Edgar Filing: Spectrum Brands Holdings, Inc.

20170101 FORM 10Q Q1FY17

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 1, 2017

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

\

Commission File No.	Name of Registrant, State of Incorporation, Address of Principal Offices, and Telephone No.	IRS Employer Identification No.
001-34757	Spectrum Brands Holdings, Inc. (a Delaware corporation) 3001 Deming Way Middleton, WI 53562 (608) 275-3340 www.spectrumbrands.com	27-2166630
333-192634-03	SB/RH Holdings, LLC (a Delaware limited liability company) 3001 Deming Way Middleton, WI 53562 (608) 275-3340	27-2812840

Indicate by check mark whether the registrants (1) have 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.


Spectrum Brands Holdings, Inc.	Yes	☒	No	☐
SB/RH Holdings, LLC	Yes	☒	No	☐

Indicate by check mark whether the registrants have submitted electronically and posted on their 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 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Spectrum Brands Holdings, Inc.	Yes	☒	No	☐
SB/RH Holdings, LLC	Yes	☒	No	☐

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):


Registrant	Large Accelerated Filer	Accelerated filer	Non-accelerated filer	Smaller reporting company
Spectrum Brands Holdings, Inc.	X
SB/RH Holdings, LLC			X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Spectrum Brands Holdings, Inc.	Yes	☐	No	☒
SB/RH Holdings, LLC	Yes	☐	No	☒

As of January 30, 2017, there were outstanding 58,822,651 shares of Spectrum Brands Holdings, Inc.’s common stock, par value $0.01 per share.

SB/RH Holdings, LLC meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this report with a reduced disclosure format as permitted by general instruction H(2).

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Forward-Looking Statements

We have made or implied certain forward-looking statements in this report. All statements, other than statements of historical facts included in this report, including the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our business strategy, future operations, financial condition, estimated revenues, projected costs, projected synergies, prospects, plans and objectives of management, as well as information concerning expected actions of third parties, are forward-looking statements. When used in this report, the words anticipate, intend, plan, estimate, believe, expect, project, could, will, should, may and similar expressions are also intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

Since these forward-looking statements are based upon our current expectations of future events and projections and are subject to a number of risks and uncertainties, many of which are beyond our control and some of which may change rapidly, actual results or outcomes may differ materially from those expressed or implied herein, and you should not place undue reliance on these statements. Important factors that could cause our actual results to differ materially from those expressed or implied herein include, without limitation:

the impact of our indebtedness on our business, financial condition and results of operations;

the impact of restrictions in our debt instruments on our ability to operate our business, finance our capital needs or pursue or expand business strategies;

any failure to comply with financial covenants and other provisions and restrictions of our debt instruments;

the impact of expenses resulting from the implementation of new business strategies, divestitures or current and proposed restructuring activities;

our inability to successfully integrate and operate new acquisitions at the level of financial performance anticipated;

the unanticipated loss of key members of senior management;

the impact of fluctuations in commodity prices, costs or availability of raw materials or terms and conditions available from suppliers, including suppliers’ willingness to advance credit;

interest rate and exchange rate fluctuations;

the loss of, or a significant reduction in, sales to any significant retail customer(s);

competitive promotional activity or spending by competitors, or price reductions by competitors;

the introduction of new product features or technological developments by competitors and/or the development of new competitors or competitive brands;

the effects of general economic conditions, including inflation, recession or fears of a recession, depression or fears of a depression, labor costs and stock market volatility or changes in trade, monetary or fiscal policies in the countries where we do business;

changes in consumer spending preferences and demand for our products;

our ability to develop and successfully introduce new products, protect our intellectual property and avoid infringing the intellectual property of third parties;

our ability to successfully implement, achieve and sustain manufacturing and distribution cost efficiencies and improvements, and fully realize anticipated cost savings;

the cost and effect of unanticipated legal, tax or regulatory proceedings or new laws or regulations (including environmental, public health and consumer protection regulations);

public perception regarding the safety of our products, including the potential for environmental liabilities, product liability claims, litigation and other claims;

the impact of pending or threatened litigation;

changes in accounting policies applicable to our business;

government regulations;

the seasonal nature of sales of certain of our products;

the effects of climate change and unusual weather activity; and

the effects of political or economic conditions, terrorist attacks, acts of war or other unrest in international markets.

