Attached files
file | filename |
---|---|
EX-32.3 - EX-32.3 - HD Supply Holdings, Inc. | a16-18206_1ex32d3.htm |
EX-32.4 - EX-32.4 - HD Supply Holdings, Inc. | a16-18206_1ex32d4.htm |
EX-32.2 - EX-32.2 - HD Supply Holdings, Inc. | a16-18206_1ex32d2.htm |
EX-32.1 - EX-32.1 - HD Supply Holdings, Inc. | a16-18206_1ex32d1.htm |
EX-31.4 - EX-31.4 - HD Supply Holdings, Inc. | a16-18206_1ex31d4.htm |
EX-31.3 - EX-31.3 - HD Supply Holdings, Inc. | a16-18206_1ex31d3.htm |
EX-31.2 - EX-31.2 - HD Supply Holdings, Inc. | a16-18206_1ex31d2.htm |
EX-31.1 - EX-31.1 - HD Supply Holdings, Inc. | a16-18206_1ex31d1.htm |
EX-10.1 - EX-10.1 - HD Supply Holdings, Inc. | a16-18206_1ex10d1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 30, 2016
- OR -
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File |
|
Exact name of Registrant as specified in its |
|
State of |
|
I.R.S. Employer |
001-35979 |
|
HD SUPPLY HOLDINGS, INC. 3100 Cumberland Boulevard, Suite 1480 |
|
Delaware |
|
26-0486780 |
333-159809 |
|
HD SUPPLY, INC. |
|
Delaware |
|
75-2007383 |
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.
HD Supply Holdings, Inc. |
|
Yes x No o |
HD Supply, Inc. |
|
Yes o No x |
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) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).
HD Supply Holdings, Inc. |
|
Yes x No o |
HD Supply, Inc. |
|
Yes x No o |
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):
HD Supply Holdings, Inc. | ||||
Large accelerated filer x |
Accelerated filer o |
Non-accelerated filer o |
Smaller reporting company o | |
|
(Do not check if a smaller reporting company) | |||
| ||||
HD Supply, Inc. | ||||
Large accelerated filer o |
Accelerated filer o |
Non-accelerated filer x |
Smaller reporting company o | |
|
(Do not check if a smaller reporting company) | |||
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
HD Supply Holdings, Inc. |
|
Yes o No x |
HD Supply, Inc. |
|
Yes o No x |
The number of shares of the Registrants common stock outstanding as of December 2, 2016:
HD Supply Holdings, Inc. |
|
201,276,090 shares of common stock, par value $0.01 per share |
HD Supply, Inc. |
|
1,000 shares of common stock, par value $0.01 per share, all of which were owned by HDS Holding Corporation, a wholly-owned subsidiary of HD Supply Holdings, Inc. |
This Form 10-Q is a combined quarterly report being filed separately by two registrants: HD Supply Holdings, Inc. and HD Supply, Inc. Unless the context indicates otherwise, any reference in this report to Holdings refers to HD Supply Holdings, Inc., any reference to HDS refers to HD Supply, Inc., the indirect wholly-owned subsidiary of Holdings, and any references to HD Supply, the Company, we, us and our refer to HD Supply Holdings, Inc. together with its direct and indirect subsidiaries, including HDS. Each registrant hereto is filing on its own behalf all of the information contained in this quarterly report that relates to such registrant. Each registrant hereto is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information.
Forward-looking statements and information
This quarterly report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use of forward-looking terms such as believes, expects, may, will, should, could, seeks, intends, plans, estimates, anticipates or other comparable terms. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth strategies and the industries in which we operate.
Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors could cause actual results to differ materially from those contained in or implied by the forward-looking statements, including those factors discussed in Item 1A, Risk Factors in our annual report on Form 10-K, for the fiscal year ended January 31, 2016 and those described from time to time in our other filings with the U.S. Securities and Exchange Commission (SEC). Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations, financial condition and liquidity, and the development of industries in which we operate include:
· inherent risks of the maintenance, repair and operations market, infrastructure spending and the non-residential and residential construction markets;
· our ability to maintain profitability;
· our substantial debt and our ability to incur additional debt, as well as our ability to service our debt or refinance all or a portion of our indebtedness;
· limitations and restrictions in the agreements governing our indebtedness;
· the competitive environment in which we operate and the demand for our products and services in highly competitive and fragmented industries;
· the loss of any of our significant customers;
· competitive pricing pressure from our customers;
· our ability to identify and acquire suitable acquisition candidates on favorable terms;
· cyclicality and seasonality of infrastructure spending, the maintenance, repair and operations market and the non-residential and residential construction markets;
· our ability to identify and develop relationships with a sufficient number of qualified suppliers and to maintain our supply chains;
· our ability to manage fixed costs;
· the development of alternatives to distributors in our supply chain;
· our ability to manage our working capital through product purchasing and customer credit policies;
· potential material liabilities under our self-insured programs;
· our ability to attract, train and retain highly qualified associates and key personnel;
· our ability to protect our intellectual property rights;
· the cost of complying with environmental, health and safety laws, as well as other legal and regulatory requirements or disclosures;
· limitations on our income tax net operating loss carryforwards in the event of an ownership change; and
· our ability to identify and integrate new products.
You should read this report completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this report are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this report and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, changes in future operating results over time or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Amounts in millions, except share and per share data, unaudited
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
October 30, |
|
November 1, |
|
October 30, |
|
November 1, |
| ||||
Net Sales |
|
$ |
2,008 |
|
$ |
1,942 |
|
$ |
5,805 |
|
$ |
5,539 |
|
Cost of sales |
|
1,325 |
|
1,294 |
|
3,833 |
|
3,684 |
| ||||
Gross Profit |
|
683 |
|
648 |
|
1,972 |
|
1,855 |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative |
|
424 |
|
391 |
|
1,239 |
|
1,164 |
| ||||
Depreciation and amortization |
|
24 |
|
26 |
|
71 |
|
81 |
| ||||
Restructuring |
|
4 |
|
4 |
|
16 |
|
4 |
| ||||
Total operating expenses |
|
452 |
|
421 |
|
1,326 |
|
1,249 |
| ||||
Operating Income |
|
231 |
|
227 |
|
646 |
|
606 |
| ||||
Interest expense |
|
65 |
|
99 |
|
219 |
|
311 |
| ||||
Loss on extinguishment & modification of debt |
|
59 |
|
100 |
|
174 |
|
100 |
| ||||
Other (income) expense, net |
|
|
|
|
|
|
|
1 |
| ||||
Income from Continuing Operations Before Provision (Benefit) for Income Taxes |
|
107 |
|
28 |
|
253 |
|
194 |
| ||||
Provision (benefit) for income taxes |
|
43 |
|
13 |
|
101 |
|
(159 |
) | ||||
Income from Continuing Operations |
|
64 |
|
15 |
|
152 |
|
353 |
| ||||
Income (Loss) from discontinued operations, net of tax |
|
(4 |
) |
235 |
|
(8 |
) |
248 |
| ||||
Net Income |
|
$ |
60 |
|
$ |
250 |
|
$ |
144 |
|
$ |
601 |
|
Other comprehensive income (loss) foreign currency translation adjustment |
|
(1 |
) |
18 |
|
1 |
|
16 |
| ||||
Total Comprehensive Income |
|
$ |
59 |
|
$ |
268 |
|
$ |
145 |
|
$ |
617 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted Average Common Shares Outstanding (thousands) |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
199,593 |
|
197,529 |
|
199,217 |
|
196,589 |
| ||||
Diluted |
|
202,007 |
|
201,546 |
|
201,786 |
|
201,354 |
| ||||
Basic Earnings Per Share (1): |
|
|
|
|
|
|
|
|
| ||||
Income from Continuing Operations |
|
$ |
0.32 |
|
$ |
0.08 |
|
$ |
0.76 |
|
$ |
1.80 |
|
Income (Loss) from Discontinued Operations |
|
$ |
(0.02 |
) |
$ |
1.19 |
|
$ |
(0.04 |
) |
$ |
1.26 |
|
Net Income |
|
$ |
0.30 |
|
$ |
1.27 |
|
$ |
0.72 |
|
$ |
3.06 |
|
Diluted Earnings Per Share (1): |
|
|
|
|
|
|
|
|
| ||||
Income from Continuing Operations |
|
$ |
0.32 |
|
$ |
0.07 |
|
$ |
0.75 |
|
$ |
1.75 |
|
Income (Loss) from Discontinued Operations |
|
$ |
(0.02 |
) |
$ |
1.17 |
|
$ |
(0.04 |
) |
$ |
1.23 |
|
Net Income |
|
$ |
0.30 |
|
$ |
1.24 |
|
$ |
0.71 |
|
$ |
2.98 |
|
(1) May not foot due to rounding.
