| Condensed Consolidating Financial Statements |
Condensed Consolidating Financial Statements
As described in Note 10, Prestige Brands Holdings, Inc., together with certain of our wholly-owned subsidiaries, have fully and unconditionally guaranteed, on a joint and several basis, the obligations of Prestige Brands, Inc. (a wholly-owned subsidiary of the Company) set forth in the indentures governing the 2012 Senior Notes and the 2010 Senior Notes, including, without limitation, the obligation to pay principal and interest with respect to the 2012 Senior Notes and the 2010 Senior Notes. The wholly-owned subsidiaries of the Company that have guaranteed the 2012 Senior Notes and the 2010 Senior Notes are as follows: Prestige Personal Care Holdings, Inc., Prestige Personal Care, Inc., Prestige Services Corp., Prestige Brands Holdings, Inc. (a Virginia corporation), Prestige Brands International, Inc., Medtech Holdings, Inc., Medtech Products Inc., The Cutex Company, The Denorex Company, The Spic and Span Company, and Blacksmith Brands, Inc. (collectively, the "Subsidiary Guarantors"). A significant portion of our operating income and cash flow is generated by our subsidiaries. As a result, funds necessary to meet Prestige Brands, Inc.'s debt service obligations are provided in part by distributions or advances from our subsidiaries. Under certain circumstances, contractual and legal restrictions, as well as the financial condition and operating requirements of our subsidiaries, could limit Prestige Brands, Inc.'s ability to obtain cash from our subsidiaries for the purpose of meeting our debt service obligations, including the payment of principal and interest on the 2012 Senior Notes and the 2010 Senior Notes. Although holders of the 2012 Senior Notes and the 2010 Senior Notes will be direct creditors of the guarantors of the 2012 Senior Notes and the 2010 Senior Notes by virtue of the guarantees, we have indirect subsidiaries located primarily in the United Kingdom and in the Netherlands (collectively, the "Non-Guarantor Subsidiaries") that have not guaranteed the 2012 Senior Notes or the 2010 Senior Notes, and such subsidiaries will not be obligated with respect to the 2012 Senior Notes or the 2010 Senior Notes. As a result, the claims of creditors of the Non-Guarantor Subsidiaries will effectively have priority with respect to the assets and earnings of such companies over the claims of the holders of the 2012 Senior Notes and the 2010 Senior Notes.
Presented below are supplemental Condensed Consolidating Balance Sheets as of December 31, 2012 and March 31, 2012, Condensed Consolidating Income and Comprehensive Income Statements for the three and nine months ended December 31, 2012 and 2011, and Condensed Consolidating Statements of Cash Flows for the nine months ended December 31, 2012 and 2011. Such consolidating information includes separate columns for:
a) Prestige Brands Holdings, Inc., the parent, b) Prestige Brands, Inc., the issuer, c) Combined Subsidiary Guarantors, d) Combined Non-Guarantor Subsidiaries, and e) Elimination entries necessary to consolidate the Company and all of its subsidiaries.
The Condensed Consolidating Financial Statements are presented using the equity method of accounting for investments in wholly-owned subsidiaries. Under the equity method, the investments in subsidiaries are recorded at cost and adjusted for our share of the subsidiaries' cumulative results of operations, capital contributions, distributions and other equity changes. The elimination entries principally eliminate investments in subsidiaries and intercompany balances and transactions. The financial information in this note should be read in conjunction with the Consolidated Financial Statements presented and other notes related thereto contained in this Quarterly Report on Form 10-Q.
Condensed Consolidating Statements of Income and Comprehensive Income Three Months Ended December 31, 2012
| | | | | | | | | | | | | | | | | | | | | | | | | | (In thousands) | | Prestige Brands Holdings, Inc. | | Prestige Brands, Inc., the issuer | | Combined Subsidiary Guarantors | | Combined Non- Guarantor Subsidiaries | | Eliminations | | Consolidated | Revenues | | | | | | | | | | | | | Net sales | | $ | — |
| | $ | 25,345 |
| | $ | 132,881 |
| | $ | 1,266 |
| | $ | — |
| | $ | 159,492 |
| Other revenues | | — |
| | 79 |
| | 724 |
| | 276 |
| | (339 | ) | | 740 |
