NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies
Organization and Ownership Structure—
Atkore International
Holdings Inc. (hereinafter collectively with all its subsidiaries referred to as the “Company,” “we,” “our,” “us,” or “Atkore”) was incorporated in the State of Delaware on November 4, 2010. The
Company is 100% owned by Atkore International Group Inc. (“Atkore Group”). The Company is the sole owner of Atkore International, Inc. (“Atkore International”). Prior to the transactions described below, all the capital stock of
Atkore International was owned by Tyco International Ltd. (“Tyco” or the “Parent Company”). The business of Atkore International was operated as the Tyco Electrical and Metal Products (“TEMP”) business of Tyco (referred
to herein as the “Predecessor Company”). Atkore was initially formed by Tyco as a holding company to hold ownership of TEMP.
The Transactions—
On
November 9, 2010, Tyco announced that it entered into an agreement to sell a majority interest in TEMP to an affiliate of the private equity firm Clayton Dubilier & Rice, LLC (“CD&R”). On December 22, 2010, the
transaction closed and CD&R acquired shares of a newly created class of cumulative convertible preferred stock (the “Preferred Stock”) of Atkore Group. The Preferred Stock initially represented 51% of the outstanding capital stock (on
an as-converted basis) of Atkore Group. On December 22, 2010, Atkore Group also issued common stock (the “Common Stock”) to a Tyco subsidiary that initially represented the remaining 49% of the outstanding capital stock of Atkore
Group. Atkore Group continues to be the sole owner of the Company, which in turn continues to be the sole owner of Atkore International. Subsequent to December 22, 2010, Atkore has operated as an independent, stand-alone entity (referred to
herein as the “Successor Company”). The aforementioned transactions described in this paragraph are referred to herein as the “Transactions.”
Basis of Presentation
—The accompanying audited
financial statements of the Company included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
The consolidated financial statements for the Successor Company include the assets and liabilities used in operating the Company’s
business, including entities in which the Company owns or controls more than 50% of the voting shares or has the ability to control the entities through similar rights. The impact of subsidiaries owned or controlled with ownership less than 100% was
not material to any of the consolidated financial statements presented. All intercompany balances and transactions have been eliminated in consolidation. The results of companies acquired or disposed of are included in the consolidated financial
statements from the effective date of acquisition or up to the date of disposal.
The combined financial statements for the
predecessor period from September 25, 2010 through December 22, 2010 (the “Predecessor Period”) and the fiscal year ended September 24, 2010, include the assets and liabilities used in operating the Predecessor
Company’s business, including entities in which the Company owns or controls more than 50% of the voting shares or has the ability to control the entities through similar rights. The impact of subsidiaries owned or controlled with ownership
less than 100% was not material to the combined financial statements presented. All intercompany transactions have been eliminated. The results of companies acquired or disposed of are included in the combined financial statements from the effective
date of acquisition or up to the date of disposal.
Additionally, the combined financial statements may not be indicative of
the Company’s future performance and do not necessarily reflect what its combined results of operations, financial position and cash flows would have been had the Company operated as an unaffiliated company during the Predecessor Period and the
fiscal year ended September 24, 2010. To the extent that an asset, liability, revenue or expense is directly associated with the Company, it is reflected in the accompanying combined financial statements. Certain general corporate overhead and
other expenses have been allocated by Tyco to the Company in the Predecessor Period and the fiscal year ended September 24, 2010. Such allocations are reasonable; however, they may not be indicative of the actual expenses that would have been
incurred had the Company been operating as an unaffiliated company for the Predecessor Period and the fiscal year ended September 24, 2010, nor are they indicative of the costs that will be incurred as an unaffiliated company.
We have reclassified certain prior period amounts to conform to the current period presentation. Included with the reclassifications are
restatements for discontinued operations, as described in Note 17, the reorganization of our reportable segments, as described below, and the presentation of assets held for sale in the condensed consolidated balance sheet. Information regarding the
assets held for sale is included in Note 17.
In addition, the Company has corrected the presentation of the borrowings and
repayments of its asset-based (the “Credit Facility”) in the accompanying Statement of Cash Flows for the period from December 23, 2010 to September 30, 2011. Related amounts had previously been presented on a net basis rather
than a gross basis in accordance with ASC 230, Statement of Cash Flows (formerly Statement of Financial Accounting Standard (“SFAS”) 95, Statement of Cash Flows). The correction had no effect on net cash used in financing activities.
- 44 -
Description of Business
—The Company is engaged in the
design, manufacture and distribution of electrical conduit, cable products, steel tube and pipe products. Effective October 1, 2011, as a result of a strategic planning exercise, the Company reorganized its segments. After this reorganization,
the Company continues to have two reportable segments: 1) Global Pipe, Tube & Conduit and 2) Global Cable & Cable Management. The Company has combined the product category formerly referred to as Sheets & Plates with
Mechanical Tube. Additionally, Metal Framing Systems is now part of Global Cable & Cable Management and Electrical Conduit is now part of Global Pipe, Tube & Conduit. In compliance with Accounting Standards Codification 280,
Segment Reporting (“ASC 280”),
the Company has reclassified all prior period amounts to conform to its new reportable segment presentation. The reclassification of prior period amounts did not have a material impact on the
Company’s financial statements. The product categories that pertain to each reportable segment are as follows:
Global Pipe, Tube & Conduit
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Pipe & Tube
—consists of steel pipe for low pressure sprinkler applications and for low pressure conveyance of fluids and certain
structural and fabrication applications and commercial quality tubing in a variety of shapes and sizes for industrial applications, such as agricultural buildings, conveyor belt tubing and highway signage (including in-line galvanized steel tubing
products for many OEM and structural applications), high strength fence framework that utilizes the in-line galvanization process to deliver consistent strength and quality, and barbed tape products for high security perimeter fences.
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•
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Conduit
—consists of tubular steel used for the protection and routing of electrical wire, including such products as electrical metallic
tubing, intermediate metal conduit, rigid steel conduit, PVC conduit and aluminum rigid conduit, elbows and fittings.
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Global Cable & Cable Management
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•
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Cable
—consists of armored cable and metal-clad cable, including fire alarm and super neutral; ColorSpec
TM
ID System, self-grounding metal-clad cable, specialty cables and
pre-fabricated wiring systems.
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•
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Cable Management
—consists of systems that hold and protect electrical raceways, such as cable tray, cable ladder and wire basket, as well
as, metal framing or steel support structures using strut, channel and related fittings and accessories for both electrical and mechanical applications.
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Corporate and Other contains those items that are not included in the Company’s two segments (see Note 13).
Fiscal Year
—The Company has a 52- or 53-week fiscal year that ends on the last Friday in
September. It is our practice to establish quarterly closings using a 4-5-4 calendar. Fiscal year 2012 was a 52-week fiscal year and ended on September 28, 2012. Fiscal year 2011 was a 53-week fiscal year and ended on September 30, 2011.
Fiscal year 2010 was a 52-week fiscal year and ended on September 24, 2010. The next fiscal year is a 52-week fiscal year and will end on September 27, 2013.
Use of Estimates
—The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclose contingent assets and liabilities at the date of the financial statements and report the associated amounts of revenues and
expenses. Significant estimates and assumptions are used for, but not limited to, allowances for doubtful accounts, estimates of future cash flows associated with asset impairments, useful lives for depreciation and amortization, estimates of total
costs for contracts under the percentage-of-completion method, loss contingencies, purchase price allocation, net realizable value of inventories, legal liabilities, income taxes and tax valuation allowances and pension and postretirement employee
benefit liabilities. Actual results could differ materially from these estimates.
Revenue Recognition
—The Company’s revenues are generated principally
from the sale of its products. Revenue from the sale of products is recognized at the time title, risks and rewards of ownership pass. This is generally when the products reach the free-on-board shipping point, the sales price is fixed and
determinable and collection is reasonably assured. The freight charges for shipments are included in the Company’s revenues.
When significant sales contracts qualify for percentage of completion accounting, the revenue is recognized using the percentage-of-completion method, measured by the percentage of costs incurred to date
compared to estimated total costs for each contract. Provisions for estimated losses on contracts in progress are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability may
result in revisions to costs and income and are recognized in the period in which the revisions are determined.
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Provisions for certain rebates, sales incentives, trade promotions, product returns and
discounts to customers are accounted for as reductions in determining sales in the same period the related sales are recorded. Rebates are estimated based on sales terms and historical experience.
Product returns are estimated based on historical experience and are recorded at the time revenues are recognized. Accordingly, the
company reduces recognized revenue for estimated future returns at the time revenue is recorded. The estimates for returns are adjusted periodically based upon changes in historical rates of returns and trend analysis. It is possible that these
estimates will change in the future or that the actual amounts could vary from the Company’s estimates.
During the
fourth quarter of fiscal year 2012, the Company reclassified freight revenue from cost of goods sold of $23 million. This error did not have a material impact on the financial statements or debt covenants. The Company has determined that this
reclassification does not require restatement of previously issued financial statements.
Cost of Sales
—The Company includes all costs directly related to the production of
goods for sale in cost of goods sold. The Company classifies direct material, direct labor, production related overheads, freight and distribution costs, and the depreciation and amortization of assets directly used in the production of goods for
sale as cost of sales in the statement of operations.
Selling, General and Administrative Expenses
—The
Company includes all costs not directly related to the production of goods for sale in selling, general and administrative expenses. These costs include mainly administrative and selling labor, related support materials and the depreciation and
amortization of assets used in the administrative and selling functions.
Translation of Foreign Currency
—For the
Company’s non-U.S. subsidiaries that report in a functional currency other than U.S. dollars, assets and liabilities are translated into U.S. dollars using year-end exchange rates. Revenue and expenses are translated at the monthly average
exchange rates in effect during the fiscal year ended September 28, 2012, the period from December 23, 2010 to September 30, 2011, the Predecessor Period, and the fiscal year ended September 24, 2010. Foreign currency translation
gains and losses are included as a component of accumulated other comprehensive loss within shareholder’s equity for the fiscal year ended September 28, 2012, and the period from December 23, 2010 to September 30, 2011, and
parent company equity for the Predecessor Period and the fiscal year ended September 24, 2010.
Cash and Cash Equivalents
—The Company considers all highly liquid
investments with a maturity of three months or less, when purchased, to be cash equivalents.
Allowance for Doubtful Accounts
—The allowance for doubtful
accounts receivable reflects the best estimate of losses inherent in the Company’s accounts receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other available evidence.
Inventories
—Inventories are recorded at the lower of cost (primarily first-in,
first-out) or market value.
Property, Plant and Equipment
—Property, plant, and equipment, net,
is recorded at cost less accumulated depreciation. Maintenance and repair expenditures are charged to expense when incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows:
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Buildings
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2 to 40 years
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Building improvements
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2 to 22 years
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Machinery and production equipment
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2 to 19 years
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Support and testing machinery and equipment
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2 to 15 years
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Leasehold improvements
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Lesser of remaining term of the lease or economic useful life
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Long-Lived Asset
Impairments
—The Company reviews long-lived assets, including property, plant and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. The
Company performs undiscounted operating cash flow analyses to determine if impairment exists. For purposes of recognition and measurement of an impairment for assets held for use, the Company groups assets and liabilities at the lowest level for
which cash flows are separately identified. If impairment is determined to exist, any related impairment loss is calculated based on fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be
received, less costs of disposal.
Goodwill and Indefinite-Lived Intangible Asset
Impairments
—Goodwill and indefinite-lived intangible assets are assessed for impairment annually and more frequently if triggering events occur (see Note 6). In performing these assessments, management relies on various factors,
including operating results, business plans, economic projections, anticipated future cash flow forecasts, market multiples of publicly traded comparable companies and other market data.
- 46 -
When testing for goodwill impairment, the Company first compares the fair value of a
reporting unit with its carrying amount. Fair value for the goodwill impairment test is determined utilizing a discounted cash flow analysis based on the forecast cash flows (including estimated underlying revenue and operating income growth rates)
discounted using an estimated weighted average cost of capital of market participants. A market approach, utilizing observable market data of comparable companies in similar lines of business that are publicly traded is used to corroborate the
discounted cash flow analysis performed at each reporting unit. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered potentially impaired and the second step of the goodwill impairment test is performed to
measure the amount of impairment loss.
In the second step of the goodwill impairment test, the Company compares the implied
fair value of the reporting unit’s goodwill with the carrying amount of the reporting unit’s goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is
recognized in an amount equal to the excess of the carrying amount of goodwill over its implied fair value. The implied fair value of goodwill is determined in the same manner that the amount of goodwill recognized in a business combination is
determined. The Company allocates the fair value of a reporting unit to all of the assets and liabilities of that unit, including intangible assets, as if the reporting unit had been acquired in a business combination. Any excess of the fair value
of a reporting unit over the amounts assigned to its assets and liabilities represents the implied fair value of goodwill.
Fair value measurements—
Authoritative guidance for fair value
measurements establishes a three-level hierarchy that ranks the quality and reliability of information used in developing fair value estimates. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to
unobservable data. In cases where two or more levels of inputs are used to determine fair value, a financial instrument’s level is determined based on the lowest level input that is considered significant to the fair value measurement in its
entirety. The three levels of the fair value hierarchy are summarized as follows:
Level 1—inputs are based upon quoted prices
(unadjusted) in active markets for identical assets or liabilities which are accessible as of the measurement date.
Level 2—inputs are
based upon 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 model-derived valuations for the asset or liability that are derived
principally from or corroborated by market data for which the primary inputs are observable, including forward interest rates, yield curves, credit risk and exchange rates.
Level 3—inputs for the valuations are unobservable and are based on management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values
are therefore determined using model-based techniques such as option pricing models and discounted cash flow models.
Income Taxes and Uncertain Tax Positions
—Income taxes are computed on a stand-alone
basis in accordance with authoritative guidance for the accounting of income taxes. In these financial statements, income taxes have been reflected on a basis where such tax returns have or could have been filed based upon entities and their related
jurisdictions as included in these financial statements. Income tax payables and receivables presented herein reflect only the existing legal and contractual obligations of the Company’s entities that are expected to be settled in cash. The
Company maintains an indemnity receivable for certain tax obligations that are indemnified by Tyco and that are expected to be settled directly with the taxing authorities.
Accounting estimates and judgments made by Company affect the calculation of certain tax liabilities and the determination of the recoverability of certain deferred tax assets, included in both prepaid
expenses and other current assets and other assets in the accompanying consolidated balance sheet.
Deferred tax assets and
liabilities are recognized for the expected future tax consequences of events that have been reflected in the financial statements. Deferred tax assets and liabilities are determined based on the differences between the book and tax bases of
particular assets and liabilities and operating loss carryforwards, using tax rates in effect for the years in which the differences are expected to reverse. A valuation allowance is provided to offset deferred tax assets if, based upon the
available evidence, including tax planning strategies, it is more likely-than-not that some or all of the deferred tax assets will not be realized.
In evaluating the ability to recover deferred tax assets, the Company considers all available positive and negative evidence including past operating results, the existence of cumulative losses in the
most recent years and the forecast of future taxable income. In estimating future taxable income, the Company develops assumptions including the amount of
- 47 -
future state, federal, and international pre-tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions
require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying businesses.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. The Company is not aware of
any such changes that would have a material effect on the Company’s financial statements.
In addition, the calculation
of tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across global operations. The Company recognizes potential liabilities and records tax liabilities for anticipated
tax audit issues in the U.S. and other tax jurisdictions based on an estimate of whether it is more likely than not that the position will be sustained upon examination. These tax liabilities are reflected net of related tax loss carryforwards. The
Company adjusts these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the
tax liabilities. If the estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the
liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. If the tax liabilities relate to tax uncertainties existing at the date of the Transactions, the adjustment
of such tax liabilities will be covered by the investment agreement with Tyco entered into in connection with the Transactions (the “Investment Agreement”) (see Note 9).
Stock-Based Compensation
—The Company is
required to estimate the fair value of share-based payment awards on the date of grant. The Company recognizes compensation costs for stock-based payment transactions to employees based on their grant-date fair value on a straight-line approach over
the service period for which such awards are expected to vest. The fair value of stock options and stock purchase rights granted pursuant to the Company’s equity incentive plans is determined using the Black-Scholes valuation model. The
determination of fair value is affected by the Company’s calculated stock price, as well as assumptions regarding subjective and complex variables such as expected employee exercise behavior and the Company’s expected stock price
volatility over the expected term of the award. Generally, the Company’s assumptions are based on historical information and judgment is required to determine if historical trends may be indicators of future outcomes. The key assumptions for
the Black-Scholes valuation calculation are:
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•
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R
isk-free interest rate
. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant for the expected
term of the option.
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•
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Expected volatility
. The Company used volatility of comparable publicly traded companies. From this volatility the Company derived the
market value and the volatility of the Company’s underlying assets implied by the equity’s market value and volatility.
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•
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Expected term
. The expected term represents the weighted-average period the stock options are expected to remain outstanding. The expected term
is determined based on the Predecessor Company’s historical exercise behavior, post-vesting termination patterns, options outstanding and future expected exercise behavior.
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•
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Expected dividends
. There were no stock dividends issued during the period from December 23, 2010 to September 30, 2011, and the
fiscal year ended September 28, 2012.
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Employee stock-based compensation expense is calculated based on
awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates and an adjustment to stock-based compensation expense will be
recognized at that time.
Changes to the Company’s underlying common shares price, the Company’s assumptions used in
the Black-Scholes option valuation calculation and the Company’s forfeiture rate, as well as future equity granted or assumed through acquisitions could significantly impact the compensation expense the Company recognized.
Concentration of Credit Risk
—The Company extends credit to various
customers in the retail and construction industries. Collection of trade receivables may be affected by changes in economic or other industry conditions and may, accordingly, impact the Company’s overall credit risk. Although the Company
generally does not require collateral, the Company performs ongoing credit evaluations of customers and maintains reserves for potential credit losses. Invoices are aged based on contractual terms with the Company’s customers. The provision for
doubtful accounts is recorded as a charge to operating expense when a potential loss is identified. Losses are written off against the allowance when the receivable is determined to be uncollectible.
