Guarantor Statements - SB/RH | NOTE 18 - GUARANTOR STATEMENTS – SB/RH SBI (“Spectrum Brands, Inc.”) and SB/RH (collectively, the “Parent”), with their domestic subsidiaries as guarantors, has issued the 6.375% Notes and the 6.625% Notes under the 2020/22 Indenture, 6.125% Notes under the 2024 Indenture and the 5.75% Notes under the 2025 Indenture. See Note 9, “Debt” for further information on the 6.375% Notes, 6.625% Notes, 6.125% Notes and 5.75% Notes. The following consolidating financial statements illustrate the components of the consolidated financial statements of SB/RH. 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 January 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 6.3 $ 3.6 $ 138.1 $ — $ 148.0 Trade receivables, net 178.9 82.7 252.2 — 513.8 Intercompany receivables — 711.6 193.7 (905.3) — Other receivables 12.8 14.7 61.6 (2.8) 86.3 Inventories 415.3 162.3 308.2 (18.1) 867.7 Prepaid expenses and other 39.2 8.0 33.3 (0.5) 80.0 Total current assets 652.5 982.9 987.1 (926.7) 1,695.8 Property, plant and equipment, net 232.8 59.7 211.9 — 504.4 Long-term intercompany receivables 550.0 303.6 14.2 (867.8) — Deferred charges and other 152.8 0.7 40.2 (154.1) 39.6 Goodwill 910.7 1,152.7 404.0 — 2,467.4 Intangible assets, net 1,387.7 641.5 416.1 — 2,445.3 Investments in subsidiaries 3,195.9 1,130.4 (2.9) (4,323.4) — Total assets $ 7,082.4 $ 4,271.5 $ 2,070.6 $ (6,272.0) $ 7,152.5 Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt $ 18.3 $ — $ 16.2 $ — $ 34.5 Accounts payable 178.1 39.1 203.7 — 420.9 Intercompany accounts payable 804.7 — 41.6 (846.3) — Accrued wages and salaries 27.4 6.6 39.2 — 73.2 Accrued interest 57.6 — 0.1 — 57.7 Other current liabilities 75.6 22.9 110.6 (3.6) 205.5 Total current liabilities 1,161.7 68.6 411.4 (849.9) 791.8 Long-term debt, net of current portion 4,065.1 — 28.1 — 4,093.2 Long-term intercompany debt 15.7 578.7 332.2 (926.6) — Deferred income taxes 198.9 422.1 98.5 (156.4) 563.1 Other long-term liabilities 26.1 6.2 70.0 — 102.3 Total liabilities 5,467.5 1,075.6 940.2 (1,932.9) 5,550.4 Shareholder's equity: Other equity 2,031.6 1,176.2 69.6 (1,308.7) 1,968.7 Accumulated (deficit) earnings (200.8) 2,211.6 1,198.8 (3,410.2) (200.6) Accumulated other comprehensive (loss) income (215.9) (191.9) (187.7) 379.8 (215.7) Total shareholder's equity 1,614.9 3,195.9 1,080.7 (4,339.1) 1,552.4 Non-controlling interest — — 49.7 — 49.7 Total equity 1,614.9 3,195.9 1,130.4 (4,339.1) 1,602.1 Total liabilities and shareholder's equity $ 7,082.4 $ 4,271.5 $ 2,070.6 $ (6,272.0) $ 7,152.5 Statement of Financial Position Guarantor Nonguarantor As of September 30, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 13.0 $ 8.6 $ 226.3 $ — $ 247.9 Trade receivables, net 175.8 94.9 228.1 — 498.8 Intercompany receivables 152.0 713.8 225.0 (1,090.8) — Other receivables 14.3 11.2 62.4 — 87.9 Inventories 410.3 95.7 291.8 (17.0) 780.8 Prepaid expenses and other 36.1 2.2 33.0 0.8 72.1 Total current assets 801.5 926.4 1,066.6 (1,107.0) 1,687.5 Property, plant and equipment, net 235.2 60.7 211.2 — 507.1 Long-term intercompany receivables 2.8 357.7 15.4 (375.9) — Deferred charges and other 154.8 14.1 35.3 (162.1) 42.1 Goodwill 910.7 1,154.0 412.0 — 2,476.7 Intangible assets, net 1,402.4 646.6 431.3 — 2,480.3 Investments in subsidiaries 3,150.1 1,095.9 (2.9) (4,243.1) — Total assets $ 6,657.5 $ 4,255.4 $ 2,168.9 $ (5,888.1) $ 7,193.7 Liabilities and Shareholder's Equity Current liabilities: Current portion of long-term debt $ 53.4 $ — $ 15.1 $ — $ 68.5 Accounts payable 281.1 45.9 293.6 — 620.6 Intercompany accounts payable 