Guarantor and Non-Guarantor Financial Information | 20. 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 June 30, 2019 and December 31, 2018 , and for the three and six months ended June 30, 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 June 30, 2019 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 30.7 $ — $ 33.0 $ — $ 63.7 Accounts receivable, net 1.2 256.4 43.7 — 301.3 Inventories — 732.3 109.8 — 842.1 Assets held for sale — 142.5 — — 142.5 Prepaid expenses and other current assets 94.7 69.9 26.2 (107.1 ) 83.7 Total current assets 126.6 1,201.1 212.7 (107.1 ) 1,433.3 Property, plant, and equipment, net 39.5 963.6 146.1 — 1,149.2 Operating lease right-of-use assets 38.9 151.6 28.1 — 218.6 Goodwill — 1,993.2 119.5 — 2,112.7 Investment in subsidiaries 5,190.6 472.4 — (5,663.0 ) — Deferred income taxes 27.3 — — (27.3 ) — Intangible and other assets, net 91.0 504.1 84.0 — 679.1 Total assets $ 5,513.9 $ 5,286.0 $ 590.4 $ (5,797.4 ) $ 5,592.9 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 31.8 $ 447.6 $ 46.2 $ — $ 525.6 Accrued expenses 120.2 264.5 25.6 (107.1 ) 303.2 Current portion of long-term debt 7.3 0.6 — — 7.9 Total current liabilities 159.3 712.7 71.8 (107.1 ) 836.7 Long-term debt 2,256.6 0.8 0.2 — 2,257.6 Operating lease liabilities 44.7 126.2 23.5 — 194.4 Deferred income taxes — 168.9 19.4 (27.3 ) 161.0 Other long-term liabilities 9.9 145.3 4.7 — 159.9 Intercompany accounts (receivable) payable, net 1,060.1 (1,058.5 ) (1.6 ) — — Stockholders’ equity 1,983.3 5,190.6 472.4 (5,663.0 ) 1,983.3 Total liabilities and stockholders’ equity $ 5,513.9 $ 5,286.0 $ 590.4 $ (5,797.4 ) $ 5,592.9 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 — 770.8 93.0 — 863.8 Prepaid expenses and other current assets 80.9 60.4 16.8 (96.3 ) 61.8 Total current assets 159.8 1,145.3 232.4 (96.3 ) 1,441.2 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 5,170.5 559.3 — (5,729.8 ) — Deferred income taxes 34.2 — — (34.2 ) — Intangible and other assets, net 86.6 577.0 82.8 — 746.4 Total assets $ 5,493.9 $ 5,416.1 $ 573.7 $ (5,860.3 ) $ 5,623.4 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 — 177.9 16.5 (34.2 ) 160.2 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 2,160.0 5,170.5 559.3 (5,729.8 ) 2,160.0 Total liabilities and stockholders’ equity $ 5,493.9 $ 5,416.1 $ 573.7 $ (5,860.3 ) $ 5,623.4 Condensed Supplemental Consolidating Statement of Operations Three Months Ended June 30, 2019 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ 1,196.5 $ 152.2 $ (98.0 ) $ 1,250.7 Cost of sales 0.1 1,005.5 144.1 (98.0 ) 1,051.7 Gross profit (0.1 ) 191.0 8.1 — 199.0 Selling, general, and administrative expense 67.7 87.6 8.1 — — 163.4 Amortization expense 2.0 15.1 2.2 — 19.3 Asset impairment — 130.4 — — 130.4 Other operating expense, net 27.5 7.4 0.6 — 35.5 Operating income (loss) (97.3 ) (49.5 ) (2.8 ) — (149.6 ) Interest expense 30.3 — 1.0 (3.4 ) 27.9 (Gain) loss on foreign currency exchange — (1.2 ) (0.1 ) — (1.3 ) Other expense (income), net 21.5 (0.1 ) (0.6 ) 3.4 24.2 Loss before income taxes (149.1 ) (48.2 ) (3.1 ) — (200.4 ) Income tax benefit (19.5 ) (7.6 ) (1.5 ) — (28.6 ) Equity in net income (loss) of subsidiaries (42.2 ) (1.6 ) — 43.8 — Net loss $ (171.8 ) $ (42.2 ) $ (1.6 ) $ 43.8 $ (171.8 ) Condensed Supplemental Consolidating Statement of Operations Three Months Ended June 30, 2018 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ 1,527.9 $ 170.2 $ (242.3 ) $ 1,455.8 Cost of sales — 1,310.6 151.0 (242.3 ) 1,219.3 Gross profit — 217.3 19.2 — 236.5 Selling, general, and administrative expense 35.0 118.0 