Guarantor and Nonguarantor Statements | Guarantor and Nonguarantor Statements The Senior Notes are general senior unsecured obligations of Pinnacle Foods Finance, effectively subordinated in right of payment to all existing and future senior secured indebtedness of Pinnacle Foods Finance and guaranteed on a full, unconditional, joint and several basis by the Company and Pinnacle Foods Finance's 100% owned domestic subsidiaries that guarantee other indebtedness of the Pinnacle Foods Finance. The indenture governing the Senior Notes contains customary exceptions under which a guarantee of a guarantor subsidiary will terminate, including (1) the sale, exchange or transfer (by merger or otherwise) of the capital stock or all or substantially all of the assets of such guarantor subsidiary, (2) the release or discharge of the guarantee by such guarantor subsidiary of the Amended Credit Agreement or other guarantee that resulted in the creation of the guarantee, (3) the designation of such guarantor subsidiary as an “unrestricted subsidiary” in accordance with the indentures governing the Senior Notes and (4) upon the legal defeasance or covenant defeasance or discharge of the indentures governing the Senior Notes. The following condensed consolidating financial information presents: (1) (a) Condensed consolidating balance sheets as of June 26, 2016 and December 27, 2015 . (b) The related condensed consolidating statements of operations and comprehensive earnings for the Company, Pinnacle Foods Finance, all guarantor subsidiaries and the non-guarantor subsidiaries for the following: i. Three and six months ended June 26, 2016 ; and ii. Three and six months ended June 28, 2015 . (c) The related condensed consolidating statements of cash flows for the Company, Pinnacle Foods Finance, all guarantor subsidiaries and the non-guarantor subsidiaries for the following: i. Six months ended ended June 26, 2016 ; and ii. Six months ended ended June 28, 2015 . (2) Elimination entries necessary to consolidate the Company, Pinnacle Foods Finance with its guarantor subsidiaries and non-guarantor subsidiaries. Investments in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions and include a reclassification entry of net non-current deferred tax assets to non-current deferred tax liabilities. Pinnacle Foods Inc. Condensed Consolidating Balance Sheet June 26, 2016 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations and Reclassifications Consolidated Total Current assets: Cash and cash equivalents $ — $ — $ 122,433 $ 6,911 $ — $ 129,344 Accounts receivable, net — — 258,122 12,078 — 270,200 Intercompany accounts receivable 92,756 — 791,709 1,610 (886,075 ) — Inventories, net — — 425,019 16,221 — 441,240 Other current assets — 239 15,838 1,057 — 17,134 Deferred tax assets — 1,670 69,717 1,233 — 72,620 Total current assets 92,756 1,909 1,682,838 39,110 (886,075 ) 930,538 Plant assets, net — — 664,754 36,217 — 700,971 Investment in subsidiaries 1,777,372 2,476,347 39,627 — (4,293,346 ) — Intercompany note receivable — 2,996,357 44,914 9,802 (3,051,073 ) — Tradenames — — 2,536,400 4,538 — 2,540,938 Other assets, net — 2,492 166,423 11,691 — 180,606 Deferred tax assets — 343,347 — — (343,347 ) — Goodwill — — 2,115,319 54,480 — 2,169,799 Total assets $ 1,870,128 $ 5,820,452 $ 7,250,275 $ 155,838 $ (8,573,841 ) $ 6,522,852 Current liabilities: Short-term borrowings $ — $ — $ 1,758 $ — $ — $ 1,758 Current portion of long-term obligations — 10,750 10,989 15 — 21,754 Accounts payable — — 209,180 9,064 — 218,244 