[ X ]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2013
|
OR
|
[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ____ to _____
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Commission File Number: 001-32433
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Delaware
|
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20-1297589
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(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
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660 White Plains Road
Tarrytown, New York 10591
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(Address of principal executive offices) (Zip Code)
|
|
(914) 524-6800
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(Registrant's telephone number, including area code)
|
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer
x
|
|
|
Accelerated filer
o
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Non-accelerated filer
o
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(Do not check if a smaller reporting company)
|
|
Smaller reporting company
o
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PART I.
|
FINANCIAL INFORMATION
|
|
|
|
|
Item 1.
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Financial Statements
|
|
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Consolidated Statements of Income and Comprehensive Income for the three months ended June 30, 2013 and 2012 (unaudited)
|
|
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Consolidated Balance Sheets as of June 30, 2013 (unaudited) and March 31, 2013
|
|
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Consolidated Statements of Cash Flows for the three months ended June 30, 2013 and 2012 (unaudited)
|
|
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Notes to Consolidated Financial Statements (unaudited)
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|
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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|
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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|
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Item 4.
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Controls and Procedures
|
|
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PART II.
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OTHER INFORMATION
|
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Item 1A.
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Risk Factors
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Item 6.
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Exhibits
|
|
|
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Signatures
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PART I
|
FINANCIAL INFORMATION
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
|
Three Months Ended June 30,
|
||||||
(In thousands, except per share data)
|
|
2013
|
|
2012
|
||||
Revenues
|
|
|
|
|
||||
Net sales
|
|
$
|
142,101
|
|
|
$
|
145,920
|
|
Other revenues
|
|
870
|
|
|
1,077
|
|
||
Total revenues
|
|
142,971
|
|
|
146,997
|
|
||
|
|
|
|
|
||||
Cost of Sales
|
|
|
|
|
|
|
||
Cost of sales (exclusive of depreciation shown below)
|
|
59,488
|
|
|
63,393
|
|
||
Gross profit
|
|
83,483
|
|
|
83,604
|
|
||
|
|
|
|
|
||||
Operating Expenses
|
|
|
|
|
|
|
||
Advertising and promotion
|
|
19,140
|
|
|
20,325
|
|
||
General and administrative
|
|
11,634
|
|
|
16,151
|
|
||
Depreciation and amortization
|
|
3,268
|
|
|
3,295
|
|
||
Total operating expenses
|
|
34,042
|
|
|
39,771
|
|
||
Operating income
|
|
49,441
|
|
|
43,833
|
|
||
|
|
|
|
|
||||
Other (income) expense
|
|
|
|
|
|
|
||
Interest income
|
|
(3
|
)
|
|
(2
|
)
|
||
Interest expense
|
|
15,908
|
|
|
19,850
|
|
||
Total other expense
|
|
15,905
|
|
|
19,848
|
|
||
Income before income taxes
|
|
33,536
|
|
|
23,985
|
|
||
Provision for income taxes
|
|
12,844
|
|
|
9,330
|
|
||
Net income
|
|
$
|
20,692
|
|
|
$
|
14,655
|
|
|
|
|
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
||
Basic
|
|
$
|
0.40
|
|
|
$
|
0.29
|
|
Diluted
|
|
$
|
0.40
|
|
|
$
|
0.29
|
|
|
|
|
|
|
||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
||
Basic
|
|
51,222
|
|
|
50,342
|
|
||
Diluted
|
|
52,040
|
|
|
51,106
|
|
||
|
|
|
|
|
||||
Comprehensive income, net of tax:
|
|
|
|
|
||||
Currency translation adjustments
|
|
1
|
|
|
(42
|
)
|
||
Total other comprehensive income (loss)
|
|
1
|
|
|
(42
|
)
|
||
Comprehensive income
|
|
$
|
20,693
|
|
|
$
|
14,613
|
|
(In thousands)
Assets
|
June 30,
2013 |
|
March 31,
2013 |
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
19,306
|
|
|
$
|
15,670
|
|
Accounts receivable, net
|
61,981
|
|
|
73,053
|
|
||
Inventories
|
66,917
|
|
|
60,201
|
|
||
Deferred income tax assets
|
6,067
|
|
|
6,349
|
|
||
Prepaid expenses and other current assets
|
8,713
|
|
|
8,900
|
|
||
Total current assets
|
162,984
|
|
|
164,173
|
|
||
|
|
|
|
||||
Property and equipment, net
|
10,697
|
|
|
9,896
|
|
||
Goodwill
|
167,546
|
|
|
167,546
|
|
||
Intangible assets, net
|
1,370,535
|
|
|
1,373,240
|
|
||
Other long-term assets
|
24,332
|
|
|
24,944
|
|
||
Total Assets
|
$
|
1,736,094
|
|
|
$
|
1,739,799
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Accounts payable
|
$
|
42,222
|
|
|
$
|
51,376
|
|
Accrued interest payable
|
13,721
|
|
|
13,894
|
|
||
Other accrued liabilities
|
25,792
|
|
|
31,398
|
|
||
Total current liabilities
|
81,735
|
|
|
96,668
|
|
||
|
|
|
|
||||
Long-term debt
|
|
|
|
||||
Principal amount
|
960,000
|
|
|
978,000
|
|
||
Less unamortized discount
|
(6,755
|
)
|
|
(7,100
|
)
|
||
Long-term debt, net of unamortized discount
|
953,245
|
|
|
970,900
|
|
||
|
|
|
|
||||
Deferred income tax liabilities
|
200,803
|
|
|
194,288
|
|
||
Total Liabilities
|
1,235,783
|
|
|
1,261,856
|
|
||
|
|
|
|
||||
Commitments and Contingencies — Note 17
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders' Equity
|
|
|
|
|
|
||
Preferred stock - $0.01 par value
|
|
|
|
|
|
||
Authorized - 5,000 shares
|
|
|
|
|
|
||
Issued and outstanding - None
|
—
|
|
|
—
|
|
||
Preferred share rights
|
283
|
|
|
283
|
|
||
Common stock - $0.01 par value
|
|
|
|
|
|
||
Authorized - 250,000 shares
|
|
|
|
|
|
||
Issued - 51,364 shares at June 30, 2013 and 51,311 shares at March 31, 2013
|
514
|
|
|
513
|
|
||
Additional paid-in capital
|
403,643
|
|
|
401,691
|
|
||
Treasury stock, at cost - 191 shares at June 30, 2013 and 181 shares at March 31, 2013
|
(965
|
)
|
|
(687
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
(103
|
)
|
|
(104
|
)
|
||
Retained earnings
|
96,939
|
|
|
76,247
|
|
||
Total Stockholders' Equity
|
500,311
|
|
|
477,943
|
|
||
Total Liabilities and Stockholders' Equity
|
$
|
1,736,094
|
|
|
$
|
1,739,799
|
|
|
Three Months Ended June 30,
|
||||||
(In thousands)
|
2013
|
|
2012
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
20,692
|
|
|
$
|
14,655
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||
Depreciation and amortization
|
3,268
|
|
|
3,295
|
|
||
Deferred income taxes
|
6,797
|
|
|
7,076
|
|
||
Amortization of deferred financing costs
|
892
|
|
|
1,048
|
|
||
Stock-based compensation costs
|
1,193
|
|
|
913
|
|
||
Amortization of debt discount
|
345
|
|
|
404
|
|
||
(Gain) loss on sale or disposal of equipment
|
(2
|
)
|
|
21
|
|
||
Changes in operating assets and liabilities, net of effects from acquisitions
|
|
|
|
|
|||
Accounts receivable
|
11,070
|
|
|
(9,214
|
)
|
||
Inventories
|
(6,716
|
)
|
|
(2,748
|
)
|
||
Prepaid expenses and other current assets
|
187
|
|
|
6
|
|
||
Accounts payable
|
(9,147
|
)
|
|
135
|
|
||
Accrued liabilities
|
(5,781
|
)
|
|
(849
|
)
|
||
Net cash provided by operating activities
|
22,798
|
|
|
14,742
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
|
|
||
Purchases of property and equipment
|
(1,364
|
)
|
|
(1,198
|
)
|
||
Proceeds from the sale of property and equipment
|
2
|
|
|
15
|
|
||
Acquisition of brands from GSK purchase price adjustments
|
—
|
|
|
(226
|
)
|
||
Net cash used in investing activities
|
(1,362
|
)
|
|
(1,409
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
||
Repayments of long-term debt
|
—
|
|
|
(45,000
|
)
|
||
Repayments under revolving credit agreement
|
(18,000
|
)
|
|
(8,000
|
)
|
||
Borrowings under revolving credit agreement
|
—
|
|
|
25,000
|
|
||
Payment of deferred financing costs
|
(280
|
)
|
|
—
|
|
||
Proceeds from exercise of stock options
|
309
|
|
|
80
|
|
||
Excess tax benefits from share-based awards
|
452
|
|
|
—
|
|
||
Fair value of shares surrendered as payment of tax withholding
|
(278
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(17,797
|
)
|
|
(27,920
|
)
|
||
|
|
|
|
||||
Effects of exchange rate changes on cash and cash equivalents
|
(3
|
)
|
|
(24
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
3,636
|
|
|
(14,611
|
)
|
||
Cash and cash equivalents - beginning of period
|
15,670
|
|
|
19,015
|
|
||
Cash and cash equivalents - end of period
|
$
|
19,306
|
|
|
$
|
4,404
|
|
|
|
|
|
||||
Interest paid
|
$
|
14,826
|
|
|
$
|
18,391
|
|
Income taxes paid
|
$
|
657
|
|
|
$
|
407
|
|
1.
