Central Garden & Pet Company Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Consolidating Condensed Financial Information of Guarantor Subsidiaries

Consolidating Condensed Financial Information of Guarantor Subsidiaries

6 Months Ended

Mar. 29, 2014

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Consolidating Condensed Financial Information of Guarantor Subsidiaries

13.

Consolidating Condensed Financial Information of Guarantor Subsidiaries

Certain 100% wholly-owned subsidiaries of the Company (as listed below, collectively the “Guarantor Subsidiaries”) have guaranteed fully and unconditionally, on a joint and several basis, the obligation to pay principal and interest on the Company’s 2018 Notes. Certain subsidiaries and operating divisions are not guarantors of the Notes (collectively, the “Non-Guarantor entities”) and have been included in the financial results of the Parent in the information below. These Non-Guarantor entities are not material to the Parent. Those subsidiaries that are guarantors and co-obligors of the Notes are as follows:

Farnam Companies, Inc.

Four Paws Products Ltd.

Gulfstream Home & Garden, Inc.

Kaytee Products, Inc.

Matson, LLC

New England Pottery, LLC

Pennington Seed, Inc. (including Gro Tec, Inc. and All-Glass Aquarium Co., Inc.)

Pets International, Ltd.

T.F.H. Publications, Inc.

Wellmark International (including B2E Corporation and B2E Biotech LLC)

In lieu of providing separate audited financial statements for the Guarantor Subsidiaries, the Company has included the accompanying consolidating condensed financial statements based on the Company’s understanding of the Securities and Exchange Commission’s interpretation and application of Rule 3-10 of the Securities and Exchange Commission’s Regulation S-X.


	CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS Three Months Ended March 29, 2014 (in thousands) (unaudited)
	Parent			Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	170,227		$	344,890		$	(13,506	)	$	501,611
Cost of products sold and occupancy		125,449			242,072			(13,506	)		354,015

Gross profit		44,778			102,818			0			147,596
Selling, general and administrative expenses		34,843			67,984			0			102,827

Income from operations		9,935			34,834			0			44,769
Interest – net		(10,384	)		(5	)		0			(10,389	)
Other income (loss )		(2,376	)		2,484			0			108

Income (loss) before income taxes		(2,825	)		37,313			0			34,488
Income taxes (tax benefit)		(798	)		13,797			0			12,999

Income (loss) including noncontrolling interest		(2,027	)		23,516						21,489
Income attributable to noncontrolling interest		594			0			0			594

Income (loss) attributable to Central Garden & Pet Co. before equity in undistributed income of guarantor subsidiaries		(2,621	)		23,516			0			20,895
Equity in undistributed income of guarantor subsidiaries		23,516			0			(23,516	)		0

Net income attributable to Central Garden & Pet Co.	$	20,895		$	23,516		$	(23,516	)	$	20,895


	CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS Three Months Ended March 30, 2013 (in thousands) (unaudited)
	Parent			Guarantor Subsidiaries		Eliminations			Consolidated
Net sales	$	158,939		$	351,581	$	(12,351	)	$	498,169
Cost of products sold and occupancy		116,559			240,791		(12,351	)		344,999

Gross profit		42,380			110,790		0			153,170
Selling, general and administrative expenses		36,927			69,497		0			106,424

Income from operations		5,453			41,293		0			46,746
Interest – net		(10,922	)		12		0			(10,910	)
Other income (loss )		(3,065	)		3,017		0			(48	)

Income (loss) before income taxes		(8,534	)		44,322		0			35,788
Income taxes (tax benefit)		(2,605	)		15,433		0			12,828

Income (loss) including noncontrolling interest		(5,929	)		28,889					22,960
Income attributable to noncontrolling interest		764			0		0			764

Income (loss) attributable to Central Garden & Pet Co. before equity in undistributed income of guarantor subsidiaries		(6,693	)		28,889		0			22,196
Equity in undistributed income of guarantor subsidiaries		28,889			0		(28,889	)		0

Net income attributable to Central Garden & Pet Co.	$	22,196		$	28,889	$	(28,889	)	$	22,196


	CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS Six Months Ended March 29, 2014 (in thousands) (unaudited)
	Parent			Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	266,566		$	550,196		$	(24,630	)	$	792,132
Cost of products sold and occupancy		202,196			387,229			(24,630	)		564,795