Intercompany accounts payable — 857,303 1,610 27,210 (886,123 ) — Accrued trade marketing expense — — 38,931 2,519 — 41,450 Accrued liabilities 244 34,052 106,370 3,490 — 144,156 Dividends payable 30,998 — — — — 30,998 Total current liabilities 31,242 902,105 368,838 42,298 (886,123 ) 458,360 Long-term debt — 3,113,678 21,029 309 — 3,135,016 Intercompany note payable — — 2,986,057 64,968 (3,051,025 ) — Pension and other postretirement benefits — — 62,903 — — 62,903 Other long-term liabilities — 27,297 33,687 3,375 — 64,359 Deferred tax liabilities — — 1,301,414 4,392 (343,347 ) 962,459 Total liabilities 31,242 4,043,080 4,773,928 115,342 (4,280,495 ) 4,683,097 Commitments and contingencies (Note 13) Shareholders' equity: Pinnacle common stock 1,186 — — — — 1,186 Additional paid-in-capital 1,404,567 1,405,753 1,313,141 33,008 (2,751,902 ) 1,404,567 Retained earnings 528,180 434,556 1,199,791 13,242 (1,647,589 ) 528,180 Accumulated other comprehensive loss (62,937 ) (62,937 ) (36,585 ) (6,623 ) 106,145 (62,937 ) Capital stock in treasury, at cost (32,110 ) — — — — (32,110 ) Total Pinnacle Foods Inc. and Subsidiaries stockholders' equity 1,838,886 1,777,372 2,476,347 39,627 (4,293,346 ) 1,838,886 Non-controlling interest — — — 869 — 869 Total Equity 1,838,886 1,777,372 2,476,347 40,496 (4,293,346 ) 1,839,755 Total liabilities and equity $ 1,870,128 $ 5,820,452 $ 7,250,275 $ 155,838 $ (8,573,841 ) $ 6,522,852 Pinnacle Foods Inc. Condensed Consolidating Balance Sheet December 27, 2015 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations and Reclassifications Consolidated Total Current assets: Cash and cash equivalents $ — $ — $ 177,669 $ 2,880 $ — $ 180,549 Accounts receivable, net — — 214,690 5,046 — 219,736 Intercompany accounts receivable 92,475 — 725,074 — (817,549 ) — Inventories, net — — 392,404 10,697 — 403,101 Other current assets — 470 11,860 1,347 — 13,677 Deferred tax assets — 1,670 38,516 385 — 40,571 Total current assets 92,475 2,140 1,560,213 20,355 (817,549 ) 857,634 Plant assets, net — — 615,123 15,986 — 631,109 Investment in subsidiaries 1,744,015 2,428,472 26,433 — (4,198,920 ) — Intercompany note receivable — 2,084,130 8,398 9,800 (2,102,328 ) — Tradenames — — 1,996,800 4,248 — 2,001,048 Other assets, net — 935 118,621 808 — 120,364 Deferred tax assets — 332,372 — — (332,372 ) — Goodwill — — 1,692,715 21,293 — 1,714,008 Total assets $ 1,836,490 $ 4,848,049 $ 6,018,303 $ 72,490 $ (7,451,169 ) $ 5,324,163 Current liabilities: Short-term borrowings $ — $ — $ 2,225 $ — $ — $ 2,225 Current portion of long-term obligations — 5,250 9,515 82 — 14,847 Accounts payable — — 206,082 4,957 — 211,039 Intercompany accounts payable — 815,100 — 2,449 (817,549 ) — Accrued trade marketing expense — — 44,096 2,132 — 46,228 Accrued liabilities 163 18,152 79,468 2,727 — 100,510 Dividends payable 30,798 — — — — 30,798 Total current liabilities 30,961 838,502 341,386 12,347 (817,549 ) 405,647 Long-term debt — 2,242,608 14,055 349 — 2,257,012 Intercompany note payable — — 2,075,113 27,215 (2,102,328 ) — Pension and other postretirement benefits — — 63,454 — — 63,454 Other long-term liabilities — 22,924 28,195 3,387 — 54,506 Deferred tax liabilities — — 1,067,628 2,759 (332,372 ) 738,015 Total liabilities 30,961 3,104,034 3,589,831 46,057 (3,252,249 ) 3,518,634 Commitments and contingencies (Note 13) Shareholders' equity: Pinnacle common stock 1,176 — — — — 1,176 Additional paid-in-capital 1,378,521 1,379,697 1,301,642 20,476 (2,701,815 ) 1,378,521 Retained earnings 517,330 423,706 1,169,032 