|
Business and Basis of Presentation
|
|
Years
|
Machinery
|
5
|
Computer equipment
|
3
|
Furniture and fixtures
|
7
|
Leasehold improvements
|
*
|
2.
|
Acquisitions
|
(In thousands)
|
|
GSK Brands I (January 31, 2012)
|
|
GSK Brands II (March 30, 2012)
|
|
Total
|
||||||
Inventory
|
|
$
|
14,820
|
|
|
$
|
250
|
|
|
$
|
15,070
|
|
Prepaid expenses
|
|
3,575
|
|
|
—
|
|
|
3,575
|
|
|||
Trade names
|
|
542,892
|
|
|
81,257
|
|
|
624,149
|
|
|||
Goodwill
|
|
17,401
|
|
|
2,831
|
|
|
20,232
|
|
|||
Total purchase price
|
|
$
|
578,688
|
|
|
$
|
84,338
|
|
|
$
|
663,026
|
|
3.
|
Divestitures
|
(In thousands)
|
October 31,
2012 |
||
Components of assets sold:
|
|
||
Inventory
|
$
|
220
|
|
Prepaid expenses
|
100
|
|
|
Trade names
|
15,604
|
|
|
Goodwill
|
6,382
|
|
4.
|
Accounts Receivable
|
(In thousands)
|
June 30,
2013 |
|
March 31,
2013 |
||||
Components of Accounts Receivable
|
|
|
|
||||
Trade accounts receivable
|
$
|
67,931
|
|
|
$
|
79,746
|
|
Other receivables
|
641
|
|
|
615
|
|
||
|
68,572
|
|
|
80,361
|
|
||
Less allowances for discounts, returns and uncollectible accounts
|
(6,591
|
)
|
|
(7,308
|
)
|
||
Accounts receivable, net
|
$
|
61,981
|
|
|
$
|
73,053
|
|
5.
|
Inventories
|
(In thousands)
|
June 30,
2013 |
|
March 31,
2013 |
||||
Components of Inventories
|
|
|
|
||||
Packaging and raw materials
|
$
|
1,164
|
|
|
$
|
1,875
|
|
Finished goods
|
65,753
|
|
|
58,326
|
|
||
Inventories
|
$
|
66,917
|
|
|
$
|
60,201
|
|
6.
|
Property and Equipment
|
(In thousands)
|
June 30,
2013 |
|
March 31,
2013 |
||||
Components of Property and Equipment
|
|
|
|
||||
Machinery
|
$
|
1,580
|
|
|
$
|
1,580
|
|
Computer equipment
|
7,914
|
|
|
6,559
|
|
||
Furniture and fixtures
|
1,519
|
|
|
1,510
|
|
||
Leasehold improvements
|
4,713
|
|
|
4,713
|
|
||
|
15,726
|
|
|
14,362
|
|
||
Accumulated depreciation
|
(5,029
|
)
|
|
(4,466
|
)
|
||
Property and equipment, net
|
$
|
10,697
|
|
|
$
|
9,896
|
|
7.
|
Goodwill
|
(In thousands)
|
OTC
Healthcare
|
|
Household
Cleaning
|
|
Consolidated
|
||||||
|
|
|
|
|
|
||||||
Balance — March 31, 2013
|
|
|
|
|
|
||||||
Goodwill
|
$
|
290,327
|
|
|
$
|
72,549
|
|
|
$
|
362,876
|
|
Accumulated impairment losses
|
(130,170
|
)
|
|
(65,160
|
)
|
|
(195,330
|
)
|
|||
|
160,157
|
|
|
7,389
|
|
|
167,546
|
|
|||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Balance — June 30, 2013
|
|
|
|
|
|
|
|
|
|||
Goodwill
|
290,327
|
|
|
72,549
|
|
|
362,876
|
|
|||
Accumulated impairment losses
|
(130,170
|
)
|
|
(65,160
|
)
|
|
(195,330
|
)
|
|||
|
$
|
160,157
|
|
|
$
|
7,389
|
|
|
$
|
167,546
|
|
8.
|
Intangible Assets
|
(In thousands)
|
Indefinite
Lived
Trademarks
|
|
Finite Lived
Trademarks
|
|
Non Compete
Agreement
|
|
Totals
|
||||||||
Gross Carrying Amounts
|
|
|
|
|
|
|
|
||||||||
Balance — March 31, 2013
|
$
|
1,243,718
|
|
|
$
|
203,066
|
|
|
$
|
158
|
|
|
$
|
1,446,942
|
|
Reductions
|
—
|
|
|
—
|
|
|
(158
|
)
|
|
(158
|
)
|
||||
Balance — June 30, 2013
|
$
|
1,243,718
|
|
|
$
|
203,066
|
|
|
$
|
—
|
|
|
$
|
1,446,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accumulated Amortization
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance — March 31, 2013
|
$
|
—
|
|
|
$
|
73,544
|
|
|
$
|
158
|
|
|
$
|
73,702
|
|
Additions
|
—
|
|
|
2,705
|
|
|
—
|
|
|
2,705
|
|
||||
Reductions
|
—
|
|
|
—
|
|
|
(158
|
)
|
|
(158
|
)
|
||||
Balance — June 30, 2013
|
$
|
—
|
|
|
$
|
76,249
|
|
|
$
|
—
|
|
|
$
|
76,249
|
|
|
|
|
|
|
|
|
|
||||||||
Intangible assets, net - June 30, 2013
|
$
|
1,243,718
|
|
|
$
|
126,817
|
|
|
$
|
—
|
|
|
$
|
1,370,535
|
|
9.
|
Other Accrued Liabilities
|
(In thousands)
|
June 30,
2013 |
|
March 31,
2013 |
||||
|
|
|
|
||||
Accrued marketing costs
|
$
|
16,297
|
|
|
$
|
17,187
|
|
Accrued compensation costs
|
3,434
|
|
|
8,847
|
|
||
Accrued broker commissions
|
519
|
|
|
1,028
|
|
||
Income taxes payable
|
1,693
|
|
|
493
|
|
||
Accrued professional fees
|
1,959
|
|
|
1,846
|
|
||
Deferred rent
|
1,368
|
|
|
1,268
|
|
||
Accrued lease termination costs
|
522
|
|
|
729
|
|
||
|
$
|
25,792
|
|
|
$
|
31,398
|
|
10.
|
Long-Term Debt
|
(In thousands, except percentages)
|
|
June 30,
2013 |
|
March 31,
2013 |
||||
2012 Senior Notes bearing interest at 8.125%, with interest only payable on February 1 and August 1 of each year. The 2012 Senior Notes mature on February 1, 2020.
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
2012 Term Loan bearing interest at the Company's option at either a base rate plus applicable margin with a floor of 2.00% or LIBOR with a floor of 1.00%, due on January 31, 2019.
|
|
445,000
|
|
|
445,000
|
|
||
2012 ABL Revolver bearing interest at the Company's option at either a base rate plus applicable margin or LIBOR plus applicable margin. Any unpaid balance is due on January 31, 2017.
|
|
15,000
|
|
|
33,000
|
|
||
2010 Senior Notes bearing interest at 8.25%, with interest only payable on April 1 and October 1 of each year. The 2010 Senior Notes mature on April 1, 2018.
|
|
250,000
|
|
|
250,000
|
|
||
|
|
960,000
|
|
|
978,000
|
|
||
Less: unamortized discount
|
|
(6,755
|
)
|
|
(7,100
|
)
|
||
Long-term debt, net of unamortized discount
|
|
$
|
953,245
|
|
|
$
|
970,900
|
|
(In thousands)
|
|
|
||
Year Ending March 31,
|
|
Amount
|
||
2014 (remaining nine months ending March 31, 2014)
|
$
|
—
|
|
|
2015
|
—
|
|
||
2016
|
—
|
|
||
2017
|
15,000
|
|
||
2018
|
—
|
|
||
Thereafter
|
945,000
|
|
||
|
$
|
960,000
|
|
11.
|
Fair Value Measurements
|
12.
|
Stockholders' Equity
|
13.
|
Accumulated Other Comprehensive Income (Loss)
|
|
June 30,
|
|
March 31,
|
||||
(In thousands)
|
2013
|
|
2013
|
||||
Components of Accumulated Other Comprehensive Income (Loss)
|
|
|
|
||||
Cumulative translation adjustment
|
$
|
1
|
|
|
$
|
(91
|
)
|
Total accumulated other comprehensive income (loss)
|
$
|
1
|
|
|
$
|
(91
|
)
|
14.
|
Earnings Per Share
|
|
|
Three Months Ended June 30,
|
||||||
(In thousands, except per share data)
|
|
2013
|
|
2012
|
||||
Numerator
|
|
|
|
|
||||
Net income
|
|
$
|
20,692
|
|
|
$
|
14,655
|
|
|
|
|
|
|
|
|
||
Denominator
|
|
|
|
|
|
|
||
Denominator for basic earnings per share — weighted average shares outstanding
|
|
51,222
|
|
|
50,342
|
|
||
Dilutive effect of unvested restricted common stock (including restricted stock units) and options issued to employees and directors
|
|
818
|
|
|
764
|
|
||
Denominator for diluted earnings per share
|
|
52,040
|
|
|
51,106
|
|
||
|
|
|
|
|
|
|
||
Earnings per Common Share:
|
|
|
|
|
|
|
||
Basic net earnings per share
|
|
$
|
0.40
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
||
Diluted net earnings per share
|
|
$
|
0.40
|
|
|
$
|
0.29
|
|
15.
