Guarantor and Non-Guarantor Financial Information | 17. GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION The 2022 Notes and 2024 Notes are fully and unconditionally, as well as jointly and severally, guaranteed by our directly and indirectly owned domestic subsidiaries, which are collectively known as the “Guarantor Subsidiaries”. Bay Valley Foods, LLC, which is a 100% owned direct subsidiary, maintains 100% direct and indirect ownership of the following Guarantor Subsidiaries: Sturm Foods, Inc.; S.T. Specialty Foods, Inc.; Associated Brands, Inc.; Cains Foods, Inc.; Cains Foods L.P.; Cains GP, LLC; Flagstone Foods, Inc., Protenergy Holdings, Inc.; Protenergy Natural Foods, Inc.; TreeHouse Private Brands, Inc. (formerly Ralcorp Holdings, Inc.); American Italian Pasta Company.; Nutcracker Brands, Inc.; Linette Quality Chocolates, Inc.; Ralcorp Frozen Bakery Products, Inc.; Cottage Bakery, Inc.; The Carriage House Companies, Inc. and certain other domestic subsidiaries that may become guarantors in the future. The guarantees of the Guarantor Subsidiaries are subject to release in limited circumstances, only upon the occurrence of certain customary conditions. There are no significant restrictions on the ability of the parent company or any guarantor to obtain funds from its subsidiaries by dividend or loan. The following condensed supplemental consolidating financial information presents the results of operations, financial position, and cash flows of the parent company, its Guarantor Subsidiaries, its non-guarantor subsidiaries, and the eliminations necessary to arrive at the information for the Company on a consolidated basis as of March 31, 2019 and December 31, 2018 , and for the three months ended March 31, 2019 and 2018 . The equity method has been used with respect to investments in subsidiaries. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Condensed Supplemental Consolidating Balance Sheet March 31, 2019 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 40.8 $ — $ 38.2 $ — $ 79.0 Accounts receivable, net 0.7 320.7 45.9 — 367.3 Inventories — 748.8 105.4 — 854.2 Prepaid expenses and other current assets 99.3 60.9 24.7 (106.1 ) 78.8 Total current assets 140.8 1,130.4 214.2 (106.1 ) 1,379.3 Property, plant, and equipment, net 41.8 1,074.1 144.1 — 1,260.0 Operating lease right-of-use assets 38.1 160.8 29.9 — 228.8 Goodwill — 2,046.7 117.2 — 2,163.9 Investment in subsidiaries 5,206.9 484.1 — (5,691.0 ) — Deferred income taxes 34.0 — — (34.0 ) — Intangible and other assets, net 90.0 560.6 82.4 — 733.0 Total assets $ 5,551.6 $ 5,456.7 $ 587.8 $ (5,831.1 ) $ 5,765.0 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 37.5 $ 495.3 $ 58.3 $ — $ 591.1 Accrued expenses 65.4 260.5 25.8 (106.1 ) 245.6 Current portion of long-term debt 4.1 0.4 0.1 — 4.6 Total current liabilities 107.0 756.2 84.2 (106.1 ) 841.3 Long-term debt 2,284.2 0.4 0.6 — 2,285.2 Operating lease liabilities 43.6 135.5 25.5 — 204.6 Deferred income taxes — 172.1 17.1 (34.0 ) 155.2 Other long-term liabilities 9.0 142.0 4.5 — 155.5 Intercompany accounts (receivable) payable, net 984.6 (956.4 ) (28.2 ) — — Stockholders’ equity 2,123.2 5,206.9 484.1 (5,691.0 ) 2,123.2 Total liabilities and stockholders’ equity $ 5,551.6 $ 5,456.7 $ 587.8 $ (5,831.1 ) $ 5,765.0 Condensed Supplemental Consolidating