Quarterly report pursuant to Section 13 or 15(d)

Consolidating Condensed Financial Information of Guarantor Subsidiaries

v3.19.3.a.u2
Consolidating Condensed Financial Information of Guarantor Subsidiaries
3 Months Ended
Dec. 28, 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 December 28, 2019
(in thousands)
Parent Non- Guarantor Subsidiaries Guarantor Subsidiaries Eliminations Consolidated
Net sales $ 170,328    $ 23,837    $ 301,041    $ (12,378)   $ 482,828   
Cost of goods sold and occupancy 132,273    23,712    206,984    (11,407)   351,562   
     Gross profit 38,055    125    94,057    (971)   131,266   
Selling, general and administrative expenses 43,237    7,819    79,116    (971)   129,201   
     Operating income (loss) (5,182)   (7,694)   14,941    —    2,065   
Interest expense (10,578)   (60)   (3)   —    (10,641)  
Interest income 1,997      —    —    2,004   
Other income (expense) (75)   737    (357)   —    305   
Income (loss) before taxes and equity in earnings (losses) of affiliates (13,838)   (7,010)   14,581    —    (6,267)  
Income tax expense (benefit) (3,898)   (365)   2,535    —    (1,728)  
Equity in earnings (loss) of affiliates 5,523    —    (680)   (4,843)   —   
Net income (loss) including noncontrolling interest (4,417)   (6,645)   11,366    (4,843)   (4,539)  
Net loss attributable to noncontrolling interest —    (122)   —    —    (122)  
Net income (loss) attributable to Central Garden & Pet Company $ (4,417)   $ (6,523)   $ 11,366    $ (4,843)   $ (4,417)  
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
Three Months Ended December 29, 2018
(in thousands)
Parent Non- Guarantor Subsidiaries Guarantor Subsidiaries Eliminations Consolidated
Net sales $ 173,406    $ 23,629    $ 279,834    $ (14,879)   $ 461,990   
Cost of goods sold and occupancy 136,013    22,003    187,683    (13,891)   331,808   
     Gross profit 37,393    1,626    92,151    (988)   130,182   
Selling, general and administrative expenses 43,665    7,351    69,973    (988)   120,001   
     Operating income (loss) (6,272)   (5,725)   22,178    —    10,181   
Interest expense (10,497)   (114)   (3)   —    (10,614)  
Interest income 2,533      —    —    2,537   
Other income (expense) 37    (216)   (13)   —    (192)  
Income (loss) before taxes and equity in earnings (losses) of affiliates (14,199)   (6,051)   22,162    —    1,912   
Income tax expense (benefit) (2,088)   (256)   2,617    273   
Equity in earnings of affiliates 13,914    —    (1,112)   (12,802)   —   
Net income (loss) including noncontrolling interest 1,803    (5,795)   18,433    (12,802)   1,639   
Net income (loss) attributable to noncontrolling interest —    (164)   —    —    (164)  
Net income (loss) attributable to Central Garden & Pet Company $ 1,803    $ (5,631)   $ 18,433    $ (12,802)   $ 1,803   




CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
  Three Months Ended December 28, 2019
(in thousands)
  Parent Non-
Guarantor
Subsidiaries
Guarantor
Subsidiaries
Eliminations Consolidated
Net income (loss) $ (4,417)   $ (6,645)   $ 11,366    $ (4,843)   $ (4,539)  
Other comprehensive income:
Foreign currency translation 436    297    21    (318)   436   
Total comprehensive income (loss) (3,981)   (6,348)   11,387    (5,161)   (4,103)  
Comprehensive loss attributable to noncontrolling interests —    (122)   —    —    (122)  
Comprehensive income (loss) attributable to Central Garden & Pet Company $ (3,981)   $ (6,226)   $ 11,387    $ (5,161)   $ (3,981)  
CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
  Three Months Ended December 29, 2018
(in thousands)
  Parent Non-
Guarantor
Subsidiaries
Guarantor
Subsidiaries
Eliminations Consolidated
Net income (loss) $ 1,803    $ (5,795)   $ 18,433    $ (12,802)   $ 1,639   
Other comprehensive loss:
Foreign currency translation (274)   (129)   (95)   224    (274)  
Total comprehensive income (loss) 1,529    (5,924)   18,338    (12,578)   1,365   
Comprehensive loss attributable to noncontrolling interests —    (164)   —    —    (164)  
Comprehensive income (loss) attributable to Central Garden & Pet Company $ 1,529    $ (5,760)   $ 18,338    $ (12,578)   $ 1,529   
CONSOLIDATING CONDENSED BALANCE SHEET
  December 28, 2019
(in thousands)
  Parent Non-
Guarantor
Subsidiaries
Guarantor
Subsidiaries
