Guarantor Statements - SB/RH | NOTE 19 - 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 July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 5.6 $ 1.5 $ 102.7 $ — $ 109.8 Trade receivables, net 209.5 198.9 207.7 — 616.1 Intercompany receivables — 1,037.7 280.9 (1,318.6) — Other receivables 7.9 3.8 30.0 (0.7) 41.0 Inventories 394.2 165.3 306.2 (22.0) 843.7 Prepaid expenses and other 47.1 8.5 38.4 0.1 94.1 Total current assets 664.3 1,415.7 965.9 (1,341.2) 1,704.7 Property, plant and equipment, net 328.3 116.4 230.4 — 675.1 Long-term intercompany receivables 351.2 110.6 12.3 (474.1) — Deferred charges and other 253.1 2.9 40.7 (245.4) 51.3 Goodwill 927.5 1,345.5 348.3 — 2,621.3 Intangible assets, net 1,335.0 741.0 377.4 — 2,453.4 Investments in subsidiaries 3,930.5 1,238.0 — (5,168.5) — Total assets $ 7,789.9 $ 4,970.1 $ 1,975.0 $ (7,229.2) $ 7,505.8 Liabilities and Shareholder's Equity Current liabilities: Current portion of long-term debt $ 16.0 $ 1.7 $ 16.8 $ (0.6) $ 33.9 Accounts payable 213.5 94.4 249.7 — 557.6 Intercompany accounts payable 1,327.4 — — (1,327.4) — Accrued wages and salaries 22.1 2.3 44.5 — 68.9 Accrued interest 45.5 — — — 45.5 Other current liabilities 82.6 14.6 100.1 (0.7) 196.6 Total current liabilities 1,707.1 113.0 411.1 (1,328.7) 902.5 Long-term debt, net of current portion 3,973.5 59.9 33.3 — 4,066.7 Long-term intercompany debt 12.4 344.0 108.3 (464.7) — Deferred income taxes 243.2 516.4 74.7 (250.6) 583.7 Other long-term liabilities 34.2 6.3 109.7 150.2 Total liabilities 5,970.4 1,039.6 737.1 (2,044.0) 5,703.1 Shareholder's equity: Other capital 2,087.2 399.3 (1,005.7) 579.5 2,060.3 Accumulated (deficit) earnings (28.3) 3,737.7 2,434.8 (6,172.5) (28.3) Accumulated other comprehensive (loss) income (239.4) (206.5) (200.0) 407.8 (238.1) Total shareholder's equity 1,819.5 3,930.5 1,229.1 (5,185.2) 1,793.9 Non-controlling interest — — 8.8 — 8.8 Total equity 1,819.5 3,930.5 1,237.9 (5,185.2) 1,802.7 Total liabilities and equity $ 7,789.9 $ 4,970.1 $ 1,975.0 $ (7,229.2) $ 7,505.8 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 July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 599.7 $ 554.3 $ 611.5 $ (461.6) $ 1,303.9 Cost of goods sold 427.5 392.3 458.8 (459.3) 819.3 Restructuring and related charges 0.2 11.0 — — 11.2 Gross profit 172.0 151.0 152.7 (2.3) 473.4 Selling 79.3 40.0 80.8 (0.6) 199.5 General and administrative 41.9 21.8 20.9 — 84.6 Research and development 9.0 2.5 3.0 — 14.5 Acquisition and integration related charges 4.6 0.4 0.8 — 5.8 Restructuring and related charges 7.9 1.8 0.3 — 10.0 Total operating expense 142.7 66.5 105.8 (0.6) 314.4 Operating income (loss) 29.3 84.5 46.9 (1.7) 159.0 Interest expense 44.7 6.0 1.8 — 52.5 Other non-operating (income) expense, net (89.1) (38.7) 1.5 128.4 2.1 Income from operations before income taxes 73.7 117.2 43.6 (130.1) 104.4 Income tax (benefit) expense (5.7) 26.0 4.5 0.2 25.0 Net income (loss) 79.4 91.2 39.1 (130.3) 79.4 Net income attributable to non-controlling interest — — 1.7 — 1.7 Net income (loss) attributable to controlling interest $ 79.4 $ 91.2 $ 37.4 $ (130.3) $ 77.7 Statement of Income Guarantor Nonguarantor Nine month period ended July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ 1,812.2 $ 1,147.1 $ 1,908.4 $ (1,182.1) $ 3,685.6 Cost of goods sold 1,232.5 807.7 1,426.4 (1,176.0) 2,290.6 Restructuring and related charges 0.5 15.9 0.1 — 16.5 Gross profit 579.2 323.5 481.9 (6.1) 1,378.5 Selling 240.5 91.8 246.0 (1.7) 576.6 General and administrative 148.4 52.9 66.5 — 267.8 Research and development 27.8 8.2 8.0 — 44.0 Acquisition and integration related charges 11.0 0.6 3.4 — 15.0 Restructuring and related charges 10.7 3.7 1.8 — 16.2 