449.4 — 28.5 (477.9) — Accrued wages and salaries 40.3 10.0 46.2 — 96.5 Accrued interest 63.2 — 0.1 — 63.3 Other current liabilities 84.5 21.5 106.0 (0.1) 211.9 Total current liabilities 971.9 77.4 489.5 (478.0) 1,060.8 Long-term debt, net of current portion 3,848.8 — 23.3 — 3,872.1 Long-term intercompany debt 16.8 578.7 392.6 (988.1) — Deferred income taxes 202.1 440.5 94.2 (164.3) 572.5 Other long-term liabilities 33.3 8.8 73.4 — 115.5 Total liabilities 5,072.9 1,105.4 1,073.0 (1,630.4) 5,620.9 Shareholder's equity: Other equity 1,981.7 1,129.2 34.7 (1,175.7) 1,969.9 Accumulated (deficit) earnings (246.7) 2,139.8 1,176.1 (3,315.9) (246.7) Accumulated other comprehensive (loss) income (200.2) (175.1) (171.0) 346.2 (200.1) Total shareholder's equity 1,534.8 3,093.9 1,039.8 (4,145.4) 1,523.1 Non-controlling interest 49.8 56.1 56.1 (112.3) 49.7 Total equity 1,584.6 3,150.0 1,095.9 (4,257.7) 1,572.8 Total liabilities and shareholder's equity $ 6,657.5 $ 4,255.4 $ 2,168.9 $ (5,888.1) $ 7,193.7 Statement of Operations Guarantor Nonguarantor Three month period ended January 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 632.0 $ 190.9 $ 734.3 $ (338.4) $ 1,218.8 Cost of goods sold 436.1 135.9 543.0 (337.0) 778.0 Restructuring and related charges — — 0.1 — 0.1 Gross profit 195.9 55.0 191.2 (1.4) 440.7 Selling 75.9 21.0 90.6 (0.4) 187.1 General and administrative 51.9 14.7 17.9 — 84.5 Research and development 8.7 1.3 3.8 — 13.8 Acquisition and integration related charges 6.4 0.8 2.7 — 9.9 Restructuring and related charges 0.8 0.1 0.2 — 1.1 Total operating expense 143.7 37.9 115.2 (0.4) 296.4 Operating income (loss) 52.2 17.1 76.0 (1.0) 144.3 Interest expense 48.3 5.5 4.6 — 58.4 Other non-operating (income) expense, net (71.9) (47.3) 3.7 119.0 3.5 Income from operations before income taxes 75.8 58.9 67.7 (120.0) 82.4 Income tax expense (benefit) 0.3 (3.7) 10.3 — 6.9 Net income (loss) 75.5 62.6 57.4 (120.0) 75.5 Net income attributable to non-controlling interest — — 0.1 — 0.1 Net income (loss) attributable to controlling interest $ 75.5 $ 62.6 $ 57.3 $ (120.0) $ 75.4 Statement of Operations Guarantor Nonguarantor Three month period ended December 28, 2014 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 258.5 $ 359.7 $ 673.3 $ (223.7) $ 1,067.8 Cost of goods sold 188.7 240.5 491.2 (223.0) 697.4 Restructuring and related charges — — 0.2 0.2 Gross profit 69.8 119.2 181.9 (0.7) 370.2 Selling 23.2 55.3 81.3 — 159.8 General and administrative 21.4 33.8 12.1 — 67.3 Research and development 4.9 3.0 3.3 — 11.2 Acquisition and integration related charges 4.0 2.9 1.2 — 8.1 Restructuring and related charges 3.6 1.9 1.7 — 7.2 Total operating expense 57.1 96.9 99.6 — 253.6 Operating income (loss) 12.7 22.3 82.3 (0.7) 116.6 Interest expense 38.4 (0.1) 6.1 — 44.4 Other non-operating (income) expense, net (67.5) (59.5) 0.5 127.2 0.7 Income from operations before income taxes 41.8 81.9 75.7 (127.9) 71.5 Income tax expense (benefit) (9.2) 12.7 17.2 (0.2) 20.5 Net income (loss) 51.0 69.2 58.5 (127.7) 51.0 Net income (loss) attributable to non-controlling interest 0.2 0.2 0.2 (0.4) 0.2 Net income (loss) attributable to controlling interest $ 50.8 $ 69.0 $ 58.3 $ (127.3) $ 50.8 Statement of Comprehensive Income Guarantor Nonguarantor Three month period ended January 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 75.5 $ 62.6 $ 57.4 $ (120.0) $ 75.5 Other comprehensive income (loss), net of tax: Foreign currency translation (loss) gain (20.4) (20.5) (20.4) 40.8 (20.5) Unrealized gain (loss) on derivative instruments 3.7 2.7 2.7 (5.4) 3.7 Defined