Quarterly report pursuant to Section 13 or 15(d)

Consolidating Condensed Financial Information of Guarantor Subsidiaries

v3.19.2
Consolidating Condensed Financial Information of Guarantor Subsidiaries
9 Months Ended
Jun. 29, 2019
Condensed Financial Information Disclosure [Abstract]  
Consolidating Condensed Financial Information of Guarantor Subsidiaries
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 2023 Notes and 2028 Notes. Certain subsidiaries and operating divisions are not guarantors of the 2023 Notes and 2028 Notes. Those subsidiaries that are guarantors and co-obligors of the 2023 Notes and 2028 Notes are as follows:

Arden Companies, LLC
C&S Products Co., Inc.
Farnam Companies, Inc.
Four Paws Products Ltd.
Gulfstream Home & Garden, Inc.
Hydro-Organics Wholesale, Inc.
IMS Trading, LLC
IMS Southern, LLC
K&H Manufacturing, LLC
Kaytee Products, Inc.
Matson, LLC
New England Pottery, LLC
Pennington Seed, Inc. (including Gro Tec, Inc., NEXGEN Turf Research, LLC and All-Glass Aquarium Co., Inc.)
Pets International, Ltd.
Segrest, Inc. (including Blue Springs Hatchery, Inc., Segrest Farms, Inc., Florida Tropical Distributors International, Inc., Sun Pet, Ltd, Aquatica Tropicals, Inc., Quality Pets, LLC and Midwest Tropicals, LLC)
T.F.H. Publications, Inc.
Wellmark International (including B2E Corporation, B2E Microbials, LLC, B2E Manufacturing, LLC, Four Star Microbial Products, LLC 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 June 29, 2019
 
 
(in thousands)
 

Parent

Non- Guarantor Subsidiaries

Guarantor Subsidiaries

Eliminations

Consolidated
Net sales

$
199,470


$
102,869


$
423,268


$
(19,032
)

$
706,575

Cost of goods sold and occupancy

153,637


69,232


281,734


(17,312
)

487,291

Gross profit

45,833


33,637


141,534


(1,720
)

219,284

Selling, general and administrative expenses

45,219


14,595


92,319


(1,720
)

150,413

Operating income

614


19,042


49,215




68,871

Interest expense

(10,500
)

(133
)

(43
)



(10,676
)
Interest income

2,173


5






2,178

Other (expense) income

(86
)

(273
)

539




180

Income (loss) before taxes and equity in earnings (losses) of affiliates

(7,799
)

18,641


49,711




60,553

Income tax expense (benefit)

(1,985
)

438


15,759




14,212

Equity in earnings of affiliates

51,966




1,301


(53,267
)


Net income including noncontrolling interest

46,152


18,203


35,253


(53,267
)

46,341

Net income attributable to noncontrolling interest



189






189

Net income attributable to Central Garden & Pet Company

$
46,152


$
18,014


$
35,253


$
(53,267
)

$
46,152

 
 
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
 
 
Three Months Ended June 30, 2018
 
 
(in thousands)
 
 
Parent
 
Non- Guarantor Subsidiaries
 
Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales

$
208,095


$
93,122


$
379,059


$
(22,333
)

$
657,943

Cost of goods sold and occupancy

161,192


67,308


247,559


(20,180
)

455,879

Gross profit

46,903


25,814


131,500


(2,153
)

202,064

Selling, general and administrative expenses

45,974


14,837


82,587


(2,153
)

141,245

Operating income

929


10,977


48,913




60,819

Interest expense

(10,470
)

(125
)

(2
)



(10,597
)
Interest income

583


1






584

Other income (loss)

1,965


(394
)

555




2,126

Income (loss) before taxes and equity in earnings of affiliates

(6,993
)

10,459


49,466




52,932

Income tax expense (benefit)

(2,633
)

236


13,792




11,395

Equity in earnings of affiliates

45,905




261


(46,166
)


Net income including noncontrolling interest

41,545


10,223


35,935


(46,166
)

41,537

Net loss attributable to noncontrolling interest



(8
)





(8
)
Net income attributable to Central Garden & Pet Company

$
41,545


$
10,231


$
35,935


$
(46,166
)