Eliminations Consolidated
ASSETS
Cash and cash equivalents $ 435,169    $ 9,467    $ 1,177    $ —    $ 445,813   
Restricted cash 12,990    —    —    —    12,990   
Short term investments —    —    —    —    —   
Accounts receivable, net 99,521    9,261    159,447    —    268,229   
Inventories, net 141,336    37,999    377,144    —    556,479   
Prepaid expenses and other 12,338    1,337    23,894    —    37,569   
Total current assets 701,354    58,064    561,662    —    1,321,080   
Property, plant and equipment, net 27,857    35,118    178,820    —    241,795   
Goodwill 20,578    7,414    261,862    —    289,854   
Operating lease right-of-use assets 51,232    6,680    47,365    —    105,277   
Other long-term assets 47,882    5,099    136,249    (12,079)   177,151   
Intercompany receivable 40,813    —    861,972    (902,785)   —   
Investment in subsidiaries 1,790,591    —    —    (1,790,591)   —   
Total $ 2,680,307    $ 112,375    $ 2,047,930    $ (2,705,455)   $ 2,135,157   
LIABILITIES AND EQUITY
Accounts payable $ 61,493    $ 17,065    $ 106,101    $ —    $ 184,659   
Accrued expenses 56,374    4,049    64,351    —    124,774   
Current operating lease liability 20,251    3,398    10,671    —    34,320   
Current portion of long-term debt 107    —    —    —    107   
Total current liabilities 138,225    24,512    181,123    —    343,860   
Long-term debt 693,329    —    —    —    693,329   
Operating lease long term liabilities 33,212    3,264    38,807    75,283   
Intercompany payable 841,709    61,077    —    (902,786)   —   
Losses in excess of investment in subsidiaries —    —    26,246    (26,246)   —   
Other long-term obligations 708    —    60,884    (12,079)   49,513   
Total Central Garden & Pet shareholders’ equity (deficit) 973,124    23,474    1,740,870    (1,764,344)   973,124   
Noncontrolling interest —    48    —    48   
Total equity 973,124    23,522    1,740,870    (1,764,344)   973,172   
Total $ 2,680,307    $ 112,375    $ 2,047,930    $ (2,705,455)   $ 2,135,157   
CONSOLIDATING CONDENSED BALANCE SHEET
  December 29, 2018
(in thousands)
  Parent Non-
Guarantor
Subsidiaries
Guarantor
Subsidiaries
Eliminations Consolidated
ASSETS
Cash and cash equivalents $ 470,049    $ 6,500    $ 2,188    $ —    $ 478,737   
Restricted cash 10,921    —    —    —    10,921   
Accounts receivable, net 95,399    9,736    145,088    —    250,223   
Inventories, net 137,158    36,698    319,889    —    493,745   
Prepaid expenses and other 16,268    1,635    20,495    —    38,398   
Total current assets 729,795    54,569    487,660    —    1,272,024   
Property, plant and equipment, net 31,311    33,483    146,766    —    211,560   
Goodwill 20,578    7,414    253,185    —    281,177   
Other long-term assets 54,972    6,663    132,846    (8,396)   186,085   
Intercompany receivable 100,968    —    775,169    (876,137)   —   
Investment in subsidiaries 1,632,068    —    —    (1,632,068)   —   
Total $ 2,569,692    $ 102,129    $ 1,795,626    $ (2,516,601)   $ 1,950,846   
LIABILITIES AND EQUITY
Accounts payable $ 47,350    $ 12,359    $ 81,477    $ —    $ 141,186   
Accrued expenses 48,038    4,159    56,048    —    108,245   
Current portion of long-term debt 117    —    —    —    117   
Total current liabilities 95,505    16,518    137,525    —    249,548   
Long-term debt 692,157    —    175    —    692,332   
Intercompany payable 817,165    58,972    —    (876,137)   —   
Losses in excess of investment in subsidiaries —    —    26,148    (26,148)   —   
Other long-term obligations 8,602    —    52,276    (8,396)   52,482   
Total Central Garden & Pet shareholders’ equity (deficit) 956,263    26,418    1,579,502    (1,605,920)   956,263   
Noncontrolling interest —    221    —    —    221   
Total equity 956,263    26,639    1,579,502    (1,605,920)   956,484   
Total $ 2,569,692    $ 102,129    $ 1,795,626    $ (2,516,601)   $ 1,950,846   
CONSOLIDATING CONDENSED BALANCE SHEET
  September 28, 2019
(in thousands)
  Parent Non-
Guarantor
Subsidiaries
Guarantor
Subsidiaries
Eliminations Consolidated
ASSETS
Cash and cash equivalents $ 489,590    $ 7,308    $ 851    $ —    $ 497,749   
Restricted cash 12,952    —    —    —    12,952   
Accounts receivable, net 99,372    11,551    189,212    —    300,135   
Inventories, net 121,344    30,826    314,027    —    466,197   