| Total revenues | | — |
| | 25,424 |
| | 133,605 |
| | 1,542 |
| | (339 | ) | | 160,232 |
| | | | | | | | | | | | | | Cost of Sales | | | | | | | | | | | | | Cost of sales (exclusive of depreciation shown below) | | — |
| | 9,877 |
| | 65,172 |
| | 525 |
| | (339 | ) | | 75,235 |
| Gross profit | | — |
| | 15,547 |
| | 68,433 |
| | 1,017 |
| | — |
| | 84,997 |
| | | | | | | | | | | | | | Operating Expenses | | | | | | | | | | | | | Advertising and promotion | | — |
| | 3,032 |
| | 19,997 |
| | 509 |
| | — |
| | 23,538 |
| General and administrative | | 952 |
| | 1,585 |
| | 8,734 |
| | 107 |
| | — |
| | 11,378 |
| Depreciation and amortization | | 549 |
| | 140 |
| | 2,658 |
| | 12 |
| | — |
| | 3,359 |
| Total operating expenses | | 1,501 |
| | 4,757 |
| | 31,389 |
| | 628 |
| | — |
| | 38,275 |
| Operating income (loss) | | (1,501 | ) | | 10,790 |
| | 37,044 |
| | 389 |
| | — |
| | 46,722 |
| | | | | | | | | | | | | | Other (income) expense | | | | | | | | | | | | | Interest income | | 33 |
| | (41,552 | ) | | 162 |
| | (62 | ) | | 41,415 |
| | (4 | ) | Interest expense | | 8,735 |
| | 35,394 |
| | 23,951 |
| | — |
| | (41,415 | ) | | 26,665 |
| Equity in income of subsidiaries | | (18,531 | ) | | (8,407 | ) | | (393 | ) | | — |
| | 27,331 |
| | — |
| Total other (income) expense | | (9,763 | ) | | (14,565 | ) | | 23,720 |
| | (62 | ) | | 27,331 |
| | 26,661 |
| Income before income taxes | | 8,262 |
| | 25,355 |
| | 13,324 |
| | 451 |
| | (27,331 | ) | | 20,061 |
| Provision (benefit) for income taxes | | (3,995 | ) | | 6,593 |
| | 5,030 |
| | 176 |
| | — |
| | 7,804 |
| Net income (loss) | | $ | 12,257 |
| | $ | 18,762 |
| | $ | 8,294 |
| | $ | 275 |
| | $ | (27,331 | ) | | $ | 12,257 |
| | | | | | | | | | | | | | Comprehensive income, net of tax: | | | | | | | | | | | | | Currency translation adjustments | | (1 | ) | | — |
| | — |
| | 1 |
| | (1 | ) | | (1 | ) | Total other comprehensive income (loss) | | (1 | ) | | — |
| | — |
| | 1 |
| | (1 | ) | | (1 | ) | Comprehensive income (loss) | | $ | 12,256 |
| | $ | 18,762 |
| | $ | 8,294 |
| | $ | 276 |
| | $ | (27,332 | ) | | $ | 12,256 |
|
Condensed Consolidating Statements of Income and Comprehensive Income Nine Months Ended December 31, 2012
| | | | | | | | | | | | | | | | | | | | | | | | | | (In thousands) | | Prestige Brands Holdings, Inc. | | Prestige Brands, Inc., the issuer | | Combined Subsidiary Guarantors | | Combined Non- Guarantor Subsidiaries | | Eliminations | | Consolidated | Revenues | | | | | | | | | | | | | Net sales | | $ | — |
| | $ | 75,294 |
| | $ | 387,815 |
| | $ | 3,626 |
| | $ | — |
| | $ | 466,735 |
| Other revenues | | — |
| | 220 |
| | 2,310 |
| | 1,270 |
| | (1,451 | ) | | 2,349 |
| Total revenues | | — |
| | 75,514 |
| | 390,125 |
| | 4,896 |
| | (1,451 | ) | | 469,084 |
| | | | | | | | | | | | | | Cost of Sales | | | | | | | | | | | | | Cost of sales (exclusive of depreciation shown below) | | — |
| | 28,493 |
| | 181,382 |
| | 1,514 |
| | (1,451 | ) | | 209,938 |
| Gross profit | | — |
| | 47,021 |
| | 208,743 |
| | 3,382 |
| | — |
| | 259,146 |
| | | | | | | | | | | | | | Operating Expenses | | | | | | | | | | | | | Advertising and promotion | | — |
| | 8,917 |
| | 57,326 |
| | 1,128 |
| | — |
| | 67,371 |
| General and administrative | | 3,676 |
| | 5,020 |
| | 30,802 |
| | 616 |
| | — |
| | 40,114 |
| Depreciation and amortization | | 818 |
| | 420 |
| | 8,667 |
| | 45 |
| | — |
| | 9,950 |
| Total operating expenses | | 4,494 |
| | 14,357 |
| | 96,795 |
| | 1,789 |
| | — |
| | 117,435 |
| Operating income (loss) | | (4,494 | ) | | 32,664 |
| | 111,948 |
| | 1,593 |
| | — |
| | 141,711 |
| | | | | | | | | | | | | | Other (income) expense | | | | | | | | | | | | | Interest income | | (24,337 | ) | | (63,573 | ) | | 162 |
| | (163 | ) | | 87,902 |
| | (9 | ) | Interest expense | | 26,147 |
| | 92,320 |
| | 35,613 |
| | — |
| | (87,902 | ) | | 66,178 |
| Equity in income of subsidiaries | | (50,008 | ) | | (49,280 | ) | | (1,306 | ) | | — |
| | 100,594 |
| | — |
| Total other (income) expense | | (48,198 | ) | | (20,533 | ) | | 34,469 |
| | (163 | ) | | 100,594 |
| | 66,169 |
| Income before income taxes | | 43,704 |
| | 53,197 |
| | 77,479 |
| | 1,756 |
| | (100,594 | ) | | 75,542 |
| Provision (benefit) for income taxes | | (2,452 | ) | | 1,524 |
| | 29,631 |
| | 683 |
| | — |
| | 29,386 |
| Net income (loss) | | $ | 46,156 |
| | $ | 51,673 |
| | $ | 47,848 |
| | $ | 1,073 |