The accompanying notes are an integral part of these consolidated financial statements.
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
Amounts in millions, except share and per share data, unaudited
|
|
October 30, |
|
January 31, |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
146 |
|
$ |
269 |
|
Receivables, less allowance for doubtful accounts of $14 and $13 |
|
1,103 |
|
872 |
| ||
Inventories |
|
888 |
|
770 |
| ||
Current assets of discontinued operations |
|
|
|
43 |
| ||
Other current assets |
|
39 |
|
29 |
| ||
Total current assets |
|
2,176 |
|
1,983 |
| ||
Property and equipment, net |
|
316 |
|
310 |
| ||
Goodwill |
|
2,869 |
|
2,869 |
| ||
Intangible assets, net |
|
116 |
|
127 |
| ||
Deferred tax asset |
|
592 |
|
685 |
| ||
Non-current assets of discontinued operations |
|
|
|
20 |
| ||
Other assets |
|
18 |
|
22 |
| ||
Total assets |
|
$ |
6,087 |
|
$ |
6,016 |
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
|
$ |
681 |
|
$ |
490 |
|
Accrued compensation and benefits |
|
124 |
|
142 |
| ||
Current installments of long-term debt |
|
14 |
|
9 |
| ||
Current liabilities of discontinued operations |
|
|
|
30 |
| ||
Other current liabilities |
|
175 |
|
200 |
| ||
Total current liabilities |
|
994 |
|
871 |
| ||
Long-term debt, excluding current installments |
|
4,083 |
|
4,302 |
| ||
Non-current liabilities of discontinued operations |
|
|
|
1 |
| ||
Other liabilities |
|
108 |
|
98 |
| ||
Total liabilities |
|
5,185 |
|
5,272 |
| ||
Stockholders equity: |
|
|
|
|
| ||
Common stock, par value $0.01; 1 billion shares authorized; 201.1 million and 200.1 million shares issued and outstanding at October 30, 2016 and January 31, 2016, respectively |
|
2 |
|
2 |
| ||
Paid-in capital |
|
3,948 |
|
3,909 |
| ||
Accumulated deficit |
|
(3,021 |
) |
(3,150 |
) | ||
Accumulated other comprehensive loss |
|
(15 |
) |
(16 |
) | ||
Treasury stock, at cost, 0.34 million and 0.06 million shares at October 30, 2016 and January 31, 2016, respectively |
|
(12 |
) |
(1 |
) | ||
Total stockholders equity |
|
902 |
|
744 |
| ||
Total liabilities and stockholders equity |
|
$ |
6,087 |
|
$ |
6,016 |
|
The accompanying notes are an integral part of these consolidated financial statements.
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in millions, unaudited
|
|
Nine Months Ended |
| ||||
|
|
October 30, |
|
November 1, |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net income |
|
$ |
144 |
|
$ |
601 |
|
Reconciliation of net income to net cash provided by (used in) operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
|
76 |
|
106 |
| ||
Provision for uncollectibles |
|
5 |
|
5 |
| ||
Non-cash interest expense |
|
13 |
|
18 |
| ||
Payments of discounts upon extinguishment of debt |
|
|
|
(12 |
) | ||
Loss on extinguishment & modification of debt |
|
174 |
|
100 |
| ||
Stock-based compensation expense |
|
15 |
|
14 |
| ||
Deferred income taxes |
|
93 |
|
(15 |
) | ||
(Gain) loss on sales of businesses, net |
|
7 |
|
(186 |
) | ||
Other |
|
(2 |
) |
(2 |
) | ||
Changes in assets and liabilities: |
|
|
|
|
| ||
(Increase) decrease in receivables |
|
(236 |
) |
(248 |
) | ||
(Increase) decrease in inventories |
|
(119 |
) |
(124 |
) | ||
(Increase) decrease in other current assets |
|
|
|
4 |
| ||
Increase (decrease) in accounts payable and accrued liabilities |
|
134 |
|
93 |
| ||
Increase (decrease) in other long-term liabilities |
|
|
|
(181 |
) | ||
Net cash provided by (used in) operating activities |
|
304 |
|
173 |
| ||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Capital expenditures |
|
(59 |
) |
(61 |
) | ||
Proceeds from sales of property and equipment |
|
2 |
|
2 |
| ||
Proceeds from sales of businesses, net |
|
28 |
|
810 |
| ||
Net cash provided by (used in) investing activities |
|
(29 |
) |
751 |
| ||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Proceeds from issuance of common stock under employee benefit plans |
|
23 |
|
55 |
| ||
Purchase of treasury shares |
|
(24 |
) |
(51 |
) | ||
Borrowings of long-term debt |
|
1,547 |
|
287 |
| ||
Repayments of long-term debt |
|
(2,435 |
) |
(1,150 |
) | ||
Borrowings on long-term revolver debt |
|
510 |
|
784 |
| ||
Repayments on long-term revolver debt |
|
|
|
(850 |
) | ||
Debt issuance and modification fees |
|
(19 |
) |
(6 |
) | ||
Other financing activities |
|
(1 |
) |
1 |
| ||
Net cash provided by (used in) financing activities |
|
(399 |
) |
(930 |
) | ||
Effect of exchange rates on cash and cash equivalents |
|
1 |
|
(2 |
) | ||
Increase (decrease) in cash and cash equivalents |
|
$ |
(123 |
) |
$ |
(8 |
) |
Cash and cash equivalents at beginning of period |
|
269 |
|
85 |
| ||
Cash and cash equivalents at end of period |
|
$ |
146 |
|
$ |
77 |
|
The accompanying notes are an integral part of these consolidated financial statements.
HD SUPPLY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Amounts in millions, unaudited
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
October 30, |
|
November 1, |
|
October 30, |
|
November 1, |
| ||||
Net Sales |
|
$ |
2,008 |
|
$ |
1,942 |
|
$ |
5,805 |
|
$ |
5,539 |
|
Cost of sales |
|
1,325 |
|
1,294 |
|
3,833 |
|
3,684 |
| ||||
Gross Profit |
|
683 |
|
648 |
|
1,972 |
|
1,855 |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative |
|
424 |
|
391 |
|
1,239 |
|
1,164 |
| ||||
Depreciation and amortization |
|
24 |
|
26 |
|
71 |
|
81 |
| ||||
Restructuring |
|
4 |
|
4 |
|
16 |
|
4 |
| ||||
Total operating expenses |
|
452 |
|
421 |
|
1,326 |
|
1,249 |
| ||||
Operating Income |
|
231 |
|
227 |
|
646 |
|
606 |
| ||||
Interest expense |
|
65 |
|
99 |
|
219 |
|
311 |
| ||||
Loss on extinguishment & modification of debt |
|
59 |
|
100 |
|
174 |
|
100 |
| ||||
Other (income) expense, net |
|
|
|
|
|
|
|
1 |
| ||||
Income from Continuing Operations Before Provision (Benefit) for Income Taxes |
|
107 |
|
28 |
|
253 |
|
194 |
| ||||
Provision (benefit) for income taxes |
|
43 |
|
13 |
|
101 |
|
(159 |
) | ||||
Income from Continuing Operations |
|
64 |
|
15 |
|
152 |
|
353 |
| ||||
Income (Loss) from discontinued operations, net of tax |
|
(4 |
) |
235 |
|
(8 |
) |
248 |
| ||||
Net Income |
|
$ |
60 |
|
$ |
250 |
|
$ |
144 |
|
$ |
601 |
|
Other comprehensive income (loss) foreign currency translation adjustment |
|
(1 |
) |
18 |
|
1 |
|
16 |
| ||||
Total Comprehensive Income |
|
$ |
59 |
|
$ |
268 |
|
$ |
145 |
|
$ |
617 |
|
The accompanying notes are an integral part of these consolidated financial statements.