Insurable Liabilities
—The Company maintains policies with various insurance
companies for its workers’ compensation, product, property, general, auto, and executive liability risks. The insurance policies the Company maintains have various retention levels and excess coverage limits. The establishment and
update of liabilities for unpaid claims, including claims incurred but not reported, is based on the assessment by the Company’s claim administrator of each claim,
- 48 -
an independent actuarial valuation of the nature and severity of total claims, and management’s estimate. The Company utilizes a third-party claims administrator to pay claims, track and
evaluate actual claims experience, and ensure consistency in the data used in the actuarial valuation. The Company has established a total accrual for product liability of $13 million, on a gross basis, at September 28, 2012, which
appropriately reflects the Company’s exposure to liabilities arising from current claims.
Recently Adopted Accounting Pronouncements
—In May 2011, the
Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2011-04,
Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP
and IFRS
(ASU 2011-04). The new guidance clarifies the concepts applicable to fair value measurement of non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in fair value
measurement. The guidance became effective for the Company in the second quarter of fiscal year 2012. The adoption of this guidance did not have a material impact on the Company’s financial statements.
Recently Issued Accounting Pronouncements
—In July 2012,
the FASB issued Accounting Standards Update No. 2012-02,
Intangibles-Goodwill and Other
(Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). ASU 2012-02 states that an entity has the option
first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and
circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to
determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Accounting Standards Codification Subtopic 350-30,
Intangibles—Goodwill and Other, General Intangibles Other than Goodwill
.
Under the guidance in ASU 2012-02, an
entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative
assessment in any subsequent period.
The amendments in ASU 2012-02 are effective for annual and interim impairment tests
performed for fiscal years beginning after September 15, 2012 (fiscal year 2013 for the Company). Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public
entity’s financial statements for the most recent annual or interim period have not yet been issued. The Company has not early adopted this provision and continues to evaluate its impact going forward.
In December 2011, the FASB issued Accounting Standards Update No. 2011-12,
Comprehensive Income (Topic 220): Deferral of the
Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05
(“ASU 2011-12”). This update was issued to effectively defer
only those changes in Accounting Standards Update No. 2011-05 (“ASU 2011-05”) that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. The amendments will be temporary to allow the
FASB time to redeliberate the presentation requirements for reclassifications out of accumulated other comprehensive income for annual and interim financial statements. All other requirements in ASU 2011-05 are not affected by ASU 2011-12, including
the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. This standard is effective retrospectively for fiscal years and interim periods within these
years beginning after December 15, 2011 (fiscal year 2013 for the Company), with early adoption permitted. The Company continues to evaluate which method it will utilize to present items of net income and other comprehensive income.
In September 2011, the FASB issued Accounting Standards Update No. 2011-08,
Intangibles—Goodwill and Other (Topic 350):
Testing Goodwill for Impairment
(ASU 201-08). The amendments in ASU 2011-08 will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these
amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The
amendments include a number of events and circumstances for an entity to consider in conducting the qualitative assessment. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after
December 15, 2011 (fiscal year 2013 for the Company). Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for
the most recent annual or interim period have not yet been issued. The Company is evaluating the financial and disclosure impact of this guidance.
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2. Acquisitions
Fiscal Year 2012 Transactions
On February 15, 2012, the Company purchased all of the outstanding equity interests of various entities under common ownership. These entities are FlexHead Industries, Inc.; SprinkFLEX, LLC; PBJ,
LLC; DXL, LLC; and PNM, Inc. (collectively referred to herein as “FlexHead”). The aggregate purchase price was approximately $38 million, paid in cash at the closing, subject to various adjustments relating to working capital, cash on-hand
and indebtedness of the acquired companies. The purchase price was funded from borrowings under the Company’s Credit Facility. FlexHead manufactures and sells flexible sprinkler hose fittings. FlexHead has generated $14 million in sales and $3
million in net income since the acquisition date. The results of FlexHead are included within the Global Pipe, Tube & Conduit segment.
There were acquisition related expenses for FlexHead of less than $1 million for the year ended September 28, 2012. These charges, which were expensed in accordance with the accounting guidance for
business combinations, were recorded in “selling, general, and administrative” on the statements of operations.
This acquisition is being accounted for as a business combination using the acquisition method of accounting, whereby the purchase price
was allocated to tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values. Fair value measurements have been applied based on assumptions that market participants would use in the pricing of the asset or
liability.
The following table summarizes the
fair values assigned to the net assets acquired and liabilities assumed as of the February 15, 2012 acquisition date ($ in millions):
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Fair value of consideration transferred:
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Fair value of equity
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$
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38
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38
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Fair value of assets acquired and liabilities assumed:
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Cash and cash equivalents
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1
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Accounts receivable
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2
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Inventories
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6
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Intangible assets
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20
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Other assets—current and long-term
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2
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Indebtedness—current and long-term
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(1
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)
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Accounts payable
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(1
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)
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Other liabilities—current and long-term
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(1
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)
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Net assets acquired
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28
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Excess purchase price attributed to goodwill acquired
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$
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10
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The acquisition resulted in the recognition of $10 million of goodwill, which is deductible for income tax purposes.
Goodwill consists of the excess of the purchase price over the net of the fair value of the acquired assets and assumed liabilities, and represents the estimated economic value attributable to future operations.
Under the terms of the purchase agreement, the seller has agreed to indemnify and hold harmless the Company, as well as FlexHead’s
respective affiliates, from and against any taxes of FlexHead with respect to any tax period ending on or before the closing, as well as all tax liabilities relating to events or transactions occurring on or prior to the closing date of the
acquisition. Accordingly, the Company has reflected those liabilities with an offsetting receivable due from the seller of approximately $1 million on the consolidated balance sheet.
- 50 -
The following table summarizes the fair value
of amortizable and indefinite-lived intangible assets as of the acquisition date ($ in millions):
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FlexHead Industries,
Inc.
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Fair
Value
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Weighted
Average
Useful Life
(Years)
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Amortizable intangible assets:
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|
Customer relationships
|
|
$
|
11
|
|
|
10
|
|
Patents
|
|
|
5
|
|
|
9
|
|
Non-compete & other
|
|
|
3
|
|
|
5
|
|
|
|
|
|
|
|
|
|
Total amortizable intangible assets
|
|
$
|
19
|
|
|
|
|
Indefinite-lived intangibles:
|
|
|
|
|
|
|
|
Trade names
|
|
$
|
1
|
|
|
Indefinite
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
|
$
|
20
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Impact of Acquisition
The following table presents unaudited pro forma results of operations for the fiscal year ended September 28, 2012, the period from
December 23, 2010 to September 30, 2011, and the period from September 25, 2010 to December 22, 2010 as if the acquisition had occurred as of the first day of the fiscal 2011 period ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Successor
Company
|
|
|
|
|
Combined Predecessor
Company
|
|
|
|
|
For the Year
Ended
September 28,
2012
|
|
|
For the
Period from
December 23,
2010 to
September 30,
2011
|
|
|
|
|
For the
Period
from
September 25,
2010 to
December 22,
2010
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
1,694
|
|
|
$
|
1,272
|
|
|
|
|
$
|
343
|
|
|
Net loss
|
|
|
(8
|
)
|
|
|
(14
|
)
|
|
|
|
|
(4
|
)
|
The pro forma condensed financial information is presented for illustrative purposes only and does not indicate the
actual financial results of the Company if the closing of the FlexHead acquisition had been completed on September 25, 2010, nor is it indicative of the results of operations in future periods. Included in the unaudited pro forma financial
information for the year ended September 28, 2012, the period from December 23, 2010 to September 30, 2011 and the period from September 25, 2010 to December 22, 2010 were pro forma adjustments to reflect the results of
operations of FlexHead as well as the impact of amortizing certain acquisition accounting adjustments such as amortizable intangible assets. The pro forma financial information neither indicates the impact of possible business model changes nor
considers any potential impact of current market conditions, expense efficiencies or other factors.
The unaudited pro forma
information reflects primarily the following unaudited pro forma adjustments for the year ended September 28, 2012:
|
|
•
|
|
Additional amortization expense of $1 million related to the fair value of identifiable intangible assets acquired;
|
|
|
•
|
|
Excluded costs of sales of $1 million related to the fair value adjustment to inventory acquired;
|
|
|
•
|
|
Excluded acquisition costs of less than $1 million; and
|
|
|
•
|
|
Additional net sales and operating loss attributable to FlexHead of $7 million and less than $1 million, respectively.
|
The unaudited pro forma information reflects primarily the following unaudited pro forma adjustments for the period from
December 23, 2010 to September 30, 2011:
|
|
•
|
|
Additional amortization expense of $2 million related to the fair value of identifiable intangible assets acquired;
|
|
|
•
|
|
An adjustment for the tax benefit of less than $1 million; and
|
|
|
•
|
|
Additional net sales and operating income attributable to FlexHead of $14 million and $4 million, respectively.
|
The unaudited pro forma information reflects primarily the following unaudited pro forma adjustments for the period from
September 25, 2010 to December 22, 2010:
|
|
•
|
|
Additional costs of sales sold of $1 million related to the fair value adjustment to inventory acquired;
|
|
|
•
|
|
Acquisition expense of less than $1 million;
|
|
|
•
|
|
Additional amortization expense of $1 million related to the fair value of identifiable intangible assets acquired;
|
|
|
•
|
|
An adjustment for the tax benefit of $1 million; and
|
|
|
•
|
|
Additional net sales attributable to FlexHead of $3 million.
|
- 51 -
On October 4, 2011, the Company acquired substantially all of the assets of Razor Wire
International, L.L.C. (“RWI”) for a purchase price of $2 million. Upon closing, the Company paid less than $2 million in cash and reserved the rest of the payment for a temporary holdback. The purchase price was subject to certain working
capital adjustments as set forth in the acquisition agreement. In the third quarter of fiscal year 2012, the temporary holdback of less than $1 million was settled. RWI manufactures razor wire ranging from 18 inches to 60 inches in diameter. The
assets purchased consist primarily of accounts receivable, inventory, manufacturing equipment, customer lists and intellectual property. Liabilities assumed consist primarily of accounts payable incurred in the normal course of business prior to the
acquisition date. The results of RWI are included within the Global Pipe, Tube & Conduit segment. The results of RWI are not material to the Company’s consolidated financial statements.
Fiscal Year 2011 Transactions
On December 22, 2010, Tyco sold a majority interest in Atkore Group to an affiliate of the private equity firm CD&R. The Transactions were completed at the end of business on December 22,
2010. In connection with the closing, Atkore International paid Tyco cash proceeds of $400 million for the repayment of indebtedness due to Tyco (see Note 3). In order to finance the Transactions, Atkore International issued senior secured
notes (the “Notes”) in the face amount of $410 million, due on January 1, 2018, with a coupon of 9.875% and obtained the Credit Facility of up to $250 million, of which $55 million was drawn as of December 22, 2010
(see Note 8).
As a result of the Transactions, an affiliate of CD&R acquired shares of a newly created class of
cumulative Preferred Stock of Atkore Group for total cash consideration of $306 million. As of the closing date of the Transactions, the Preferred Stock held by the affiliate of CD&R represented 51% of the outstanding voting interest in
Atkore Group. As of the same date, the ownership of Tyco represented the remaining 49% voting interest in Atkore Group.
The
Company further determined that CD&R and Tyco represent a collaborative group in accordance with Accounting Standards Codification 805-10,
Business Combinations
(“ASC 805-10”). As a result, in following the acquisition method of
accounting, the Company applied “push down” accounting treatment as required by the authoritative guidance. The Company concluded that CD&R and Tyco constitute a collaborative group under the applicable guidance due to the existence of
tag-along and drag-along rights, guaranteed board seats, stockholder consent rights and the restrictions on the transfer of equity securities.
Tag-along right
—If CD&R or Tyco proposes to transfer any equity securities of Atkore Group (other than shares of Preferred Stock) to any person, CD&R or Tyco will have a right to
participate in such transfer on the same terms and conditions, up to such participating stockholder’s pro rata share of the equity securities proposed to be transferred. The tag-along rights will terminate upon a public offering.
Drag-along right
—If CD&R proposes to transfer all of its outstanding shares of capital stock of Atkore Group to any
person and the amount of capital stock held by CD&R constitutes more than 50% of the total number of outstanding shares of capital stock of Atkore Group, then each other stockholder will be required to sell all of its equity securities in such
transaction, on the same terms and conditions, provided that the proceeds and other rights received in such drag-along transaction are shared by all stockholders and CD&R on a pro rata basis, based on the number of shares sold by each
stockholder in such transaction. The drag-along right will terminate upon a public offering.
Guaranteed board
seats
—Atkore Group’s board of directors is currently comprised of eight directors. CD&R currently has the right to designate four directors, including the chairman of the board, and Tyco currently has the right to designate three
directors. The Chief Executive Officer of Atkore Group is the eighth director.
Stockholder consent rights
—Atkore
Group and its subsidiaries may not take certain corporate actions without the prior written consent of any stockholder who owns in excess of 25% of the total number of outstanding shares of capital stock of Atkore Group.
Restrictions on the transfer of equity securities
—For so long as CD&R or Tyco own at least 25% of the outstanding capital
stock of Atkore Group, without the consent of CD&R or Tyco, (i) no stockholder may transfer any equity securities of Atkore Group (A) to any competitor of Atkore Group (other than in connection with a public offering) or (B) if
such transfer would constitute a prohibited transaction and (ii) neither CD&R nor Tyco may transfer any equity securities of Atkore Group if such transfer would (A) involve less than 5% of the total outstanding capital stock of Atkore
Group or (B) prior to the tenth anniversary of the closing of the Transactions (the “Milestone Date”), result in the shares held by CD&R or Tyco, as applicable, at the closing of the Transactions being held by more than four or,
after the Milestone Date, more than eight, stockholders that are not affiliates of each other.
Dividends
—The Preferred Stock entitles the holder to participate equally and ratably with the holders of Common Stock,
on an as-converted basis, in all cash dividends paid on the shares of such Common Stock. In addition, the Preferred
- 52 -
Stock is entitled to dividends at a rate of 12% per annum, compounding quarterly and payable in cash or in shares of Preferred Stock, at the option of Atkore Group. Upon the occurrence
of a Default (as defined in the Certificate of Designations of Atkore Group), the dividend rate will increase by 3% per annum for any prospective period during which the default is continuing. Preferred dividend payments will be eliminated for
any prospective period if the earnings before interest, taxes, depreciation, and amortization (“EBITDA”), or earnings before interest, taxes, depreciation and amortization, of Atkore Group and its subsidiaries for three 12-month periods
exceeds the following targets: (i) $250 million for the first and third of such 12-month periods; and (ii) $225 million for the second of such 12-month periods. Notwithstanding the foregoing, the dividend rate will be reinstated
if any shares of Preferred Stock are outstanding after the Milestone Date.
This acquisition is being accounted for as a
business combination using the acquisition method of accounting, whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values. Fair value measurements have been
applied based on assumptions that market participants would use in the pricing of the asset or liability.
The following table summarizes the fair values assigned to the net assets
acquired as of the December 22, 2010 acquisition date ($ in millions):
|
|
|
|
|
|
|
Fair value of consideration transferred:
|
|
|
|
|
|
Fair value of equity
|
|
$
|
600
|
|
|
Purchase price adjustment
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
612
|
|
|
|
|
|
|
|
|
Fair value of assets acquired and liabilities assumed:
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
14
|
|
|
Accounts receivable
|
|
|
222
|
|
|
Receivables due from Tyco International Ltd. and affiliates
|
|
|
26
|
|
|
Inventories
|
|
|
292
|
|
|
Property and equipment
|
|
|
331
|
|
|
Intangible assets
|
|
|
279
|
|
|
Deferred income tax assets—current and long-term
|
|
|
18
|
|
|
Other assets—current and long-term
|
|
|
35
|
|
|
Indebtedness—current and long-term, including amounts due to Tyco and affiliates of $400
|
|
|
(404
|
)
|
|
Accounts payable and amounts due to Tyco
|
|
|
(115
|
)
|
|
Deferred income tax liabilities—current and long-term
|
|
|
(109
|
)
|
|
Other liabilities—current and long-term
|
|
|
(113
|
)
|
|
|
|
|
|
|
|
Net assets acquired
|
|
|
476
|
|
|
|
|
|
|
|
|
Excess purchase price attributed to goodwill acquired
|
|
$
|
136
|
|
|
|
|
|
|
|
The acquisition resulted in the recognition of $136 million of goodwill, which is not deductible for income tax
purposes. Goodwill consists of the excess of the purchase price over the net of fair value of the acquired assets and assumed liabilities, and represents the estimated economic value attributable to future operations. In connection with applying the
provisions of purchase accounting, the Company increased inventory value by $11 million, which negatively impacted cost of sales over the period from December 23, 2010 to September 30, 2011.
During the fourth quarter of 2011, the Company discovered two errors; one in the accounting for the deferred tax liability associated
with the Company’s indefinite lived intangible assets, and the other related to indemnification of Predecessor Period uncertain tax positions. The Company determined that a deferred tax liability should have been recorded in the first quarter
of fiscal year 2011 related to the indefinite lived intangible assets, increasing the deferred tax liability and goodwill in the amount of $38 million. The Company also determined that a receivable to offset indemnified uncertain tax
positions should have been recorded in the first quarter of fiscal year 2011, increasing receivables and reducing goodwill in the amount of $25 million. The errors were corrected in the fourth quarter of fiscal year 2011 and did not impact net
income or debt covenant calculation. The Company has determined that corrections of these two errors do not require restatement of previously issued financial statements.
Goodwill at September 30, 2011, has been restated to reflect the changes for discontinued operations of $6 million, as described in Note 17, and the reorganization of two reportable segments, as
described in Note 1.
- 53 -
During the fiscal year ended September 28, 2012, the Company made a correction
associated with filing one of its Predecessor Period tax returns, reducing both deferred tax liability and goodwill by $7 million. In addition, the Company reclassified $1 million of goodwill to assets held for sale associated with a manufacturing
facility that was classified as held for sale in the third quarter.
The Company recorded $16 million of
transaction-related costs incurred in connection with the Transactions in the consolidated statement of operations for the period from December 23, 2010 to September 30, 2011. Additionally, in connection with the funding of the senior
secured Notes and Credit Facility (see Note 8) upon closing of the sale, the Company capitalized $38 million in debt issuance costs.