| | $ | (100,594 | ) | | $ | 46,156 |
| | | | | | | | | | | | | | Comprehensive income, net of tax: | | | | | | | | | | | | | Currency translation adjustments | | 23 |
| | — |
| | — |
| | (23 | ) | | 23 |
| | 23 |
| Total other comprehensive income (loss) | | 23 |
| | — |
| | — |
| | (23 | ) | | 23 |
| | 23 |
| Comprehensive income (loss) | | $ | 46,179 |
| | $ | 51,673 |
| | $ | 47,848 |
| | $ | 1,050 |
| | $ | (100,571 | ) | | $ | 46,179 |
|
Condensed Consolidating Statements of Income and Comprehensive Income Three Months Ended December 31, 2011
| | | | | | | | | | | | | | | | | | | | | | | | | | (In thousands) | | Prestige Brands Holdings, Inc. | | Prestige Brands, Inc., the issuer | | Combined Subsidiary Guarantors | | Combined Non- Guarantor Subsidiaries | | Eliminations | | Consolidated | Revenues | | | | | | | | | | | | | Net sales | | $ | — |
| | $ | 27,352 |
| | $ | 77,308 |
| | $ | 1,139 |
| | $ | — |
| | $ | 105,799 |
| Other revenues | | — |
| | 57 |
| | 451 |
| | 227 |
| | (284 | ) | | 451 |
| Total revenues | | — |
| | 27,409 |
| | 77,759 |
| | 1,366 |
| | (284 | ) | | 106,250 |
| | | | | | | | | | | | | | Cost of Sales | | | | | | | | | | | | | Cost of sales (exclusive of depreciation shown below) | | — |
| | 9,784 |
| | 41,154 |
| | 474 |
| | (284 | ) | | 51,128 |
| Gross profit | | — |
| | 17,625 |
| | 36,605 |
| | 892 |
| | — |
| | 55,122 |
| | | | | | | | | | | | | | Operating Expenses | | | | | | | | | | | | | Advertising and promotion | | 3 |
| | 3,431 |
| | 11,216 |
| | 624 |
| | — |
| | 15,274 |
| General and administrative | | 5,318 |
| | 2,322 |
| | 5,684 |
| | 331 |
| | — |
| | 13,655 |
| Depreciation and amortization | | 135 |
| | 143 |
| | 2,267 |
| | 18 |
| | — |
| | 2,563 |
| Total operating expenses | | 5,456 |
| | 5,896 |
| | 19,167 |
| | 973 |
| | — |
| | 31,492 |
| Operating income (loss) | | (5,456 | ) | | 11,729 |
| | 17,438 |
| | (81 | ) | | — |
| | 23,630 |
| | | | | | | | | | | | | | Other (income) expense | | | | | | | | | | | | | Interest income | | (12,302 | ) | | (11,118 | ) | | — |
| | (60 | ) | | 23,479 |
| | (1 | ) | Interest expense | | 8,791 |
| | 16,907 |
| | 5,898 |
| | — |
| | (23,479 | ) | | 8,117 |
| Equity in income of subsidiaries | | (10,727 | ) | | (7,936 | ) | | 39 |
| | — |
| | 18,624 |
| | — |
| Total other (income) expense | | (14,238 | ) | | (2,147 | ) | | 5,937 |
| | (60 | ) | | 18,624 |
| | 8,116 |
| Income (loss) before income taxes | | 8,782 |
| | 13,876 |
| | 11,501 |
| | (21 | ) | | (18,624 | ) | | 15,514 |
| Provision (benefit) for income taxes | | (728 | ) | | 2,285 |
| | 4,454 |
| | (7 | ) | | — |
| | 6,004 |
| Net income (loss) | | 9,510 |
| | 11,591 |
| | 7,047 |
| | (14 | ) | | (18,624 | ) | | 9,510 |
| | | | | | | | | | | | | | Comprehensive income, net of tax: | | | | | | | | | | | | | Currency translation adjustments | | (18 | ) | | — |
| | — |
| | (18 | ) | | 18 |
| | (18 | ) | Total other comprehensive income (loss) | | (18 | ) | | — |
| | — |
| | (18 | ) | | 18 |
| | (18 | ) | Comprehensive income (loss) | | $ | 9,492 |
| | $ | 11,591 |
| | $ | 7,047 |
| | $ | (32 | ) | | $ | (18,606 | ) | | $ | 9,492 |
|
Condensed Consolidating Statements of Income and Comprehensive Income Nine Months Ended December 31, 2011
| | | | | | | | | | | | | | | | | | | | | | | | | | (In thousands) | | Prestige Brands Holdings, Inc. | | Prestige Brands, Inc., the issuer | | Combined Subsidiary Guarantors | | Combined Non- Guarantor Subsidiaries | | Eliminations | | Consolidated | Revenues | | | | | | | | | | | | | Net sales | | $ | — |
| | $ | 74,767 |
| | $ | 226,859 |
| | $ | 3,052 |
| | $ | — |
| | $ | 304,678 |
| Other revenues | | — |
| | 178 |
| | 2,386 |
| | 1,131 |
| | (1,284 | ) | | 2,411 |
| Total revenues | | — |
| | 74,945 |
| | 229,245 |
| | 4,183 |
| | (1,284 | ) | | 307,089 |
| | | | | | | | | | | | | | Cost of Sales | | | | | | | | | | | | | Cost of sales (exclusive of depreciation shown below) | | — |
| | 27,191 |
| | 121,032 |
| | 1,254 |
| | (1,284 | ) | | 148,193 |
| Gross profit | | — |
| | 47,754 |
| | 108,213 |
| | 2,929 |
| | — |
| | 158,896 |
| | | | | | | | | | | | | | Operating Expenses | | | | | | | | | | | | | Advertising and promotion | | 3 |
| | 9,341 |
| | 28,133 |
| | 1,103 |
| | — |
| | 38,580 |
| General and administrative | | 5,514 |
| | 7,502 |
| | 18,538 |
| | 812 |
| | — |
| | 32,366 |
| Depreciation and amortization | | 412 |
| | 428 |
| | 6,789 |
| | 54 |