HD SUPPLY, INC. AND SUBSIDIARIES
Amounts in millions, except share and per share data, unaudited
|
|
October 30, |
|
January 31, |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
144 |
|
$ |
266 |
|
Receivables, less allowance for doubtful accounts of $14 and $13 |
|
1,103 |
|
872 |
| ||
Inventories |
|
888 |
|
770 |
| ||
Current assets of discontinued operations |
|
|
|
43 |
| ||
Other current assets |
|
39 |
|
29 |
| ||
Total current assets |
|
2,174 |
|
1,980 |
| ||
Property and equipment, net |
|
316 |
|
310 |
| ||
Goodwill |
|
2,869 |
|
2,869 |
| ||
Intangible assets, net |
|
116 |
|
127 |
| ||
Deferred tax asset |
|
592 |
|
685 |
| ||
Non-current assets of discontinued operations |
|
|
|
20 |
| ||
Other assets |
|
18 |
|
22 |
| ||
Total assets |
|
$ |
6,085 |
|
$ |
6,013 |
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
|
$ |
681 |
|
$ |
490 |
|
Accrued compensation and benefits |
|
124 |
|
142 |
| ||
Current installments of long-term debt |
|
14 |
|
9 |
| ||
Current liabilities of discontinued operations |
|
|
|
30 |
| ||
Other current liabilities |
|
174 |
|
199 |
| ||
Total current liabilities |
|
993 |
|
870 |
| ||
Long-term debt, excluding current installments |
|
4,083 |
|
4,302 |
| ||
Non-current liabilities of discontinued operations |
|
|
|
1 |
| ||
Other liabilities |
|
108 |
|
98 |
| ||
Total liabilities |
|
5,184 |
|
5,271 |
| ||
Stockholders equity: |
|
|
|
|
| ||
Common stock, par value $0.01; authorized 1,000 shares; issued and outstanding 1,000 shares at October 30, 2016 and January 31, 2016 |
|
|
|
|
| ||
Paid-in capital |
|
3,801 |
|
3,786 |
| ||
Accumulated deficit |
|
(2,885 |
) |
(3,028 |
) | ||
Accumulated other comprehensive loss |
|
(15 |
) |
(16 |
) | ||
Total stockholders equity |
|
901 |
|
742 |
| ||
Total liabilities and stockholders equity |
|
$ |
6,085 |
|
$ |
6,013 |
|
The accompanying notes are an integral part of these consolidated financial statements.
HD SUPPLY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in millions, unaudited
|
|
Nine Months Ended |
| ||||
|
|
October 30, |
|
November 1, |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net income |
|
$ |
144 |
|
$ |
601 |
|
Reconciliation of net income to net cash provided by (used in) operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
|
76 |
|
106 |
| ||
Provision for uncollectibles |
|
5 |
|
5 |
| ||
Non-cash interest expense |
|
13 |
|
18 |
| ||
Payment of discount upon extinguishment of debt |
|
|
|
(12 |
) | ||
Loss on extinguishment & modification of debt |
|
174 |
|
100 |
| ||
Stock-based compensation expense |
|
15 |
|
14 |
| ||
Deferred income taxes |
|
93 |
|
(15 |
) | ||
(Gain) loss on sales of businesses, net |
|
7 |
|
(186 |
) | ||
Other |
|
(2 |
) |
(2 |
) | ||
Changes in assets and liabilities: |
|
|
|
|
| ||
(Increase) decrease in receivables |
|
(236 |
) |
(248 |
) | ||
(Increase) decrease in inventories |
|
(119 |
) |
(124 |
) | ||
(Increase) decrease in other current assets |
|
|
|
4 |
| ||
Increase (decrease) in accounts payable and accrued liabilities |
|
134 |
|
93 |
| ||
Increase (decrease) in other long-term liabilities |
|
|
|
(181 |
) | ||
Net cash provided by (used in) operating activities |
|
304 |
|
173 |
| ||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Capital expenditures |
|
(59 |
) |
(61 |
) | ||
Proceeds from sales of property and equipment |
|
2 |
|
2 |
| ||
Proceeds from sales of businesses, net |
|
28 |
|
810 |
| ||
Net cash provided by (used in) investing activities |
|
(29 |
) |
751 |
| ||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Borrowings of long-term debt |
|
1,547 |
|
287 |
| ||
Repayments of long-term debt |
|
(2,435 |
) |
(1,150 |
) | ||
Borrowings on long-term revolver debt |
|
510 |
|
784 |
| ||
Repayments on long-term revolver debt |
|
|
|
(850 |
) | ||
Debt issuance and modification fees |
|
(19 |
) |
(6 |
) | ||
Other financing activities |
|
(1 |
) |
1 |
| ||
Net cash provided by (used in) financing activities |
|
(398 |
) |
(934 |
) | ||
Effect of exchange rates on cash and cash equivalents |
|
1 |
|
(2 |
) | ||
Increase (decrease) in cash and cash equivalents |
|
$ |
(122 |
) |
$ |
(12 |
) |
Cash and cash equivalents at beginning of period |
|
266 |
|
85 |
| ||
Cash and cash equivalents at end of period |
|
$ |
144 |
|
$ |
73 |
|
The accompanying notes are an integral part of these consolidated financial statements.
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business
HD Supply Holdings, Inc. (Holdings) indirectly owns all of the outstanding common stock of HD Supply, Inc. (HDS).
Holdings, together with its direct and indirect subsidiaries, including HDS (HD Supply or the Company), is one of the largest industrial distribution companies in North America. The Company specializes in three distinct market sectors: Maintenance, Repair & Operations; Infrastructure; and Specialty Construction. Through approximately 500 locations across 48 U.S. states and six Canadian provinces, the Company serves these markets with an integrated go-to-market strategy. HD Supply has approximately 14,000 associates delivering localized, customer-tailored products, services and expertise. The Company serves approximately 500,000 customers, which include contractors, maintenance professionals, industrial businesses, and government entities. HD Supplys broad range of end-to-end product lines and services include more than 800,000 stock-keeping units (SKUs) of quality, name-brand and proprietary-brand products as well as value-add services supporting the entire life-cycle of a project from infrastructure and construction to maintenance, repair and operations.
HD Supply is managed primarily on a product line basis and reports results of operations in three reportable segments. The reportable segments are Facilities Maintenance, Waterworks, and Construction & Industrial - White Cap. In addition to the reportable segments, the consolidated financial statements include an operating segment, Home Improvement Solutions, and Corporate, which is comprised of enterprise-wide functional departments.
Basis of Presentation
In managements opinion, the unaudited financial information for the interim periods presented includes all adjustments necessary for a fair statement of the results of operations, financial position, and cash flows. All adjustments are of a normal recurring nature unless otherwise disclosed. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. For a more complete discussion of the Companys significant accounting policies and other information, you should read this report in conjunction with the Companys annual report on Form 10-K for the year ended January 31, 2016, which includes all disclosures required by generally accepted accounting principles in the United States of America (GAAP). Certain amounts in the prior-period financial statements have been reclassified to conform to the current periods presentation.
Fiscal Year
HD Supplys fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. Fiscal years ending January 29, 2017 (fiscal 2016) and January 31, 2016 (fiscal 2015) both include 52 weeks. The three months ended October 30, 2016 (third quarter 2016) and November 1, 2015 (third quarter 2015) both include 13 weeks. The nine months ended October 30, 2016 and November 1, 2015 both include 39 weeks.
Principles of Consolidation
The consolidated financial statements of Holdings present the results of operations, financial position and cash flows of Holdings and its wholly-owned subsidiaries, including HDS. The consolidated financial statements of HD Supply, Inc. present the results of operations, financial position and cash flows of HDS. and its wholly-owned subsidiaries. All material intercompany balances and transactions are eliminated. Results of operations of businesses acquired are included from their respective dates of acquisition. The results of operations of all discontinued operations have been separately reported as discontinued operations for all periods presented.
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Estimates
Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these consolidated financial statements in conformity with GAAP. Actual results could differ from these estimates.
Self-Insurance
HD Supply has a high deductible insurance program for most losses related to general liability, product liability, environmental liability, automobile liability and workers compensation, and is self-insured for medical claims and certain legal claims. The expected ultimate cost for claims incurred as of the balance sheet date is not discounted and is recognized as a liability. Self-insurance losses for claims filed and claims incurred but not reported are accrued based upon estimates of the aggregate liability for uninsured claims using loss development factors and actuarial assumptions followed in the insurance industry and historical loss development experience. At October 30, 2016 and January 31, 2016, self-insurance reserves totaled approximately $85 million and $84 million, respectively.
NOTE 2 DISCONTINUED OPERATIONS
In May 2016, the Company completed the sale of its Interior Solutions business. Including the final working capital settlement in September 2016, the Company received cash proceeds of approximately $26 million, net of $2 million of transaction costs. As a result of the sale, the Company recorded a $10 million pre-tax loss.