Some of the above-mentioned factors are described in further detail in the sections entitled “Risk Factors” in our annual and quarterly reports (including this report), as applicable. You should assume the information appearing in this report is accurate only as of the end of the period covered by this report, or as otherwise specified, as our business, financial condition, results of operations and prospects may have changed since that date. Except as required by applicable law, including the securities laws of the United States (“U.S.”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”), we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

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SPECTRUM BRANDS HOLDINGS, INC.

SB/RH HOLDINGS, LLC

TABLE OF CONTENTS

This report is a combined report of Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC. The combined notes to the condensed consolidated financial statements include notes representing Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC and certain notes related specifically to SB/RH Holdings, LLC.


PART I	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements	2
Spectrum Brands Holdings, Inc. Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Financial Position as of January 1, 2017 and September 30, 2016	2
	Condensed Consolidated Statements of Income for the three month periods ended January 1, 2017 and January 3, 2016	3
	Condensed Consolidated Statements of Comprehensive Income for the three month periods ended January 1, 2017 and January 3, 2016	3
	Condensed Consolidated Statements of Cash Flows for the three month periods ended January 1, 2017 and January 3, 2016	4
SB/RH Holdings, LLC Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Financial Position as of January 1, 2017 and September 30, 2016	5
	Condensed Consolidated Statements of Income for the three month periods ended January 1, 2017 and January 3, 2016	6
	Condensed Consolidated Statements of Comprehensive Income for the three month periods ended January 1, 2017 and January 3, 2016	6
	Condensed Consolidated Statements of Cash Flows for the three month periods ended January 1, 2017 and January 3, 2016	7
Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC Combined (Unaudited)
	Combined Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6.	Exhibits	37
Signatures		38

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Financial Position

January 1, 2017 and September 30, 2016

(in millions, unaudited)



	January 1, 2017		September 30, 2016
Assets
Current assets:
Cash and cash equivalents	$	143.3	$	275.3
Trade receivables, net		489.2		482.6
Other receivables		57.0		55.6
Inventories		779.7		740.6
Prepaid expenses and other current assets		80.5		78.8
Total current assets		1,549.7		1,632.9
Property, plant and equipment, net		568.2		542.1
Deferred charges and other		44.2		43.2
Goodwill		2,464.5		2,478.4
Intangible assets, net		2,327.9		2,372.5
Total assets	$	6,954.5	$	7,069.1
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt	$	42.5	$	164.0
Accounts payable		532.4		580.1
Accrued wages and salaries		65.1		122.9
Accrued interest		41.2		39.3
Other current liabilities		186.7		189.3
Total current liabilities		867.9		1,095.6
Long-term debt, net of current portion		3,613.7		3,456.2
Deferred income taxes		563.1		532.7
Other long-term liabilities		124.4		140.6
Total liabilities		5,169.1		5,225.1
Commitments and contingencies
Shareholders' equity:
Common Stock		0.6		0.6
Additional paid-in capital		2,088.7		2,073.6
Accumulated earnings		106.1		63.6
Accumulated other comprehensive loss, net of tax		(247.7)		(229.4)
Treasury stock, at cost		(205.9)		(108.3)
Total shareholders' equity		1,741.8		1,800.1
Noncontrolling interest		43.6		43.9
Total equity		1,785.4		1,844.0
Total liabilities and equity	$	6,954.5	$	7,069.1

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Income

For the three month periods ended January 1, 2017 and January 3, 2016

(in millions, except per share figures, unaudited)