|
Share-Based Compensation
|
Restricted Shares and Restricted Stock Units
|
|
Shares
(in thousands)
|
|
Weighted-
Average
Grant-Date
Fair Value
|
|||
Three months ended June 30, 2012:
|
|
|
|
|
|||
Outstanding at March 31, 2012
|
|
363.4
|
|
|
$
|
9.92
|
|
Granted
|
|
123.8
|
|
|
13.50
|
|
|
Vested and issued
|
|
—
|
|
|
—
|
|
|
Forfeited
|
|
(3.0
|
)
|
|
10.11
|
|
|
Outstanding at June 30, 2012
|
|
484.2
|
|
|
10.84
|
|
|
Vested at June 30, 2012
|
|
54.0
|
|
|
7.40
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2013:
|
|
|
|
|
|||
Outstanding at March 31, 2013
|
|
421.3
|
|
|
$
|
11.01
|
|
Granted
|
|
113.6
|
|
|
29.94
|
|
|
Vested and issued
|
|
(27.7
|
)
|
|
9.03
|
|
|
Forfeited
|
|
(3.6
|
)
|
|
13.24
|
|
|
Outstanding at June 30, 2013
|
|
503.6
|
|
|
15.38
|
|
|
Vested at June 30, 2013
|
|
83.1
|
|
|
9.63
|
|
|
Three Months Ended June 30,
|
||||||
|
2013
|
|
2012
|
||||
Expected volatility
|
48.0
|
%
|
|
43.8
|
%
|
||
Expected dividends
|
$
|
—
|
|
|
$
|
—
|
|
Expected term in years
|
6.0
|
|
|
6.5
|
|
||
Risk-free rate
|
1.3
|
%
|
|
1.2
|
%
|
Options
|
|
Shares
(in thousands)
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Three months ended June 30, 2012:
|
|
|
|
|
|
|
|
|
|||||
Outstanding at March 31, 2012
|
|
1,745.4
|
|
|
$
|
8.44
|
|
|
|
|
|
||
Granted
|
|
423.0
|
|
|
13.24
|
|
|
|
|
|
|||
Exercised
|
|
(6.8
|
)
|
|
11.84
|
|
|
|
|
|
|||
Forfeited or expired
|
|
(5.7
|
)
|
|
10.12
|
|
|
|
|
|
|||
Outstanding at June 30, 2012
|
|
2,155.9
|
|
|
9.37
|
|
|
7.9
|
|
$
|
13,885
|
|
|
Exercisable at June 30, 2012
|
|
802.7
|
|
|
8.74
|
|
|
7.2
|
|
5,679
|
|
||
|
|
|
|
|
|
|
|
|
|||||
Three months ended June 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
||
Outstanding at March 31, 2013
|
|
1,386.4
|
|
|
$
|
10.43
|
|
|
|
|
|
||
Granted
|
|
227.7
|
|
|
29.94
|
|
|
|
|
|
|||
Exercised
|
|
(25.0
|
)
|
|
12.40
|
|
|
|
|
|
|||
Forfeited or expired
|
|
(8.0
|
)
|
|
13.24
|
|
|
|
|
|
|||
Outstanding at June 30, 2013
|
|
1,581.1
|
|
|
13.19
|
|
|
6.2
|
|
$
|
9,840
|
|
|
Exercisable at June 30, 2013
|
|
515.9
|
|
|
11.27
|
|
|
7.2
|
|
3,715
|
|
16.
|
Income Taxes
|
(In thousands)
|
|
|||
Year Ending March 31,
|
Amount
|
|||
2014 (Remaining nine months ending March 31, 2014)
|
$
|
849
|
|
|
2015
|
1,105
|
|
||
2016
|
1,074
|
|
||
2017
|
1,044
|
|
||
2018
|
1,013
|
|
||
Thereafter
|
1,542
|
|
||
|
$
|
6,627
|
|
18.
|
Concentrations of Risk
|
19.
|
Business Segments
|
|
Three Months Ended June 30, 2013
|
|
Three Months Ended June 30, 2012
|
||||||||||||||||||||
(In thousands)
|
OTC
Healthcare
|
|
Household
Cleaning
|
|
Consolidated
|
|
OTC
Healthcare |
|
Household
Cleaning |
|
Consolidated
|
||||||||||||
Net sales
|
$
|
122,768
|
|
|
$
|
19,333
|
|
|
$
|
142,101
|
|
|
$
|
126,004
|
|
|
$
|
19,916
|
|
|
$
|
145,920
|
|
Other revenues
|
157
|
|
|
713
|
|
|
870
|
|
|
181
|
|
|
896
|
|
|
1,077
|
|
||||||
Total revenues
|
122,925
|
|
|
20,046
|
|
|
142,971
|
|
|
126,185
|
|
|
20,812
|
|
|
146,997
|
|
||||||
Cost of sales
|
45,011
|
|
|
14,477
|
|
|
59,488
|
|
|
47,399
|
|
|
15,994
|
|
|
63,393
|
|
||||||
Gross profit
|
77,914
|
|
|
5,569
|
|
|
83,483
|
|
|
78,786
|
|
|
4,818
|
|
|
83,604
|
|
||||||
Advertising and promotion
|
18,232
|
|
|
908
|
|
|
19,140
|
|
|
17,853
|
|
|
2,472
|
|
|
20,325
|
|
||||||
Contribution margin
|
$
|
59,682
|
|
|
$
|
4,661
|
|
|
64,343
|
|
|
$
|
60,933
|
|
|
$
|
2,346
|
|
|
63,279
|
|
||
Other operating expenses
|
|
|
|
|
|
|
14,902
|
|
|
|
|
|
|
19,446
|
|
||||||||
Operating income
|
|
|
|
|
|
|
49,441
|
|
|
|
|
|
|
43,833
|
|
||||||||
Other expense
|
|
|
|
|
|
|
15,905
|
|
|
|
|
|
|
19,848
|
|
||||||||
Income before income taxes
|
|
|
|
|
33,536
|
|
|
|
|
|
|
23,985
|
|
||||||||||
Provision for income taxes
|
|
|
|
|
|
|
12,844
|
|
|
|
|
|
|
9,330
|
|
||||||||
Net income
|
|
|
|
|
$
|
20,692
|
|
|
|
|
|
|
$
|
14,655
|
|
|
Three Months Ended June 30,
|
|||||
(In thousands)
|
2013
|
|
2012
|
|
||
Analgesics
|
$
|
28,223
|
|
$
|
27,675
|
|
Cough & Cold
|
21,582
|
|
23,804
|
|
||
Gastrointestinal
|
21,837
|
|
24,204
|
|
||
Eye & Ear Care
|
22,702
|
|
21,707
|
|
||
Dermatologicals
|
13,932
|
|
14,482
|
|
||
Oral Care
|
11,159
|
|
10,530
|
|
||
Other OTC
|
3,490
|
|
3,783
|
|
||
Total OTC Healthcare Segment
|
122,925
|
|
126,185
|
|
||
Household Cleaning Segment
|
20,046
|
|
20,812
|
|
||
Consolidated Total Revenues
|
$
|
142,971
|
|
$
|
146,997
|
|
(In thousands)
|
OTC
Healthcare
|
|
Household
Cleaning
|
|
Consolidated
|
||||||
Goodwill
|
$
|
160,157
|
|
|
$
|
7,389
|
|
|
$
|
167,546
|
|
|
|
|
|
|
|
||||||
Intangible assets
|
|
|
|
|
|
|
|||||
Indefinite-lived
|
1,123,898
|
|
|
119,820
|
|
|
1,243,718
|
|
|||
Finite-lived
|
99,342
|
|
|
27,475
|
|
|
126,817
|
|
|||
|
1,223,240
|
|
|
147,295
|
|
|
1,370,535
|
|
|||
|
$
|
1,383,397
|
|
|
$
|
154,684
|
|
|
$
|
1,538,081
|
|
(In thousands)
|
|
Prestige
Brands
Holdings,
Inc.
