Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________________ 
FORM 10-Q
__________________________________________________________
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File No. 001-35938
__________________________________________________________
GLOBAL BRASS AND COPPER HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
__________________________________________________________ 
Delaware
 
06-1826563
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
 
 
475 N. Martingale Road Suite 1050
Schaumburg, IL
 
60173
(Address of principal executive offices)
 
(Zip Code)
(847) 240-4700
(Registrant’s telephone number, including area code)
__________________________________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
x
 
 
 
 
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes  ¨     No  x
On April 28, 2016, there were 21,483,715 shares of common stock outstanding.
 


Table of Contents

Global Brass and Copper Holdings, Inc.
Index
March 31, 2016
Table of Contents
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 

i

Table of Contents

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
Global Brass and Copper Holdings, Inc.
Consolidated Balance Sheets (Unaudited)
 
 
As of
(In millions, except share and par value data)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash
$
48.7

 
$
83.5

 
$
52.1

Accounts receivable (net of allowance of $0.6, $1.2 and $1.0 at March 31, 2016, December 31, 2015 and March 31, 2015, respectively)
142.8

 
119.6

 
191.9

Inventories
159.6

 
176.3

 
184.8

Prepaid expenses and other current assets
17.6

 
17.4

 
34.0

Income tax receivable
0.7

 
2.4

 
4.0

Total current assets
369.4

 
399.2

 
466.8

Property, plant and equipment
163.8

 
158.8

 
140.5

Less: Accumulated depreciation
(51.1
)
 
(47.7
)
 
(38.3
)
Property, plant and equipment, net
112.7

 
111.1

 
102.2

Investment in joint venture

 

 
1.7

Goodwill
4.4

 
4.4

 
4.4

Intangible assets, net
0.5

 
0.5

 
0.6

Deferred income taxes
36.9

 
38.0

 
31.0

Other noncurrent assets
3.7

 
4.0

 
5.0

Total assets
$
527.6

 
$
557.2

 
$
611.7

Liabilities and equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Current portion of capital lease obligation
$
1.1

 
$
1.1

 
$
1.0

Accounts payable
68.9

 
71.0

 
98.4

Accrued liabilities
41.6

 
53.9

 
70.4

Accrued interest
10.1

 
3.0

 
12.1

Income tax payable
0.5

 
0.2

 
0.2

Total current liabilities
122.2

 
129.2

 
182.1

Noncurrent portion of debt
307.3

 
342.0

 
370.6

Other noncurrent liabilities
25.3

 
25.3

 
25.4

Total liabilities
454.8

 
496.5

 
578.1

Commitments and Contingencies (Note 11)

 

 

Global Brass and Copper Holdings, Inc. stockholders’ equity:
 
 
 
 
 
Common stock - $0.01 par value; 80,000,000 shares authorized; 21,553,883, 21,553,883 and 21,513,021 shares issued at March 31, 2016, December 31, 2015 and March 31, 2015, respectively
0.2

 
0.2

 
0.2

Additional paid-in capital
38.1

 
36.9

 
33.2

Retained earnings (accumulated deficit)
33.7

 
22.3

 
(2.8
)
Treasury stock - 64,238, 46,729 and 32,344 shares at March 31, 2016, December 31, 2015 and March 31, 2015, respectively
(1.1
)
 
(0.7
)
 
(0.5
)
Accumulated other comprehensive loss
(2.4
)
 
(2.3
)
 
(0.8
)
Total Global Brass and Copper Holdings, Inc. stockholders’ equity
68.5

 
56.4

 
29.3

Noncontrolling interest
4.3

 
4.3

 
4.3

Total equity
72.8

 
60.7

 
33.6

Total liabilities and equity
$
527.6

 
$
557.2

 
$
611.7

The accompanying notes are an integral part of these consolidated financial statements.

1

Table of Contents

Global Brass and Copper Holdings, Inc.
Consolidated Statements of Operations (Unaudited)
 
 
Three Months Ended
March 31,
(In millions, except per share data)
2016
 
2015
Net sales
$
328.9

 
$
400.2

Cost of sales
(279.4
)
 
(356.3
)
Gross profit
49.5

 
43.9

Selling, general and administrative expenses
(19.7
)
 
(21.4
)
Operating income
29.8

 
22.5

Interest expense
(8.4
)
 
(10.0
)
Loss on extinguishment of debt
(2.9
)
 

Other income (expense), net
0.4

 
(0.1
)
Income before provision for income taxes and equity income
18.9

 
12.4

Provision for income taxes
(6.7
)
 
(4.5
)
Income before equity income
12.2

 
7.9

Equity income, net of tax

 
0.2

Net income
12.2

 
8.1

Net income attributable to noncontrolling interest

 

Net income attributable to Global Brass and Copper Holdings, Inc.
$
12.2

 
$
8.1

Net income attributable to Global Brass and Copper Holdings, Inc. per common share:
 
 
 
Basic
$
0.57

 
$
0.38

Diluted
$
0.57

 
$
0.38

Weighted average common shares outstanding:
 
 
 
Basic
21.3

 
21.2

Diluted
21.5

 
21.3

Dividends declared per common share
$
0.0375

 
$
0.0375

The accompanying notes are an integral part of these consolidated financial statements.

2

Table of Contents

Global Brass and Copper Holdings, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
 
 
Three Months Ended
March 31,
(In millions)
2016
 
2015
Net income
$
12.2

 
$
8.1

Other comprehensive loss:
 
 
 
Foreign currency translation adjustment
(0.2
)
 
(0.2
)
Income tax benefit on foreign currency translation adjustment
0.1

 
0.1

Comprehensive income
12.1

 
8.0

Comprehensive income attributable to noncontrolling interest

 
(0.1
)
Comprehensive income attributable to Global Brass and Copper Holdings, Inc.
$
12.1

 
$
7.9

The accompanying notes are an integral part of these consolidated financial statements.

