SBH 06.30.2013 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________
FORM 10-Q
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x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2013
OR
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¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 001-34757
_________________________________________
Spectrum Brands Holdings, Inc.
(Exact name of registrant as specified in its charter)
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Delaware | | 27-2166630 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
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601 Rayovac Drive Madison, Wisconsin | | 53711 |
(Address of principal executive offices) | | (Zip Code) |
(608) 275-3340
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report.)
_________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer | x | Accelerated filer | o |
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Non-accelerated filer | o | Smaller reporting company | o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The number of shares outstanding of the Registrant’s common stock, $.01 par value, as of August 6, 2013, was 52,172,352.
SPECTRUM BRANDS HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED June 30, 2013
INDEX
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| Part I—Financial Information | |
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Item 1. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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Item 1. | | |
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Item 1A. | | |
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Item 2. | | |
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Item 6. | | |
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SPECTRUM BRANDS HOLDINGS, INC.
Condensed Consolidated Statements of Financial Position
June 30, 2013 and September 30, 2012
(Unaudited)
(Amounts in thousands, except per share figures)
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| | | | | | | |
| June 30, 2013 | | September 30, 2012 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 98,993 |
| | $ | 157,961 |
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Receivables: | | | |
Trade accounts receivable, net of allowances of $32,591 and $21,870, respectively | 479,307 |
| | 335,301 |
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Other | 71,594 |
| | 38,116 |
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Inventories | 707,340 |
| | 452,633 |
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Deferred income taxes | 21,252 |
| | 28,143 |
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Prepaid expenses and other | 69,906 |
| | 49,273 |
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Total current assets | 1,448,392 |
| | 1,061,427 |
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Property, plant and equipment, net of accumulated depreciation of $180,596 and $139,994, respectively | 355,250 |
| | 214,017 |
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Deferred charges and other | 22,389 |
| | 27,711 |
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Goodwill | 1,470,180 |
| | 694,245 |
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Intangible assets, net | 2,169,404 |
| | 1,714,929 |
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Debt issuance costs | 71,903 |
| | 39,320 |
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Total assets | $ | 5,537,518 |
| | $ | 3,751,649 |
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Liabilities and Shareholders’ Equity | | | |
Current liabilities: | | | |
Current maturities of long-term debt | $ | 40,783 |
| | $ | 16,414 |
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Accounts payable | 427,539 |
| | 325,023 |
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Accrued liabilities: | | | |
Wages and benefits | 63,623 |
| | 82,119 |
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Income taxes payable | 29,586 |
| | 30,272 |
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Accrued interest | 26,906 |
| | 30,473 |
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Other | 156,655 |
| | 126,330 |
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Total current liabilities | 745,092 |
| | 610,631 |
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Long-term debt, net of current maturities | 3,185,271 |
| | 1,652,886 |
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Employee benefit obligations, net of current portion | 109,340 |
| | 89,994 |
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Deferred income taxes | 503,454 |
| | 377,465 |
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Other | 24,845 |
| | 31,578 |
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Total liabilities | 4,568,002 |
| | 2,762,554 |
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Commitments and contingencies | | | |
Shareholders’ equity: | | | |
Common stock, $.01 par value, authorized 200,000 shares; issued 53,491 and 52,799 shares, respectively; outstanding 52,172 and 51,483 shares | 535 |
| | 528 |
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Additional paid-in capital | 1,403,193 |
| | 1,399,261 |
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Accumulated deficit | (385,882 | ) | | (340,647 | ) |
Accumulated other comprehensive loss | (56,310 | ) | | (33,435 | ) |
| 961,536 |
| | 1,025,707 |
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Less treasury stock, at cost, 1,319 and 1,316 shares, respectively | (36,811 | ) | | (36,612 | ) |
Total shareholders' equity | 924,725 |
| | 989,095 |
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Non-controlling interest | 44,791 |
| | — |
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Total equity | 969,516 |
| | 989,095 |
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Total liabilities and equity | $ | 5,537,518 |
| | $ | 3,751,649 |
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See accompanying notes which are an integral part of these condensed consolidated financial statements (Unaudited).
SPECTRUM BRANDS HOLDINGS, INC.
Condensed Consolidated Statements of Operations
For the three and nine month periods ended June 30, 2013 and July 1, 2012
(Unaudited)
(Amounts in thousands, except per share figures)
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| | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | NINE MONTHS ENDED |
| 2013 | | 2012 | | 2013 | | 2012 |
Net sales | $ | 1,089,825 |
| | $ | 824,803 |
| | $ | 2,947,849 |
| | $ | 2,419,859 |
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Cost of goods sold | 706,053 |
| | 531,069 |
| | 1,949,332 |
| | 1,575,803 |
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Restructuring and related charges | 1,013 |
| | 2,038 |
| | 4,698 |
| | 8,303 |
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Gross profit | 382,759 |
| | 291,696 |
| | 993,819 |
| | 835,753 |
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Selling | 165,178 |
| | 129,851 |
| | 464,961 |
| | 391,522 |
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General and administrative | 70,429 |
| | 50,928 |
| | 197,587 |
| | 158,091 |
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Research and development | 11,486 |
| | 8,597 |
| | 31,517 |
| | 23,790 |
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Acquisition and integration related charges | 7,747 |
| | 5,274 |
| | 40,558 |
| | 20,625 |
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Restructuring and related charges | 12,232 |
| | 1,858 |
| | 23,038 |
| | 7,587 |
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Total operating expenses | 267,072 |
| | 196,508 |
| | 757,661 |
| | 601,615 |
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Operating income | 115,687 |
| | 95,188 |
| | 236,158 |
| | 234,138 |
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Interest expense | 61,516 |
| | 39,686 |
| | 191,758 |
| | 150,082 |
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Other expense, net | 2,613 |
| | 2,224 |
| | 7,941 |
| | 2,225 |
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Income from continuing operations before income taxes | 51,558 |
| | 53,278 |
| | 36,459 |
| | 81,831 |
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Income tax expense (benefit) | 15,169 |
| | (5,371 | ) | | 54,928 |
| | 38,772 |
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Net income (loss) | 36,389 |
| | 58,649 |
| | (18,469 | ) | | 43,059 |
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Less: Net income attributable to non-controlling interest | 259 |
| | — |
| | 72 |
| | — |
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Net income (loss) attributable to controlling interest | $ | 36,130 |
| | $ | 58,649 |
| | $ | (18,541 | ) | | $ | 43,059 |
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Basic earnings per share: | | | | | | | |
Weighted average shares of common stock outstanding | 52,136 |
| | 51,342 |
| | 51,992 |
| | 51,669 |
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Net income (loss) per share attributable to controlling interest | $ | 0.69 |
| | $ | 1.14 |
| | $ | (0.36 | ) | | $ | 0.83 |
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Diluted earnings per share: | | | | | | | |
Weighted average shares and equivalents outstanding | 52,701 |
| | 51,819 |
| | 51,992 |
| | 52,145 |
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Net income (loss) per share attributable to controlling interest | $ | 0.69 |
| | $ | 1.13 |
| | $ | (0.36 | ) | | $ | 0.83 |
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Cash dividends declared per common share | $ | 0.25 |
| | $ | — |
| | $ | 0.50 |
| | $ | — |
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See accompanying notes which are an integral part of these condensed consolidated financial statements
(Unaudited).
SPECTRUM BRANDS HOLDINGS, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
For the three and nine month periods ended June 30, 2013 and July 1, 2012
(Unaudited)
(Amounts in thousands)
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| | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | NINE MONTHS ENDED |
| 2013 | | 2012 | | 2013 | | 2012 |
Net income (loss) | $ | 36,389 |
| | $ | 58,649 |
| | $ | (18,469 | ) | | $ | 43,059 |
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Other comprehensive (loss) income, net of tax: | | | | | | | |
Foreign currency translation | (7,830 | ) | | (34,148 | ) | | (25,385 | ) | | (30,538 | ) |
Unrealized gain on derivative instruments | 1,780 |
| | 1,475 |
| | 2,858 |
| | 2,370 |
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Defined benefit pension (loss) gain | (52 | ) | | 422 |
| | (348 | ) | | 924 |
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Other comprehensive loss, net of tax | (6,102 | ) | | (32,251 | ) | | (22,875 | ) | | (27,244 | ) |
Comprehensive income (loss) | 30,287 |
| | 26,398 |
| | (41,344 | ) | | 15,815 |
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Less: Comprehensive income attributable to non-controlling interest | 259 |
| | — |
| | 72 |
| | — |
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Comprehensive income (loss) attributable to controlling interest | $ | 30,028 |
| | $ | 26,398 |
| | $ | (41,416 | ) | | $ | 15,815 |
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See accompanying notes which are an integral part of these condensed consolidated financial statements
(Unaudited).