$
41,545



 
 
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
 
 
Nine Months Ended June 29, 2019
 
 
(in thousands)
 
 
Parent
 
Non-
Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales

$
586,918


$
161,689


$
1,152,912


$
(59,253
)

$
1,842,266

Cost of goods sold and occupancy

452,783


121,578


767,281


(54,893
)

1,286,749

Gross profit

134,135


40,111


385,631


(4,360
)

555,517

Selling, general and administrative expenses

136,019


32,431


250,222


(4,360
)

414,312

Operating income (loss)

(1,884
)

7,680


135,409




141,205

Interest expense

(31,479
)

(388
)

(63
)



(31,930
)
Interest income

6,956


14






6,970

Other income (expense)

256


(246
)

478




488

Income (loss) before taxes and equity in earnings of affiliates

(26,151
)

7,060


135,824




116,733

Income tax expense (benefit)

(5,821
)

127


31,725




26,031

Equity in earnings of affiliates

110,676




88


(110,764
)


Net income including noncontrolling interest

90,346


6,933


104,187


(110,764
)

90,702

Net income attributable to noncontrolling interest



356






356

Net income attributable to Central Garden & Pet Company

$
90,346


$
6,577


$
104,187


$
(110,764
)

$
90,346


 
 
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
 
 
Nine Months Ended June 30, 2018
 
 
(in thousands)
 
 
Parent
 
Non-
Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales

$
562,620


$
139,298


$
1,077,831


$
(66,701
)

$
1,713,048

Cost of goods sold and occupancy

438,539


103,316


704,682


(61,847
)

1,184,690

Gross profit

124,081


35,982


373,149


(4,854
)

528,358

Selling, general and administrative expenses

124,290


25,274


234,522


(4,854
)

379,232

Operating income (loss)

(209
)

10,708


138,627




149,126

Interest expense

(28,365
)

(203
)

(9
)



(28,577
)
Interest income

1,461


3






1,464

Other income (expense)

155


(140
)

527




542

Income (loss) before taxes and equity in earnings of affiliates

(26,958
)

10,368


139,145




122,555

Income tax expense (benefit)

(1,961
)

(31
)

10,794




8,802

Equity in earnings of affiliates

138,023




1,202


(139,225
)


Net income including noncontrolling interest

113,026


10,399


129,553


(139,225
)

113,753

Net income attributable to noncontrolling interest



727






727

Net income attributable to Central Garden & Pet Company

$
113,026


$
9,672


$
129,553


$
(139,225
)

$
113,026




 
 
CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 
Three Months Ended June 29, 2019
 
 
(in thousands)
 
 
Parent
 
Non-
Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net income
 
$
46,152

 
$
18,203

 
$
35,253

 
$
(53,267
)
 
$
46,341

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
Foreign currency translation
 
(146
)
 
(132
)
 
37

 
95

 
(146
)
Total comprehensive income
 
46,006

 
18,071

 
35,290

 
(53,172
)
 
46,195

Comprehensive income attributable to noncontrolling interests
 

 
189

 

 

 
189

Comprehensive income attributable to Central Garden & Pet Company
 
$
46,006

 
$
17,882

 
$
35,290

 
$
(53,172
)
 
$
46,006

 
 
CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 
Three Months Ended June 30, 2018
 
 
(in thousands)
 
 
Parent
 
Non-
Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net income
 
$
41,545

 
$
10,223

 
$
35,935

 
$
(46,166
)
 
$
41,537

Other comprehensive loss:
 
 
 
 
 
 
 
 
 
 
Foreign currency translation

(480
)

(323
)

(35
)

358


(480
)
Total comprehensive income
 
41,065

 
9,900

 
35,900

 
(45,808
)
 
41,057

Comprehensive loss attributable to noncontrolling interests
 

 
(8
)
 

 

 
(8
)
Comprehensive income attributable to Central Garden & Pet Company
 
$
41,065

 
$
9,908

 
$
35,900

 
$
(45,808
)
 
$
41,065


 
 
CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 
Nine Months Ended June 29, 2019
 
 
(in thousands)
 
 
Parent
 
Non-
Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net income

$
90,346


$
6,933


$
104,187


$
(110,764
)

$
90,702

Other comprehensive loss:











