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 2022 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 Holdings, LLC. The ‘Parent’ consists of the financial statements of Spectrum Brands, Inc. as the debt issuer, with SB/RH Holdings, LLC as a parent guarantor, without consolidated entities. SB/RH Holdings, LLC financial information is not presented separately as there are no independent assets or operations and therefore determined to not be material. 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 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 5.1 $ 0.1 $ 131.9 $ — $ 137.1 Trade receivables, net 190.7 132.0 205.8 — 528.5 Intercompany receivables — 810.6 238.1 (1,048.7) — Other receivables 7.0 2.6 33.8 (0.6) 42.8 Inventories 383.0 186.5 287.0 (20.2) 836.3 Prepaid expenses and other 41.4 9.0 38.3 0.1 88.8 Total current assets 627.2 1,140.8 934.9 (1,069.4) 1,633.5 Property, plant and equipment, net 329.2 112.2 219.4 — 660.8 Long-term intercompany receivables 210.0 114.5 12.9 (337.4) — Deferred charges and other 210.6 0.9 42.3 (220.3) 33.5 Goodwill 912.1 1,154.5 407.2 — 2,473.8 Intangible assets, net 1,312.0 619.7 380.8 — 2,312.5 Investments in subsidiaries 3,562.6 1,287.9 (2.9) (4,847.6) — Total assets $ 7,163.7 $ 4,430.5 $ 1,994.6 $ (6,474.7) $ 7,114.1 Liabilities and Shareholder's Equity Current liabilities: Current portion of long-term debt $ 13.3 $ 1.3 $ 20.4 $ — $ 35.0 Accounts payable 202.7 103.9 218.4 — 525.0 Intercompany accounts payable 1,056.9 — — (1,056.9) — Accrued wages and salaries 23.8 2.8 38.0 — 64.6 Accrued interest 37.2 — — — 37.2 Other current liabilities 65.1 15.5 94.1 (0.6) 174.1 Total current liabilities 1,399.0 123.5 370.9 (1,057.5) 835.9 Long-term debt, net of current portion 3,662.6 50.1 33.1 — 3,745.8 Long-term intercompany debt 11.7 200.6 116.7 (329.0) — Deferred income taxes 236.0 487.4 79.9 (225.8) 577.5 Other long-term liabilities 18.8 6.3 106.1 — 131.2 Total liabilities 5,328.1 867.9 706.7 (1,612.3) 5,290.4 Shareholder's equity: Other capital 2,090.8 140.1 (963.3) 761.2 2,028.8 Accumulated (deficit) earnings (18.4) 3,650.0 2,422.5 (6,072.5) (18.4) Accumulated other comprehensive (loss) income (236.8) (227.5) (220.7) 448.9 (236.1) Total shareholder's equity 1,835.6 3,562.6 1,238.5 (4,862.4) 1,774.3 Non-controlling interest — — 49.4 — 49.4 Total equity 1,835.6 3,562.6 1,287.9 (4,862.4) 1,823.7 Total liabilities and equity $ 7,163.7 $ 4,430.5 $ 1,994.6 $ (6,474.7) $ 7,114.1 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 earnings (deficit) 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 April 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 579.7 $ 400.1 $ 585.3 $ (395.2) $ 1,169.9 Cost of goods sold 387.4 277.9 436.6 (391.3) 710.6 Restructuring and related charges 0.3 3.8 — 4.1 Gross profit 192.0 118.4 148.7 (3.9) 455.2 Selling 79.9 30.4 77.8 (0.7) 187.4 General and administrative 58.0 18.1 19.8 — 95.9 Research and development 9.7 2.1 3.3 — 15.1 Acquisition and integration related charges 3.6 0.2 1.3 — 5.1 Restructuring and related charges 2.3 1.5 0.3 — 4.1 Total operating expense 153.5 52.3 102.5 (0.7) 307.6 Operating income (loss) 38.5 66.1 46.2 (3.2) 147.6 Interest expense 44.5 4.1 2.1 — 50.7 Other non-operating (income) expense, net (66.7) (35.8) (0.7) 105.0 1.8 Income from operations before income taxes 60.7 97.8 44.8 (108.2) 95.1 Income tax (benefit) expense (0.1) 25.3 9.7 (0.6) 34.3 Net income (loss) 60.8 72.5 35.1 (107.6) 60.8 Net loss attributable to non-controlling interest — — (0.2) — (0.2) Net income (loss) attributable to controlling interest $ 60.8 $ 72.5 $ 35.3 $ (107.6) $ 61.0 Statement of Income Guarantor Nonguarantor Six month period ended April 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 1,212.6 $ 592.8 $ 1,296.8 $ (720.5) $ 2,381.7 Cost of goods sold 805.0 415.4 967.6 (716.8) 1,471.2 Restructuring and related charges 0.3 4.9 0.1 — 5.3 Gross profit 407.3 172.5 329.1 (3.7) 905.2 Selling 161.2 51.4 165.7 (1.1) 377.2 General and administrative 106.7 32.3 44.3 — 183.3 Research and development 18.8 3.8 6.9 — 29.5 Acquisition and integration related charges 6.4 0.3 2.5 — 9.2 Restructuring and related charges 2.8 1.9 1.5 — 6.2 Total operating expense 295.9 89.7 220.9 (1.1) 605.4 Operating income 111.4 82.8 108.2 (2.6) 299.8 Interest expense 93.9 8.1 4.7 — 106.7 Other non-operating (income) expense, net (127.6) (81.2) (1.6) 211.2 0.8 Income from operations before income taxes 145.1 155.9 105.1 (213.8) 192.3 Income tax