SEC Filings

8-K/A
SPECTRUM BRANDS HOLDINGS, INC. filed this Form 8-K/A on 01/04/2019
Entire Document
 

SPECTRUM BRANDS HOLDINGS, INC. (formerly HRG GROUP, INC.)

Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements (Unaudited)

(in millions, except per share figures)



NOTE 1 – Significant Accounting Policies



The unaudited pro forma condensed consolidated statement of financial position as of September 30, 2018 is presented as if the Global Batteries & Lights (“GBL”) business divestiture had occurred on September 30, 2018.  The unaudited pro forma condensed consolidated statement of operations for the year ended September 30, 2018 are presented as if the GBL divestiture occurred on October 1, 2017.  Spectrum previously recognized the GBL business, along with the net assets and operations of its HPC business, as discontinued operations within the condensed consolidated financial statements and therefore all historical financial statements of Spectrum were recasted to exclude the results of operations from its GBL and HPC businesses from its continuing operations.  Additionally, the net assets of the GBL and HPC businesses were previously recognized as assets held for sale within its statement of financial position.



The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when a business is sold and classified as held for sale, in accordance with the criteria of Accounting Standards Codification (“ASC”) Topic 205 Presentation of Financial Statements and ASC Topic 360 Property, Plant and Equipment.  The results of discontinued operations are reported in Income From Discontinued Operations, Net of Tax in the accompanying Consolidated Statements of Income for the current and prior periods commencing in the period in which the business meets the criteria of a discontinued operations, and include any gain or loss recognized on closing, or adjustment of the carrying amount to fair value less cost to sell.  Assets and liabilities of a business classified as held for sale are recorded at the lower of its carrying amount or estimated fair value less cost to sell.  If the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized.  Assets and liabilities related to a business classified as held for sale are segregated in the current and prior balance sheets in the period in which the business is classified as held for sale.  Transactions between the businesses held for sale and businesses held for use that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and balances held for sale.



NOTE 2 – Pro Forma Adjustments for the GBL divestiture



(A)

Adjustments reflect the increase in cash and cash equivalents resulting from the cash consideration received based upon the $2.0 billion purchase price, net customary purchase price adjustments, less closing transaction expenses.



(B)

Adjustments reflect the elimination of the assets and liabilities of Spectrum’s GBL business that were previously classified as held for sale as of September 30, 2018, as well as the other comprehensive loss attributable to Spectrum’s GBL business as of September 30, 2018.  The elimination of the other comprehensive loss attributable to Spectrum’s GBL business is offset by a gain on the sale of the GBL business which is reflected in accumulated (deficit) earnings.



(C)

Adjustments reflect the reclassification of the Company’s Spectrum Brands, Inc. Term Loans from long-term to current as of September 30, 2018 as the Company has the intent and ability to paydown the respective outstanding debt using current assets and funds received upon the consummation of the GBL divestiture.  The annual interest expense related to the Term Loans is approximately $50.6 million. 



NOTE 3Subsequent Events



HPC Divestiture



On November 15, 2018, subsequent to the year ended September 30, 2018, the Company made a strategic decision to cease marketing the Home and Personal Care ( HPC”) Division as held for sale, which was recognized as a component of discontinued operations from its GBA business. As of September 30, 2018, HPC continued to meet the criteria for recognition of assets held for sale, as a component of its GBA business, along with GBL, in accordance with ASC 360 as the Company was actively marketing and was in active discussions with third parties for the potential sale of the HPC business. As a result, the HPC business was classified as held for sale by the Company and discontinued operations for the year ended September 30, 2018. Subsequent to September 30, 2018, management made a strategic decision to no longer actively market and pursue a sale of the HPC business and recognize HPC as a component of the ongoing operations of the consolidated group and retroactively adjust the comparable prior periods.  The pro forma financial statements have not been adjusted to reflect this presentation for the respective periods presented.



GAC Divestitiure



On November 15, 2018, subsequent to the year ended September 30, 2018, the Company entered into an agreement with Energizer Holdings, Inc. (“Energizer”) to sell its GAC business to Energizer for a $1.25 billion purchase price comprised of $937.5 million of cash and $312.5 million of Energizer equity. As of September 30, 2018, GAC did not meet the criteria for recognition of assets held for sale in accordance with ASC 360 and therefore was classified as held for use by the Company and included as a component of the continuing operations for the year ended September 30, 2018. Subsequent to the year ended September 30, 2018, the Company will report the net assets of GAC as held for sale and discontinued operations and retroactively adjust comparable prior periods. The net assets of GAC will be measured at their fair value, less an estimated cost to sell beginning the first quarter of the fiscal year ended September 30, 2019.  The pro forma financial statements have not been adjusted to reflect this presentation for the respective periods presented.