	January 1, 2017		January 3, 2016
Net sales	$	1,211.8	$	1,218.8
Cost of goods sold		760.7		778.0
Restructuring and related charges		1.1		0.1
Gross profit		450.0		440.7
Selling		189.8		187.1
General and administrative		88.6		86.3
Research and development		14.4		13.8
Acquisition and integration related charges		4.1		9.9
Restructuring and related charges		2.1		1.1
Total operating expenses		299.0		298.2
Operating income		151.0		142.5
Interest expense		55.8		58.4
Other non-operating (income) expense, net		(1.1)		3.5
Income from operations before income taxes		96.3		80.6
Income tax expense		31.1		6.9
Net income		65.2		73.7
Net income attributable to non-controlling interest		—		0.1
Net income attributable to controlling interest	$	65.2	$	73.6
Earnings Per Share
Basic earnings per share	$	1.10	$	1.24
Diluted earnings per share		1.10		1.24
Dividends per share		0.38		0.33
Weighted Average Shares Outstanding
Basic		59.3		59.2
Diluted		59.5		59.2

See accompanying notes to the condensed consolidated financial statements

SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Comprehensive Income

For the three month periods ended January 1, 2017 and January 3, 2016

(in millions, unaudited)



	January 1, 2017		January 3, 2016
Net income	$	65.2	$	73.7
Other comprehensive (loss) income, net of tax:
Foreign currency translation loss, net tax of $3.9 and $0.0, respectively		(46.1)		(20.5)
Unrealized gain on hedging activity, net tax of $(14.2) and $(0.7), respectively		24.2		3.7
Defined benefit pension gain, net tax of $(1.2) and $(0.3), respectively		3.3		1.1
Other comprehensive loss, net of tax		(18.6)		(15.7)
Comprehensive income		46.6		58.0
Comprehensive loss attributable to non-controlling interest		(0.3)		(0.1)
Comprehensive income attributable to controlling interest	$	46.9	$	58.1

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

For the three month periods ended January 1, 2017 and January 3, 2016

(in millions, unaudited)



	January 1, 2017		January 3, 2016
Cash flows from operating activities
Net income	$	65.2	$	73.7
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets		23.6		23.6
Depreciation		22.4		23.0
Share based compensation		8.8		10.1
Amortization of debt issuance costs		1.8		2.1
Write-off of debt issuance costs		1.9		—
Non-cash debt accretion		0.2		0.3
Deferred tax expense (benefit)		19.6		(9.7)
Net changes in operating assets and liabilities		(137.7)		(346.6)
Net cash provided (used) by operating activities		5.8		(223.5)
Cash flows from investing activities
Purchases of property, plant and equipment		(28.0)		(17.4)
Proceeds from sales of property, plant and equipment		0.1		0.1
Other investing activities		(0.8)		—
Net cash used by investing activities		(28.7)		(17.3)
Cash flows from financing activities
Proceeds from issuance of debt		177.1		230.0
Payment of debt		(135.9)		(5.9)
Payment of debt issuance costs		(0.5)		(1.1)
Payment of cash dividends		(22.6)		(19.5)
Treasury stock purchases		(97.6)		(40.2)
Share based tax withholding payments, net of proceeds upon vesting		(23.2)		(5.3)
Net cash (used) provided by financing activities		(102.7)		158.0
Effect of exchange rate changes on cash and cash equivalents		(6.4)		(3.1)
Net decrease in cash and cash equivalents		(132.0)		(85.9)
Cash and cash equivalents, beginning of period		275.3		247.9
Cash and cash equivalents, end of period	$	143.3	$	162.0
Supplemental disclosure of cash flow information
Cash paid for interest	$	44.5	$	61.6
Cash paid for taxes	$	10.4	$	10.0
Non cash investing activities
Acquisition of property, plant and equipment through capital leases	$	31.1	$	8.4
Non cash financing activities
Issuance of shares through stock compensation plan	$	52.2	$	36.0

See accompanying notes to the condensed consolidated financial statements

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SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Financial Position