3

Table of Contents

Global Brass and Copper Holdings, Inc.
Consolidated Statements of Changes in Equity (Unaudited)
 
(In millions, except share data)
Shares Outstanding
 
Common
stock
 
Additional
paid-in
capital
 
Retained earnings / (accumulated
deficit)
 
Treasury
stock
 
Accumulated
other
comprehensive
(loss) income
 
Total
Global Brass
and Copper
Holdings, Inc.
stockholders’
equity/(deficit)
 
Noncontrolling
interest
 
Total
equity
Balance at December 31, 2014
21,340,207

 
$
0.2

 
$
32.5

 
$
(10.1
)
 
$
(0.4
)
 
$
(0.6
)
 
$
21.6

 
$
4.4

 
$
26.0

Share-based compensation
143,614

 

 
0.7

 

 

 

 
0.7

 

 
0.7

Share repurchases
(3,144
)
 

 

 

 
(0.1
)
 

 
(0.1
)
 

 
(0.1
)
Dividends declared

 

 

 
(0.8
)
 

 

 
(0.8
)
 

 
(0.8
)
Distribution to noncontrolling interest

 

 

 

 

 

 

 
(0.2
)
 
(0.2
)
Net income

 

 

 
8.1

 

 

 
8.1

 

 
8.1

Other comprehensive (loss) income, net of tax

 

 

 

 

 
(0.2
)
 
(0.2
)
 
0.1

 
(0.1
)
Balance at March 31, 2015
21,480,677

 
$
0.2

 
$
33.2

 
$
(2.8
)
 
$
(0.5
)
 
$
(0.8
)
 
$
29.3

 
$
4.3

 
$
33.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
21,507,154

 
$
0.2

 
$
36.9

 
$
22.3

 
$
(0.7
)
 
$
(2.3
)
 
$
56.4

 
$
4.3

 
$
60.7

Share-based compensation

 

 
1.1

 

 

 

 
1.1

 

 
1.1

Share repurchases
(17,509
)
 

 

 

 
(0.4
)
 

 
(0.4
)
 

 
(0.4
)
Excess tax benefit on share-based compensation

 

 
0.1

 

 

 

 
0.1

 

 
0.1

Dividends declared

 

 

 
(0.8
)
 

 

 
(0.8
)
 

 
(0.8
)
Net income

 

 

 
12.2

 

 

 
12.2

 

 
12.2

Other comprehensive loss, net of tax

 

 

 

 

 
(0.1
)
 
(0.1
)
 

 
(0.1
)
Balance at March 31, 2016
21,489,645

 
$
0.2

 
$
38.1

 
$
33.7

 
$
(1.1
)
 
$
(2.4
)
 
$
68.5

 
$
4.3

 
$
72.8

The accompanying notes are an integral part of these consolidated financial statements.

4

Table of Contents

Global Brass and Copper Holdings, Inc.
Consolidated Statements of Cash Flows (Unaudited)
 
 
Three Months Ended March 31,
(In millions)
2016
 
2015
Cash flows from operating activities
 
 
 
Net income
$
12.2

 
$
8.1

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Lower of cost or market adjustment to inventory
0.3

 
1.9

Unrealized gain on derivatives
(1.9
)
 
(1.0
)
Depreciation
3.6

 
3.3

Amortization of debt issuance costs
0.7

 
0.7

Loss on extinguishment of debt
2.9

 

Share-based compensation expense
1.1

 
0.7

Excess tax benefit from share-based compensation
(0.1
)
 

Provision for bad debts, net of reductions
(0.3
)
 

Deferred income taxes
1.2

 
(0.8
)
Equity earnings, net of distributions

 
0.2

Change in assets and liabilities:
 
 
 
Accounts receivable
(22.9
)
 
(39.6
)
Inventories
16.3

 
2.2

Prepaid expenses and other current assets
1.8

 
(6.8
)
Accounts payable
0.4

 
18.5

Accrued liabilities
(12.5
)
 
13.5

Accrued interest
7.1

 
8.9

Income taxes, net
2.1

 
4.0

Net cash provided by operating activities
12.0

 
13.8

Cash flows from investing activities
 
 
 
Capital expenditures
(7.6
)
 
(5.0
)
Net cash used in investing activities
(7.6
)
 
(5.0
)
Cash flows from financing activities
 
 
 
Borrowings on ABL Facility
0.4

 
0.3

Payments on ABL Facility
(0.4
)
 
(0.3
)
Purchases of Senior Secured Notes
(35.5
)
 

Premium payment on partial extinguishment of debt
(2.2
)
 

Principal payments under capital lease obligation
(0.3
)
 
(0.2
)
Dividends paid
(0.8
)
 
(0.8
)
Distribution to noncontrolling interest owner

 
(0.2
)
Excess tax benefit from share-based compensation
0.1

 

Share repurchases
(0.4
)
 
(0.1
)
Net cash used in financing activities
(39.1
)
 
(1.3
)
Effect of foreign currency exchange rates
(0.1
)
 

Net (decrease) increase in cash
(34.8
)
 
7.5

Cash at beginning of period
83.5

 
44.6

Cash at end of period
$
48.7

 
$
52.1

Noncash investing and financing activities
 
 
 
Purchases of property, plant and equipment not yet paid
$
1.9

 
$
1.0

The accompanying notes are an integral part of these consolidated financial statements.