11.6 — 164.6 Amortization expense 2.7 16.3 2.3 — 21.3 Other operating expense, net 36.6 7.4 2.7 — 46.7 Operating income (loss) (74.3 ) 75.6 2.6 — 3.9 Interest expense 31.6 — — (0.3 ) 31.3 (Gain) loss on foreign currency exchange — 1.8 0.1 — 1.9 Other expense (income), net (4.4 ) 0.7 (0.4 ) 0.3 (3.8 ) Loss before income taxes (101.5 ) 73.1 2.9 — (25.5 ) Income tax benefit (23.2 ) 17.6 (0.4 ) — (6.0 ) Equity in net income (loss) of subsidiaries 58.8 3.3 — (62.1 ) — Net loss $ (19.5 ) $ 58.8 $ 3.3 $ (62.1 ) $ (19.5 ) Condensed Supplemental Consolidating Statement of Operations Six Months Ended June 30, 2019 (In millions) Parent Guarantor Non-Guarantor Eliminations Consolidated Net sales $ — $ 2,442.2 $ 304.9 $ (195.3 ) $ 2,551.8 Cost of sales 0.1 2,063.3 289.6 (195.3 ) 2,157.7 Gross profit (0.1 ) 378.9 15.3 — 394.1 Selling, general, and administrative expense 102.4 189.6 16.5 — 308.5 Amortization expense 5.4 31.1 4.4 — 40.9 Asset impairment — 130.4 — — 130.4 Other operating expense, net 46.9 16.5 0.9 — 64.3 Operating income (loss) (154.8 ) 11.3 (6.5 ) — (150.0 ) Interest expense 56.4 — 1.8 (3.4 ) 54.8 (Gain) loss on foreign currency exchange — (1.6 ) (0.1 ) — (1.7 ) Other expense (income), net 35.1 0.1 (2.2 ) 3.4 36.4 Loss before income taxes (246.3 ) 12.8 (6.0 ) — (239.5 ) Income tax benefit (41.8 ) 2.2 (1.2 ) — (40.8 ) Equity in net income (loss) of subsidiaries 5.8 (4.8 ) — (1.0 ) — Net loss $ (198.7 ) $ 5.8 $ (4.8 ) $ (1.0 ) $ (198.7 ) Condensed Supplemental Consolidating Statement of Operations Six Months Ended June 30, 2018 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ 2,936.7 $ 347.4 $ (347.1 ) $ 2,937.0 Cost of sales — 2,504.2 310.8 (347.1 ) 2,467.9 Gross profit — 432.5 36.6 — 469.1 Selling, general, and administrative expense 79.6 254.0 20.5 — 354.1 Amortization expense 5.7 33.2 4.6 — 43.5 Other operating expense, net 55.4 17.4 2.8 — 75.6 Operating income (loss) (140.7 ) 127.9 8.7 — (4.1 ) Interest expense 60.6 — 1.4 (2.2 ) 59.8 (Gain) loss on foreign currency exchange (0.4 ) 3.9 0.9 — 4.4 Other expense (income), net 0.9 0.5 (3.2 ) 2.2 0.4 Loss before income taxes (201.8 ) 123.5 9.6 — (68.7 ) Income tax benefit (43.4 ) 27.0 0.8 — (15.6 ) Equity in net income (loss) of subsidiaries 105.3 8.8 — (114.1 ) — Net loss $ (53.1 ) $ 105.3 $ 8.8 $ (114.1 ) $ (53.1 ) Condensed Supplemental Consolidating Statement of Comprehensive Income (Loss) Three Months Ended June 30, 2019 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net loss $ (171.8 ) $ (42.2 ) $ (1.6 ) $ 43.8 $ (171.8 ) Other comprehensive income (loss): Foreign currency translation adjustments — — 7.2 — 7.2 Pension and postretirement reclassification adjustment, net of tax — 0.2 — — 0.2 Other comprehensive income (loss) — 0.2 7.2 — 7.4 Equity in other comprehensive (loss) income of subsidiaries 7.4 7.2 — (14.6 ) — Comprehensive loss $ (164.4 ) $ (34.8 ) $ 5.6 $ 29.2 $ (164.4 ) Condensed Supplemental Consolidating Statement of Comprehensive Income (Loss) Three Months Ended June 30, 2018 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net loss $ (19.5 ) $ 58.8 $ 3.3 $ (62.1 ) $ (19.5 ) Other comprehensive income (loss): Foreign currency translation adjustments — — (9.4 ) — (9.4 ) Pension and postretirement reclassification adjustment, net of tax — 0.1 — — 0.1 Other comprehensive income (loss) — 0.1 (9.4 ) — (9.3 ) Equity in other comprehensive income (loss) of subsidiaries (9.3 ) (9.4 ) — 18.7 — Comprehensive loss $ (28.8 ) $ 49.5 $ (6.1 ) $ (43.4 ) $ (28.8 ) Condensed Supplemental Consolidating Statement of Comprehensive Income (Loss) Six Months Ended June 30, 