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/ 20 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 condensed 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 July 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 3.9 $ 2.5 $ 110.5 $ — $ 116.9 Trade receivables, net 183.2 211.9 193.8 — 588.9 Intercompany receivables — 795.3 215.4 (1,010.7) — Other receivables — 8.1 56.1 (3.0) 61.2 Inventories 406.4 132.2 326.5 (22.8) 842.3 Prepaid expenses and other 43.3 4.8 34.1 — 82.2 Total current assets 636.8 1,154.8 936.4 (1,036.5) 1,691.5 Property, plant and equipment, net 234.5 74.5 214.2 — 523.2 Long-term intercompany receivables 500.2 241.4 13.8 (755.4) — Deferred charges and other 168.8 0.9 40.8 (175.9) 34.6 Goodwill 912.1 1,154.5 413.1 — 2,479.7 Intangible assets, net 1,359.6 633.5 406.5 — 2,399.6 Investments in subsidiaries 3,433.9 1,206.7 (2.9) (4,637.7) — Total assets $ 7,245.9 $ 4,466.3 $ 2,021.9 $ (6,605.5) $ 7,128.6 Liabilities and Shareholder's Equity Current liabilities: Current portion of long-term debt $ 23.0 $ 0.4 $ 18.9 $ — $ 42.3 Accounts payable 195.5 75.0 203.0 — 473.5 Intercompany accounts payable 1,012.2 — 12.8 (1,025.0) — Accrued wages and salaries 48.3 4.6 41.6 — 94.5 Accrued interest 42.0 — — — 42.0 Other current liabilities 77.5 15.6 97.0 (3.0) 187.1 Total current liabilities 1,398.5 95.6 373.3 (1,028.0) 839.4 Long-term debt, net of current portion 3,794.9 14.6 30.7 — 3,840.2 Long-term intercompany debt 14.3 476.7 250.1 (741.1) — Deferred income taxes 203.3 444.1 89.9 (181.7) 555.6 Other long-term liabilities 33.2 1.4 71.2 — 105.8 Total liabilities 5,444.2 1,032.4 815.2 (1,950.8) 5,341.0 Shareholder's equity: Other equity 2,055.9 151.7 (955.0) 739.0 1,991.6 Accumulated (deficit) earnings (58.2) 3,457.8 2,282.9 (5,740.8) (58.3) Accumulated other comprehensive (loss) income (196.0) (175.6) (171.0) 347.1 (195.5) Total shareholder's equity 1,801.7 3,433.9 1,156.9 (4,654.7) 1,737.8 Non-controlling interest — — 49.8 — 49.8 Total equity 1,801.7 3,433.9 1,206.7 (4,654.7) 1,787.6 Total liabilities and equity $ 7,245.9 $ 4,466.3 $ 2,021.9 $ (6,605.5) $ 7,128.6 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 July 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 615.6 $ 567.6 $ 615.7 $ (437.4) $ 1,361.5 Cost of goods sold 412.2 392.9 460.0 (434.3) 830.8 Restructuring and related charges — — 0.1 0.1 Gross profit 203.4 174.7 155.6 (3.1) 530.6 Selling 77.5 40.3 84.0 (0.1) 201.7 General and administrative 53.1 18.7 21.0 — 92.8 Research and development 9.1 1.6 3.9 — 14.6 Acquisition and integration related charges 4.4 0.3 3.3 — 8.0 Restructuring and related charges 0.6 3.7 1.1 — 5.4 Total operating expense 144.7 64.6 113.3 (0.1) 322.5 Operating income (loss) 58.7 110.1 42.3 (3.0) 208.1 Interest expense 50.7 5.1 4.1 — 59.9 Other non-operating (income) expense, net (129.9) (24.6) 2.3 154.4 2.2 Income from operations before income taxes 137.9 129.6 35.9 (157.4) 146.0 Income tax expense (benefit) 32.7 (0.5) 8.1 0.5 40.8 Net income (loss) 105.2 130.1 27.8 (157.9) 105.2 Net income attributable to non-controlling interest — — 0.1 — 0.1 Net income (loss) attributable to controlling interest $ 105.2 $ 130.1 $ 27.7 $ (157.9) $ 105.1 Statement of Operations Guarantor Nonguarantor Nine month period ended July 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 1,821.9 $ 1,167.8 $ 1,956.8 $ (1,156.5) $ 3,790.0 Cost of goods sold 1,241.8 805.8 1,457.6 (1,149.7) 2,355.5 Restructuring and related charges — — 0.4 — 0.4 Gross profit 580.1 362.0 498.8 (6.8) 1,434.1 Selling 234.0 91.2 254.1 (1.0) 578.3 General and administrative 160.5 51.5 59.8 (0.1) 271.7 Research and development 27.2 4.4 11.3 42.9 Acquisition and integration related charges 18.0 3.5 9.7 31.2 Restructuring and related charges 1.9 4.0 1.9 7.8 Total operating expense 441.6 154.6 336.8 (1.1) 931.9 Operating income (loss) 138.5 207.4 162.0 (5.7) 502.2 Interest expense 147.0 15.6 13.1 0.1 175.8 Other non-operating (income) expense, net (282.7) (116.7) 6.4 399.5 6.5 Income from operations before