Pro Forma Impact of the Transactions
The following table presents unaudited pro forma consolidated results of operations for the fiscal year ended September 28, 2012 and September 30, 2011 as if the Transactions had occurred
as of the first day of the fiscal year 2011 period ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Net sales
|
|
$
|
1,687
|
|
|
$
|
1,650
|
|
|
Net loss
|
|
$
|
(8
|
)
|
|
$
|
(24
|
)
|
The unaudited pro forma consolidated results of operations were prepared using the acquisition method of
accounting and are based on the historical financial information of the Company. In addition, the unaudited pro forma information does not reflect any incremental costs to operate as a stand-alone company.
The unaudited pro forma information is not necessarily indicative of what the Company’s consolidated results of operations
actually would have been had the Transactions been completed on the first day of the fiscal year 2011 period. In addition, the unaudited pro forma information does not purport to project the future results of operations of the Company. The
unaudited pro forma information reflects primarily the following unaudited pro forma adjustments:
|
|
•
|
|
Additional amortization expense of $3 million related to the fair value of identifiable intangible assets acquired;
|
|
|
•
|
|
Additional depreciation expense of $2 million related to the fair value adjustment to property, plant and equipment acquired;
|
|
|
•
|
|
An incremental increase of interest expense of $1 million related to the financing of the Transactions including amortization of associated deferred
financing costs;
|
|
|
•
|
|
Additional expense for the annual management fee of $2 million per annum to be paid to CD&R and Tyco;
|
|
|
•
|
|
A reduction in pension expense of $1 million from the impacts of revaluing obligations under purchase accounting; and
|
|
|
•
|
|
All of the above adjustments were adjusted for the applicable tax benefit of $3 million.
|
3. Related Party Transactions
Trade Activity and Indemnification with Tyco
—The following table presents related party transactions with
Tyco and its affiliates ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Successor Company
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Accounts receivable
|
|
$
|
1
|
|
|
$
|
3
|
|
|
Receivables due from Tyco and its affiliates-current and noncurrent (see Note 9)
|
|
$
|
22
|
|
|
$
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Successor Company
|
|
|
|
|
Combined Predecessor Company
|
|
|
|
|
For the Year
Ended
September 28,
2012
|
|
|
For the Period
from
December 23,
2010 to
September 30,
2011
|
|
|
|
|
For the
Period from
September 25
2010 to
December 22,
2010
|
|
|
For the Year
Ended
September 24,
2010
|
|
|
Purchases
|
|
$
|
6
|
|
|
$
|
6
|
|
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
Net sales
|
|
|
16
|
|
|
|
15
|
|
|
|
|
|
6
|
|
|
|
24
|
|
|
Cost of sales
|
|
|
13
|
|
|
|
12
|
|
|
|
|
|
5
|
|
|
|
21
|
|
- 54 -
Other Related Party Trade Activity
—An affiliate of CD&R currently owns
equity positions in two of the Company’s customers. The following table presents information regarding related party transactions with these customers ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Successor
Company
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Accounts receivable
|
|
$
|
15
|
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Successor Company
|
|
|
|
|
Combined Predecessor Company
|
|
|
|
|
For the Year
Ended
September 28,
2012
|
|
|
For the Period
from
December 23,
2010 to
September 30,
2011
|
|
|
|
|
For the
Period from
September 25
2010 to
December 22,
2010
|
|
|
For the Year
Ended
September 24,
2010
|
|
|
Net sales
|
|
$
|
72
|
|
|
$
|
40
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cost of sales
|
|
|
57
|
|
|
|
31
|
|
|
|
|
|
—
|
|
|
|
—
|
|
Debt
—The Company repaid $400 million, $300 million, and $22 million owed to Tyco and its affiliates for the
period from December 23, 2010 to September 30, 2011, the Predecessor Period, and the year ended September 24, 2010, respectively.
Parent Company Investment
—During the Predecessor Period and the year ended September 24, 2010, this account included transactions with the Predecessor Company’s parent for items such
as tax payments, dividends and capital contributions.
Interest Expense, Net
—The Company recognized $11 million
and $51 million of interest expense associated with the debt due to Tyco and its affiliates during the Predecessor Period and the year ended September 24, 2010, respectively. The Company recognized less than $1 million and $2 million of
interest income associated with cash to be transferred from Tyco’s cash management system during the Predecessor Period and the year ended September 24, 2010, respectively. Subsequent to December 24, 2010, the Company no longer had
any debt owed to Tyco.
Insurable Liabilities
—Prior to December 23, 2010, the Company was insured for
workers’ compensation, general and auto liabilities by a captive insurance company that was wholly-owned by Tyco. The Company paid a premium to obtain insurance coverage during the Predecessor Period and the year ended September 24, 2010.
Premiums expensed by the Company were $1 million and $5 million for the Predecessor Period and the year ended September 24, 2010, respectively. The premium expenses are included in the selling, general and administrative expenses in the
combined statement of operations.
Allocated Expenses
—Prior to December 23, 2010, the Company was allocated
corporate overhead expenses from Tyco for corporate-related functions based on a pro-rata percentage of the Company’s net revenue to Tyco’s consolidated net revenue. Corporate overhead expenses related primarily to centralized corporate
functions, including treasury, tax, legal, internal audit, human resources and risk management functions. During the Predecessor Period and the year ended September 24, 2010, the Company was allocated $4 million and $20 million of general
corporate expenses incurred by Tyco, respectively, which are included within selling, general and administrative expenses in the combined statement of operations.
Transaction Costs and Debt Issuance Costs
—For the period from December 23, 2010 to September 30, 2011, in connection with the Transactions, the Company paid fees to CD&R of $6
million. Debt issuance costs capitalized within other current assets and other assets included $9 million paid to CD&R in connection with their direct effort to arrange financing for the Company.
Management Fees
—The Company is obligated to pay a $6 million aggregate annual management fee to CD&R and Tyco, subsequent
to the Transactions. Such fees are to be paid quarterly, in advance, except that the fee for the first calendar quarter of 2011 was paid in arrears. The Company paid $6 million during the fiscal year ended September 28, 2012. The Company paid
$5 million for the period from December 23, 2010 to September 30, 2011, and there was no management fee paid in the Predecessor Period or the year ended September 24, 2010. The management fees are included in selling, general, and
administrative expense. The management fee is payable to CD&R and Tyco based upon their pro-rata ownership percentage.
- 55 -
4. Inventories, Net
As of September 28, 2012 and September 30, 2011, inventories were comprised of ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Purchased materials and manufactured parts
|
|
$
|
82
|
|
|
$
|
98
|
|
|
Work in process
|
|
|
23
|
|
|
|
27
|
|
|
Finished goods
|
|
|
132
|
|
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories, net
|
|
$
|
237
|
|
|
$
|
258
|
|
|
|
|
|
|
|
|
|
|
|
Inventories are recorded at the lower of cost (primarily first-in, first-out) or market value.
As of September 28, 2012 and September 30, 2011, the inventory reserve was $9 million and $8 million, respectively.
5. Property, Plant and Equipment
As of September 28, 2012 and September 30, 2011, property, plant and equipment at cost and accumulated
depreciation were ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Land
|
|
$
|
18
|
|
|
$
|
19
|
|
|
Buildings and related improvements
|
|
|
120
|
|
|
|
110
|
|
|
Machinery and equipment
|
|
|
187
|
|
|
|
162
|
|
|
Leasehold improvements
|
|
|
3
|
|
|
|
3
|
|
|
Construction in progress
|
|
|
14
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
342
|
|
|
|
332
|
|
|
Accumulated depreciation
|
|
|
(59
|
)
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
$
|
283
|
|
|
$
|
308
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense for the year ended September 28, 2012, totaled $35 million. Depreciation expense for the
period from December 23, 2010 to September 30, 2011, and the Predecessor Period totaled $25 million and $6 million, respectively. Depreciation expense for the year ended September 24, 2010 totaled $34 million.
In the third quarter of fiscal year 2012, the Company recorded an asset impairment charge of $6 million related to an Enterprise Resource
Planning system (the “ERP system”) due to changing of the Company’s business plan. The ERP system was included in construction in progress in previous periods. The Company has decided not to implement the ERP system at this time, and
therefore, wrote off the value of the asset.
6. Goodwill and Intangible Assets
The Company’s intangible assets relate primarily to customer relationships, patents and indefinite-lived trade
names/trademarks, specifically within the Company’s North American businesses.
Customer Relationships
—The
Company’s key customers are primarily wholesalers and national distributors. The Company provides products and services to these customers who ultimately target a variety of end markets. The relationships with customers are driven by high
quality service and products that the Company sells. The overall terms of these relationships are based on purchase orders and are not contractually-based. The selection of the remaining useful lives for the customers is based on past customer
retention experience. The customer relationships are amortized over their useful lives, ranging from 6 to 14 years.
Trade Names/Trademarks
—The Company’s products are marketed under many well-recognized trade names/trademarks, including the Company’s primary brands,
Allied Tube &
Conduit
®
,
AFC Cable Systems
®
and
Unistrut
®
, as
well as certain other brands, such as
Power-Strut
®
,
Columbia MBF
®
,
Cope
®
,
Telespar
®
, Kaf-Tech
®
, Flo-Coat
®
, Gatorshield
®
, Kwik-Fit
®
, ColorSpec
®
, Acroba
®
, Razor Ribbon
®
,
,
FlexHead
®
,
and
SprinkFLEX
®
among others. Given the strength of the various brands, their long history and the Company’s intention to
continue to use the brands for the foreseeable future, an indefinite life was assigned to these intangibles.
Other
Intangible Assets
—Other intangible assets with determinable lives consist primarily of patents and non-compete agreements. These other intangibles are amortized over their estimated useful lives, ranging from 5 to 10 years.
The fair value estimates related to the customer relationships were based on the multi-period excess earnings method, the fair value
estimates related to trade names/trademarks and patents were based on the relief-from-royalty method
- 56 -
and the fair value estimates related to the non-compete agreements were based on the lost profit method. The Company relied upon projections for each of its North American businesses as a basis
for developing its valuations for the intangible assets. In accordance with Accounting Standards Codification Topic 350-20,
Intangibles—Goodwill and Other
, intangible assets that have finite lives are amortized over the period during
which the asset is expected to contribute directly or indirectly to future cash flows of the entity (useful lives). The amortization method should reflect the pattern in which the asset’s economic benefits are consumed by the entity. If the
pattern cannot be determined, the straight-line method is used. The Company has determined to use the straight-line method of amortization.
The following table provides the gross carrying value, accumulated amortization, and net carrying value for each major class of intangible assets ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28, 2012
|
|
|
September 30, 2011
|
|
|
|
|
Weighted
Average
Useful
Life
(Years)
|
|
|
Gross
Carrying
Value
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Value
|
|
|
Gross
Carrying
Value
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Value
|
|
|
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
|
13
|
|
|
$
|
188
|
|
|
$
|
(24
|
)
|
|
$
|
164
|
|
|
$
|
179
|
|
|
$
|
(10
|
)
|
|
$
|
169
|
|
|
Other
|
|
|
6
|
|
|
|
8
|
|
|
|
(1
|
)
|
|
|
7
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
196
|
|
|
|
(25
|
)
|
|
|
171
|
|
|
|
179
|
|
|
|
(10
|
)
|
|
|
169
|
|
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names
|
|
|
|
|
|
|
95
|
|
|
|
—
|
|
|
|
95
|
|
|
|
95
|
|
|
|
—
|
|
|
|
95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
291
|
|
|
$
|
(25
|
)
|
|
$
|
266
|
|
|
$
|
274
|
|
|
$
|
(10
|
)
|
|
$
|
264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense for the year ended September 28, 2012 totaled $15 million. Amortization expense for the
period from December 23, 2010 to September 30, 2011 totaled $10 million. There was no amortization expense in the Predecessor Period. Amortization expense for the year ended September 24, 2010 totaled less than $1 million. The Company
estimates that the aggregate amortization expenses will be $15 million in fiscal year 2013, $15 million in fiscal year 2014, $15 million in fiscal year 2015, $15 million in fiscal year 2016, $15 million in fiscal year 2017, $15 million in fiscal
year 2018 and $81 million thereafter. Actual amounts of amortization may differ from estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets, and other events.
Changes in the carrying amount of goodwill for the fiscal years ended September 28, 2012 and September 30, 2011, by operating
segment were as follows ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
Pipe,
Tube &
Conduit
|
|
|
Global
Cable &
Cable
Management
|
|
|
Total
|
|
|
December 22, 2010
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Transactions
|
|
|
85
|
|
|
|
45
|
|
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 23, 2010*
|
|
|
85
|
|
|
|
45
|
|
|
|
130
|
|
|
Acquisitions
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Impairment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2011*
|
|
$
|
85
|
|
|
$
|
45
|
|
|
$
|
130
|
|
|
Acquisitions
|
|
|
10
|
|
|
|
—
|
|
|
|
10
|
|
|
Adjustments
|
|
|
(8
|
)
|
|
|
—
|
|
|
|
(8
|
)
|
|
Impairment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28, 2012**
|
|
$
|
87
|
|
|
$
|
45
|
|
|
$
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Goodwill by operating segment at December 23, 2010, and September 30, 2011, has been restated to reflect the changes for discontinued operations and the
reorganization of two reportable segments as described in Note 1.
|
|
**
|
During the fiscal year ended September 28, 2012, the Company made a correction associated with filing one of its Predecessor Period tax returns, reducing both
deferred tax liability and goodwill by $7 million. In addition, the Company reclassified $1 million of goodwill to assets held for sale associated with a manufacturing facility that was classified as held for sale in the third quarter.
|
The Company had no goodwill impairments in the fiscal year ended September 28, 2012, and the period from
December 23, 2010 to September 30, 2011. As of September 28, 2012, the fair values of the reporting units exceed their
- 57 -
respective carrying amount by 10% or more, except at the Pipe, Tube & Conduit North America reporting unit. The fair value of the Pipe, Tube & Conduit North America reporting
unit exceeds its carrying value by 4%. The reporting unit’s goodwill balance at September 28, 2012 was $87 million. Adverse changes to the Company’s business environment, changes to the Company’s future cash flows and
changes to the discount rate and terminal growth rate could cause the Company to record impairment charges in future periods which could be material.
Since the modification of assumptions used in the valuation model can have a significant impact on the fair value, the Company performed a sensitivity analysis assuming a 10 basis point increase in the
discount rate and a 10 basis point decrease in the terminal growth rate. The Company believes these assumptions have the most sensitivity in the valuation model. The results of this sensitivity analysis are as follows ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
Decrease in fair value
|
|
10 basis point
increase in
discount rate
|
|
|
10 basis point
decrease in
terminal growth
rate
|
|
|
Pipe, Tube and Conduit North America
|
|
$
|
6
|
|
|
$
|
3
|
|
The valuation of the Pipe, Tube & Conduit North America reporting unit concluded the fair value exceeded its
carrying value by $24 million. The decrease in fair value for the sensitivity analysis would not have indicated that the Company failed step one of the goodwill impairment analysis of the Pipe, Tube & Conduit North America reporting unit.
The Company will continue to monitor the recoverability of its goodwill.
7. Accrued and Other Current Liabilities
As of September 28, 2012 and September 30, 2011, accrued and other current liabilities were comprised of ($
in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Accrued payroll and payroll related
|
|
$
|
20
|
|
|
$
|
20
|
|
|
Accrued interest
|
|
|
10
|
|
|
|
10
|
|
|
Accrued transportation costs
|
|
|
11
|
|
|
|
11
|
|
|
Accrued audit and legal fees
|
|
|
8
|
|
|
|
4
|
|
|
Other
|
|
|
30
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued and other current liabilities
|
|
$
|
79
|
|
|
$
|
79
|
|
|
|
|
|
|
|
|
|
|
|
8. Debt
Debt as of September 28, 2012 and September 30, 2011, was as follows ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Senior secured notes due January 1, 2018
|
|
$
|
410
|
|
|
$
|
410
|
|
|
Asset-based Credit Facility
|
|
|
—
|
|
|
|
46
|
|
|
Other
|
|
|
7
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
417
|
|
|
|
458
|
|
|
Current portion
|
|
|
(7
|
)
|
|
|
(47
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
410
|
|
|
$
|
411
|
|
|
|
|
|
|
|
|
|
|
|
On December 22, 2010, Atkore International issued Notes in the principal amount of $410 million, due on
January 1, 2018, with a coupon of 9.875%. The obligations under the Notes are senior to unsecured indebtedness of the Company. Interest on the Notes is payable on a semi-annual basis, commencing on July 1, 2011. Atkore International’s
obligations under the Notes are fully and unconditionally guaranteed on a stand-alone senior secured basis by the Company (the direct parent of Atkore International) and are fully and unconditionally guaranteed on a joint and several senior secured
basis by each of Atkore International’s domestic subsidiaries that is a borrower or guarantor under the Credit Facility. The Notes are redeemable at the Company’s option in whole or in part on or after January 1, 2014, with not less
than 30 or more than 60 days notice, for an amount to be determined pursuant to provisions set forth in the indenture governing the Notes. In addition, during any 12-month period prior to January 1, 2014, the Company may redeem up to $41
million of the Notes at a redemption price of 103%, plus accrued interest. In the event that Atkore International raises additional equity prior to January 1, 2014, then subject to the restrictions in the Notes, Atkore International may redeem
up to 35% of the Notes of
- 58 -
109.875% at par, plus accrued and unpaid interest up to the redemption date. The Company may also redeem the Notes prior to January 1, 2014, in whole or in part at par plus an applicable
premium, as defined in the indenture, and applicable and accrued interest. The Notes contain covenants typical to this type of financing, including limitations on indebtedness, restricted payments including dividends, liens, restrictions on
distributions from restricted subsidiaries, sales of assets, affiliate transactions, mergers and consolidations. The Notes also contain customary events of default typical to this type of financing, including without limitation, failure to pay
principal and/or interest when due, failure to observe covenants, certain events of bankruptcy, the rendering of certain judgments, or the loss of any guarantee.