2019 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net loss $ (198.7 ) $ 5.8 $ (4.8 ) $ (1.0 ) $ (198.7 ) Other comprehensive income (loss): Foreign currency translation adjustments — — 14.0 — 14.0 Pension and postretirement reclassification adjustment, net of tax — 0.3 — — 0.3 Other comprehensive income (loss) — 0.3 14.0 — 14.3 Equity in other comprehensive (loss) income of subsidiaries 14.3 14.0 — (28.3 ) — Comprehensive loss $ (184.4 ) $ 20.1 $ 9.2 $ (29.3 ) $ (184.4 ) Condensed Supplemental Consolidating Statement of Comprehensive Income (Loss) Six Months Ended June 30, 2018 (In millions) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net loss $ (53.1 ) $ 105.3 $ 8.8 $ (114.1 ) $ (53.1 ) Other comprehensive income (loss): Foreign currency translation adjustments — — (19.5 ) — (19.5 ) Pension and postretirement reclassification adjustment, net of tax — 0.3 — — 0.3 Adoption of ASU 2018-02 reclassification to retained earnings — (1.1 ) — — (1.1 ) Other comprehensive income (loss) — (0.8 ) (19.5 ) — (20.3 ) Equity in other comprehensive income (loss) of subsidiaries (20.3 ) (19.5 ) — 39.8 — Comprehensive loss $ (73.4 ) $ 85.0 $ (10.7 ) $ (74.3 ) $ (73.4 ) Condensed Supplemental Consolidating Statement of Cash Flows Six Months Ended June 30, 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 $ (159.1 ) $ 174.6 $ (5.0 ) $ (1.1 ) $ 9.4 Cash flows from investing activities: Additions to property, plant, and equipment — (54.4 ) (5.8 ) — (60.2 ) Additions to intangible assets (13.7 ) (0.1 ) — — (13.8 ) Intercompany transfer (143.9 ) (264.4 ) — 408.3 — Other 0.1 0.3 0.9 — 1.3 Net cash (used in) provided by investing activities (157.5 ) (318.6 ) (4.9 ) 408.3 (72.7 ) Cash flows from financing activities: Net (repayment) borrowing of debt (35.4 ) 0.3 (1.2 ) — (36.3 ) Intercompany transfer 309.9 143.7 (46.4 ) (407.2 ) — Receipts related to stock-based award activities 0.5 — — — 0.5 Payments related to stock-based award activities (5.6 ) — — — (5.6 ) Net cash (used in) provided by financing activities 269.4 144.0 (47.6 ) (407.2 ) (41.4 ) Effect of exchange rate changes on cash and cash equivalents — — 4.1 — 4.1 Decrease (increase) in cash and cash equivalents (47.2 ) — (53.4 ) — (100.6 ) Cash and cash equivalents, beginning of period 77.9 — 86.4 — 164.3 Cash and cash equivalents, end of period $ 30.7 $ — $ 33.0 $ — $ 63.7 Condensed Supplemental Consolidating Statement of Cash Flows Six Months Ended June 30, 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 $ 66.5 $ 230.0 $ 27.5 $ (92.7 ) $ 231.3 Cash flows from investing activities: Additions to property, plant, and equipment (1.1 ) (70.2 ) (8.0 ) — (79.3 ) Additions to intangible assets (8.4 ) (0.6 ) — — (9.0 ) Intercompany transfer 24.1 (91.9 ) 15.5 52.3 — Other — 3.3 (0.7 ) — 2.6 Net cash (used in) provided by investing activities 14.6 (159.4 ) 6.8 52.3 (85.7 ) Cash flows from financing activities: Net borrowing (repayment) of debt (148.6 ) (1.5 ) — — (150.1 ) Intercompany transfer 56.3 (69.3 ) (27.4 ) 40.4 — Repurchases of common stock (29.6 ) — — — (29.6 ) Receipts related to stock-based award activities 4.7 — — — 4.7 Payments related to stock-based award activities (3.0 ) — — — (3.0 ) Net cash (used in) provided by financing activities (120.2 ) (70.8 ) (27.4 ) 40.4 (178.0 ) Effect of exchange rate changes on cash and cash equivalents — — (1.5 ) — (1.5 ) Increase (decrease) in cash and cash equivalents (39.1 ) (0.2 ) 5.4 — (33.9 ) Cash and cash equivalents, beginning of period 83.2 0.2 49.4 — 132.8 Cash and cash equivalents, end of period $ 44.1 $ — $ 54.8 $ — $ 98.9 |