Foreign currency translation

(208
)

(134
)

(23
)

157


(208
)
Total comprehensive income

90,138


6,799


104,164


(110,607
)

90,494

Comprehensive income attributable to noncontrolling interests



356






356

Comprehensive income attributable to Central Garden & Pet Company

$
90,138


$
6,443


$
104,164


$
(110,607
)

$
90,138


 
 
CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 
Nine Months Ended June 30, 2018
 
 
(in thousands)
 
 
Parent
 
Non-
Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net income

$
113,026


$
10,399


$
129,553


$
(139,225
)

$
113,753

Other comprehensive loss:











Foreign currency translation

(202
)

(74
)

(99
)

173


(202
)
Total comprehensive income

112,824


10,325


129,454


(139,052
)

113,551

Comprehensive income attributable to noncontrolling interests



727






727

Comprehensive income attributable to Central Garden & Pet Company

$
112,824


$
9,598


$
129,454


$
(139,052
)

$
112,824


 
 
CONSOLIDATING CONDENSED BALANCE SHEET
 
 
June 29, 2019
 
 
(in thousands)
 
 
Parent
 
Non-
Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
421,542

 
$
3,761

 
$
20,329

 
$

 
$
445,632

Restricted cash
 
10,924

 

 

 

 
10,924

Short term investments





119




119

Accounts receivable, net
 
114,610

 
19,979

 
260,992

 

 
395,581

Inventories
 
124,224

 
37,705

 
302,988

 

 
464,917

Prepaid expenses and other
 
8,154

 
1,914

 
22,385

 

 
32,453

Total current assets
 
679,454

 
63,359

 
606,813

 

 
1,349,626

Land, buildings, improvements and equipment, net
 
28,181

 
35,674

 
175,093

 

 
238,948

Goodwill
 
20,578

 
7,414

 
253,185

 

 
281,177

Other long-term assets
 
44,637

 
6,235

 
147,937

 
(3,642
)
 
195,167

Intercompany receivable
 
32,503

 

 
764,826

 
(797,329
)
 

Investment in subsidiaries
 
1,770,053

 

 

 
(1,770,053
)
 

Total
 
$
2,575,406

 
$
112,682

 
$
1,947,854

 
$
(2,571,024
)
 
$
2,064,918

LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
40,953

 
$
15,456

 
$
81,259

 
$

 
$
137,668

Accrued expenses
 
54,442

 
7,581

 
79,006

 

 
141,029

Current portion of long-term debt
 
116

 

 

 

 
116

Total current liabilities
 
95,511

 
23,037

 
160,265

 

 
278,813

Long-term debt
 
692,748

 

 
200

 

 
692,948

Intercompany payable
 
746,732

 
50,597

 

 
(797,329
)
 

Losses in excess of investment in subsidiaries
 

 

 
25,199

 
(25,199
)
 

Other long-term obligations
 
6,770

 

 
55,706

 
(3,642
)
 
58,834

Total Central Garden & Pet shareholders’ equity
 
1,033,645

 
38,370

 
1,706,484

 
(1,744,854
)
 
1,033,645

Noncontrolling interest
 

 
678

 

 


 
678

Total equity
 
1,033,645

 
39,048

 
1,706,484

 
(1,744,854
)
 
1,034,323

Total
 
$
2,575,406

 
$
112,682

 
$
1,947,854

 
$
(2,571,024
)
 
$
2,064,918


 
 
CONSOLIDATING CONDENSED BALANCE SHEET
 
 
June 30, 2018
 
 
(in thousands)
 
 
Parent
 
Non-
Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
196,051

 
$
5,060

 
$
3,277

 
$

 
$
204,388

Restricted cash
 
13,978

 

 

 

 
13,978

Accounts receivable, net
 
122,534

 
20,612

 
205,635

 

 
348,781

Inventories
 
124,029

 
36,841

 
267,137

 

 
428,007

Prepaid expenses and other
 
6,032

 
2,065

 
18,638

 

 
26,735

Total current assets
 
462,624

 
64,578

 
494,687

 

 
1,021,889

Land, buildings, improvements and equipment, net
 
35,000

 
34,024

 
142,793

 