January 1, 2017 and September 30, 2016

(in millions, unaudited)



	January 1, 2017		September 30, 2016
Assets
Current assets:
Cash and cash equivalents	$	143.2	$	270.8
Trade receivables, net		489.2		482.6
Other receivables		60.6		55.6
Inventories		779.7		740.6
Prepaid expenses and other current assets		80.5		78.8
Total current assets		1,553.2		1,628.4
Property, plant and equipment, net		568.2		542.1
Deferred charges and other		31.9		32.1
Goodwill		2,464.5		2,478.4
Intangible assets, net		2,327.9		2,372.5
Total assets	$	6,945.7	$	7,053.5
Liabilities and Shareholder's Equity
Current liabilities:
Current portion of long-term debt	$	74.3	$	164.0
Accounts payable		532.4		580.1
Accrued wages and salaries		65.1		122.9
Accrued interest		41.2		39.3
Other current liabilities		186.1		188.3
Total current liabilities		899.1		1,094.6
Long-term debt, net of current portion		3,613.7		3,456.2
Deferred income taxes		563.1		532.7
Other long-term liabilities		124.4		140.6
Total liabilities		5,200.3		5,224.1
Commitments and contingencies
Shareholder's equity:
Other capital		2,018.2		2,000.9
Accumulated (deficit) earnings		(74.6)		8.1
Accumulated other comprehensive loss, net of tax		(247.7)		(229.4)
Total shareholder's equity		1,695.9		1,779.6
Noncontrolling interest		49.5		49.8
Total equity		1,745.4		1,829.4
Total liabilities and equity	$	6,945.7	$	7,053.5

See accompanying notes to the condensed consolidated financial statements

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SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Income

For the three month periods ended January 1, 2017 and January 3, 2016

(in millions, unaudited)



	January 1, 2017		January 3, 2016
Net sales	$	1,211.8	$	1,218.8
Cost of goods sold		760.7		778.0
Restructuring and related charges		1.1		0.1
Gross profit		450.0		440.7
Selling		189.8		187.1
General and administrative		87.4		84.5
Research and development		14.4		13.8
Acquisition and integration related charges		4.1		9.9
Restructuring and related charges		2.1		1.1
Total operating expenses		297.8		296.4
Operating income		152.2		144.3
Interest expense		56.1		58.4
Other non-operating (income) expense, net		(1.1)		3.5
Income from operations before income taxes		97.2		82.4
Income tax expense		32.3		6.9
Net income		64.9		75.5
Net (loss) income attributable to non-controlling interest		(0.1)		0.1
Net income attributable to controlling interest	$	65.0	$	75.4

See accompanying notes to the condensed consolidated financial statements

SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Comprehensive Income

For the three month periods ended January 1, 2017 and January 3, 2016

(in millions, unaudited)



	January 1, 2017		January 3, 2016
Net income	$	64.9	$	75.5
Other comprehensive (loss) income, net of tax:
Foreign currency translation loss, net tax of $3.9 and $0.0, respectively		(46.1)		(20.5)
Unrealized gain on hedging activity, net tax of $(14.2) and $(0.7), respectively		24.2		3.7
Defined benefit pension gain, net tax of $(1.2) and $(0.3), respectively		3.3		1.1
Other comprehensive loss, net of tax		(18.6)		(15.7)
Comprehensive income		46.3		59.8
Comprehensive loss attributable to non-controlling interest		(0.3)		(0.1)
Comprehensive income attributable to controlling interest	$	46.6	$	59.9

See accompanying notes to the condensed consolidated financial statements

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SB/RH HOLDINGS, LLC

Condensed Consolidated Statements of Cash Flows

For the three month periods ended January 1, 2017 and January 3, 2016

(in millions, unaudited)