Gross profit		64,370			162,967			0			227,337
Selling, general and administrative expenses		63,218			127,705			0			190,923

Income from operations		1,152			35,262			0			36,414
Interest – net		(22,568	)		(25	)		0			(22,593	)
Other income (loss )		(1,961	)		1,901			0			(60	)

Income (loss) before income taxes		(23,377	)		37,138			0			13,761
Income taxes (tax benefit)		(8,646	)		13,730			0			5,084

Income (loss) including noncontrolling interest		(14,731	)		23,408						8,677
Income attributable to noncontrolling interest		490			0			0			490

Income (loss) attributable to Central Garden & Pet Co. before equity in undistributed income of guarantor subsidiaries		(15,221	)		23,408			0			8,187
Equity in undistributed income of guarantor subsidiaries		23,408			0			(23,408	)		0

Net income attributable to Central Garden & Pet Co.	$	8,187		$	23,408		$	(23,408	)	$	8,187


	CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS Six Months Ended March 30, 2013 (in thousands) (unaudited)
	Parent			Guarantor Subsidiaries		Eliminations			Consolidated
Net sales	$	254,942		$	560,626	$	(24,902	)	$	790,666
Cost of products sold and occupancy		191,402			394,037		(24,902	)		560,537

Gross profit		63,540			166,589		0			230,129
Selling, general and administrative expenses		65,446			131,031		0			196,477

Income (loss) from operations		(1,906	)		35,558		0			33,652
Interest – net		(21,221	)		61		0			(21,160	)
Other income (loss )		(2,817	)		1,788		0			(1,029	)

Income (loss) before income taxes		(25,944	)		37,407		0			11,463
Income taxes (tax benefit)		(8,988	)		12,838		0			3,850

Income (loss) including noncontrolling interest		(16,956	)		24,569					7,613
Income attributable to noncontrolling interest		686			0		0			686

Income (loss) attributable to Central Garden & Pet Co. before equity in undistributed income of guarantor subsidiaries		(17,642	)		24,569		0			6,927
Equity in undistributed income of guarantor subsidiaries		24,569			0		(24,569	)		0

Net income attributable to Central Garden & Pet Co.	$	6,927		$	24,569	$	(24,569	)	$	6,927


	CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME Three Months Ended March 29, 2014 (in thousands) (unaudited)
	Parent			Guarantor Subsidiaries		Eliminations		Consolidated
Net income (loss)	$	(2,027	)	$	23,516	$	0	$	21,489
Other comprehensive income:
Foreign currency translation		2			0		0		2

Total comprehensive income (loss)		(2,025	)		23,516		0		21,491
Comprehensive income attributable to noncontrolling interests		594			0		0		594

Comprehensive income (loss) attributable to Central Garden & Pet Company	$	(2,619	)	$	23,516	$	0	$	20,897


	CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME Three Months Ended March 30, 2013 (in thousands) (unaudited)
	Parent			Guarantor Subsidiaries		Eliminations		Consolidated
Net income (loss)	$	(5,929	)	$	28,889	$	0	$	22,960
Other comprehensive loss:
Foreign currency translation		(566	)		0		0		(566	)

Total comprehensive income (loss)		(6,495	)		28,889		0		22,394
Comprehensive income attributable to noncontrolling interests		764			0		0		764

Comprehensive income (loss) attributable to Central Garden & Pet Company	$	(7,259	)	$	28,889	$	0	$	21,630


	CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME Six Months Ended March 29, 2014 (in thousands) (unaudited)
	Parent			Guarantor Subsidiaries		Eliminations		Consolidated
Net income (loss)	$	(14,731	)	$	23,408	$	0	$	8,677
Other comprehensive income:
Foreign currency translation		87			0		0		87

Total comprehensive income (loss)		(14,644	)		23,408		0		8,764
Comprehensive income attributable to noncontrolling interests		490			0		0		490

Comprehensive income (loss) attributable to Central Garden & Pet Company	$	(15,134	)	$	23,408	$	0	$	8,274


	CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME Six Months Ended March 30, 2013 (in thousands) (unaudited)
	Parent			Guarantor Subsidiaries		Eliminations		Consolidated
Net income (loss)	$	(16,956	)	$	24,569	$	0	$	7,613
Other comprehensive income:
Foreign currency translation		(607	)		0		0		(607	)

Total comprehensive income (loss)		(17,563	)		24,569		0		7,006
Comprehensive income attributable to noncontrolling interests		686			0		0		686

Comprehensive income (loss) attributable to Central Garden & Pet Company	$	(18,249	)	$	24,569	$	0	$	6,320


	CONSOLIDATING CONDENSED BALANCE SHEET March 29, 2014 (in thousands) (unaudited)
	Parent		Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	14,820	$	1,928	$	0		$	16,748
Short term investments		14,220		0		0			14,220
Accounts receivable, net		104,384		226,821		(8,022	)		323,183
Inventories		129,367		273,353		0			402,720
Prepaid expenses and other assets		25,719		30,163		0			55,882

Total current assets		288,510		532,265		(8,022	)		812,753
Land, buildings, improvements and equipment, net		77,903		107,451		0			185,354
Goodwill		0		205,756		0			205,756
Investment in guarantors		741,485		0		(741,485	)		0
Deferred income taxes and other assets		57,247		33,237		0			90,484

Total	$	1,165,145	$	878,709	$	(749,507	)	$	1,294,347

LIABILITIES AND EQUITY
Accounts payable	$	63,803	$	86,371	$	(8,022	)	$	142,152
Accrued expenses and other current liabilities		35,455		45,734		0			81,189

Total current liabilities		99,258		132,105		(8,022	)		223,341
Long-term debt		544,917		115		0			545,032
Other long-term obligations		35,466		5,004		0			40,470
Shareholders’ equity attributable to Central Garden & Pet Co.		484,301		741,485		(741,485	)		484,301
Noncontrolling interest		1,203		0		0			1,203

Total equity		485,504		741,485		(741,485	)		485,504

Total	$	1,165,145	$	878,709	$	(749,507	)	$	1,294,347


	CONSOLIDATING CONDENSED BALANCE SHEET September 28, 2013 (in thousands)
	Parent		Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	12,441	$	2,715	$	0		$	15,156
Short term investments		17,820		0		0			17,820
Accounts receivable, net		43,660		153,734		(3,134	)		194,260
Inventories		114,662		277,272		0			391,934
Prepaid expenses and other assets		24,747		28,737		0			53,484

Total current assets		213,330		462,458		(3,134	)		672,654
Land, buildings, improvements and equipment, net		78,662		110,251		0			188,913
Goodwill		0		205,756		0			205,756
Investment in guarantors		693,615		0		(693,615	)		0
Other assets		57,255		36,582		0			93,837

Total	$	1,042,862	$	815,047	$	(696,749	)	$	1,161,160

LIABILITIES AND EQUITY
Accounts payable	$	36,869	$	69,834	$	(3,134	)	$	103,569
Accrued expenses and other liabilities		33,664		45,096		0			78,760

Total current liabilities		70,533		114,930		(3,134	)		182,329
Long-term debt		472,418		27		0			472,445
Other long-term obligations		29,887		6,475		0			36,362
Shareholders’ equity attributable to Central Garden & Pet		468,678		693,615		(693,615	)		468,678
Noncontrolling interest		1,346		0		0			1,346

Total equity		470,024		693,615		(693,615	)		470,024

Total	$	1,042,862	$	815,047	$	(696,749	)	$	1,161,160


	CONSOLIDATING CONDENSED BALANCE SHEET March 30, 2013 (in thousands) (unaudited)
	Parent		Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	8,906	$	2,378	$	0		$	11,284
Short term investments		17,820		0		0			17,820
Accounts receivable, net		108,938		224,199		(10,947	)		322,190
Inventories		145,781		290,102		0			435,883
Prepaid expenses and other assets		30,013		29,395		0			59,408

Total current assets		311,458		546,074		(10,947	)		846,585
Land, buildings, improvements and equipment, net		82,948		110,725		0			193,673
Goodwill		0		210,223		0			210,223
Investment in guarantors		772,514		0		(772,514	)		0
Deferred income taxes and other assets		53,747		42,353		0			96,100