In October 2015, the Company completed the sale of its Power Solutions business. Including the final working capital settlement in May 2016, the Company received cash proceeds of approximately $812 million, net of $16 million of transaction costs. As a result of the sale, the Company recorded a $189 million pre-tax gain.
Summary Financial Information
In accordance with Accounting Standards Codification (ASC) 205-20, Discontinued Operations and Accounting Standards Update (ASU) 2014-08, Reporting discontinued operations and disclosure of disposals of components of an entity, the results of Interior Solutions and Power Solutions are classified as discontinued operations. The presentation of discontinued operations includes revenues and expenses of the discontinued operations and gain/loss on the disposition of businesses, net of tax, as one line item on the Consolidated Statements of Operations and Comprehensive Income. All Consolidated Statements of Operations and Comprehensive Income presented have been revised to reflect this presentation.
The following table provides additional detail related to the results of operations of the discontinued operations (amounts in millions):
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
October 30, |
|
November 1, |
|
October 30, |
|
November 1, |
| ||||
Net sales |
|
$ |
|
|
$ |
437 |
|
$ |
85 |
|
$ |
1,592 |
|
Cost of sales |
|
|
|
365 |
|
64 |
|
1,335 |
| ||||
Gross Profit |
|
|
|
72 |
|
21 |
|
257 |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative |
|
|
|
56 |
|
23 |
|
204 |
| ||||
Depreciation and amortization |
|
|
|
5 |
|
1 |
|
20 |
| ||||
Total operating expenses |
|
|
|
61 |
|
24 |
|
224 |
| ||||
Operating Income (Loss) |
|
|
|
11 |
|
(3 |
) |
33 |
| ||||
(Gain) loss on sales of discontinued operations |
|
4 |
|
(186 |
) |
7 |
|
(186 |
) | ||||
Other (income) expense, net |
|
|
|
3 |
|
|
|
3 |
| ||||
Income (loss) before provision for income taxes |
|
(4 |
) |
194 |
|
(10 |
) |
216 |
| ||||
Provision (benefit) for income taxes |
|
|
|
(41 |
) |
(2 |
) |
(32 |
) | ||||
Income (loss) from discontinued operations, net of tax |
|
$ |
(4 |
) |
$ |
235 |
|
$ |
(8 |
) |
$ |
248 |
|
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
At October 30, 2016 and January 31, 2016, the carrying amounts of major classes of assets and liabilities of discontinued operations included in the Consolidated Balance Sheets were as follows (amounts in millions):
|
|
October 30, |
|
January 31, |
| ||
Current assets: |
|
|
|
|
| ||
Receivables, less allowance for doubtful accounts of $0 and $1 |
|
$ |
|
|
$ |
31 |
|
Inventories |
|
|
|
12 |
| ||
Total current assets |
|
|
|
43 |
| ||
Intangible assets, net |
|
|
|
3 |
| ||
Other non-current assets |
|
|
|
17 |
| ||
Total assets of discontinued operations |
|
$ |
|
|
$ |
63 |
|
|
|
|
|
|
| ||
Current Liabilities: |
|
|
|
|
| ||
Accounts payable |
|
$ |
|
|
$ |
19 |
|
Accrued compensation and benefits |
|
|
|
2 |
| ||
Other current liabilities |
|
|
|
9 |
| ||
Total current liabilities |
|
|
|
30 |
| ||
Other non-current liabilities |
|
|
|
1 |
| ||
Total liabilities of discontinued operations |
|
$ |
|
|
$ |
31 |
|
The following table provides additional detail related to the net cash provided by (used in) operating and investing activities of the discontinued operations (amounts in millions):
|
|
Nine Months Ended |
| ||||
|
|
October 30, |
|
November 1, |
| ||
Net cash flows provided by (used in) operating activities |
|
$ |
(3 |
) |
$ |
31 |
|
Cash flows from investing activities: |
|
|
|
|
| ||
Capital expenditures |
|
(1 |
) |
(3 |
) | ||
Proceeds from sales of businesses, net |
|
28 |
|
810 |
| ||
Net cash flows provided by (used in) investing activities |
|
$ |
27 |
|
$ |
807 |
|
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 DEBT
HDSs long-term debt as of October 30, 2016 and January 31, 2016 consisted of the following (dollars in millions):
|
|
October 30, 2016 |
|
January 31, 2016 |
| ||||||
|
|
Outstanding |
|
Interest |
|
Outstanding |
|
Interest |
| ||
Senior ABL Facility due 2018 |
|
$ |
510 |
|
2.19 |
|
$ |
|
|
|
|
Term Loans due 2021 |
|
|
|
|
|
848 |
|
3.75 |
| ||
Term B-1 Loans due 2021 |
|
842 |
|
3.59 |
|
|
|
|
| ||
Term B-2 Loans due 2023 |
|
550 |
|
3.63 |
|
|
|
|
| ||
December 2014 First Priority Notes due 2021 |
|
1,250 |
|
5.25 |
|
1,250 |
|
5.25 |
| ||
April 2016 Senior Unsecured Notes due 2024 |
|
1,000 |
|
5.75 |
|
|
|
|
| ||
October 2012 Senior Unsecured Notes due 2020 |
|
|
|
|
|
1,000 |
|
11.50 |
| ||
February 2013 Senior Unsecured Notes due 2020 |
|
|
|
|
|
1,275 |
|
7.50 |
| ||
Total gross long-term debt |
|
$ |
4,152 |
|
|
|
$ |
4,373 |
|
|
|
Less unamortized discount |
|
(12 |
) |
|
|
(11 |
) |
|
| ||
Less unamortized deferred financing costs |
|
(43 |
) |
|
|
(51 |
) |
|
| ||
Total net long-term debt |
|
$ |
4,097 |
|
|
|
$ |
4,311 |
|
|
|
Less current installments |
|
(14 |
) |
|
|
(9 |
) |
|
| ||
Total net long-term debt, excluding current installments |
|
$ |
4,083 |
|
|
|
$ |
4,302 |
|
|
|
(1) Represents the stated rate of interest, without including the effect of discounts or premiums.
On October 14, 2016, HDS entered into a Fourth Amendment (the Fourth Amendment) to the credit agreement governing HDSs existing Term Loan Facility, as defined below. Pursuant to the Fourth Amendment, HDS amended its existing Term Loan Facility to, among other things, (i) eliminate its London Interbank Offered Rate (LIBOR) floor by means of a replacement tranche that replaced all of the Companys outstanding term loans in an aggregate principal amount of approximately $842 million (the Term B-1 Loans) and (ii) issue a new tranche of term loans in an aggregate principal amount of $550 million (the Term B-2 Loans).
Pursuant to the Fourth Amendment, the Term B-1 Loans bear interest at the applicable margin for borrowings of 2.75% for LIBOR borrowings and 1.75% for base rate borrowings, with no LIBOR floor. The Term B-1 Loans amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of the replaced tranche with the balance payable on the maturity date, August 13, 2021.
The Term B-2 Loans bear interest at the applicable margin for borrowings of 2.75% for LIBOR borrowings and 1.75% for base rate borrowings, with no LIBOR floor. The Term Loan Facility allows for a reduction to the applicable margin on the Term B-2 Loans from 2.75% per annum to 2.50% per annum upon the Company reaching a consolidated total leverage ratio of 3.0x or less. The Term B-2 Loans will amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount and will mature on October 17, 2023.
On October 17, 2016, HDS used the proceeds from the Term B-2 Loans, together with cash on hand and available borrowings under HDSs Senior ABL Facility, to redeem all of the outstanding $1,275 million aggregate principal of the 7.5% Senior Unsecured Notes due 2020 (the February 2013 Senior Unsecured Notes), and pay a $48 million premium in accordance with the terms of the indenture governing such notes. As a result, the Company incurred a $59 million loss on extinguishment of the debt, which includes the $48 million premium and write-off of $11 million of unamortized deferred financing costs, in accordance with ASC 470-50, Debt Modifications and Extinguishments.
On April 11, 2016, HDS issued $1,000 million of 5.75% Senior Unsecured Notes due 2024 (the April 2016 Senior Unsecured Notes) at par. HDS received approximately $985 million, net of transaction fees. The
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
transaction fees of $15 million are reflected as deferred financing costs in the Consolidated Balance Sheets and will be amortized into interest expense over the term of the notes.
