor Nonguarantor Nine Month Period Ended July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash provided (used) by operating activities from continuing operations $ 130.8 $ (19.3) $ 32.5 $ (116.8) $ 27.2 Net cash provided by operating activities from discontinued operations 15.4 — 8.6 93.3 117.3 Net cash provided (used) by operating activities 146.2 (19.3) 41.1 (23.5) 144.5 Cash flows from investing activities Purchases of property, plant and equipment (16.7) (16.3) (18.1) — (51.1) Proceeds from sales of property, plant and equipment — 0.2 3.3 — 3.5 Business acquisitions, net cash acquired (304.7) — — — (304.7) Other investing activities — (1.1) — — (1.1) Net cash used by investing activities from continuing operations (321.4) (17.2) (14.8) — (353.4) Net cash used by investing activities from discontinued operations (15.4) — (10.9) — (26.3) Net cash used by investing activities (336.8) (17.2) (25.7) — (379.7) Cash flows from financing activities Proceeds from issuance of debt 543.0 — 13.9 — 556.9 Payment of debt (207.7) — (17.3) — (225.0) Payment of debt issuance costs (5.9) — — — (5.9) Purchase of noncontrolling interest (12.6) — — — (12.6) Payment of cash dividends to parent (240.1) — — — (240.1) Advances related to intercompany transactions 20.9 34.9 (79.3) 23.5 — Net cash provided (used) by financing activities from continuing operations 97.6 34.9 (82.7) 23.5 73.3 Net cash provided by financing activities from discontinued operations — — 2.4 — 2.4 Net cash provided (used) by financing activities 97.6 34.9 (80.3) 23.5 75.7 Effect of exchange rate changes on cash and cash equivalents — — (1.5) — (1.5) Net decrease in cash and cash equivalents (93.0) (1.6) (66.4) — (161.0) Cash and cash equivalents, beginning of period 98.6 3.1 169.1 — 270.8 Cash and cash equivalents, end of period $ 5.6 $ 1.5 $ 102.7 $ — $ 109.8 |