Attached files

file filename
8-K - 8-K - CommScope Holding Company, Inc.d67443d8k.htm
EX-99.2 - EX-99.2 - CommScope Holding Company, Inc.d67443dex992.htm

Exhibit 99.1

THE BROADBAND NETWORK SOLUTIONS BUSINESS OF TE CONNECTIVITY LTD.

CONDENSED COMBINED FINANCIAL STATEMENTS

As of June 26, 2015 and September 26, 2014 and

for the quarterly and nine month periods ended

June 26, 2015 and June 27, 2014


THE BROADBAND NETWORK SOLUTIONS BUSINESS OF TE CONNECTIVITY LTD.

INDEX TO CONDENSED COMBINED FINANCIAL STATEMENTS

 

     Page  

Condensed Combined Statements of Operations for the Quarters and Nine Months Ended June 26, 2015 and June 27, 2014

     1   

Condensed Combined Statements of Comprehensive Income for the Quarters and Nine Months Ended June 26, 2015 and June 27, 2014

     2   

Condensed Combined Balance Sheets as of June 26, 2015 and September 26, 2014

     3   

Condensed Combined Statements of Business Unit Equity for the Nine Months Ended June 26, 2015 and June 27, 2014

     4   

Condensed Combined Statements of Cash Flows for the Nine Months Ended June 26, 2015 and June 27, 2014

     5   

Notes to Condensed Combined Financial Statements

     6   


THE BROADBAND NETWORK SOLUTIONS BUSINESS OF TE CONNECTIVITY LTD.

CONDENSED COMBINED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

     For the Quarters Ended     For the Nine Months Ended  
     June 26,
2015
    June 27,
2014
    June 26,
2015
    June 27,
2014
 
     (in thousands)  

Net sales

   $ 470,954      $ 503,985      $ 1,312,927      $ 1,435,589   

Cost of sales

     294,855        323,488        838,448        912,177   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     176,099        180,497        474,479        523,412   

Selling expenses

     54,302        60,510        158,737        181,909   

General and administrative expenses

     47,690        37,883        117,482        116,329   

Research, development, and engineering expenses

     22,976        25,116        70,331        75,754   

Restructuring charges (credits), net

     (1,243     3,761        1,630        26,452   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     52,374        53,227        126,299        122,968   

Interest income

     105        215        498        567   

Interest expense

     (763     (732     (2,254     (2,245
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     51,716        52,710        124,543        121,290   

Income tax benefit (expense)

     3,957        (18,322     (14,406     (81,864
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 55,673      $ 34,388      $ 110,137      $ 39,426   
  

 

 

   

 

 

   

 

 

   

 

 

 

See Notes to Condensed Combined Financial Statements.


THE BROADBAND NETWORK SOLUTIONS BUSINESS OF TE CONNECTIVITY LTD.

CONDENSED COMBINED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 

     For the Quarters Ended      For the Nine Months Ended  
     June 26,
2015
     June 27,
2014
     June 26,
2015
       June 27,
2014
 
     (in thousands)  

Net income

   $ 55,673       $ 34,388       $ 110,137         $ 39,426   

Other comprehensive income (loss):

             

Currency translation

     3,567         2,547         (44,329        2,151   

Adjustments to unrecognized pension benefit costs, net of income taxes

     (115      (2,460      2,687           (2,376
  

 

 

    

 

 

    

 

 

      

 

 

 

Other comprehensive income (loss)

     3,452         87         (41,642        (225
  

 

 

    

 

 

    

 

 

      

 

 

 

Comprehensive income

   $ 59,125       $ 34,475       $ 68,495         $ 39,201   
  

 

 

    

 

 

    

 

 

      

 

 

 

See Notes to Condensed Combined Financial Statements.


THE BROADBAND NETWORK SOLUTIONS BUSINESS OF TE CONNECTIVITY LTD.