|
|
Prestige
Brands,
Inc.,
the issuer
|
|
Combined
Subsidiary
Guarantors
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
|
$
|
—
|
|
|
$
|
24,259
|
|
|
$
|
116,619
|
|
|
$
|
1,223
|
|
|
$
|
—
|
|
|
$
|
142,101
|
|
Other revenues
|
|
—
|
|
|
68
|
|
|
863
|
|
|
434
|
|
|
(495
|
)
|
|
870
|
|
||||||
Total revenues
|
|
—
|
|
|
24,327
|
|
|
117,482
|
|
|
1,657
|
|
|
(495
|
)
|
|
142,971
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of sales (exclusive of depreciation shown below)
|
|
—
|
|
|
9,458
|
|
|
49,989
|
|
|
536
|
|
|
(495
|
)
|
|
59,488
|
|
||||||
Gross profit
|
|
—
|
|
|
14,869
|
|
|
67,493
|
|
|
1,121
|
|
|
—
|
|
|
83,483
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Advertising and promotion
|
|
—
|
|
|
3,440
|
|
|
15,493
|
|
|
207
|
|
|
—
|
|
|
19,140
|
|
||||||
General and administrative
|
|
1,499
|
|
|
1,643
|
|
|
8,457
|
|
|
35
|
|
|
—
|
|
|
11,634
|
|
||||||
Depreciation and amortization
|
|
517
|
|
|
142
|
|
|
2,595
|
|
|
14
|
|
|
—
|
|
|
3,268
|
|
||||||
Total operating expenses
|
|
2,016
|
|
|
5,225
|
|
|
26,545
|
|
|
256
|
|
|
—
|
|
|
34,042
|
|
||||||
Operating income (loss)
|
|
(2,016
|
)
|
|
9,644
|
|
|
40,948
|
|
|
865
|
|
|
—
|
|
|
49,441
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other (income) expense
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income
|
|
(12,213
|
)
|
|
(14,323
|
)
|
|
—
|
|
|
(2
|
)
|
|
26,535
|
|
|
(3
|
)
|
||||||
Interest expense
|
|
8,607
|
|
|
15,908
|
|
|
17,928
|
|
|
—
|
|
|
(26,535
|
)
|
|
15,908
|
|
||||||
Equity in income of subsidiaries
|
|
(19,855
|
)
|
|
(14,553
|
)
|
|
(679
|
)
|
|
—
|
|
|
35,087
|
|
|
—
|
|
||||||
Total other (income) expense
|
|
(23,461
|
)
|
|
(12,968
|
)
|
|
17,249
|
|
|
(2
|
)
|
|
35,087
|
|
|
15,905
|
|
||||||
Income before income taxes
|
|
21,445
|
|
|
22,612
|
|
|
23,699
|
|
|
867
|
|
|
(35,087
|
)
|
|
33,536
|
|
||||||
Provision (benefit) for income taxes
|
|
753
|
|
|
3,087
|
|
|
8,816
|
|
|
188
|
|
|
—
|
|
|
12,844
|
|
||||||
Net income (loss)
|
|
$
|
20,692
|
|
|
$
|
19,525
|
|
|
$
|
14,883
|
|
|
$
|
679
|
|
|
$
|
(35,087
|
)
|
|
$
|
20,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Currency translation adjustments
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
1
|
|
||||||
Total other comprehensive income (loss)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
1
|
|
||||||
Comprehensive income (loss)
|
|
$
|
20,693
|
|
|
$
|
19,525
|
|
|
$
|
14,883
|
|
|
$
|
678
|
|
|
$
|
(35,086
|
)
|
|
$
|
20,693
|
|
(In thousands)
|
|
Prestige
Brands
Holdings,
Inc.
|
|
Prestige
Brands,
Inc.,
the issuer
|
|
Combined
Subsidiary
Guarantors
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
|
$
|
—
|
|
|
$
|
23,222
|
|
|
$
|
121,657
|
|
|
$
|
1,041
|
|
|
$
|
—
|
|
|
$
|
145,920
|
|
Other revenues
|
|
—
|
|
|
67
|
|
|
1,062
|
|
|
475
|
|
|
(527
|
)
|
|
1,077
|
|
||||||
Total revenues
|
|
—
|
|
|
23,289
|
|
|
122,719
|
|
|
1,516
|
|
|
(527
|
)
|
|
146,997
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of sales (exclusive of depreciation shown below)
|
|
—
|
|
|
8,441
|
|
|
55,035
|
|
|
444
|
|
|
(527
|
)
|
|
63,393
|
|
||||||
Gross profit
|
|
—
|
|
|
14,848
|
|
|
67,684
|
|
|
1,072
|
|
|
—
|
|
|
83,604
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Advertising and promotion
|
|
—
|
|
|
3,107
|
|
|
16,920
|
|
|
298
|
|
|
—
|
|
|
20,325
|
|
||||||
General and administrative
|
|
1,829
|
|
|
1,729
|
|
|
12,090
|
|
|
503
|
|
|
—
|
|
|
16,151
|
|
||||||
Depreciation and amortization
|
|
132
|
|
|
141
|
|
|
3,005
|
|
|
17
|
|
|
—
|
|
|
3,295
|
|
||||||
Total operating expenses
|
|
1,961
|
|
|
4,977
|
|
|
32,015
|
|
|
818
|
|
|
—
|
|
|
39,771
|
|
||||||
Operating income (loss)
|
|
(1,961
|
)
|
|
9,871
|
|
|
35,669
|
|
|
254
|
|
|
—
|
|
|
43,833
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other (income) expense
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income
|
|
(12,128
|
)
|
|
(10,960
|
)
|
|
—
|
|
|
(47
|
)
|
|
23,133
|
|
|
(2
|
)
|
||||||
Interest expense
|
|
8,666
|
|
|
28,516
|
|
|
5,801
|
|
|
—
|
|
|
(23,133
|
)
|
|
19,850
|
|
||||||
Equity in income of subsidiaries
|
|
(13,738
|
)
|
|
(19,878
|
)
|
|
(133
|
)
|
|
—
|
|
|
33,749
|
|
|
—
|
|
||||||
Total other (income) expense
|
|
(17,200
|
)
|
|
(2,322
|
)
|
|
5,668
|
|
|
(47
|
)
|
|
33,749
|
|
|
19,848
|
|
||||||
Income (loss) before income taxes
|
|
15,239
|
|
|
12,193
|
|
|
30,001
|
|
|
301
|
|
|
(33,749
|
)
|
|
23,985
|
|
||||||
Provision (benefit) for income taxes
|
|
584
|
|
|
(2,989
|
)
|
|
11,618
|
|
|
117
|
|
|
—
|
|
|
9,330
|
|
||||||
Net income (loss)
|
|
14,655
|
|
|
15,182
|
|
|
18,383
|
|
|
184
|
|
|
(33,749
|
)
|
|
14,655
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Currency translation adjustments
|
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
|
42
|
|
|
(42
|
)
|
||||||
Total other comprehensive income (loss)
|
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
|
42
|
|
|
(42
|
)
|
||||||
Comprehensive income (loss)
|
|
$
|
14,613
|
|
|
$
|
15,182
|
|
|
$
|
18,383
|
|
|
$
|
142
|
|
|
$
|
(33,707
|
)
|
|
$
|
14,613
|
|
(In thousands)
|
|
Prestige
Brands
Holdings,
Inc.
|
|
Prestige
Brands,
Inc.,
the issuer
|
|
Combined
Subsidiary
Guarantors
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
18,325
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
981
|
|
|
$
|
—
|
|
|
$
|
19,306
|
|
Accounts receivable, net
|
|
143
|
|
|
11,513
|
|
|
49,220
|
|
|
1,105
|
|
|
—
|
|
|
61,981
|
|
||||||
Inventories
|
|
—
|
|
|
11,787
|
|
|
54,616
|
|
|
514
|
|
|
—
|
|
|
66,917
|
|
||||||
Deferred income tax assets
|
|
239
|
|
|
894
|
|
|
4,934
|
|
|
—
|
|
|
—
|
|
|
6,067
|
|
||||||
Prepaid expenses and other current assets
|
|
2,842
|
|
|
723
|
|
|
4,878
|
|
|
270
|
|
|
—
|
|
|
8,713
|
|
||||||
Total current assets
|
|
21,549
|
|
|
24,917
|
|
|
113,648
|
|
|
2,870
|
|
|
—
|
|
|
162,984
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property and equipment, net
|
|
10,455
|
|
|
26
|
|
|
216
|
|
|
—
|
|
|
—
|
|
|
10,697
|
|
||||||
Goodwill
|
|
—
|
|
|
66,007
|
|
|
101,539
|
|
|
—
|
|
|
—
|
|
|
167,546
|
|
||||||
Intangible assets, net
|
|
—
|
|
|
193,262
|
|
|
1,176,967
|
|
|
306
|
|
|
—
|
|
|
1,370,535
|
|
||||||
Other long-term assets
|
|
—
|
|
|
24,332
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,332
|
|
||||||
Intercompany receivable
|
|
651,002
|
|
|
1,892,251
|
|
|
434,939
|
|
|
8,159
|
|
|
(2,986,351
|
)
|
|
—
|
|
||||||
Investment in subsidiary
|
|
1,449,631
|
|
|
653,164
|
|
|
7,746
|
|
|
—
|
|
|
(2,110,541
|
)
|
|
—
|
|
||||||
Total Assets
|
|
$
|
2,132,637
|
|
|
$
|
2,853,959
|
|
|
$
|
1,835,055
|
|
|
$
|
11,335
|
|
|
$
|
(5,096,892
|
)
|
|
$
|
1,736,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable
|
|
$
|
2,184
|
|
|
$
|
7,640
|
|
|
$
|
31,517
|
|
|
$
|
881
|
|
|
$
|
—
|
|
|
$
|
42,222
|
|
Accrued interest payable
|
|
—
|
|
|
13,721
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,721
|
|
||||||
Other accrued liabilities
|
|
7,226
|
|
|
2,103
|
|
|
15,366
|
|
|
1,097
|
|
|
—
|
|
|
25,792
|
|
||||||
Total current liabilities
|
|
9,410
|
|
|
23,464
|
|
|
46,883
|
|
|
1,978
|
|
|
—
|
|
|
81,735
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Principal amount
|
|
—
|
|
|
960,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
960,000
|
|
||||||
Less unamortized discount
|
|
—
|
|
|
(6,755
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,755
|
)
|
||||||
Long-term debt, net of unamortized discount
|
|
—
|
|
|
953,245
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
953,245
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deferred income tax liabilities
|
|
—
|
|
|
55,859
|
|
|
144,873
|
|
|
71
|
|
|
—
|
|
|
200,803
|
|
||||||
Intercompany payable
|
|
1,622,916
|
|
|
441,102
|
|
|
922,333
|
|
|
—
|
|
|
(2,986,351
|
)
|
|
—
|
|
||||||
Total Liabilities
|
|
1,632,326
|
|
|
1,473,670
|
|
|
1,114,089
|
|
|
2,049
|
|
|
(2,986,351
|
)
|
|
1,235,783
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preferred share rights
|
|
283
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
283
|
|
||||||
Common stock
|
|
514
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
514
|
|
||||||
Additional paid-in capital
|
|
403,643
|
|
|
1,280,945
|
|
|
624,742
|
|
|
1,111
|
|
|
(1,906,798
|
)
|
|
403,643
|
|
||||||
Treasury stock, at cost - 191 shares
|
|
(965
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(965
|
)
|
||||||
Accumulated other comprehensive income, net of tax
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
|
103
|
|
|
(103
|
)
|
||||||
Retained earnings (accumulated deficit)
|
|
96,939
|
|
|
99,344
|
|
|
96,224
|
|
|
8,278
|
|
|
(203,846
|
)
|
|
96,939
|
|
||||||
Total Stockholders' Equity
|
|
500,311
|
|
|
1,380,289
|
|
|
720,966
|
|
|
9,286
|
|
|
(2,110,541
|
)
|
|
500,311
|
|
||||||
Total Liabilities and Stockholders' Equity
|
|
$
|
2,132,637
|
|
|
$
|
2,853,959
|
|
|
$
|
1,835,055
|
|
|
$
|
11,335
|
|
|
$
|
(5,096,892
|
)
|
|
$
|
1,736,094
|
|
(In thousands)
|
|
Prestige
Brands
Holdings,
Inc.