SPECTRUM BRANDS HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
For the nine month periods ended June 30, 2013 and July 1, 2012
(Unaudited)
(Amounts in thousands)
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| | | | | | | |
| NINE MONTHS ENDED |
| 2013 | | 2012 |
Cash flows from operating activities: | | | |
Net (loss) income | $ | (18,469 | ) | | $ | 43,059 |
|
Adjustments to reconcile net (loss) income to net cash used by operating activities, net of effects of acquisitions: | | | |
Depreciation | 42,618 |
| | 28,708 |
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Amortization of intangibles | 57,502 |
| | 46,550 |
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Amortization of unearned restricted stock compensation | 32,566 |
| | 15,771 |
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Amortization of debt issuance costs | 7,210 |
| | 5,273 |
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Non-cash increase to cost of goods sold from sale of HHI Business acquisition inventory | 31,000 |
| | — |
|
Write off unamortized discount / (premium) on retired debt | 885 |
| | (466 | ) |
Write off of debt issuance costs | 4,600 |
| | 2,945 |
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Other non-cash adjustments | 19,518 |
| | 3,021 |
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Net changes in assets and liabilities | (253,069 | ) | | (206,703 | ) |
Net cash used by operating activities | (75,639 | ) | | (61,842 | ) |
Cash flows from investing activities: | | | |
Purchases of property, plant and equipment | (45,236 | ) | | (33,117 | ) |
Acquisition of Shaser, net of cash acquired | (48,707 | ) | | — |
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Acquisition of the HHI Business, net of cash acquired | (1,351,008 | ) | | — |
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Acquisition of Black Flag | — |
| | (43,750 | ) |
Acquisition of FURminator, net of cash acquired | — |
| | (139,390 | ) |
Other investing activities | (1,148 | ) | | (1,627 | ) |
Net cash used by investing activities | (1,446,099 | ) | | (217,884 | ) |
Cash flows from financing activities: | | | |
Proceeds from issuance of Term Loan, net of discount | 792,000 |
| | — |
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Proceeds from issuance of 6.375% Notes | 520,000 |
| | — |
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Proceeds from issuance of 6.625% Notes | 570,000 |
| | — |
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Proceeds from issuance of 6.75% Notes | — |
| | 300,000 |
|
Payment of 12% Notes, including tender and call premium | — |
| | (270,431 | ) |
Proceeds from issuance of 9.5% Notes, including premium | — |
| | 217,000 |
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Payment of senior credit facilities, excluding ABL revolving credit facility | (406,904 | ) | | (4,091 | ) |
Debt issuance costs | (44,469 | ) | | (11,163 | ) |
Other debt financing, net | 17,080 |
| | 6,192 |
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Reduction of other debt | (1,970 | ) | | (2,992 | ) |
ABL revolving credit facility, net | 69,500 |
| | 2,500 |
|
Cash dividends paid | (27,075 | ) | | — |
|
Treasury stock purchases | (200 | ) | | (30,996 | ) |
Share based award tax withholding payments | (20,141 | ) | | (3,936 | ) |
Other financing activities | — |
| | (953 | ) |
Net cash provided by financing activities | 1,467,821 |
| | 201,130 |
|
Effect of exchange rate changes on cash and cash equivalents due to Venezuela devaluation | (1,870 | ) | | — |
|
Effect of exchange rate changes on cash and cash equivalents | (3,181 | ) | | (1,429 | ) |
Net decrease in cash and cash equivalents | (58,968 | ) | | (80,025 | ) |
Cash and cash equivalents, beginning of period | 157,961 |
| | 142,414 |
|
Cash and cash equivalents, end of period | $ | 98,993 |
| | $ | 62,389 |
|
See accompanying notes which are an integral part of these condensed consolidated financial statements
(Unaudited).
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands, except per share figures)
Spectrum Brands Holdings, Inc., a Delaware corporation (“SB Holdings” or the “Company”), is a diversified global branded consumer products company. Spectrum Brands, Inc. (“Spectrum Brands”), is a wholly owned subsidiary of SB Holdings. SB Holdings' common stock trades on the New York Stock Exchange (the “NYSE”) under the symbol “SPB.”
The Company’s operations include the worldwide manufacturing and marketing of alkaline, zinc carbon and hearing aid batteries, as well as aquariums and aquatic health supplies and the designing and marketing of rechargeable batteries, battery-powered lighting products, electric shavers and accessories, grooming products and hair care appliances. The Company’s operations also include the manufacturing and marketing of specialty pet supplies. The Company also manufactures and markets herbicides, insecticides and insect repellents in North America. The Company also designs, markets and distributes a broad range of branded small appliances and personal care products. The Company’s operations utilize manufacturing and product development facilities located in the United States ("U.S."), Europe, Latin America and Asia.
On December 17, 2012, the Company acquired the residential hardware and home improvement business (the “HHI Business”) from Stanley Black & Decker, Inc. (“Stanley Black & Decker”), which includes (i) the equity interests of certain subsidiaries of Stanley Black & Decker engaged in the business and (ii) certain assets of Stanley Black & Decker used or held for use in connection with the business (the “Hardware Acquisition”). The HHI Business has a broad portfolio of recognized brand names, including Kwikset, Weiser, Baldwin, National Hardware, Stanley, FANAL and Pfister, as well as patented technologies such as Smartkey, a rekeyable lockset technology, and Smart Code Home Connect. On April 8, 2013, the Company completed the Hardware Acquisition, which included the acquisition of certain assets of Tong Lung Metal Industry Co. Ltd., a Taiwan Corporation ("TLM Taiwan”), which is involved in the production of residential locksets. For information pertaining to the Hardware Acquisition, see Note 15, “Acquisitions.”
The Company sells its products in approximately 140 countries through a variety of trade channels, including retailers, wholesalers and distributors, hearing aid professionals, industrial distributors and original equipment manufacturers and enjoys name recognition in its markets under the Rayovac, VARTA and Remington brands, each of which has been in existence for more than 80 years, and under the Tetra, 8-in-1, Dingo, Nature's Miracle, Spectracide, Cutter, Hot Shot, Black & Decker, George Foreman, Russell Hobbs, Farberware, Black Flag, FURminator, the previously mentioned HHI Business brands and various other brands.
The Company's global branded consumer products have positions in seven major product categories: consumer batteries; small appliances; pet supplies; electric shaving and grooming; electric personal care; home and garden controls; and hardware and home improvement, which consists of the recently acquired HHI Business.
The Company manages the businesses in four vertically integrated, product-focused reporting segments: (i) Global Batteries & Appliances, which consists of the Company's worldwide battery, electric shaving and grooming, electric personal care and small appliances primarily in the kitchen and home product categories (“Global Batteries & Appliances”); (ii) Global Pet Supplies, which consists of the Company's worldwide pet supplies business (“Global Pet Supplies”); (iii) Home and Garden Business, which consists of the Company's home and garden and insect control business (the “Home and Garden Business”); and (iv) Hardware & Home Improvement, which consists of the recently acquired HHI Business (“Hardware & Home Improvement”). Management reviews the performance of the Company based on these segments, which also reflect the manner in which the Company's management monitors performance and allocates resources. For information pertaining to our business segments, see Note 12, “Segment Results.”
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2 | SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation: The condensed consolidated financial statements include the accounts of SB Holdings and its subsidiaries and are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). All intercompany transactions have been eliminated.
These condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of the Company, include all adjustments (which are normal and recurring in nature) necessary to present fairly the financial position of the Company at June 30, 2013, the results of operations for the three and nine month periods ended June 30, 2013 and July 1, 2012, the comprehensive income (loss) for the three and nine month periods ended June 30, 2013 and July 1, 2012 and the cash flows for
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
the nine month periods ended June 30, 2013 and July 1, 2012. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2012.