On April 27, 2016, HDS used the net proceeds from the April 2016 Senior Unsecured Notes issuance, together with available cash, to redeem all of the outstanding $1,000 million aggregate principal of the 11.5% Senior Unsecured Notes due 2020 (the October 2012 Senior Unsecured Notes), and pay a $106 million make-whole premium calculated in accordance with the terms of the indenture governing such notes and pay $4 million of accrued but unpaid interest to the redemption date. As a result, the Company incurred a $115 million loss on extinguishment of the debt, which includes the $106 million make-whole premium and the write-off of $9 million of unamortized deferred financing costs, in accordance with ASC 470-50, Debt Modifications and Extinguishments.
Senior Credit Facilities
Asset Based Lending Facility
HDSs Senior Asset Based Lending Facility due 2018 (Senior ABL Facility) provides for senior secured revolving loans and letters of credit of up to a maximum aggregate principal amount of $1,500 million (subject to availability under a borrowing base). Extensions of credit under the Senior ABL Facility are limited by a borrowing base calculated periodically based on specified percentages of the value of eligible inventory and eligible accounts receivable, subject to certain reserves and other adjustments. A portion of the Senior ABL Facility is available for letters of credit and swingline loans. As of October 30, 2016, HDS had $960 million of additional available borrowings under the Senior ABL Facility (after giving effect to the borrowing base limitations and approximately $30 million in letters of credit issued and including $364 million of borrowings available on qualifying cash balances).
At HDSs option, the interest rates applicable to the loans under the Senior ABL Facility are based (i) in the case of U.S. dollar-denominated loans, either at LIBOR plus an applicable margin, or Prime Rate plus an applicable margin and (ii) in the case of Canadian dollar-denominated loans, either the bankers acceptance (BA) rate plus an applicable margin, or the Canadian Prime Rate plus an applicable margin. The margins applicable for each elected interest rate are subject to a pricing grid, as defined in the agreement governing the Senior ABL Facility, based on average excess availability for the previous fiscal quarter. The Senior ABL Facility also contains a letter of credit fee computed at a rate per annum equal to the Applicable Margin (as defined in the Senior ABL Facility agreement) then in effect for LIBOR Loans (as defined in the Senior ABL Facility agreement) and an unused commitment fee subject to a pricing grid, included in the agreement governing the Senior ABL Facility, based on the Average Daily Used Percentage (as defined in the agreement).
The Senior ABL Facility also permits HDS to add one or more incremental term loan facilities to be included in the Senior ABL Facility or one or more revolving credit facility commitments to be included in the Senior ABL Facility. The Senior ABL Facility will mature on June 28, 2018 (or the maturity date under HDSs Term Loan Facility, if earlier).
Senior Secured Term Loan Facility
HDSs Senior Term Facility consists of a senior secured term loan facility (the Term Loan Facility, and the term loans thereunder, the Term Loans) providing for Term Loans in an original aggregate principal amount of $1,392 million, comprised of two tranches, Term B-1 Loans and Term B-2 Loans, with aggregate principal amounts of $842 million and $550 million, respectively. Term B-1 Loans will mature on August 13, 2021 (the Term B-1 Loans Maturity Date) and Term B-2 Loans will mature on October 17, 2023 (the Term B-2 Loans Maturity Date). Both Term B-1 Loans and Term B-2 Loans amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of the Term Loans with the balances payable on their respective Maturity Dates. Both Term B-1 Loans and Term B-2 Loans bear interest at the applicable margin for borrowings of 2.75% for LIBOR borrowings and 1.75% for base rate borrowings. The Term Loan Facility
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
allows for a reduction to the applicable margin on the Term B-2 Loans from 2.75% per annum to 2.50% per annum upon the Company reaching a consolidated total leverage ratio of 3.0x or less.
For additional information on our Senior ABL Facility or Term Loan Facility (collectively, the Senior Credit Facilities), including guarantees and security, please refer to the Notes to Consolidated Financial Statements of our Form 10-K for the fiscal year ended January 31, 2016.
Secured Notes
5.25% Senior Secured First Priority Notes due 2021
HDSs 5.25% Senior Secured First Priority Notes due 2021 (the December 2014 First Priority Notes) bear interest at 5.25% per annum and will mature on December 15, 2021. Interest is paid semi-annually in arrears on June 15th and December 15th of each year.
Redemption
HDS may redeem the December 2014 First Priority Notes, in whole or in part, at any time (1) prior to December 15, 2017, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus the applicable make-whole premium set forth in the indenture governing the December 2014 First Priority Notes and (2) on and after December 15, 2017, at the applicable redemption price set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to the relevant redemption date, if redeemed during the 12-month period commencing on December 15 of the year set forth below.
Year |
|
Percentage |
|
2017 |
|
103.938 |
% |
2018 |
|
102.625 |
% |
2019 |
|
101.313 |
% |
2020 and thereafter |
|
100.000 |
% |
In addition, at any time prior to December 15, 2017, HDS may redeem on one or more occasions up to 40% of the aggregate principal amount of the December 2014 First Priority Notes with the proceeds of certain equity offerings at a redemption price of 105.25% of the principal amount of the December 2014 First Priority Notes being redeemed, plus accrued and unpaid interest to the redemption date, provided, however, that if the December 2014 First Priority Notes are redeemed, an aggregate principal amount of December 2014 First Priority Notes equal to at least 50% of the original aggregate principal amount of December 2014 First Priority Notes must remain outstanding immediately after each such redemption of December 2014 First Priority Notes.
Collateral
The December 2014 First Priority Notes and the related guarantees are secured by a first-priority security interest in substantially all of the tangible and intangible assets of HDS and the Subsidiary Guarantors (other than the ABL Priority Collateral (both as defined in the indenture governing the December 2014 First Priority Notes), in which the December 2014 First Priority Notes and the related guarantees have a second-priority security interest), including pledges of all capital stock of HDSs restricted subsidiaries directly owned by HDS and the Subsidiary Guarantors (but only up to 65% of each series of capital stock of each direct Foreign Subsidiary owned by HDS or any Subsidiary Guarantor), subject to certain thresholds, exceptions and permitted liens, and excluding any Excluded Assets and Excluded Subsidiary Securities (each as defined in the indenture governing the December 2014 First Priority Notes, and together, the Cash Flow Priority Collateral).
The indenture governing the December 2014 First Priority Notes and the applicable collateral documents provide that any capital stock and other securities of any of HDSs subsidiaries will be excluded from the collateral to the extent the pledge of such capital stock or other securities to secure the December 2014 First Priority Notes would cause such subsidiary to be required to file separate financial statements with the U.S. Securities and Exchange Commission (SEC) pursuant to Rule 3-16 of Regulation S-X (as in effect from time to time).
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
For additional information on the December 2014 First Priority Notes, including guarantees and security, please refer to the Notes to Consolidated Financial Statements of our Form 10-K, for the fiscal year ended January 31, 2016.
Unsecured Notes
5.75% Senior Unsecured Notes due 2024
HDS issued $1,000 million aggregate principal amount of 5.75% Senior Notes (April 2016 Senior Unsecured Notes) under an Indenture, dated as of April 11, 2016 (April 2016 Senior Unsecured Notes Indenture) among HDS, certain subsidiaries of HDS as guarantors and the Trustee. The April 2016 Senior Unsecured Notes bear interest at a rate of 5.75% per annum and will mature on April 15, 2024. Interest is paid semi-annually on April 15th and October 15th of each year.
The April 2016 Senior Unsecured Notes are unsecured senior indebtedness of HDS and rank equal in right of payment with all of HDSs existing and future senior indebtedness, senior in right of payment to all of HDSs existing and future subordinated indebtedness, and effectively subordinated to all of HDSs existing and future indebtedness, including, without limitation, indebtedness under the Senior Credit Facilities and December 2014 First Priority Notes, to the extent of the value of the collateral securing each indebtedness.
The April 2016 Senior Unsecured Notes are guaranteed, on a senior unsecured basis, by each of HDSs direct and indirect domestic existing and future subsidiaries that is a wholly owned domestic subsidiary (other than certain excluded subsidiaries), and by each other domestic subsidiary that is a borrower under the Senior ABL Facility or that guarantees HDSs obligations under any credit facility or capital markets securities. These guarantees are subject to release under customary circumstances as stipulated in the April 2016 Senior Unsecured Notes Indenture.