| | — |
| | 7,683 |
| Total operating expenses | | 5,929 |
| | 17,271 |
| | 53,460 |
| | 1,969 |
| | — |
| | 78,629 |
| Operating income (loss) | | (5,929 | ) | | 30,483 |
| | 54,753 |
| | 960 |
| | — |
| | 80,267 |
| | | | | | | | | | | | | | Other (income) expense | | | | | | | | | | | | | Interest income | | (38,196 | ) | | (33,291 | ) | | — |
| | (173 | ) | | 71,656 |
| | (4 | ) | Interest expense | | 26,323 |
| | 51,299 |
| | 19,011 |
| | — |
| | (71,656 | ) | | 24,977 |
| Gain on settlement | | (5,063 | ) | | — |
| | — |
| | — |
| | — |
| | (5,063 | ) | Equity in income of subsidiaries | | (30,438 | ) | | (23,768 | ) | | (745 | ) | | — |
| | 54,951 |
| | — |
| Total other (income) expense | | (47,374 | ) | | (5,760 | ) | | 18,266 |
| | (173 | ) | | 54,951 |
| | 19,910 |
| Income (loss) before income taxes | | 41,445 |
| | 36,243 |
| | 36,487 |
| | 1,133 |
| | (54,951 | ) | | 60,357 |
| Provision (benefit) for income taxes | | 4,218 |
| | 4,781 |
| | 13,697 |
| | 434 |
| | — |
| | 23,130 |
| Net income (loss) | | 37,227 |
| | 31,462 |
| | 22,790 |
| | 699 |
| | (54,951 | ) | | 37,227 |
| | | | | | | | | | | | | | Comprehensive income, net of tax: | | | | | | | | | | | | | Currency translation adjustments | | (70 | ) | | — |
| | — |
| | (70 | ) | | 70 |
| | (70 | ) | Total other comprehensive income (loss) | | (70 | ) | | — |
| | — |
| | (70 | ) | | 70 |
| | (70 | ) | Comprehensive income (loss) | | $ | 37,157 |
| | $ | 31,462 |
| | $ | 22,790 |
| | $ | 629 |
| | $ | (54,881 | ) | | $ | 37,157 |
|
Condensed Consolidating Balance Sheet December 31, 2012
| | | | | | | | | | | | | | | | | | | | | | | | | | (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 | | $ | 8,878 |
| | $ | — |
| | $ | — |
| | $ | 1,553 |
| | $ | — |
| | $ | 10,431 |
| Accounts receivable, net | | 140 |
| | 13,217 |
| | 59,428 |
| | 967 |
| | — |
| | 73,752 |
| Inventories | | — |
| | 9,340 |
| | 44,218 |
| | 692 |
| | — |
| | 54,250 |
| Deferred income tax assets | | 213 |
| | 730 |
| | 5,651 |
| | — |
| | — |
| | 6,594 |
| Prepaid expenses and other current assets | | 1,656 |
| | 425 |
| | 4,101 |
| | 13 |
| | — |
| | 6,195 |
| Total current assets | | 10,887 |
| | 23,712 |
| | 113,398 |
| | 3,225 |
| | — |
| | 151,222 |
| | | | | | | | | | | | | | Property and equipment, net | | 8,987 |
| | 25 |
| | 178 |
| | — |
| | — |
| | 9,190 |
| Goodwill | | — |
| | 66,007 |
| | 101,539 |
| | — |
| | — |
| | 167,546 |
| Intangible assets, net | | — |
| | 193,530 |
| | 1,182,074 |
| | 334 |
| | — |
| | 1,375,938 |
| Other long-term assets | | — |
| | 27,493 |
| | — |
| | — |
| | — |
| | 27,493 |
| Intercompany receivable | | 1,284,415 |
| | 1,933,896 |
| | 420,375 |
| | 7,537 |
| | (3,646,223 | ) | | — |
| Investment in subsidiary | | 808,377 |
| | 622,107 |
| | 6,890 |
| | — |
| | (1,437,374 | ) | | — |
| Total Assets | | $ | 2,112,666 |
| | $ | 2,866,770 |
| | $ | 1,824,454 |
| | $ | 11,096 |
| | $ | (5,083,597 | ) | | $ | 1,731,389 |
| | | | | | | | | | | | | | Liabilities and Stockholders' Equity | | | | | | | | | | | | | Current liabilities | | | | | | | | | | | | | Accounts payable | | $ | 2,275 |
| | $ | 7,304 |
| | $ | 30,012 |
| | $ | 1,267 |
| | $ | — |
| | $ | 40,858 |
| Accrued interest payable | | — |
| | 13,620 |
| | — |
| | — |
| | — |
| | 13,620 |
| Other accrued liabilities | | 10,571 |
| | 2,485 |
| | 19,958 |
| | 1,258 |
| | — |
| | 34,272 |
| Total current liabilities | | 12,846 |
| | 23,409 |
| | 49,970 |
| | 2,525 |
| | — |
| | 88,750 |
| | | | | | | | | | | | | | Long-term debt | | | | | | | | | | | | | Principal amount | | — |
| | 1,007,500 |
| | — |
| | — |
| | — |
| | 1,007,500 |
| Less unamortized discount | | — |
| | (7,200 | ) | | — |
| | — |
| | — |
| | (7,200 | ) | Long-term debt, net of unamortized discount | | — |
| | 1,000,300 |
| | — |
| | — |
| | — |
| | 1,000,300 |
| | | | | | | | | | | | | | Deferred income tax liabilities | | — |
| | 50,869 |
| | 134,059 |
| | 79 |
| | — |
| | 185,007 |
| Intercompany payable | | 1,642,488 |
| | 451,454 |
| | 1,552,100 |
| | 181 |
| | (3,646,223 | ) | | — |
| Total Liabilities | | 1,655,334 |
| | 1,526,032 |
| | 1,736,129 |
| | 2,785 |
| | (3,646,223 | ) | | 1,274,057 |
| | | | | | | | | | | | | | Stockholders' Equity | | | | | | | | | | | | | Preferred share rights | | 283 |
| | — |
| | — |
| | — |
| | — |
| | 283 |
| Common stock | | 512 |
| | — |
| | — |
| | — |
| | — |
| | 512 |
| Additional paid-in capital | | 400,316 |