 
211,817

Goodwill
 
15,058

 

 
253,185

 

 
268,243

Other long-term assets
 
72,697

 
14,009

 
131,010

 
(11,260
)
 
206,456

Intercompany receivable
 
40,342

 

 
684,808

 
(725,150
)
 

Investment in subsidiaries
 
1,583,729

 

 

 
(1,583,729
)
 

Total
 
$
2,209,450

 
$
112,611

 
$
1,706,483

 
$
(2,320,139
)
 
$
1,708,405

LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
32,330

 
$
13,242

 
$
62,557

 
$

 
$
108,129

Accrued expenses
 
61,367

 
7,256

 
54,274

 

 
122,897

Current portion of long-term debt
 
106

 

 
13

 

 
119

Total current liabilities
 
93,803

 
20,498

 
116,844

 

 
231,145

Long-term debt
 
691,591

 

 
150

 

 
691,741

Intercompany payable
 
671,405

 
53,745

 

 
(725,150
)
 

Losses in excess of investment in subsidiaries
 

 

 
24,967

 
(24,967
)
 

Other long-term obligations
 
8,516

 

 
43,542

 
(11,260
)
 
40,798

Total Central Garden & Pet shareholders’ equity (deficit)
 
744,135

 
37,782

 
1,520,980

 
(1,558,762
)
 
744,135

Noncontrolling interest
 

 
586

 

 

 
586

Total equity
 
744,135

 
38,368

 
1,520,980

 
(1,558,762
)
 
744,721

Total
 
$
2,209,450

 
$
112,611

 
$
1,706,483

 
$
(2,320,139
)
 
$
1,708,405

 
 
CONSOLIDATING CONDENSED BALANCE SHEET
 
 
September 29, 2018
 
 
(in thousands)
 
 
Parent
 
Non-
Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
474,210

 
$
6,005

 
$
1,891

 
$

 
$
482,106

Restricted cash
 
10,899

 

 

 

 
10,899

Accounts receivable, net
 
94,657

 
9,647

 
171,604

 

 
275,908

Inventories
 
123,178

 
32,556

 
272,089

 

 
427,823

Prepaid expenses and other assets
 
6,304

 
1,455

 
12,803

 

 
20,562

Total current assets
 
709,248

 
49,663

 
458,387

 

 
1,217,298

Land, buildings, improvements and equipment, net
 
33,484

 
33,840

 
150,323

 

 
217,647

Goodwill
 
20,578

 
7,414

 
253,185

 

 
281,177

Other long-term assets
 
62,199

 
7,469

 
133,145

 
(11,726
)
 
191,087

Intercompany receivable
 
40,365

 

 
769,886

 
(810,251
)
 

Investment in subsidiaries
 
1,618,378

 

 

 
(1,618,378
)
 

Total
 
$
2,484,252

 
$
98,386

 
$
1,764,926

 
$
(2,440,355
)
 
$
1,907,209

LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
33,122

 
$
4,759

 
$
72,378

 
$

 
$
110,259

Accrued expenses and other liabilities
 
44,142

 
4,746

 
53,695

 

 
102,583

Current portion of long term debt
 
116

 

 
6

 

 
122

Total current liabilities
 
77,380

 
9,505

 
126,079

 

 
212,964

Long-term debt
 
691,869

 

 
162

 

 
692,031

Intercompany payable
 
753,933

 
56,318

 

 
(810,251
)
 

Losses in excess of investment in subsidiaries
 

 

 
25,036

 
(25,036
)
 

Other long-term obligations
 
8,621

 

 
52,485

 
(11,726
)
 
49,380

Total Central Garden & Pet shareholders’ equity (deficit)
 
952,449

 
32,178

 
1,561,164

 
(1,593,342
)
 
952,449

Noncontrolling interest
 

 
385

 

 

 
385

Total equity
 
952,449

 
32,563

 
1,561,164

 
(1,593,342
)
 
952,834

Total
 
$
2,484,252

 
$
98,386

 
$
1,764,926

 
$
(2,440,355
)
 
$
1,907,209


 
 
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
 
 
Nine Months Ended June 29, 2019
 
 
(in thousands)
 
 
Parent
 
Non-
Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net cash provided by operating activities
 