Balance Sheet December 31, 2018 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 77.9 $ — $ 86.4 $ — $ 164.3 Accounts receivable, net 1.0 314.1 36.2 — 351.3 Inventories — 746.7 93.0 — 839.7 Prepaid expenses and other current assets 80.9 60.4 16.8 (96.3 ) 61.8 Total current assets 159.8 1,121.2 232.4 (96.3 ) 1,417.1 Property, plant, and equipment, net 42.8 1,087.8 143.8 — 1,274.4 Goodwill — 2,046.7 114.7 — 2,161.4 Investment in subsidiaries 5,152.4 559.3 — (5,711.7 ) — Deferred income taxes 34.2 — — (34.2 ) — Intangible and other assets, net 86.6 577.0 82.8 — 746.4 Total assets $ 5,475.8 $ 5,392.0 $ 573.7 $ (5,842.2 ) $ 5,599.3 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 23.9 $ 508.3 $ 45.7 $ — $ 577.9 Accrued expenses 71.8 261.6 19.0 (96.3 ) 256.1 Current portion of long-term debt 0.6 0.5 0.1 — 1.2 Total current liabilities 96.3 770.4 64.8 (96.3 ) 835.2 Long-term debt 2,296.2 0.6 0.6 — 2,297.4 Deferred income taxes — 171.9 16.5 (34.2 ) 154.2 Other long-term liabilities 17.7 147.8 5.1 — 170.6 Intercompany accounts (receivable) payable, net 923.7 (851.1 ) (72.6 ) — — Stockholders’ equity 2,141.9 5,152.4 559.3 (5,711.7 ) 2,141.9 Total liabilities and stockholders’ equity $ 5,475.8 $ 5,392.0 $ 573.7 $ (5,842.2 ) $ 5,599.3 Condensed Supplemental Consolidating Statement of Operations Three Months Ended March 31, 2019 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ 1,245.7 $ 152.7 $ (97.3 ) $ 1,301.1 Cost of sales — 1,058.3 145.5 (97.3 ) 1,106.5 Gross profit — 187.4 7.2 — 194.6 Selling, general, and administrative expense 34.7 102.0 8.4 — — 145.1 Amortization expense 3.4 16.0 2.2 — 21.6 Other operating expense, net 19.4 9.1 0.3 — 28.8 Operating income (loss) (57.5 ) 60.3 (3.7 ) — (0.9 ) Interest expense 26.1 — 0.8 — 26.9 (Gain) loss on foreign currency exchange — (0.4 ) — — (0.4 ) Other expense, net 13.6 0.2 (1.6 ) — 12.2 Loss before income taxes (97.2 ) 60.5 (2.9 ) — (39.6 ) Income tax benefit (22.3 ) 9.7 0.3 — (12.3 ) Equity in net income (loss) of subsidiaries 47.6 (3.2 ) — (44.4 ) — Net loss $ (27.3 ) $ 47.6 $ (3.2 ) $ (44.4 ) $ (27.3 ) Condensed Supplemental Consolidating Statement of Operations Three Months Ended March 31, 2018 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ 1,408.8 $ 177.2 $ (104.8 ) $ 1,481.2 Cost of sales — 1,194.3 159.8 (104.8 ) 1,249.3 Gross profit — 214.5 17.4 — 231.9 Selling, general, and administrative expense 44.6 136.0 8.9 — 189.5 Amortization expense 3.0 16.9 2.3 — 22.2 Other operating expense, net 18.8 10.0 0.1 — 28.9 Operating income (loss) (66.4 ) 51.6 6.1 — (8.7 ) Interest expense 29.0 — 1.4 (1.9 ) 28.5 (Gain) loss on foreign currency exchange (0.4 ) 2.1 0.8 — 2.5 Other expense, net 5.3 (0.2 ) (2.8 ) 1.9 4.2 Loss before income taxes (100.3 ) 49.7 6.7 — (43.9 ) Income tax benefit (20.2 ) 9.2 1.2 — (9.8 ) Equity in net income (loss) of subsidiaries 46.0 5.5 — (51.5 ) — Net loss $ (34.1 ) $ 46.0 $ 5.5 $ (51.5 ) $ (34.1 ) Condensed Supplemental Consolidating Statement of Comprehensive Income (Loss) Three Months Ended March 31, 2019 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net loss $ (27.3 ) $ 47.6 $ (3.2 ) $ (44.4 ) $ (27.3 ) Other comprehensive income (loss): Foreign currency translation adjustments — — 6.8 — 6.8 Pension and postretirement reclassification adjustment, net of tax — 0.1 — — 0.1 Other comprehensive