On December 22, 2010, Atkore International also obtained a Credit Facility of up to $250 million, subject to borrowing base availability. As of September 28, 2012 and September 30, 2011, $0
million and $46 million were drawn, respectively. The borrowing base is equal to the sum of 85% of eligible accounts receivable plus 80% of eligible inventory of each borrower and guarantor. The Credit Facility is guaranteed by the Company and the
U.S. operating companies owned by Atkore International. The Company’s availability under the Credit Facility was $233 million and $200 million as of September 28, 2012 and September 30, 2011, respectively. The interest rate on the
Credit Facility is LIBOR plus an applicable margin ranging from 2.25% to 2.75%, or an alternate base rate for U.S. Dollar denominated borrowings plus an applicable margin ranging from 1.25% to 1.75%. The Credit Facility matures on
December 22, 2015. The Credit Facility contains customary representations and warranties and customary affirmative and negative covenants. Affirmative covenants include, but are not limited to, the timely delivery of quarterly and annual
financial statements, certifications to be made by the Company, payment of obligations, maintenance of corporate existence and insurance, notices, compliance with environmental laws, and the grant of liens on after acquired property. The negative
covenants include, but are not limited to, the following: limitations on indebtedness, dividends and distributions, investments, prepayments or redemptions of subordinated indebtedness, amendments of subordinated indebtedness, transactions with
affiliates, asset sales, mergers, consolidations and sales of all or substantially all assets, liens, negative pledge clauses, changes in fiscal periods, changes in line of business and changes in charter documents. Additionally, if the borrowing
availability under the Credit Facility falls below certain levels, the Company would subsequently be required to maintain a minimum fixed charge coverage ratio.
The Company may from time to time repurchase or otherwise retire or extend the Company’s debt and/or take other steps to reduce the Company’s debt or otherwise improve the Company’s
financial position. These actions may include open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and/or opportunistic refinancing of debt. The amount of debt that may be repurchased or otherwise retired or
refinanced, if any, will depend on market conditions, trading levels of the Company’s debt, the Company’s cash position, compliance with debt covenants and other considerations. Affiliates of the Company may also purchase the
Company’s debt from time to time, through open market purchases or other transactions. In such cases, the Company’s debt may not be retired, in which case the Company would continue to pay interest in accordance with the terms of the debt,
and the Company would continue to reflect the debt as outstanding in its condensed consolidated statements of financial position.
As of September 28, 2012, management believes that Atkore International was in compliance with all covenants of the Credit Facility and the Notes. Atkore International was not subject to the minimum
fixed charge coverage ratio during any period subsequent to the establishment of the Credit Facility.
As of
September 28, 2012, the fair value of the floating rate borrowings under the Credit Facility approximated its carrying amount based on the short-term nature of such debt. The fair value of the Company’s Notes was $400 million as of
September 28, 2012. In determining the fair value of its long-term debt, the Company used the trading value amongst financial institutions for the Notes, which were classified within Level 1 of the fair value hierarchy.
9. Income Taxes
Significant components of loss from continuing operations and income tax expense for the fiscal year ended
September 28, 2012, the period from December 23, 2010 to September 30, 2011, the Predecessor Period, and for the fiscal year ended September 24, 2010 consisted of the following ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor Company
|
|
|
|
|
Predecessor Company
|
|
|
|
|
For the Year
Ended
September 28,
2012
|
|
|
For the
Period from
December 23,
2010 to
September 30,
2011
|
|
|
|
|
For the
Period from
September 25,
2010 to
December 22,
2010
|
|
|
For the Year
Ended
September 24,
2010
|
|
|
Components of (loss) income from continuing operations before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
(14
|
)
|
|
$
|
(17
|
)
|
|
|
|
$
|
2
|
|
|
$
|
6
|
|
|
Non-U.S.
|
|
|
2
|
|
|
|
3
|
|
|
|
|
|
(2
|
)
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before income taxes
|
|
$
|
(12
|
)
|
|
$
|
(14
|
)
|
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
Income tax expense (benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
State
|
|
|
1
|
|
|
|
2
|
|
|
|
|
|
1
|
|
|
|
3
|
|
|
Non-U.S.
|
|
|
2
|
|
|
|
1
|
|
|
|
|
|
1
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax expense
|
|
$
|
4
|
|
|
$
|
3
|
|
|
|
|
$
|
3
|
|
|
$
|
9
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
State
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Non-U.S.
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
|
|
(2
|
)
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax (benefit) expense
|
|
|
(14
|
)
|
|
|
(1
|
)
|
|
|
|
|
(2
|
)
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense
|
|
$
|
(10
|
)
|
|
$
|
2
|
|
|
|
|
$
|
1
|
|
|
$
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 59 -
The mix of foreign earnings and domestic losses, along with rate reconciling items as
outlined below, impacts the effective tax rate for the periods. Differences between the statutory federal income tax rate and effective income tax rate are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor Company
|
|
|
|
|
Predecessor Company
|
|
|
|
|
For the Year
ended
September 28,
2012
|
|
|
For the
Period from
December 23,
2010 to
September 30,
2011
|
|
|
|
|
For the
Period from
September 25,
2010 to
December 22,
2010
|
|
|
For the Year
ended
September 24,
2010
|
|
|
Statutory federal tax
|
|
|
35
|
%
|
|
|
35
|
%
|
|
|
|
|
35
|
%
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
Adjustments to reconcile to the effective income tax rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State income taxes
|
|
|
1
|
%
|
|
|
—
|
|
|
|
|
|
(65
|
%)
|
|
|
—
|
|
|
Nondeductible transaction costs
|
|
|
—
|
|
|
|
(23
|
%)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Nondeductible expenses
|
|
|
(7
|
%)
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
5
|
%
|
|
Valuation allowance
|
|
|
5
|
%
|
|
|
(5
|
%)
|
|
|
|
|
(172
|
%)
|
|
|
24
|
%
|
|
U.S. tax effects of unremitted foreign earnings
|
|
|
10
|
%
|
|
|
(25
|
%)
|
|
|
|
|
—
|
|
|
|
32
|
%
|
|
Changes in tax rate
|
|
|
(8
|
%)
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Finalization of Federal audits
|
|
|
44
|
%
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Correction of prior period tax accounts
|
|
|
1
|
%
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Other
|
|
|
4
|
%
|
|
|
—
|
|
|
|
|
|
(31
|
%)*
|
|
|
(5
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax rate
|
|
|
85
|
%
|
|
|
(18
|
%)
|
|
|
|
|
(233
|
%)
|
|
|
91
|
%
|
|
*
|
The “Other” amount related to the Predecessor Period is $0.1 million and primarily relates to other nondeductible expense.
|
The Company’s effective tax rate for the fiscal year ended September 28, 2012 differs from the statutory rate
due to additional federal net operating losses recognized from the Predecessor Period audit and the tax benefit from income of certain foreign subsidiaries deemed indefinitely reinvested. For the period from December 23, 2010 to
September 30, 2011, the effective tax rate differs from the statutory rate primarily due to non deductible costs associated with the Transactions and additional tax expense on earning of foreign subsidiaries that were not indefinitely
reinvested.
For the Predecessor Period and the fiscal year ended September 24, 2010, the effective tax rate varied from
the statutory rate primarily due to losses in jurisdictions for which no benefit was recognized due to valuation allowances recorded against deferred tax assets. In addition, the effective tax rate for the fiscal year ended September 24, 2010
was also impacted by additional tax expense of income of foreign subsidiaries that was not indefinitely reinvested and other non-deductible costs.
- 60 -
Deferred income taxes result from temporary differences between the amount of assets and
liabilities recognized for financial reporting and tax purposes. The components of the net deferred income tax asset are as follows ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28, 2012
|
|
|
September 30, 2011
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
Accrued liabilities and reserves
|
|
$
|
19
|
|
|
$
|
18
|
|
|
Tax loss and credit carryforwards
|
|
|
25
|
|
|
|
24
|
|
|
Postretirement benefits
|
|
|
16
|
|
|
|
14
|
|
|
Property, plant and equipment
|
|
|
—
|
|
|
|
3
|
|
|
Inventory
|
|
|
9
|
|
|
|
4
|
|
|
Other
|
|
|
3
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
72
|
|
|
$
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
$
|
(29
|
)
|
|
$
|
(42
|
)
|
|
Intangible assets
|
|
|
(96
|
)
|
|
|
(101
|
)
|
|
Other
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(125
|
)
|
|
|
(144
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax liability before valuation allowance
|
|
$
|
(53
|
)
|
|
$
|
(77
|
)
|
|
Valuation allowance
|
|
|
(5
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax liability
|
|
$
|
(58
|
)
|
|
$
|
(83
|
)
|
|
|
|
|
|
|
|
|
|
|
As of September 28, 2012, the Company has approximately $45 million of federal and $103 million of state net
operating loss carryforwards which will expire beginning in 2012 through 2031. As a result of the Transaction, the federal net operating loss carryforwards are subject to Internal Revenue Code section 382, which provides an annual limitation on the
amount of loss that can be used in future years. The Company does not expect the limitation to impact the ability to utilize the losses prior to their expiration. In certain non-U.S. jurisdictions the Company has net operating loss carryforwards of
$21 million which have an expiration period ranging from five years to unlimited.
Valuation allowances have been established
on net operating losses and other deferred tax assets in the United Kingdom, China, and other foreign and U.S. state jurisdictions as a result of the corporation’s determination that there is a less than 50% likelihood that these assets will be
realized. As of September 28, 2012, the Company no longer records a valuation allowance against deferred tax assets in Australia as a result of significant positive evidence in the form of expected future taxable income. Furthermore, taxable
income in fiscal year 2012 will allow for the utilization of the entire net operating loss carryforward. As a result, the valuation allowance in Australia was released during the fiscal year ended September 28, 2012.
As of September 28, 2012, the Company had unrecognized tax benefits of $10 million which, if recognized, would affect the
effective tax rate. The remaining balances would not impact the effective tax rate as a result of the indemnification agreement between the Company and Tyco. For uncertainties arising in the post-Transaction period, the Company recognizes interest
and penalties related to unrecognized tax benefits in income tax expense. An immaterial amount of interest and no penalties were accrued for the period from December 23, 2010 to September 30, 2011. The Company had accrued interest and
penalties related to unrecognized tax benefits of less than $1 million for the Predecessor Period. As of September 28, 2012, the Company accrued interest and penalties related to pre-Transaction periods of $6 million in the consolidated balance
sheet.
A reconciliation of the beginning and ending amount of unrecognized tax benefit, excluding interest and penalties, is
as follows ($ in millions):
|
|
|
|
|
|
|
|
|
Successor Company
|
|
|
|
|
For the Period from
December 23, 2010
to September 28,
2012
|
|
|
Balance as of December 22, 2010
|
|
$
|
18
|
|
|
Additions based on tax positions related to prior years
|
|
|
1
|
|
|
Settlements
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
Balance as of September 30, 2011
|
|
$
|
12
|
|
|
|
|
|
|
|
|
Additions based on tax positions related to prior years
|
|
|
—
|
|
|
Settlements
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
Balance as of September 28, 2012
|
|
$
|
10
|
|
|
|
|
|
|
|
- 61 -
|
|
|
|
|
|
|
|
|
Predecessor
Company
|
|
|
|
|
For the
Period from
September 26,
2010 to
December 22,
2010
|
|
|
Balance as of September 26, 2009
|
|
$
|
20
|
|
|
Additions based on tax positions related to prior years
|
|
|
1
|
|
|
Additions based on tax positions related to the current year
|
|
|
1
|
|
|
Reductions based on tax positions related to prior years
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
Balance as of September 24, 2010
|
|
$
|
19
|
|
|
Additions based on tax positions related to prior years
|
|
|
—
|
|
|
Settlement
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
Balance as of December 22, 2010
|
|
$
|
18
|
|
|
|
|
|
|
|
During fiscal year 2012, the Predecessor Company settled audits with various taxing jurisdictions resulting in a
decrease of $2 million in the balance of unrecognized tax benefits. Tyco administers any audits with various taxing jurisdictions for all periods prior to December 22, 2010. These settlements relate to historical pre-transaction unrecognized
tax benefits and are covered by the Investment Agreement between the Company and Tyco. Accordingly, the decrease in unrecognized tax benefits did not result in a benefit recorded to tax expense.
During fiscal year 2012, the Company made a correction associated with filing one of its Predecessor Period tax returns, reducing both
deferred tax liability and goodwill by $7 million.
Many of the Company’s uncertain tax positions relate to tax years
that remain subject to audit by the taxing authorities. The following tax years remain subject to examination by the major tax jurisdictions as follows:
|
|
|
|
|
Jurisdiction
|
|
Years Open
To Audit
|
|
Australia
|
|
2005 – 2011
|
|
Brazil
|
|
2005 – 2011
|
|
Canada
|
|
2001 – 2011
|
|
United Kingdom
|
|
2010 – 2011
|
|
U.S
|
|
1997 – 2011
|
The Company’s income tax returns are examined periodically by various taxing authorities. The Company’s
federal tax returns for periods 1997 through 2004 are currently under examination by the IRS and the Company is currently under examination in various state jurisdictions. Based on the current status of its income tax audits, the Company believes
that it is reasonably possible for the amount of unrecognized tax benefits to decrease by $3 million in the next twelve months for a variety of unrecognized tax benefits as a result of the completion of tax audits and the expiration of the statute
of limitations. Should any unrecognized tax benefits be resolved, the Company will seek reimbursement from Tyco under the terms of the Investment Agreement relative to the periods prior to the Transactions.
Other Income Tax Matters
For the fiscal years ended September 28, 2012 and September 30, 2011, the Company recorded a deferred tax liability of $2
million and $3 million, respectively, for U.S. and non-U.S. income taxes on the undistributed income of subsidiaries or for unrecognized deferred tax liabilities for temporary differences related to investments in subsidiaries which the Company does
not consider to be indefinitely reinvested. No additional provision has been made for U.S. or non-U.S. income taxes on the undistributed income of subsidiaries or for unrecognized deferred tax liabilities for temporary differences related to basis
differences in investments in subsidiaries, as such income are expected to be permanently reinvested, the
- 62 -
investments are essentially permanent in duration, or we have concluded that no additional tax liability will arise as a result of the distribution of such income. As of September 28, 2012,
certain subsidiaries had approximately $14 million of undistributed income that we intend to permanently reinvest. A liability could arise if our intentions to permanently reinvest such income were to change and amounts are distributed by such
subsidiaries or if such subsidiaries are ultimately disposed. It is not practicable to estimate the additional income taxes related to permanently reinvested income or the basis differences related to investments in subsidiaries.
The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations
in a multitude of jurisdictions across its global operations. The Company records tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on the Company’s estimate of whether, and the extent to which,
additional taxes will be due. These tax liabilities are reflected net of related tax loss carryforwards. The Company adjusts these reserves in light of changing facts and circumstances. However, due to the complexity of some of these uncertainties,
the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. For uncertain tax liabilities arising in the periods prior to the Transactions that are resolved in a
future period, the Company plans to seek repayment from Tyco under the terms of the Investment Agreement. Accordingly, the Company has reflected those liabilities with an offsetting receivable due from Tyco of $16 million on the consolidated balance
sheet. If the Company’s estimate of uncertain tax liabilities arising in the periods following the Transactions proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately
proves to be less than the recorded amounts, the reversal of the liabilities may result in income tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary.
Under the terms of the Investment Agreement, Tyco has agreed to indemnify and hold harmless the Company and its subsidiaries and their
respective affiliates from and against any taxes of the Company with respect to any tax period ending on or before the closing of the Transactions, as well as all tax liabilities relating to events or transactions occurring on or prior to the
closing date of the Transactions. In addition, the Company has agreed to indemnify and hold harmless Tyco and its affiliates from and against any liability for any taxes of the Company with respect to any post-Transactions tax period.
10. Postretirement Benefits
The Company sponsors a number of defined pension plans. The Company measures its pension plans as of its fiscal
year-end. In connection with the Transactions, the Company obtained updated pension valuations as of the Transaction date. The application of purchase accounting resulted in a reduction to the Company’s pension liabilities of $10 million.
The Company has a number of noncontributory and contributory defined benefit retirement plans covering certain U.S. and
non-U.S. employees, designed in accordance with conditions and practices in the countries concerned. Net periodic pension benefit cost is based on periodic actuarial valuations that use the projected unit credit method of calculation and is charged
to the statements of operations on a systematic basis over the expected average remaining service lives of current participants. Contribution amounts are determined based on local regulations and with the assistance of professionally qualified
actuaries in the countries concerned. The benefits under the defined benefit plans are based on various factors, such as years of service and compensation. The defined benefit pension plans are presented on a combined basis as the non-U.S. plans are
not material to the total of all plans to warrant separate disclosure.
The net periodic benefit cost for the periods
presented was as follows ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor Company
|
|
|
|
|
For the Year
Ended
September 28,
2012
|
|
|
For the
Period from
December 23,
2010 to
September 30,
2011
|
|
|
Service cost
|
|
$
|
3
|
|
|
$
|
2
|
|
|
Interest cost
|
|
|
4
|
|
|
|
4
|
|
|
Expected return on plan assets
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
Amortization of actuarial loss
|
|
|
1
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
3
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions used to determine net periodic pension cost during the period:
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
4.8
|
%
|
|
|
5.5
|
%
|
|
Expected return on plan assets
|
|
|
8.0
|
%
|
|
|
8.0
|
%
|
|
Rate of compensation increase
|
|
|
0
|
%
|
|
|
0
|
%
|
- 63 -
The information presented for the Predecessor Period and the year ended September 24,
2010 is representative of Tyco’s pension plan under the Predecessor Company. The information may not be indicative of the Company’s current defined pension plans. In connection with the Transactions, the Company obtained updated pension
valuations as of the Transaction Date.