5

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)


1.
Basis of Presentation and Principles of Consolidation
Global Brass and Copper Holdings, Inc. (“Holdings,” the “Company,” “we,” “us,” or “our”) through its wholly-owned principal operating subsidiary, Global Brass and Copper, Inc. (“GBC”), is operated and managed through three reportable segments: GBC Metals, LLC (“Olin Brass”), Chase Brass and Copper Company, LLC (“Chase Brass”) and A.J. Oster, LLC (“A.J. Oster”).
These unaudited consolidated financial statements include the accounts of the Company, our wholly-owned subsidiaries and our majority-owned subsidiaries in which we have a controlling interest. All intercompany accounts and transactions are eliminated in consolidation.
The accompanying unaudited interim consolidated financial statements include all normal recurring adjustments that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. The December 31, 2015 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“US GAAP”). Certain information and disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted.
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. In addition, it requires management to make estimates and assumptions that affect the reported amount of net sales and expenses during the reporting periods. Actual amounts could differ from those estimates.
Results of operations for the interim periods presented are not necessarily indicative of results which may be expected for any other interim period or for the year as a whole. There have been no significant changes to our significant accounting policies during the three months ended March 31, 2016. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company included in our Annual Report on Form 10-K for the year ended December 31, 2015.
Adoption of Accounting Standards
In 2015, we elected to early adopt Accounting Standard Update (“ASU”) No. 2015-3, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-3”) and ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), and we applied the requirements retrospectively to all periods presented in the consolidated balance sheets. Neither of these ASU’s affected the underlying accounting for interest or taxes, but rather only affected the presentation of such accounts in our consolidated financial statements. A summary of the reclassifications in the consolidated balance sheet as of March 31, 2015 is as follows:

 
March 31, 2015
(in millions)
As previously reported
 
Adjustment
 
As Revised
Current deferred income tax asset
$
30.2

  
$
(30.2
)
 
$

Total current assets
497.0

 
(30.2
)
 
466.8

Noncurrent deferred income tax asset
1.0

  
30.0

  
31.0

Other noncurrent assets
14.0

 
(9.0
)
 
5.0

Total assets
620.9

 
(9.2
)
 
611.7

Noncurrent portion of debt
379.6

 
(9.0
)
 
370.6

Noncurrent deferred income tax liability
0.2

 
(0.2
)
 

Total liabilities
587.3

 
(9.2
)
 
578.1


6

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Recently Issued and Recently Adopted Accounting Pronouncements
In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-9, Compensation-Stock Compensation (Topic 718) (“ASU 2016-9”). ASU 2016-9 simplifies various aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. The provisions of ASU 2016-9 are effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. We are in the process of evaluating the impact of adoption on our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) (“ASU 2016-2”). ASU 2016-2 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease effectively finances a purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method (finance lease) or on a straight line basis over the term of the lease (operating lease). A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. ASU 2016-2 supersedes the existing guidance on accounting for leases in “Leases (Topic 840).” The provisions of ASU 2016-2 are effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted and the provisions are to be applied using a modified retrospective approach. We are in the process of evaluating the impact of adoption on our consolidated financial statements.
In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”).  ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2015. The adoption of this standard did not have a material effect on our consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-9”). The guidance provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. In August 2015, the FASB issued ASU No. 2015-14, Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”), which is an amendment to ASU 2014-9 and defers its effective date by one year to interim and annual reporting periods beginning after December 15, 2017. It permits early adoption of the standard, but not before the original effective date of December 15, 2016. Further, in March 2016, the FASB issued ASU No. 2016-8, Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (Topic 606) (“ASU 2016-8”), which clarifies the implementation guidance on principal versus agent considerations. The revenue recognition guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. We are in the process of evaluating the impact of adoption on our consolidated financial statements.

2.
Earnings Per Share
Basic earnings per share is computed based on the weighted-average number of common shares outstanding and diluted earnings per share is computed based on the weighted-average number of common shares outstanding adjusted by the number of additional shares that would have been outstanding had potentially dilutive common shares been issued. Potentially dilutive securities include nonvested share awards and stock options for which the exercise price was less than the average market price of our outstanding common stock. Nonvested performance-based share awards are included in the average diluted shares outstanding for each period if established performance criteria have been met at the end of the respective periods.

7

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

The following table sets forth the computation of basic and diluted earnings per share:
 
Three Months Ended
March 31,
(in millions, except per share data)
2016
 
2015
Numerator
 
 
 
Net income attributable to Global Brass and Copper Holdings, Inc.
$
12.2

 
$
8.1

Denominator
 
 
 
Weighted-average common shares outstanding
21.3

 
21.2

Effect of potentially dilutive securities:
 
 
 
Stock options and nonvested share awards
0.2

 
0.1

Weighted-average common shares outstanding, assuming dilution
21.5

 
21.3

 
 
 
 
Anti-dilutive shares excluded from above

 
0.3

Net income attributable to Global Brass and Copper Holdings, Inc. per common share:
 
 
 
Basic
$
0.57

 
$
0.38

Diluted
$
0.57

 
$
0.38


3.
Segment Information
Our Chief Operating Decision Maker allocates resources and evaluates performance at the divisional level. As such, we have determined that we have three reportable segments: Olin Brass, Chase Brass and A.J. Oster.
Olin Brass is a leading manufacturer, fabricator and converter of non-ferrous products, including sheet, strip, foil, tube and fabricated products. Olin Brass also rerolls and forms other alloys such as stainless steel, carbon steel and aluminum. Sheet and strip is generally manufactured from copper and copper-alloy scrap. Olin Brass’s products are used in five primary markets: building and housing, munitions, automotive, coinage, and electronics / electrical components.
Chase Brass is a leading manufacturer of brass rod in North America. Chase Brass primarily manufactures rod in round and other shapes, ranging from 1/4 inch to 4.5 inches in diameter. The key attributes of brass rod include its machinability, corrosion resistance and moderate strength, making it especially suitable for forging and machining products such as valves and fittings. Brass rod is generally manufactured from copper or copper-alloy scrap. Chase Brass produces brass rod used in production applications which can be grouped into four primary markets: building and housing, transportation, electronics / electrical components and industrial machinery and equipment.
A.J. Oster primarily processes and distributes copper and copper-alloy sheet, strip and foil through six strategically-located service centers in the United States, Puerto Rico and Mexico. Each A.J. Oster service center reliably provides a broad range of high quality products at quick lead-times in small quantities. These capabilities, combined with A.J. Oster’s operations of precision slitting, hot tinning, traverse winding, cutting, edging, stamping and special packaging, provide value to a broad customer base. A.J. Oster’s products are used in three primary markets: building and housing, automotive and electronics / electrical components.
Corporate includes compensation for corporate executives and officers, corporate office and administrative salaries, and professional fees for accounting, tax and legal services. Corporate also includes interest expense, state and Federal income taxes, overhead costs, all share-based compensation expense, gains and losses associated with certain acquisitions and dispositions and the elimination of intercompany balances and transactions.
The Chief Operating Decision Maker evaluates performance and determines resource allocations based on a number of factors, the primary performance measure being adjusted EBITDA (as defined below), a non-GAAP measure.