	January 1, 2017		January 3, 2016
Cash flows from operating activities
Net income	$	64.9	$	75.5
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets		23.6		23.6
Depreciation		22.4		23.0
Share based compensation		7.8		8.5
Amortization of debt issuance costs		1.8		2.1
Write-off of debt issuance costs		1.9		—
Non-cash debt accretion		0.2		0.3
Deferred tax expense (benefit)		20.8		(9.7)
Net changes in operating assets and liabilities		(160.8)		(361.5)
Net cash used by operating activities		(17.4)		(238.2)
Cash flows from investing activities
Purchases of property, plant and equipment		(28.0)		(17.4)
Proceeds from sales of property, plant and equipment		0.1		0.1
Other investing activities		(0.8)		—
Net cash used by investing activities		(28.7)		(17.3)
Cash flows from financing activities
Proceeds from issuance of debt		208.9		230.0
Payment of debt		(135.9)		(40.7)
Payment of debt issuance costs		(0.5)		(1.1)
Payment of cash dividends to parent		(147.6)		(29.5)
Net cash (used) provided by financing activities		(75.1)		158.7
Effect of exchange rate changes on cash and cash equivalents		(6.4)		(3.1)
Net decrease in cash and cash equivalents		(127.6)		(99.9)
Cash and cash equivalents, beginning of period		270.8		247.9
Cash and cash equivalents, end of period	$	143.2	$	148.0
Supplemental disclosure of cash flow information
Cash paid for interest	$	44.5	$	61.6
Cash paid for taxes	$	10.4	$	10.0
Non cash investing activities
Acquisition of property, plant and equipment through capital leases	$	31.1	$	8.4

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unaudited)

This report is a combined report of Spectrum Brands Holdings, Inc. (“SBH”) and SB/RH Holdings, LLC (“SB/RH”) (collectively, the “Company”). The notes to the condensed consolidated financial statements that follow include both consolidated SBH and SB/RH notes, unless otherwise indicated below.

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company and its majority owned subsidiaries in accordance with accounting principles for interim financial information generally accepted in the United States and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes necessary for a comprehensive presentation of financial position and results of operations. It is management’s opinion, however, that all material adjustments have been made which are necessary for a fair financial statement presentation. For further information, refer to the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2016.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. This ASU requires revenue recognition to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue recognition model requires identifying the contract and performance obligations, determining the transaction price, allocating the transaction price to performance obligations and recognizing the revenue upon satisfaction of performance obligations. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. This ASU can be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the updates recognized at the date of the initial application along with additional disclosures. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date, which amends the previously issued ASU to provide for a one year deferral from the original effective date. As a result, the ASU will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2019, with early application available to us beginning in the first quarter of our fiscal year ending September 30, 2018. We are assessing the impact this pronouncement will have on the consolidated financial statements of the Company and have not determined the materiality or method of adoption.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the lease requirements in ASC 840, Leases. This ASU requires lessees to recognize lease assets and liabilities on the balance sheet, as well as disclosing key information about leasing arrangements. Although the new ASU requires both operating and finance leases to be disclosed on the balance sheet, a distinction between the two types still exists as the economics of leases can vary. The ASU can be applied using a modified retrospective approach, with a number of optional practical expedients relating to the identification and classification of leases that commenced before the effective date, along with the ability to use hindsight in the evaluation of lease decisions, that entities may elect to apply. As a result, the ASU will become effective for us beginning in the first quarter of our fiscal year ending September 30, 2020, with early adoption applicable. We are assessing the impact this pronouncement will have on the consolidated financial statements of the Company and have not determined the materiality or method of adoption.

NOTE 3 – ACQUISITION AND INTEGRATION COSTS

The following summarizes acquisition and integration related charges for the three month periods ended January 1, 2017 and January 3, 2016:


(in millions)	January 1, 2017		January 3, 2016
Armored AutoGroup	$	1.7	$	4.5
HHI Business		1.9		2.8
Other		0.5		2.6
Total acquisition and integration related charges	$	4.1	$	9.9

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NOTE 4 - RESTRUCTURING AND RELATED CHARGES

GAC Business Rationalization Initiatives – During the third quarter of the year ended September 30, 2016, the Company implemented a series of initiatives in the GAC segment to consolidate certain operations and reduce operating costs. These initiatives included headcount reductions and the exit of certain facilities. Total costs associated with these initiatives are expected to be approximately $20 million, of which $6.8 million has been incurred to date. The balance is anticipated to be incurred through September 30, 2017.