expense 19.3 27.1 20.5 (0.4) 66.5 Net income (loss) 125.8 128.8 84.6 (213.4) 125.8 Net loss attributable to non-controlling interest — — (0.2) — (0.2) Net income (loss) attributable to controlling interest $ 125.8 $ 128.8 $ 84.8 $ (213.4) $ 126.0 Statement of Income 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 (22.0) 28.5 6.7 (4.2) 9.0 Net income (loss) 82.6 91.6 32.1 (123.7) 82.6 Net income attributable to non-controlling interest — — 0.1 — 0.1 Net income (loss) attributable to controlling interest $ 82.6 $ 91.6 $ 32.0 $ (123.7) $ 82.5 Statement of Income 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 (21.7) 24.7 17.0 (4.1) 15.9 Net income (loss) 158.1 154.3 89.6 (243.9) 158.1 Net income attributable to non-controlling interest — — 0.2 — 0.2 Net income (loss) attributable to controlling interest $ 158.1 $ 154.3 $ 89.4 $ (243.9) $ 157.9 Statement of Comprehensive Income Guarantor Nonguarantor Three month period ended April 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 60.8 $ 72.5 $ 35.1 $ (107.6) $ 60.8 Other comprehensive income (loss), net of tax: Foreign currency translation gain (loss) 21.7 26.4 26.9 (53.3) 21.7 Unrealized (loss) gain on derivative instruments (9.7) (5.1) (5.2) 10.3 (9.7) Defined benefit pension (loss) gain (0.3) (0.4) (0.3) 0.7 (0.3) Other comprehensive income (loss) 11.7 20.9 21.4 (42.3) 11.7 Comprehensive income (loss) 72.5 93.4 56.5 (149.9) 72.5 Comprehensive income attributable to non-controlling interest — — 0.1 — 0.1 Comprehensive income (loss) attributable to controlling interest $ 72.5 $ 93.4 $ 56.4 $ (149.9) $ 72.4 Statement of Comprehensive Income Guarantor Nonguarantor Six month period ended April 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 125.8 $ 128.8 $ 84.6 $ (213.4) $ 125.8 Other comprehensive income (loss), net of tax: Foreign currency translation (loss) gain (24.4) (23.5) (23.0) 46.5 (24.4) Unrealized gain (loss) on derivative instruments 14.5 (0.9) (0.8) 1.7 14.5 Defined benefit pension gain (loss) 3.0 3.0 3.0 (6.0) 3.0 Other comprehensive (loss) income (6.9) (21.4) (20.8) 42.2 (6.9) Comprehensive income (loss) 118.9 107.4 63.8 (171.2) 118.9 Comprehensive loss attributable to non-controlling interest — — (0.2) — (0.2) Comprehensive income (loss) attributable to controlling interest $ 118.9 $ 107.4 $ 64.0 $ (171.2) $ 119.1 Statement of Comprehensive Income Guarantor Nonguarantor Three month period ended April 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 82.6 $ 91.6 $ 32.1 $ (123.7) $ 82.6 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) 107.3 113.8 54.2 (168.0) 107.3 Comprehensive income attributable to non-controlling interest — — — — — Comprehensive income (loss) attributable to controlling interest $ 107.3 $ 113.8 $ 54.2 $ (168.0) $ 107.3 Statement of Comprehensive Income Guarantor Nonguarantor Six month period ended April 3, 2016 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 158.1 $ 154.3 $ 89.6 $ (243.9) $ 158.1 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) 167.1 159.8 95.1 (254.9) 167.1 Comprehensive loss attributable to non-controlling interest — — (0.1) — (0.1) Comprehensive income (loss) attributable to controlling interest $ 167.1 $ 159.8 $ 95.2 $ (254.9) $ 167.2 Statement of Cash Flows Guarantor Nonguarantor Six month period ended April 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash (used) provided by operating activities $ 171.4 $ 227.2 $ 211.8 $ (597.7) $ 12.7 Cash flows from investing activities Purchases of property, plant and equipment (22.5) (10.8) (18.0) — (51.3) Proceeds from sales of property, plant and equipment — 0.2 0.6 — 0.8 Other investing activities — (1.2) — — (1.2) Net cash used by investing activities (22.5) (11.8) (17.4) — (51.7) Cash flows from financing activities Proceeds from issuance of debt 216.1 — — — 216.1 Payment of debt (140.8) — (10.8) — (151.6) Payment of debt issuance costs (2.7) — — — (2.7) Payment of cash dividends to parent (152.5) — — — (152.5) Advances related to intercompany transactions (162.5) (218.4) (216.8) 597.7 — Net cash (used) provided by financing activities (242.4) (218.4) (227.6) 597.7 (90.7) Effect of exchange rate changes on cash and cash equivalents — — (4.0) — (4.0) Net decrease in cash and cash equivalents (93.5) (3.0) (37.2) — (133.7) Cash and cash equivalents, beginning of period 98.6 3.1 169.1 — 270.8 Cash and cash equivalents, end of period $ 5.1 $ 0.1 $ 131.9 $ — $ 137.1 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 |