CONDENSED COMBINED BALANCE SHEETS

(UNAUDITED)

 

     June 26,
2015
    September 26,
2014
 
     (in thousands)  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 12,966      $ 16,864   

Accounts receivable, net of allowance for doubtful accounts of $23,456 and $19,301, respectively

     351,773        382,046   

Inventories

     208,671        239,157   

Prepaid expenses and other current assets

     46,165        70,803   

Deferred income taxes

     45,303        45,303   
  

 

 

   

 

 

 

Total current assets

     664,878        754,173   

Property, plant, and equipment, net

     186,640        205,500   

Goodwill

     586,900        588,982   

Intangible assets, net

     212,284        241,217   

Deferred income taxes

     183,775        168,423   

Other assets

     6,039        6,478   
  

 

 

   

 

 

 

Total Assets

   $ 1,840,516      $ 1,964,773   
  

 

 

   

 

 

 

Liabilities and Business Unit Equity

    

Current liabilities:

    

Current maturities of long-term debt

   $ 89,293      $ 89,497   

Accounts payable

     142,189        160,313   

Accrued and other current liabilities

     122,604        179,450   
  

 

 

   

 

 

 

Total current liabilities

     354,086        429,260   

Long-term pension liabilities

     7,666        8,409   

Deferred income taxes

     30,114        30,114   

Income taxes

     13,285        14,553   

Other liabilities

     28,256        32,473   
  

 

 

   

 

 

 

Total Liabilities

     433,407        514,809   
  

 

 

   

 

 

 

Commitments and contingencies (Note 7)

    

Business Unit Equity:

Parent company investment

     1,419,287        1,420,500   

Accumulated other comprehensive income (loss)

     (12,178     29,464   
  

 

 

   

 

 

 

Total Business Unit Equity

     1,407,109        1,449,964   
  

 

 

   

 

 

 

Total Liabilities and Business Unit Equity

   $ 1,840,516      $ 1,964,773   
  

 

 

   

 

 

 

See Notes to Condensed Combined Financial Statements.


THE BROADBAND NETWORK SOLUTIONS BUSINESS OF TE CONNECTIVITY LTD.

CONDENSED COMBINED STATEMENTS OF BUSINESS UNIT EQUITY

(UNAUDITED)

 

     Parent
Company
Investment
    Accumulated
Other
Comprehensive
Income (Loss)
    Total
Business
Unit Equity
 
           (in thousands)        

Balance at September 26, 2014

   $ 1,420,500      $ 29,464      $ 1,449,964   

Net income

     110,137        —          110,137   

Other comprehensive loss

     —          (41,642     (41,642
  

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss)

     110,137        (41,642     68,495   

Net decrease in Parent company investment

     (111,350     —          (111,350
  

 

 

   

 

 

   

 

 

 

Balance at June 26, 2015

   $ 1,419,287      $ (12,178   $ 1,407,109   
  

 

 

   

 

 

   

 

 

 

Balance at September 27, 2013

   $ 1,473,428      $ 52,752      $ 1,526,180   

Net income

     39,426        —          39,426   

Other comprehensive loss

     —          (225     (225
  

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss)

     39,426        (225     39,201   

Net decrease in Parent company investment

     (98,409     —          (98,409
  

 

 

   

 

 

   

 

 

 

Balance at June 27, 2014

   $ 1,414,445      $ 52,527      $ 1,466,972   
  

 

 

   

 

 

   

 

 

 

See Notes to Condensed Combined Financial Statements.


THE BROADBAND NETWORK SOLUTIONS BUSINESS OF TE CONNECTIVITY LTD.

CONDENSED COMBINED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

     For the Nine Months Ended  
     June 26, 2015     June 27, 2014  
     (in thousands)  

Cash Flows From Operating Activities:

    

Net income

   $ 110,137      $ 39,426   

Adjustments to reconcile income to net cash provided by operating activities:

    

Depreciation and amortization

     47,123        49,664   

Non-cash restructuring charges (credits)

     (230     3,003   

Deferred income taxes

     (15,352     58,150   

Provision for losses on accounts receivable and inventories

     11,348        15,084   

Share-based compensation expense

     5,421        5,348   

Other

     1,561        —     

Changes in assets and liabilities, net of the effects of acquisitions and divestitures:

    

Accounts receivable, net

     6,262        (28,170

Inventories

     11,245        (1,500

Prepaid expenses and other current assets

     23,323        2,541   

Accounts payable

     (15,854     (12,576

Accrued and other current liabilities

     (51,011     2,522   

Other

     (4,926     162   
  

 