Change in Accounting Principle: During the quarter ended June 30, 2013, the Company made a change in accounting principle to present tax withholdings for share-based payment awards paid to taxing authorities on behalf of an employee as a financing activity within its Condensed Consolidated Statement of Cash Flows. Such amounts were previously presented within operating activities in the Condensed Consolidated Statement of Cash Flows. The Company believes this change is preferable as the predominant characteristic of the transaction is a financing activity. The Company has reclassified the following amounts within its previously reported Condensed Consolidated Statements of Cash Flows on a retrospective basis to reflect this change in accounting principle:
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| Nine Months Ended |
| 2013 | | 2012 |
Net cash used by operating activities: Net changes in assets and liabilities | 17,946 |
| | 3,936 |
|
Net cash provided by financing activities: Share based award tax withholding payments | (17,946 | ) | | (3,936 | ) |
Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Intangible Assets: Intangible assets are recorded at cost or at fair value if acquired in a purchase business combination. Customer relationships and proprietary technology intangibles are amortized, using the straight-line method, over their estimated useful lives. Excess of cost over fair value of net assets acquired (goodwill) and indefinite lived trade name intangibles are not amortized. Accounting Standards Codification (“ASC”) Topic 350: “Intangibles-Goodwill and Other,” requires that goodwill and indefinite-lived intangible assets be tested for impairment annually, or more often if an event or circumstance indicates that an impairment loss may have been incurred. Goodwill is tested for impairment at the reporting unit level, with such groupings being consistent with the Company’s reportable segments. If an impairment is indicated, a write-down to fair value (normally measured by discounting estimated future cash flows) is recorded. Indefinite lived trade name intangibles are tested for impairment at least annually by comparing the fair value with the carrying value. Any excess of carrying value over fair value is recognized as an impairment loss in income from operations.
The Company’s annual impairment testing is completed at the August financial period end. Management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as unexpected adverse business conditions, economic factors, unanticipated technological change or competitive activities, loss of key personnel, and acts by governments and courts may signal that an asset has become impaired.
Shipping and Handling Costs: The Company incurred shipping and handling costs of $67,023 and $183,050 for the three and nine month periods ended June 30, 2013, respectively, and $48,797 and $148,383 for the three and nine month periods ended July 1, 2012, respectively. These costs are included in Selling expenses in the accompanying Condensed Consolidated Statements of Operations (Unaudited). Shipping and handling costs include costs incurred with third-party carriers to transport products to customers as well as salaries and overhead costs related to activities to prepare the Company’s products for shipment from its distribution facilities.
Concentrations of Credit Risk: Trade receivables subject the Company to credit risk. Trade accounts receivable are carried at net realizable value. The Company extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history, and generally does not require collateral. The Company monitors its customers’ credit and financial condition based on changing economic conditions and makes adjustments to credit policies as required. Provisions for losses on uncollectible trade receivables are determined based on ongoing evaluations of the Company’s receivables, principally on the basis of historical collection experience and evaluations of the risks of nonpayment for a given customer.
The Company has a broad range of customers including many large retail outlet chains, one of which accounts for a significant percentage of its sales volume. This customer represented approximately 17% and 18% of the Company’s Net sales
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
during the three and nine month periods ended June 30, 2013, respectively, and 23% of the Company’s Net sales during both the three and nine month periods ended July 1, 2012. This customer also represented approximately 10% and 13% of the Company’s Trade accounts receivable, net at June 30, 2013 and September 30, 2012, respectively.
Approximately 37% and 41% of the Company’s Net sales during the three and nine month periods ended June 30, 2013, respectively, and 40% and 44% of the Company’s Net sales during the three and nine month periods ended July 1, 2012, respectively, occurred outside the U.S. These sales and related receivables are subject to varying degrees of credit, currency, political and economic risk. The Company monitors these risks and makes appropriate provisions for collectibility based on an assessment of the risks present.
Stock-Based Compensation: The Company measures the cost of its stock-based compensation plans based on the fair value of its employee stock awards and recognizes these costs over the requisite service period of the awards.
Total stock compensation expense associated with restricted stock awards and restricted stock units recognized by the Company during the three and nine month periods ended June 30, 2013 was $17,807 and $32,566, respectively. Total stock compensation expense associated with restricted stock awards and restricted stock units recognized by the Company during the three and nine month periods ended July 1, 2012 was $4,490 and $15,771, respectively.
The Company granted approximately 30 and 666 restricted stock units during the three and nine month periods ended June 30, 2013, respectively. Of these grants, 22 restricted stock units are time-based and vest over a one year period. Of the remaining 644 restricted stock units, 90 are performance-based and vest over a one year period and 554 are performance and time-based and vest over a two year period. The total market value of the restricted stock units on the dates of the grants was approximately $30,189.
The Company granted approximately 42 and 759 restricted stock units during the three and nine month periods ended July 1, 2012, respectively. Of these grants, 18 restricted stock units are time-based and vest over a one year period and 42 restricted stock units are time-based and vest over a two year period. The remaining 699 restricted stock units are performance and time-based and vest over a two year period. The total market value of the restricted stock units on the dates of the grants was approximately $20,756.
The fair value of restricted stock awards and restricted stock units is determined based on the market price of the Company’s shares of common stock on the grant date. A summary of the activity in the Company’s non-vested restricted stock awards and restricted stock units during the nine months ended June 30, 2013 is as follows:
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| | | | | | | | | | | |
Restricted Stock Awards | | Shares | | Weighted Average Grant Date Fair Value | | Fair Value at Grant Date |
Non-vested restricted stock awards at September 30, 2012 | | 13 |
| | $ | 28.00 |
| | $ | 364 |
|
Vested | | (13 | ) | | 28.00 |
| | (364 | ) |
Non-vested restricted stock awards at June 30, 2013 | | — |
| | $ | — |
| | $ | — |
|
|
| | | | | | | | | | | |
Restricted Stock Units | | Shares | | Weighted Average Grant Date Fair Value | | Fair Value at Grant Date |
Non-vested restricted stock units at September 30, 2012 | | 1,931 |
| | $ | 28.45 |
| | $ | 54,931 |
|
Granted | | 666 |
| | 45.33 |
| | 30,189 |
|
Forfeited | | (290 | ) | | 29.78 |
| | (8,637 | ) |
Vested | | (1,121 | ) | | 28.28 |
| | (31,699 | ) |
Non-vested restricted stock units at June 30, 2013 | | 1,186 |
| | $ | 37.76 |
| | $ | 44,784 |
|
Acquisition and Integration Related Charges: Acquisition and integration related charges reflected in Operating expenses in the accompanying Condensed Consolidated Statements of Operations (Unaudited) include, but are not limited to, transaction costs such as banking, legal, accounting and other professional fees directly related to acquisitions, termination and
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
related costs for transitional and certain other employees, integration related professional fees and other post business combination expenses associated with mergers and acquisitions.
The following table summarizes acquisition and integration related charges incurred by the Company during the three and nine month periods ended June 30, 2013 and July 1, 2012:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| 2013 | | 2012 | | 2013 | | 2012 |
Russell Hobbs | | | | | | | |
Integration costs | $ | 695 |
| | $ | 1,573 |
| | $ | 2,630 |
| | $ | 6,766 |
|
Employee termination charges | (35 | ) | | 840 |
| | 224 |
| | 3,356 |
|
Legal and professional fees | (78 | ) | | 587 |
| | 12 |
| | 1,508 |
|
Russell Hobbs Acquisition and integration related charges | $ | 582 |
| | $ | 3,000 |
| | $ | 2,866 |
| | $ | 11,630 |
|
HHI Business | | | | | | | |
Legal and professional fees | 4,663 |
| | — |
| | 25,650 |
| | — |
|
Integration costs | 1,615 |
| | — |
| | 5,292 |
| | — |
|
Employee termination charges | 13 |
| | — |
| | 103 |
| | — |
|
HHI Business Acquisition and integration related charges | $ | 6,291 |
| | $ | — |
| | $ | 31,045 |
| | $ | — |
|
| | | | | | | |
Shaser | 161 |
| | — |
| | 4,534 |
| | — |
|
FURminator | 372 |
| | 1,738 |
| | 1,605 |
| | 6,337 |
|
Black Flag | 52 |
| | 95 |
| | 90 |
| | 1,912 |
|
Other | 289 |
| | 441 |
| | 418 |
| | 746 |
|
Total Acquisition and integration related charges | $ | 7,747 |
| | $ | 5,274 |
| | $ | 40,558 |
| | $ | 20,625 |
|
| |
3 | COMPREHENSIVE INCOME (LOSS) |
Comprehensive income (loss) includes foreign currency translation gains and losses on assets and liabilities of foreign subsidiaries, effects of exchange rate changes on intercompany balances of a long-term nature and transactions designated as a hedge of a net investment in a foreign subsidiary, deferred gains and losses on derivative financial instruments designated as cash flow hedges and amortization of deferred gains and losses associated with the Company’s pension plans. The foreign currency translation gains and losses for the three and nine month periods ended June 30, 2013 and July 1, 2012 were primarily attributable to the impact of translation of the net assets of the Company’s European and Latin American operations, which primarily have functional currencies in Euros, Pounds Sterling and Brazilian Real.