|
|
Prestige
Brands,
Inc.,
the issuer
|
|
Combined
Subsidiary
Guarantors
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
14,720
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
950
|
|
|
$
|
—
|
|
|
$
|
15,670
|
|
Accounts receivable, net
|
|
21
|
|
|
13,875
|
|
|
58,345
|
|
|
812
|
|
|
—
|
|
|
73,053
|
|
||||||
Inventories
|
|
—
|
|
|
11,164
|
|
|
48,474
|
|
|
563
|
|
|
—
|
|
|
60,201
|
|
||||||
Deferred income tax assets
|
|
218
|
|
|
855
|
|
|
5,276
|
|
|
—
|
|
|
—
|
|
|
6,349
|
|
||||||
Prepaid expenses and other current assets
|
|
4,942
|
|
|
93
|
|
|
3,609
|
|
|
256
|
|
|
—
|
|
|
8,900
|
|
||||||
Total current assets
|
|
19,901
|
|
|
25,987
|
|
|
115,704
|
|
|
2,581
|
|
|
—
|
|
|
164,173
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property and equipment, net
|
|
9,609
|
|
|
34
|
|
|
253
|
|
|
—
|
|
|
—
|
|
|
9,896
|
|
||||||
Goodwill
|
|
—
|
|
|
66,007
|
|
|
101,539
|
|
|
—
|
|
|
—
|
|
|
167,546
|
|
||||||
Intangible assets, net
|
|
—
|
|
|
193,396
|
|
|
1,179,524
|
|
|
320
|
|
|
—
|
|
|
1,373,240
|
|
||||||
Other long-term assets
|
|
—
|
|
|
24,944
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,944
|
|
||||||
Intercompany receivable
|
|
653,049
|
|
|
1,911,573
|
|
|
415,587
|
|
|
7,316
|
|
|
(2,987,525
|
)
|
|
—
|
|
||||||
Investment in subsidiary
|
|
1,429,775
|
|
|
638,611
|
|
|
7,067
|
|
|
—
|
|
|
(2,075,453
|
)
|
|
—
|
|
||||||
Total Assets
|
|
$
|
2,112,334
|
|
|
$
|
2,860,552
|
|
|
$
|
1,819,674
|
|
|
$
|
10,217
|
|
|
$
|
(5,062,978
|
)
|
|
$
|
1,739,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable
|
|
$
|
2,601
|
|
|
$
|
10,600
|
|
|
$
|
37,695
|
|
|
$
|
480
|
|
|
$
|
—
|
|
|
$
|
51,376
|
|
Accrued interest payable
|
|
—
|
|
|
13,894
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,894
|
|
||||||
Other accrued liabilities
|
|
12,694
|
|
|
1,684
|
|
|
16,107
|
|
|
913
|
|
|
—
|
|
|
31,398
|
|
||||||
Total current liabilities
|
|
15,295
|
|
|
26,178
|
|
|
53,802
|
|
|
1,393
|
|
|
—
|
|
|
96,668
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Principal amount
|
|
—
|
|
|
978,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
978,000
|
|
||||||
Less unamortized discount
|
|
—
|
|
|
(7,100
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,100
|
)
|
||||||
Long-term debt, net of unamortized discount
|
|
—
|
|
|
970,900
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
970,900
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deferred income tax liabilities
|
|
—
|
|
|
55,291
|
|
|
138,924
|
|
|
73
|
|
|
—
|
|
|
194,288
|
|
||||||
Intercompany payable
|
|
1,619,096
|
|
|
447,419
|
|
|
920,865
|
|
|
145
|
|
|
(2,987,525
|
)
|
|
—
|
|
||||||
Total Liabilities
|
|
1,634,391
|
|
|
1,499,788
|
|
|
1,113,591
|
|
|
1,611
|
|
|
(2,987,525
|
)
|
|
1,261,856
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preferred share rights
|
|
283
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
283
|
|
||||||
Common stock
|
|
513
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
513
|
|
||||||
Additional paid-in capital
|
|
401,691
|
|
|
1,280,945
|
|
|
624,742
|
|
|
1,111
|
|
|
(1,906,798
|
)
|
|
401,691
|
|
||||||
Treasury stock, at cost - 181 shares
|
|
(687
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(687
|
)
|
||||||
Accumulated other comprehensive loss, net of tax
|
|
(104
|
)
|
|
—
|
|
|
—
|
|
|
(104
|
)
|
|
104
|
|
|
(104
|
)
|
||||||
Retained earnings (accumulated deficit)
|
|
76,247
|
|
|
79,819
|
|
|
81,341
|
|
|
7,599
|
|
|
(168,759
|
)
|
|
76,247
|
|
||||||
Total Stockholders' Equity
|
|
477,943
|
|
|
1,360,764
|
|
|
706,083
|
|
|
8,606
|
|
|
(2,075,453
|
)
|
|
477,943
|
|
||||||
Total Liabilities and Stockholders' Equity
|
|
$
|
2,112,334
|
|
|
$
|
2,860,552
|
|
|
$
|
1,819,674
|
|
|
$
|
10,217
|
|
|
$
|
(5,062,978
|
)
|
|
$
|
1,739,799
|
|
(In thousands)
|
|
Prestige
Brands
Holdings,
Inc.
|
|
Prestige
Brands,
Inc.,
the issuer
|
|
Combined
Subsidiary
Guarantors
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
|
$
|
20,692
|
|
|
$
|
19,525
|
|
|
$
|
14,883
|
|
|
$
|
679
|
|
|
$
|
(35,087
|
)
|
|
$
|
20,692
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation and amortization
|
|
517
|
|
|
142
|
|
|
2,595
|
|
|
14
|
|
|
—
|
|
|
3,268
|
|
||||||
Deferred income taxes
|
|
(21
|
)
|
|
529
|
|
|
6,291
|
|
|
(2
|
)
|
|
—
|
|
|
6,797
|
|
||||||
Amortization of deferred financing costs
|
|
—
|
|
|
892
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
892
|
|
||||||
Stock-based compensation costs
|
|
1,193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,193
|
|
||||||
Amortization of debt discount
|
|
—
|
|
|
345
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
345
|
|
||||||
Gain on sale of assets
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
Equity in income of subsidiaries
|
|
(19,855
|
)
|
|
(14,553
|
)
|
|
(679
|
)
|
|
—
|
|
|
35,087
|
|
|
—
|
|
||||||
Changes in operating assets and liabilities, net of effects from acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts receivable
|
|
(122
|
)
|
|
2,362
|
|
|
9,125
|
|
|
(295
|
)
|
|
—
|
|
|
11,070
|
|
||||||
Inventories
|
|
—
|
|
|
(623
|
)
|
|
(6,142
|
)
|
|
49
|
|
|
—
|
|
|
(6,716
|
)
|
||||||
Prepaid expenses and other current assets
|
|
2,100
|
|
|
(630
|
)
|
|
(1,269
|
)
|
|
(14
|
)
|
|
—
|
|
|
187
|
|
||||||
Accounts payable
|
|
(417
|
)
|
|
(2,960
|
)
|
|
(6,178
|
)
|
|
408
|
|
|
—
|
|
|
(9,147
|
)
|
||||||
Accrued liabilities
|
|
(5,468
|
)
|
|
246
|
|
|
(741
|
)
|
|
182
|
|
|
—
|
|
|
(5,781
|
)
|
||||||
Net cash provided by (used in) operating activities
|
|
(1,381
|
)
|
|
5,275
|
|
|
17,883
|
|
|
1,021
|
|
|
—
|
|
|
22,798
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchases of property and equipment
|
|
(1,364
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,364
|
)
|
||||||
Proceeds from the sale of property and equipment
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Net cash provided by (used in) investing activities
|
|
(1,364
|
)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(1,362
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Repayments under revolving credit agreement
|
|
—
|
|
|
(18,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,000
|
)
|
||||||
Payment of deferred financing costs
|
|
—
|
|
|
(280
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(280
|
)
|
||||||
Proceeds from exercise of stock options
|
|
309
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309
|
|
||||||
Excess tax benefits from share-based awards
|
|
452
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
452
|
|
||||||
Shares surrendered as payment of tax withholding
|
|
(278
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(278
|
)
|
||||||
Intercompany activity, net
|
|
5,867
|
|
|
13,005
|
|
|
(17,885
|
)
|
|
(987
|
)
|
|
—
|
|
|
—
|
|
||||||
Net cash (used in) provided by financing activities
|
|
6,350
|
|
|
(5,275
|
)
|
|
(17,885
|
)
|
|
(987
|
)
|
|
—
|
|
|
(17,797
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||||
Increase in cash and cash equivalents
|
|
3,605
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
3,636
|
|
||||||
Cash - beginning of period
|
|
14,720
|
|
|
—
|
|
|
—
|
|
|
950
|
|
|
—
|
|
|
15,670
|
|
||||||
Cash - end of period
|
|
$
|
18,325
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
981
|
|
|
$
|
—
|
|
|
$
|
19,306
|
|
(In thousands)
|
|
Prestige Brands Holdings, Inc.