| | 1,280,945 |
| | 39,724 |
| | 1,111 |
| | (1,321,780 | ) | | 400,316 |
| Treasury stock, at cost - 181 shares | | (687 | ) | | — |
| | — |
| | — |
| | — |
| | (687 | ) | Accumulated other comprehensive income, net of tax | | 10 |
| | — |
| | — |
| | 10 |
| | (10 | ) | | 10 |
| Retained earnings (accumulated deficit) | | 56,898 |
| | 59,793 |
| | 48,601 |
| | 7,190 |
| | (115,584 | ) | | 56,898 |
| Total Stockholders' Equity | | 457,332 |
| | 1,340,738 |
| | 88,325 |
| | 8,311 |
| | (1,437,374 | ) | | 457,332 |
| Total Liabilities and Stockholders' Equity | | $ | 2,112,666 |
| | $ | 2,866,770 |
| | $ | 1,824,454 |
| | $ | 11,096 |
| | $ | (5,083,597 | ) | | $ | 1,731,389 |
|
Condensed Consolidating Balance Sheet March 31, 2012
| | | | | | | | | | | | | | | | | | | | | | | | | | (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 | | $ | 18,221 |
| | $ | — |
| | $ | — |
| | $ | 794 |
| | $ | — |
| | $ | 19,015 |
| Accounts receivable, net | | 25 |
| | 13,502 |
| | 45,954 |
| | 747 |
| | — |
| | 60,228 |
| Inventories | | — |
| | 8,098 |
| | 42,334 |
| | 681 |
| | — |
| | 51,113 |
| Deferred income tax assets | | 356 |
| | 849 |
| | 4,078 |
| | — |
| | — |
| | 5,283 |
| Prepaid expenses and other current assets | | 8,102 |
| | 56 |
| | 2,874 |
| | 364 |
| | — |
| | 11,396 |
| Total current assets | | 26,704 |
| | 22,505 |
| | 95,240 |
| | 2,586 |
| | — |
| | 147,035 |
| | | | | | | | | | | | | | Property and equipment, net | | 934 |
| | 22 |
| | 346 |
| | 2 |
| | — |
| | 1,304 |
| Goodwill | | — |
| | 66,007 |
| | 107,695 |
| | — |
| | — |
| | 173,702 |
| Intangible assets, net | | — |
| | 193,932 |
| | 1,206,213 |
| | 377 |
| | — |
| | 1,400,522 |
| Other long-term assets | | — |
| | 35,713 |
| | — |
| | — |
| | — |
| | 35,713 |
| Intercompany receivable | | 680,067 |
| | 1,449,005 |
| | 314,699 |
| | 5,935 |
| | (2,449,706 | ) | | — |
| Investment in subsidiary | | 1,358,120 |
| | 1,172,601 |
| | 5,583 |
| | — |
| | (2,536,304 | ) | | — |
| Total Assets | | $ | 2,065,825 |
| | $ | 2,939,785 |
| | $ | 1,729,776 |
| | $ | 8,900 |
| | $ | (4,986,010 | ) | | $ | 1,758,276 |
| | | | | | | | | | | | | | Liabilities and Stockholders' Equity | | | | | | | | | | | | | Current liabilities | | | | | | | | | | | | | Accounts payable | | $ | 4,531 |
| | $ | 4,816 |
| | $ | 17,008 |
| | $ | 371 |
| | $ | — |
| | $ | 26,726 |
| Accrued interest payable | | — |
| | 13,889 |
| | — |
| | — |
| | — |
| | 13,889 |
| Other accrued liabilities | | 11,758 |
| | 1,687 |
| | 8,944 |
| | 919 |
| | — |
| | 23,308 |
| Total current liabilities | | 16,289 |
| | 20,392 |
| | 25,952 |
| | 1,290 |
| | — |
| | 63,923 |
| | | | | | | | | | | | | | Long-term debt | | | | | | | | | | | | | Principal amount | | — |
| | 1,135,000 |
| | — |
| | — |
| | — |
| | 1,135,000 |
| Less unamortized discount | | — |
| | (11,092 | ) | | — |
| | — |
| | — |
| | (11,092 | ) | Long-term debt, net of unamortized discount | | — |
| | 1,123,908 |
| | — |
| | — |
| | — |
| | 1,123,908 |
| | | | | | | | | | | | | | Deferred income tax liabilities | | — |
| | 50,944 |
| | 116,690 |
| | 83 |
| | — |
| | 167,717 |
| Intercompany payable | | 1,646,808 |
| | 455,702 |
| | 346,884 |
| | 312 |
| | (2,449,706 | ) | | — |
| Total Liabilities | | 1,663,097 |
| | 1,650,946 |
| | 489,526 |
| | 1,685 |
| | (2,449,706 | ) | | 1,355,548 |
| | | | | | | | | | | | | | Stockholders' Equity | | | | | | | | | | | | | Preferred share rights | | 283 |
| | — |
| | — |
| | — |
| | — |
| | 283 |
| Common stock | | 505 |
| | — |
| | — |
| | — |
| | — |
| | 505 |
| Additional paid-in capital | | 391,898 |
| | 1,280,719 |
| | 1,239,497 |
| | 1,111 |
| | (2,521,327 | ) | | 391,898 |
| Treasury stock, at cost - 181 shares | | (687 | ) | | — |
| | — |
| | — |
| | — |
| | (687 | ) | Accumulated other comprehensive loss, net of tax | | (13 | ) | | — |
| | — |
| | (13 | ) | | 13 |
| | (13 | ) | Retained earnings (accumulated deficit) | | 10,742 |
| | 8,120 |
| | 753 |
| | 6,117 |
| | (14,990 | ) | | 10,742 |
| Total Stockholders' Equity | | 402,728 |
| | 1,288,839 |
| | 1,240,250 |
| | 7,215 |
| | (2,536,304 | ) | | 402,728 |
| Total Liabilities and Stockholders' Equity | | $ | 2,065,825 |
| | $ | 2,939,785 |
| | $ | 1,729,776 |
| | $ | 8,900 |
| | $ | (4,986,010 | ) | | $ | 1,758,276 |
|
Condensed Consolidating Statement of Cash Flows Nine Months Ended December 31, 2012