For information pertaining to the reclassification of unrealized gains and losses on derivative instruments, see Note 8, “Derivative Financial Instruments.”
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
The components of Other comprehensive income (loss), net of tax, for the three and nine month periods ended June 30, 2013 and July 1, 2012 are as follows:
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | 2013 | | 2012 | | 2013 | | 2012 |
Foreign Currency Translation Adjustments: | | | | | | | | |
Gross change before reclassification adjustment | | $ | (7,830 | ) | | $ | (34,148 | ) | | $ | (25,385 | ) | | $ | (30,538 | ) |
Net reclassification adjustment for (gains) losses included in earnings | | — |
| | — |
| | — |
| | — |
|
Gross change after reclassification adjustment | | (7,830 | ) | | (34,148 | ) | | (25,385 | ) | | (30,538 | ) |
Deferred tax effect | | — |
| | — |
| | — |
| | — |
|
Deferred tax valuation allowance | | — |
| | — |
| | — |
| | — |
|
Other Comprehensive Loss | | $ | (7,830 | ) | | $ | (34,148 | ) | | $ | (25,385 | ) | | $ | (30,538 | ) |
| | | | | | | | |
Unrealized Gains (Losses) on Derivative Instruments: | | | | | | | | |
Gross change before reclassification adjustment | | $ | 3,193 |
| | $ | 3,210 |
| | $ | 4,595 |
| | $ | 391 |
|
Net reclassification adjustment for (gains) losses included in earnings | | (507 | ) | | (309 | ) | | (80 | ) | | 3,214 |
|
Gross change after reclassification adjustment | | 2,686 |
| | 2,901 |
| | 4,515 |
| | 3,605 |
|
Deferred tax effect | | (450 | ) | | (1,891 | ) | | (1,566 | ) | | (1,478 | ) |
Deferred tax valuation allowance | | (456 | ) | | 465 |
| | (91 | ) | | 243 |
|
Other Comprehensive Income | | $ | 1,780 |
| | $ | 1,475 |
| | $ | 2,858 |
| | $ | 2,370 |
|
| | | | | | | | |
Defined Benefit Pension Plans: | | | | | | | | |
Gross change before reclassification adjustment | | $ | (575 | ) | | $ | 217 |
| | $ | (2,164 | ) | | $ | 539 |
|
Net reclassification adjustment for losses included in Cost of goods sold | | 326 |
| | 152 |
| | 979 |
| | 320 |
|
Net reclassification adjustment for losses included in Selling expenses | | 41 |
| | 19 |
| | 122 |
| | 40 |
|
Net reclassification adjustment for losses included in General and administrative expenses | | 152 |
| | 71 |
| | 456 |
| | 148 |
|
Gross change after reclassification adjustment | | (56 | ) | | 459 |
| | (607 | ) | | 1,047 |
|
Deferred tax effect | | (38 | ) | | (37 | ) | | 205 |
| | (94 | ) |
Deferred tax valuation allowance | | 42 |
| | — |
| | 54 |
| | (29 | ) |
Other Comprehensive (Loss) Income | | $ | (52 | ) | | $ | 422 |
| | $ | (348 | ) | | $ | 924 |
|
| | | | | | | | |
Total Other Comprehensive Loss, net of tax | | $ | (6,102 | ) | | $ | (32,251 | ) | | $ | (22,875 | ) | | $ | (27,244 | ) |
| |
4 | NET INCOME (LOSS) PER COMMON SHARE |
Net loss per common share of the Company for the three and nine month periods ended June 30, 2013 and July 1, 2012 is calculated based upon the following number of shares:
|
| | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| 2013 | | 2012 | | 2013 | | 2012 |
Basic | 52,136 |
| | 51,342 |
| | 51,992 |
| | 51,669 |
|
Effect of common stock equivalents | 565 |
| | 477 |
| | — |
| | 476 |
|
Diluted | 52,701 |
| | 51,819 |
| | 51,992 |
| | 52,145 |
|
For the nine month period ended June 30, 2013, the Company has not assumed any dilution associated with outstanding common stock equivalents as the impact would be antidilutive due to the loss reported.
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
Inventories for the Company, which are stated at the lower of cost or market, consist of the following:
|
| | | | | | | |
| June 30, 2013 | | September 30, 2012 |
Raw materials | $ | 108,284 |
| | $ | 58,515 |
|
Work-in-process | 53,461 |
| | 23,434 |
|
Finished goods | 545,595 |
| | 370,684 |
|
| $ | 707,340 |
| | $ | 452,633 |
|
| |
6 | GOODWILL AND INTANGIBLE ASSETS |
Goodwill and intangible assets of the Company consist of the following:
|
| | | | | | | | | | | | | | | | | | | |
| Global Batteries & Appliances | | Hardware & Home Improvement | | Global Pet Supplies | | Home and Garden Business | | Total |
Goodwill: | | | | | | | | | |
Balance at September 30, 2012 | $ | 268,556 |
| | $ | — |
| | $ | 237,932 |
| | $ | 187,757 |
| | $ | 694,245 |
|
Additions | 65,618 |
| | 720,890 |
| | — |
| | 1,179 |
| | 787,687 |
|
Effect of translation | (5,432 | ) | | (5,817 | ) | | (503 | ) | | — |
| | (11,752 | ) |
Balance at June 30, 2013 | $ | 328,742 |
| | $ | 715,073 |
| | $ | 237,429 |
| | $ | 188,936 |
| | $ | 1,470,180 |
|
Intangible Assets: | | | | | | | | | |
Trade names Not Subject to Amortization | | | | | | | | | |
Balance at September 30, 2012 | $ | 545,426 |
| | $ | — |
| | $ | 212,142 |
| | $ | 83,500 |
| | $ | 841,068 |
|
Additions | — |
| | 330,000 |
| | — |
| | — |
| | 330,000 |
|
Effect of translation | (4,887 | ) | | (157 | ) | | 886 |
| | — |
| | (4,158 | ) |
Balance at June 30, 2013 | $ | 540,539 |
| | $ | 329,843 |
| | $ | 213,028 |
| | $ | 83,500 |
| | $ | 1,166,910 |
|
Intangible Assets Subject to Amortization | | | | | | | | | |
Balance at September 30, 2012, net | $ | 447,112 |
| | — |
| | $ | 264,622 |
| | $ | 162,127 |
| | $ | 873,861 |
|
Additions | 32,800 |
| | 157,100 |
| | 749 |
| | — |
| | 190,649 |
|
Amortization during period | (26,818 | ) | | (7,565 | ) | | (16,013 | ) | | (7,106 | ) | | (57,502 | ) |
Effect of translation | (3,276 | ) | | (698 | ) | | (540 | ) | | — |
| | (4,514 | ) |
Balance at June 30, 2013, net | $ | 449,818 |
| | $ | 148,837 |
| | $ | 248,818 |
| | $ | 155,021 |
| | $ | 1,002,494 |
|
Total Intangible Assets, net at June 30, 2013 | $ | 990,357 |
| | $ | 478,680 |
| | $ | 461,846 |
| | $ | 238,521 |
| | $ | 2,169,404 |
|
Intangible assets subject to amortization include proprietary technology, customer relationships and certain trade names, which were recognized in connection with acquisitions and from the application of fresh-start reporting during fiscal 2009. The useful lives of the Company’s intangible assets subject to amortization are 9 to 17 years for technology assets associated with the Global Batteries & Appliances segment, 8 to 9 years for technology assets related to the Hardware & Home Improvement segment, 4 to 9 years for technology assets related to the Global Pet Supplies segment, 15 to 20 years for customer relationships of the Global Batteries & Appliances segment, 20 years for customer relationships of the Hardware & Home Improvement segment, Home and Garden Business and Global Pet Supplies segments, 1 to 12 years for trade names within the Global Batteries & Appliances segment, 5 to 8 years for trade names within the Hardware & Home Improvement segment and 3 years for a trade name within the Global Pet Supplies segment.