|
|
Prestige Brands, Inc., the issuer
|
|
Combined Subsidiary Guarantors
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
|
$
|
14,655
|
|
|
$
|
15,182
|
|
|
$
|
18,383
|
|
|
$
|
184
|
|
|
$
|
(33,749
|
)
|
|
$
|
14,655
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation and amortization
|
|
132
|
|
|
141
|
|
|
3,005
|
|
|
17
|
|
|
—
|
|
|
3,295
|
|
||||||
Deferred income taxes
|
|
20
|
|
|
908
|
|
|
6,154
|
|
|
(6
|
)
|
|
—
|
|
|
7,076
|
|
||||||
Amortization of deferred financing costs
|
|
—
|
|
|
1,048
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,048
|
|
||||||
Stock-based compensation costs
|
|
913
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
913
|
|
||||||
Amortization of debt discount
|
|
—
|
|
|
404
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
404
|
|
||||||
Loss on disposal of equipment
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||||
Equity in income of subsidiaries
|
|
(13,738
|
)
|
|
(19,878
|
)
|
|
(133
|
)
|
|
—
|
|
|
33,749
|
|
|
—
|
|
||||||
Changes in operating assets and liabilities, net of effects from acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts receivable
|
|
(4
|
)
|
|
2,264
|
|
|
(11,295
|
)
|
|
(179
|
)
|
|
—
|
|
|
(9,214
|
)
|
||||||
Inventories
|
|
—
|
|
|
593
|
|
|
(3,633
|
)
|
|
292
|
|
|
—
|
|
|
(2,748
|
)
|
||||||
Prepaid expenses and other current assets
|
|
535
|
|
|
(39
|
)
|
|
(642
|
)
|
|
152
|
|
|
—
|
|
|
6
|
|
||||||
Accounts payable
|
|
(2,954
|
)
|
|
846
|
|
|
2,149
|
|
|
94
|
|
|
—
|
|
|
135
|
|
||||||
Accrued liabilities
|
|
(4,730
|
)
|
|
285
|
|
|
3,605
|
|
|
(9
|
)
|
|
—
|
|
|
(849
|
)
|
||||||
Net cash provided by (used in) operating activities
|
|
(5,171
|
)
|
|
1,754
|
|
|
17,614
|
|
|
545
|
|
|
—
|
|
|
14,742
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchases of property and equipment
|
|
(1,198
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,198
|
)
|
||||||
Proceeds from sale of property and equipment
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||||
Acquisition of GSK purchase price adjustments
|
|
—
|
|
|
—
|
|
|
(226
|
)
|
|
—
|
|
|
—
|
|
|
(226
|
)
|
||||||
Intercompany activity, net
|
|
(226
|
)
|
|
—
|
|
|
226
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net cash (Used in) provided by investing activities
|
|
(1,424
|
)
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
(1,409
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Repayment of long-term debt
|
|
—
|
|
|
(45,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45,000
|
)
|
||||||
Repayments under revolving credit agreement
|
|
—
|
|
|
(8,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,000
|
)
|
||||||
Borrowings under revolving credit agreement
|
|
—
|
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
||||||
Proceeds from exercise of stock options
|
|
80
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80
|
|
||||||
Intercompany activity, net
|
|
(8,138
|
)
|
|
26,246
|
|
|
(17,629
|
)
|
|
(479
|
)
|
|
—
|
|
|
—
|
|
||||||
Net cash used in financing activities
|
|
(8,058
|
)
|
|
(1,754
|
)
|
|
(17,629
|
)
|
|
(479
|
)
|
|
—
|
|
|
(27,920
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
||||||
(Decrease) increase in cash and cash equivalents
|
|
(14,653
|
)
|
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
(14,611
|
)
|
||||||
Cash - beginning of period
|
|
18,221
|
|
|
—
|
|
|
—
|
|
|
794
|
|
|
—
|
|
|
19,015
|
|
||||||
Cash - end of period
|
|
$
|
3,568
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
836
|
|
|
$
|
—
|
|
|
$
|
4,404
|
|
(In thousands)
|
|
Prestige Brands Holdings, Inc.
|
|
Prestige Brands, Inc., the issuer
|
|
Combined Subsidiary Guarantors
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|||||||||||||||||||||||||
|
|
Reported
|
Revised
|
|
Reported
|
Revised
|
|
Reported
|
Revised
|
|
Reported
|
Revised
|
|
Reported
|
Revised
|
||||||||||||||||||||
Revenue
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
23,289
|
|
$
|
23,289
|
|
|
$
|
122,719
|
|
$
|
122,719
|
|
|
$
|
1,516
|
|
$
|
1,516
|
|
|
$
|
(527
|
)
|
$
|
(527
|
)
|
Income before income taxes
|
|
10,902
|
|
15,239
|
|
|
12,193
|
|
12,193
|
|
|
29,808
|
|
30,001
|
|
|
362
|
|
301
|
|
|
(29,280
|
)
|
(33,749
|
)
|
||||||||||
Provision (benefit) for income taxes
|
|
(3,753
|
)
|
584
|
|
|
1,361
|
|
(2,989
|
)
|
|
11,554
|
|
11,618
|
|
|
168
|
|
117
|
|
|
—
|
|
—
|
|
||||||||||
Net income
|
|
14,655
|
|
14,655
|
|
|
10,832
|
|
15,182
|
|
|
18,254
|
|
18,383
|
|
|
194
|
|
184
|
|
|
(29,280
|
)
|
(33,749
|
)
|
(In thousands)
|
|
Prestige Brands Holdings, Inc.
|
|
Prestige Brands, Inc., the issuer
|
|
Combined Subsidiary Guarantors
|
|
Combined Non-Guarantor Subsidiaries
|
|
Eliminations
|
|||||||||||||||||||||||||
|
|
Reported
|
Revised
|
|
Reported
|
Revised
|
|
Reported
|
Revised
|
|
Reported
|
Revised
|
|
Reported
|
Revised
|
||||||||||||||||||||
Net cash provided by (used in) operating activities
|
|
$
|
(4,028
|
)
|
$
|
(5,171
|
)
|
|
$
|
(2,388
|
)
|
$
|
1,754
|
|
|
$
|
19,335
|
|
$
|
17,614
|
|
|
$
|
1,823
|
|
$
|
545
|
|
|
$
|
—
|
|
$
|
—
|
|
Net cash provided by (used in) investing activities
|
|
(1,424
|
)
|
(1,424
|
)
|
|
—
|
|
—
|
|
|
15
|
|
15
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||||||
Net cash provided by (used in) financing activities
|
|
(9,201
|
)
|
(8,058
|
)
|
|
2,388
|
|
(1,754
|
)
|
|
(19,350
|
)
|
(17,629
|
)
|
|
(1,757
|
)
|
(479
|
)
|
|
—
|
|
—
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
See also “Cautionary Statement Regarding Forward-Looking Statements” on page
44
of this Quarterly Report on Form 10-Q.