| | | | | | | | | | | | | | | | | | | | | | | | | | (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) | | $ | 46,156 |
| | $ | 51,673 |
| | $ | 47,848 |
| | $ | 1,073 |
| | $ | (100,594 | ) | | $ | 46,156 |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | | | | Depreciation and amortization | | 818 |
| | 420 |
| | 8,667 |
| | 45 |
| | — |
| | 9,950 |
| Deferred income taxes | | 143 |
| | 44 |
| | 15,796 |
| | (4 | ) | | — |
| | 15,979 |
| Amortization of deferred financing costs | | — |
| | 8,220 |
| | — |
| | — |
| | — |
| | 8,220 |
| Stock-based compensation costs | | 2,965 |
| | — |
| | — |
| | — |
| | — |
| | 2,965 |
| Amortization of debt discount | | — |
| | 3,892 |
| | — |
| | — |
| | — |
| | 3,892 |
| Lease termination costs | | 975 |
| | — |
| | — |
| | — |
| | — |
| | 975 |
| Loss on disposal of equipment | | 30 |
| | — |
| | 21 |
| | — |
| | — |
| | 51 |
| Equity in income of subsidiaries | | (50,008 | ) | | (49,280 | ) | | (1,306 | ) | | — |
| | 100,594 |
| | — |
| Changes in operating assets and liabilities, net of effects from acquisitions: | | | | | | | | | | | | | Accounts receivable | | (115 | ) | | 285 |
| | (13,474 | ) | | (214 | ) | | — |
| | (13,518 | ) | Inventories | | — |
| | (1,242 | ) | | (2,104 | ) | | (5 | ) | | — |
| | (3,351 | ) | Prepaid expenses and other current assets | | 6,446 |
| | (369 | ) | | (627 | ) | | 351 |
| | — |
| | 5,801 |
| Accounts payable | | (3,347 | ) | | 2,488 |
| | 14,095 |
| | 889 |
| | — |
| | 14,125 |
| Accrued liabilities | | (1,071 | ) | | 529 |
| | 9,830 |
| | 343 |
| | — |
| | 9,631 |
| Net cash provided by operating activities | | 2,992 |
| | 16,660 |
| | 78,746 |
| | 2,478 |
| | — |
| | 100,876 |
| | | | | | | | | | | | | | Investing Activities | | | | | | | | | | | | | Purchases of property and equipment | | (8,922 | ) | | — |
| | — |
| | — |
| | — |
| | (8,922 | ) | Proceeds from the sale of property and equipment | | — |
| | — |
| | 15 |
| | — |
| | — |
| | 15 |
| Proceeds from the sale of the Phazyme brand | | — |
| | — |
| | 21,700 |
| | — |
| | — |
| | 21,700 |
| Acquisition of brands from GSK purchase price adjustments | | — |
| | — |
| | (226 | ) | | — |
| | — |
| | (226 | ) | Intercompany activity, net | | (226 | ) | | — |
| | 226 |
| | — |
| | — |
| | — |
| Net cash provided by (used in) investing activities | | (9,148 | ) | | — |
| | 21,715 |
| | — |
| | — |
|
| 12,567 |
| | | | | | | | | | | | | | Financing Activities | | | | | | | | | | | | | Repayments of long-term debt | | — |
| | (167,500 | ) | | — |
| | — |
| | — |
| | (167,500 | ) | Repayments under revolving credit agreement | | — |
| | (8,000 | ) | | — |
| | — |
| | — |
| | (8,000 | ) | Borrowings under revolving credit agreement | | — |
| | 48,000 |
| | — |
| | — |
| | — |
| | 48,000 |
| Proceeds from exercise of stock options | | 5,460 |
| | — |
| | — |
| | — |
| | — |
| | 5,460 |
| Intercompany activity, net | | (8,647 | ) | | 110,840 |
| | (100,461 | ) | | (1,732 | ) | | — |
| | — |
| Net cash used in financing activities | | (3,187 | ) | | (16,660 | ) | | (100,461 | ) | | (1,732 | ) | | — |
| | (122,040 | ) | | | | | | | | | | | | | | Effect of exchange rate changes on cash and cash equivalents | | — |
| | — |
| | — |
| | 13 |
| | — |
| | 13 |
| (Decrease) increase in cash and cash equivalents | | (9,343 | ) | | — |
| | — |
| | 759 |
| | — |
| | (8,584 | ) | Cash - beginning of period | | 18,221 |
| | — |
| | — |
| | 794 |
| | — |
| | 19,015 |
| Cash - end of period | | $ | 8,878 |
| | $ | — |
| | $ | — |
| | $ | 1,553 |
| | $ | — |
| | $ | 10,431 |
|
Condensed Consolidating Statement of Cash Flows Nine Months Ended December 31, 2011
| | | | | | | | | | | | | | | | | | | | | | | | | | (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) | | $ | 37,227 |
| | $ | 31,462 |
| | $ | 22,790 |
| | $ | 699 |
| | $ | (54,951 | ) | | $ | 37,227 |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | | | | Depreciation and amortization | | 412 |
| | 428 |
| | 6,789 |
| | 54 |
| | — |
| | 7,683 |
| Deferred income taxes | | 427 |
| | 1,612 |
| | 5,293 |
| | (11 | ) | | — |
| | 7,321 |
| Amortization of deferred financing costs | | — |
| | 847 |
| | — |
| | — |
| | — |
| | 847 |
| Stock-based compensation costs | | 2,360 |
| | — |
| | — |
| | — |
| | — |
| | 2,360 |
| Amortization of debt discount | | — |
| | 687 |
| | — |
| | — |
| | — |
| | 687 |
| Equity in income of subsidiaries | | (30,438 | ) | | (23,768 | ) | | (745 | ) | | — |
| | 54,951 |
| | — |