14,212 (1,606,950 ) 517,330 Accumulated other comprehensive loss (59,388 ) (59,388 ) (42,202 ) (8,255 ) 109,845 (59,388 ) Capital stock in treasury, at cost (32,110 ) — — — — (32,110 ) Total Shareholders' equity 1,805,529 1,744,015 2,428,472 26,433 (4,198,920 ) 1,805,529 Total liabilities and shareholders' equity $ 1,836,490 $ 4,848,049 $ 6,018,303 $ 72,490 $ (7,451,169 ) $ 5,324,163 Pinnacle Foods Inc. Condensed Consolidating Statement of Operations and Comprehensive Earnings For the three months ended June 26, 2016 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations Consolidated Total Net sales $ — $ — $ 741,576 $ 44,222 $ (29,417 ) $ 756,381 Cost of products sold — — 525,536 38,072 (28,419 ) 535,189 Gross profit — — 216,040 6,150 (998 ) 221,192 Marketing and selling expenses — — 59,356 1,680 — 61,036 Administrative expenses — — 41,281 2,422 — 43,703 Research and development expenses — — 4,967 131 — 5,098 Intercompany royalties — — (48 ) 155 (107 ) — Intercompany management fees — — — 643 (643 ) — Intercompany technical service fees — — — 248 (248 ) — Other expense (income), net — (499 ) 3,967 101 — 3,569 Equity in (earnings) loss of investees (45,784 ) (52,539 ) (683 ) — 99,006 — (45,784 ) (53,038 ) 108,840 5,380 98,008 113,406 Earnings before interest and taxes 45,784 53,038 107,200 770 (99,006 ) 107,786 Intercompany interest (income) expense — (23,434 ) 23,650 (216 ) — — Interest expense — 34,987 491 10 — 35,488 Interest income — — 13 14 — 27 Earnings before income taxes 45,784 41,485 83,072 990 (99,006 ) 72,325 Provision (benefit) for income taxes — (4,299 ) 30,533 308 — 26,542 Net earnings 45,784 45,784 52,539 682 (99,006 ) 45,783 Less: Net loss attributable to non-controlling interest — — — (1 ) — (1 ) Net earnings attributable to Pinnacle Foods, Inc. and Subsidiaries common stockholders $ 45,784 $ 45,784 $ 52,539 $ 683 $ (99,006 ) $ 45,784 Total comprehensive earnings 42,611 42,611 52,952 903 (96,467 ) 42,610 Less: Comprehensive loss attributable to non-controlling interest — — — (1 ) — (1 ) Comprehensive earnings attributable to Pinnacle Foods, Inc. and Subsidiaries $ 42,611 $ 42,611 $ 52,952 $ 904 $ (96,467 ) $ 42,611 Pinnacle Foods Inc. Condensed Consolidating Statement of Operations and Comprehensive Earnings For the three months ended June 28, 2015 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations Consolidated Total Net sales $ — $ — $ 626,468 $ 31,067 $ (25,789 ) $ 631,746 Cost of products sold — 14 461,850 26,304 (25,531 ) 462,637 Gross profit — (14 ) 164,618 4,763 (258 ) 169,109 Marketing and selling expenses — — 43,320 2,378 — 45,698 Administrative expenses — (129 ) 26,308 1,486 — 27,665 Research and development expenses — — 3,449 140 — 3,589 Intercompany royalties — — — 8 (8 ) — Intercompany technical service fees — — — 250 (250 ) — Other expense (income), net — (522 ) 2,830 34 — 2,342 Equity in (earnings) loss of investees (43,679 ) (46,246 ) (266 ) — 90,191 — (43,679 ) (46,897 ) 75,641 4,296 89,933 79,294 Earnings before interest and taxes 43,679 46,883 88,977 467 (90,191 ) 89,815 Intercompany interest (income) expense — (17,181 ) 16,908 273 — — Interest expense — 21,808 367 12 — 22,187 Interest income — — 2 10 — 12 Earnings before income taxes 43,679 42,256 71,704 192 (90,191 ) 67,640 Provision (benefit) for income taxes — (1,423 ) 25,458 (74 ) — 23,961 Net earnings $ 43,679 $ 43,679 $ 46,246 $ 266 $ (90,191 ) $ 43,679 Total comprehensive earnings (loss) $ 45,715 $ 45,715 $ 46,100 $ (31 ) $ (91,784 ) $ 45,715 Pinnacle Foods Inc. Condensed