Guarantor Statements - SB/RH | NOTE 18 - 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 6.375% 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 April 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 4.3 $ 0.9 $ 128.0 $ — $ 133.2 Trade receivables, net 170.0 168.0 219.2 — 557.2 Intercompany receivables — 664.6 210.8 (875.4) — Other receivables 10.3 14.8 56.5 (1.9) 79.7 Inventories 423.2 186.6 334.5 (19.9) 924.4 Prepaid expenses and other 41.3 6.4 38.1 (0.1) 85.7 Total current assets 649.1 1,041.3 987.1 (897.3) 1,780.2 Property, plant and equipment, net 233.6 77.4 217.9 — 528.9 Long-term intercompany receivables 505.4 287.4 14.5 (807.3) — Deferred charges and other 170.9 0.9 41.1 (183.7) 29.2 Goodwill 912.1 1,153.9 417.4 — 2,483.4 Intangible assets, net 1,373.1 636.5 422.8 — 2,432.4 Investments in subsidiaries 3,309.7 1,184.8 (2.9) (4,491.6) — Total assets $ 7,153.9 $ 4,382.2 $ 2,097.9 $ (6,379.9) $ 7,254.1 Liabilities and Shareholder's Equity Current liabilities: Current portion of long-term debt $ 31.9 $ 0.5 $ 16.2 $ — $ 48.6 Accounts payable 191.0 80.9 200.3 — 472.2 Intercompany accounts payable 801.6 — 40.8 (842.4) — Accrued wages and salaries 39.0 2.6 37.4 — 79.0 Accrued interest 54.0 — 0.1 — 54.1 Other current liabilities 68.8 15.7 98.6 (2.8) 180.3 Total current liabilities 1,186.3 99.7 393.4 (845.2) 834.2 Long-term debt, net of current portion 4,022.5 16.5 30.1 — 4,069.1 Long-term intercompany debt 15.4 501.4 322.7 (839.5) — Deferred income taxes 200.8 453.4 94.4 (190.1) 558.5 Other long-term liabilities 31.8 1.4 72.6 — 105.8 Total liabilities 5,456.8 1,072.4 913.2 (1,874.8) 5,567.6 Shareholder's equity: Other equity 2,039.6 122.9 (983.7) 800.1 1,978.9 Accumulated (deficit) earnings (151.2) 3,356.6 2,284.0 (5,640.6) (151.2) Accumulated other comprehensive (loss) income (191.3) (169.7) (165.4) 335.4 (191.0) Total shareholder's equity 1,697.1 3,309.8 1,134.9 (4,505.1) 1,636.7 Non-controlling interest — — 49.8 — 49.8 Total equity 1,697.1 3,309.8 1,184.7 (4,505.1) 1,686.5 Total liabilities and equity $ 7,153.9 $ 4,382.2 $ 2,097.9 $ (6,379.9) $ 7,254.1 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 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 April 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 574.3 $ 409.3 $ 606.9 $ (380.9) $ 1,209.6 Cost of goods sold 393.6 276.9 454.6 (378.5) 746.6 Restructuring and related charges — — 0.2 — 0.2 Gross profit 180.7 132.4 152.1 (2.4) 462.8 Selling 80.6 29.8 79.6 (0.5) 189.5 General and administrative 55.2 18.1 20.9 — 94.2 Research and development 9.5 1.4 3.6 — 14.5 Acquisition and integration related charges 7.1 2.5 3.7 — 13.3 Restructuring and related charges 0.5 0.3 0.6 — 1.4 Total operating expense 152.9 52.1 108.4 (0.5) 312.9 Operating income (loss) 27.8 80.3 43.7 (1.9) 149.9 Interest expense 48.0 5.1 4.4 — 57.5 Other non-operating (income) expense, net (80.8) (44.9) 0.5 126.0 0.8 Income from operations before income taxes 60.6 120.1 38.8 (127.9) 91.6 Income tax (benefit) expense (11.6) 28.5 6.7 (4.2) 19.4 Net income (loss) 72.2 91.6 32.1 (123.7) 72.2 Net income attributable to non-controlling interest — — 0.1 — 0.1 Net income (loss) attributable to controlling interest $ 72.2 $ 91.6 $ 32.0 $ (123.7) $ 72.1 Statement of Operations Guarantor Nonguarantor Six month period ended April 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 1,206.3 $ 600.2 $ 1,341.1 $ (719.2) $ 2,428.4 Cost of goods sold 829.7 412.8 997.6 (715.5) 1,524.6 Restructuring and related charges — — 0.3 — 0.3 Gross profit 376.6 187.4 343.2 (3.7) 903.5 Selling 156.6 50.8 170.1 (0.9) 376.6 General and administrative 107.2 32.7 38.8 — 178.7 Research and development 18.1 2.8 7.4 — 28.3 Acquisition and integration related charges 13.5 3.3 6.4 — 23.2 Restructuring and related charges 1.3 0.4 0.8 — 2.5 Total operating expense 296.7 90.0 223.5 (0.9) 609.3 Operating income (loss) 79.9 97.4 119.7 (2.8) 294.2 Interest expense 96.3 10.5 9.0 0.1 115.9 Other