| Changes in operating assets and liabilities, net of effects from acquisitions: | | | | | | | | | | | | | Accounts receivable | | (23 | ) | | (2,930 | ) | | (2,671 | ) | | (192 | ) | | — |
| | (5,816 | ) | Inventories | | — |
| | (1,053 | ) | | (2,822 | ) | | 25 |
| | — |
| | (3,850 | ) | Prepaid expenses and other current assets | | 3,219 |
| | (138 | ) | | (418 | ) | | (13 | ) | | — |
| | 2,650 |
| Accounts payable | | (31 | ) | | (502 | ) | | 2,571 |
| | 354 |
| | — |
| | 2,392 |
| Accrued liabilities | | 589 |
| | (5,032 | ) | | 761 |
| | 174 |
| | — |
| | (3,508 | ) | Net cash provided by operating activities | | 13,742 |
| | 1,613 |
| | 31,548 |
| | 1,090 |
| | — |
| | 47,993 |
| | | | | | | | | | | | | | Investing Activities | | | | | | | | | | | | | Purchases of property and equipment | | (140 | ) | | — |
| | (218 | ) | | — |
| | — |
| | (358 | ) | Proceeds from escrow of Blacksmith acquisition | | — |
| | — |
| | 1,200 |
| | — |
| | — |
| | 1,200 |
| Intercompany activity, net | | 1,200 |
| | — |
| | (1,200 | ) | | — |
| | — |
| | — |
| Net cash provided by (used in) investing activities | | 1,060 |
| | — |
| | (218 | ) | | — |
| | — |
| | 842 |
| | | | | | | | | | | | | | Financing Activities | | | | | | | | | | | | | Repayment of long-term debt | | — |
| | (58,000 | ) | | — |
| | — |
| | — |
| | (58,000 | ) | Proceeds from exercise of stock options | | 572 |
| | — |
| | — |
| | — |
| | — |
| | 572 |
| Shares surrendered as payment of tax withholding | | (271 | ) | | — |
| | — |
| | — |
| | — |
| | (271 | ) | Intercompany activity, net | | (24,256 | ) | | 56,387 |
| | (31,330 | ) | | (801 | ) | | — |
| | — |
| Net cash used in financing activities | | (23,955 | ) | | (1,613 | ) | | (31,330 | ) | | (801 | ) | | — |
| | (57,699 | ) | | | | | | | | | | | | | | Effect of exchange rate changes on cash and cash equivalents | | — |
| | — |
| | — |
| | (31 | ) | | — |
| | (31 | ) | Increase in cash and cash equivalents | | (9,153 | ) | | — |
| | — |
| | 258 |
| | — |
| | (8,895 | ) | Cash - beginning of period | | 12,698 |
| | — |
| | — |
| | 636 |
| | — |
| | 13,334 |
| Cash - end of period | | $ | 3,545 |
| | $ | — |
| | $ | — |
| | $ | 894 |
| | $ | — |
| | $ | 4,439 |
|
In the first quarter of fiscal 2013, the Company determined that in prior periods it had incorrectly recorded intercompany transactions between Prestige Brands Holdings, Inc. ("the Parent") and Prestige Brands, Inc. ("the Issuer") as a component of interest expense, resulting in (i) the misclassification of amounts between interest expense, equity in income of subsidiaries, and taxes of the Parent, and (ii) a corresponding understatement of interest income, taxes and net income of the Issuer. It was further determined that certain subsidiaries of the Issuer had been fully consolidated by the Issuer in error, resulting in (i) a gross-up of the Issuer's balance sheet, statement of income and comprehensive income and statement of cash flows and (ii) the need to revise the presentation to reflect the Issuer's interests in those subsidiaries under the equity method. Those entities had previously been incorrectly included in the Issuer column and omitted from the Guarantor column, and accordingly, this resulted in a need to revise the presentation to include the balance sheet, results of operations, and cash flows of those Issuer subsidiary entities in the Combined Subsidiary Guarantors column of the revised condensed consolidating financial statements. In addition, the Company reclassified portions of its intercompany activity between operating and financing in the statement of cash flows. The Company also determined that it had incorrectly presented certain intercompany balances between the Parent, the Issuer, the Combined Subsidiary Guarantors and Non-Guarantors resulting in revisions impacting other accrued liabilities, deferred income taxes, provision (benefit) for income taxes, intercompany receivables, intercompany payables, investment in subsidiaries and total equity balances. Additionally, certain revisions have been made to the Company's Condensed Consolidating Statement of Income and Comprehensive Income for the three months ended June 30, 2012. For the three months ended June 30, 2012, the provision for income taxes was increased approximately $4.3 million to $0.6 million for the Parent, and the benefit for income taxes was increased approximately $4.4 million to $3.0 million for the Issuer.