Other Restructuring Activities – The Company is entering or may enter into small, less significant initiatives and restructuring activities to reduce costs and improve margins throughout the organization. Individually these activities are not substantial, and occur over a shorter time period (less than 12 months).

The following summarizes restructuring and related charges for the three month periods ended January 1, 2017 and January 3, 2016:


(in millions)	January 1, 2017		January 3, 2016
GAC business rationalization initiatives	$	1.5	$	—
Global expense rationalization initiatives		—		1.1
HHI business rationalization initiatives		—		(0.7)
Other restructuring activities		1.7		0.8
Total restructuring and related charges	$	3.2	$	1.2
Reported as:
Cost of goods sold	$	1.1	$	0.1
Operating expense		2.1		1.1

The following is a summary of restructuring and related charges for the three month periods ended January 1, 2017 and January 3, 2016 and cumulative costs for current restructuring initiatives as of January 1, 2017, by cost type:


	Termination		Other
(in millions)	Benefits		Costs		Total
For the three months ended January 1, 2017		1.8		1.4		3.2
For the three months ended January 3, 2016		1.0		0.2		1.2
Cumulative costs through January 1, 2017		2.1		6.4		8.5

The following is a rollforward of the accrual related to all restructuring and related activities, included within Other Current Liabilities, by cost type for the three month period ended January 1, 2017:


	Termination		Other
(in millions)	Benefits		Costs		Total
Accrual balance at September 30, 2016		1.6		1.0		2.6
Provisions		1.8		1.4		3.2
Cash expenditures		(1.6)		(1.4)		(3.0)
Non-cash items		(0.1)		—		(0.1)
Accrual balance at January 1, 2017	$	1.7	$	1.0	$	2.7

The following summarizes restructuring and related charges by segment for the three month periods ended January 1, 2017 and January 3, 2016, cumulative costs incurred through January 1, 2017, and future expected costs to be incurred by segment:


(in millions)	GBA		PET		HHI		GAC		Total
For the three months ended January 1, 2017	$	0.4	$	0.2	$	1.1	$	1.5	$	3.2
For the three months ended January 3, 2016		0.3		0.8		0.1		—		1.2
Cumulative costs through January 1, 2017		0.4		0.2		1.1		6.8		8.5
Future costs to be incurred		0.9		0.1		—		13.2		14.2

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NOTE 5 - RECEIVABLES AND CONCENTRATION OF CREDIT RISK

The allowance for uncollectible receivables as of January 1, 2017 and September 30, 2016 was $48.0 million and $46.8 million, respectively. The Company has a broad range of customers including many large retail outlet chains, one of which accounts for a significant percentage of its sales volume. This customer represents approximately 13% and 15% of the Company’s Trade Receivables at January 1, 2017 and September 30, 2016, respectively.

NOTE 6 - INVENTORIES

Inventories consist of the following:



(in millions)	January 1, 2017		September 30, 2016
Raw materials	$	146.6	$	127.5
Work-in-process		45.6		43.6
Finished goods		587.5		569.5
	$	779.7	$	740.6

NOTE 7 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:


(in millions)	January 1, 2017		September 30, 2016
Land, buildings and improvements	$	194.2	$	195.8
Machinery, equipment and other		551.9		550.6
Capitalized leases		158.2		130.0
Construction in progress		68.9		57.7
Property, plant and equipment	$	973.2	$	934.1
Accumulated depreciation		(405.0)		(392.0)
Property, plant and equipment, net	$	568.2	$	542.1

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS

Goodwill, by segment, consists of the following:



(in millions)	GBA		HHI		PET		H&G		GAC		Total
As of September 30, 2016		345.1		702.8		299.8		196.5		934.2		2,478.4
Foreign currency impact		(5.0)		(3.6)		(4.6)		—		(0.7)		(13.9)
As of January 1, 2017	$	340.1	$	699.2	$	295.2	$	196.5	$	933.5	$	2,464.5

The carrying value and accumulated amortization for intangible assets subject to amortization are as follows:



	January 1, 2017						September 30, 2016
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	$	973.3	$	(313.2)	$	660.1	$	984.8	$	(302.9)	$	681.9
Technology assets		237.8		(102.3)		135.5		237.2		(96.7)		140.5
Tradenames		165.7		(93.0)		72.7		165.7		(89.1)		76.6
Total	$	1,376.8	$	(508.5)	$	868.3	$	1,387.7	$	(488.7)	$	899.0

The range and weighted average useful lives for definite-lived intangible assets are as follows:


Asset Type	Range	Weighted Average
Customer relationships	2 - 20 years	18.5 years
Technology assets	5 - 18 years	11.2 years
Tradenames	5 - 13 years	11.4 years

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Certain tradename intangible assets have an indefinite life and are not amortized. The balance of tradenames not subject to amortization was $1,459.6 million and $1,473.5 million as of January 1, 2017 and September 30, 2016, respectively. There was no impairment loss on indefinite-lived trade names for the three month periods ended January 1, 2017 and January 3, 2016.

Amortization expense from intangible assets for the three month periods ended January 1, 2017 and January 3, 2016 was $23.6 million. Excluding the impact of any future acquisitions or changes in foreign currency, the Company estimates annual amortization expense of intangible assets for the next five fiscal years will be as follows:


(in millions)	Amortization
2017	$	91.9
2018		85.7
2019		85.4
2020		85.2
2021		81.9

NOTE 9 - DEBT

Debt consists of the following:


	SBH								SB/RH
	January 1, 2017				September 30, 2016				January 1, 2017				September 30, 2016
(in millions)	Amount		Rate		Amount		Rate		Amount		Rate		Amount		Rate
Term Loan, variable rate, due June 23, 2022	$	1,003.0	3.4	%	$	1,005.5	3.6	%	$	1,003.0	3.4	%	$	1,005.5	3.6	%
CAD Term Loan, variable rate, due June 23, 2022		53.3	4.5	%		54.9	4.6	%		53.3	4.5	%		54.9	4.6	%
Euro Term Loan, variable rate, due June 23, 2022		58.8	3.5	%		63.0	3.5	%		58.8	3.5	%		63.0	3.5	%
4.00% Notes, due October 1, 2026		445.8	4.0	%		477.0	4.0	%		445.8	4.0	%		477.0	4.0	%
5.75% Notes, due July 15, 2025		1,000.0	5.8	%		1,000.0	5.8	%		1,000.0	5.8	%		1,000.0	5.8	%
6.125% Notes, due December 15, 2024		250.0	6.1	%		250.0	6.1	%		250.0	6.1	%		250.0	6.1	%
6.375% Notes, due November 15, 2020		—	—	%		129.7	6.4	%		—	—	%		129.7	6.4	%
6.625% Notes, due November 15, 2022		570.0	6.6	%		570.0	6.6	%		570.0	6.6	%		570.0	6.6	%
Revolver Facility, variable rate, expiring June 23, 2020		165.5	5.6	%		—	—	%		165.5	5.6	%		—	—	%
Intercompany Loan with Parent Company		—	—	%		—	—	%		31.8	3.4	%		—	—	%
Other notes and obligations		26.9	7.7	%		16.8	9.8	%		26.9	7.7	%		16.8	9.8	%
Obligations under capital leases		140.9	5.3	%		114.7	5.5	%		140.9	5.3	%		114.7	5.5	%
Total debt		3,714.2				3,681.6