Redemption
HDS may redeem the April 2016 Senior Unsecured Notes, in whole or in part, at any time (1) prior to April 15, 2019, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus the applicable make-whole premium set forth in the April 2016 Senior Unsecured Notes Indenture and (2) on and after April 15, 2019, at the applicable redemption price set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to the relevant redemption date, if redeemed during the 12-month period commencing on April 15 of the year set forth below.
Year |
|
Percentage |
|
2019 |
|
104.313 |
% |
2020 |
|
102.875 |
% |
2021 |
|
101.438 |
% |
2022 and thereafter |
|
100.000 |
% |
In addition, at any time prior to April 15, 2019, HDS may redeem on one or more occasions up to 40% of the aggregate principal amount of the April 2016 Senior Unsecured Notes with the proceeds of certain equity offerings at a redemption price of 105.75% of the principal amount in respect of the April 2016 Senior Unsecured Notes being redeemed, plus accrued and unpaid interest to the redemption date, provided, however, that if the April 2016 Senior Unsecured Notes are redeemed, an aggregate principal amount of April 2016 Senior Unsecured Notes equal to at least 50% of the original aggregate principal amount of April 2016 Senior Unsecured Notes must remain outstanding immediately after each such redemption of April 2016 Senior Unsecured Notes.
11.5% Senior Unsecured Notes due 2020
HDSs October 2012 Senior Unsecured Notes bore interest at 11.5% per annum with a maturity date of July 15, 2020. Interest was paid semi-annually in arrears on April 15th and October 15th of each year, prior to the April 27, 2016 redemption of all of the outstanding $1,000 million aggregate principal amount of the October 2012 Senior Unsecured Notes.
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7.5% Senior Unsecured Notes due 2020
HDSs February 2013 Senior Unsecured Notes bore interest at 7.5% per annum with a maturity date of July 15, 2020. Interest was paid semi-annually in arrears on April 15th and October 15th of each year, prior to the redemption on October 17, 2016 of all the outstanding $1,275 million aggregate principal of the February 2013 Senior Unsecured Notes.
Debt covenants
HDSs outstanding debt agreements contain various restrictive covenants including, but not limited to, limitations on the incurrence of additional indebtedness and dividend payments and restrictions on the use of proceeds from asset dispositions. As of October 30, 2016, HDS was in compliance with all such covenants that were in effect on such date.
NOTE 4 FAIR VALUE MEASUREMENTS
The fair value measurements and disclosure principles of GAAP (ASC 820, Fair Value Measurements and Disclosures) define fair value, establish a framework for measuring fair value and provide disclosure requirements about fair value measurements. These principles define a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly;
Level 3 Unobservable inputs in which little or no market activity exists.
The Companys financial instruments that are not reflected at fair value on the Consolidated Balance Sheets were as follows as of October 30, 2016 and January 31, 2016 (amounts in millions):
|
|
As of October 30, 2016 |
|
As of January 31, 2016 |
| ||||||||
|
|
Recorded |
|
Estimated |
|
Recorded |
|
Estimated |
| ||||
Senior ABL Facility |
|
$ |
510 |
|
$ |
502 |
|
$ |
|
|
$ |
|
|
Term Loans and Notes |
|
3,642 |
|
3,773 |
|
4,373 |
|
4,560 |
| ||||
Total |
|
$ |
4,152 |
|
$ |
4,275 |
|
$ |
4,373 |
|
$ |
4,560 |
|
(1) These amounts do not include accrued interest; accrued interest is classified as Other current liabilities in the accompanying Consolidated Balance Sheets. These amounts do not include any related discounts, premiums, or deferred financing costs.
The Company utilized Level 2 inputs, as defined in the fair value hierarchy, to measure the fair value of the long-term debt. Managements fair value estimates were based on quoted prices for recent trades of HDSs long-term debt, recent similar credit facilities initiated by companies with like credit quality in similar industries, quoted prices for similar instruments, and inquiries with certain investment communities.
NOTE 5 INCOME TAXES
For the nine months ended October 30, 2016, the Companys combined federal, state, and foreign effective tax rate is an expense of 39.9%. The effective rate for continuing operations for the nine months ended November 1, 2015 was a benefit of 82.0%, mainly driven by a decrease of $189 million in the Companys unrecognized U.S. federal and state tax benefits related to the Joint Committee on Taxations February 19, 2015 approval and finalization of the Companys tentative settlement with the Internal Revenue Services Office of Appeals in conjunction with a Revenue Agents Report issued in January 2013. For additional information, please refer to the Notes to Consolidated Financial Statements of our Form 10-K for the fiscal year ended January 31, 2016.
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Companys effective tax rate will vary based on a variety of factors, including overall profitability, the geographical mix of income before taxes and the related tax rates in the jurisdictions where it operates, restructuring and other one-time charges, as well as discrete events, such as settlements of future audits.
As of January 31, 2016, the Companys unrecognized tax benefits in accordance with the income taxes principles of GAAP (ASC 740, Income Taxes) were $9 million. As of October 30, 2016, the Companys unrecognized tax benefits increased by $1 million to $10 million. The Companys ending net accrual for interest and penalties related to unrecognized tax benefits as of January 31, 2016 was zero and remained unchanged as of October 30, 2016. At October 30, 2016 and January 31, 2016, the Companys valuation allowance on its U.S. deferred tax assets was approximately $4 million and $6 million, respectively. Each reporting period management assesses available positive and negative evidence and estimates if sufficient future taxable income will be generated to utilize the existing deferred tax assets.
NOTE 6 BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
The following basic and diluted weighted average common shares information is provided for Holdings.
The reconciliation of basic to diluted weighted average common shares for the three and nine months ended October 30, 2016 and November 1, 2015 was as follows (in thousands):
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||
|
|
October 30, |
|
November 1, |
|
October 30, |
|
November 1, |
|
Weighted-average common shares |
|
199,593 |
|
197,529 |
|
199,217 |
|
196,589 |
|
Effect of potentially dilutive stock plan securities |
|
2,414 |
|
4,017 |
|
2,569 |
|
4,765 |
|
Diluted weighted-average common shares |
|
202,007 |
|
201,546 |
|
201,786 |
|
201,354 |
|
Stock plan securities excluded from dilution (1) |
|
1,327 |
|
49 |
|
1,885 |
|
719 |
|
(1) Represents securities not included in the computation of diluted earnings per share because their effect would have been anti-dilutive.
Stock plan securities consist of securities (stock options, restricted stock and restricted stock units) granted under Holdings stock-based compensation plans.
NOTE 7 SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION
Receivables
Receivables consisted of the following (amounts in millions):
|
|
October 30, |
|
January 31, |
| ||
Trade receivables, net of allowance for doubtful accounts |
|
$ |
1,006 |
|
$ |
784 |
|
Vendor rebate receivables |
|
87 |
|
76 |
| ||
Other receivables |
|
10 |
|
12 |
| ||
Total receivables, net |
|
$ |
1,103 |
|
$ |
872 |
|
Other Current Liabilities
Other current liabilities consisted of the following (amounts in millions):
|
|
HD Supply Holdings, Inc. |
|
HD Supply, Inc. |
| ||||||||
|
|
October 30, |
|
January 31, |
|
October 30, |
|
January 31, |
| ||||
Accrued interest |
|
$ |
30 |
|
$ |
73 |
|
$ |
30 |
|
$ |
73 |
|
Accrued non-income taxes |
|
45 |
|
30 |
|
45 |
|
30 |
| ||||
Other |
|
100 |
|
97 |
|
99 |
|
96 |
| ||||
Total other current liabilities |
|
$ |
175 |
|
$ |
200 |
|
$ |
174 |
|
$ |
199 |
|
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Supplemental Cash Flow Information
Cash paid for interest in the nine months ended October 30, 2016 and November 1, 2015 was $249 million and $354 million, respectively.
Cash paid for income taxes, net of refunds, in the nine months ended October 30, 2016 and November 1, 2015 was approximately $12 million and $14 million, respectively.
Significant Non-Cash Transactions
During the nine months ended October 30, 2016, Holdings retired 449,717 shares of its common stock (Retired Shares) held as treasury shares by Holdings in the amount of $14 million. All of these shares were repurchased by Holdings pursuant to the publicly announced share repurchase program previously authorized by Holdings board of directors. Holdings reinstated the Retired Shares to the status of authorized but unissued shares of common stock, par value $0.01 per share, effective as of the date of retirement. In accordance with ASC 505-30, Equity-Treasury Stock, Holdings reversed the $0.01 par value of the Retired Shares and the excess of the cost of the Retired Shares over par value to Retained Earnings.