The Company has revised its Condensed Consolidating Financial Statements to correct the presentation of these items. There were no changes to any of the Company's Condensed Consolidated Financial Statements. The Company assessed the materiality of these items on previously issued annual and interim financial statements in accordance with SEC Staff Accounting Bulletin No. 99 and No. 108, and concluded that the revisions were not material to the consolidated financial statements. The Company will disclose the impact of the revisions on previously reported amounts and accordingly revise the Condensed Consolidated Financial Statements for comparative periods in its future filings. The impact of these revisions as of March 31, 2012 and for each of the three and nine month periods ended December 31, 2011 are shown in the following tables:
Condensed Consolidating Statement of Income and Comprehensive Income for the Three Months Ended December 31, 2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (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 | | $ | — |
| $ | — |
| | $ | 83,768 |
| $ | 27,409 |
| | $ | 21,343 |
| $ | 77,759 |
| | $ | 1,423 |
| $ | 1,366 |
| | $ | (284 | ) | $ | (284 | ) | Income before income taxes | | 13,575 |
| 8,782 |
| | 6,402 |
| 13,876 |
| | (1,316 | ) | 11,501 |
| | (22 | ) | (21 | ) | | (3,125 | ) | (18,624 | ) | Provision (benefit) for income taxes | | 4,065 |
| (728 | ) | | 2,430 |
| 2,285 |
| | (509 | ) | 4,454 |
| | 18 |
| (7 | ) | | — |
| — |
| Net income | | 9,510 |
| 9,510 |
| | 3,972 |
| 11,591 |
| | (807 | ) | 7,047 |
| | (40 | ) | (14 | ) | | (3,125 | ) | (18,624 | ) |
Condensed Consolidating Statement of Income and Comprehensive Income for the Nine Months Ended December 31, 2011. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (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 | | $ | — |
| $ | — |
| | $ | 232,214 |
| $ | 74,945 |
| | $ | 71,823 |
| $ | 229,245 |
| | $ | 4,336 |
| $ | 4,183 |
| | $ | (1,284 | ) | $ | (1,284 | ) | Income before income taxes | | 52,806 |
| 41,445 |
| | 20,701 |
| 36,243 |
| | (2,163 | ) | 36,487 |
| | 1,132 |
| 1,133 |
| | (12,119 | ) | (54,951 | ) | Provision (benefit) for income taxes | | 15,579 |
| 4,218 |
| | 8,000 |
| 4,781 |
| | (837 | ) | 13,697 |
| | 388 |
| 434 |
| | — |
| — |
| Net income | | 37,227 |
| 37,227 |
| | 12,701 |
| 31,462 |
| | (1,326 | ) | 22,790 |
| | 744 |
| 699 |
| | (12,119 | ) | (54,951 | ) |
Condensed Consolidating Balance sheet as of March 31, 2012. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (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 | Total current assets | | $ | 26,704 |
| $ | 26,704 |
| | $ | 98,887 |
| $ | 22,505 |
| | $ | 19,222 |
| $ | 95,240 |
| | $ | 2,222 |
| $ | 2,586 |
| | $ | — |
| $ | — |
| Total assets | | 2,200,652 |
| 2,065,825 |
| | 3,236,598 |
| 2,939,785 |
| | 267,407 |
| 1,729,776 |
| | 10,402 |
| 8,900 |
| | (3,956,783 | ) | (4,986,010 | ) | Total current liabilities | | 16,779 |
| 16,289 |
| | 49,246 |
| 20,392 |
| | (3,446 | ) | 25,952 |
| | 1,344 |
| 1,290 |
| | — |
| — |
| Total liabilities | | 1,797,927 |
| 1,663,097 |
| | 2,982,492 |
| 1,650,946 |
| | 196,430 |
| 489,526 |
| | 2,116 |
| 1,685 |
| | (3,623,417 | ) | (2,449,706 | ) | Total stockholder's equity | | 402,725 |
| 402,728 |
| | 254,106 |
| 1,288,839 |
| | 70,977 |
| 1,240,250 |
| | 8,286 |
| 7,215 |
| | (333,366 | ) | (2,536,304 | ) |
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended December 31, 2011. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (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 | | $ | 54,406 |
| $ | 13,742 |
| | $ | (4,109 | ) | $ | 1,613 |
| | $ | — |
| $ | 31,548 |
| | $ | 169 |
| $ | 1,090 |
| | $ | (2,473 | ) | $ | — |
| Net cash provided by (used in) investing activities | | 1,060 |
| 1,060 |
| | (218 | ) | — |
| | — |
| (218 | ) | | — |
| — |
| | — |
| — |
| Net cash provided by (used in) financing activities | | (64,619 | ) | (23,955 | ) | | 4,327 |
| (1,613 | ) | | — |
| (31,330 | ) | | 120 |
| (801 | ) | | 2,473 |
| — |
|
|