Total operating expense 438.4 157.2 325.7 (1.7) 919.6 Operating income (loss) 140.8 166.3 156.2 (4.4) 458.9 Interest expense 138.7 14.1 6.4 — 159.2 Other non-operating (income) expense, net (216.6) (120.6) (0.1) 340.2 2.9 Income from operations before income taxes 218.7 272.8 149.9 (344.6) 296.8 Income tax expense (benefit) 13.5 52.8 25.5 (0.2) 91.6 Net income (loss) 205.2 220.0 124.4 (344.4) 205.2 Net income attributable to non-controlling interest — — 1.5 — 1.5 Net income (loss) attributable to controlling interest $ 205.2 $ 220.0 $ 122.9 $ (344.4) $ 203.7 Statement of Income 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 Income 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 Comprehensive Income Guarantor Nonguarantor Three month period ended July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 79.4 $ 91.2 $ 39.1 $ (130.3) $ 79.4 Other comprehensive income (loss), net of tax: Foreign currency translation gain (loss) 30.3 32.3 31.1 (63.4) 30.3 Unrealized (loss) gain on derivative instruments (30.2) (9.1) (9.0) 18.1 (30.2) Defined benefit pension (loss) gain (2.3) (2.2) (2.3) 4.5 (2.3) Other comprehensive (loss) income (2.2) 21.0 19.8 (40.8) (2.2) Comprehensive income (loss) 77.2 112.2 58.9 (171.1) 77.2 Comprehensive (loss) attributable to non-controlling interest — — (0.2) — (0.2) Comprehensive income (loss) attributable to controlling interest $ 77.2 $ 112.2 $ 59.1 $ (171.1) $ 77.4 Statement of Comprehensive Income Guarantor Nonguarantor Nine month period ended July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net income (loss) $ 205.2 $ 220.0 $ 124.4 $ (344.4) $ 205.2 Other comprehensive income (loss), net of tax: Foreign currency translation gain (loss) 5.9 8.8 8.1 (16.9) 5.9 Unrealized (loss) gain on derivative instruments (15.7) (9.9) (10.0) 19.9 (15.7) Defined benefit pension gain (loss) 0.7 0.8 0.8 (1.6) 0.7 Other comprehensive (loss) income (9.1) (0.3) (1.1) 1.4 (9.1) Comprehensive income (loss) 196.1 219.7 123.3 (343.0) 196.1 Comprehensive loss attributable to non-controlling interest — — (0.4) — (0.4) Comprehensive income (loss) attributable to controlling interest $ 196.1 $ 219.7 $ 123.7 $ (343.0) $ 196.5 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 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 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 Cash Flows Guarantor Nonguarantor Nine month period ended July 2, 2017 (in millions) Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash provided (used) by operating activities $ 176.6 $ 91.1 $ (46.1) $ (77.0) $ 144.6 Cash flows from investing activities Purchases of property, plant and equipment (35.4) (13.0) (29.7) — (78.1) Business acquisitions, net of cash acquired (304.7) — — — (304.7) Proceeds from sales of property, plant and equipment — 0.3 4.0 — 4.3 Other investing activities — (1.2) — — (1.2) Net cash used by investing activities (340.1) (13.9) (25.7) — (379.7) Cash flows from financing activities Proceeds from issuance of debt 557.5 — — — 557.5 Payment of debt (207.7) — (15.6) — (223.3) Payment of debt issuance costs (5.9) — — — (5.9) Payment of cash dividends to parent (240.1) — — — (240.1) Purchase of non-controlling interest (12.6) — — — (12.6) Advances related to intercompany transactions (20.7) (78.8) 22.5 77.0 — Net cash provided (used) by financing activities 70.5 (78.8) 6.9 77.0 75.6 Effect of exchange rate changes on cash and cash equivalents — — (1.5) — (1.5) Net decrease in cash and cash equivalents (93.0) (1.6) (66.4) — (161.0) Cash and cash equivalents, beginning of period 98.6 3.1 169.1 — 270.8 Cash and cash equivalents, end of period $ 5.6 $ 1.5 $ 102.7 $ — $ 109.8 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 |