Guarantor and Nonguarantor Statements | Guarantor and Nonguarantor Statements The Senior Notes are general senior unsecured obligations of Pinnacle Foods Finance LLC, effectively subordinated in right of payment to all existing and future senior secured indebtedness of Pinnacle Foods Finance LLC and guaranteed on a full, unconditional, joint and several basis by the Company and Pinnacle Foods Finance LLC's 100% owned domestic subsidiaries that guarantee other indebtedness of the Pinnacle Foods Finance LLC. 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 Third Amended and Restated 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 25, 2017 and December 25, 2016 . (b) The related condensed consolidating statements of operations and comprehensive earnings for the Company, Pinnacle Foods Finance LLC, all guarantor subsidiaries and the non-guarantor subsidiaries for the following: i. Three months ended June 25, 2017 ; and ii. Three months ended June 26, 2016 . (c) The related condensed consolidating statements of cash flows for the Company, Pinnacle Foods Finance LLC, all guarantor subsidiaries and the non-guarantor subsidiaries for the following: i. Six months ended ended June 25, 2017 ; and ii. Six months ended ended June 26, 2016 . (2) Elimination entries necessary to consolidate the Company, Pinnacle Foods Finance LLC 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 25, 2017 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations and Reclassifications Consolidated Total Current assets: Cash and cash equivalents $ — $ — $ 121,370 $ 9,499 $ — $ 130,869 Accounts receivable, net — — 269,254 8,724 — 277,978 Intercompany accounts receivable 97,109 — 1,085,304 — (1,182,413 ) — Inventories, net — — 461,119 16,415 — 477,534 Other current assets 2,952 17,711 2,489 — 23,152 Deferred tax assets — — — — — — Total current assets 97,109 2,952 1,954,758 37,127 (1,182,413 ) 909,533 Plant assets, net — — 663,152 30,912 — 694,064 Investment in subsidiaries 1,882,191 2,615,127 33,816 — (4,531,134 ) — Intercompany note receivable — 3,011,127 45,079 9,800 (3,066,006 ) — Tradenames — — 2,497,771 4,447 — 2,502,218 Other assets, net — 741 148,854 10,538 — 160,133 Deferred tax assets — 354,426 — — (354,426 ) — Goodwill — — 2,105,077 58,981 — 2,164,058 Total assets $ 1,979,300 $ 5,984,373 $ 7,448,507 $ 151,805 $ (9,133,979 ) $ 6,430,006 Current liabilities: Short-term borrowings $ — $ — $ 1,783 $ — $ — $ 1,783 Current portion of long-term obligations — 22,620 13,312 15 — 35,947 Accounts payable — — 305,310 7,114 — 312,424 Intercompany accounts payable — 1,148,510 — 33,903 (1,182,413 ) — Accrued trade marketing expense — — 30,748 2,513 — 33,261 Accrued liabilities 178 18,330 89,240 2,463 — 110,211 Dividends payable 35,244 — — — — 35,244 Total current liabilities 35,422 1,189,460 440,393 46,008 (1,182,413 ) 528,870 Long-term debt — 2,909,918 30,598 284 — 2,940,800 Intercompany note payable — — 3,001,226 64,780 (3,066,006 ) — Pension and other postretirement benefits — — 54,608 — — 54,608 Other long-term liabilities — 2,804 30,833 3,252 — 36,889 Deferred tax liabilities — — 1,275,722 2,559 (354,426 ) 923,855 Total liabilities 35,422 4,102,182 4,833,380 116,883 (4,602,845 ) 4,485,022 Commitments and contingencies (Note 14) Shareholders' equity: Pinnacle common stock 1,198 — — — — 1,198 Additional paid-in-capital 1,439,221 1,440,418 1,362,345 32,771 (2,835,534 ) 1,439,221 Retained earnings 574,535 480,739 1,286,234 5,096 (1,772,069 ) 574,535 Accumulated other comprehensive loss (38,966 ) (38,966 ) (33,452 ) (4,051 ) 76,469 (38,966 ) Capital stock in treasury, at cost (32,110 ) — — — — (32,110 ) Total Pinnacle Foods Inc. and Subsidiaries stockholders' equity 1,943,878 1,882,191 2,615,127 33,816 (4,531,134 ) 1,943,878 Non-controlling interest — — — 1,106 — 1,106 Total Equity 1,943,878 1,882,191 2,615,127 34,922 (4,531,134 ) 1,944,984 Total liabilities and equity $ 1,979,300 $ 5,984,373 $ 7,448,507 $ 151,805 $ (9,133,979 ) $ 6,430,006 Pinnacle Foods Inc. Condensed Consolidating Balance Sheet December 25, 2016 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations and Reclassifications Consolidated Total Current assets: Cash and cash equivalents $ — $ — $ 341,238 $ 11,838 $ — $ 353,076 Accounts receivable, net — — 281,189 8,393 — 289,582 Intercompany accounts receivable 96,923 — 804,203 — (901,126 ) — Inventories, net — — 429,009 16,482 — 445,491 Other current assets — 631 8,402 1,654 — 10,687 Total current assets 96,923 631 1,864,041 38,367 (901,126 ) 1,098,836 Plant assets, net — — 690,515 32,830 — 723,345 Investment in subsidiaries 1,886,496 2,589,850 30,600 — (4,506,946 ) — Intercompany note receivable — 2,984,974 44,928 9,800 (3,039,702 ) — Tradenames — — 2,525,200 4,358 — 2,529,558 Other assets, net — 2,963 158,934 11,174 — 173,071 Deferred tax assets — 335,178 — — (335,178 ) — Goodwill — — 2,104,648 58,508 — 2,163,156 Total assets $ 1,983,419 $ 5,913,596 $ 7,418,866 $ 155,037 $ (8,782,952 ) $ 6,687,966 Current liabilities: Short-term borrowings $ — $ — $ 2,389 $ — $ — $ 2,389 Current portion of long-term obligations — 10,750 13,028 23 — 23,801 Accounts payable — — 283,999 8,479 — 292,478 Intercompany accounts payable — 863,358 — 37,766 (901,124 ) — Accrued trade marketing expense — — 48,850 2,204 — 51,054 Accrued liabilities 178 28,557 133,316 4,690 — 166,741 Dividends payable 35,233 — — — — 35,233 Total current liabilities 35,411 902,665 481,582 53,162 (901,124 ) 571,696 Long-term debt — 3,112,196 28,024 276 — 3,140,496 Intercompany note payable — — 2,975,471 64,233 (3,039,704 ) — Pension and other postretirement benefits — — 56,323 — — 56,323 Other long-term liabilities — 12,239 31,994 3,296 — 47,529 Deferred tax liabilities — — 1,255,622 2,536 (335,178 ) 922,980 Total liabilities 35,411 4,027,100 4,829,016 123,503 (4,276,006 ) 4,739,024 Commitments and contingencies (Note 14) Shareholders' equity: Pinnacle common stock 1,191 — — — — 1,191 Additional paid-in-capital 1,429,447 1,430,639 1,352,568 32,770 (2,815,977 ) 1,429,447 Retained earnings 601,049 507,426 1,272,939 3,936 (1,784,301 ) 601,049 Accumulated other comprehensive loss (51,569 ) (51,569 ) (35,657 ) (6,106 ) 93,332 (51,569 ) Capital stock in treasury, at cost (32,110 ) — — — — (32,110 ) Total Pinnacle Foods Inc. and Subs stockholders equity 1,948,008 1,886,496 2,589,850 30,600 (4,506,946 ) 1,948,008 Non-controlling interest — — — 934 — 934 Total Equity 1,948,008 1,886,496 2,589,850 31,534 (4,506,946 ) 1,948,942 Total liabilities and shareholders' equity $ 1,983,419 $ 5,913,596 $ 7,418,866 $ 155,037 $ (8,782,952 ) $ 6,687,966 Pinnacle Foods Inc. Condensed Consolidating Statement of Operations and Comprehensive Earnings For the three months ended June 25, 2017 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations Consolidated Total Net sales $ — $ — $ 729,927 $ 37,501 $ (22,820 ) $ 744,608 Cost of products sold — — 570,724 31,803 (22,337 ) 580,190 Gross profit — — 159,203 5,698 (483 ) 164,418 Marketing and selling expenses — — 48,485 985 — 49,470 Administrative expenses — — 32,319 1,311 — 33,630 Research and development expenses — — 4,441 139 — 4,580 Tradename impairment charges — — 27,430 — — 27,430 Intercompany royalties — — (166 ) 166 — — Intercompany management fees — — — 391 (391 ) — Intercompany technical service fees — — — 92 (92 ) — Other (income) expense, net — (164 ) 6,026 (574 ) — 5,288 Equity in (earnings) loss of investees (18,669 ) (23,402 ) (2,472 ) — 44,543 — (18,669 ) (23,566 ) 116,063 2,510 44,060 120,398 Earnings before interest and taxes 18,669 23,566 43,140 3,188 (44,543 ) 44,020 Intercompany interest (income) expense — (19,624 ) 19,416 208 — — Interest expense — 27,772 722 13 — 28,507 Interest income — — 10 3 — 13 Earnings before income taxes 18,669 15,418 23,012 2,970 (44,543 ) 15,526 (Benefit) provision for income taxes — (3,251 ) (390 ) 549 — (3,092 ) Net earnings 18,669 18,669 23,402 2,421 (44,543 ) 18,618 Less: Net loss attributable to non-controlling interest — — — (51 ) — (51 ) Net earnings attributable to Pinnacle Foods, Inc. and Subsidiaries common stockholders $ 18,669 $ 18,669 $ 23,402 $ 2,472 $ (44,543 ) $ 18,669 Total comprehensive earnings 16,165 16,165 24,101 2,928 (43,245 ) 16,114 Less: Comprehensive loss attributable to non-controlling interest — — — (51 ) — (51 ) Comprehensive earnings attributable to Pinnacle Foods, Inc. and Subsidiaries $ 16,165 $ 16,165 $ 24,101 $ 2,979 $ (43,245 ) $ 16,165 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 technical service fees — — — 643 (643 ) — Termination fee received, net of costs, associated with the Hillshire merger agreement — — — 248 (248 ) — Other (income) expense, 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 (Benefit) provision 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 earnings 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 six months ended June 25, 2017 Pinnacle Foods Inc. Pinnacle Foods Finance LLC Guarantor Subsidiaries Nonguarantor Subsidiaries Eliminations Consolidated Total Net sales $ — $ — $ 1,484,514 $ 74,195 $ (48,027 ) $ 1,510,682 Cost of products sold — — 1,116,445 65,659 (46,904 ) 1,135,200 Gross profit — — 368,069 8,536 (1,123 ) 375,482 Marketing and selling expenses — — 103,188 1,876 — 105,064 Administrative expenses — — 66,704 2,937 — 69,641 Research and development expenses — — 8,278 323 — 8,601 Tradename impairment charges — — 27,430 — — 27,430 Intercompany royalties — — (354 ) 354 — — Intercompany management fees — — — 782 (782 ) — Intercompany technical service fees — — — 341 (341 ) — Other (income) expense, net — (397 ) 10,046 (131 ) — 9,518 Equity in (earnings) loss of investees (41,595 ) (81,579 ) (1,120 ) — 124,294 — (41,595 ) (81,976 ) 214,172 6,482 123,171 220,254 Earnings before interest and taxes 41,595 81,976 153,897 2,054 (124,294 ) 155,228 Intercompany interest (income) expense — (41,929 ) 41,503 426 — — Interest expense — 107,942 1,273 23 — 109,238 Interest income — — 20 8 — 28 Earnings before income taxes 41,595 15,963 111,141 1,613 (124,294 ) 46,018 (Benefit) provision for income taxes — (25,632 ) 29,562 321 — 4,251 Net earnings 41,595 41,595 81,579 1,292 (124,294 ) 41,767 Less: Net earnings attributable to non-controlling interest — — — 172 — 172 Net earnings attributable to Pinnacle Foods, Inc. and Subsidiaries common stockholders $ 41,595 $ 41,595 $ 81,579 $ 1,120 $ (124,294 ) $ 41,595 Total comprehensive earnings 54,198 54,198 83,782 3,174 (140,982 ) 54,370 Less: Comprehensive earnings attributable to non-controlling interest — — — 172 172 Comprehensive earnings attributable to Pinnacle Foods, Inc. and Subsidiaries $ 54,198 $ 54,198 $ 83,782 $ 3,002 $ (140,982 ) $ 54,198 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 (income) expense, 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 (Benefit) provision 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 (loss) 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 Cash Flows For the six months ended June 25, 2017 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 $ — $ (18,025 ) $ 138,670 $ (297 ) $ — $ 120,348 Cash flows from investing activities Intercompany accounts receivable/payable — 248,150 2,571 — (250,721 ) — Investment in Subsidiary 67,287 58,504 — — (125,791 ) — Capital expenditures (48,271 ) (1,084 ) — (49,355 ) Sale of plant assets — — 517 1,430 — 1,947 Net cash (used in) provided by investing activities 67,287 306,654 (45,183 ) 346 (376,512 ) (47,408 ) Cash flows from financing activities Net proceeds from issuance of common stock 9,051 — — — — 9,051 Taxes paid related to net share settlement of equity awards (8,926 ) — — — (8,926 ) Dividends paid (67,412 ) — — — (67,412 ) Proceeds from bank term loans — 2,262,000 — — 2,262,000 Repayments of long-term obligations — (2,470,405 ) (1,915 ) — (2,472,320 ) Proceeds from short-term borrowing — — 1,634 — 1,634 Repayments of short-term borrowing — — (2,240 ) — (2,240 ) Intercompany accounts receivable/payable — — (248,150 ) (2,571 ) 250,721 — Return of capital — (67,287 ) (58,504 ) — 125,791 — Repayment of capital lease obligations — — (4,180 ) (36 ) (4,216 ) Debt acquisition costs — (12,937 ) — — (12,937 ) Net cash (used in) provided by financing activities (67,287 ) (288,629 ) (313,355 ) (2,607 ) 376,512 (295,366 ) Effect of exchange rate changes on cash 219 219 Net change in cash and cash equivalents — — (219,868 ) (2,339 ) — (222,207 ) Cash and cash equivalents - beginning of period — — 341,238 11,838 — 353,076 Cash and cash equivalents - end of period $ — $ — $ 121,370 $ 9,499 $ — $ 130,869 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 Payments for business acquisitions — — (985,365 ) — — (985,365 ) Intercompany accounts receivable/payable — 7,832 13,588 — (21,420 ) — Intercompany loans — (880,122 ) — — 880,122 — Investment in subsidiaries 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 the 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 bond offering — 350,000 — — — 350,000 Proceeds from bank term loan — 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 |