Consolidating Statement of Operations and Comprehensive Earnings For the six months ended June 26, 2016 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations Consolidated Total Net sales $ — $ — $ 1,486,639 $ 82,803 $ (58,806 ) $ 1,510,636 Cost of products sold — — 1,073,951 73,981 (57,055 ) 1,090,877 Gross profit — — 412,688 8,822 (1,751 ) 419,759 Marketing and selling expenses — — 116,893 3,041 — 119,934 Administrative expenses — — 85,073 4,518 — 89,591 Research and development expenses — — 8,903 380 — 9,283 Intercompany royalties — — (304 ) 483 (179 ) — Intercompany management fees — — — 1,074 (1,074 ) — Intercompany technical service fees — — — 498 (498 ) — Other expense (income), net — (1,283 ) 14,035 132 — 12,884 Equity in (earnings) loss of investees (70,620 ) (78,657 ) 1,665 — 147,612 — (70,620 ) (79,940 ) 226,265 10,126 145,861 231,692 Earnings before interest and taxes 70,620 79,940 186,423 (1,304 ) (147,612 ) 188,067 Intercompany interest (income) expense — (51,692 ) 51,582 110 — — Interest expense — 66,127 979 22 — 67,128 Interest income — — 71 33 — 104 Earnings (loss) before income taxes 70,620 65,505 133,933 (1,403 ) (147,612 ) 121,043 Provision (benefit) for income taxes — (5,115 ) 55,276 262 — 50,423 Net earnings (loss) 70,620 70,620 78,657 (1,665 ) (147,612 ) 70,620 Less: Net earnings attributable to non-controlling interest — — — — — — Net earnings (loss) attributable to Pinnacle Foods, Inc. and Subsidiaries common stockholders $ 70,620 $ 70,620 $ 78,657 $ (1,665 ) $ (147,612 ) $ 70,620 Total comprehensive earnings 67,071 67,071 84,338 3,634 (155,043 ) 67,071 Less: Comprehensive earnings attributable to non-controlling interest — — — — — — Comprehensive earnings attributable to Pinnacle Foods, Inc. and Subsidiaries $ 67,071 $ 67,071 $ 84,338 $ 3,634 $ (155,043 ) $ 67,071 Pinnacle Foods Inc. Condensed Consolidating Statement of Operations and Comprehensive Earnings For the six months ended June 28, 2015 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations Consolidated Total Net sales $ — $ — $ 1,287,635 $ 60,565 $ (51,173 ) $ 1,297,027 Cost of products sold — 16 957,236 49,609 (50,660 ) 956,201 Gross profit — (16 ) 330,399 10,956 (513 ) 340,826 Marketing and selling expenses — — 86,611 6,096 — 92,707 Administrative expenses — 3 52,248 3,200 — 55,451 Research and development expenses — — 6,390 251 — 6,641 Intercompany royalties — — — 14 (14 ) — Intercompany technical service fees — — — 499 (499 ) — Other expense (income), net — 1,311 6,396 36 — 7,743 Equity in (earnings) loss of investees (85,215 ) (91,452 ) (337 ) — 177,004 — (85,215 ) (90,138 ) 151,308 10,096 176,491 162,542 Earnings before interest and taxes 85,215 90,122 179,091 860 (177,004 ) 178,284 Intercompany interest (income) expense — (34,359 ) 33,829 530 — — Interest expense — 42,929 863 23 — 43,815 Interest income — — 147 18 — 165 Earnings (loss) before income taxes 85,215 81,552 144,546 325 (177,004 ) 134,634 Provision (benefit) for income taxes — (3,663 ) 53,094 (12 ) — 49,419 Net earnings (loss) $ 85,215 $ 85,215 $ 91,452 $ 337 $ (177,004 ) $ 85,215 Total comprehensive earnings (loss) $ 78,054 $ 78,054 $ 90,511 $ (925 ) $ (167,640 ) $ 78,054 Pinnacle Foods Inc. Condensed Consolidating Statement of Cash Flows For the six months ended June 26, 2016 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations and Reclassifications Consolidated Total Cash flows from operating activities Net cash provided by (used in) operating activities $ (6,369 ) $ 11,481 $ 139,564 $ 20,427 $ — $ 165,103 Cash flows