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Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization (“EBITDA”) adjusted to exclude the following:
unrealized gains and losses on derivative contracts in support of our balanced book approach;
unrealized gains and losses associated with derivative contracts related to energy and utility costs;
non-cash losses due to lower of cost or market adjustments to inventory;
non-cash gains and losses due to the depletion of a last-in, first out (“LIFO”) layer of metal inventory;
share-based compensation expense;
loss on extinguishment of debt;
non-cash income accretion related to Dowa Olin Metal Corporation (the “Dowa Joint Venture”);
restructuring and other business transformation charges;
specified legal and professional expenses; and
certain other items.
Each of these items are excluded because our management believes they are not indicative of the ongoing performance of our core operations.
Below is a reconciliation of adjusted EBITDA of segments to income before provision for income taxes and equity income:
 
 
 
 
 
Three Months Ended
March 31,
(in millions)
2016
 
2015
Net Sales, External Customers
 
 
 
Olin Brass
$
131.6

 
$
169.4

Chase Brass
128.1

 
156.0

A.J. Oster
69.2

 
74.8

Total net sales, external customers
$
328.9

 
$
400.2

Intersegment Net Sales
 
 
 
Olin Brass
$
20.2

 
$
15.3

Chase Brass
0.1

 
0.4

A.J. Oster

 

Total intersegment net sales
$
20.3

 
$
15.7

Adjusted EBITDA
 
 
 
Olin Brass
$
13.3

 
$
9.3

Chase Brass
19.2

 
21.4

A.J. Oster
5.1

 
3.5

Total adjusted EBITDA of segments
37.6

 
34.2

Corporate and Other
(3.9
)
 
(4.9
)
Depreciation expense
(3.6
)
 
(3.3
)
Interest expense
(8.4
)
 
(10.0
)
Unrealized gain on derivative contracts (a)
1.9

 
1.0

Loss on extinguishment of debt (b)
(2.9
)
 

Specified legal/professional expenses (c)
(0.4
)
 
(1.1
)
Lower of cost or market adjustment to inventory (d)
(0.3
)
 
(1.9
)
Share-based compensation expense (e)
(1.1
)
 
(0.7
)
Restructuring and other business transformation charges (f)

 
(0.9
)
Income before provision for income taxes and equity income
$
18.9

 
$
12.4


9

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

(a)
Represents unrealized gains on derivative contracts.
(b)
Represents the loss on extinguishment of debt recognized in connection with the open market purchases of Senior Secured Notes (see Note 7, “Financing”).
(c)
Represents selected professional fees for accounting, tax, legal and consulting services incurred as a public company that exceed our expected long-term requirements.
(d)
Represents non-cash lower of cost or market charges for the write down of domestic, non-copper metal inventory.
(e)
Represents compensation expense resulting from stock compensation awards to certain employees and our Board of Directors.
(f)
Restructuring and other business transformation charges for the three months ended March 31, 2015 represent severance charges at Olin Brass.

4.
Inventories
Inventories were as follows:
 
As of
(in millions)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Raw materials and supplies
$
22.6

 
$
31.3

 
$
32.5

Work-in-process
63.6

 
69.7

 
69.8

Finished goods
73.4

 
75.3

 
82.5

Total inventories
$
159.6

 
$
176.3

 
$
184.8

Inventories include costs attributable to direct labor and manufacturing overhead, but are primarily comprised of metal costs. The metals component of inventories that is valued on a LIFO basis comprised approximately 70% of total inventory at March 31, 2016December 31, 2015 and March 31, 2015. Other manufactured inventories, including the direct labor and manufacturing overhead components and certain non-U.S. inventories, are valued on a first-in, first out (“FIFO”) basis.
During the three months ended March 31, 2016 and 2015, we reduced the recorded value of certain domestic, non-copper metal inventory by $0.3 million and $1.9 million, respectively, resulting from the decline in market value of these metals. These non-cash, lower of cost or market adjustments were recorded in cost of sales in the accompanying consolidated statements of operations.
Below is a summary of inventories valued at period-end market values compared to the as reported values.
 
As of
(in millions)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Market value
$
202.1

 
$
213.1

 
$
265.2

As reported
159.6

 
176.3

 
184.8

Excess of market over reported value
$
42.5

 
$
36.8

 
$
80.4



10

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

5.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets were as follows:
 
As of
(in millions)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Workers’ compensation plan deposits
$
6.5

 
$
6.0

 
$
6.9

Deferred cost of sales - toll customers
4.2

 
4.0

 
20.1

Derivative contract assets
2.3

 
1.8

 
1.9

Prepaid insurance
1.1

 
2.0

 
1.8

Prepaid tooling
0.3

 
0.5

 
0.7

Other
3.2

 
3.1

 
2.6

Total prepaid expenses and other current assets
$
17.6

 
$
17.4

 
$
34.0


6.    Accrued Liabilities
Accrued liabilities consisted of the following:
 
As of
(in millions)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Workers’ compensation
$
13.2