Prepaid expenses and other assets 9,339    1,241    19,580    —    30,160   
Total current assets 732,597    50,926    523,670    —    1,307,193   
Property, plant and equipment, net 27,395    35,854    182,156    —    245,405   
Goodwill 20,578    7,414    258,085    —    286,077   
Other long-term assets 55,690    5,487    139,138    (13,970)   186,345   
Intercompany receivable 37,544    —    879,231    (916,775)   —   
Investment in subsidiaries 1,784,750    —    —    (1,784,750)   —   
Total $ 2,658,554    $ 99,681    $ 1,982,280    $ (2,715,495)   $ 2,025,020   
LIABILITIES AND EQUITY
Accounts payable $ 47,506    $ 6,895    $ 94,845    $ —    $ 149,246   
Accrued expenses and other liabilities 54,623    4,814    69,729    —    129,166   
Current portion of long term debt 113    —    —    —    113   
Total current liabilities 102,242    11,709    164,574    —    278,525   
Long-term debt 693,037    —    —    —    693,037   
Intercompany payable 858,673    58,102    —    (916,775)   —   
Losses in excess of investment in subsidiaries —    —    25,567    (25,567)   —   
Other long-term obligations 8,595    —    62,656    (13,970)   57,281   
Total Central Garden & Pet shareholders’ equity (deficit) 996,007    29,700    1,729,483    (1,759,183)   996,007   
Noncontrolling interest —    170    —    —    170   
Total equity 996,007    29,870    1,729,483    (1,759,183)   996,177   
Total $ 2,658,554    $ 99,681    $ 1,982,280    $ (2,715,495)   $ 2,025,020   
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
  Three Months Ended December 28, 2019
(in thousands)
  Parent Non-
Guarantor
Subsidiaries
Guarantor
Subsidiaries
Eliminations Consolidated
Net cash used by operating activities $ (8,297)   $ (1,238)   $ (8,487)   $ —    $ (18,022)  
Additions to property, plant and equipment (1,817)   188    (8,248)   —    (9,877)  
Investments (424)   —    —    —    (424)  
Other investing activities (75)   —    —    —    (75)  
Intercompany investing activities (3,270)   —    17,258    (13,988)   —   
Net cash (used) provided by investing activities (5,586)   188    9,010    (13,988)   (10,376)  
Repayments of long-term debt (31)   —    —    —    (31)  
Payment of financing costs (869)   (869)  
Repurchase of common stock (23,054)   —    —    —    (23,054)  
Payment of contingent consideration liability —    —    (77)   —    (77)  
Intercompany financing activities (16,962)   2,974    —    13,988    —   
Net cash (used) provided by financing activities (40,916)   2,974    (77)   13,988    (24,031)  
Effect of exchange rate changes on cash, cash equivalents and restricted cash 416    235    (120)   —    531   
Net increase (decrease) in cash, cash equivalents and restricted cash (54,383)   2,159    326    —    (51,898)  
Cash, cash equivalents and restricted cash at beginning of period 502,542    7,308    851    —    510,701   
Cash, cash equivalents and restricted cash at end of period $ 448,159    $ 9,467    $ 1,177    $ —    $ 458,803   
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
  Three Months Ended December 29, 2018
(in thousands)
  Parent Non-Guarantor
Subsidiaries
Guarantor
Subsidiaries
Eliminations Consolidated
Net cash (used) provided by operating activities $ (3,592)   $ (1,459)   $ 11,851    $ —    $ 6,800   
Additions to property, plant and equipment (873)   (704)   (6,261)   —    (7,838)  
Investments (1,499)   —    —    —    (1,499)  
Other investing activities (50)   —    —    —    (50)  
Intercompany investing activities (60,604)   —    (5,283)   65,887    —   
Net cash used by investing activities (63,026)   (704)   (11,544)   65,887    (9,387)  
Repayments of long-term debt (28)   —    (6)   —    (34)  
Repurchase of common stock (547)   —    —    —    (547)  
Payment of contingent consideration —    —    (54)   —    (54)  
Intercompany financing activities 63,233    2,654    —    (65,887)   —   
Net cash provided (used) by financing activities 62,658    2,654    (60)   (65,887)   (635)  
Effect of exchange rates on cash, cash equivalents and restricted cash (179)     50    —    (125)  
Net increase (decrease) in cash, cash equivalents and restricted cash (4,139)   495    297    —    (3,347)  
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 $ 480,970    $ 6,500    $ 2,188    $ —    $ 489,658