income taxes 274.2 308.5 142.5 (405.3) 319.9 Income tax expense (benefit) 10.9 24.2 25.1 (3.6) 56.6 Net income (loss) 263.3 284.3 117.4 (401.7) 263.3 Net income attributable to non-controlling interest — — 0.3 — 0.3 Net income (loss) attributable to controlling interest $ 263.3 $ 284.3 $ 117.1 $ (401.7) $ 263.0 Statement of Operations Guarantor Nonguarantor Three month period ended June 28, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 577.7 $ 324.1 $ 605.0 $ (259.3) $ 1,247.5 Cost of goods sold 397.5 202.8 445.3 (256.1) 789.5 Restructuring and related charges — — — — — Gross profit 180.2 121.3 159.7 (3.2) 458.0 Selling 69.8 32.1 83.2 (0.3) 184.8 General and administrative 54.2 15.4 18.6 — 88.2 Research and development 8.3 1.0 3.6 — 12.9 Acquisition and integration related charges 21.9 0.4 1.9 — 24.2 Restructuring and related charges 22.7 0.2 (12.4) — 10.5 Total operating expense 176.9 49.1 94.9 (0.3) 320.6 Operating income (loss) 3.3 72.2 64.8 (2.9) 137.4 Interest expense 99.4 2.7 10.8 — 112.9 Other non-operating (income) expense, net (89.6) (42.7) 1.0 133.0 1.7 Income from operations before income taxes (6.5) 112.2 53.0 (135.9) 22.8 Income tax (benefit) expense (53.1) 22.2 7.1 — (23.8) Net income (loss) 46.6 90.0 45.9 (135.9) 46.6 Net income (loss) attributable to non-controlling interest — 0.1 0.1 (0.2) — Net income (loss) attributable to controlling interest $ 46.6 $ 89.9 $ 45.8 $ (135.7) $ 46.6 Statement of Operations Guarantor Nonguarantor Nine month period ended June 28, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 1,672.6 $ 529.7 $ 1,875.5 $ (695.5) $ 3,382.3 Cost of goods sold 1,163.9 328.9 1,375.2 (689.0) 2,179.0 Restructuring and related charges — — 0.4 — 0.4 Gross profit 508.7 200.8 499.9 (6.5) 1,202.9 Selling 206.3 63.8 248.2 (0.6) 517.7 General and administrative 156.0 30.8 51.3 — 238.1 Research and development 24.3 2.0 10.6 — 36.9 Acquisition and integration related charges 33.9 3.0 7.3 — 44.2 Restructuring and related charges 30.7 0.3 (9.1) — 21.9 Total operating expense 451.2 99.9 308.3 (0.6) 858.8 Operating income (loss) 57.5 100.9 191.6 (5.9) 344.1 Interest expense 180.8 1.1 24.6 — 206.5 Other non-operating (income) expense, net (175.6) (114.0) 4.0 291.2 5.6 Income from operations before income taxes 52.3 213.8 163.0 (297.1) 132.0 Income tax (benefit) expense (74.9) 44.3 36.2 (0.8) 4.8 Net income (loss) 127.2 169.5 126.8 (296.3) 127.2 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 $ 127.0 $ 169.3 $ 126.6 $ (295.9) $ 127.0 Statement of Comprehensive Income Guarantor Nonguarantor Three month period ended July 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 105.2 $ 130.1 $ 27.8 $ (157.9) $ 105.2 Other comprehensive income (loss), net of tax: Foreign currency translation (loss) gain (13.7) (13.7) (13.7) 27.4 (13.7) Unrealized gain (loss) on derivative instruments 7.8 6.7 6.7 (13.4) 7.8 Defined benefit pension gain (loss) 1.2 1.1 1.2 (2.3) 1.2 Other comprehensive (loss) income (4.7) (5.9) (5.8) 11.7 (4.7) Comprehensive income (loss) 100.5 124.2 22.0 (146.2) 100.5 Comprehensive income (loss) attributable to non-controlling interest — — (0.2) — (0.2) Comprehensive income (loss) attributable to controlling interest $ 100.5 $ 124.2 $ 22.2 $ (146.2) $ 100.7 Statement of Comprehensive Income Guarantor Nonguarantor Nine month period ended July 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 263.3 $ 284.3 $ 117.4 $ (401.7) $ 263.3 Other comprehensive income (loss), net of tax: Foreign currency translation (loss) gain (6.0) (6.0) (5.9) 11.9 (6.0) Unrealized gain (loss) on derivative instruments 8.6 3.9 3.8 (7.7) 8.6 Defined benefit pension gain (loss) 1.7 1.7 1.6 (3.3) 1.7 Other comprehensive income (loss) 4.3 (0.4) (0.5) 0.9 4.3 Comprehensive income (loss) 267.6 283.9 116.9 (400.8) 267.6 Comprehensive income (loss) attributable to non-controlling interest — — (0.3) — (0.3) Comprehensive income (loss) attributable to controlling interest $ 267.6 $ 283.9 $ 117.2 $ (400.8) $ 267.9 Statement of Comprehensive Income Guarantor Nonguarantor