 
$
13.3

 
$
13.5

Compensation and benefits
12.3

 
23.8

 
24.6

Deferred sales revenue - toll customers
4.3

 
4.0

 
20.1

Insurance
2.6

 
2.6

 
2.4

Professional fees
2.6

 
2.5

 
2.3

Utilities
1.8

 
1.6

 
1.8

Taxes
1.2

 
1.3

 
1.6

Tooling
0.2

 
0.5

 
0.5

Other
3.4

 
4.3

 
3.6

Total accrued liabilities
$
41.6

 
$
53.9

 
$
70.4


7.
Financing
Long-term debt consisted of the following:
 
As of
(in millions)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Senior Secured Notes
$
309.8

 
$
345.3

 
$
375.0

Deferred financing fees - Senior Secured Notes
(5.9
)
 
(7.0
)
 
(9.0
)
ABL Facility

 

 

Obligations under capital lease
4.5

 
4.8

 
5.6

Total debt
308.4

 
343.1

 
371.6

Less: Current portion of capital lease obligations
(1.1
)
 
(1.1
)
 
(1.0
)
Noncurrent portion of debt
$
307.3

 
$
342.0

 
$
370.6


11

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Senior Secured Notes
We have $309.8 million of senior secured notes outstanding that mature on June 1, 2019 (the “Senior Secured Notes”) and are guaranteed by Holdings. Interest on the Senior Secured Notes accrues at the rate of 9.50% per annum and is payable semiannually in arrears on June 1 and December 1.
During the three months ended March 31, 2016, we purchased in the open market an aggregate of $35.5 million principal amount of our Senior Secured Notes for an aggregate purchase price of $37.7 million, plus accrued interest. As a result of these purchases, we recognized a loss on the extinguishment of debt of $2.9 million, which includes a premium of $2.2 million and the write-off of $0.7 million of unamortized debt issuance costs.
Subsequent to March 31, 2016, we purchased in the open market an aggregate of $4.5 million principal amount of our Senior Secured Notes for an aggregate purchase price of $4.7 million, plus accrued interest. We expect to recognize a loss on the extinguishment of debt of $0.3 million related to these purchases in the second quarter of 2016, which includes a premium of $0.2 million and the write-off of $0.1 million of unamortized debt issuance costs. We may, from time to time, continue to retire certain of our outstanding debt through open market cash purchases, privately-negotiated transactions or otherwise. Such purchases, if any, will depend on prevailing market conditions, our liquidity requirements and other factors.
The credit agreement governing the ABL Facility (hereinafter defined) and the indenture governing the Senior Secured Notes (the “Indenture”) limit the ability of GBC and its subsidiaries to pay dividends or distribute cash to Holdings and to its equityholders, although ordinary course dividends and distributions to meet the limited holding company expenses and related obligations at Holdings of up to $5.0 million per year are permitted under those agreements. Under the terms of the Indenture, GBC is also permitted to pay dividends or distribute to Holdings and its equityholders up to 50% of its “Consolidated Net Income” (as such term is used in the Indenture) from April 1, 2012 to the end of GBC’s most recently ended fiscal quarter. As of March 31, 2016, all of the net assets of the subsidiaries are restricted except for $86.2 million, which are permitted for dividend distributions under the Indenture. As of March 31, 2016, we were in compliance with all of the covenants relating to the Indenture.
ABL Facility
Available borrowings under our asset-based revolving loan facility (the “ABL Facility”) were $200.0 million, $196.9 million and $200.0 million as of March 31, 2016December 31, 2015 and March 31, 2015, respectively. As of March 31, 2016December 31, 2015 and March 31, 2015, amounts outstanding, if any, under the ABL Facility accrued interest at a rate of 4.50%, 4.50% and 4.25%, respectively. Unused amounts under the ABL Facility incur an unused line fee of 0.50% per annum, payable in full on a quarterly basis.
The ABL Facility has an expiration date of June 1, 2017 and contains various debt covenants to which we are subject on an ongoing basis. As of March 31, 2016, we were in compliance with all of the covenants under the ABL Facility.

8.
Income Taxes
The effective income tax rate, which is the provision for income taxes as a percentage of income before provision for income taxes and equity income, was 35.4% and 36.3% for the three months ended March 31, 2016 and 2015, respectively. The effective income tax rates for the three months ended March 31, 2016 and 2015 differed from the U.S. Federal statutory rate of 35% primarily due to state income taxes, utilization of foreign tax credits and the domestic manufacturing deduction.
As of March 31, 2016December 31, 2015 and March 31, 2015, we had $25.1 million, $25.1 million and $25.2 million, respectively, of unrecognized tax benefits, none of which would impact the effective tax rate, if recognized. Estimated interest and penalties related to the underpayment of income taxes are classified as a component of provision for income taxes. There were no such estimated amounts for the three months ended March 31, 2016 or 2015. Accrued interest and penalties as of March 31, 2016December 31, 2015 and March 31, 2015 were $0.1 million. Our liability for uncertain tax positions of $25.2 million, $25.2 million and $25.3 million at March 31, 2016December 31, 2015 and March 31, 2015, respectively, is presented in other noncurrent liabilities in the accompanying unaudited consolidated balance sheets.

12

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Our U.S. federal returns for the period ended December 31, 2012 and all subsequent periods remain open for audit. The majority of state returns for the period ended December 31, 2011 and all subsequent periods also remain open for audit.

