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 6.625% Notes under the 20 22 Indenture, the 6.125% Notes under the 2024 Indenture , the 5.75% Notes under the 2025 Indenture and the 4.00% Notes under the 2026 Indenture. 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 January 1, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 6.4 $ 0.2 $ 136.6 $ — $ 143.2 Trade receivables, net 172.9 65.4 250.9 — 489.2 Intercompany receivables — 941.3 219.7 (1,161.0) — Other receivables — 2.8 58.7 (0.9) 60.6 Inventories 366.8 154.6 275.4 (17.1) 779.7 Prepaid expenses and other 41.3 6.9 32.2 0.1 80.5 Total current assets 587.4 1,171.2 973.5 (1,178.9) 1,553.2 Property, plant and equipment, net 270.4 82.3 215.5 — 568.2 Long-term intercompany receivables 355.2 125.5 12.8 (493.5) — Deferred charges and other 183.1 1.0 41.7 (193.9) 31.9 Goodwill 912.1 1,154.5 397.9 — 2,464.5 Intangible assets, net 1,326.7 624.2 377.0 — 2,327.9 Investments in subsidiaries 3,514.7 1,270.7 (2.9) (4,782.5) — Total assets $ 7,149.6 $ 4,429.4 $ 2,015.5 $ (6,648.8) $ 6,945.7 Liabilities and Shareholder's Equity Current liabilities: Current portion of long-term debt $ 47.5 $ 1.3 $ 26.0 $ (0.5) $ 74.3 Accounts payable 208.3 71.3 252.8 — 532.4 Intercompany accounts payable 1,175.4 — — (1,175.4) — Accrued wages and salaries 20.3 2.6 42.2 — 65.1 Accrued interest 41.2 — — — 41.2 Other current liabilities 80.8 11.5 94.7 (0.9) 186.1 Total current liabilities 1,573.5 86.7 415.7 (1,176.8) 899.1 Long-term debt, net of current portion 3,559.9 20.1 33.7 — 3,613.7 Long-term intercompany debt 11.7 345.8 121.0 (478.5) — Deferred income taxes 220.5 461.1 80.3 (198.8) 563.1 Other long-term liabilities 29.3 1.0 94.1 — 124.4 Total liabilities 5,394.9 914.7 744.8 (1,854.1) 5,200.3 Shareholder's equity: Other capital 2,077.8 140.0 (963.8) 764.2 2,018.2 Accumulated (deficit) earnings (74.6) 3,623.2 2,426.7 (6,049.9) (74.6) Accumulated other comprehensive (loss) income (248.5) (248.5) (241.7) 491.0 (247.7) Total shareholder's equity 1,754.7 3,514.7 1,221.2 (4,794.7) 1,695.9 Non-controlling interest — — 49.5 — 49.5 Total equity 1,754.7 3,514.7 1,270.7 (4,794.7) 1,745.4 Total liabilities and equity $ 7,149.6 $ 4,429.4 $ 2,015.5 $ (6,648.8) $ 6,945.7 Statement of Financial Position Guarantor Nonguarantor As of September 30, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 98.6 $ 3.1 $ 169.1 $ — $ 270.8 Trade receivables, net 179.5 68.7 234.4 — 482.6 Intercompany receivables — 909.1 233.4 (1,142.5) — Other receivables — 5.5 56.3 (6.2) 55.6 Inventories 372.8 104.3 281.1 (17.6) 740.6 Prepaid expenses and other 42.8 4.4 32.1 (0.5) 78.8 Total current assets 693.7 1,095.1 1,006.4 (1,166.8) 1,628.4 Property, plant and equipment, net 241.1 77.6 223.4 — 542.1 Long-term intercompany receivables 365.4 187.3 13.7 (566.4) — Deferred charges and other 180.5 0.9 41.5 (190.8) 32.1 Goodwill 912.1 1,154.5 411.8 — 2,478.4 Intangible assets, net 1,341.5 628.5 402.5 — 2,372.5 Investments in subsidiaries 3,497.8 1,258.1 (2.9) (4,753.0) — Total assets $ 7,232.1 $ 4,402.0 $ 2,096.4 $ (6,677.0) $ 7,053.5 Liabilities and Shareholder's Equity Current liabilities: Current portion of long-term debt $ 143.6 $ 1.4 $ 19.9 $ (0.9) $ 164.0 Accounts payable 257.5 58.4 264.2 — 580.1 Intercompany accounts payable 1,157.0 — — (1,157.0) — Accrued wages and salaries 63.9 6.6 52.4 — 122.9 Accrued interest 39.3 — — — 39.3 Other current liabilities 88.0 11.0 95.5 (6.2) 188.3 Total current liabilities 1,749.3 77.4 432.0 (1,164.1) 1,094.6 Long-term debt, net of current portion 3,402.5 20.5 33.2 — 3,456.2 Long-term intercompany debt 12.8 346.1 192.6 (551.5) — Deferred income taxes 189.0 459.2 80.3 (195.8) 532.7 Other long-term liabilities 39.5 1.0 100.1 — 140.6 Total liabilities 