 

   

 

 

 

Net cash provided by operating activities

     129,047        133,654   
  

 

 

   

 

 

 

Cash Flows From Investing Activities:

    

Capital expenditures

     (23,370     (31,015

Other

     (360     1,561   
  

 

 

   

 

 

 

Net cash used in investing activities

     (23,730     (29,454
  

 

 

   

 

 

 

Cash Flows From Financing Activities:

    

Repayment of long-term debt

     (177     (164

Net financing activities with Parent and Parent’s subsidiaries(1)

     (107,598     (107,470
  

 

 

   

 

 

 

Net cash used in financing activities

     (107,775     (107,634
  

 

 

   

 

 

 

Effect of currency translation on cash

     (1,440     (368

Net decrease in cash and cash equivalents

     (3,898     (3,802

Cash and cash equivalents at beginning of period

     16,864        22,473   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 12,966      $ 18,671   
  

 

 

   

 

 

 

 

(1) Net financing activities with Parent and Parent’s subsidiaries include cash flows related to intercompany cash management and funding transactions, and other intercompany activity.

See Notes to Condensed Combined Financial Statements.


THE BROADBAND NETWORK SOLUTIONS BUSINESS OF TE CONNECTIVITY LTD.

NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS

1. Basis of Presentation

The unaudited Condensed Combined Financial Statements of the Broadband Network Solutions business (“BNS” or the “Company,” which may be referred to as “we, “us,” or “our”) of TE Connectivity Ltd. (“TE Connectivity” or “Parent”) have been prepared in United States (“U.S.”) dollars, in accordance with accounting principles generally accepted in the U.S. (“GAAP”). In management’s opinion, the unaudited Condensed Combined Financial Statements contain all normal recurring adjustments necessary for a fair presentation of interim results. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire fiscal year or any subsequent interim period.

The assets and liabilities in the Condensed Combined Financial Statements have been reflected on a historical cost basis, as included in the historical Condensed Consolidated Balance Sheets of Parent. The Condensed Combined Statements of Operations include allocations for a) certain support functions that are provided on a centralized basis by Parent and historically recorded at the business unit level, as well as b) corporate costs not historically allocated by Parent to the business unit level. These expenses include departmental charges related to executive office, finance, tax, treasury, human resources, information technology, and legal, among others. These expenses have been allocated to BNS on the basis of direct usage when identifiable, with the remainder allocated on a proportional basis of operating income, headcount or other measures of BNS or Parent. Management believes the assumptions underlying the Condensed Combined Financial Statements, including the assumptions regarding allocating general corporate expenses from Parent, are reasonable. Nevertheless, the Condensed Combined Financial Statements may not include the actual expenses that would have been incurred by BNS and may not reflect the combined results of operations, financial position, and cash flows had it been a stand-alone business during the periods presented. Actual costs that would have been incurred had BNS been a stand-alone business would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

The year-end balance sheet data was derived from audited financial statements, but does not include all of the information and disclosures required by GAAP. These financial statements should be read in conjunction with our audited Combined Financial Statements for the fiscal year ended September 26, 2014.

Unless otherwise indicated, references in the Condensed Combined Financial Statements to fiscal 2015 and fiscal 2014 are to our fiscal years ending September 25, 2015 and September 26, 2014, respectively.

On January 27, 2015, Parent entered into a definitive agreement to sell BNS for $3.0 billion in cash, subject to a final working capital adjustment. The transaction is expected to close during calendar 2015 pending customary closing conditions and regulatory approvals.


2. Restructuring Charges (Credits), Net

Restructuring charges (credits), net consist primarily of employee severance charges.

Activity in our restructuring reserves during the first nine months of fiscal 2015 is summarized as follows:

 

     Balance at
September 26,
2014
     Charges      Changes
in
Estimate
     Cash
Payments
     Non-Cash
Items
and
Other(1)
     Balance
at
June 26,
2015
 
     (in thousands)  

Fiscal 2014 Actions

   $ 11,101       $ —         $ (509    $ (4,572    $ (605    $ 5,415   

Pre-Fiscal 2014 Actions

     44,930         4,046         (1,907      (27,210      (3,966      15,893   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total activity

   $ 56,031       $ 4,046       $ (2,416    $ (31,782    $ (4,571    $ 21,308   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Includes non-cash charges associated with asset write-offs and the effects of currency translation.