non-operating (income) expense, net (152.8) (92.1) 4.1 245.1 4.3 Income from operations before income taxes 136.4 179.0 106.6 (248.0) 174.0 Income tax (benefit) expense (11.3) 24.7 17.0 (4.1) 26.3 Net income (loss) 147.7 154.3 89.6 (243.9) 147.7 Net income attributable to non-controlling interest — — 0.2 — 0.2 Net income (loss) attributable to controlling interest $ 147.7 $ 154.3 $ 89.4 $ (243.9) $ 147.5 Statement of Operations Guarantor Nonguarantor Three month period ended March 29, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 529.8 $ 152.5 $ 597.2 $ (212.5) $ 1,067.0 Cost of goods sold 369.6 93.7 438.7 (209.9) 692.1 Restructuring and related charges — — 0.2 — 0.2 Gross profit 160.2 58.8 158.3 (2.6) 374.7 Selling 70.5 19.2 83.7 (0.3) 173.1 General and administrative 51.7 10.2 20.6 0.1 82.6 Research and development 8.7 0.5 3.6 — 12.8 Acquisition and integration related charges 7.1 0.7 4.1 — 11.9 Restructuring and related charges 2.7 0.1 1.4 — 4.2 Total operating expense 140.7 30.7 113.4 (0.2) 284.6 Operating income (loss) 19.5 28.1 44.9 (2.4) 90.1 Interest expense 42.9 (1.4) 7.7 — 49.2 Other non-operating (income) expense, net (32.1) (11.6) 2.5 44.4 3.2 Income from operations before income taxes 8.7 41.1 34.7 (46.8) 37.7 Income tax (benefit) expense (20.9) 17.7 11.8 (0.5) 8.1 Net income (loss) 29.6 23.4 22.9 (46.3) 29.6 Net income (loss) attributable to non-controlling interest — 0.1 0.1 (0.2) — Net income (loss) attributable to controlling interest $ 29.6 $ 23.3 $ 22.8 $ (46.1) $ 29.6 Statement of Operations Guarantor Nonguarantor Six month period ended March 29, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 1,095.0 $ 205.5 $ 1,270.5 $ (436.2) $ 2,134.8 Cost of goods sold 766.3 126.1 929.9 (432.8) 1,389.5 Restructuring and related charges — — 0.4 — 0.4 Gross profit 328.7 79.4 340.2 (3.4) 744.9 Selling 136.5 31.7 165.0 (0.3) 332.9 General and administrative 101.8 15.4 32.8 (0.1) 149.9 Research and development 16.0 1.0 7.0 — 24.0 Acquisition and integration related charges 12.0 2.6 5.4 — 20.0 Restructuring and related charges 8.1 0.1 3.2 — 11.4 Total operating expense 274.4 50.8 213.4 (0.4) 538.2 Operating income (loss) 54.3 28.6 126.8 (3.0) 206.7 Interest expense 81.4 (1.6) 13.8 — 93.6 Other non-operating (income) expense, net (85.9) (71.1) 2.9 158.0 3.9 Income from operations before income taxes 58.8 101.3 110.1 (161.0) 109.2 Income tax (benefit) expense (21.8) 22.1 29.0 (0.7) 28.6 Net income (loss) 80.6 79.2 81.1 (160.3) 80.6 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 $ 80.4 $ 79.0 $ 80.9 $ (159.9) $ 80.4 Statement of Comprehensive Income Guarantor Nonguarantor Three month period ended April 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 72.2 $ 91.6 $ 32.1 $ (123.7) $ 72.2 Other comprehensive income (loss), net of tax: Foreign currency translation gain (loss) 28.2 28.3 28.3 (56.6) 28.2 Unrealized (loss) gain on derivative instruments (2.9) (5.5) (5.6) 11.1 (2.9) Defined benefit pension (loss) gain (0.6) (0.6) (0.6) 1.2 (0.6) Other comprehensive income (loss) 24.7 22.2 22.1 (44.3) 24.7 Comprehensive income (loss) 96.9 113.8 54.2 (168.0) 96.9 Comprehensive income (loss) attributable to non-controlling interest — — — — — Comprehensive income (loss) attributable to controlling interest $ 96.9 $ 113.8 $ 54.2 $ (168.0) $ 96.9 Statement of Comprehensive Income Guarantor Nonguarantor Six month period ended April 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 147.7 $ 154.3 $ 89.6 $ (243.9) $ 147.7 Other comprehensive income (loss), net of tax: Foreign currency translation gain (loss) 7.8 7.8 7.8 (15.7) 7.7 Unrealized gain (loss) on derivative instruments 0.7 (2.8) (2.8) 5.7 0.8 Defined benefit pension gain (loss) 0.5 0.5 0.5 (1.0) 0.5 Other comprehensive income (loss) 9.0 5.5 5.5 (11.0) 9.0 Comprehensive income (loss) 156.7 159.8 95.1 (254.9) 156.7 Comprehensive income (loss) attributable to non-controlling interest — — (0.1) — (0.1) Comprehensive income (loss) attributable