benefit pension gain (loss) 1.1 1.1 1.1 (2.2) 1.1 Other comprehensive (loss) income (15.6) (16.7) (16.6) 33.2 (15.7) Comprehensive income (loss) 59.9 45.9 40.8 (86.8) 59.8 Comprehensive (loss) attributable to non-controlling interest — — (0.1) — (0.1) Comprehensive income (loss) attributable to controlling interest $ 59.9 $ 45.9 $ 40.9 $ (86.8) $ 59.9 Statement of Comprehensive Income Guarantor Nonguarantor Three month period ended December 28, 2014 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 51.0 $ 69.2 $ 58.5 $ (127.7) $ 51.0 Other comprehensive income (loss), net of tax: Foreign currency translation (loss) gain (34.5) (34.7) (34.7) 69.4 (34.5) Unrealized gain (loss) on derivative instruments 1.9 2.8 3.1 (5.9) 1.9 Defined benefit pension gain (loss) 1.1 1.0 1.0 (2.0) 1.1 Other comprehensive (loss) income (31.5) (30.9) (30.6) 61.5 (31.5) Comprehensive income (loss) 19.5 38.3 27.9 (66.2) 19.5 Comprehensive income (loss) attributable to non-controlling interest 0.2 0.2 0.2 (0.4) 0.2 Comprehensive income (loss) attributable to controlling interest $ 19.3 $ 38.1 $ 27.7 $ (65.8) $ 19.3 Statement of Cash Flows Guarantor Nonguarantor Three month period ended January 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash (used) provided by operating activities $ (668.5) $ 52.4 $ (76.8) $ 454.7 $ (238.2) Cash flows from investing activities Purchases of property, plant and equipment (8.5) (3.3) (5.6) — (17.4) Proceeds from sales of property, plant and equipment 0.1 — — — 0.1 Net cash used by investing activities (8.4) (3.3) (5.6) — (17.3) Cash flows from financing activities Proceeds from issuance of debt 230.0 — — — 230.0 Payment of debt (40.6) — (0.1) — (40.7) Payment of debt issuance costs (1.1) — — — (1.1) Payment of cash dividends to parent (29.5) — — — (29.5) Advances related to intercompany transactions 511.4 (54.1) (2.6) (454.7) — Net cash provided (used) by financing activities 670.2 (54.1) (2.7) (454.7) 158.7 Effect of exchange rate changes on cash and cash equivalents — — (3.1) — (3.1) Net (decrease) in cash and cash equivalents (6.7) (5.0) (88.2) — (99.9) Cash and cash equivalents, beginning of period 13.0 8.6 226.3 — 247.9 Cash and cash equivalents, end of period $ 6.3 $ 3.6 $ 138.1 $ — $ 148.0 Statement of Cash Flows Guarantor Nonguarantor Three month period ended December 28, 2014 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash (used) provided by operating activities $ (91.2) $ 43.3 $ (436.9) $ 331.5 $ (153.3) Cash flows from investing activities — Purchases of property, plant and equipment (4.9) (5.2) (4.1) — (14.2) Business acquisitions, net of cash acquired — (29.2) — — (29.2) Proceeds from sales of property, plant and equipment 1.1 — — — 1.1 Other investing activities — — (0.9) — (0.9) Net cash used by investing activities (3.8) (34.4) (5.0) — (43.2) Cash flows from financing activities Proceeds from issuance of debt 435.4 — 8.4 — 443.8 Payment of debt — — (1.8) — (1.8) Payment of debt issuance costs (6.1) — — — (6.1) Payment of cash dividends to parent (15.9) — — — (15.9) Share based tax withholding payments, net of proceeds upon vesting (1.7) — — — (1.7) Advances related to intercompany transactions (18.9) (11.9) 362.3 (331.5) — Net cash provided (used) by financing activities 392.8 (11.9) 368.9 (331.5) 418.3 Effect of exchange rate changes on cash and cash equivalents — — (6.3) — (6.3) Net increase (decrease) in cash and cash equivalents 297.8 (3.0) (79.3) — 215.5 Cash and cash equivalents, beginning of period 4.8 11.2 176.9 — 192.9 Cash and cash equivalents, end of period $ 302.6 $ 8.2 $ 97.6 $ — $ 408.4 |