NOTE 8 RESTRUCTURING ACTIVITIES
During the fourth quarter of fiscal 2015 in conjunction with the sale of the Power Solutions business unit, management evaluated the Companys talent alignment and functional support strategies. Consequently, during fiscal 2015, the Company initiated a restructuring plan to strategically align its leadership and functional support teams. Initially, the Company expected to incur approximately $10 million to $20 million of restructuring charges under the plan. During first quarter fiscal 2016, the Company accelerated and expanded the restructuring plan. As a result, the Company now expects to incur a total of approximately $25 million to $30 million of restructuring charges under the restructuring plan, which is expected to be complete in fiscal 2016 and deliver a payback of approximately two years via a reduction in costs.
During the three and nine months ended October 30, 2016, the Companys activities under this restructuring plan resulted in restructuring charges of $4 million and $16 million, respectively, of which $2 million and $11 million, respectively, was incurred at the Facilities Maintenance business. During fiscal 2015, the Company incurred $9 million of restructuring charges under this plan. The Company expects to incur up to an additional $5 million of restructuring charges over the next three months primarily for severance, relocation and related costs.
The following table presents the activity for the liability balance, included in Other current liabilities in the Consolidated Balance Sheets (amounts in millions):
|
|
Severance |
|
Relocation & |
|
Total |
| |||
BalanceJanuary 31, 2016 |
|
$ |
6 |
|
$ |
1 |
|
$ |
7 |
|
Charges |
|
5 |
|
11 |
|
16 |
| |||
Cash payments |
|
(8 |
) |
(11 |
) |
(19 |
) | |||
BalanceOctober 30, 2016 |
|
$ |
3 |
|
$ |
1 |
|
$ |
4 |
|
NOTE 9 COMMITMENTS AND CONTINGENCIES
Legal Matters
HD Supply is involved in various legal proceedings arising in the normal course of its business. The Company establishes reserves for litigation and similar matters when those matters present loss contingencies that it determines to be both probable and reasonably estimable in accordance with ASC 450, Contingencies. In the opinion of management, based on current knowledge, all reasonably estimable and probable matters are believed to be adequately reserved for or covered by insurance and are not expected to have a material adverse effect on the Companys consolidated financial condition, results of operations or cash flows. For all other matters, except as noted below, management believes the possibility of losses from such matters is not probable,
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
the potential loss from such matters is not reasonably estimable, or such matters, if disposed of unfavorably to the Company, are of such kind or involve such amounts that would not have a material adverse effect on the financial position, results of operations or cash flows of the Company. For material matters that are reasonably possible and reasonably estimable, including matters that are probable and estimable but for which the amount that is reasonably possible is in excess of the amount that the Company has accrued for, management has estimated the aggregate range of potential loss as $0 to $15 million. If a material loss is probable or reasonably possible, and in either case estimable, the Company has considered it in the analysis and it is included in the discussion set forth above.
NOTE 10 SEGMENT INFORMATION
HD Supplys operating segments are based on management structure and internal reporting. Each segment offers different products and services to the end customer, except for Corporate, which provides general corporate overhead support. The Company determines its reportable segments in accordance with the principles of segment reporting within ASC 280, Segment Reporting. For purposes of evaluation under these segment reporting principles, the Chief Operating Decision Maker for HD Supply assesses HD Supplys ongoing performance, based on the periodic review and evaluation of Net sales, Adjusted EBITDA and certain other measures for each of the operating segments.
HD Supply has three reportable segments, each of which is presented below:
· Facilities MaintenanceFacilities Maintenance distributes maintenance, repair and operations (MRO) products, provides value-add services and fabricates custom products to multifamily, hospitality, healthcare and institutional facilities.
· WaterworksWaterworks distributes complete lines of water and wastewater transmission products, serving contractors and municipalities in the water and wastewater industries for non-residential and residential uses.
· Construction & Industrial - White CapConstruction & Industrial - White Cap distributes specialized hardware, tools, engineered materials and safety products to non-residential and residential contractors.
In addition to the reportable segments, the Companys consolidated financial results include Corporate & Other. Corporate & Other includes the operating segment Home Improvement Solutions, which offers light remodeling and construction supplies, kitchen and bath cabinets, windows, plumbing materials, electrical equipment and other products, primarily to small remodeling contractors and trade professionals. Corporate & Other also includes costs related to our centralized support functions, which are comprised of finance, information technology, human resources, legal, supply chain and other support services, and removes inter-segment transactions.
The following tables present Net sales, Adjusted EBITDA, and other measures for each of the reportable segments and total continuing operations for the periods indicated (amounts in millions):
|
|
Facilities |
|
Waterworks |
|
Construction & |
|
Corporate & |
|
Total |
| |||||
Three Months Ended October 30, 2016 |
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
|
$ |
724 |
|
$ |
733 |
|
$ |
499 |
|
$ |
52 |
|
$ |
2,008 |
|
Adjusted EBITDA |
|
140 |
|
74 |
|
60 |
|
(10 |
) |
264 |
| |||||
Depreciation(1) & Software Amortization |
|
8 |
|
2 |
|
6 |
|
5 |
|
21 |
| |||||
Other Intangible Amortization |
|
1 |
|
1 |
|
1 |
|
1 |
|
4 |
| |||||
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
|
Facilities |
|
Waterworks |
|
Construction & |
|
Corporate & |
|
Total |
| |||||
Three Months Ended November 1, 2015 |
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
|
$ |
716 |
|
$ |
705 |
|
$ |
472 |
|
$ |
49 |
|
$ |
1,942 |
|
Adjusted EBITDA |
|
149 |
|
70 |
|
51 |
|
(7 |
) |
263 |
| |||||
Depreciation(1) & Software Amortization |
|
11 |
|
3 |
|
6 |
|
4 |
|
24 |
| |||||
Other Intangible Amortization |
|
1 |
|
1 |
|
1 |
|
1 |
|
4 |
| |||||
Nine Months Ended October 30, 2016 |
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
|
$ |
2,142 |
|
$ |
2,071 |
|
$ |
1,435 |
|
$ |
157 |
|
$ |
5,805 |
|
Adjusted EBITDA |
|
425 |
|
192 |
|
163 |
|
(28 |
) |
752 |
| |||||
Depreciation(1) & Software Amortization |
|
23 |
|
7 |
|
20 |
|
14 |
|
64 |
| |||||
Other Intangible Amortization |
|
4 |
|
2 |
|
1 |
|
4 |
|
11 |
| |||||
Nine Months Ended November 1, 2015 |
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
|
$ |
2,084 |
|
$ |
1,977 |
|
$ |
1,334 |
|
$ |
144 |
|
$ |
5,539 |
|
Adjusted EBITDA |
|
427 |
|
181 |
|
130 |
|
(29 |
) |
709 |
| |||||
Depreciation(1) & Software Amortization |
|
34 |
|
8 |
|
19 |
|
13 |
|
74 |
| |||||
Other Intangible Amortization |
|
4 |
|
2 |
|
1 |
|
4 |
|
11 |
|
(1) Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations.
Reconciliation to Consolidated Financial Statements
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
October 30, |
|
November 1, |
|
October 30, |
|
November 1, |
| ||||
Total Adjusted EBITDA |
|
$ |
264 |
|
$ |
263 |
|
$ |
752 |
|
$ |
709 |
|
Depreciation and amortization(1) |
|
25 |
|
28 |
|
75 |
|
85 |
| ||||
Stock-based compensation |
|
4 |
|
4 |
|
15 |
|
14 |
| ||||
Restructuring |
|
4 |
|
4 |
|
16 |
|
4 |
| ||||
Operating income |
|
231 |
|
227 |
|
646 |
|
606 |
| ||||
Interest expense, net |
|
65 |
|
99 |
|
219 |
|
311 |
| ||||
Loss on extinguishment & modification of debt(2) |
|
59 |
|
100 |
|
174 |
|
100 |
| ||||
Other (income) expense, net(3) |
|
|
|
|
|
|
|
1 |
| ||||
Income from Continuing Operations Before Provision (Benefit) for Income Taxes |
|
107 |
|
28 |
|
253 |
|
194 |
| ||||
Provision (benefit) for income taxes |
|
43 |
|
13 |
|
101 |
|
(159 |
) | ||||
Income from continuing operations |
|
64 |
|
15 |
|
152 |
|
353 |
| ||||
Less: Income (loss) from discontinued operations, net of tax |
|
(4 |
) |
235 |
|
(8 |
) |
248 |
| ||||
Net income |
|
$ |
60 |
|
$ |
250 |
|
$ |
144 |
|
$ |
601 |
|
(1) Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations.