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
The carrying value and accumulated amortization for intangible assets subject to amortization are as follows:
|
| | | | | | | |
| June 30, 2013 | | September 30, 2012 |
Technology Assets Subject to Amortization: | | | |
Gross balance | $ | 175,473 |
| | $ | 90,924 |
|
Accumulated amortization | (34,777 | ) | | (22,768 | ) |
Carrying value, net | $ | 140,696 |
| | $ | 68,156 |
|
Trade Names Subject to Amortization: | | | |
Gross balance | $ | 171,482 |
| | $ | 150,829 |
|
Accumulated amortization | (41,168 | ) | | (28,347 | ) |
Carrying value, net | $ | 130,314 |
| | $ | 122,482 |
|
Customer Relationships Subject to Amortization: | | | |
Gross balance | $ | 879,410 |
| | $ | 796,235 |
|
Accumulated amortization | (147,926 | ) | | (113,012 | ) |
Carrying value, net | $ | 731,484 |
| | $ | 683,223 |
|
Total Intangible Assets, net Subject to Amortization | $ | 1,002,494 |
| | $ | 873,861 |
|
Amortization expense for the three and nine month periods ended June 30, 2013 and July 1, 2012 is as follows:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| 2013 | | 2012 | | 2013 | | 2012 |
Proprietary technology amortization | $ | 4,470 |
| | $ | 2,411 |
| | $ | 12,009 |
| | $ | 6,721 |
|
Trade names amortization | 4,264 |
| | 3,509 |
| | 12,162 |
| | 9,788 |
|
Customer relationships amortization | 11,611 |
| | 10,181 |
| | 33,331 |
| | 30,041 |
|
| $ | 20,345 |
| | $ | 16,101 |
| | $ | 57,502 |
| | $ | 46,550 |
|
The Company estimates annual amortization expense of intangible assets for the next five fiscal years will approximate $78,500 per year.
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
Debt consists of the following:
|
| | | | | | | | | | | | | |
| June 30, 2013 | | September 30, 2012 |
| Amount | | Rate | | Amount | | Rate |
Term Loan, due December 17, 2019 | $ | 757,457 |
| | 4.6 | % | | $ | — |
| | — | % |
Former term loan facility | — |
| | — |
| | 370,175 |
| | 5.1 | % |
9.5% Notes, due June 15, 2018 | 950,000 |
| | 9.5 | % | | 950,000 |
| | 9.5 | % |
6.375% Notes, due November 15, 2020 | 520,000 |
| | 6.4 | % | | — |
| | — | % |
6.625% Notes, due November 15, 2022 | 570,000 |
| | 6.6 | % | | — |
| | — | % |
6.75% Notes, due March 15, 2020 | 300,000 |
| | 6.8 | % | | 300,000 |
| | 6.8 | % |
ABL Facility, expiring May 24, 2017 | 69,500 |
| | 2.1 | % | | — |
| | 4.3 | % |
Other notes and obligations | 32,966 |
| | 8.3 | % | | 18,059 |
| | 10.9 | % |
Capitalized lease obligations | 29,861 |
| | 6.2 | % | | 26,683 |
| | 6.2 | % |
| $ | 3,229,784 |
| | | | $ | 1,664,917 |
| | |
Original issuance (discounts) premiums on debt | (3,730 | ) | | | | 4,383 |
| | |
Less: current maturities | 40,783 |
| | | | 16,414 |
| | |
Long-term debt | $ | 3,185,271 |
| | | | $ | 1,652,886 |
| | |
Term Loan
On December 17, 2012, Spectrum Brands entered into a senior term loan facility, maturing December 17, 2019, which provides borrowings in an aggregate principal amount of $800,000, with $100,000 in Canadian dollar equivalents (the "Term Loan") in connection with the acquisition of the HHI Business. A portion of the Term Loan proceeds were used to refinance the former term loan facility, which was scheduled to mature on June 17, 2016, and had an aggregate amount outstanding of $370,175 prior to refinancing. In connection with the refinancing, the Company recorded accelerated amortization of portions of the unamortized discount and unamortized Debt issuance costs related to the former term loan facility totaling $5,485 as an adjustment to interest expense during the nine month period ended June 30, 2013.
The Term Loan contains financial covenants with respect to debt, including, but not limited to, a fixed charge ratio. In addition, the Term Loan contains customary restrictive covenants, including, but not limited to, restrictions on the Company's ability to incur additional indebtedness, create liens, make investments or specified payments, give guarantees, pay dividends, make capital expenditures and merge or acquire or sell assets. Pursuant to a guarantee and collateral agreement, the Company, its domestic subsidiaries and its Canadian subsidiaries have guaranteed their respective obligations under the Term Loan and related loan documents and have pledged substantially all of their respective assets to secure such obligations. The Term Loan also provides for customary events of default, including payment defaults and cross-defaults on other material indebtedness.
In connection with the issuance of the Term Loan, the Company recorded $201 and $19,328 of fees during the three and nine month periods ended June 30, 2013, respectively, of which $16,907 is classified as Debt issuance costs within the accompanying Condensed Consolidated Statements of Financial Position (Unaudited) and is being amortized as an adjustment to interest expense over the remaining life of the Term Loan, with the remainder of $2,421 reflected as an increase to interest expense during the nine month period ended June 30, 2013.
6.375% Notes and 6.625% Notes
On December 17, 2012, in connection with the acquisition of the HHI Business, Spectrum Brands assumed $520,000 aggregate principal amount of 6.375% Notes at par value, due November 15, 2020 (the "6.375% Notes"), and $570,000 aggregate principal amount of 6.625% Notes at par value, due November 15, 2022 (the "6.625% Notes"), previously issued by Spectrum Brands Escrow Corporation. The 6.375% Notes and the 6.625% Notes are unsecured and guaranteed by Spectrum Brands’ parent company, SB/RH Holdings, LLC, as well as by existing and future domestic restricted subsidiaries.
The Company may redeem all or a part of the 6.375% Notes and the 6.625% Notes, upon not less than 30 or more than 60 days notice, at specified redemption prices. Further, the indenture governing the 6.375% Notes and the 6.625% Notes (the
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
“2020/22 Indenture”), requires the Company to make an offer, in cash, to repurchase all or a portion of the applicable outstanding notes for a specified redemption price, including a redemption premium, upon the occurrence of a change of control of the Company, as defined in such indenture.
The 2020/22 Indenture contains customary covenants that limit, among other things, the incurrence of additional indebtedness, payment of dividends on or redemption or repurchase of equity interests, the making of certain investments, expansion into unrelated businesses, creation of liens on assets, merger or consolidation with another company, transfer or sale of all or substantially all assets, and transactions with affiliates.
In addition, the 2020/22 Indenture provides for customary events of default, including failure to make required payments, failure to comply with certain agreements or covenants, failure to make payments when due or on acceleration of certain other indebtedness, and certain events of bankruptcy and insolvency. Events of default under the 2020/22 Indenture arising from certain events of bankruptcy or insolvency will automatically cause the acceleration of the amounts due under the 6.375% Notes and the 6.625% Notes. If any other event of default under the 2020/22 Indenture occurs and is continuing, the trustee for the 2020/22 Indenture or the registered holders of at least 25% in the then aggregate outstanding principal amount of the 6.375% Notes, or the 6.625% Notes, may declare the acceleration of the amounts due under those notes.
The Company recorded $3 and $12,906 of fees in connection with the offering of the 6.375% Notes during the three and nine month periods ended June 30, 2013, respectively, and $4 and $14,127 of fees in connection with the offering of the 6.625% Notes during the three and nine month periods ended June 30, 2013, respectively. The fees are classified as Debt issuance costs within the accompanying Condensed Consolidated Statements of Financial Position (Unaudited) and are being amortized as an adjustment to interest expense over the respective remaining lives of the 6.375% Notes and the 6.625% Notes.
ABL Facility
On December 17, 2012 the Company exercised its option to increase its asset based lending revolving credit facility (the "ABL Facility") from $300,000 to $400,000 and extend the maturity to May 24, 2017. In connection with the increase and extension, the Company incurred $323 of fees during the nine month period ended June 30, 2013. The fees are classified as Debt issuance costs within the accompanying Condensed Consolidated Statements of Financial Position (Unaudited) and are being amortized as an adjustment to interest expense over the remaining life of the ABL Facility.