income (loss) — 0.1 6.8 — 6.9 Equity in other comprehensive (loss) income of subsidiaries 6.9 6.8 — (13.7 ) — Comprehensive loss $ (20.4 ) $ 54.5 $ 3.6 $ (58.1 ) $ (20.4 ) Condensed Supplemental Consolidating Statement of Comprehensive Income (Loss) Three Months Ended March 31, 2018 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net loss $ (34.1 ) $ 46.0 $ 5.5 $ (51.5 ) $ (34.1 ) Other comprehensive income (loss): Foreign currency translation adjustments — — (10.1 ) — (10.1 ) Pension and postretirement reclassification adjustment, net of tax — 0.2 — — 0.2 Adoption of ASU 2018-02 reclassification to retained earnings — (1.1 ) — — (1.1 ) Other comprehensive income (loss) — (0.9 ) (10.1 ) — (11.0 ) Equity in other comprehensive income (loss) of subsidiaries (9.9 ) (10.1 ) — 20.0 — Comprehensive loss $ (44.0 ) $ 35.0 $ (4.6 ) $ (31.5 ) $ (45.1 ) Condensed Supplemental Consolidating Statement of Cash Flows Three Months Ended March 31, 2019 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by (used in) operating activities $ (50.0 ) $ 61.9 $ (5.3 ) $ (44.5 ) $ (37.9 ) Cash flows from investing activities: Additions to property, plant, and equipment — (27.7 ) (2.2 ) — (29.9 ) Additions to intangible assets (6.4 ) (0.1 ) — — (6.5 ) Intercompany transfer (21.5 ) (11.8 ) — 33.3 — Other — — (0.1 ) — (0.1 ) Net cash (used in) provided by investing activities (27.9 ) (39.6 ) (2.3 ) 33.3 (36.5 ) Cash flows from financing activities: Net (repayment) borrowing of debt (10.0 ) (0.4 ) — — (10.4 ) Intercompany transfer 55.2 (21.9 ) (44.5 ) 11.2 — Receipts related to stock-based award activities 0.2 — — — 0.2 Payments related to stock-based award activities (4.6 ) — — — (4.6 ) Net cash (used in) provided by financing activities 40.8 (22.3 ) (44.5 ) 11.2 (14.8 ) Effect of exchange rate changes on cash and cash equivalents — — 3.9 — 3.9 Decrease (increase) in cash and cash equivalents (37.1 ) — (48.2 ) — (85.3 ) Cash and cash equivalents, beginning of period 77.9 — 86.4 — 164.3 Cash and cash equivalents, end of period $ 40.8 $ — $ 38.2 $ — $ 79.0 Condensed Supplemental Consolidating Statement of Cash Flows Three Months Ended March 31, 2018 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by (used in) operating activities $ 41.3 $ 41.2 $ 26.5 $ (51.2 ) $ 57.8 Cash flows from investing activities: Additions to property, plant, and equipment (0.9 ) (32.3 ) (5.3 ) — (38.5 ) Additions to intangible assets (2.5 ) (0.4 ) — — (2.9 ) Intercompany transfer (42.8 ) (43.3 ) 0.5 85.6 — Other — — (0.3 ) — (0.3 ) Net cash (used in) provided by investing activities (46.2 ) (76.0 ) (5.1 ) 85.6 (41.7 ) Cash flows from financing activities: Net borrowing (repayment) of debt (2.4 ) (1.4 ) — — (3.8 ) Intercompany transfer 10.8 36.2 (12.6 ) (34.4 ) — Repurchases of common stock (17.1 ) — — — (17.1 ) Receipts related to stock-based award activities 1.9 — — — 1.9 Payments related to stock-based award activities (1.1 ) — — — (1.1 ) Net cash (used in) provided by financing activities (7.9 ) 34.8 (12.6 ) (34.4 ) (20.1 ) Effect of exchange rate changes on cash and cash equivalents — — (0.3 ) — (0.3 ) Increase (decrease) in cash and cash equivalents (12.8 ) — 8.5 — (4.3 ) Cash and cash equivalents, beginning of period 83.2 0.2 49.4 — 132.8 Cash and cash equivalents, end of period $ 70.4 $ 0.2 $ 57.9 $ — $ 128.5 |