The net periodic benefit cost was $1 million for the Predecessor Period.
|
|
|
|
|
|
|
|
|
Predecessor Company
|
|
|
|
|
For the Year Ended
September 24, 2010
|
|
|
Service cost
|
|
$
|
2
|
|
|
Interest cost
|
|
|
4
|
|
|
Expected return on plan assets
|
|
|
(4
|
)
|
|
Amortization of prior service cost
|
|
|
1
|
|
|
Amortization of actuarial loss
|
|
|
2
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions used to determine net periodic pension cost during the period:
|
|
|
|
|
|
Discount rate
|
|
|
5.5
|
%
|
|
Expected return on plan assets
|
|
|
8.0
|
%
|
|
Rate of compensation increase
|
|
|
0
|
%
|
The estimated net actuarial loss for pension benefit plans that will be amortized from accumulated other comprehensive
income into net periodic benefit cost over the next fiscal year is expected to be $2 million.
The change in benefit
obligations, plan assets and the amounts recognized on the consolidated balance sheet was as follows ($ in millions):
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
Change in benefit obligations:
|
|
|
|
|
|
Benefit obligations as of December 23, 2010
|
|
$
|
86
|
|
|
Service cost
|
|
|
2
|
|
|
Interest cost
|
|
|
4
|
|
|
Actuarial loss
|
|
|
10
|
|
|
Benefits and administrative expenses paid
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
Benefit obligations as of September 30, 2011
|
|
$
|
100
|
|
|
Service cost
|
|
|
3
|
|
|
Interest cost
|
|
|
4
|
|
|
Actuarial loss
|
|
|
16
|
|
|
Benefits and administrative expenses paid
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
Benefit obligations as of September 28, 2012
|
|
$
|
120
|
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
Fair value of plan assets as of December 23, 2010
|
|
$
|
68
|
|
|
Actual return on plan assets
|
|
|
(3
|
)
|
|
Employer contributions
|
|
|
2
|
|
|
Benefits and administrative expenses paid
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
Fair value of plan assets as of September 30, 2011
|
|
$
|
65
|
|
|
Actual return on plan assets
|
|
|
10
|
|
|
Employer contributions
|
|
|
8
|
|
|
Benefits and administrative expenses paid
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
Fair value of plan assets as of September 28, 2012
|
|
$
|
80
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(40
|
)
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(40
|
)
|
|
|
|
|
|
|
- 64 -
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Amounts recognized in the consolidated balance sheet consist of:
|
|
|
|
|
|
|
|
|
|
Pension liabilities
|
|
$
|
(40
|
)
|
|
$
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(40
|
)
|
|
$
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive loss (before income taxes) consist of:
|
|
|
|
|
|
|
|
|
|
Net actuarial loss
|
|
$
|
(27
|
)
|
|
$
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total loss recognized
|
|
$
|
(27
|
)
|
|
$
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions used to determine pension benefit obligations at year end:
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
3.7
|
%
|
|
|
4.8
|
%
|
|
Rate of compensation increase
|
|
|
Not applicable
|
|
|
|
Not applicable
|
|
The accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit
obligations in excess of plan assets were $120 million and $80 million, respectively, as of September 28, 2012.
In determining the expected return on plan assets, the Company considers the relative weighting of plan assets by class, historical
performance of asset classes over long-term periods, asset class performance expectations as well as current and future economic conditions.
The Company’s investment strategy for its pension plans is to manage the plans on a going-concern basis. Current investment policy is to maximize the return on assets, subject to a prudent level of
portfolio risk, for the purpose of enhancing the security of benefits for participants. For the pension plans, this policy targets a 60% allocation to equity securities and a 40% allocation to debt securities.
Pension plans have the following weighted-average asset allocations:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Asset Category:
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
|
59
|
%
|
|
|
52
|
%
|
|
Debt securities
|
|
|
40
|
%
|
|
|
43
|
%
|
|
Cash and cash equivalents
|
|
|
1
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
The Company evaluates its defined benefit plans’ asset portfolios for the existence of significant concentrations
of risk. Types of investment concentration risks that are evaluated include, but are not limited to, concentrations in a single entity, industry, foreign country and individual fund manager. As of September 28, 2012, there were no significant
concentrations of risk in the Company’s defined benefit plan assets.
The Company’s plan assets are accounted for at
fair value and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires
judgment, and may affect the valuation of fair value of assets and their placement within the fair value hierarchy levels. The Company’s asset allocations by level within the fair value hierarchy for the year ended September 28, 2012 and
September 30, 2011, are presented in the table below for the Company’s defined benefit plans ($ in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28, 2012
|
|
|
September 30, 2011
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. equity securities
|
|
$
|
7
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
6
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
Non-U.S. equity securities
|
|
|
—
|
|
|
|
13
|
|
|
|
—
|
|
|
|
13
|
|
|
|
—
|
|
|
|
9
|
|
|
|
—
|
|
|
|
9
|
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government and government agency securities
|
|
|
—
|
|
|
|
13
|
|
|
|
—
|
|
|
|
13
|
|
|
|
—
|
|
|
|
12
|
|
|
|
—
|
|
|
|
12
|
|
|
Corporate debt securities
|
|
|
—
|
|
|
|
9
|
|
|
|
—
|
|
|
|
9
|
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
6
|
|
|
Mortgage and other asset-backed securities
|
|
|
—
|
|
|
|
10
|
|
|
|
—
|
|
|
|
10
|
|
|
|
—
|
|
|
|
9
|
|
|
|
—
|
|
|
|
9
|
|
|
Cash and cash equivalents
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8
|
|
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
80
|
|
|
$
|
10
|
|
|
$
|
55
|
|
|
$
|
—
|
|
|
$
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 65 -
Equity securities consist primarily of publicly traded U.S. and non-U.S. equities. Publicly
traded securities are valued at the last trade or closing price reported in the active market in which the individual securities are traded. Certain equity securities are held within commingled funds, which are valued at the unitized net asset value
(“NAV”) or percentage of the NAV as determined by the custodian of the fund. These values are based on the fair value of the underlying net assets owned by the fund.
Fixed income securities consist primarily of government and agency securities, corporate debt securities, and mortgage and other asset-backed securities. When available, fixed income securities are valued
at the closing price reported in the active market in which the individual security is traded. Government and agency securities and corporate debt securities are valued using the most recent bid prices or occasionally the mean of the latest bid and
ask prices when markets are less liquid. Asset-backed securities including mortgage backed securities are valued using broker/dealer quotes when available. When quotes are not available, fair value is determined by utilizing a discounted cash flow
approach, which incorporates other observable inputs such as cash flows, underlying security structure and market information including interest rates and bid evaluations of comparable securities. As of September 28, 2012, the Company does not
have any Level 3 pension assets. Certain fixed income securities are held within commingled funds, which are valued utilizing NAV as determined by the custodian of the fund. These values are based on the fair value of the underlying net assets owned
by the fund.
Cash and cash equivalents consist primarily of short-term commercial paper, and other cash or cash-like
instruments including settlement proceeds due from brokers, stated at cost, which approximates fair value.
Transfers between
levels of the fair value hierarchy (the “hierarchy”) are recognized on the actual date of the event or circumstance giving rise to the transfer, which generally coincides with the Company’s valuation process. In the third quarter of
fiscal year 2011, $15 million of pension assets, classified as Level 1 as of September 24, 2010, were liquidated from the Tyco master trust and reinvested in equity funds and fixed income funds, which were classified as Level 2 assets as of
September 30, 2011.
The strategy of the Company’s investment managers with regard to the investments valued using
NAV or its equivalent is to either match or exceed relevant benchmarks associated with the respective asset category. The underlying investment funds are available to be redeemed on a daily basis. None of the investments valued using NAV or its
equivalent contain any redemption restrictions or unfunded commitments.
The Company’s funding policy is to make
contributions in accordance with the laws and customs of the various countries in which it operates as well as to make discretionary voluntary contributions from time-to-time. The Company contributed $8 million to its pension plans for the
fiscal year ended September 28, 2012, which represented the Company’s minimum required contributions to its pension plans for fiscal year 2012. The Company contributed $2 million to its pension plans for the period from
December 23, 2010 to September 30, 2011, which represented the Company’s minimum required contributions to its pension plans for fiscal year 2011. No contribution was made during the Predecessor Period. The Company contributed less
than $1 million to its pension plans for the fiscal year ended September 24, 2010.
The Company anticipates that it will
contribute at least the minimum required contribution of $6 million to its pension plans in fiscal year 2013.
- 66 -
Benefit payments, which reflect future expected service as appropriate, are
expected to be paid in each fiscal year as follows ($ in millions):
|
|
|
|
|
|
|
2013
|
|
$
|
4
|
|
|
2014
|
|
|
5
|
|
|
2015
|
|
|
5
|
|
|
2016
|
|
|
5
|
|
|
2017
|
|
|
5
|
|
|
2018-2022
|
|
|
30
|
|
Defined Contribution Retirement Plans
—The Company also sponsors several defined contribution retirement
plans—the 401(k) matching programs. Expense for the defined contribution plans is computed as a percentage of participants’ compensation and was $3 million for the fiscal year ended September 28, 2012. Expense for the defined
contribution plans was $3 million and $1 million for the period from December 23, 2010 to September 30, 2011, and the Predecessor Period, respectively. Expense for the defined contribution plans was $4 million for the fiscal
year ended September 24, 2010. Additionally, the Company maintains a Supplemental Executive Retirement Plan (“SERP”) that preceded the acquisition of AFC Cable Systems by Tyco. This plan is fully funded and inactive.
11. Stock Incentive Plan
Successor Company
On May 16, 2011, the Board of Directors of Atkore Group adopted the Atkore International Group Inc. Stock Incentive Plan (the “Stock Incentive Plan”). A maximum of 6 million shares of
common stock of Atkore Group (“Shares”) is reserved for issuance under the Stock Incentive Plan. The Stock Incentive Plan provides for stock purchases and grants of other equity awards, including non-qualified stock options, restricted
stock, and restricted stock units, to officers and key employees.
Stock options vest ratably over five years. The cost of
stock options, based on the fair market value of the Shares on the date of grant, is being charged to selling, general and administrative expenses over the respective vesting periods. All options and rights must be exercised within ten years from
the date of grant.
There were 1,696,808 and 1,039,350 stock options to purchase Shares issued under the Stock Incentive Plan
as of September 28, 2012 and September 30, 2011, respectively. The total compensation expense related to all share-based compensation plans was $1 million for the fiscal year ended September 28, 2012. The total compensation expense
related to all share-based compensation plans for the period from December 23, 2010 to September 30, 2011 and the Predecessor Period was less than $1 million. The compensation expense was included in selling, general, and administrative
expenses.
The fair value of each of Atkore Group’s options granted for the periods presented was estimated on the date
of grant using the Black-Scholes option pricing model with the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year
Ended
September 28,
2012
|
|
|
For the Year
Ended
September 30,
2011
|
|
|
Expected dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Expected volatility
|
|
|
60
|
%
|
|
|
55
|
%
|
|
Risk free interest rate
|
|
|
1.2
|
%
|
|
|
2.2
|
%
|
|
Weighted average expected option life
|
|
|
5.9 years
|
|
|
|
6.3 years
|
|
The weighted-average grant-date fair value of options granted during the year ended September 28, 2012 and the
period from December 23, 2010 to September 30, 2011, was $3.09 and $2.87, respectively. No options were exercised during the fiscal year ended September 28, 2012, the period from December 23, 2010 to September 30, 2011, the
Predecessor Period or the fiscal year ended September 24, 2010.
The expected life of options represents the
weighted-average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and expected exercise patterns. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the
time of the grant for periods corresponding with the expected life of the options. Expected volatility is based on historical volatilities of comparable companies. Dividends are not paid on common stock.
- 67 -
Stock option activity for the period
December 23, 2010 to September 28, 2012, was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted-Average
Exercise Price
|
|
|
Weighted-
Average
Remaining
Contractual Term
(in years)
|
|
|
Aggregate
Intrinsic
Value ($ in
millions)
|
|
|
Outstanding as of December 23, 2010
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
|
1,049,600
|
|
|
|
10
|
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Forfeited
|
|
|
(10,250
|
)
|
|
|
10
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as of September 30, 2011
|
|
|
1,039,350
|
|
|
$
|
10
|
|
|
|
9.65
|
|
|
$
|
—
|
|
|
Granted
|
|
|
1,009,548
|
|
|
|
10
|
|
|
|
9.33
|
|
|
|
—
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Forfeited
|
|
|
(352,090
|
)
|
|
|
10
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as of September 28, 2012
|
|
|
1,696,808
|
|
|
$
|
10
|
|
|
|
9.00
|
|
|
$
|
—
|
|
|
Vested and unvested expected to vest as of September 28, 2012
|
|
|
1,527,127
|
|
|
|
10
|
|
|
|
9.00
|
|
|
|
—
|
|
|
Vested as of September 28, 2012
|
|
|
184,170
|
|
|
$
|
10
|
|
|
|
8.71
|
|
|
$
|
—
|
|
As of September 28, 2012, there was $4 million of total unrecognized compensation cost related to non-vested
options granted. The cost is expected to be recognized over a weighted-average period of 5 years.
As part of the Stock
Incentive Plan, certain key employees committed to purchase 64,050 Shares over a period of years subsequent to fiscal year 2011. The purchases of these Shares will result in the issuance of an additional 174,150 of stock options. During the fiscal
year ended September 28, 2012, a total of 17,302 Shares were purchased for total gross proceeds of less than $1 million. The total Shares to be purchased as of September 28, 2012, were 46,748 with an additional 126,663 stock options
remaining.
Accounting Standards Codification Topic 718-740-25-10, Compensation—Stock Compensation provides that the
excess tax benefit and credit to additional paid in capital related to windfall should not be recorded until the tax deduction reduces income taxes payable, on the basis that cash tax savings have not occurred. As a result, the Company did not
recognize $1.3 million of windfall tax benefit for the fiscal year ended September 28, 2012 as no tax savings were recognized due to the Company’s existing tax net operating loss carryover.
On April 23, 2012, the Company entered into a definitive separation agreement and general release with Karl Schmidt, the
Company’s former Vice President and Chief Financial Officer, with an effective date of April 15, 2012. As a result, Atkore Group repurchased 35,050 Shares held by Mr. Schmidt for $350,500. In addition, in accordance with the terms of
the Stock Incentive Plan, Mr. Schmidt forfeited 19,200 vested options as of July 14, 2012, and forfeited his unvested options as of April 15, 2012.
On April 27, 2012, the Company entered into a definitive separation agreement and general release with James Pinto, Global Vice President of Operations & Supply Chain, with an effective date
of May 4, 2012. As a result of the separation and pursuant to a Stock Repurchase and Option Cancellation Agreement between Atkore International Group Inc. (“Atkore Group”) and Mr. Pinto, dated June 4, 2012, Atkore Group
repurchased 25,000 Shares held by Mr. Pinto for $250,000. In addition, all of Mr. Pinto’s vested and unvested options were terminated as of May 4, 2012.
Predecessor Company
Prior to the Transactions, all equity awards
(restricted share awards and share options) under the Predecessor Company were granted under the Tyco International Ltd. 2004 Stock and Incentive Plan (the “2004 Plan”) or other Tyco equity incentive plans. The 2004 Plan is
administered by the Compensation and Human Resources Committee of the Board of Directors of Tyco, which consists exclusively of independent directors of Tyco and provides for the award of stock options, stock appreciation rights, annual performance
bonuses, long-term performance awards, restricted units, restricted shares, deferred stock units, promissory stock, and other stock-based awards .
The total share-based compensation cost was approximately less than $1 million and $3 million for the Predecessor Period and the year ended September 24, 2010, respectively, which has been
included in the combined statements of operations within selling, general, and administrative expenses. The Predecessor Company recognized a related tax benefit associated with its share-based compensation arrangements of $1 million in the year
ended September 24, 2010.
- 68 -
The grant-date fair value of each option grant is estimated using the Black-Scholes option
pricing model. The fair value is then amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected
model inputs. Expected volatility was calculated based on an analysis of historic and implied volatility measures for a set of peer companies. The average expected life was based on the contractual term of the option and expected employee exercise
and post-vesting employment termination behavior. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The compensation expense recognized is net of
estimated forfeitures. Forfeitures are estimated based on voluntary termination behavior, as well as an analysis of actual option forfeitures.
The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:
|
|
|
|
|
|
|
|
|
For the Year Ended
September 24, 2010
|
|
|
Expected stock price volatility
|
|
|
34
|
%
|
|
Risk-free interest rate
|
|
|
2.2
|
%
|
|
Expected annual dividend per share
|
|
$
|
0.80
|
|
|
Average expected life of options (years)
|
|
|
4.7
|
|
The weighted-average grant-date fair values of Tyco options granted to the Predecessor Company employees during the
year ended September 24, 2010 was $9 million. The total intrinsic value of Tyco options exercised by Company employees was $1 million during the year ended September 24, 2010. The related excess cash tax benefit classified as a
financing cash inflow for the year ended September 24, 2010 was not significant.
Share Options
—Options were
granted to purchase Tyco common shares at prices that are equal to or greater than the closing market price of the common shares on the date the option is granted. Conditions of vesting are determined at the time of grant under the 2004 Plan.
Options are generally exercisable in equal annual installments over a period of four years and will generally expire 10 years after the date of grant.
Share option activity for Company employees under
all Tyco plans as of September 24, 2010, and changes during the year then ended are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Term
(in years)
|
|
|
Aggregate
Intrinsic
Value
($ in
millions)
|
|
|
Outstanding—September 25, 2009
|
|
|
882,357
|
|
|
$
|
48.59
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
98,430
|
|
|
|
34.03
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(51,504
|
)
|
|
|
26.90
|
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(174,676
|
)
|
|
|
58.38
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(37,030
|
)
|
|
|
39.44
|
|
|
|
|
|
|
|
|
|
|
Net transfers(1)
|
|
|
50,622
|
|
|
|
27.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding—September 24, 2010
|
|
|
768,199
|
|
|
$
|
44.34
|
|
|
|
5.2
|
|
|
$
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and unvested expected to vest—September 24, 2010
|
|
|
743,088
|
|
|
|
44.67
|
|
|
|
5.1
|
|
|
|
2.7
|
|
|
Exercisable—September 24, 2010
|
|
|
560,766
|
|
|
|
48.25
|
|
|
|
4.1
|
|
|
|
1.5
|
|
|
(1)
|
Net transfers of shares relate to the share options associated with employees transferring between the Predecessor Company and another Tyco entity while maintaining
their Tyco share options.
|
As of September 24, 2010, there was $1 million of total unrecognized compensation cost related to non-vested
Tyco share options granted to the Predecessor Company employees under Tyco share option plans. The cost was expected to be recognized over a period of 2.4 years.