|
(In thousands)
|
|
GSK Brands I (January 31, 2012)
|
|
GSK Brands II (March 30, 2012)
|
|
Total
|
||||||
Inventory
|
|
$
|
14,820
|
|
|
$
|
250
|
|
|
$
|
15,070
|
|
Prepaid expenses
|
|
3,575
|
|
|
—
|
|
|
3,575
|
|
|||
Trade names
|
|
542,892
|
|
|
81,257
|
|
|
624,149
|
|
|||
Goodwill
|
|
17,401
|
|
|
2,831
|
|
|
20,232
|
|
|||
Total purchase price
|
|
$
|
578,688
|
|
|
$
|
84,338
|
|
|
$
|
663,026
|
|
(In thousands)
|
October 31,
2012 |
||
Components of assets sold:
|
|
||
Inventory
|
$
|
220
|
|
Prepaid expenses
|
100
|
|
|
Trade names
|
15,604
|
|
|
Goodwill
|
6,382
|
|
|
Three Months Ended June 30,
|
|||||||||||||||||
Revenues
|
2013
|
|
%
|
|
2012
|
|
%
|
|
Increase (Decrease)
|
|
%
|
|||||||
Analgesics
|
$
|
28,223
|
|
|
19.7
|
|
$
|
27,675
|
|
|
18.8
|
|
$
|
548
|
|
|
2.0
|
|
Cough & Cold
|
21,582
|
|
|
15.1
|
|
23,804
|
|
|
16.2
|
|
(2,222
|
)
|
|
(9.3
|
)
|
|||
Gastrointestinal
|
21,837
|
|
|
15.3
|
|
24,204
|
|
|
16.5
|
|
(2,367
|
)
|
|
(9.8
|
)
|
|||
Eye & Ear Care
|
22,702
|
|
|
15.9
|
|
21,707
|
|
|
14.8
|
|
995
|
|
|
4.6
|
|
|||
Dermatologicals
|
13,932
|
|
|
9.7
|
|
14,482
|
|
|
9.9
|
|
(550
|
)
|
|
(3.8
|
)
|
|||
Oral Care
|
11,159
|
|
|
7.8
|
|
10,530
|
|
|
7.2
|
|
629
|
|
|
6.0
|
|
|||
Other OTC
|
3,490
|
|
|
2.4
|
|
3,783
|
|
|
2.6
|
|
(293
|
)
|
|
(7.7
|
)
|
|||
Total OTC Healthcare Revenues
|
122,925
|
|
|
86.0
|
|
126,185
|
|
|
85.8
|
|
(3,260
|
)
|
|
(2.6
|
)
|
|||
Household Cleaning
|
20,046
|
|
|
14.0
|
|
20,812
|
|
|
14.2
|
|
(766
|
)
|
|
(3.7
|
)
|
|||
Consolidated Total Revenues
|
$
|
142,971
|
|
|
100.0
|
|
$
|
146,997
|
|
|
100.0
|
|
$
|
(4,026
|
)
|
|
(2.7
|
)
|
|
Three Months Ended June 30,
|
|||||||||||||||||
Cost of Sales
|
2013
|
|
%
|
|
2012
|
|
%
|
|
Increase (Decrease)
|
|
%
|
|||||||
OTC Healthcare
|
$
|
45,011
|
|
|
36.6
|
|
$
|
47,399
|
|
|
37.6
|
|
$
|
(2,388
|
)
|
|
(5.0
|
)
|
Household Cleaning
|
14,477
|
|
|
72.2
|
|
15,994
|
|
|
76.8
|
|
(1,517
|
)
|
|
(9.5
|
)
|
|||
|
$
|
59,488
|
|
|
41.6
|
|
$
|
63,393
|
|
|
43.1
|
|
$
|
(3,905
|
)
|
|
(6.2
|
)
|
|
Three Months Ended June 30,
|
|||||||||||||||||
Gross Profit
|
2013
|
|
%
|
|
2012
|
|
%
|
|
Increase (Decrease)
|
|
%
|
|||||||
OTC Healthcare
|
$
|
77,914
|
|
|
63.4
|
|
$
|
78,786
|
|
|
62.4
|
|
$
|
(872
|
)
|
|
(1.1
|
)
|
Household Cleaning
|
5,569
|
|
|
27.8
|
|
4,818
|
|
|
23.2
|
|
751
|
|
|
15.6
|
|
|||
|
$
|
83,483
|
|
|
58.4
|
|
$
|
83,604
|
|
|
56.9
|
|
$
|
(121
|
)
|
|
(0.1
|
)
|
|
Three Months Ended June 30,
|
|||||||||||||||||
Contribution Margin
|
2013
|
|
%
|
|
2012
|
|
%
|
|
Increase (Decrease)
|
|
%
|
|||||||
OTC Healthcare
|
$
|
59,682
|
|
|
48.6
|
|
$
|
60,933
|
|
|
48.3
|
|
$
|
(1,251
|
)
|
|
(2.1
|
)
|
Household Cleaning
|
4,661
|
|
|
23.3
|
|
2,346
|
|
|
11.3
|
|
2,315
|
|
|
98.7
|
|
|||
|
$
|
64,343
|
|
|
45.0
|
|
$
|
63,279
|
|
|
43.0
|
|
$
|
1,064
|
|
|
1.7
|
|
|
Three Months Ended June 30,
|
||||||
(In thousands)
|
2013
|
|
2012
|
||||
Cash provided by (used in):
|
|
|
|
||||
Operating Activities
|
$
|
22,798
|
|
|
$
|
14,742
|
|
Investing Activities
|
(1,362
|
)
|
|
(1,409
|
)
|
||
Financing Activities
|
(17,797
|
)
|
|
(27,920
|
)
|
•
|
$250.0 million
of 8.25% 2010 Senior Notes due 2018;
|
•
|
$250.0 million
of 8.125% 2012 Senior Notes due 2020;
|
•
|
$445.0 million
of borrowings under the 2012 Term Loan; and
|
•
|
$15.0 million
of borrowings under the 2012 ABL Revolver.
|
•
|
Have a leverage ratio of less than
7.10 to 1.0
for the quarter ended
June 30, 2013
(defined as, with certain adjustments, the ratio of our consolidated total net debt as of the last day of the fiscal quarter to our trailing twelve month consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items (“EBITDA”)). Our leverage ratio requirement decreases over time to
3.50 to 1.0
for the quarter ending June 30, 2016, and remains level thereafter;
|
•
|
Have an interest coverage ratio of greater than
1.6 to 1.0
for the quarter ended
June 30, 2013
(defined as, with certain adjustments, the ratio of our consolidated EBITDA to our trailing twelve month consolidated cash interest expense). Our interest coverage requirement increases over time to
2.50 to 1.0
for the quarter ending June 30, 2016, and remains level thereafter; and
|
•
|
Have a fixed charge ratio of greater than
1.0 to 1.0
for the quarter ended
June 30, 2013
(defined as, with certain adjustments, the ratio of our consolidated EBITDA minus capital expenditures to our trailing twelve month consolidated interest paid, taxes paid and other specified payments). Our fixed charge requirement remains level throughout the term of the agreement.
|
(In thousands)
|
OTC
Healthcare
|
|
Household
Cleaning
|
|
Consolidated
|
||||||
|
|
|
|
|
|
||||||
Goodwill
|
$
|
160,157
|
|
|
$
|
7,389
|
|
|
$
|
167,546
|
|
|
|
|
|
|
|
|
|||||
Intangible assets, net
|
|
|
|
|
|
|
|||||
Indefinite-lived:
|
|
|
|
|
|
|
|||||
Analgesics
|
341,123
|
|
|
—
|
|
|
341,123
|
|
|||
Cough & Cold
|
185,453
|
|
|
—
|
|
|
185,453
|
|
|||
Gastrointestinal
|
213,639
|
|
|
—
|
|
|
213,639
|
|
|||
Eye & Ear Care
|
172,318
|
|
|
—
|
|
|
172,318
|
|
|||
Dermatologicals
|
149,927
|
|
|
—
|
|
|
149,927
|
|
|||
Oral Care
|
61,438
|
|
|
—
|
|
|
61,438
|
|
|||
Other OTC
|
—
|
|
|
—
|
|
|
—
|
|
|||
Household Cleaning
|
—
|
|
|
119,820
|
|
|
119,820
|
|
|||
Total indefinite-lived intangible assets, net
|
1,123,898
|
|
|
119,820
|
|
|
1,243,718
|
|
|||
|
|
|
|
|
|
||||||
Finite-lived:
|
|
|
|
|
|
|
|||||
Analgesics
|
4,283
|
|
|
—
|
|
|
4,283
|
|
|||
Cough & Cold
|
22,056
|
|
|
—
|
|
|
22,056
|
|
|||
Gastrointestinal
|
12,635
|
|
|
—
|
|
|
12,635
|
|
|||
Eye & Ear Care
|
8,440
|
|
|
—
|
|
|
8,440
|
|
|||
Dermatologicals
|
6,111
|
|
|
—
|
|
|
6,111
|
|
|||
Oral Care
|
18,213
|
|
|
—
|
|
|
18,213
|
|
|||
Other OTC
|
27,604
|
|
|
—
|
|
|
27,604
|
|
|||
Household Cleaning
|
—
|
|
|
27,475
|
|
|
27,475
|
|
|||
Total finite-lived intangible assets, net
|
99,342
|
|
|
27,475
|
|
|
126,817
|
|
|||
Total intangible assets, net
|
1,223,240
|
|
|
147,295
|
|
|
1,370,535
|
|
|||
Total goodwill and intangible assets, net
|
$
|
1,383,397
|
|
|
$
|
154,684
|
|
|
$
|
1,538,081
|
|
•
|
Brand History
|
•
|
Market Position
|
•
|
Recent and Projected Sales Growth
|
•
|
History of and Potential for Product Extensions
|
•
|
Reviews period-to-period sales and profitability by brand;
|
•
|
Analyzes industry trends and projects brand growth rates;
|
•
|
Prepares annual sales forecasts;
|
•
|
Evaluates advertising effectiveness;
|
•
|
Analyzes gross margins;
|
•
|
Reviews contractual benefits or limitations;
|
•
|
Monitors competitors' advertising spend and product innovation;
|
•
|
Prepares projections to measure brand viability over the estimated useful life of the intangible asset; and
|
•
|
Considers the regulatory environment, as well as industry litigation.
|
•
|
Type of instrument (i.e., restricted shares vs. an option, warrant or performance shares);
|
•
|
Strike price of the instrument;
|
•
|
Market price of our common stock on the date of grant;
|
•
|
Discount rates;
|
•
|
Duration of the instrument; and
|
•
|
Volatility of our common stock in the public market.
|
•
|
Rules and regulations promulgated by regulatory agencies;
|
•
|
Sufficiency of the evidence in support of our position;
|
•
|
Anticipated costs to support our position; and
|
•
|
Likelihood of a positive outcome.