to controlling interest $ 156.7 $ 159.8 $ 95.2 $ (254.9) $ 156.8 Statement of Comprehensive Income Guarantor Nonguarantor Three month period ended March 29, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 29.6 $ 23.4 $ 22.9 $ (46.3) $ 29.6 Other comprehensive income (loss), net of tax: Foreign currency translation (loss) gain (43.6) (44.0) (44.0) 88.0 (43.6) Unrealized gain (loss) on derivative instruments 1.4 2.5 2.5 (5.0) 1.4 Defined benefit pension gain (loss) 2.4 2.4 2.4 (4.8) 2.4 Other comprehensive (loss) income (39.8) (39.1) (39.1) 78.2 (39.8) Comprehensive (loss) income (10.2) (15.7) (16.2) 31.9 (10.2) Comprehensive income (loss) attributable to non-controlling interest — — — — — Comprehensive income (loss) attributable to controlling interest $ (10.2) $ (15.7) $ (16.2) $ 31.9 $ (10.2) Statement of Comprehensive Income Guarantor Nonguarantor Six month period ended March 29, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 80.6 $ 79.2 $ 81.1 $ (160.3) $ 80.6 Other comprehensive income (loss), net of tax: Foreign currency translation (loss) gain (78.1) (78.7) (78.7) 157.4 (78.1) Unrealized gain (loss) on derivative instruments 3.4 5.6 5.6 (11.2) 3.4 Defined benefit pension gain (loss) 3.4 3.4 3.4 (6.8) 3.4 Other comprehensive (loss) income (71.3) (69.7) (69.7) 139.4 (71.3) Comprehensive income (loss) 9.3 9.5 11.4 (20.9) 9.3 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 $ 9.1 $ 9.3 $ 11.2 $ (20.5) $ 9.1 Statement of Cash Flows Guarantor Nonguarantor Six month period ended April 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash (used) provided by operating activities $ (557.4) $ 146.2 $ (346.4) $ 593.9 $ (163.7) Cash flows from investing activities Purchases of property, plant and equipment (20.1) (6.4) (12.2) — (38.7) Proceeds from sales of property, plant and equipment 0.1 — 0.7 — 0.8 Net cash used by investing activities (20.0) (6.4) (11.5) — (37.9) Cash flows from financing activities Proceeds from issuance of debt 188.9 — — — 188.9 Payment of debt (47.0) — (1.1) — (48.1) Payment of debt issuance costs (1.6) — — — (1.6) Payment of cash dividends to parent (52.0) — — — (52.0) Advances related to intercompany transactions 480.4 (147.5) 261.0 (593.9) — Net cash provided (used) by financing activities 568.7 (147.5) 259.9 (593.9) 87.2 Effect of exchange rate changes on cash and cash equivalents — — (0.3) — (0.3) Net (decrease) in cash and cash equivalents (8.7) (7.7) (98.3) — (114.7) Cash and cash equivalents, beginning of period 13.0 8.6 226.3 — 247.9 Cash and cash equivalents, end of period $ 4.3 $ 0.9 $ 128.0 $ — $ 133.2 Statement of Cash Flows Guarantor Nonguarantor Six month period ended March 29, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash (used) provided by operating activities $ (204.2) $ (132.3) $ (376.5) $ 532.7 $ (180.3) Cash flows from investing activities — Purchases of property, plant and equipment (16.4) (3.9) (9.6) — (29.9) Business acquisitions, net of cash acquired (176.7) — (116.0) — (292.7) Proceeds from sales of property, plant and equipment 1.2 — — — 1.2 Other investing activities — — (0.9) — (0.9) Net cash used by investing activities (191.9) (3.9) (126.5) — (322.3) Cash flows from financing activities Proceeds from issuance of debt 481.3 — (0.1) — 481.2 Payment of debt (25.5) — — — (25.5) Payment of debt issuance costs (6.9) — — — (6.9) Payment of cash dividends to parent (33.5) — — — (33.5) Share based tax withholding payments, net of proceeds upon vesting (5.9) — — — (5.9) Advances related to intercompany transactions (16.6) 129.4 419.9 (532.7) — Net cash provided (used) by financing activities 392.9 129.4 419.8 (532.7) 409.4 Effect of exchange rate changes on cash and cash equivalents — — (11.9) — (11.9) Net increase (decrease) in cash and cash equivalents (3.2) (6.8) (95.1) — (105.1) Cash and cash equivalents, beginning of period 4.8 11.2 176.9 — 192.9 Cash and cash equivalents, end of period $ 1.6 $ 4.4 $ 81.8 $ — $ 87.8 |