Total	$	1,220,667	$	909,375	$	(783,461	)	$	1,346,581

LIABILITIES AND EQUITY
Accounts payable	$	79,227	$	97,411	$	(10,947	)	$	165,691
Accrued expenses and other current liabilities		39,520		37,666		0			77,186

Total current liabilities		118,747		135,077		(10,947	)		242,877
Long-term debt		593,376		48		0			593,424
Other long-term obligations		32,915		1,736		0			34,651
Shareholders’ equity attributable to Central Garden & Pet Co.		474,626		772,514		(772,514	)		474,626
Noncontrolling interest		1,003		0		0			1,003

Total equity		475,629		772,514		(772,514	)		475,629

Total	$	1,220,667	$	909,375	$	(783,461	)	$	1,346,581


	CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS Six Months Ended March 29, 2014 ( in thousands) (unaudited)
	Parent			Guarantor Subsidiaries			Eliminations			Consolidated
Net cash used by operating activities	$	(16,606	)	$	(20,029	)	$	(23,408	)	$	(60,043	)

Additions to property and equipment		(4,979	)		(5,045	)		0			(10,024	)
Proceeds from short term investments		3,600			0			0			3,600
Payment to acquire companies		0			0			0			0
Investment in guarantor subsidiaries		(47,870	)		24,462			23,408			0

Net cash provided (used) by investing activities		(49,249	)		19,417			23,408			(6,424	)

Repayments of long-term debt		(104	)		(99	)		0			(203	)
Borrowings under revolving line of credit		188,000			0			0			188,000
Repayments under revolving line of credit		(116,000	)		0			0			(116,000	)
Repurchase of common stock		(924	)		0			0			(924	)
Proceeds from issuance of common stock		461			0			0			461
Payment of deferred financing costs		(3,087	)		0			0			(3,087	)
Distribution to minority interest		(633	)		0			0			(633	)
Excess tax benefits from stock-based awards		321			0			0			321

Net cash provided (used) by financing activities		68,034			(99	)		0			67,935
Effect of exchange rate changes on cash		200			(76	)		0			124

Net increase (decrease) in cash and cash equivalents		2,379			(787	)		0			1,592
Cash and cash equivalents at beginning of period		12,441			2,715			0			15,156

Cash and cash equivalents at end of period	$	14,820		$	1,928		$	0		$	16,748


	CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS Six Months Ended March 30, 2013 ( in thousands) (unaudited)
	Parent			Guarantor Subsidiaries			Eliminations			Consolidated
Net cash used by operating activities	$	(56,490	)	$	(81,105	)	$	(24,569	)	$	(162,164	)

Additions to property and equipment		(7,000	)		(9,164	)		0			(16,164	)
Proceeds from short term investments		4,885			0			0			4,885
Payment to acquire companies		0			(4,835	)		0			(4,835	)
Investment in guarantor subsidiaries		(118,152	)		93,583			24,569			0

Net cash provided (used) by investing activities		(120,267	)		79,584			24,569			(16,114	)

Repayments of long-term debt		(111	)		(59	)		0			(170	)
Borrowings under revolving line of credit		186,000			0			0			186,000
Repayments under revolving line of credit		(42,000	)		0			0			(42,000	)
Repurchase of common stock		(2,454	)		0			0			(2,454	)
Proceeds from issuance of common stock		475			0			0			475
Distribution to minority interest		(629	)		0			0			(629	)
Excess tax benefits from stock-based awards		289			0			0			289

Net cash provided (used) by financing activities		141,570			(59	)		0			141,511
Effect of exchange rate changes on cash		(569	)		145			0			(424	)

Net decrease in cash and cash equivalents		(35,756	)		(1,435	)		0			(37,191	)
Cash and cash equivalents at beginning of period		44,662			3,813			0			48,475

Cash and cash equivalents at end of period	$	8,906		$	2,378		$	0		$	11,284

The Company and its guarantor subsidiaries participate in a cash pooling program. As part of this program, cash balances are generally swept on a daily basis between the guarantor subsidiary bank accounts and those of the Company. In addition, the Company pays expenses on behalf of its guarantor subsidiaries on a regular basis. These types of transactions have been accounted for as investments in guarantor subsidiaries within investing activities.

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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