9.
Derivative Contracts
We maintain a metal, energy and utility pricing risk-management strategy that uses commodity derivative contracts to minimize significant, unanticipated gains or losses that may arise from volatility of the commodity indices.
We are also exposed to credit risk and market risk. Credit risk is the risk that the counterparty might fail to fulfill its performance obligations under the terms of the derivative contract. Market risk is the risk that the value of a derivative instrument might be adversely affected by a change in commodity price. We manage the market risk associated with derivative contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.
We manage credit risk associated with derivative contracts by executing derivative instruments with counterparties that we believe are credit-worthy. The amount of such credit risk is limited to the fair value of the derivative contract plus the unpaid portion of amounts due to the Company pursuant to terms of the derivative contracts, if any. If the credit- worthiness of these counterparties deteriorates, we believe the exposure is mitigated by provisions in the derivative arrangements which allow for the legal right of offset of amounts due to the Company from the counterparties, if any, with any amounts payable to the counterparties.
The following tables provide a summary of our outstanding commodity derivative contracts:
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
(in millions, except for number of contracts)
March 31, 2016
 
December 31, 2015
 
March 31, 2015
 
Net
Notional
Amount
 
# of
Contracts
 
Net
Notional
Amount
 
# of
Contracts
 
Net
Notional
Amount
 
# of
Contracts
Metal
$
29.0

 
750

 
$
18.2

 
534

 
$
16.0

 
471

Energy and utilities
3.7

 
92

 
4.3

 
114

 
6.1

 
113

Total
$
32.7

 
842

 
$
22.5

 
648

 
$
22.1

 
584

 
As of
(in millions)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Notional amount - long
$
37.5

 
$
28.5

 
$
30.4

Notional amount - (short)
(4.8
)
 
(6.0
)
 
(8.3
)
Net long / (short)
$
32.7

 
$
22.5

 
$
22.1



13

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

The fair values of derivative contracts in the consolidated balance sheets include the impact of netting derivative assets and liabilities when a legally enforceable master netting arrangement exists. The following tables summarize the gross amounts of open derivative contracts, the net amounts presented in the consolidated balance sheets, and the collateral deposited with counterparties:
 
As of March 31, 2016
(in millions)
Gross Amounts of
Recognized Assets
 
Gross Amounts Offset in
Consolidated Balance
Sheet
 
Net Amounts of Assets
Presented in Consolidated
Balance Sheet
Metal
$
1.8

 
$
(0.7
)
 
$
1.1

Collateral on deposit
1.7

 
(0.5
)
 
1.2

Total
$
3.5

 
$
(1.2
)
 
$
2.3

 
 
 
 
 
 
Consolidated balance sheet location:
 
 
 
 
 
Prepaid expenses and other current assets
 
 
 
 
$
2.3

 
 
As of March 31, 2016
(in millions)
Gross Amounts of
Recognized Liabilities
 
Gross Amounts Offset in
Consolidated Balance
Sheet
 
Net Amounts of Liabilities
Presented in Consolidated
Balance Sheet
Metal
$
0.7

 
$
(0.7
)
 
$

Energy and utilities
0.5

 
(0.5
)
 

Total
$
1.2

 
$
(1.2
)
 
$

 
 
As of December 31, 2015
(in millions)
Gross Amounts of
Recognized Assets
 
Gross Amounts Offset in
Consolidated Balance
Sheet
 
Net Amounts of Assets
Presented in Consolidated
Balance Sheet
Metal
$
0.6

 
$
(0.6
)
 
$

Energy and utilities
0.1

 
(0.1
)
 

Collateral on deposit
3.2

 
(1.4
)
 
1.8

Total
$
3.9

 
$
(2.1
)
 
$
1.8

 
 
 
 
 
 
Consolidated balance sheet location:
 
 
 
 
 
Prepaid expenses and other current assets
 
 
 
 
$
1.8

 
 
As of December 31, 2015
(in millions)
Gross Amounts of
Recognized Liabilities
 
Gross Amounts Offset in
Consolidated Balance
Sheet
 
Net Amounts of Liabilities
Presented in Consolidated
Balance Sheet
Metal
$
1.7

 
$
(1.7
)
 
$

Energy and utilities
0.4

 
(0.4
)
 

Total
$
2.1

 
$
(2.1
)
 
$

 

14

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

 
As of March 31, 2015
(in millions)
Gross Amounts of
Recognized Assets
 
Gross Amounts Offset in
Consolidated Balance
Sheet
 
Net Amounts of Assets
Presented in Consolidated
Balance Sheet
Metal
$
1.2

 
$
(1.2
)
 
$

Energy and utilities
0.1

 
(0.1
)
 

Collateral on deposit
2.9

 
(1.0
)
 
1.9

Total
$
4.2

 
$
(2.3
)
 
$
1.9

 
 
 
 
 
 
Consolidated balance sheet location:
 
 
 
 
 
Prepaid expenses and other current assets
 
 
 
 
$
1.9

 
 
As of March 31, 2015
(in millions)
Gross Amounts of
Recognized Liabilities
 
Gross Amounts Offset in
Consolidated Balance
Sheet
 
Net Amounts of Liabilities
Presented in Consolidated
Balance Sheet
Metal
$
1.2

 
$
(1.2
)
 
$

Energy and utilities
1.1

 
(1.1
)
 

Total
$
2.3

 
$
(2.3
)
 
$


The following table summarizes the effects of derivative contracts in the consolidated statements of operations:
 
Three Months Ended
March 31,
(in millions)
2016
 
2015
Losses (gains) in cost of sales for:
 
 
 
Metal
$
(1.3
)
 
$
(0.5
)
Energy and utilities
0.5

 
0.1

Total
$
(0.8
)
 
$
(0.4
)

10.
Fair Value Measurements
ASC 820 specifies a fair value framework and hierarchy based upon the observability of inputs used in valuation techniques. In accordance with this guidance, fair value measurements are classified under the following hierarchy:
Level 1 - Quoted prices for identical instruments in active markets.
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.
Level 3 - Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.
As of March 31, 2016December 31, 2015 and March 31, 2015, the fair value of our commodity derivative contracts was $2.3 million, $1.8 million and $1.9 million, respectively. In accordance with ASC 820, our metal, energy and utility commodity derivative contracts are considered Level 2, as fair value measurements consist of both quoted price inputs and inputs provided by a third party that are derived principally from or corroborated by observable market data by correlation. These assumptions include, but are not limited to, those concerning interest rates, credit rates, discount rates, default rates and other factors. All of our derivative commodity contracts have a set term of 24 months or less.
We do not hold assets or liabilities requiring a Level 3 measurement and there have not been any transfers between the hierarchy levels during 2016 or 2015.

