16 CONSOLIDATING FINANCIAL STATEMENTS

In connection with the combination with Russell Hobbs, Spectrum Brands, with its domestic subsidiaries and SB/RH Holdings, LLC as guarantors, issued the 9.5% Notes under the 2018 Indenture. (See Note 6, "Debt," for further information on the the 9.5% Notes under the 2018 Indenture.)

The following consolidating financial statements illustrate the components of the consolidated financial statements of the Company. Investments in subsidiaries are accounted for using the equity method for purposes of illustrating the consolidating presentation. Earnings of subsidiaries are therefore reflected in the Company's and Guarantor Subsidiaries' investment accounts and earnings. The elimination entries presented herein eliminate investments in subsidiaries and intercompany balances and transactions. Separate consolidated financial statements of the Guarantor Subsidiaries are not presented because management has determined that such financial statements would not be material to investors.

SPECTRUM BRANDS, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Financial Position

April 1, 2012

(Unaudited)

(Amounts in thousands)


	Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	464		$	2,316		$	48,908	$	—		$	51,688
Receivables:
Trade accounts receivables, net of allowances		39,827			126,714			203,699		—			370,240
Intercompany receivables		824,090			902,397			440,731		(2,165,609	)		1,609
Other		4,453			6,119			34,554		—			45,126
Inventories		96,768			228,185			231,377		(5,297	)		551,033
Deferred income taxes		(8,290	)		25,135			7,653		1,298			25,796
Prepaid expenses and other		19,098			11,959			29,175		59			60,291

Total current assets		976,410			1,302,825			996,097		(2,169,549	)		1,105,783
Property, plant and equipment, net		58,121			46,068			103,655		—			207,844
Long term intercompany receivables		141,395			134,859			114,995		(391,249	)		—
Deferred charges and other		15,043			4,532			20,504		—			40,079
Goodwill		67,722			438,864			190,184		—			696,770
Intangible assets, net		520,188			799,434			435,382		—			1,755,004
Debt issuance costs		44,901			—			—		—			44,901
Investments in subsidiaries		2,606,720			1,109,336			—		(3,716,056	)		—

Total assets	$	4,430,500		$	3,835,918		$	1,860,817	$	(6,276,854	)	$	3,850,381

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	5,574		$	1,667		$	26,665	$	—		$	33,906
Accounts payable		1,412,955			511,227			258,602		(1,922,303	)		260,481
Accrued liabilities:
Wages and benefits		13,758			9,435			32,208		—			55,401
Income taxes payable		611			304			27,271		—			28,186
Accrued interest		32,961			—			64		—			33,025
Other		16,590			36,353			57,529		—			110,472

Total current liabilities		1,482,449			558,986			402,339		(1,922,303	)		521,471
Long-term debt, net of current maturities		1,822,569			468,607			191,483		(634,494	)		1,848,165
Employee benefit obligations, net of current portion		24,012			—			55,981		—			79,993
Deferred income taxes		93,235			201,250			82,869		—			377,354
Other		18,277			355			18,809		—			37,441

Total liabilities		3,440,542			1,229,198			751,481		(2,556,797	)		2,864,424
Shareholders' equity:
Other equity		1,345,846			1,215,858			985,194		(2,201,055	)		1,345,843
Accumulated (deficit) retained earnings		(266,166	)		1,466,190			115,002		(1,665,473	)		(350,447	)
Accumulated other comprehensive (deficit) income		(89,722	)		(75,328	)		9,140		146,471			(9,439	)

Total shareholders' equity (deficit)		989,958			2,606,720			1,109,336		(3,720,057	)		985,957

Total liabilities and shareholders' equity	$	4,430,500		$	3,835,918		$	1,860,817	$	(6,276,854	)	$	3,850,381

SPECTRUM BRANDS, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Financial Position

September 30, 2011

(Unaudited)

(Amounts in thousands)


	Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations			Consolidated Total
ASSETS
Current assets:
Cash and cash equivalents	$	49		$	8,789		$	133,576	$	—		$	142,414
Receivables:
Trade accounts receivables, net of allowances		64,832			115,440			176,333		—			356,605
Intercompany receivables		550,640			907,730			392,044		(1,854,857	)		(4,443	)
Other		2,144			5,527			30,007		—			37,678
Inventories		75,652			179,506			183,640		(4,168	)		434,630
Deferred income taxes		(7,285	)		26,436			8,037		982			28,170
Prepaid expenses and other		18,286			4,538			25,968		—			48,792

Total current assets		704,318			1,247,966			949,605		(1,858,043	)		1,043,846
Property, plant and equipment, net		57,669			43,808			104,912		—			206,389
Long term intercompany receivables		136,709			134,313			127,175		(398,197	)		—
Deferred charges and other		11,364			4,725			20,735		—			36,824
Goodwill		67,722			354,481			188,135		—			610,338
Intangible assets, net		525,409			714,710			443,790		—			1,683,909
Debt issuance costs		40,957			—			—		—			40,957
Investments in subsidiaries		2,330,632			1,022,634			—		(3,353,266	)		—

Total assets	$	3,874,780		$	3,522,637		$	1,834,352	$	(5,609,506	)	$	3,622,263

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	30,585		$	1,036		$	9,469	$	—		$	41,090
Accounts payable		1,338,536			455,696			283,669		(1,754,730	)		323,171
Accrued liabilities:
Wages and benefits		20,377			13,396			37,172		—			70,945
Income taxes payable		366			(21	)		31,261		—			31,606
Accrued interest		30,361			—			106		—			30,467
Other		20,661			45,827			68,077		—			134,565

Total current liabilities		1,440,886			515,934			429,754		(1,754,730	)		631,844
Long-term debt, net of current maturities		1,503,990			307,087			222,753		(498,308	)		1,535,522
Employee benefit obligations, net of current portion		17,408			7,301			59,093		—			83,802
Deferred income taxes		86,248			169,838			81,250		—			337,336
Other		22,205			3,564			18,868		—			44,637

Total liabilities		3,070,737			1,003,724			811,718		(2,253,038	)		2,633,141
Shareholders' equity:
Other equity		1,338,735			1,693,632			980,167		(2,673,800	)		1,338,734
Accumulated (deficit) retained earnings		(426,165	)		922,638			37,719		(869,358	)		(335,166	)
Accumulated other comprehensive (deficit) income		(108,527	)		(97,357	)		4,748		186,690			(14,446	)

Total shareholders' equity (deficit)		804,043			2,518,913			1,022,634		(3,356,468	)		989,122

Total liabilities and shareholders' equity	$	3,874,780		$	3,522,637		$	1,834,352	$	(5,609,506	)	$	3,622,263

SPECTRUM BRANDS, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

Three Month Period Ended April 1, 2012

(Unaudited)

(Amounts in thousands)


	Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations			Consolidated Total
Net sales	$	137,940		$	298,347		$	354,108		$	(44,110	)	$	746,285
Cost of goods sold		101,967			203,319			222,646			(43,338	)		484,594
Restructuring and related charges		—			1,206			454			—			1,660

Gross profit		35,973			93,822			131,008			(772	)		260,031
Operating expenses:
Selling		17,675			41,291			71,185			(239	)		129,912
General and administrative		16,751			21,361			18,222			4			56,338
Research and development		4,609			2,439			910			—			7,958
Acquisition and integration related charges		987			4,275			2,489			—			7,751
Restructuring and related charges		660			1,716			233			—			2,609

		40,682			71,082			93,039			(235	)		204,568
Operating (loss) income		(4,709	)		22,740			37,969			(537	)		55,463
Interest expense		64,582			1,162			3,524			5			69,273
Other (income) expense, net		(37,456	)		(31,849	)		(1,274	)		68,387			(2,192	)

(Loss) income from continuing operations before income taxes		(31,835	)		53,427			35,719			(68,929	)		(11,618	)
Income tax (benefit)expense		(3,460	)		13,448			7,400			(555	)		16,833

Net (loss) income	$	(28,375	)	$	39,979		$	28,319		$	(68,374	)	$	(28,451	)

SPECTRUM BRANDS, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

Three Month Period Ended April 3, 2011

(Unaudited)