On March 28, 2013, the Company amended its ABL Facility to conform certain provisions to reflect the acquisition of the HHI Business. In connection with the amendment, the Company incurred $98 and $206 of fees during the three and nine month periods ended June 30, 2013, respectively. The fees are classified as Debt issuance costs within the accompanying Condensed Consolidated Statements of Financial Position (Unaudited) and are being amortized as an adjustment to interest expense over the remaining life of the ABL Facility.
As a result of borrowings and payments under the ABL Facility, at June 30, 2013, the Company had aggregate borrowing availability of approximately $228,055, net of lender reserves of $7,942 and outstanding letters of credit of $38,491.
| |
8 | DERIVATIVE FINANCIAL INSTRUMENTS |
Derivative financial instruments are used by the Company principally in the management of its interest rate, foreign currency exchange rate and raw material price exposures. The Company does not hold or issue derivative financial instruments for trading purposes. Derivative instruments are reported at fair value in the Condensed Consolidated Statements of Financial Position (unaudited). When hedge accounting is elected at inception, the Company formally designates the financial instrument as a hedge of a specific underlying exposure and documents both the risk management objectives and strategies for undertaking the hedge. The Company formally assesses both at the inception and at least quarterly thereafter, whether the financial instruments that are used in hedging transactions are effective at offsetting changes in the forecasted cash flows of the related underlying exposure. Because of the high degree of effectiveness between the hedging instrument and the underlying exposure being hedged, fluctuations in the value of the derivative instruments are generally offset by changes in the forecasted cash flows of the underlying exposures being hedged. Any ineffective portion of a financial instrument’s change in fair value is immediately recognized in earnings. For derivatives that are not designated as cash flow hedges, or do not qualify for hedge accounting treatment, the change in the fair value is also immediately recognized in earnings.
Fair Value of Derivative Instruments
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
The Company discloses its derivative instruments and hedging activities in accordance with ASC Topic 815: “Derivatives and Hedging” (“ASC 815”).
The fair value of the Company’s outstanding derivative contracts recorded as assets in the accompanying Condensed Consolidated Statements of Financial Position (Unaudited) are as follows:
|
| | | | | | | | | |
Asset Derivatives | | | June 30, 2013 | | September 30, 2012 |
Derivatives designated as hedging instruments under ASC 815: | | | | | |
Commodity contracts | Receivables—Other | | $ | 21 |
| | $ | 985 |
|
Commodity contracts | Deferred charges and other | | 16 |
| | 1,017 |
|
Foreign exchange contracts | Receivables—Other | | 5,197 |
| | 1,194 |
|
Foreign exchange contracts | Deferred charges and other | | 621 |
| | — |
|
Total asset derivatives designated as hedging instruments under ASC 815 | | | 5,855 |
| | 3,196 |
|
Derivatives not designated as hedging instruments under ASC 815: | | | | | |
Foreign exchange contracts | Receivables—Other | | 24 |
| | 41 |
|
Total asset derivatives | | | $ | 5,879 |
| | $ | 3,237 |
|
The fair value of the Company’s outstanding derivative contracts recorded as liabilities in the accompanying Condensed Consolidated Statements of Financial Position (Unaudited) are as follows:
|
| | | | | | | | | |
Liability Derivatives | | | June 30, 2013 | | September 30, 2012 |
Derivatives designated as hedging instruments under ASC 815: | | | | | |
Commodity contracts | Accounts payable | | $ | 1,174 |
| | $ | 9 |
|
Commodity contracts | Other long-term liabilities | | 79 |
| | — |
|
Foreign exchange contracts | Accounts payable | | 126 |
| | 3,063 |
|
Foreign exchange contracts | Other long-term liabilities | | 13 |
| | — |
|
Total liability derivatives designated as hedging instruments under ASC 815 | | | $ | 1,392 |
| | $ | 3,072 |
|
Derivatives not designated as hedging instruments under ASC 815: | | | | | |
Commodity contract | Accounts payable | | 197 |
| | — |
|
Foreign exchange contracts | Accounts payable | | 3,324 |
| | 3,967 |
|
Foreign exchange contracts | Other long-term liabilities | | 1,078 |
| | 2,926 |
|
Total liability derivatives | | | $ | 5,991 |
| | $ | 9,965 |
|
Changes in AOCI from Derivative Instruments
For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of Accumulated Other Comprehensive Income ("AOCI") and reclassified into
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. See Note 3, "Comprehensive Income (Loss)" for further information.
The following table summarizes the impact of derivative instruments on the accompanying Condensed Consolidated Statement of Operations (Unaudited) for the three month period ended June 30, 2013, pretax:
|
| | | | | | | | | | | | | | | |
Derivatives in ASC 815 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) | | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | | Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) |
Commodity contracts | $ | (930 | ) | | Cost of goods sold | | $ | (321 | ) | | Cost of goods sold | | $ | 11 |
|
Foreign exchange contracts | 89 |
| | Net sales | | 313 |
| | Net sales | | — |
|
Foreign exchange contracts | 4,034 |
| | Cost of goods sold | | 515 |
| | Cost of goods sold | | — |
|
Total | $ | 3,193 |
| | | | $ | 507 |
| | | | $ | 11 |
|
The following table summarizes the impact of derivative instruments on the accompanying Condensed Consolidated Statement of Operations (Unaudited) for the nine month period ended June 30, 2013, pretax:
|
| | | | | | | | | | | | | | | |
Derivatives in ASC 815 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) | | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | | Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) |
Commodity contracts | $ | (3,361 | ) | | Cost of goods sold | | $ | (223 | ) | | Cost of goods sold | | $ | (71 | ) |
Foreign exchange contracts | 755 |
| | Net sales | | 653 |
| | Net sales | | — |
|
Foreign exchange contracts | 7,201 |
| | Cost of goods sold | | (350 | ) | | Cost of goods sold | | — |
|
Total | $ | 4,595 |
| | | | $ | 80 |
| | | | $ | (71 | ) |
The following table summarizes the impact of derivative instruments on the accompanying Condensed Consolidated Statement of Operations (Unaudited) for the three month period ended July 1, 2012, pretax:
|
| | | | | | | | | | | | | | | |
Derivatives in ASC 815 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) | | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | | Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) |
Commodity contracts | $ | (2,368 | ) | | Cost of goods sold | | $ | (120 | ) | | Cost of goods sold | | $ | (6 | ) |
Foreign exchange contracts | (395 | ) | | Net sales | | (129 | ) | | Net sales | | — |
|
Foreign exchange contracts | 5,973 |
| | Cost of goods sold | | 558 |
| | Cost of goods sold | | — |
|
Total | $ | 3,210 |
| | | | $ | 309 |
| | | | $ | (6 | ) |
The following table summarizes the impact of derivative instruments on the accompanying Condensed Consolidated Statement of Operations (Unaudited) for the nine month period ended July 1, 2012, pretax:
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
|
| | | | | | | | | | | | | | | |
Derivatives in ASC 815 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) | | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | | Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | | Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) |
Commodity contracts | $ | (1,989 | ) | | Cost of goods sold | | $ | (675 | ) | | Cost of goods sold | | $ | 8 |
|
Interest rate contracts | 15 |
| | Interest expense | | (864 | ) | | Interest expense | | — |
|
Foreign exchange contracts | (61 | ) | | Net sales | | (339 | ) | | Net sales | | — |
|
Foreign exchange contracts | 2,426 |
| | Cost of goods sold | | (1,336 | ) | | Cost of goods sold | | — |
|
Total | $ | 391 |
| | | | $ | (3,214 | ) | | | | $ | 8 |
|
Other Changes in Fair Value of Derivative Contracts
For derivative instruments that are used to economically hedge the fair value of the Company’s third party and intercompany foreign currency payments, commodity purchases and interest rate payments, the gain (loss) associated with the derivative contract is recognized in earnings in the period of change. During the three month periods ended June 30, 2013 and July 1, 2012, the Company recognized the following gains (losses) on these derivative contracts:
|
| | | | | | | | | |
Derivatives Not Designated as Hedging Instruments Under ASC 815 | Amount of Gain (Loss) Recognized in Income on Derivatives | | Location of Gain or (Loss) Recognized in Income on Derivatives |
2013 | | 2012 | |
Commodity contracts | $ | (197 | ) | | $ | — |
| | Cost of goods sold |
Foreign exchange contracts | 477 |
| | 7,941 |
| | Other expense, net |
Total | $ | 280 |
| | $ | 7,941 |
| | |
During the nine month periods ended June 30, 2013 and July 1, 2012, the Company recognized the following gains (losses) on these derivative contracts:
|
| | | | | | | | | |
Derivatives Not Designated as Hedging Instruments Under ASC 815 | Amount of Gain (Loss) Recognized in Income on Derivatives | | Location of Gain or (Loss) Recognized in Income on Derivatives |
2013 | | 2012 | |
Commodity contracts | $ | (197 | ) | | $ | — |
| | Cost of goods sold |
Foreign exchange contracts | (1,834 | ) | | 11,734 |
| | Other expense, net |
Total | $ | (2,031 | ) | | $ | 11,734 |
| | |
Credit Risk
The Company is exposed to the risk of default by the counterparties with which it transacts and generally does not require collateral or other security to support financial instruments subject to credit risk. The Company monitors counterparty credit risk on an individual basis by periodically assessing each such counterparty’s credit rating exposure. The maximum loss due to credit risk equals the fair value of the gross asset derivatives that are concentrated with certain domestic and foreign financial institution counterparties. The Company considers these exposures when measuring its credit reserve on its derivative assets, which was $36 and $46 at June 30, 2013 and September 30, 2012, respectively.