from investing activities Business acquisition activity — — (985,365 ) — — (985,365 ) Intercompany accounts receivable/payable — 7,832 13,588 — (21,420 ) — Intercompany loans — (880,122 ) — — 880,122 — Investment in Subsidiary 44,905 33,726 — — (78,631 ) — Capital expenditures — — (57,086 ) (3,101 ) — (60,187 ) Net cash (used in) provided by investing activities 44,905 (838,564 ) (1,028,863 ) (3,101 ) 780,071 (1,045,552 ) Cash flows from financing activities Net proceeds from issuance of common stock 15,642 — — — — 15,642 Excess tax benefits on stock-based compensation 6,369 — — — — 6,369 Taxes paid related to net share settlement of equity awards (1,087 ) — — — — (1,087 ) Dividends paid (59,460 ) — — — — (59,460 ) Proceeds from notes offering — 350,000 — — — 350,000 Proceeds from bank term loans — 547,250 — — — 547,250 Repayments of long-term obligations — (4,000 ) (2,478 ) — — (6,478 ) Proceeds from short-term borrowing — — 1,604 — — 1,604 Repayments of short-term borrowing — — (2,060 ) — — (2,060 ) Intercompany accounts receivable/payable — — (7,832 ) (13,588 ) 21,420 — Return of capital — (44,905 ) (33,726 ) — 78,631 — Intercompany loans — — 880,122 — (880,122 ) — Repayment of capital lease obligations — — (1,567 ) (7 ) — (1,574 ) Debt acquisition costs — (21,262 ) — — — (21,262 ) Net cash (used in) provided by financing activities (38,536 ) 827,083 834,063 (13,595 ) (780,071 ) 828,944 Effect of exchange rate changes on cash — — — 300 — 300 Net change in cash and cash equivalents — — (55,236 ) 4,031 — (51,205 ) Cash and cash equivalents - beginning of period — — 177,669 2,880 — 180,549 Cash and cash equivalents - end of period $ — $ — $ 122,433 $ 6,911 $ — $ 129,344 Pinnacle Foods Inc. Condensed Consolidating Statement of Cash Flows For the six months ended June 28, 2015 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations and Reclassifications Consolidated Total Cash flows from operating activities Net cash provided by (used in) operating activities $ — $ (6,195 ) $ 137,365 $ (6,736 ) $ — $ 124,434 Cash flows from investing activities Payments for business acquisitions — — 1,102 — — 1,102 Intercompany accounts receivable/payable — — (19,131 ) — 19,131 — Intercompany loans — — (7,209 ) — 7,209 — Investment in subsidiaries 55,248 — — — (55,248 ) — Capital expenditures — — (47,057 ) (1,111 ) — (48,168 ) Net cash (used in) provided by investing activities 55,248 — (72,295 ) (1,111 ) (28,908 ) (47,066 ) Cash flows from financing activities Proceeds from the issuance of common stock 824 — — — — 824 Excess tax benefits on stock-based compensation 1,076 — — — — 1,076 Taxes paid related to net share settlement of equity awards (2,401 ) — — — — (2,401 ) Dividends paid (54,747 ) — — — — (54,747 ) Repayments of long-term obligations — (2,626 ) (1,796 ) — — (4,422 ) Proceeds from short-term borrowing — — 1,710 — — 1,710 Repayments of short-term borrowing — — (2,312 ) — — (2,312 ) Intercompany accounts receivable/payable — 8,821 — 10,310 (19,131 ) — Proceeds from Intercompany loans — — — 7,209 (7,209 ) — Parent investment — — (55,248 ) — 55,248 — Repayment of capital lease obligations — — (1,871 ) — — (1,871 ) Net cash (used in) provided by financing activities (55,248 ) 6,195 (59,517 ) 17,519 28,908 (62,143 ) Effect of exchange rate changes on cash — — — (346 ) — (346 ) Net change in cash and cash equivalents — — 5,553 9,326 — 14,879 Cash and cash equivalents - beginning of period — — 32,942 5,535 — 38,477 Cash and cash equivalents - end of period $ — $ — $ 38,495 $ 14,861 $ — $ 53,356 |