$
10,831

 
$
7,468

 
$
74,755

 
$
(250
)
 
$
92,804

Additions to property and equipment
 
(2,705
)
 
(3,691
)
 
(14,492
)
 

 
(20,888
)
Payments to acquire companies, net of cash acquired
 
(41,158
)
 

 

 

 
(41,158
)
Investments
 
(1,749
)
 

 
(9
)
 

 
(1,758
)
Other investing activities
 
(453
)
 

 
(750
)
 

 
(1,203
)
Intercompany investing activities
 
7,861

 

 
5,060

 
(12,921
)
 

Net cash used by investing activities
 
(38,204
)
 
(3,691
)
 
(10,191
)
 
(12,921
)
 
(65,007
)
Repayments of long-term debt
 
(90
)
 

 
(46,072
)
 

 
(46,162
)
Repurchase of common stock
 
(17,796
)
 

 

 

 
(17,796
)
Distribution to parent
 

 
(250
)
 

 
250

 

Distribution to noncontrolling interest
 

 
(64
)
 

 

 
(64
)
Payment of contingent consideration liability
 

 

 
(104
)
 

 
(104
)
Intercompany financing activities
 
(7,199
)
 
(5,722
)
 

 
12,921

 

Net cash used by financing activities
 
(25,085
)
 
(6,036
)
 
(46,176
)
 
13,171

 
(64,126
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
(185
)
 
15

 
50

 

 
(120
)
Net increase (decrease) in cash, cash equivalents and restricted cash
 
(52,643
)
 
(2,244
)
 
18,438

 

 
(36,449
)
Cash, cash equivalents and restricted cash at beginning of period
 
485,109

 
6,005

 
1,891

 

 
493,005

Cash, cash equivalents and restricted cash at end of period
 
$
432,466

 
$
3,761

 
$
20,329

 
$

 
$
456,556

 
 
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
 
 
Nine Months Ended June 30, 2018
 
 
(in thousands)
 
 
Parent
 
Non-Guarantor
Subsidiaries
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net cash (used) provided by operating activities
 
$
(20,284
)
 
$
(101
)
 
$
44,534

 
$
(6,387
)
 
$
17,762

Additions to property, plant and equipment
 
(6,508
)
 
(986
)
 
(19,509
)
 

 
(27,003
)
Payments to acquire companies, net of cash acquired
 
(86,777
)
 

 

 

 
(86,777
)
Investments

(8,048
)







(8,048
)
Other investing activities
 
(2,655
)
 

 

 

 
(2,655
)
Intercompany investing activities
 
(3,737
)
 

 
(22,671
)
 
26,408

 

Net cash used by investing activities
 
(107,725
)
 
(986
)
 
(42,180
)
 
26,408

 
(124,483
)
Repayments under revolving line of credit
 
(23,000
)
 

 

 

 
(23,000
)
Borrowings under revolving line of credit
 
23,000

 

 

 

 
23,000

Repayments of long-term debt
 
(27
)
 

 
(368
)
 

 
(395
)
Issuance of long-term debt
 
300,000

 

 

 

 
300,000

Payment of financing costs

(4,770
)







(4,770
)
Repurchase of common stock
 
(12,942
)
 

 

 

 
(12,942
)
Distribution to parent
 

 
(6,387
)
 

 
6,387

 

Distribution to noncontrolling interest
 

 
(1,597
)
 

 

 
(1,597
)
Payment of contingent consideration





(204
)



(204
)
Intercompany financing activities
 
23,997

 
2,411

 

 
(26,408
)
 

Net cash provided (used) by financing activities
 
306,258

 
(5,573
)
 
(572
)
 
(20,021
)
 
280,092

Effect of exchange rates on cash, cash equivalents and restricted cash
 
(103
)
 
27

 
29

 

 
(47
)
Net increase (decrease) in cash, cash equivalents and restricted cash
 
178,146

 
(6,633
)
 
1,811

 

 
173,324

Cash, cash equivalents and restricted cash at beginning of period
 
31,883

 
11,693

 
1,466

 

 
45,042

Cash, cash equivalents and restricted cash at end of period
 
$
210,029

 
$
5,060

 
$
3,277

 
$

 
$
218,366