(2) Represents the loss on extinguishment of debt including the premium paid to redeem the debt as well as the write-off of unamortized deferred financing costs and other assets or liabilities associated with such debt. Also includes the costs of debt modification.
(3) Represents the costs expensed in connection with secondary offerings of Holdings common stock by certain of Holdings stockholders.
NOTE 11 SUBSIDIARY GUARANTORS
HDS (the Debt Issuer) has outstanding December 2014 First Priority Notes and April 2016 Senior Unsecured Notes (collectively the Notes), which are guaranteed by certain of its subsidiaries (the Subsidiary Guarantors). The Subsidiary Guarantors are direct or indirect wholly-owned domestic subsidiaries of HDS. The subsidiaries of
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
HDS that do not guarantee the Notes (Non-guarantor Subsidiaries) are direct or indirect wholly-owned subsidiaries of HDS and primarily include HDSs operations in Canada.
The Debt Issuers payment obligations under the Notes are jointly and severally guaranteed by the Subsidiary Guarantors and all guarantees are full and unconditional.
These guarantees are subject to release under the circumstances as described below:
(i) concurrently with any direct or indirect sale or disposition (by merger or otherwise) of any Subsidiary Guarantor or any interest therein in accordance with the terms of the applicable indebtedness by HDS or a restricted subsidiary, following which such Subsidiary Guarantor is no longer a restricted subsidiary of HDS;
(ii) at any time that such Subsidiary Guarantor is released from all of its obligations under all of its guarantees of payment of any indebtedness of HDS or any Subsidiary Guarantor under all other indebtedness and is not a borrower under the Senior ABL Facility;
(iii) upon the merger or consolidation of any Subsidiary Guarantor with and into HDS or another Subsidiary Guarantor that is the surviving entity in such merger or consolidation, or upon the liquidation of such Subsidiary Guarantor following the transfer of all of its assets to HDS or another Subsidiary Guarantor;
(iv) concurrently with any Subsidiary Guarantor becoming an unrestricted subsidiary;
(v) during the period when the rating on the Notes is changed to investment grade and certain covenants cease to apply while such investment grade rating is maintained, upon the merger or consolidation of any Subsidiary Guarantor with and into another subsidiary that is not a Subsidiary Guarantor with such other subsidiary being the surviving entity in such merger or consolidation, or upon liquidation of such Subsidiary Guarantor following the transfer of all of its assets to a subsidiary that is not a Subsidiary Guarantor;
(vi) upon legal or covenant defeasance of HDSs obligations under the applicable indebtedness, or satisfaction and discharge of the indenture governing the applicable indebtedness; or
(vii) subject to customary contingent reinstatement provisions, upon payment in full of the aggregate principal amount of all applicable indebtedness then outstanding and all other obligations guaranteed by a Subsidiary Guarantor then due and owing.
In addition, HDS has the right, upon 30 days notice to the applicable trustee, to cause any Subsidiary Guarantor that has not guaranteed payment of any indebtedness of HDS or any Subsidiary Guarantor under all other indebtedness and is not a borrower under the Senior ABL Facility to be unconditionally released from all obligations under its Subsidiary Guarantee, and such Subsidiary Guarantee shall thereupon terminate and be discharged and of no further force or effect.
In connection with the issuance of the Notes, HDS determined the need for compliance with Rule 3-10 of SEC Regulation S-X. In lieu of providing separate audited financial statements for the Guarantor Subsidiaries, HDS has included the accompanying Condensed Consolidating Financial Statements in accordance with Rule 3-10(f) of SEC Regulation S-X. The following supplemental financial information sets forth, on a consolidating basis under the equity method of accounting, the condensed statements of operations and comprehensive income, the condensed balance sheets and the condensed statements of cash flows for the Debt Issuer, for the Subsidiary Guarantors and the Non-guarantor Subsidiaries and total consolidated Debt Issuer and subsidiaries (amounts in millions).
HD SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
HD SUPPLY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
|
|
Three Months Ended October 30, 2016 |
| |||||||||||||
|
|
Debt |
|
Subsidiary |
|
Non- |
|
Eliminations |
|
Total |
| |||||
Net Sales |
|
$ |
|
|
$ |
1,976 |
|
$ |
32 |
|
$ |
|
|
$ |
2,008 |
|
Cost of sales |
|
|
|
1,308 |
|
17 |
|
|
|
1,325 |
| |||||
Gross Profit |
|
|
|
668 |
|
15 |
|
|
|
683 |
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Selling, general and administrative |
|
19 |
|
394 |
|
11 |
|
|
|
424 |
| |||||
Depreciation and amortization |
|
4 |
|
20 |
|
|
|
|
|
24 |
| |||||
Restructuring |
|
2 |
|
2 |
|
|
|
|
|
4 |
| |||||
Total operating expenses |
|
25 |
|
416 |
|
11 |
|
|
|
452 |
| |||||
Operating Income (Loss) |
|
(25 |
) |
252 |
|
4 |
|
|
|
231 |
| |||||
Interest expense |
|
69 |
|
61 |
|
1 |
|
(66 |
) |
65 |
| |||||
Interest (income) |
|
(61 |
) |
(5 |
) |
|
|
66 |
|
|
| |||||
Net (earnings) loss of equity affiliates |
|
(198 |
) |
|
|
|
|
198 |
|
|
| |||||
Loss on extinguishment & modification of debt |
|
59 |
|
|
|
|
|
|
|
59 |
| |||||
Income (Loss) from Continuing Operations Before Provision for Income Taxes |
|
106 |
|
196 |
|
3 |
|
(198 |
) |
107 |
| |||||
Provision for income taxes |
|
42 |
|
1 |
|
|
|
|
|
43 |
| |||||
Income (Loss) from Continuing Operations |
|
64 |
|
195 |
|
3 |
|
(198 |
) |
64 |
| |||||
Loss from discontinued operations, net of tax |
|
(4 |
) |
|
|
|
|
|
|
(4 |
) | |||||
Net Income (Loss) |
|
$ |
60 |
|
$ |
195 |
|
$ |
3 |
|
$ |
(198 |
) |
$ |
60 |
|
Other comprehensive income (loss) foreign currency translation adjustment |
|
(1 |
) |
|
|
(1 |
) |
1 |
|
(1 |
) | |||||
Total Comprehensive Income (Loss) |
|
$ |
59 |
|
$ |
195 |
|
$ |
2 |
|
$ |
(197 |
) |
$ |
59 |
|
|
|
Three Months Ended November 1, 2015 |
| |||||||||||||
|
|
Debt |
|
Subsidiary |
|
Non- |
|
Eliminations |
|
Total |
| |||||
Net Sales |
|
$ |
|
|
$ |
1,912 |
|
$ |
31 |
|
$ |
(1 |
) |
$ |
1,942 |
|
Cost of sales |
|
|
|
1,278 |
|
17 |
|
(1 |
) |
1,294 |
| |||||
Gross Profit |
|
|
|
634 |
|
14 |
|
|
|
648 |
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Selling, general and administrative |
|
18 |
|
362 |
|
11 |
|
|
|
391 |
| |||||
Depreciation and amortization |
|
4 |
|
22 |
|
|
|
|
|
26 |
| |||||
Restructuring |
|
|
|
4 |
|
|
|
|
|
4 |
| |||||
Total operating expenses |
|
22 |
|
388 |
|
11 |
|
|
|
421 |
| |||||
Operating Income (Loss) |
|
(22 |
) |
246 |
|
3 |
|
|
|
227 |
| |||||
Interest expense |
|
100 |
|
61 |
|
|
|
(62 |
) |
99 |
| |||||
Interest (income) |
|
(61 |
) |
(1 |
) |
|
|
62 |
|
|
| |||||
Net (earnings) loss of equity affiliates |
|
(198 |
) |
|
|
|
|
198 |
|
|
| |||||
Loss on extinguishment & modification of debt |
|
100 |
|
|
|
|
|
|
|
100 |
| |||||
Income (Loss) from Continuing Operations Before Provision for Income Taxes |
|
37 |
|
186 |
|
3 |
|
(198 |
) |
28 |
| |||||
Provision for income taxes |
|
9 |
|
|
|
4 |
|