15

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

For purposes of financial reporting, we have determined that the carrying value of cash, accounts receivable, accounts payable, and accrued expenses approximates fair value due to their short term nature. Additionally, given the revolving nature and the variable interest rates, we have determined that the carrying value of the ABL Facility also approximates fair value. As of March 31, 2016, December 31, 2015 and March 31, 2015, the fair value of our Senior Secured Notes approximated $329.2 million, $365.2 million and $408.8 million, respectively, compared to a carrying value of $309.8 million, $345.3 million and $375.0 million, respectively. The fair value of the Senior Secured Notes was based upon quotes from financial institutions (Level 2 in the fair value hierarchy as defined by ASC 820).

11.
Commitments and Contingencies
Environmental Considerations
We are subject to a variety of environmental laws and regulations governing discharges to air and water, the handling, storage and disposal of hazardous or solid waste materials and the remediation of contamination associated with releases of hazardous substances. Although we believe we are in material compliance with all of the various regulations applicable to our business, there can be no assurance that requirements will not change in the future or that we will not incur significant costs to comply with such requirements. We are currently not aware of any environmental matters which may have a material impact on our financial position, results of operations, or liquidity.
On November 19, 2007 (the date of inception of GBC), we acquired the assets and operations relating to the worldwide metals business of Olin Corporation. Olin Corporation agreed to retain liability arising out of the existing conditions on certain of our properties for any remedial actions required by environmental laws, and agreed to indemnify the Company for all or part of a number of other environmental liabilities. Since 2007, Olin Corporation has been performing remedial actions at the facilities in East Alton, Illinois and Waterbury, Connecticut related to environmental conditions at such facilities, and has been participating in remedial actions at certain other properties as well. If Olin Corporation were to stop its environmental remedial activities at our properties, we could be required to assume responsibility for these activities, the cost of which could be material.
Legal Considerations
We are party to various legal proceedings arising in the ordinary course of business. We believe that none of our lawsuits are individually material or that the aggregate exposure of all of our lawsuits, including those that are probable and those that are only reasonably possible, is material to our financial condition, results of operations or cash flows.

12.
Guarantor / Non-Guarantor Subsidiary Financial Information
In June 2012, Holdings (presented as “Parent” in the following tables), through its wholly-owned principal operating subsidiary, GBC (presented as “Issuer” in the following tables), issued the Senior Secured Notes as further described in Note 7, “Financing.” The Senior Secured Notes are jointly and severally guaranteed on a senior secured basis by Holdings and substantially all existing 100%-owned U.S. subsidiaries of GBC and any future restricted subsidiaries who guarantee or incur certain types of Permitted Debt, as such term is defined under the Indenture (individually, a “Guarantor” and collectively, the “Guarantors”). The guarantees are full and unconditional, except that a Guarantor can be automatically released and relieved of its obligations under certain customary provisions contained in the Indenture. Under these customary provisions, a Guarantor is automatically released from its obligations as a guarantor upon the sale of the Guarantor or substantially all of its assets to a third party, the designation of the Guarantor as an unrestricted subsidiary in accordance with the terms of the Indenture, the release or discharge of all guarantees by such Guarantor and the repayment of all indebtedness, or upon the Issuer’s exercise of its legal defeasance option or covenant defeasance option or if the obligations under the Indenture are discharged in accordance with the terms of the Indenture. All other subsidiaries of GBC, whether direct or indirect, do not guarantee the Senior Secured Notes (collectively, the “Non-Guarantors”).
Holdings is also a guarantor of the ABL Facility and substantially all of its 100%-owned U.S. subsidiaries are borrowers under, or guarantors of, the ABL Facility on a senior secured basis.
The following condensed consolidating financial information presents the financial position, results of operations, comprehensive income and cash flows of (1) the Parent, (2) the Issuer, (3) the Guarantors, (4) the Non-Guarantors and (5) eliminations to arrive at the information for the Company on a consolidated basis. The condensed consolidating

16

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

financial information presented below is not necessarily indicative of the financial position, results of operations, comprehensive income or cash flows of the Parent, the Issuer, the Guarantors or the Non-Guarantors on a stand-alone basis.
As discussed in Note 1, “Basis of Presentation and Principles of Consolidation,” we adopted ASU 2015-3 and ASU 2015-17 on December 31, 2015 and we applied the new guidance retrospectively to all prior periods presented in the accompanying financial statements to conform to the fiscal 2015 presentation. The adoption of ASU 2015-03 resulted in a decrease of $9.0 million in the Company’s and the Issuer’s other noncurrent assets and a corresponding decrease in the Company’s and the Issuer’s noncurrent portion of debt as of March 31, 2015 related to the retrospective reclassification of deferred financing fees incurred in connection with the issuance of the Senior Secured Notes. The adoption of ASU 2015-17 resulted in a decrease of $30.2 million in the Company’s and the Issuer’s current deferred income tax asset, a decrease of $0.2 million in the Company’s and the Issuer’s noncurrent deferred income tax liability and a corresponding net increase of $30.0 million to the Company’s and the Issuer’s noncurrent deferred income tax assets as of March 31, 2015 related to the retrospective reclassification of all deferred income taxes as noncurrent on the balance sheet.