|
•
|
The high level of competition in our industry and markets;
|
•
|
Our ability to increase organic growth via new product introductions or line extensions;
|
•
|
Our ability to invest in research and development;
|
•
|
Our dependence on a limited number of customers for a large portion of our sales;
|
•
|
Our expectations regarding increased advertising and promotion spending for acquired brands;
|
•
|
Our ability to grow our international sales;
|
•
|
General economic conditions affecting our products and their respective markets;
|
•
|
Changing consumer trends or pricing pressures which may cause us to lower our prices;
|
•
|
Our dependence on third-party manufacturers to produce the products we sell;
|
•
|
Price increases for raw materials, labor, energy and transportation costs;
|
•
|
Disruptions in our distribution center;
|
•
|
Acquisitions, dispositions or other strategic transactions diverting managerial resources, the incurrence of additional liabilities or integration problems associated with such transactions;
|
•
|
Actions of government agencies in connection with our products or regulatory matters governing our industry;
|
•
|
Product liability claims, product recalls and related negative publicity;
|
•
|
Our ability to protect our intellectual property rights;
|
•
|
Our dependence on third parties for intellectual property relating to some of the products we sell;
|
•
|
Our assets being comprised virtually entirely of goodwill and intangibles;
|
•
|
Our dependence on key personnel;
|
•
|
Shortages of supply of sourced goods or interruptions in the manufacturing of our products;
|
•
|
The costs associated with any adverse judgments rendered in any litigation or arbitration;
|
•
|
Our level of indebtedness, and possible inability to service our debt;
|
•
|
Our ability to obtain additional financing; and
|
•
|
The restrictions imposed by our financing agreements on our operations.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
PART II.
|
OTHER INFORMATION
|
•
|
Changes in the legislative or regulatory requirements of the countries or regions where we do business;
|
•
|
Currency controls that restrict or prohibit the payment of funds or the repatriation of earnings to the United States;
|
•
|
Fluctuating foreign exchange rates could result in unfavorable increases in the price of our products or cause increases in the cost of certain products purchased from our foreign third-party manufacturers;
|
•
|
Regulatory oversight and its impact on our ability to get products registered for sale in certain markets;
|
•
|
Potential trade restrictions and exchange controls;
|
•
|
Inability to protect our intellectual property rights in these markets; and
|
•
|
Increased costs of compliance with general business and tax regulations in these countries or regions.
|
•
|
Increase our vulnerability to general adverse economic and industry conditions;
|
•
|
Limit our ability to engage in strategic acquisitions;
|
•
|
Require us to dedicate a substantial portion of our cash flow from operations toward repayment of our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and investments and other general corporate purposes;
|
•
|
Limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate;
|
•
|
Place us at a competitive disadvantage compared to our competitors that have less debt; and
|
•
|
Limit, among other things, our ability to borrow additional funds on favorable terms or at all.
|
Director Nominee
|
For
|
Withheld
|
Broker Non-Votes
|
Matthew Mannelly
|
46,298,608
|
358,157
|
1,764,571
|
John Byom
|
43,248,171
|
3,408,594
|
1,764,571
|
Gary Costley
|
43,120,926
|
3,535,839
|
1,764,571
|
Charles Hinkaty
|
43,247,471
|
3,409,294
|
1,764,571
|
Carl Johnson *
|
46,525,953
|
130,812
|
1,764,571
|
For
|
Against
|
Abstentions
|
48,277,157
|
134,054
|
10,125
|
For
|
Against
|
Abstentions
|
Broker Non-Votes
|
42,476,629
|
4,151,418
|
28,718
|
1,764,571
|
For
|
Against
|
Abstentions
|
Broker Non-Votes
|
45,179,607
|
543,014
|
934,144
|
1,764,571
|
|
|
PRESTIGE BRANDS HOLDINGS, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
August 1, 2013
|
By:
|
/s/ RONALD M. LOMBARDI
|
|
|
|
|
Ronald M. Lombardi
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer and
|
|
|
|
|
Duly Authorized Officer)
|
|
* XBRL information is furnished and not filed for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement, prospectus or other document to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.
|
1.
|
Employment
. Prestige Brands Holdings, Inc. (“Employer”) agrees to employ Paul Migaki (“Executive”) and Executive accepts such employment for the period beginning as of April 1, 2013 and ending upon his termination pursuant to Section 1(c) hereof (the “Employment Period”), subject only to the approval of the Prestige Brands Holdings, Inc. Board of Directors (the “Board”).
|
(i)
|
To Employer:
|
Prestige Brands Holdings, Inc.
|
|
|
660 White Plains Road
|
|
|
Tarrytown, New York 10591
|
|
|
Attention: Chief Executive Officer
|
(ii)
|
With a copy to:
|
Prestige Brands Holdings, Inc.
|
|
|
660 White Plains Road
|
|
|
Tarrytown, New York 10591
|
|
|
Attention: General Counsel
|
(iii)
|
To the Employee:
|
Paul Migaki
|
|
|
21 Willett Avenue, PH14
|
|
|
Port Chester, NY 10573
|
(i)
|
The parties shall first use their reasonable best efforts to discuss and negotiate a resolution of the dispute.
|
(ii)
|
If efforts to negotiate a resolution do not succeed within 5 business days after a written request for negotiation has been made, the dispute shall be resolved timely and exclusively by final and binding arbitration in New York County or Westchester County, New York
|
(iii)
|
The parties recognize that this Section 4(i) means that certain claims will be reviewed and decided only before an impartial arbitrator or panel of arbitrators instead of before a court of law and/or a jury, but desire the many benefits of the arbitration process over court proceedings, including speed of resolution, lower costs and fees, and more flexible rules of evidence. The arbitration or arbitrators duly selected pursuant to the AAA’s Rules shall have the same power and authority to order any remedy for violation of a statute, regulation, or ordinance as a court would have; and shall have the same power to order discovery as a federal district court has under the Federal Rules of Civil Procedure.
|
(b)
|
The provisions of this Section 4(i) shall not apply to any action by the Employer seeking to enforce its rights arising out of or related to the provisions of Sections 2 and 3 of this Agreement.
|
(c)
|
This Section 4(i) is intended by the Employer and the Executive to be enforceable under the Federal Arbitration Act (“FAA”). Should it be determined by any court that the FAA does not apply, then this Section 4(i) shall be enforceable under the applicable arbitration statutes of the State of Delaware.
|
(i)
|
the Executive continues to provide services as an employee of the Employer at an annual rate that is twenty percent (20%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or, if employed less than three years, such lesser period) and the annual remuneration for such services is twenty percent (20%) or more of the average annual remuneration earned during the final three full calendar years of employment (or, if less, such lesser period), or
|
(ii)
|
the Executive continues to provide services to the Employer in a capacity other than as an employee of the Employer at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is fifty percent (50%) or more of the average annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period).
|
PRESTIGE BRANDS HOLDINGS, INC.
|
By:
/s/ Matthew M. Mannelly
|
Name: Matthew M. Mannelly
|
Title: Chief Executive Officer
|
By:
/s/ Paul Migaki
|
Name: Paul Migaki
|
(i)
|
a material diminution in the Executive’s base salary as in effect on the date hereof or as the same may be increased from time to time;
|
(ii)
|
a material diminution in the Executive’s authority, duties, or responsibilities;
|
(iii)
|
the relocation of the Employer’s headquarters outside a thirty-mile radius of Tarrytown, New York or the Employer’s requiring the Executive to be based at any place other than a location within a thirty-mile radius of Tarrytown, New York, except for reasonably required travel on the Employer’s business; or
|
(iv)
|
any other action or inaction that constitutes a material breach by the Employer of this Agreement.
|
PRESTIGE BRANDS HOLDINGS, INC., as Holdings and Guarantor
|
By:
/s/ Ron Lombardi
|
Name: Ronald M. Lombardi
|
Title: Chief Financial Officer
|
PRESTIGE BRANDS, INC., as Borrower
|
BY:
/s/ Ron Lombardi
|
Name: Ronald M. Lombardi
|
Title: Chief Financial Officer
|
BLACKSMITH BRANDS, INC.
|
MEDTECH HOLDINGS, INC.
|
MEDTECH PRODUCTS INC.
|
PRESTIGE BRANDS HOLDINGS, INC.
|
PRESTIGE BRANDS INTERNATIONAL, INC.
|
PRESTIGE SERVICES CORP.
|
THE CUTEX COMPANY
|
THE SPIC AND SPAN COMPANY,
AS SUBSIDIARY GUARANTORS
|
BY:
/s/ Ron Lombardi
|
NAME: Ronald M. Lombardi
|
TITLE: Chief Financial Officer
|
CITIBANK, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and as an Incremental Lender
|
By:
/s/ Michael J. Smolow
|
Name: Michael J. Smolow
|
Title: Director & Vice President
|
MORGAN STANLEY BANK, N.A.,
as an Incremental Lender |
By:
/s/ Kelly Chin
|
Name: Kelly Chin
|
Title: Authorized Signatory
|
ROYAL BANK OF CANADA, as an Incremental Lender
|
By:
/s/ John Flores
|
Name: John Flores
|
Title: Authorized Signatory
|
DEUTSCHE BANK TRUST COMPANY AMERICAS, as a Lender
|
By:
/s/ Michael Getz
|
Name: Michael Getz
|
Title: Vice President
|
By:
/s/ Marcus M. Tarkington
|
Name: Marcus M. Tarkington
|
Title: Director
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Prestige Brands Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 1, 2013
|
/s/ Matthew M. Mannelly
|
|
|
|
Matthew M. Mannelly
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Prestige Brands Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 1, 2013
|
/s/ Ronald M. Lombardi
|
|
|
|
Ronald M. Lombardi
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
|
/s/ Matthew M. Mannelly
|
Name: Matthew M. Mannelly
|
Title: Chief Executive Officer
|
(Principal Executive Officer)
|
Date: August 1, 2013
|
|
|
|
|
|
|
/s/ Ronald M. Lombardi
|
|
Name: Ronald M. Lombardi
|
|
Title: Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
Date: August 1, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|