Fiscal 2014 Actions

During fiscal 2014, we initiated a restructuring program associated with headcount reductions and manufacturing site closures. In connection with this program, during the nine months ended June 26, 2015 and June 27, 2014, we recorded net restructuring credits of $509 thousand and charges of $21,576 thousand, respectively, primarily related to manufacturing site closures. We expect to complete all restructuring programs commenced in fiscal 2014 by the end of fiscal 2015. We do not expect to incur any additional charges related to restructuring actions commenced in fiscal 2014.

Pre-Fiscal 2014 Actions

In connection with the restructuring actions initiated prior to fiscal 2014, during the nine months ended June 26, 2015 and June 27, 2014, we recorded net restructuring charges of $2,139 thousand and $4,876 thousand, respectively. We expect to incur additional charges of approximately $364 thousand related to pre-fiscal 2014 actions.

Total Restructuring Reserves

Restructuring reserves included on the combined balance sheets were as follows:

 

     June 26,
2015
     September 26,
2014
 
     (in thousands)  

Accrued and other current liabilities

   $ 10,039       $ 43,182   

Other liabilities

     11,269         12,849   
  

 

 

    

 

 

 

Restructuring reserves

   $ 21,308       $ 56,031   
  

 

 

    

 

 

 

3. Inventories

Inventories consisted of the following:

 

     June 26,
2015
     September 26,
2014
 
     (in thousands)  

Raw materials

   $ 36,403       $ 46,267   

Work in progress

     56,750         61,484   

Finished goods

     115,518         131,406   
  

 

 

    

 

 

 

Inventories

   $ 208,671       $ 239,157   
  

 

 

    

 

 

 


4. Goodwill

The changes in the carrying amount of goodwill were as follows:

 

     (in thousands)  

September 26, 2014(1)

   $ 588,982   

Currency translation

     (2,082
  

 

 

 

June 26, 2015(1)

   $ 586,900   
  

 

 

 

 

(1) For both periods, there were no accumulated impairment losses related to the BNS reporting units.

5. Intangible Assets, Net

Intangible assets consisted of the following:

 

     June 26, 2015      September 26, 2014  
     Gross
Carrying
Amount
     Accumulated
Amortization
    Net
Carrying
Amount
     Gross
Carrying
Amount
     Accumulated
Amortization
    Net
Carrying
Amount
 
     (in thousands)  

Intellectual property

   $ 231,011       $ (117,138   $ 113,873       $ 229,623       $ (105,466   $ 124,157   

Customer relationships

     168,681         (70,306     98,375         169,577         (58,836     110,741   

Other

     1,809         (1,773     36         8,927         (2,608     6,319   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 401,501       $ (189,217   $ 212,284       $ 408,127       $ (166,910   $ 241,217   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Intangible asset amortization expense was $9,252 thousand and $7,790 thousand for the third quarters of fiscal 2015 and 2014, respectively and $24,784 thousand and $23,095 thousand for the first nine months of fiscal 2015 and 2014, respectively

The aggregate amortization expense on intangible assets is expected to be as follows:

 

     (in thousands)  

Remainder of Fiscal 2015

   $ 7,708   

Fiscal 2016

     30,703   

Fiscal 2017

     30,652   

Fiscal 2018

     30,652   

Fiscal 2019

     30,652   

Fiscal 2020

     29,667   

Thereafter

     52,250   
  

 

 

 

Total

   $ 212,284   
  

 

 

 


6. Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following:

 

     June 26,
2015
     September 26,
2014
 
     (in thousands)  

Accrued payroll and employee benefits

   $ 54,506       $ 69,076   

Restructuring reserves

     10,039         43,182   

Value-added and other duties and taxes payable

     23,639         24,125   

Income taxes payable

     5,180         6,542   

Deferred income taxes

     3,627         3,627   

Other

     25,613         32,898   
  

 

 

    

 

 

 

Accrued and other current liabilities

   $ 122,604       $ 179,450   
  

 

 

    

 

 

 

7. Commitments and Contingencies

Legal Proceedings

In the ordinary course of business, we are subject to various legal proceedings and claims, including patent infringement claims, product liability matters, employment disputes, disputes on agreements, other commercial disputes, environmental matters, antitrust claims, and tax matters, including non-income tax matters such as value added tax, sales and use tax, real estate tax, and transfer tax. Although it is not feasible to predict the outcome of these proceedings, based upon our experience, current information, and applicable law, we do not expect that the outcome of these proceedings, either individually or in the aggregate, will have a material effect on our results of operations, financial position, or cash flows.