17

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

(in millions)
Condensed Consolidating Balance Sheet
As of March 31, 2016
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash
$

 
$
32.8

 
$
4.7

 
$
12.5

 
$
(1.3
)
 
$
48.7

Accounts receivable, net of allowance

 
3.1

 
129.5

 
10.2

 

 
142.8

Inventories

 

 
149.1

 
12.1

 
(1.6
)
 
159.6

Prepaid expenses and other current assets

 
10.2

 
6.9

 
0.5

 

 
17.6

Income tax receivable

 
0.8

 

 

 
(0.1
)
 
0.7

Total current assets

 
46.9

 
290.2

 
35.3

 
(3.0
)
 
369.4

Property, plant and equipment, net

 
0.4

 
111.8

 
0.5

 

 
112.7

Investment in subsidiaries
77.7

 
905.4

 
23.3

 

 
(1,006.4
)
 

Intercompany accounts

 

 
571.1

 

 
(571.1
)
 

Goodwill

 

 
4.4

 

 

 
4.4

Intangible assets, net

 

 
0.5

 

 

 
0.5

Deferred income taxes

 
36.9

 

 

 

 
36.9

Other noncurrent assets

 
1.8

 
1.9

 

 

 
3.7

Total assets
$
77.7

 
$
991.4

 
$
1,003.2

 
$
35.8

 
$
(1,580.5
)
 
$
527.6

Liabilities and equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Current portion of capital lease obligation
$

 
$

 
$
1.1

 
$

 
$

 
$
1.1

Accounts payable

 
1.6

 
68.2

 
2.0

 
(2.9
)
 
68.9

Accrued liabilities

 
16.4

 
24.7

 
0.5

 

 
41.6

Accrued interest

 
10.1

 

 

 

 
10.1

Income tax payable

 

 
0.3

 
0.3

 
(0.1
)
 
0.5

Total current liabilities

 
28.1

 
94.3

 
2.8

 
(3.0
)
 
122.2

Noncurrent portion of debt

 
303.9

 
3.4

 

 

 
307.3

Other noncurrent liabilities

 
25.2

 
0.1

 

 

 
25.3

Intercompany accounts
9.2

 
556.5

 

 
5.4

 
(571.1
)
 

Total liabilities
9.2

 
913.7

 
97.8

 
8.2

 
(574.1
)
 
454.8

Global Brass and Copper Holdings, Inc. stockholders’ equity
68.5

 
77.7

 
905.4

 
23.3

 
(1,006.4
)
 
68.5

Noncontrolling interest

 

 

 
4.3

 

 
4.3

Total equity
68.5

 
77.7

 
905.4

 
27.6

 
(1,006.4
)
 
72.8

Total liabilities and equity
$
77.7

 
$
991.4

 
$
1,003.2

 
$
35.8

 
$
(1,580.5
)
 
$
527.6

 
 

18

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

(in millions)
Condensed Consolidating Balance Sheet
As of December 31, 2015
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash
$

 
$
68.8

 
$
4.1

 
$
12.3

 
$
(1.7
)
 
$
83.5

Accounts receivable, net of allowance

 
3.1

 
106.1

 
10.4

 

 
119.6

Inventories

 

 
164.9

 
12.7

 
(1.3
)
 
176.3

Prepaid expenses and other current assets

 
10.1

 
6.9

 
0.4

 

 
17.4

Income tax receivable

 
2.7

 

 

 
(0.3
)
 
2.4

Total current assets

 
84.7

 
282.0

 
35.8

 
(3.3
)
 
399.2

Property, plant and equipment, net

 
0.4

 
110.3

 
0.4

 

 
111.1

Investment in subsidiaries
65.4

 
872.1

 
22.3

 

 
(959.8
)
 

Intercompany accounts

 

 
559.2

 

 
(559.2
)
 

Goodwill

 

 
4.4

 

 

 
4.4

Intangible assets, net

 

 
0.5

 

 

 
0.5

Deferred income taxes

 
38.0

 

 

 

 
38.0

Other noncurrent assets

 
2.0

 
2.0

 

 

 
4.0

Total assets
$
65.4

 
$
997.2

 
$
980.7

 
$
36.2

 
$
(1,522.3
)
 
$
557.2

Liabilities and equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Current portion of capital lease obligation
$

 
$

 
$
1.1

 
$

 
$

 
$
1.1

Accounts payable

 
2.0

 
69.5

 
2.5

 
(3.0
)
 
71.0

Accrued liabilities

 
19.3

 
34.0

 
0.6

 

 
53.9

Accrued interest

 
3.0

 

 

 

 
3.0

Income tax payable

 

 
0.2

 
0.3

 
(0.3
)
 
0.2

Total current liabilities

 
24.3

 
104.8

 
3.4

 
(3.3
)
 
129.2

Noncurrent portion of debt

 
338.3

 
3.7

 

 

 
342.0

Other noncurrent liabilities

 
25.2

 
0.1

 

 

 
25.3

Intercompany accounts
9.0

 
544.0

 

 
6.2

 
(559.2
)
 

Total liabilities
9.0

 
931.8

 
108.6

 
9.6

 
(562.5
)
 
496.5

Global Brass and Copper Holdings, Inc. stockholders’ equity
56.4

 
65.4

 
872.1

 
22.3

 
(959.8
)
 
56.4

Noncontrolling interest

 

 

 
4.3

 

 
4.3

Total equity
56.4

 
65.4

 
872.1

 
26.6

 
(959.8
)
 
60.7

Total liabilities and equity
$
65.4

 
$
997.2

 
$
980.7

 
$
36.2

 
$
(1,522.3
)
 
$
557.2

 
 

19

Table of Contents

Global Brass and Copper Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)

(in millions)
Condensed Consolidating Balance Sheet
As of March 31, 2015
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash
$

 
$
39.3

 
$
6.0

 
$
8.8

 
$
(2.0
)
 
$
52.1

Accounts receivable, net of allowance

 
2.8

 
174.7

 
14.4

 

 
191.9

Inventories

 

 
170.0

 
17.6

 
(2.8
)
 
184.8

Prepaid expenses and other current assets

 
10.6

 
22.8

 
0.6

 

 
34.0

Income tax receivable

 
4.3

 

 

 
(0.3
)
 
4.0

Total current assets

 
57.0

 
373.5

 
41.4

 
(5.1
)
 
466.8

Property, plant and equipment, net

 
0.6

 
101.2

 
0.4

 

 
102.2

Investment in joint venture

 

 
1.7

 

 

 
1.7

Investment in subsidiaries
37.7

 
781.2

 
22.8