5,393.1 904.2 838.2 (1,911.4) 5,224.1 Shareholder's equity: Other capital 2,060.9 152.3 (954.0) 741.7 2,000.9 Accumulated (deficit) earnings 8.0 3,551.6 2,362.1 (5,913.6) 8.1 Accumulated other comprehensive (loss) income (229.9) (206.1) (199.7) 406.3 (229.4) Total shareholder's equity 1,839.0 3,497.8 1,208.4 (4,765.6) 1,779.6 Non-controlling interest — — 49.8 — 49.8 Total equity 1,839.0 3,497.8 1,258.2 (4,765.6) 1,829.4 Total liabilities and equity $ 7,232.1 $ 4,402.0 $ 2,096.4 $ (6,677.0) $ 7,053.5 Statement of Income Guarantor Nonguarantor Three month period ended January 1, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 632.9 $ 192.7 $ 711.4 $ (325.2) $ 1,211.8 Cost of goods sold 417.6 137.4 531.1 (325.4) 760.7 Restructuring and related charges — 1.1 — — 1.1 Gross profit 215.3 54.2 180.3 0.2 450.0 Selling 81.3 21.0 87.9 (0.4) 189.8 General and administrative 48.6 14.3 24.5 — 87.4 Research and development 9.1 1.7 3.6 — 14.4 Acquisition and integration related charges 2.8 0.1 1.2 — 4.1 Restructuring and related charges 0.6 0.3 1.2 — 2.1 Total operating expense 142.4 37.4 118.4 (0.4) 297.8 Operating income 72.9 16.8 61.9 0.6 152.2 Interest expense 49.5 4.1 2.5 — 56.1 Other non-operating (income) expense, net (60.9) (45.6) (0.9) 106.3 (1.1) Income from operations before income taxes 84.3 58.3 60.3 (105.7) 97.2 Income tax expense 19.4 1.8 10.9 0.2 32.3 Net income (loss) 64.9 56.5 49.4 (105.9) 64.9 Net income (loss) attributable to non-controlling interest — — (0.1) — (0.1) Net income (loss) attributable to controlling interest $ 64.9 $ 56.5 $ 49.5 $ (105.9) $ 65.0 Statement of Income 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 (loss) 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 Comprehensive Income Guarantor Nonguarantor Three month period ended January 1, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 64.9 $ 56.5 $ 49.4 $ (105.9) $ 64.9 Other comprehensive income (loss), net of tax: Foreign currency translation (loss) gain (46.1) (49.9) (49.9) 99.8 (46.1) Unrealized gain (loss) on derivative instruments 24.2 4.2 4.3 (8.5) 24.2 Defined benefit pension gain (loss) 3.3 3.3 3.4 (6.7) 3.3 Other comprehensive (loss) income (18.6) (42.4) (42.2) 84.6 (18.6) Comprehensive income (loss) 46.3 14.1 7.2 (21.3) 46.3 Comprehensive loss attributable to non-controlling interest — — (0.3) — (0.3) Comprehensive income (loss) attributable to controlling interest $ 46.3 $ 14.1 $ 7.5 $ (21.3) $ 46.6 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 Cash Flows Guarantor Nonguarantor Three month period ended January 1, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash (used) provided by operating activities $ (27.9) $ 67.4 $ 257.4 $ (314.3) $ (17.4) Cash flows from investing activities Purchases of property, plant and equipment (10.4) (7.3) (10.3) — (28.0) Proceeds from sales of property, plant and equipment — — 0.1 — 0.1 Other investing activities — (0.8) — — (0.8) Net cash used by investing activities (10.4) (8.1) (10.2) — (28.7) Cash flows from financing activities Proceeds from issuance of debt 208.9 — — — 208.9 Payment of debt (135.2) — (0.7) — (135.9) Payment of debt issuance costs (0.5) — — — (0.5) Payment of cash dividends to parent (147.6) — — — (147.6) Advances related to intercompany transactions 20.5 (62.2) (272.6) 314.3 — Net cash (used) provided by financing activities (53.9) (62.2) (273.3) 314.3 (75.1) Effect of exchange rate changes on cash and cash equivalents — — (6.4) — (6.4) Net decrease in cash and cash equivalents (92.2) (2.9) (32.5) — (127.6) Cash and cash equivalents, beginning of period 98.6 3.1 169.1 — 270.8 Cash and cash equivalents, end of period $ 6.4 $ 0.2 $ 136.6 $ — $ 143.2 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 |