- 69 -
Restricted Share Awards
—Restricted share awards were granted by Tyco subject to
certain restrictions. Conditions of vesting are determined at the time of grant under the 2004 Plan. All restrictions on the award generally lapse upon normal retirement, if more than twelve months from the grant date, death, or disability of the
employee.
The fair market value of restricted awards, both time vesting and those subject to specific performance criteria,
are expensed over the period of vesting. Restricted share awards that vest based upon passage of time generally vest over a period of four years. The fair value of restricted share awards is determined based on the closing market price of
Tyco’s shares on the grant date. Restricted share awards that vest dependent upon attainment of various levels of performance that equal or exceed targeted levels generally vest in their entirety three years from the grant date. The fair value
of performance share awards is determined based on the Monte Carlo valuation model. The compensation expense recognized for restricted share awards is net of estimated forfeitures.
The Predecessor Company generally granted restricted stock units. Recipients of restricted stock units have no voting rights and receive
dividend equivalent units. Recipients of performance shares have no voting rights and may receive dividend equivalent units depending on the terms of the grant.
A summary of the status of Tyco’s restricted share awards including performance share awards as of September 24, 2010, and changes during the year then ended are presented in the table below:
|
|
|
|
|
|
|
|
|
|
|
Non-vested Restricted Share and Performance Awards
|
|
Shares
|
|
|
Weighted
Average
Grant-
Date Fair
Value
|
|
|
Nonvested—September 25, 2009
|
|
|
205,430
|
|
|
$
|
36.95
|
|
|
Granted
|
|
|
78,805
|
|
|
|
36.61
|
|
|
Vested
|
|
|
(57,989
|
)
|
|
|
39.97
|
|
|
Forfeited
|
|
|
(33,834
|
)
|
|
|
45.12
|
|
|
Net transfers(1)
|
|
|
(7,341
|
)
|
|
|
33.86
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested—September 24, 2010
|
|
|
185,071
|
|
|
$
|
34.47
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net transfers of shares relate to the restricted share and performance awards associated with employees transferring between the Predecessor Company and another Tyco
entity while maintaining their Tyco restricted share and performance awards.
|
As of September 24, 2010, there was $3 million of total unrecognized compensation cost related to non-vested
Tyco restricted share awards and performance shares granted to the Predecessor Company employees. The cost was expected to be recognized over a period of 2.1 years.
The weighted-average grant-date fair value of Tyco restricted share and performance share awards granted to the Predecessor Company employees during 2010 was approximately $37 million. The total fair
value of restricted share and performance share awards vested for the Predecessor Company employees during 2010 was $2 million.
The treatment upon completion of the Transactions of options to purchase shares of Tyco common stock (“Tyco Options”), restricted stock units with respect to shares of Tyco common stock
(“Tyco RSUs”), and performance shares units with respect to Tyco common stock (“Tyco PSUs”), was as follows:
Treatment of Tyco Options
Upon completion of the Transactions, each grant
of Tyco Options vested prorata based on the number of whole months completed from the grant date. The remaining unvested options were cancelled as of this date. The term of the vested option was based on the terms of the underlying grants and ranges
from an exercise period of 90 days to 36 months.
Treatment of Tyco RSUs
Upon completion of the Transactions, each grant of Tyco RSUs vested prorata based on the number of whole months completed from the grant
date. The remaining unvested Tyco RSUs were cancelled as of that date.
- 70 -
Treatment of Tyco PSUs
Upon completion of the Transactions, each grant of Tyco PSUs vested prorata based on the number of whole months completed from the grant
date. The vested Tyco PSUs remained subject to the original performance conditions. The remaining unvested Tyco PSUs were cancelled as of that date.
- 71 -
12. Restructuring Charges
2012 Program
During fiscal year 2012, the Company identified and pursued opportunities for cost savings through workforce reductions to drive business improvement and help manage costs effectively (the “2012
Program”). The Company maintained a restructuring reserve related to the 2012 Program for employee severance and benefits. The total restructuring payment of $1 million is expected to be substantially completed by the end of the first quarter
of fiscal year 2013.
Europe, Middle East, Australia Restructuring
During fiscal year 2011, the Company identified and pursued an opportunity for cost savings through restructuring activities and workforce
reductions through migration of certain product lines to the United Kingdom facility, improving operating efficiencies across these product lines previously operated at the France manufacturing facility (the “EMEA Restructuring”). The
total restructuring payment has been substantially completed as of the end of fiscal year 2012.
2009 Program
During fiscal years 2009 and 2010, the Company identified and pursued opportunities for cost savings through restructuring activities and
workforce reductions to improve operating efficiencies across all of the Company’s segments (the “2009 Program”). The Company maintained a restructuring reserve related to the 2009 Program for employee severance and benefits as well
as facility exit costs for long-term non-cancelable lease obligations. The total restructuring payment has been substantially completed as of the end of fiscal year 2012.
2007 Program
During fiscal years 2007 and 2008, the Company launched a
restructuring program to streamline some of its businesses and reduce its operational footprint (the “2007 Program”). The Company maintained a restructuring reserve related to the 2007 Program for employee severance and benefits as well as
facility exit costs for long-term non-cancelable lease obligations through 2016. During fiscal year 2012, the Company exercised its option to terminate a facility lease which resulted in a $2 million reversal of reserves. During the Predecessor
Period, $2 million of reserves were reversed for previously contemplated actions that will not be taken.
Restructuring reserves
The roll-forward of the reserves is as follows ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Predecessor Company:
|
|
2009
Program
|
|
|
2007
Program
|
|
|
Total
|
|
|
Balance as of September 26, 2009
|
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
16
|
|
|
Charges
|
|
|
5
|
|
|
|
2
|
|
|
|
7
|
|
|
Utilization
|
|
|
(8
|
)
|
|
|
(2
|
)
|
|
|
(10
|
)
|
|
Reversals
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 24, 2010
|
|
$
|
5
|
|
|
$
|
8
|
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Predecessor Company:
|
|
2009
Program
|
|
|
2007
Program
|
|
|
Total
|
|
|
Balance as of September 25, 2010
|
|
$
|
5
|
|
|
$
|
8
|
|
|
$
|
13
|
|
|
Charges
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
Utilization
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
Reversals
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 22, 2010
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Successor Company:
|
|
2012
Program
|
|
|
EMEA
|
|
|
2009
Program
|
|
|
2007
Program
|
|
|
Total
|
|
|
Balance as of December 23, 2010
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
11
|
|
|
Charges
|
|
|
—
|
|
|
|
2
|
|
|
|
3
|
|
|
|
1
|
|
|
|
6
|
|
|
Utilization
|
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
Reversals
|
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2011
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
Utilization
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
Reversals
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 28, 2012
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 72 -
The net restructuring charges for the restructuring activities described above were $0
million for the year ended September 28, 2012, $1 million for the period from December 23, 2010 to September 30, 2011, ($1) million for the Predecessor Period, and $7 million for the year ended September 24, 2010.
Restructuring reserves related to the 2012 Program, EMEA Restructuring, 2009 Program, and 2007 Program, were included in the
Company’s consolidated balance sheet as follows ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30.
2011
|
|
|
Accrued and other current liabilities
|
|
$
|
3
|
|
|
$
|
5
|
|
|
Other long-term liabilities
|
|
|
—
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
13. Segment and Geographic Data
Effective October 1, 2011, as a result of a strategic planning exercise, the Company reorganized its segments.
After this reorganization, the Company continues to have two reportable segments: 1) Global Pipe, Tube & Conduit and 2) Global Cable & Cable Management. The Company has combined the product category formerly referred to as
Sheets & Plates with Mechanical Tube. Additionally, Metal Framing Systems is now part of Global Cable & Cable Management and Electrical Conduit is now part of Global Pipe, Tube & Conduit. In compliance with ASC 280, the
Company has reclassified all prior period amounts to conform to its new reportable segment presentation. The reclassification of prior period amounts did not have a material impact on the Company’s financial statements. The product categories
that pertain to each reportable segment are as follows:
Global Pipe, Tube & Conduit
|
|
•
|
|
Pipe & Tube
—consists of steel pipe for low pressure fire sprinkler applications and for low pressure conveyance of fluids and
certain structural and fabrication applications and commercial quality tubing in a variety of shapes and sizes for industrial applications, such as agricultural buildings, conveyor belt tubing and highway signage (including in-line galvanized steel
tubing products for many OEM and structural applications), high strength fence framework that utilizes the in-line galvanization process to deliver consistent strength and quality, and barbed tape products for high security perimeter fences.
|
|
|
•
|
|
Conduit
—consists of tubular raceways used for the protection and routing of electrical wire, including such products as electrical metallic
tubing, intermediate metal conduit, rigid steel conduit, PVC conduit and aluminum rigid conduit, elbows and fittings.
|
Global Cable & Cable Management
|
|
•
|
|
Cable
—consists of armored cable and metal-clad cable, including fire alarm and super neutral; ColorSpec
TM
ID System, self-grounding metal-clad cable, specialty cables and
pre-fabricated wiring systems.
|
|
|
•
|
|
Cable Management
—consists of systems that hold and protect electrical raceways, such as cable tray, cable ladder and wire basket, as well
as metal framing or steel support structures using strut, channel and related fittings and accessories for both electrical and mechanical applications.
|
Corporate and other includes corporate administrative expenses.
We have
reclassified certain prior period amounts to conform to the current period presentation. Included with the reclassifications are restatements for discontinued operations, as described in Note 17, and the reorganization of two reportable segments, as
described above.
- 73 -
Selected information by reportable segment is presented in the following tables ($ in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Successor
Company
|
|
|
Combined Predecessor
Company
|
|
|
|
|
For the Year
Ended
September 28,
2012
|
|
|
For the
Period from
December 23,
2010 to
September 30,
2011
|
|
|
For the
Period from
September 25,
2010 to
December 22,
2010
|
|
|
For the Year
Ended
September 24,
2010
|
|
|
Net sales(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Pipe, Tube & Conduit
|
|
$
|
1,092
|
|
|
$
|
843
|
|
|
$
|
227
|
|
|
$
|
963
|
|
|
Global Cable & Cable Management
|
|
|
634
|
|
|
|
434
|
|
|
|
119
|
|
|
|
463
|
|
|
Elimination of intersegment revenues
|
|
|
(39
|
)
|
|
|
(19
|
)
|
|
|
(6
|
)
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,687
|
|
|
$
|
1,258
|
|
|
$
|
340
|
|
|
$
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Pipe, Tube & Conduit
|
|
$
|
24
|
|
|
$
|
61
|
|
|
$
|
8
|
|
|
$
|
88
|
|
|
Global Cable & Cable Management
|
|
|
63
|
|
|
|
27
|
|
|
|
9
|
|
|
|
27
|
|
|
Corporate and Other
|
|
|
(51
|
)
|
|
|
(65
|
)
|
|
|
(6
|
)
|
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
36
|
|
|
$
|
23
|
|
|
$
|
11
|
|
|
$
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Pipe, Tube & Conduit
|
|
$
|
33
|
|
|
$
|
23
|
|
|
$
|
4
|
|
|
$
|
23
|
|
|
Global Cable & Cable Management
|
|
|
16
|
|
|
|
11
|
|
|
|
2
|
|
|
|
10
|
|
|
Corporate and Other
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
50
|
|
|
$
|
35
|
|
|
$
|
6
|
|
|
$
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Pipe, Tube & Conduit
|
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
5
|
|
|
$
|
36
|
|
|
Global Cable & Cable Management
|
|
|
7
|
|
|
|
19
|
|
|
|
4
|
|
|
|
4
|
|
|
Corporate and Other
|
|
|
2
|
|
|
|
8
|
|
|
|
3
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
23
|
|
|
$
|
41
|
|
|
$
|
12
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts represent sales to external customers and related parties (see Note 3). No single customer represented 10% or more of the Company’s total net sales in any
period presented.
|
The reconciliation of operating income to loss before taxes is as follows ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Successor
Company
|
|
|
Combined Predecessor
Company
|
|
|
|
|
For the Year
Ended
September 28,
2012
|
|
|
For the
Period from
December 23,
2010 to
September 30,
2011
|
|
|
For the
Period from
September 25,
2010 to
December 22,
2010
|
|
|
For the Year
Ended
September 24,
2010
|
|
|
Operating income
|
|
$
|
36
|
|
|
$
|
23
|
|
|
$
|
11
|
|
|
$
|
69
|
|
|
Interest expense, net
|
|
|
48
|
|
|
|
37
|
|
|
|
11
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before taxes
|
|
$
|
(12
|
)
|
|
$
|
(14
|
)
|
|
$
|
—
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and other contains interest expense that is not allocated to the other segments. Total interest expense
included in corporate was $48 million for the fiscal year ended September 28, 2012. The interest expense included in corporate and other for the period from December 23, 2010 to September 30, 2011 and the Predecessor Period was $37
million and $11 million, respectively. Total interest expense included in corporate and other was $48 million for the fiscal year ended September 24, 2010.
Selected information by reportable segment is presented in the following table ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Total assets:
|
|
|
|
|
|
|
|
|
|
Global Pipe, Tube & Conduit
|
|
$
|
799
|
|
|
$
|
881
|
|
|
Global Cable & Cable Management
|
|
|
434
|
|
|
|
410
|
|
|
Corporate and Other
|
|
|
96
|
|
|
|
108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,329
|
|
|
$
|
1,399
|
|
|
|
|
|
|
|
|
|
|
|
- 74 -
Selected information by geographic area is as follows ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor Company
|
|
|
Predecessor Company
|
|
|
|
|
For the Year
Ended
September 28,
2012
|
|
|
For the
Period from
December 23,
2010 to
September 30,
2011
|
|
|
For the
Period from
September 25,
2010 to
December 22,
2011
|
|
|
For the Year
Ended
September 24,
2010
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
1,406
|
|
|
$
|
1,024
|
|
|
$
|
270
|
|
|
$
|
1,095
|
|
|
Other Americas
|
|
|
184
|
|
|
|
163
|
|
|
|
49
|
|
|
|
223
|
|
|
Europe
|
|
|
44
|
|
|
|
40
|
|
|
|
12
|
|
|
|
49
|
|
|
Asia—Pacific
|
|
|
53
|
|
|
|
31
|
|
|
|
9
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,687
|
|
|
$
|
1,258
|
|
|
$
|
340
|
|
|
$
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Long lived assets:
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
249
|
|
|
$
|
275
|
|
|
Other Americas
|
|
|
29
|
|
|
|
26
|
|
|
Europe
|
|
|
8
|
|
|
|
8
|
|
|
Asia—Pacific
|
|
|
6
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
292
|
|
|
$
|
314
|
|
|
|
|
|
|
|
|
|
|
|
As of September 28, 2012, the long-lived assets included $283 million of property, plant and equipment, net, $2
million of SERP pension assets, and $7 million of other long-lived assets. As of September 30, 2011, the long-lived assets included $308 million of property, plant and equipment, net, $2 million of SERP pension assets, and $4 million of other
long-lived assets.
Selected information by product category is presented in the following tables ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Successor
Company
|
|
|
Combined Predecessor
Company
|
|
|
|
|
For the Year
September 28,
2012
|
|
|
For the
Period from
December 23,
2010 to
September 30,
2011
|
|
|
For the
Period from
September 25,
2010 to
December 22,
2010
|
|
|
For the Year
Ended
September 24,
2010
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Pipe, Tube & Conduit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pipe & Tube
|
|
$
|
671
|
|
|
$
|
512
|
|
|
$
|
132
|
|
|
$
|
590
|
|
|
Conduit
|
|
|
421
|
|
|
|
331
|
|
|
|
95
|
|
|
|
373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Global Pipe, Tube & Conduit
|
|
|
1,092
|
|
|
|
843
|
|
|
|
227
|
|
|
|
963
|
|
|
Global Cable & Cable Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable
|
|
|
389
|
|
|
|
266
|
|
|
|
69
|
|
|
|
281
|
|
|
Cable Management Systems
|
|
|
245
|
|
|
|
168
|
|
|
|
50
|
|
|
|
182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Global Cable & Cable Management
|
|
|
634
|
|
|
|
434
|
|
|
|
119
|
|
|
|
463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elimination of intersegment revenues
|
|
|
(39
|
)
|
|
|
(19
|
)
|
|
|
(6
|
)
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,687
|
|
|
$
|
1,258
|
|
|
$
|
340
|
|
|
$
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 75 -
14. Commitments and Contingencies
The Company has obligations related to commitments to purchase certain goods and services. As of September 28,
2012, such obligations were $108 million for the next twelve months, $11 million for year two, $1 million for year three, and $0 thereafter.
The Company leases certain facilities and equipment under operating leases. At September 28, 2012, minimum future operating lease payments in excess of one year aggregated $33 million payable as
follows: $10 million in 2013, $8 million in 2014, $6 million in 2015, $4 million in 2016, $3 million in 2017 and $2 million in 2018 and thereafter.
Legal Contingencies
—The Company is a defendant in a number of pending legal proceedings incidental to present and former operations, including several lawsuits alleging that the anti-microbial
coated sprinkler pipe causes stress cracking in polyvinyl chloride pipe when installed with certain kinds of such pipe manufactured by unrelated parties. After consultation with internal counsel and external counsel representing the Company in these
matters, the Company has reserved its best estimate of the probable loss related to the matter. The Company had an accrual of $9 million and $8 million as of September 28, 2012, and September 30, 2011, respectively. At September 28,
2012 and September 30, 2011, $3 million was included in accrued and other current liabilities in the consolidated balance sheet for this matter. At September 28, 2012 and September 30, 2011, $6 million and $5 million, respectively was
included in other long-term liabilities in the consolidated balance sheet for this matter. The Company does not expect the outcome of these proceedings, either individually or in the aggregate, to have a material effect on its financial statements.
The range of reasonably possible losses related to these matters is from $3 million to $12 million.