The Company’s standard contracts do not contain credit risk related contingent features whereby the Company would be required to post additional cash collateral as a result of a credit event. However, the Company is typically required to post collateral in the normal course of business to offset its liability positions. At June 30, 2013 and September 30, 2012, the
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
Company had posted cash collateral of $450 and $50, respectively, related to such liability positions. In addition, at June 30, 2013 and September 30, 2012, the Company had no posted standby letters of credit related to such liability positions. The cash collateral is included in Current Assets—Receivables-Other within the accompanying Condensed Consolidated Statements of Financial Position (Unaudited).
Derivative Financial Instruments
Cash Flow Hedges
When appropriate, the Company uses interest rate swaps to manage its interest rate risk. The swaps are designated as cash flow hedges with the changes in fair value recorded in AOCI and as a derivative hedge asset or liability, as applicable. The swaps settle periodically in arrears with the related amounts for the current settlement period payable to, or receivable from, the counter-parties included in accrued liabilities or receivables, respectively, and recognized in earnings as an adjustment to interest expense from the underlying debt to which the swap is designated. At June 30, 2013, the Company did not have any interest rate swaps outstanding.
The Company periodically enters into forward foreign exchange contracts to hedge the risk from forecasted foreign currency denominated third party and intercompany sales or payments. These obligations generally require the Company to exchange foreign currencies for U.S. Dollars, Euros, Pounds Sterling, Australian Dollars, Brazilian Reals, Mexican Pesos, Canadian Dollars or Japanese Yen. These foreign exchange contracts are cash flow hedges of fluctuating foreign exchange related to sales of product or raw material purchases. Until the sale or purchase is recognized, the fair value of the related hedge is recorded in AOCI and as a derivative hedge asset or liability, as applicable. At the time the sale or purchase is recognized, the fair value of the related hedge is reclassified as an adjustment to Net sales or purchase price variance in Cost of goods sold. At June 30, 2013, the Company had a series of foreign exchange derivative contracts outstanding through September 2014 with a contract value of $228,419. The derivative net gain on these contracts recorded in AOCI by the Company at June 30, 2013 was $4,138, net of tax expense of $1,541. At June 30, 2013, the portion of derivative net gain estimated to be reclassified from AOCI into earnings by the Company over the next 12 months is $3,697, net of tax.
The Company is exposed to risk from fluctuating prices for raw materials, specifically zinc and brass used in its manufacturing processes. The Company hedges a portion of the risk associated with the purchase of these materials through the use of commodity swaps. The hedge contracts are designated as cash flow hedges with the fair value changes recorded in AOCI and as a hedge asset or liability, as applicable. The unrecognized changes in fair value of the hedge contracts are reclassified from AOCI into earnings when the hedged purchase of raw materials also affects earnings. The swaps effectively fix the floating price on a specified quantity of raw materials through a specified date. At June 30, 2013, the Company had a series of zinc swap contracts outstanding through September 2014 for 10 tons with a contract value of $20,372. At June 30, 2013, the Company had a series of brass swap contracts outstanding through September 2014 for 1 ton with a contract value of $5,609. The derivative net loss on these contracts recorded in AOCI by the Company at June 30, 2013 was $1,068, net of tax benefit of $127. At June 30, 2013, the portion of derivative net loss estimated to be reclassified from AOCI into earnings by the Company over the next 12 months is $1,010, net of tax.
Derivative Contracts
The Company periodically enters into forward and swap foreign exchange contracts to economically hedge the risk from third party and intercompany payments resulting from existing obligations. These obligations generally require the Company to exchange foreign currencies for U.S. Dollars, Canadian Dollars, Euros or Australian Dollars. These foreign exchange contracts are fair value hedges of a related liability or asset recorded in the accompanying Condensed Consolidated Statements of Financial Position (Unaudited). The gain or loss on the derivative hedge contracts is recorded in earnings as an offset to the change in value of the related liability or asset at each period end. At June 30, 2013 and September 30, 2012, the Company had $112,737 and $172,581, respectively, of notional value for such foreign exchange derivative contracts outstanding.
The Company periodically enters into commodity swap contracts to economically hedge the risk from fluctuating prices for raw materials, specifically the pass-through of market prices for silver used in manufacturing purchased watch batteries. The Company hedges a portion of the risk associated with these materials through the use of commodity swaps. The swap contracts are designated as economic hedges with the unrealized gain or loss recorded in earnings and as an asset or liability at each period end. The unrecognized changes in fair value of the hedge contracts are adjusted through earnings when the realized gains or losses affect earnings upon settlement of the hedges. The swaps effectively fix the floating price on a specified quantity of silver through a specified date. At June 30, 2013, the Company had a series of such swap contracts outstanding through April 2014 for 60 troy ounces with a contract value of $1,189.
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
| |
9 | FAIR VALUE OF FINANCIAL INSTRUMENTS |
The Company’s net derivative portfolio as of June 30, 2013, contains Level 2 instruments and consists of commodity and foreign exchange contracts. The fair values of these instruments as of June 30, 2013 were as follows:
|
| | | | | | | | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Total |
Assets: | | | | | | | |
Foreign exchange contracts, net | $ | — |
| | $ | 1,301 |
| | $ | — |
| | $ | 1,301 |
|
Total Assets, net | $ | — |
| | $ | 1,301 |
| | $ | — |
| | $ | 1,301 |
|
Liabilities: | | | | | | | |
Commodity contracts, net | $ | — |
| | $ | (1,413 | ) | | $ | — |
| | $ | (1,413 | ) |
Total Liabilities, net | $ | — |
| | $ | (1,413 | ) | | $ | — |
| | $ | (1,413 | ) |
The Company’s net derivative portfolio as of September 30, 2012, contains Level 2 instruments and consists of commodity and foreign exchange contracts. The fair values of these instruments as of September 30, 2012 were as follows:
|
| | | | | | | | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Total |
Assets: | | | | | | | |
Commodity contracts, net | $ | — |
| | $ | 1,993 |
| | $ | — |
| | $ | 1,993 |
|
Total Assets, net | $ | — |
| | $ | 1,993 |
| | $ | — |
| | $ | 1,993 |
|
Liabilities: | | | | | | | |
Foreign exchange contracts, net | $ | — |
| | $ | (8,721 | ) | | $ | — |
| | $ | (8,721 | ) |
Total Liabilities, net | $ | — |
| | $ | (8,721 | ) | | $ | — |
| | $ | (8,721 | ) |
The carrying values of cash and cash equivalents, accounts and notes receivable, accounts payable and non-publicly traded debt approximate fair value. The fair values of long-term publicly traded debt are based on unadjusted quoted market prices (Level 1) and derivative financial instruments are generally based on quoted or observed market prices (Level 2).
The carrying values of goodwill, intangible assets and other long-lived assets are tested annually, or more frequently if an event occurs that indicates an impairment loss may have been incurred, using fair value measurements with unobservable inputs (Level 3).
The carrying amounts and fair values of the Company’s financial instruments are summarized as follows ((liability)/asset):
|
| | | | | | | | | | | | | | | |
| June 30, 2013 | | September 30, 2012 |
| Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
Total debt | $ | (3,226,054 | ) | | $ | (3,395,679 | ) | | $ | (1,669,300 | ) | | $ | (1,804,831 | ) |
Commodity swap and option agreements | (1,413 | ) | | (1,413 | ) | | 1,993 |
| | 1,993 |
|
Foreign exchange forward agreements | 1,301 |
| | 1,301 |
| | (8,721 | ) | | (8,721 | ) |
Pension Benefits
The Company has various defined benefit pension plans covering some of its employees in the U.S. and certain employees in other countries, including the United Kingdom, the Netherlands, Germany, Guatemala, Brazil, Mexico and Taiwan. These pension plans generally provide benefits of stated amounts for each year of service.