(Amounts in thousands)


	Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations			Consolidated Total
Net sales	$	91,588		$	317,344		$	315,655	$	(30,702	)	$	693,885
Cost of goods sold		49,800			226,669			190,210		(30,286	)		436,393
Restructuring and related charges		—			1,803			250		—			2,053

Gross profit		41,788			88,872			125,195		(416	)		255,439
Operating expenses:
Selling		15,916			43,567			71,041		(163	)		130,361
General and administrative		19,405			18,482			20,461		—			58,348
Research and development		4,775			3,215			808		—			8,798
Acquisition and integration related charges		1,959			2,855			2,774		—			7,588
Restructuring and related charges		638			1,964			492		—			3,094

		42,693			70,083			95,576		(163	)		208,189
Operating (loss)income		(905	)		18,789			29,619		(253	)		47,250
Interest expense		67,385			399			4,648		(1	)		72,431
Other (income) expense, net		(61,951	)		(40,774	)		428		102,010			(287	)

(Loss) income from continuing operations before income taxes		(6,339	)		59,164			24,543		(102,262	)		(24,894	)
Income tax expense		3,000			20,603			1,515		13			25,131

Net (loss) income	$	(9,339	)	$	38,561		$	23,028	$	(102,275	)	$	(50,025	)

SPECTRUM BRANDS, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

Six Month Period Ended April 1, 2012

(Unaudited)

(Amounts in thousands)


	Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations			Consolidated Total
Net sales	$	339,938		$	553,892		$	785,565		$	(84,339	)	$	1,595,056
Cost of goods sold		245,005			394,329			488,195			(82,795	)		1,044,734
Restructuring and related charges		—			2,791			3,474			—			6,265

Gross profit		94,933			156,772			293,896			(1,544	)		544,057
Operating expenses:
Selling		37,755			75,634			148,753			(471	)		261,671
General and administrative		31,191			37,447			38,125			4			106,767
Research and development		8,600			4,699			1,894			—			15,193
Acquisition and integration related charges		6,309			5,928			3,114			—			15,351
Restructuring and related charges		1,456			3,161			1,112			—			5,729

		85,311			126,869			192,998			(467	)		404,711
Operating income		9,622			29,903			100,898			(1,077	)		139,346
Interest expense		101,053			2,359			7,070			1			110,483
Other (income) expense, net		(84,981	)		(69,672	)		(45	)		154,699			1

(Loss) income from continuing operations before income taxes		(6,450	)		97,216			93,873			(155,777	)		28,862
Income tax expense		8,031			16,185			20,242			(315	)		44,143

Net (loss) income	$	(14,481	)	$	81,031		$	73,631		$	(155,462	)	$	(15,281	)

SPECTRUM BRANDS, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

Six Month Period Ended April 3, 2011

(Unaudited)

(Amounts in thousands)


	Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations			Consolidated Total
Net sales	$	210,517		$	657,120		$	781,950	$	(94,635	)	$	1,554,952
Cost of goods sold		111,935			494,417			484,524		(93,249	)		997,627
Restructuring and related charges		—			2,547			100		—			2,647

Gross profit		98,582			160,156			297,326		(1,386	)		554,678
Operating expenses:
Selling		36,388			84,145			150,331		(283	)		270,581
General and administrative		35,883			38,511			44,699		—			119,093
Research and development		8,751			5,979			1,635		—			16,365
Acquisition and integration related charges		4,340			12,917			6,786		—			24,043
Restructuring and related charges		2,633			4,916			516		—			8,065

		87,995			146,468			203,967		(283	)		438,147
Operating income		10,587			13,688			93,359		(1,103	)		116,531
Interest expense		113,940			766			10,805		14			125,525
Other (income) expense, net		(128,131	)		(72,491	)		250		200,974			602

Income from continuing operations before income taxes		24,778			85,413			82,304		(202,091	)		(9,596	)
Income tax expense		21,148			19,685			19,355		(14	)		60,174

Net income (loss)	$	3,630		$	65,728		$	62,949	$	(202,077	)	$	(69,770	)