In October 2010, the
Company was notified of an assessment by the Rio Grande do Sul State Treasury Secretariat related to the appropriateness of certain value-added tax credits taken in Brazil during the periods 2005 to 2007. The Brazilian government alleges that the
Company owes approximately $10 million in taxes, penalties and interest. The Company has been vigorously defending the matter based on its belief that its position was in accordance with the applicable law based in part upon the findings of the
third party that assisted us in documenting and responding to the notice. During the third quarter of fiscal year 2012, the administrative court of Rio Grande do Sul State issued two unfavorable rulings against the Company. The Company has no
further appeal options on these rulings at the pre-trial, administrative stage and must file suit in judicial court to contest these rulings. As a result of these unfavorable rulings at the administrative stage, the Company believed that the
likelihood that it would incur a loss was probable and that the amount of the loss was reasonably estimable. In October 2012, the Rio Grande do Sul Treasury Secretariat announced a tax amnesty program that would significantly lessen the
Company’s potential loss in this matter by reducing assessed penalties and interest by 75% and 40%, respectively. The Company elected to participate in this program and reached a final agreement with the Treasury Secretariat on
November 28, 2012, to settle this matter for a substantially lower amount of $6 million. Accordingly, the Company’s accrual for this matter as of September 28, 2012, reflects the amount of the settlement paid subsequent to
year-end. As described in Note 9, under the terms of the Investment Agreement, Tyco has agreed to indemnify and hold harmless the Company and its subsidiaries from and against any taxes of the Company with respect to any tax period ending on or
before the closing of the Transactions, as well as all tax liabilities relating to events or transactions occurring on or prior to the closing date of the Transactions. Accordingly, the Company recorded $6 million related to the Company’s right
to be indemnified by Tyco in connection with this matter in receivables due from Tyco International Ltd. and its affiliates.
From time to time, the Company is subject to a number of disputes, administrative proceedings and other claims arising out of the conduct
of the Company’s business. These matters generally relate to disputes arising out of the use or installation of the Company’s products, product liability litigation, contract disputes, patent infringement accusations, employment matters
and similar matters. On the basis of information currently available to the Company, it does not believe that existing proceedings and claims will have a material impact on its financial statements. The range of reasonably possible losses related to
these matters is less than $1 million, in the aggregate. However, litigation is unpredictable, and the Company could incur judgments or enter into settlements for current or future claims that could adversely affect its financial statements.
15. Guarantees
The Company has an outstanding letter of credit for $5 million supporting workers’ compensation and liability
insurance policies, outstanding letters of credit for $10 million supporting foreign lines of credit, and outstanding letters of credit for $2 million supporting foreign purchase agreements. Outstanding letters of credit reduce the availability
under the Credit Facility from $250 million to $233 million. The Company also has $14 million in surety bonds primarily related to performance guarantees on supply agreements and construction contracts, and payment of duties and taxes. Tyco has
guaranteed the performance to third parties in the amount of $13 million and provided financial guarantees for financial commitments of less than $1 million on behalf of the Company. Tyco intends to obtain releases from the guarantees related to the
Company. The Company has initiated terminating the lease of a facility supported by $8 million of performance guarantees and expects the termination to be completed in the second quarter of fiscal year 2013.
- 76 -
In disposing of assets or businesses, the Company often provides representations, warranties
and indemnities to cover various risks including unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing
facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. The Company does not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However,
the Company has no reason to believe that these uncertainties would have a material effect on the Company’s financial statements.
In the normal course of business, the Company is liable for product performance and contract completion. In the opinion of management, such obligations will not significantly affect the Company’s
financial statements.
16. Financial Instruments
The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts
payable and debt. The fair value of cash and cash equivalents, accounts receivable, and accounts payable approximated book value as of September 28, 2012. See Note 8 for the fair value of the Company’s debt.
17. Discontinued Operations and Dispositions
In February 2012, the Company determined that the Morrisville business was no longer strategic to the Company. This
business was under Allied Tube & Conduit Corporation (“Allied Tube”), a wholly-owned indirect subsidiary of the Company. On March 6, 2012, Allied Tube entered into an asset purchase agreement with JMC Steel Group, Inc.
(“JMC Steel”) pursuant to which JMC Steel would purchase the real estate, building and improvements of the Morrisville operations for approximately $40 million (the “Morrisville Sale”). Morrisville’s operations and cash
flows have been removed from continuing operations for all of the periods presented. Atkore will not have any continuing involvement in the operations after the disposal transaction. The results of Morrisville operations previously were included
within the Global Pipe, Tube & Conduit segment. On April 23, 2012, the Company completed the sale. The total loss, net of tax, from the sale was $4 million.
The following tables present the operating results of the Company’s discontinued operations for the fiscal year ended September 28, 2012, the period from December 23, 2010 to
September 30, 2011, the period from September 25, 2010 to December 22, 2010, and the fiscal year ended September 24, 2010 ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Successor
Company
|
|
|
Combined Predecessor
Company
|
|
|
|
|
For the Year
Ended
September 28,
2012
|
|
|
For the
Period from
December 23,
2010 to
September 30,
2011
|
|
|
For the
Period from
September 25,
2010 to
December 22,
2010
|
|
|
For the Year
Ended
September 24,
2010
|
|
|
Net sales
|
|
$
|
24
|
|
|
$
|
40
|
|
|
$
|
12
|
|
|
$
|
33
|
|
|
Costs and expenses
|
|
|
27
|
|
|
|
42
|
|
|
|
15
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(1
|
)
|
|
Income tax benefit
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
|
Loss from disposal of discontinued business assets, net of tax
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations and disposal net of income tax benefit of $0, $1, $1 and $0, respectively
|
|
$
|
(6
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows an analysis of assets and liabilities of discontinued operations as of September 28,
2012, and September 30, 2011 ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Current assets
|
|
$
|
—
|
|
|
$
|
16
|
|
|
Property, plant and equipment, net
|
|
|
—
|
|
|
|
31
|
|
|
Goodwill and intangible assets
|
|
|
—
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets of discontinued operations
|
|
|
—
|
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
—
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities of discontinued operations
|
|
$
|
—
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
- 77 -
Included in current liabilities at September 30, 2011 was $3 million related to
accounts payable and accrued and other current liabilities. The goodwill was allocated on a relative fair value basis.
The
Company has classified several buildings and an investment in an unconsolidated joint venture as held for sale on the accompanying consolidated balance sheet as of September 28, 2012 and September 30, 2011. The components of assets held
for sale at September 28, 2012 and September 30, 2011 consist of the following ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
2012
|
|
|
September 30,
2011
|
|
|
Property, plant and equipment, net
|
|
$
|
8
|
|
|
$
|
6
|
|
|
Other assets
|
|
|
3
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale
|
|
$
|
11
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
In January 2012, the Company entered into a share purchase agreement pursuant to which the Company would sell its
minority ownership share in a joint venture in the Middle East for cash consideration of approximately $10 million, which was paid into an escrow account in May 2012. The escrow remains in the name of the buyer, and the Company retains the
benefit of the investment until all deliverables are met. The carrying value of the equity method investment is $3 million and is classified as held for sale. The consideration is to be distributed incrementally from the escrow as certain
milestones are reached. The Company will recognize the gain on the sale upon completion of the milestones.
In addition, the
Company decided to sell several buildings. The Company has vacated the premises of the buildings and is actively searching for a buyer on the open market. The carrying value of the buildings is $8 million and $6 million at September 28, 2012
and September 30, 2011, respectively. The Company determined the fair value of one of the buildings based on the negotiated selling price and recorded a $1 million impairment charge in the fourth quarter of fiscal year 2012. The Company
determined that the valuation of the building, which was classified within Level 2 of the fair value hierarchy, utilizing the negotiated sales price
On August 10, 2012, the Company sold the Gem Fabrication manufacturing facility for approximately $8 million. The Company recorded a loss of $5 million resulting from the sale which is included in
“selling, general and administrative expense” on the statements of operations. The assets associated with the Gem Fabrication manufacturing facility were classified as held for sale in the third quarter.
18. Guarantor Financial Information
Under the indenture governing the Notes, certain 100% owned U.S. subsidiaries of Atkore International provided a full
and unconditional guarantee on a joint and several basis of the Notes. Under the same indenture, the Company also provided a full and unconditional guarantee of the Notes. Atkore International is a 100% owned subsidiary of the Company.
The Company refers to the Notes priority collateral and the Credit Facility priority collateral together as the “Collateral.”
The Collateral does not include any capital stock of a subsidiary of the Company, including Atkore International, to the extent that the pledge of such capital stock results in a requirement to file separate financial statements of such subsidiary
under Rule 3-16 of Regulation S-X under the Securities Act. Any such capital stock covered by a pledge that triggers such a requirement to file financial statements of such subsidiary would be automatically released from being included in the
Collateral, but only to the extent necessary to not be subject to such requirement. Accordingly, a significant portion of the capital stock of Atkore International, Atkore International (NV) Inc., Allied Tube & Conduit Corporation, as well
as a portion of the capital stock of WPFY, Inc. and Atkore Foreign Holdings Inc., is currently not included in the pledge as Collateral as a result of the filing of the Registration Statement on Form S-4 filed with the SEC, as declared effective on
October 19, 2011.
The following tables present financial information for (a) the Company, the parent guarantor,
(b) Atkore International, the borrower, (c) Atkore International’s domestically domiciled subsidiaries (“Guarantor Subsidiaries”), (d) Atkore International’s foreign subsidiaries (“Non-Guarantor
Subsidiaries”), (e) elimination entries necessary to combine a parent guarantor with the Guarantor Subsidiaries and Non-Guarantor Subsidiaries, and (f) the Company on a consolidated basis for the fiscal year ended September 28,
2012, for the period from December 23, 2010 to September 30, 2011, and on a
- 78 -
combined basis for the period from September 25, 2010 to December 22, 2010, and the fiscal year ended September 24, 2010. The following financial information presents the results
of operations, financial position and cash flows and the eliminations necessary to arrive at the information for the Company using the equity method of accounting for subsidiaries.
- 79 -
Successor Company
Condensed Consolidated Statement of Operations
For the Fiscal Year Ended September 28, 2012
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atkore
International
Holdings
Inc.
|
|
|
Atkore
International
Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminating
Entries
|
|
|
Atkore
Consolidated
|
|
|
Net sales
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,448
|
|
|
$
|
278
|
|
|
$
|
(39
|
)
|
|
$
|
1,687
|
|
|
Cost of sales
|
|
|
—
|
|
|
|
—
|
|
|
|
1,243
|
|
|
|
247
|
|
|
|
(39
|
)
|
|
|
1,451
|
|
|
Selling, general and administrative
|
|
|
—
|
|
|
|
8
|
|
|
|
161
|
|
|
|
31
|
|
|
|
—
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
—
|
|
|
|
(8
|
)
|
|
|
44
|
|
|
|
—
|
|
|
|
—
|
|
|
|
36
|
|
|
Interest expense (income), net
|
|
|
—
|
|
|
|
11
|
|
|
|
39
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
|
—
|
|
|
|
(19
|
)
|
|
|
5
|
|
|
|
2
|
|
|
|
—
|
|
|
|
(12
|
)
|
|
Income tax benefit
|
|
|
—
|
|
|
|
(7
|
)
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
—
|
|
|
|
(12
|
)
|
|
|
8
|
|
|
|
2
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
Loss from discontinued operations and disposal, net of tax benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
(6
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(6
|
)
|
|
(Loss) income from subsidiaries
|
|
|
(8
|
)
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(8
|
)
|
|
$
|
(8
|
)
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor Company
Condensed Consolidated Statement of Operations
For the Period from
December 23, 2010 to September 30, 2011
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atkore
International
Holdings
Inc.
|
|
|
Atkore
International
Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminating
Entries
|
|
|
Atkore
Consolidated
|
|
|
Net sales
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,047
|
|
|
$
|
230
|
|
|
$
|
(19
|
)
|
|
$
|
1,258
|
|
|
Cost of sales
|
|
|
—
|
|
|
|
—
|
|
|
|
886
|
|
|
|
201
|
|
|
|
(19
|
)
|
|
|
1,068
|
|
|
Selling, general and administrative
|
|
|
—
|
|
|
|
6
|
|
|
|
118
|
|
|
|
27
|
|
|
|
—
|
|
|
|
151
|
|
|
Transaction-related costs
|
|
|
—
|
|
|
|
16
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
—
|
|
|
|
(22
|
)
|
|
|
43
|
|
|
|
2
|
|
|
|
—
|
|
|
|
23
|
|
|
Interest expense, net
|
|
|
—
|
|
|
|
8
|
|
|
|
30
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
|
—
|
|
|
|
(30
|
)
|
|
|
13
|
|
|
|
3
|
|
|
|
—
|
|
|
|
(14
|
)
|
|
Income tax expense (benefit)
|
|
|
—
|
|
|
|
7
|
|
|
|
(6
|
)
|
|
|
1
|
|
|
|
—
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
—
|
|
|
|
(37
|
)
|
|
|
19
|
|
|
|
2
|
|
|
|
—
|
|
|
|
(16
|
)
|
|
Loss from discontinued operations and disposal, net of tax benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
(Loss) income from subsidiaries
|
|
|
(17
|
)
|
|
|
20
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(17
|
)
|
|
$
|
(17
|
)
|
|
$
|
18
|
|
|
$
|
2
|
|
|
$
|
(3
|
)
|
|
$
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 80 -
Predecessor Company
Condensed Combined Statement of Operations
For the Period from September 25, 2010 to December 22, 2010
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminating
Entries
|
|
|
Atkore
Combined
|
|
|
Net sales
|
|
$
|
276
|
|
|
$
|
70
|
|
|
$
|
(6
|
)
|
|
$
|
340
|
|
|
Cost of sales
|
|
|
233
|
|
|
|
63
|
|
|
|
(6
|
)
|
|
|
290
|
|
|
Selling, general and administrative
|
|
|
30
|
|
|
|
9
|
|
|
|
—
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
13
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
11
|
|
|
Interest expense, net
|
|
|
10
|
|
|
|
1
|
|
|
|
—
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
3
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Income tax expense (benefit)
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
1
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
Loss from discontinued operations and disposal, net of tax expense
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor Company
Condensed Combined Statement of Operations
For the Fiscal Year Ended
September 24, 2010
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminating
Entries
|
|
|
Atkore
Combined
|
|
|
Net sales
|
|
$
|
1,124
|
|
|
$
|
302
|
|
|
$
|
(26
|
)
|
|
$
|
1,400
|
|
|
Cost of sales
|
|
|
931
|
|
|
|
255
|
|
|
|
(26
|
)
|
|
|
1,160
|
|
|
Selling, general and administrative
|
|
|
141
|
|
|
|
30
|
|
|
|
—
|
|
|
|
171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
52
|
|
|
|
17
|
|
|
|
—
|
|
|
|
69
|
|
|
Interest expense, net
|
|
|
40
|
|
|
|
8
|
|
|
|
—
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
12
|
|
|
|
9
|
|
|
|
—
|
|
|
|
21
|
|
|
Income tax expense
|
|
|
14
|
|
|
|
5
|
|
|
|
—
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
(2
|
)
|
|
|
4
|
|
|
|
—
|
|
|
|
2
|
|
|
Loss from discontinued operations and disposal, net of tax expense
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(3
|
)
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 81 -
Successor Company
Condensed Consolidated Balance Sheet
As of September 28, 2012
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atkore
International
Holdings
Inc.
|
|
|
Atkore
International
Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Eliminating
Entries
|
|
|
Atkore
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
52
|
|
|
Accounts receivable, net
|
|
|
—
|
|
|
|
—
|
|
|
|
184
|
|
|
|
51
|
|
|
|
—
|
|
|
|
235
|
|
|
Receivables due from Tyco International Ltd. and its affiliates
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
6
|
|
|
|
—
|
|
|
|
9
|
|
|
Inventories, net
|
|
|
—
|
|
|
|
—
|
|
|
|
196
|
|
|
|
41
|
|
|
|
—
|
|
|
|
237
|
|
|
Assets held for sale
|
|
|
—
|
|
|
|
—
|
|
|
|
11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11
|
|
|
Prepaid expenses and other current assets
|
|
|
—
|
|
|
|
8
|
|
|
|
20
|
|
|
|
7
|
|
|
|
—
|
|
|
|
35
|
|
|
Deferred income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
|
|
2
|
|
|
|
—
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
—
|
|
|
|
8
|
|
|
|
450
|
|
|
|
143
|
|
|
|
—
|
|
|
|
601
|
|
|
Property, plant and equipment, net
|
|
|
—
|
|
|
|
—
|
|
|
|
247
|
|
|
|
36
|
|
|
|
—
|
|
|
|
283
|
|
|
Intangible assets, net
|
|
|
—
|
|
|
|
—
|
|
|
|
266
|
|
|
|
—
|
|
|
|
—
|
|
|
|
266
|
|
|
Goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
132
|
|
|
|
—
|
|
|
|
—
|
|
|
|
132
|
|
|
Deferred income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
3
|
|
|
Receivables due from Tyco International Ltd. and its affiliates
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
Investment in subsidiaries
|
|
|
552
|
|
|
|
628
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,180
|
)
|
|
|
—
|
|
|
Intercompany receivable
|
|
|
—
|
|
|
|
305
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(305
|
)
|
|
|
—
|
|
|
Other assets
|
|
|
—
|
|
|
|
21
|
|
|
|
2
|
|
|
|
8
|
|
|
|
—
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets of continuing operations
|
|
|
552
|
|
|
|
962
|
|
|
|
1,110
|
|
|
|
190
|
|
|
|
(1,485
|
)
|
|
|
1,329
|
|
|
Total assets of discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
552
|
|
|
$
|
962
|
|
|
$
|
1,110
|
|
|
$
|
190
|
|
|
$
|
(1,485
|
)
|
|
$
|
1,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
Accounts payable
|
|
|
—
|
|
|
|
—
|
|
|
|
108
|
|
|
|
22
|
|
|
|
—
|
|
|
|
130
|
|
|
Income tax payable
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
1
|
|
|
|
—
|
|
|
|
4
|
|
|
Accrued and other current liabilities
|
|
|
—
|
|
|
|
10
|
|
|
|
52
|
|
|
|
17
|
|
|
|
—
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
—
|
|
|
|
10
|
|
|
|
163
|
|
|
|
47
|
|
|
|
—
|
|
|
|
220
|
|
|
Long-term debt
|
|
|
—
|
|
|
|
410
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
410
|
|
|
Deferred income taxes
|
|
|
—
|
|
|
|
(10
|
)
|
|
|
93
|
|
|
|
—
|
|
|
|
—
|
|
|
|
83
|
|
|
Intercompany payable
|
|
|
—
|
|
|
|
—
|
|
|
|
302
|
|
|
|
3
|
|
|
|
(305
|
)
|
|
|
—
|
|
|
Income tax payable
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
Pension liabilities
|
|
|
—
|
|
|
|
—
|
|
|
|
40
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40
|
|
|
Other long-term liabilities
|
|
|
—
|
|
|
|
—
|
|
|
|
11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities of continuing operations
|
|
|
—
|
|
|
|
410
|
|
|
|
622
|
|
|
|
50
|
|
|
|
(305
|
)
|
|
|
777
|
|
|
Total liabilities of discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
—
|
|
|
|
410
|
|
|
|
622
|
|
|
|
50
|
|
|
|
(305
|
)
|
|
|
777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholder’s Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares and additional paid in capital
|
|
|
605
|
|
|
|
605
|
|
|
|
485
|
|
|
|
149
|
|
|
|
(1,239
|
)
|
|
|
605
|
|
|
(Accumulated deficit) retained earnings
|
|
|
(25
|
)
|
|
|
(25
|
)
|
|
|
20
|
|
|
|
4
|
|
|
|
1
|
|
|
|
(25
|
)
|
|
Accumulated other comprehensive (loss) income
|
|
|
(28
|
)
|
|
|
(28
|
)
|
|
|
(17
|
)
|
|
|
(13
|
)
|
|
|
58
|
|
|
|
(28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholder’s Equity
|
|
|
552
|
|
|
|
552
|
|
|
|
488
|
|
|
|
140
|
|
|
|
(1,180
|
)
|
|
|
552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholder’s Equity
|
|
$
|
552
|
|
|
$
|
962
|
|
|
$
|
1,110
|
|
|
$
|
190
|
|
|
$
|
(1,485
|
)
|
|
$
|
1,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 82 -
Successor Company
Condensed Consolidated Balance Sheet
As of September 30, 2011
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atkore
International
Holdings
Inc.