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
The Company’s results of operations for the three and nine month periods ended June 30, 2013 and July 1, 2012 reflect the following pension and deferred compensation benefit costs:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
Components of net periodic pension benefit and deferred compensation benefit cost | 2013 | | 2012 | | 2013 | | 2012 |
Service cost | $ | 867 |
| | $ | 578 |
| | $ | 2,416 |
| | $ | 1,700 |
|
Interest cost | 2,498 |
| | 2,552 |
| | 7,326 |
| | 7,030 |
|
Expected return on assets | (2,196 | ) | | (2,051 | ) | | (6,589 | ) | | (5,378 | ) |
Recognized net actuarial loss | 519 |
| | 242 |
| | 1,557 |
| | 508 |
|
Employee contributions | (46 | ) | | (46 | ) | | (137 | ) | | (139 | ) |
Net periodic benefit cost | $ | 1,642 |
| | $ | 1,275 |
| | $ | 4,573 |
| | $ | 3,721 |
|
The Company funds its U.S. pension plans in accordance with the Internal Revenue Service (“IRS”) defined guidelines and, where applicable, in amounts sufficient to satisfy the minimum funding requirements of applicable laws. Additionally, in compliance with the Company’s funding policy, annual contributions to non-U.S. defined benefit plans are equal to the actuarial recommendations or statutory requirements in the respective countries. The Company’s contributions to its pension and deferred compensation plans for the three and nine month periods ended June 30, 2013 and July 1, 2012 were as follows:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
Pension and deferred compensation contributions | 2013 | | 2012 | | 2013 | | 2012 |
Contributions made during period | $ | 1,188 |
| | $ | 1,289 |
| | $ | 2,890 |
| | $ | 3,767 |
|
The Company sponsors a defined contribution pension plan for its domestic salaried employees, which allows participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code. The Company also sponsors defined contribution pension plans for employees of certain foreign subsidiaries. Company contributions charged to operations, including discretionary amounts, for the three and nine month periods ended June 30, 2013 were $2,851 and $5,665, respectively. Company contributions charged to operations, including discretionary amounts, for the three and nine month periods ended July 1, 2012 were $545 and $1,694, respectively.
The Company's effective tax rates for the three and nine month periods ended June 30, 2013 were 29% and 151%, respectively. The Company's effective tax rates for the three and nine month periods ended July 1, 2012 were (10)% and 47%, respectively. The Company's effective tax rates differ from the United States federal statutory rate of 35% principally due to: (i) losses in the U.S. and certain foreign jurisdictions for which no tax benefit can be recognized due to full valuation allowances that have been provided on the Company's net operating loss carryforward tax benefits and other deferred tax assets; (ii) deferred income tax expense related to the change in book versus tax basis of indefinite lived intangibles, which are amortized for tax purposes but not for book purposes, and (iii) the reversal of U.S. valuation allowances of $49,291 as a result of the HHI Business acquisition during the nine months ended June 30, 2013, and $13,915 as a result of the FURminator acquisition during the nine month period ended July 1, 2012.
The Company recognizes in its consolidated financial statements the impact of a tax position if it concludes that the position is more likely than not sustainable upon audit, based on the technical merits of the position. At June 30, 2013 and September 30, 2012, the Company had $8,968 and $5,877, respectively, of unrecognized tax benefits related to uncertain tax positions. The Company also had approximately $3,787 and $3,564, respectively, of accrued interest and penalties related to the uncertain tax positions at those dates. Interest and penalties related to uncertain tax positions are reported in the consolidated financial statements as part of income tax expense.
As of June 30, 2013, certain of the Company's legal entities in various jurisdictions are undergoing income tax audits. The Company cannot predict the ultimate outcome of the examinations; however, it is reasonably possible that during the next 12 months some portion of previously unrecognized tax benefits could be recognized.
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
The Company manages its business in four vertically integrated, product-focused reporting segments: (i) Global Batteries & Appliances; (ii) Global Pet Supplies; (iii) Home and Garden Business; and (iv) Hardware & Home Improvement.
The results of the HHI Business operations, excluding the TLM Business, since December 17, 2012 are included in the Company's Condensed Consolidated Statement of Operations (Unaudited). The results of the TLM Business operations since April 8, 2013 are included in the Company's Condensed Consolidated Statement of Operations (Unaudited). The financial results related to the HHI Business are reported as a separate business segment, Hardware & Home Improvement.
Global strategic initiatives and financial objectives for each reportable segment are determined at the corporate level. Each reportable segment is responsible for implementing defined strategic initiatives and achieving certain financial objectives and has a general manager responsible for the sales and marketing initiatives and financial results for product lines within that segment.
Net sales and Cost of goods sold from transactions with other business segments have been eliminated. The gross contribution of intersegment sales is included in the segment selling the product to the external customer. Segment net sales are based upon the segment from which the product is shipped.
The operating segment profits do not include restructuring and related charges, acquisition and integration related charges, interest expense, interest income and income tax expense. Corporate expenses primarily include general and administrative expenses and global long-term incentive compensation plan costs which are evaluated on a consolidated basis and not allocated to the Company’s operating segments. All depreciation and amortization included in income from operations is related to operating segments or corporate expense. Costs are identified to operating segments or corporate expense according to the function of each cost center.
All capital expenditures are related to operating segments. Variable allocations of assets are not made for segment reporting.
Segment information for the three and nine month periods ended June 30, 2013 and July 1, 2012 is as follows:
SPECTRUM BRANDS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited) – (Continued)
(Amounts in thousands, except per share figures)
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| 2013 | | 2012 | | 2013 | | 2012 |
Net sales to external customers | | | | | | | |
Consumer batteries | $ | 207,339 |
| | $ | 211,198 |
| | $ | 678,067 |
| | $ | 684,277 |
|
Small appliances | 168,744 |
| | 173,140 |
| | 543,451 |
| | 575,630 |
|
Electric shaving and grooming | 61,742 |
| | 62,860 |
| | 207,978 |
| | 214,979 |
|
Electric personal care | 53,776 |
| | 53,526 |
| | 196,747 |
| | 195,087 |
|
Global Batteries & Appliances | 491,601 |
| | 500,724 |
| | 1,626,243 |
| | 1,669,973 |
|
Global Pet Supplies | 156,440 |
| | 157,495 |
| | 456,639 |
| | 448,962 |
|
Home and Garden Business | 156,568 |
| | 166,584 |
| | 289,091 |
| | 300,924 |
|
Hardware & Home Improvement | 285,216 |
| | — |
| | 575,876 |
| | — |
|
Total segments | $ | 1,089,825 |
| | $ | 824,803 |
| | $ | 2,947,849 |
| | $ | 2,419,859 |
|
| | | | | | | |
| Three Months Ended | | Nine Months Ended |
| 2013 | | 2012 | | 2013 | | 2012 |
Segment profit | | | | | | | |
Global Batteries & Appliances | $ | 44,904 |
| | $ | 47,093 |
| | $ | 181,696 |
| | $ | 185,726 |
|
Global Pet Supplies | 26,560 |
| | 22,470 |
| | 62,833 |
| | 57,778 |
|
Home and Garden Business | 43,117 |
| | 44,224 |
| | 59,648 |
| | 60,509 |
|
Hardware & Home Improvement | 42,963 |
| | — |
| | 46,483 |
| | — |
|
Total segments | 157,544 |
| | 113,787 |
| | 350,660 |
| | 304,013 |
|
Corporate expense | 20,865 |
| | 9,429 |
| | 46,208 |
| | 33,360 |
|
Acquisition and integration related charges | 7,747 |
| | 5,274 |
| | 40,558 |
| | 20,625 |
|
Restructuring and related charges | 13,245 |
| | 3,896 |
| | 27,736 |
| | 15,890 |
|
Interest expense | 61,516 |
| | 39,686 |
| | 191,758 |
| | 150,082 |
|
Other expense, net | 2,613 |
| | 2,224 |
| | 7,941 |
| | 2,225 |
|
Income from continuing operations before income taxes | $ | 51,558 |
| | $ | |