Guarantor and Non-Guarantor Financial Information | 22. 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, 2018 and December 31, 2017, and for the three and six months ended June 30, 2018 and 2017. 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, 2018 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 44.1 $ — $ 54.8 $ — $ 98.9 Investments — — 14.0 — 14.0 Accounts receivable, net 1.3 207.6 49.4 — 258.3 Inventories — 839.4 104.9 — 944.3 Deferred income taxes 12.4 — — (12.4 ) — Prepaid expenses and other current assets 28.2 64.6 25.7 — 118.5 Total current assets 86.0 1,111.6 248.8 (12.4 ) 1,434.0 Property, plant, and equipment, net 35.3 1,086.7 148.4 — 1,270.4 Goodwill — 2,057.3 119.2 — 2,176.5 Investment in subsidiaries 5,029.9 571.9 — (5,601.8 ) — Intangible and other assets, net 68.6 620.4 90.6 — 779.6 Total assets $ 5,219.8 $ 5,447.9 $ 607.0 $ (5,614.2 ) $ 5,660.5 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses $ 63.3 $ 578.8 $ 56.6 $ — $ 698.7 Current portion of long-term debt 9.6 0.5 0.1 — 10.2 Total current liabilities 72.9 579.3 56.7 — 708.9 Long-term debt 2,389.8 0.5 0.5 — 2,390.8 Deferred income taxes — 164.4 21.8 (12.4 ) 173.8 Other long-term liabilities 18.2 169.4 13.9 — 201.5 Intercompany accounts receivable (payable), net 553.4 (495.5 ) (57.9 ) — — Stockholders’ equity 2,185.5 5,029.8 572.0 (5,601.8 ) 2,185.5 Total liabilities and stockholders’ equity $ 5,219.8 $ 5,447.9 $ 607.0 $ (5,614.2 ) $ 5,660.5 Condensed Supplemental Consolidating Balance Sheet December 31, 2017 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 83.2 $ 0.2 $ 49.4 $ — $ 132.8 Investments — — 14.1 — 14.1 Accounts receivable, net 0.2 297.1 32.5 — 329.8 Inventories — 803.1 115.2 — 918.3 Prepaid expenses and other current assets 69.8 32.0 20.0 (32.1 ) 89.7 Total current assets 153.2 1,132.4 231.2 (32.1 ) 1,484.7 Property, plant, and equipment, net 29.3 1,108.7 156.4 — 1,294.4 Goodwill — 2,057.3 124.7 — 2,182.0 Investment in subsidiaries 4,945.5 582.6 — (5,528.1 ) — Intercompany accounts (payable) receivable, net (328.6 ) 274.5 54.1 — — Deferred income taxes 15.1 — — (15.1 ) — Intangible and other assets, net 62.5 652.1 103.6 — 818.2 Total assets $ 4,877.0 $ 5,807.6 $ 670.0 $ (5,575.3 ) $ 5,779.3 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses $ 53.3 $ 513.8 $ 54.7 $ (32.1 ) $ 589.7 Current portion of long-term debt 9.0 1.1 — — 10.1 Total current liabilities 62.3 514.9 54.7 (32.1 ) 599.8 Long-term debt 2,533.8 1.4 0.5 — 2,535.7 Deferred income taxes — 167.3 26.2 (15.1 ) 178.4 Other long-term liabilities 17.6 178.5 6.0 — 202.1 Stockholders’ equity 2,263.3 4,945.5 582.6 (5,528.1 ) 2,263.3 Total liabilities and stockholders’ equity $ 4,877.0 $ 5,807.6 $ 670.0 $ (5,575.3 ) $ 5,779.3 Condensed Supplemental Consolidating Statement of Operations Three Months Ended June 30, 2018 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 1,527.9 $ 170.2 $ (242.3 ) $ 1,455.8 Cost of sales — 1,311.3 151.0 (242.3 ) 1,220.0 Gross profit — 216.6 19.2 — 235.8 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 (loss) income (74.3 ) 74.9 2.6 — 3.2 Interest expense 31.6 — — (0.3 ) 31.3 Interest income (0.1 ) (0.4 ) (0.3 ) 0.3 (0.5 ) Other (income) expense, net (4.3 ) 2.9 — — (1.4 ) (Loss) income before income taxes (101.5 ) 72.4 2.9 — (26.2 ) Income taxes (23.2 ) 17.5 (0.4 ) — (6.1 ) Equity in net income (loss) of subsidiaries 58.2 3.4 — (61.6 ) — Net (loss) income $ (20.1 ) $ 58.3 $ 3.3 $ (61.6 ) $ (20.1 ) Condensed Supplemental Consolidating Statement of Operations Three Months Ended June 30, 2017 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 1,439.9 $ 158.9 $ (76.6 ) $ 1,522.2 Cost of sales — 1,187.3 134.9 (76.6 ) 1,245.6 Gross profit — 252.6 24.0 — 276.6 Selling, general, and administrative expense 34.6 132.7 10.4 — 177.7 Amortization expense 3.2 23.1 2.4 — 28.7 Other operating expense, net — 92.8 1.2 — 94.0 Operating (loss) income (37.8 ) 4.0 10.0 — (23.8 ) Interest expense 31.7 — (0.2 ) 0.3 31.8 Interest income — 0.3 (0.3 ) (0.3 ) (0.3 ) Other expense (income), net 1.5 (0.2 ) (0.6 ) — 0.7 (Loss) income before income taxes (71.0 ) 3.9 11.1 — (56.0 ) Income taxes (27.4 ) 3.1 2.5 — (21.8 ) Equity in net income (loss) of subsidiaries 9.4 8.6 — (18.0 ) — Net (loss) income $ (34.2 ) $ 9.4 $ 8.6 $ (18.0 ) $ (34.2 ) Condensed Supplemental Consolidating Statement of Operations Six Months Ended June 30, 2018 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 2,936.7 $ 347.4 $ (347.1 ) $ 2,937.0 Cost of sales — 2,505.6 310.8 (347.1 ) 2,469.3 Gross profit — 431.1 36.6 — 467.7 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 (loss) income (140.7 ) 126.5 8.7 — (5.5 ) Interest expense 60.6 — 1.4 (2.2 ) 59.8 Interest income (2.3 ) (2.1 ) (0.3 ) 2.2 (2.5 ) Other expense (income), net 2.8 6.5 (2.0 ) — 7.3 (Loss) income before income taxes (201.8 ) 122.1 9.6 — (70.1 ) Income taxes (43.4 ) 26.7 0.8 — (15.9 ) Equity in net income (loss) of subsidiaries 104.2 8.9 — (113.1 ) — Net (loss) income $ (54.2 ) $ 104.3 $ 8.8 $ (113.1 ) $ (54.2 ) Condensed Supplemental Consolidating Statement of Operations Six Months Ended June 30, 2017 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 2,895.3 $ 322.9 $ (159.8 ) $ 3,058.4 Cost of sales — 2,375.7 279.5 (159.8 ) 2,495.4 Gross profit — 519.6 43.4 — 563.0 Selling, general, and administrative expense 62.1 279.3 20.0 — 361.4 Amortization expense 6.1 46.5 4.7 — 57.3 Other operating expense, net — 99.4 1.4 — 100.8 Operating (loss) income (68.2 ) 94.4 17.3 — 43.5 Interest expense 62.9 0.2 1.0 (2.6 ) 61.5 Interest income (2.2 ) (2.6 ) (0.9 ) 2.6 (3.1 ) Other expense (income), net 1.6 (0.2 ) — — 1.4 (Loss) income before income taxes (130.5 ) 97.0 17.2 — (16.3 ) Income taxes (50.2 ) 36.5 3.4 — (10.3 ) Equity in net income (loss) of subsidiaries 74.3 13.8 — (88.1 ) — Net (loss) income $ (6.0 ) $ 74.3 $ 13.8 $ (88.1 ) $ (6.0 ) Condensed Supplemental Consolidating Statement of Comprehensive Income (Loss) Three Months Ended June 30, 2018 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net (loss) income $ (20.1 ) $ 58.3 $ 3.3 $ (61.6 ) $ (20.1 ) Other comprehensive income: Foreign currency translation adjustments — — (9.4 ) — (9.4 ) Pension and postretirement reclassification adjustment, net of tax — 0.1 — — 0.1 Adoption of ASU 2018-02 reclassification to retained earnings — — — — — Other comprehensive income (loss) — 0.1 (9.4 ) — (9.3 ) Equity in other comprehensive (loss) income of subsidiaries (10.4 ) (9.6 ) — 20.0 — Comprehensive (loss) income $ (30.5 ) $ 48.8 $ (6.1 ) $ (41.6 ) $ (29.4 ) Condensed Supplemental Consolidating Statement of Comprehensive Income (Loss) Three Months Ended June 30, 2017 