8. Retirement Plans

Defined Benefit Pension Plans

The net periodic pension benefit cost for pension plans that were fully dedicated to the BNS business was as follows:

 

     For the Quarters Ended      For the Nine Months
Ended
 
     June 26,
2015
       June 27,
2014
     June 26,
2015
     June 27,
2014
 
     (in thousands)  

Service cost

   $ 1,117         $ 1,081       $ 3,352       $ 3,144   

Interest cost

     500           756         1,502         2,048   

Expected return on plan assets

     (1,067        (1,202      (3,201      (3,507

Amortization of net actuarial loss

     122           154         366         457   

Other

     60           193         180         194   
  

 

 

      

 

 

    

 

 

    

 

 

 

Net periodic pension benefit cost

   $ 732         $ 982       $ 2,199       $ 2,336   
  

 

 

      

 

 

    

 

 

    

 

 

 

During the nine months ended June 26, 2015, we contributed $989 thousand to fully dedicated pension plans.


Shared Pension Plans

Certain BNS employees participate in various defined benefit pension plans sponsored by Parent (the “Shared Plans”). Pension expense, calculated as actuarially determined service and interest cost, for BNS employees that participate in these shared plans was $709 thousand and $845 thousand in the third quarters of fiscal 2015 and 2014, respectively, and $2,058 thousand and $2,525 thousand in the first nine months of fiscal 2015 and 2014, respectively. The Condensed Combined Balance Sheets do not include any liabilities associated with the Shared Plans.

9. Income Taxes

We recorded an income tax benefit of $3,957 thousand and an income tax provision of $18,322 thousand for the quarters ended June 26, 2015 and June 27, 2014, respectively. The tax benefit for the quarter ended June 26, 2015 reflects an income tax benefit related to a decrease in the valuation allowance for U.S. tax loss carryforwards and income tax benefits recognized in connection with the profitability of certain entities operating in lower tax jurisdictions. The tax provision for the quarter ended June 27, 2014 reflects an income tax charge related to the increase in the valuation allowance for U.S. tax loss carryforwards partially offset by income tax benefits recognized in connection with the profitability of certain entities operating in lower tax jurisdictions.

We recorded income tax provisions of $14,406 thousand and $81,864 thousand for the nine months ended June 26, 2015 and June 27, 2014, respectively. The tax provision for the nine months ended June 26, 2015 reflects an income tax benefit related to a decrease in the valuation allowance for U.S. tax loss carryforwards and income tax benefits recognized in connection with the profitability of certain entities operating in lower tax jurisdictions. The tax provision for the nine months ended June 27, 2014 reflects an income tax charge related to the increase in the valuation allowance for U.S. tax loss carryforwards partially offset by income tax benefits recognized in connection with the profitability of certain entities operating in lower tax jurisdictions.

We record accrued interest as well as penalties related to uncertain tax positions as part of the provision for income taxes. As of June 26, 2015 and September 26, 2014, we had recorded $3,893 thousand and $5,150 thousand, respectively, of accrued interest and penalties related to uncertain tax positions, all of which was recorded in income taxes on the Condensed Combined Balance Sheet. During the nine months ended June 26, 2015, we recognized a $560 thousand income tax benefit related to interest and penalties on the Condensed Combined Statement of Operations.

BNS’s U.S. operations were included in various income tax returns which were filed on a unitary, consolidated, or stand-alone basis in multiple U.S. jurisdictions, which generally have statutes of limitations ranging from 3 to 4 years.

BNS’s non-U.S. operations were included in various income tax returns of non-U.S. subsidiaries which file income tax returns in the countries in which they have operations. Generally, these countries have statutes of limitations ranging from 3 to 10 years.


Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that up to approximately $1,600 thousand of unrecognized income tax benefits, excluding the impact relating to accrued interest and penalties, could be resolved within the next twelve months.

We are not aware of any other matters that would result in significant changes to the amount of unrecognized income tax benefits reflected on the Condensed Combined Balance Sheet as of June 26, 2015.

10. Share Plans

Total share-based compensation expense, which was included in general and administrative expenses on the Condensed Combined Statements of Operations, was $1,763 thousand and $1,642 thousand during the third quarters of fiscal 2015 and 2014, respectively, and $5,421 thousand and $5,348 thousand during the first nine months of fiscal 2015 and 2014, respectively.

11. Related Party Transactions, Parent’s Net Investment, and Significant Transactions

Related-Party Transactions

All significant intercompany transactions and accounts within BNS’s combined businesses have been eliminated. All intercompany transactions between BNS and Parent and/or Parent’s other subsidiaries have been included in these Condensed Combined Financial Statements as changes in Parent company investment. As the books and records of BNS were not kept on a separate-company basis, the determination of the average net balance due to or from Parent was not practicable.

Corporate Allocations and Parent Company Investment

Historically, Parent has provided services to, and funded certain expenses for BNS that have been included as a direct component of BNS’s historical accounting records, such as information technology, global operations, legal, and finance (the “direct allocations”). In addition, the Condensed Combined Financial Statements include general corporate expenses of Parent which were not historically allocated to BNS for certain support functions that are provided on a centralized basis within Parent and not recorded at the business unit level (“general corporate expenses”). The general corporate expenses often related to the same or similar functions as the direct allocations, but were not recorded at the business unit level for Parent financial reporting purposes. The general corporate expenses, however, incrementally included amounts related to, for example, corporate employee stock compensation, as well as other corporate costs not specifically benefiting any of Parent’s business units. For purposes of these stand-alone financial statements, the general corporate expenses have been allocated to BNS. The direct allocations and general corporate expenses are included in the Condensed Combined Statements of Operations as components of cost of sales; selling expenses; research, development, and engineering expenses; and general and administrative expenses, respectively, and accordingly as a component of business unit equity. These expenses have been allocated to BNS on a pro rata basis of operating income. Management believes the assumptions underlying


the Condensed Combined Financial Statements, including the assumptions regarding allocating general corporate expenses from Parent, are reasonable. Nevertheless, the Condensed Combined Financial Statements may not include all of the actual expenses that would have been incurred and may not reflect BNS’s combined results of operations, financial position, and cash flows had it been a stand-alone company during the periods presented. Actual costs that would have been incurred if BNS had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.


The corporate allocations made during the third quarters of fiscal 2015 and 2014 of $44,461 thousand and $33,726 thousand, respectively, included both general corporate expenses of Parent which were not historically allocated to BNS of $16,107 thousand and $9,976 thousand, respectively, and the direct allocations historically recorded on BNS’s accounting records primarily consisting of approximately $28,354 thousand and $23,750 thousand, respectively.

The corporate allocations made during the first nine months of fiscal 2015 and 2014 of $121,405 thousand and $97,460 thousand, respectively, included both general corporate expenses of Parent which were not historically allocated to BNS of $36,322 thousand and $26,472 thousand, respectively, and the direct allocations historically recorded on BNS’s accounting records primarily consisting of approximately $85,083 thousand and $70,988 thousand, respectively.

All significant intercompany transactions between BNS and Parent are considered to be effectively settled for cash at the time the separation of BNS from Parent is recorded. As discussed above, the total net effect of the settlement of these intercompany transactions is reflected in the Condensed Combined Statements of Cash Flows as a financing activity and in the Condensed Combined Balance Sheets as Parent company investment.

12. Subsequent Events

BNS has evaluated subsequent events through July 31, 2015, the date the Condensed Combined Financial Statements were issued.

On July 15, 2015, BNS fully repaid its 3.50% convertible subordinated notes due in July 2015 for a payment of $90,701 thousand, which included principal of $89,141 thousand and accrued interest of $1,560 thousand. Parent provided the funds for repayment via an increase in Parent company investment.