Three month period ended June 28, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 46.6 $ 90.0 $ 45.9 $ (135.9) $ 46.6 Other comprehensive income (loss), net of tax: Foreign currency translation gain (loss) 9.5 9.5 9.5 (19.0) 9.5 Unrealized (loss) gain on derivative instruments (12.0) (11.5) (11.5) 23.0 (12.0) Defined benefit pension (loss) gain (0.6) (0.6) (0.6) 1.2 (0.6) Other comprehensive (loss) income (3.1) (2.6) (2.6) 5.2 (3.1) Comprehensive income (loss) 43.5 87.4 43.3 (130.7) 43.5 Comprehensive income (loss) attributable to non-controlling interest — — — — — Comprehensive income (loss) attributable to controlling interest $ 43.5 $ 87.4 $ 43.3 $ (130.7) $ 43.5 Statement of Comprehensive Income Guarantor Nonguarantor Nine month period ended June 28, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 127.2 $ 169.5 $ 126.8 $ (296.3) $ 127.2 Other comprehensive income (loss), net of tax: Foreign currency translation (loss) gain (68.6) (69.2) (69.2) 138.4 (68.6) Unrealized (loss) gain on derivative instruments (8.6) (5.8) (5.8) 11.6 (8.6) Defined benefit pension gain (loss) 2.8 2.8 2.8 (5.6) 2.8 Other comprehensive (loss) income (74.4) (72.2) (72.2) 144.4 (74.4) Comprehensive income (loss) 52.8 97.3 54.6 (151.9) 52.8 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 $ 52.6 $ 97.1 $ 54.4 $ (151.5) $ 52.6 Statement of Cash Flows Guarantor Nonguarantor Nine month period ended July 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash (used) provided by operating activities $ (272.0) $ 219.5 $ (99.8) $ 257.0 $ 104.7 Cash flows from investing activities Purchases of property, plant and equipment (32.2) (6.0) (21.4) — (59.6) Proceeds from sales of property, plant and equipment 0.1 — 0.7 — 0.8 Other investing activities (0.6) (1.3) — — (1.9) Net cash used by investing activities (32.7) (7.3) (20.7) — (60.7) Cash flows from financing activities Proceeds from issuance of debt 217.8 — — — 217.8 Payment of debt (310.0) — (1.7) — (311.7) Payment of debt issuance costs (1.6) — — — (1.6) Payment of cash dividends to parent (74.6) — — — (74.6) Payment of contingent consideration (3.2) — — — (3.2) Advances related to intercompany transactions 467.2 (218.3) 8.1 (257.0) — Net cash provided (used) by financing activities 295.6 (218.3) 6.4 (257.0) (173.3) Effect of exchange rate changes on cash and cash equivalents — — (1.7) — (1.7) Net (decrease) in cash and cash equivalents (9.1) (6.1) (115.8) — (131.0) Cash and cash equivalents, beginning of period 13.0 8.6 226.3 — 247.9 Cash and cash equivalents, end of period $ 3.9 $ 2.5 $ 110.5 $ — $ 116.9 Statement of Cash Flows Guarantor Nonguarantor Nine month period ended June 28, 2015 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash (used) provided by operating activities $ (544.1) $ (355.9) $ (1,358.3) $ 2,094.7 $ (163.6) Cash flows from investing activities — Purchases of property, plant and equipment (25.0) (7.3) (17.2) — (49.5) Business acquisitions, net of cash acquired (1,077.5) — (115.7) — (1,193.2) Proceeds from sales of property, plant and equipment 0.1 — 1.2 — 1.3 Other investing activities — — (0.9) — (0.9) Net cash used by investing activities (1,102.4) (7.3) (132.6) — (1,242.3) Cash flows from financing activities Proceeds from issuance of debt 3,177.0 — — — 3,177.0 Payment of debt (1,989.8) — (292.1) — (2,281.9) Payment of debt issuance costs (37.3) — — — (37.3) Payment of cash dividends to parent (51.0) — — — (51.0) Share based tax withholding payments, net of proceeds upon vesting (1.9) — — — (1.9) Advances related to intercompany transactions 18.9 369.0 1,706.8 (2,094.7) — Capital contribution from parent 528.3 — — — 528.3 Net cash provided (used) by financing activities 1,644.2 369.0 1,414.7 (2,094.7) 1,333.2 Effect of exchange rate changes on cash and cash equivalents — — (13.0) — (13.0) Net increase (decrease) in cash and cash equivalents (2.3) 5.8 (89.2) — (85.7) Cash and cash equivalents, beginning of period 4.8 11.2 176.9 — 192.9 Cash and cash equivalents, end of period $ 2.5 $ 17.0 $ 87.7 $ — $ 107.2 |