SPECTRUM BRANDS, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Cash Flows

Six Month Period Ended April 1, 2012

(Unaudited)

(Amounts in thousands)


	Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations			Consolidated Total
Net cash (used) provided by operating activities	$	(27,616	)	$	236,366		$	53,143		$	(416,697	)	$	(154,804	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(6,982	)		(5,597	)		(6,011	)		—			(18,590	)
Proceeds from sale of property, plant and equipment		—			7			75			—			82
Acquisition of Black Flag		—			(43,750	)		—			—			(43,750	)
Acquisition of FURminator, net of cash		—			(139,390	)		—			—			(139,390	)
Other investing		—			(118	)		(1,927	)		—			(2,045	)

Net cash used by investing activities		(6,982	)		(188,848	)		(7,863	)		—			(203,693	)
Cash flows from financing activities:
Proceeds from 6.75% Notes		300,000			—			—			—			300,000
Payment of 12% Notes, including tender and call premium		(270,431	)		—			—			—			(270,431	)
Proceeds from 9.5% Notes, including premium		217,000			—			—			—			217,000
Payment of senior credit facilities, excluding ABL revolving credit facility		(2,727	)		—			—			—			(2,727	)
ABL revolving credit facility, net		50,000			—			—			—			50,000
Reduction of other debt		(25,000	)		—			(1,371	)		—			(26,371	)
Proceeds from other debt financing		—			—			11,866			—			11,866
Debt issuance costs		(9,941	)		—			—			—			(9,941	)
Other financing activities		—			(954	)		—			—			(954	)
Advances related to intercompany transactions		(223,888	)		(53,037	)		(139,772	)		416,697			—

Net cash provided (used) by financing activities		35,013			(53,991	)		(129,277	)		416,697			268,442
Effect of exchange rate changes on cash and cash equivalents		—			—			(671	)		—			(671	)

Net increase (decrease) in cash and cash equivalents		415			(6,473	)		(84,668	)		—			(90,726	)
Cash and cash equivalents, beginning of period		49			8,789			133,576			—			142,414

Cash and cash equivalents, end of period	$	464		$	2,316		$	48,908		$	—		$	51,688

SPECTRUM BRANDS, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Cash Flows

Six Month Period Ended April 3, 2011

(Unaudited)

(Amounts in thousands)


	Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations			Consolidated Total
Net cash provided (used) by operating activities		72,118			(28,312	)		660,823			(826,904	)		(122,275	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(8,132	)		(5,638	)		(4,942	)		—			(18,712	)
Proceeds from sale of property, plant and equipment		—			82			49			—			131
Acquisition, net of cash		—			(10,278	)		—			—			(10,278	)
Proceeds from sale of assets—Ningbo		—			—			6,997			—			6,997
Other investing		—			(1,530	)		—			—			(1,530	)

Net cash (used) provided by investing activities		(8,132	)		(17,364	)		2,104			—			(23,392	)
Cash flows from financing activities:
Payment of senior credit facilities, excluding ABL revolving credit facility		(71,700	)		—			—			—			(71,700	)
ABL revolving credit facility, net		118,000			—			—			—			118,000
Reduction of other debt		—			—			(367	)		—			(367	)
Proceeds from other debt financing		22,496			—			—			—			22,496
Debt issuance costs		(8,648	)		—			—			—			(8,648	)
Prepayment penalty of term loan facility		(7,500	)		—			—			—			(7,500	)
Treasury stock purchases		(3,241	)		—			—			—			(3,241	)
(Advances related to) proceeds from intercompany transactions		(165,634	)		48,471			(709,741	)		826,904			—

Net cash (used) provided by financing activities		(116,227	)		48,471			(710,108	)		826,904			49,040
Effect of exchange rate changes on cash and cash equivalents		—			—			(896	)		—			(896	)

Net (decrease) increase in cash and cash equivalents		(52,241	)		2,795			(48,077	)		—			(97,523	)
Cash and cash equivalents, beginning of period		52,580			2,723			115,311			—			170,614

Cash and cash equivalents, end of period	$	339		$	5,518		$	67,234		$	—		$	73,091