|
|
|
Atkore
International
Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminating
Entries
|
|
|
Atkore
Consolidated
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
48
|
|
|
Accounts receivable, net
|
|
|
—
|
|
|
|
—
|
|
|
|
169
|
|
|
|
52
|
|
|
|
—
|
|
|
|
221
|
|
|
Receivables due from Tyco International Ltd. and its affiliates
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
Inventories, net
|
|
|
—
|
|
|
|
—
|
|
|
|
220
|
|
|
|
38
|
|
|
|
—
|
|
|
|
258
|
|
|
Assets held for sale
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
Prepaid expenses and other current assets
|
|
|
—
|
|
|
|
6
|
|
|
|
21
|
|
|
|
7
|
|
|
|
—
|
|
|
|
34
|
|
|
Deferred income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
14
|
|
|
|
2
|
|
|
|
—
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
—
|
|
|
|
6
|
|
|
|
434
|
|
|
|
147
|
|
|
|
—
|
|
|
|
587
|
|
|
Property, plant and equipment, net
|
|
|
—
|
|
|
|
—
|
|
|
|
273
|
|
|
|
35
|
|
|
|
—
|
|
|
|
308
|
|
|
Intangible assets, net
|
|
|
—
|
|
|
|
—
|
|
|
|
264
|
|
|
|
—
|
|
|
|
—
|
|
|
|
264
|
|
|
Goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
130
|
|
|
|
—
|
|
|
|
—
|
|
|
|
130
|
|
|
Deferred income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
Receivables due from Tyco International Ltd. and its affiliates
|
|
|
—
|
|
|
|
—
|
|
|
|
14
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14
|
|
|
Investment in subsidiaries
|
|
|
570
|
|
|
|
604
|
|
|
|
—
|
|
|
|
1
|
|
|
|
(1,175
|
)
|
|
|
—
|
|
|
Intercompany receivable
|
|
|
—
|
|
|
|
399
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(399
|
)
|
|
|
—
|
|
|
Other assets
|
|
|
—
|
|
|
|
27
|
|
|
|
6
|
|
|
|
3
|
|
|
|
—
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets of continuing operations
|
|
|
570
|
|
|
|
1,036
|
|
|
|
1,121
|
|
|
|
188
|
|
|
|
(1,574
|
)
|
|
|
1,341
|
|
|
Total assets of discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
58
|
|
|
|
—
|
|
|
|
—
|
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
570
|
|
|
$
|
1,036
|
|
|
$
|
1,179
|
|
|
$
|
188
|
|
|
$
|
(1,574
|
)
|
|
$
|
1,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt
|
|
$
|
—
|
|
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
47
|
|
|
Accounts payable
|
|
|
—
|
|
|
|
—
|
|
|
|
98
|
|
|
|
25
|
|
|
|
—
|
|
|
|
123
|
|
|
Income tax payable
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
Accrued and other current liabilities
|
|
|
—
|
|
|
|
10
|
|
|
|
55
|
|
|
|
14
|
|
|
|
—
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
—
|
|
|
|
56
|
|
|
|
157
|
|
|
|
40
|
|
|
|
—
|
|
|
|
253
|
|
|
Long-term debt
|
|
|
—
|
|
|
|
410
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
411
|
|
|
Deferred income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
101
|
|
|
|
—
|
|
|
|
—
|
|
|
|
101
|
|
|
Intercompany payable
|
|
|
—
|
|
|
|
—
|
|
|
|
396
|
|
|
|
3
|
|
|
|
(399
|
)
|
|
|
—
|
|
|
Income tax payable
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
Pension liabilities
|
|
|
—
|
|
|
|
—
|
|
|
|
35
|
|
|
|
—
|
|
|
|
—
|
|
|
|
35
|
|
|
Other long-term liabilities
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities of continuing operations
|
|
|
—
|
|
|
|
466
|
|
|
|
716
|
|
|
|
44
|
|
|
|
(400
|
)
|
|
|
826
|
|
|
Total liabilities of discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
—
|
|
|
|
466
|
|
|
|
719
|
|
|
|
44
|
|
|
|
(400
|
)
|
|
|
829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholder’s Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares and additional paid in capital
|
|
|
604
|
|
|
|
604
|
|
|
|
452
|
|
|
|
149
|
|
|
|
(1,205
|
)
|
|
|
604
|
|
|
(Accumulated deficit) retained earnings
|
|
|
(17
|
)
|
|
|
(17
|
)
|
|
|
18
|
|
|
|
2
|
|
|
|
(3
|
)
|
|
|
(17
|
)
|
|
Accumulated other comprehensive (loss) income
|
|
|
(17
|
)
|
|
|
(17
|
)
|
|
|
(10
|
)
|
|
|
(7
|
)
|
|
|
34
|
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholder’s Equity
|
|
|
570
|
|
|
|
570
|
|
|
|
460
|
|
|
|
144
|
|
|
|
(1,174
|
)
|
|
|
570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholder’s Equity
|
|
$
|
570
|
|
|
$
|
1,036
|
|
|
$
|
1,179
|
|
|
$
|
188
|
|
|
$
|
(1,574
|
)
|
|
$
|
1,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 83 -
Successor Company
Condensed Consolidated Statement of Cash Flows
For the Fiscal Year Ended September 28, 2012
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atkore
International
Holdings
|
|
|
Atkore
International
Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Atkore
Consolidated
|
|
|
Cash flows (used for) provided by operating activities
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
$
|
80
|
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
$
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
—
|
|
|
|
—
|
|
|
|
(16
|
)
|
|
|
(6
|
)
|
|
|
—
|
|
|
|
(22
|
)
|
|
Change in due to (from) subsidiaries
|
|
|
—
|
|
|
|
94
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(94
|
)
|
|
|
—
|
|
|
Acquisitions of businesses, net of cash acquired
|
|
|
—
|
|
|
|
(38
|
)
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(40
|
)
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities
|
|
|
—
|
|
|
|
56
|
|
|
|
(9
|
)
|
|
|
(6
|
)
|
|
|
(94
|
)
|
|
|
(53
|
)
|
|
Net cash provided by discontinued investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
40
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities
|
|
|
—
|
|
|
|
56
|
|
|
|
31
|
|
|
|
(6
|
)
|
|
|
(94
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under Credit Facility
|
|
|
—
|
|
|
|
495
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
495
|
|
|
Repayments under Credit Facility
|
|
|
—
|
|
|
|
(541
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(541
|
)
|
|
Repayments of other long-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Proceeds from short-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
|
—
|
|
|
|
7
|
|
|
Repayments of short-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
Change in due to (from) subsidiaries
|
|
|
—
|
|
|
|
—
|
|
|
|
(94
|
)
|
|
|
—
|
|
|
|
94
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used for) provided by financing activities
|
|
|
—
|
|
|
|
(46
|
)
|
|
|
(95
|
)
|
|
|
6
|
|
|
|
94
|
|
|
|
(41
|
)
|
|
Net cash provided by discontinued financing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used for) provided by financing activities
|
|
|
—
|
|
|
|
(46
|
)
|
|
|
(95
|
)
|
|
|
6
|
|
|
|
94
|
|
|
|
(41
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of currency translation on cash
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
|
|
(12
|
)
|
|
|
—
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48
|
|
|
|
—
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 84 -
Successor Company
Condensed Consolidated Statement of Cash Flows
For the Period from December 23, 2010 to September 30, 2011
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atkore
International
Holdings
|
|
|
Atkore
International
Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Atkore
Consolidated
|
|
|
Cash flows (used for) provided by operating activities
|
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
45
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
—
|
|
|
|
—
|
|
|
|
(30
|
)
|
|
|
(8
|
)
|
|
|
—
|
|
|
|
(38
|
)
|
|
Change in due to (from) subsidiaries
|
|
|
—
|
|
|
|
12
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12
|
)
|
|
|
—
|
|
|
Purchase price adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
(12
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(12
|
)
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) continuing investing activities
|
|
|
—
|
|
|
|
12
|
|
|
|
(42
|
)
|
|
|
(7
|
)
|
|
|
(12
|
)
|
|
|
(49
|
)
|
|
Net cash used for discontinued investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities
|
|
|
—
|
|
|
|
12
|
|
|
|
(43
|
)
|
|
|
(7
|
)
|
|
|
(12
|
)
|
|
|
(50
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of long-term debt due to Tyco International Ltd. and its affiliates, net
|
|
|
—
|
|
|
|
—
|
|
|
|
(400
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(400
|
)
|
|
Proceeds from issuance of senior secured notes
|
|
|
—
|
|
|
|
410
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
410
|
|
|
Borrowings under Credit Facility
|
|
|
—
|
|
|
|
471
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
471
|
|
|
Repayments under Credit Facility
|
|
|
—
|
|
|
|
(425
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(425
|
)
|
|
Issuance of long-term debt to subsidiaries
|
|
|
—
|
|
|
|
(411
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(411
|
)
|
|
Proceeds from long-term debt from Atkore International Inc
|
|
|
—
|
|
|
|
—
|
|
|
|
399
|
|
|
|
—
|
|
|
|
12
|
|
|
|
411
|
|
|
Change in due to (from) Atkore International
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
Payment of debt issuance costs
|
|
|
—
|
|
|
|
(38
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(38
|
)
|
|
Change in parent company investment
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
Payment of short-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
(3
|
)
|
|
Proceeds from short-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
Capital contribution
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) continuing financing activities
|
|
|
—
|
|
|
|
6
|
|
|
|
(2
|
)
|
|
|
3
|
|
|
|
12
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by discontinued financing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) financing activities
|
|
|
—
|
|
|
|
6
|
|
|
|
(2
|
)
|
|
|
3
|
|
|
|
12
|
|
|
|
19
|
|
|
Effect of currency translation on cash
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34
|
|
|
|
—
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14
|
|
|
|
—
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 85 -
Predecessor Company
Condensed Combined Statement of Cash Flows
For the Period from September 25, 2010 to December 22, 2010
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Atkore
Combined
|
|
|
Cash flows (used for) provided by operating activities
|
|
$
|
(77
|
)
|
|
$
|
10
|
|
|
$
|
(67
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(10
|
)
|
|
|
(2
|
)
|
|
|
(12
|
)
|
|
Change in due to (from) Tyco International Ltd. and its affiliates
|
|
|
405
|
|
|
|
(48
|
)
|
|
|
357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) continuing investing activities
|
|
|
395
|
|
|
|
(50
|
)
|
|
|
345
|
|
|
Net cash provided by (used for) discontinued investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities
|
|
|
395
|
|
|
|
(50
|
)
|
|
|
345
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of long-term debt due to Tyco International Ltd. and its affiliates, net
|
|
|
(135
|
)
|
|
|
(165
|
)
|
|
|
(300
|
)
|
|
Proceeds from short-term debt
|
|
|
—
|
|
|
|
4
|
|
|
|
4
|
|
|
Change in parent company investment
|
|
|
(183
|
)
|
|
|
182
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used for) provided by continuing financing activities
|
|
|
(318
|
)
|
|
|
21
|
|
|
|
(297
|
)
|
|
Net cash provided by discontinued financing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net cash (used for) provided by financing activities
|
|
|
(318
|
)
|
|
|
21
|
|
|
|
(297
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
—
|
|
|
|
(19
|
)
|
|
|
(19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
33
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 86 -
Predecessor Company
Condensed Combined Statement of Cash Flows
For the Fiscal Year Ended September 24, 2010
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Atkore
Combined
|
|
|
Cash flows provided by (used for) operating activities
|
|
$
|
60
|
|
|
$
|
(30
|
)
|
|
$
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(34
|
)
|
|
|
(11
|
)
|
|
|
(45
|
)
|
|
Change in due to (from) Tyco International Ltd. and its affiliates
|
|
|
67
|
|
|
|
69
|
|
|
|
136
|
|
|
Proceeds from sale of fixed assets
|
|
|
3
|
|
|
|
—
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by continuing investing activities
|
|
|
36
|
|
|
|
58
|
|
|
|
94
|
|
|
Net cash (used for) discontinued investing activities
|
|
|
(40
|
)
|
|
|
—
|
|
|
|
(40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used for) provided by investing activities
|
|
|
(4
|
)
|
|
|
58
|
|
|
|
54
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds of long-term debt due to Tyco International Ltd. and its affiliates, net
|
|
|
—
|
|
|
|
12
|
|
|
|
12
|
|
|
Repayments of long-term debt due to Tyco International Ltd. and its affiliates, net
|
|
|
—
|
|
|
|
(22
|
)
|
|
|
(22
|
)
|
|
Change in parent company investment
|
|
|
(56
|
)
|
|
|
(16
|
)
|
|
|
(72
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for continuing financing activities
|
|
|
(56
|
)
|
|
|
(26
|
)
|
|
|
(82
|
)
|
|
Net cash provided by discontinued financing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net cash used for financing activities
|
|
|
(56
|
)
|
|
|
(26
|
)
|
|
|
(82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
—
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
31
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 87 -
19. Selected Quarterly Data (Unaudited)
The Company reports its interim quarterly periods on a 13-week basis ending on a Friday with the fiscal year ending on
September 28 for fiscal year 2012. In fiscal year 2012, the Company’s interim quarterly periods ended December 30, March 30, June 29, and September 28; and in fiscal year 2011, the Company’s interim quarterly
periods ended for the period from December 23, 2010 to September 30, 2011 on December 24, March 25, June 24, and September 30, respectively.
Selected quarterly financial information is presented in the table below for the quarterly periods of fiscal year 2012 and fiscal year 2011 which is the first year of the Company’s existence as an
independent, stand-alone entity.
We have reclassified certain prior period amounts to conform to the current period
presentation. Included with the reclassifications are restatements for discontinued operations, as described in Note 17 ($ in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2012
|
|
|
|
|
Successor Company
|
|
|
|
|
December 30
|
|
|
March 30
|
|
|
June 29
|
|
|
September 28
|
|
|
Net Sales
|
|
$
|
371
|
|
|
$
|
427
|
|
|
$
|
428
|
|
|
$
|
461
|
|
|
Gross profit
|
|
|
47
|
|
|
|
71
|
|
|
|
62
|
|
|
|
56
|
|
|
(Loss) income from continuing operations, net of income tax
|
|
|
(7
|
)
|
|
|
6
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Loss from discontinued operations and disposal, net of income tax
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
—
|
|
|
Net (loss) income
|
|
$
|
(8
|
)
|
|
$
|
4
|
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2011
|
|
|
|
|
Predecessor Company
|
|
|
|
|
Successor Company
|
|
|
|
|
For the period from
September 25, 2010
to December 22, 2010
|
|
|
|
|
December 24
|
|
|
March 25
|
|
|
June 24
|
|
|
September 30
|
|
|
Net Sales
|
|
$
|
340
|
|
|
|
|
$
|
—
|
|
|
$
|
392
|
|
|
$
|
417
|
|
|
$
|
449
|
|
|
Gross profit
|
|
|
50
|
|
|
|
|
|
—
|
|
|
|
64
|
|
|
|
80
|
|
|
|
46
|
|
|
(Loss) income from continuing operations, net of income tax
|
|
|
(1
|
)
|
|
|
|
|
(15
|
)
|
|
|
3
|
|
|
|
14
|
|
|
|
(18
|
)
|
|
(Loss) income from discontinued operations and disposal, net of income tax
|
|
|
(2
|
)
|
|
|
|
|
—
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Net (loss) income
|
|
$
|
(3
|
)
|
|
|
|
$
|
(15
|
)
|
|
$
|
4
|
|
|
$
|
13
|
|
|
$
|
(19
|
)
|
20. Subsequent Events
On November 28, 2012, the Company made the decision to shut down an underperforming facility. The closure is
expected to be completed in the third quarter of fiscal year 2013.
- 88 -