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net (loss) income $ (34.2 ) $ 9.4 $ 8.6 $ (18.0 ) $ (34.2 ) Other comprehensive income: Foreign currency translation adjustments — — 12.9 — 12.9 Pension and postretirement reclassification adjustment, net of tax — 6.8 — — 6.8 Other comprehensive income — 6.8 12.9 — 19.7 Equity in other comprehensive income (loss) of subsidiaries 19.7 12.9 — (32.6 ) — Comprehensive (loss) income $ (14.5 ) $ 29.1 $ 21.5 $ (50.6 ) $ (14.5 ) Condensed Supplemental Consolidating Statement of Comprehensive Income (Loss) Six Months Ended June 30, 2018 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net (loss) income $ (54.2 ) $ 104.3 $ 8.8 $ (113.1 ) $ (54.2 ) Other comprehensive income: 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 loss — (0.8 ) (19.5 ) — (20.3 ) Equity in other comprehensive (loss) income of subsidiaries (20.3 ) (19.7 ) — 40.0 — Comprehensive (loss) income $ (74.5 ) $ 83.8 $ (10.7 ) $ (73.1 ) $ (74.5 ) Condensed Supplemental Consolidating Statement of Comprehensive Income (Loss) Six Months Ended June 30, 2017 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net (loss) income $ (6.0 ) $ 74.3 $ 13.8 $ (88.1 ) $ (6.0 ) Other comprehensive income: Foreign currency translation adjustments — — 16.5 — 16.5 Pension and postretirement reclassification adjustment, net of tax — 7.1 — — 7.1 Other comprehensive income — 7.1 16.5 — 23.6 Equity in other comprehensive income (loss) of subsidiaries 23.6 16.5 — (40.1 ) — Comprehensive income (loss) $ 17.6 $ 97.9 $ 30.3 $ (128.2 ) $ 17.6 Condensed Supplemental Consolidating Statement of Cash Flows Six Months Ended June 30, 2018 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries 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 provided by (used in) investing activities 14.6 (159.4 ) 6.8 52.3 (85.7 ) Cash flows from financing activities: Net (repayment) borrowing 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 provided by (used in) 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 Condensed Supplemental Consolidating Statement of Cash Flows Six Months Ended June 30, 2017 (In millions) Parent Guarantor Non-Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by (used in) operating activities $ (0.4 ) $ 400.5 $ 8.1 $ (80.8 ) $ 327.4 Cash flows from investing activities: Additions to property, plant, and equipment (1.3 ) (62.2 ) (7.9 ) — (71.4 ) Additions to intangible assets (13.3 ) (0.7 ) — — (14.0 ) Intercompany transfer 189.7 (87.3 ) (0.1 ) (102.3 ) — Proceeds from sale of fixed assets — 1.7 — — 1.7 Proceeds from divestiture — 19.0 0.3 — 19.3 Other — — (0.6 ) — (0.6 ) Net cash provided by (used in) investing activities 175.1 (129.5 ) (8.3 ) (102.3 ) (65.0 ) Cash flows from financing activities: Net borrowing (repayment) of debt (152.7 ) (1.9 ) — — (154.6 ) Intercompany transfer 81.7 (269.1 ) 4.3 183.1 — Receipts related to stock-based award activities 9.9 — — — 9.9 Payments related to stock-based award activities (6.6 ) — — — (6.6 ) Net cash provided by (used in) financing activities (67.7 ) (271.0 ) 4.3 183.1 (151.3 ) Effect of exchange rate changes on cash and cash equivalents — — 1.0 — 1.0 Increase in cash and cash equivalents 107.0 — 5.1 — 112.1 Cash and cash equivalents, beginning of period — 0.2 61.9 — 62.1 Cash and cash equivalents, end of period $ 107.0 $ 0.2 $ 67.0 $ — $ 174.2 |